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110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-217

======================================================================



 
              EXPANDING AMERICAN HOMEOWNERSHIP ACT OF 2007

                                _______
                                

 June 28, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 1852]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 1852) to modernize and update the National 
Housing Act and enable the Federal Housing Administration to 
use risk-based pricing to more effectively reach underserved 
borrowers, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................    18
Background and Need for Legislation..............................    18
Hearings.........................................................    24
Committee Consideration..........................................    25
Committee Votes..................................................    25
Committee Oversight Findings.....................................    32
Performance Goals and Objectives.................................    33
New Budget Authority, Entitlement Authority, and Tax Expenditures    33
Committee Cost Estimate..........................................    33
Congressional Budget Office Estimate.............................    33
Federal Mandates Statement.......................................    43
Advisory Committee Statement.....................................    43
Constitutional Authority Statement...............................    43
Applicability to Legislative Branch..............................    43
Earmark Identification...........................................    43
Section-by-Section Analysis of the Legislation...................    44
Changes in Existing Law Made by the Bill, as Reported............    50
Additional Views.................................................    92

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Expanding American 
Homeownership Act of 2007''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Maximum principal loan obligation.
Sec. 4. Extension of mortgage term.
Sec. 5. Downpayment simplification.
Sec. 6. Mortgage insurance premiums for zero- and lower-downpayment 
borrowers.
Sec. 7. Mortgage insurance premiums for standard and higher-risk 
borrowers.
Sec. 8. Risk-based mortgage insurance premiums.
Sec. 9. Payment incentives.
Sec. 10. Borrower protections for higher risk mortgages.
Sec. 11. Annual reports on new programs and loss mitigation.
Sec. 12. Insurance for single family homes with licensed child care 
facilities.
Sec. 13. Rehabilitation loans.
Sec. 14. Discretionary action.
Sec. 15. Insurance of condominiums and manufactured housing.
Sec. 16. Mutual Mortgage Insurance Fund.
Sec. 17. Hawaiian home lands and Indian reservations.
Sec. 18. Conforming and technical amendments.
Sec. 19. Home equity conversion mortgages.
Sec. 20. Participation of mortgage brokers and correspondent lenders.
Sec. 21. Conforming loan limit in disaster areas.
Sec. 22. Failure to pay amounts from escrow accounts for single family 
mortgages.
Sec. 23. Acceptable identification for FHA mortgagors.
Sec. 24. Pilot program for automated process for borrowers without 
sufficient credit history.
Sec. 25. Sense of Congress regarding technology for financial systems.
Sec. 26. Multifamily housing mortgage limits in high cost areas.
Sec. 27. Valuation of multifamily properties in noncompetitive sales by 
HUD to States and localities.
Sec. 28. Clarification of disposition of certain properties.
Sec. 29. Use of FHA savings for costs of mortgage insurance, housing 
counseling, FHA technologies, procedures, and processes, and for 
affordable housing grant fund, and study.
Sec. 30. Limitation on mortgage insurance premium increases.
Sec. 31. Savings provision.
Sec. 32. Implementation.

SEC. 2. FINDINGS AND PURPOSES.

  (a) Findings.--The Congress finds that--
          (1) one of the primary missions of the Federal Housing 
        Administration (FHA) single family mortgage insurance program 
        is to reach borrowers who are underserved, or not served, by 
        the existing conventional mortgage marketplace;
          (2) the FHA program has a long history of innovation, which 
        includes pioneering the 30-year self-amortizing mortgage and a 
        safe-to-seniors reverse mortgage product, both of which were 
        once thought too risky to private lenders;
          (3) the FHA single family mortgage insurance program 
        traditionally has been a major provider of mortgage insurance 
        for home purchases;
          (4) the FHA mortgage insurance premium structure, as well as 
        FHA's product offerings, should be revised to reflect FHA's 
        enhanced ability to determine risk at the loan level and to 
        allow FHA to better respond to changes in the mortgage market;
          (5) during past recessions, including the oil-patch downturns 
        in the mid-1980s, FHA remained a viable credit enhancer and was 
        therefore instrumental in preventing a more catastrophic 
        collapse in housing markets and a greater loss of homeowner 
        equity; and
          (6) as housing price appreciation slows and interest rates 
        rise, many homeowners and prospective homebuyers will need the 
        less-expensive, safer financing alternative that FHA mortgage 
        insurance provides.
  (b) Purposes.--The purposes of this Act are--
          (1) to provide flexibility to FHA to allow for the insurance 
        of housing loans for low- and moderate-income homebuyers during 
        all economic cycles in the mortgage market;
          (2) to modernize the FHA single family mortgage insurance 
        program by making it more reflective of enhancements to loan-
        level risk assessments and changes to the mortgage market; and
          (3) to adjust the loan limits for the single family mortgage 
        insurance program to reflect rising house prices and the 
        increased costs associated with new construction.

SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION.

  Section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)) 
is amended by striking subparagraph (A) and inserting the following new 
subparagraph:
                  ``(A) not to exceed the lesser of--
                          ``(i) in the case of a 1-family residence, 
                        the median 1-family house price in the area, as 
                        determined by the Secretary; and in the case of 
                        a 2-, 3-, or 4-family residence, the percentage 
                        of such median price that bears the same ratio 
                        to such median price as the dollar amount 
                        limitation in effect under section 305(a)(2) of 
                        the Federal Home Loan Mortgage Corporation Act 
                        (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-
                        family residence, respectively, bears to the 
                        dollar amount limitation in effect under such 
                        section for a 1-family residence; or
                          ``(ii) the dollar amount limitation 
                        determined under such section 305(a)(2) for a 
                        residence of the applicable size;
                except that the dollar amount limitation in effect for 
                any area under this subparagraph may not be less than 
                the greater of (I) the dollar amount limitation in 
                effect under this section for the area on October 21, 
                1998, or (II) 65 percent of the dollar limitation 
                determined under such section 305(a)(2) for a residence 
                of the applicable size; and''.

SEC. 4. EXTENSION OF MORTGAGE TERM.

  Paragraph (3) of section 203(b) of the National Housing Act (12 
U.S.C. 1709(b)(3)) is amended--
          (1) by striking ``thirty-five years'' and inserting ``forty 
        years''; and
          (2) by striking ``(or thirty years if such mortgage is not 
        approved for insurance prior to construction)''.

SEC. 5. DOWNPAYMENT SIMPLIFICATION.

  Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is 
amended--
          (1) in paragraph (2)--
                  (A) by striking subparagraph (B) and inserting the 
                following new subparagraph:
                  ``(B) not to exceed an amount equal to the sum of--
                          ``(i) the amount of the mortgage premium paid 
                        at the time the mortgage is insured; and
                          ``(ii)(I) except as provided in subclause 
                        (II), 97.75 percent of the appraised value of 
                        the property; or
                          ``(II) in the case only of a mortgage 
                        described in subsection (c)(3), 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) in the matter after and below subparagraph (B), 
                by striking the second sentence (relating to a 
                definition of ``average closing cost'') and all that 
                follows through ``title 38, United States Code.''; and
                  (C) by striking the last undesignated paragraph 
                (relating to counseling with respect to the 
                responsibilities and financial management involved in 
                homeownership); and
          (2) in paragraph (9), by striking the paragraph designation 
        and all that follows through ``Provided further, That for'' and 
        inserting the following:
          ``(9) Except in the case of a mortgage described in 
        subsection (c)(3), be executed by a mortgagor who shall have 
        paid on account of the property, in cash or its equivalent, at 
        least 3 percent of the Secretary's estimate of the cost of 
        acquisition (excluding the mortgage insurance premium paid at 
        the time the mortgage is insured). For''.

SEC. 6. MORTGAGE INSURANCE PREMIUMS FOR ZERO- AND LOWER-DOWNPAYMENT 
                    BORROWERS.

  Section 203(c) of the National Housing Act (12 U.S.C. 1709(c) is 
amended by adding at the end the following new paragraph:
  ``(3) Zero- and Lower-Downpayment Borrowers.--
          ``(A) Applicability.--This paragraph shall apply to any 
        mortgage that--
                  ``(i) is secured by a 1- to 4-family dwelling;
                  ``(ii)(I) is an obligation of the Mutual Mortgage 
                Insurance Fund or of the General Insurance Fund 
                pursuant to subsection (v) of this section; or
                  ``(II) is insured under subsection (k) of this 
                section or section 234(c);
                  ``(iii) is executed by a mortgagor who is a first-
                time homebuyer; and
                  ``(iv)(I) involves a principal obligation that does 
                not comply with subclause (I) of subsection 
                (b)(2)(B)(ii) (relating to loan-to-value ratio); or
                  ``(II) is executed by a mortgagor who has not paid on 
                account of the property, in cash or its equivalent, at 
                least 3 percent of the Secretary's estimate of the cost 
                of acquisition (excluding the mortgage insurance 
                premium paid at the time the mortgage is insured).
          ``(B) Up-front premiums.--The amount of any single premium 
        payment collected at the time of insurance may not exceed 3.0 
        percent of the amount of the original insured principal 
        obligation of the mortgage.
          ``(C) Annual premiums.--Except as provided in subparagraph 
        (D), the amount of any annual premium payment collected may not 
        exceed 0.75 percent of the remaining insured principal 
        obligation of the mortgage.
          ``(D) Annual redetermination of premium rate.--The Secretary 
        shall redetermine the rates of premiums not less than once 
        every 12 months.''.

SEC. 7. MORTGAGE INSURANCE PREMIUMS FOR STANDARD AND HIGHER-RISK 
                    BORROWERS.

  Paragraph (2) of section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)(2)) is amended--
          (1) by striking the matter that precedes subparagraph (A) and 
        inserting the following:
  ``(2) Standard-Risk Mortgages.--In the case of any mortgage that is 
secured by a 1- to 4-family dwelling, is an obligation of the Mutual 
Mortgage Insurance Fund or of the General Insurance Fund pursuant to 
subsection (v) of this section or is insured under subsection (k) of 
this section or section 234(c), for which the mortgagor has paid on 
account of the property, in cash or its equivalent, at least 3 percent 
of the Secretary's estimate of the cost of acquisition (excluding the 
mortgage insurance premium paid at the time the mortgage is insured), 
and that involves a principal obligation that complies with subclause 
(I) of subsection (b)(2)(B)(ii), the following requirements shall 
apply:''; and
          (2) by adding at the end the following new subparagraph:
          ``(C) Higher-risk borrowers.--The Secretary shall establish 
        underwriting standards that provide for insurance under this 
        section of mortgages described in the matter in this paragraph 
        preceding subparagraph (A) for which the mortgagor has a credit 
        score equivalent to a FICO score of less than 560, and may 
        insure, and make commitments to insure, such mortgages. Such 
        underwriting standards shall include establishing and 
        collecting premium payments that comply with the requirements 
        of this paragraph, except that notwithstanding subparagraph 
        (A), the single premium payment collected at the time of 
        insurance may be established in an amount that does not exceed 
        3.0 percent of the amount of the original insured principal 
        obligation of the mortgage.''.

SEC. 8. RISK-BASED MORTGAGE INSURANCE PREMIUMS.

  Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)), as 
amended by the preceding provisions of this Act, is further amended by 
adding at the end the following new paragraphs:
  ``(4) Flexible Risk-Based Premiums.--In the case of a mortgage 
referred to in paragraph (2)(C) or (3)(A) for which the loan 
application is received by the mortgagee on or after October 1, 2007:
          ``(A) In general.--The Secretary may establish a mortgage 
        insurance premium structure involving a single premium payment 
        collected prior to the insurance of the mortgage or annual 
        payments (which may be collected on a periodic basis), or both, 
        subject to the requirements of subparagraph (B) and paragraph 
        (5). Under such structure, the rate of premiums for such a 
        mortgage may vary according to the credit risk associated with 
        the mortgage and the rate of any annual premium for such a 
        mortgage may vary during the mortgage term as long as the basis 
        for determining the variable rate is established before the 
        execution of the mortgage. The Secretary may change a premium 
        structure established under this subclause but only to the 
        extent that such change is not applied to any mortgage already 
        executed.
          ``(B) Establishment and alteration of premium structure.--A 
        premium structure shall be established or changed under 
        subparagraph (A) only by providing notice to mortgagees and to 
        the Congress, at least 30 days before the premium structure is 
        established or changed.
          ``(C) Annual report regarding premiums.--The Secretary shall 
        submit a report to the Congress annually setting forth the rate 
        structures and rates established and altered pursuant to this 
        paragraph during the preceding 12-month period and describing 
        how such rates were determined.
  ``(5) Considerations for Premium Structure.--When establishing 
premiums for mortgages referred to in paragraph (2)(C), establishing 
premiums pursuant to paragraph (3), establishing a premium structure 
under paragraph (4), and when changing such a premium structure, the 
Secretary shall consider the following:
          ``(A) The effect of the proposed premiums or structure on the 
        Secretary's ability to meet the operational goals of the Mutual 
        Mortgage Insurance Fund as provided in section 202(a).
          ``(B) Underwriting variables.
          ``(C) The extent to which new pricing under the proposed 
        premiums or structure has potential for acceptance in the 
        private market.
          ``(D) The administrative capability of the Secretary to 
        administer the proposed premiums or structure.
          ``(E) The effect of the proposed premiums or structure on the 
        Secretary's ability to maintain the availability of mortgage 
        credit and provide stability to mortgage markets.
  ``(6) Authority to Base Premium Prices on Product Risk.--
          ``(A) Authority.--In establishing premium rates under 
        paragraphs (2), (3), and (4), the Secretary may provide for 
        variations in such rates according to the credit risk 
        associated with the type of mortgage product that is being 
        insured under this title, which may include providing that 
        premium rates differ between fixed-rate mortgages and 
        adjustable-rate mortgages insured pursuant to section 251, 
        between mortgages insured pursuant to section 203(b) and 
        mortgages for condominiums insured pursuant to section 234, and 
        between such other products as the Secretary considers 
        appropriate.
          ``(B) Limitation.--Subparagraph (A) may not be construed to 
        authorize the Secretary to establish, for any mortgage product, 
        any mortgage insurance premium rate that does not comply with 
        the requirements and limitations under paragraphs (2) through 
        (5).''.

SEC. 9. PAYMENT INCENTIVES.

  Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)), as 
amended by the preceding provisions of this Act, is further amended by 
adding at the end the following new paragraph:
  ``(7) Payment Incentives.--
          ``(A) Authority.--With respect to mortgages referred to in 
        paragraph (2)(C) or (3):
                  ``(i) Discretionary 3-year payment incentive.--The 
                Secretary may provide, in the discretion of the 
                Secretary, that the payment incentive under 
                subparagraph (B) shall apply upon the expiration of the 
                3-year period beginning upon the time of insurance of 
                such a mortgage.
                  ``(ii) Mandatory 5-year payment incentive.--The 
                Secretary shall provide that the payment incentive 
                under subparagraph (B) applies upon the expiration of 
                the 5-year period beginning upon the time of insurance 
                of such a mortgage.
          ``(B) Payment incentive.--In the case of any mortgage to 
        which the payment incentive under this subparagraph applies, 
        if, during the period referred to in clause (i) or (ii) of 
        subparagraph (A), as applicable, all mortgage insurance 
        premiums for such mortgage have been paid on a timely basis, 
        upon the expiration of such period the Secretary shall--
                  ``(i) reduce the amount of the annual premium 
                payments otherwise due thereafter under such mortgage--
                          ``(I) in the case of a mortgage referred to 
                        in paragraph (3), to an amount that does not 
                        exceed the amount of the maximum annual premium 
                        allowable under paragraph (2)(B); and
                          ``(II) in the case of a mortgage referred to 
                        in paragraph (2)(C), to an amount that does not 
                        exceed the amount of the annual premium payable 
                        at the time of insurance of the mortgage on a 
                        mortgage of the same product type having the 
                        same terms, but for which the mortgagor has a 
                        credit score equivalent to a FICO score of 560 
                        or more; and
                  ``(ii) in the case only of a mortgage referred to in 
                paragraph (2)(C), refund to the mortgagor, upon payment 
                in full of the obligation of the mortgage, any amount 
                by which the single premium payment for such mortgage 
                collected at the time of insurance exceeded the amount 
                of the single premium payment chargeable under 
                paragraph (2)(A) at the time of insurance for a 
                mortgage of the same product type having the same 
                terms, but for which the mortgagor has a credit score 
                equivalent to a FICO score of 560 or more.''.

SEC. 10. BORROWER PROTECTIONS FOR HIGHER RISK MORTGAGES.

  Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is 
amended by adding at the end the following new paragraph:
          ``(10) Borrower protections for certain mortgages.--Except as 
        otherwise specifically provided in this paragraph, in the case 
        of any mortgage referred to in paragraph (2)(C) or (3) of 
        subsection (c), the following requirements shall apply:
                  ``(A) Disclosures.--
                          ``(i) Required disclosures.--In addition to 
                        any disclosures that are otherwise required by 
                        law or by the Secretary for single family 
                        mortgages, the mortgagee shall disclose to the 
                        mortgagor the following information:
                                  ``(I) At application.--At the time of 
                                application for the loan involved in 
                                the mortgage--
                                          ``(aa) a list of counseling 
                                        agencies approved by the 
                                        Secretary in the area of the 
                                        applicant; and
                                          ``(bb) if the mortgagor is 
                                        not provided counseling in 
                                        accordance with subparagraph 
                                        (B), the information required 
                                        under subclauses (I), (II), and 
                                        (III) of subparagraph (B)(iii) 
                                        to be provided to the 
                                        mortgagor.
                                  ``(II) At execution.--At the time of 
                                entering into the mortgage--
                                          ``(aa) the terms of the 
                                        mandatory 5-year payment 
                                        incentive required under 
                                        subsection (c)(7)(A)(ii); and
                                          ``(bb) a statement that the 
                                        mortgagor has a right under 
                                        contract to loss mitigation.
                                  ``(III) Other information.--Any other 
                                additional information that the 
                                Secretary determines is appropriate to 
                                ensure that the mortgagor has received 
                                timely and accurate information about 
                                the program under paragraph (2)(C) or 
                                (3) of subsection (c), as applicable.
                          ``(ii) Penalties for failure to provide 
                        required disclosures.--The Secretary may 
                        establish and impose appropriate penalties for 
                        failure of a mortgagee to provide any 
                        disclosure required under clause (i).
                          ``(iii) No private right of action.--This 
                        subparagraph shall not create any private right 
                        of action on behalf of the mortgagor.
                  ``(B) Counseling.--
                          ``(i) Allowable requirement.--The Secretary 
                        may, in the discretion of the Secretary, 
                        require that the mortgagor shall have received 
                        counseling that complies with the requirements 
                        of this subparagraph.
                          ``(ii) Terms of counseling.--Counseling under 
                        this subparagraph shall be provided--
                                  ``(I) prior to application for the 
                                loan involved in the mortgage;
                                  ``(II) 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;
                                  ``(III) on an individual basis to the 
                                mortgagor by a representative of the 
                                approved third-party counseling entity; 
                                and
                                  ``(IV) in person, to the maximum 
                                extent possible.
                          ``(iii) Topics.--In the case only of a 
                        mortgage referred to in subsection (c)(3), 
                        counseling under this subparagraph shall 
                        include providing to, and discussing with, the 
                        mortgagor--
                                  ``(I) information regarding 
                                homeownership options other than a 
                                mortgage that is subject to this 
                                paragraph, 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 subject to this paragraph), 
                                and any other information that the 
                                Secretary may require;
                                  ``(II) a written disclosure that sets 
                                forth the amount and the percentage by 
                                which a property with a mortgage that 
                                is subject to this paragraph 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; and
                                  ``(III) 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 that is referred to in 
                                subsection (c)(3) exceeds the maximum 
                                amount that could be borrowed under a 
                                mortgage insured under this subsection 
                                that is not a mortgage referred to in 
                                such subsection, 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; the disclosure 
                                required under this subclause may be 
                                provided in conjunction with the notice 
                                required under subsection (f).
                          ``(iv) 2- and 3-family residences.--In the 
                        case of a mortgage involving a 2- or 3-family 
                        residence, counseling under this subparagraph 
                        shall include (in addition to the information 
                        required under clause (iii)) information 
                        regarding real estate property management.
                  ``(C) Notice of foreclosure prevention counseling 
                availability.--
                          ``(i) Written agreement.--To be eligible for 
                        insurance under this subsection, the mortgagee 
                        shall provide the mortgagor, at the time of the 
                        execution of the mortgage, a written agreement 
                        which shall be signed by the mortgagor and 
                        under which the mortgagee shall provide notice 
                        described in clause (ii) to a housing 
                        counseling entity that has agreed to provide 
                        the notice and counseling required under clause 
                        (iii) and is approved by the Secretary.
                          ``(ii) Notice to counseling agency.--The 
                        notice described in this clause, 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.
                          ``(iii) 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.
                          ``(iv) Ability to cure.--Failure to provide 
                        the written agreement required under clause (i) 
                        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 
                        clause.
                          ``(v) Penalties for failure to provide 
                        agreement.--The Secretary may establish and 
                        impose appropriate penalties for failure of a 
                        mortgagee to provide the written agreement 
                        required under clause (i).
                          ``(vi) 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 clause (iii).
                          ``(vii) No private right of action.--This 
                        subparagraph shall not create any private right 
                        of action on behalf of the mortgagor.
                          ``(viii) Delinquency period.--For purposes of 
                        this subparagraph, 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.''.

SEC. 11. ANNUAL REPORTS ON NEW PROGRAMS AND LOSS MITIGATION.

  Section 540(b)(2) of the National Housing Act (12 U.S.C. 1735f-
18(b)(2)) is amended, by adding at the end the following new 
subparagraphs:
                  ``(C) The rates of default and foreclosure for the 
                applicable collection period for mortgages insured 
                pursuant to the programs for mortgage insurance under 
                paragraphs (2)(C) and (3) of section 203(c).
                  ``(D) Actions taken by the Secretary during the 
                applicable collection period with respect to loss 
                mitigation on mortgages insured pursuant to section 
                203.''.

SEC. 12. INSURANCE FOR SINGLE FAMILY HOMES WITH LICENSED CHILD CARE 
                    FACILITIES.

  (a) Definition of Child Care Facility.--Section 201 of the National 
Housing Act (12 U.S.C. 1707) is amended by adding at the end the 
following new subsection:
  ``(g) The term `child care facility' means a facility that--
          ``(A) has as its purpose the care of children who are less 
        than 12 years of age; and
          ``(B) is licensed or regulated by the State in which it is 
        located (or, if there is no State law providing for such 
        licensing and regulation by the State, by the municipality or 
        other political subdivision in which the facility is located).
Such term does not include facilities for school-age children primarily 
for use during normal school hours.''.
  (b) Increase in Maximum Mortgage Amount Limitation.--Paragraph (2) of 
section 203(b) of the National Housing Act (12 U.S.C. 1709(b)(2)), as 
amended by the preceding provisions of this Act, is further amended by 
adding at end the following new undesignated paragraph:
          ``Notwithstanding any other provision of this paragraph, the 
        amount that may be insured under this section may be increased 
        by up to 25 percent if such increase is necessary to account 
        for the increased cost of the residence due to an increased 
        need of space in the residence for locating and operating a 
        child care facility (as such term is defined in section 201) 
        within the residence, but only if a valid license or 
        certificate of compliance with regulations described in section 
        201(g)(2) has been issued for such facility as of the date of 
        the execution of the mortgage, and only if such increase in the 
        amount insured is proportional to the amount of space of such 
        residence that will be used for such facility.''.

SEC. 13. REHABILITATION LOANS.

  Subsection (k) of section 203 of the National Housing Act (12 U.S.C. 
1709(k)) is amended--
          (1) in paragraph (1), by striking ``on'' and all that follows 
        through ``1978''; and
          (2) in paragraph (5)--
                  (A) by striking ``General Insurance Fund'' the first 
                place it appears and inserting ``Mutual Mortgage 
                Insurance Fund''; and
                  (B) in the second sentence, by striking the comma and 
                all that follows through ``General Insurance Fund''.

SEC. 14. DISCRETIONARY ACTION.

  The National Housing Act is amended--
          (1) in subsection (e) of section 202 (12 U.S.C. 1708(e))--
                  (A) in paragraph (3)(B), by striking ``section 202(e) 
                of the National Housing Act'' and inserting ``this 
                subsection''; and
                  (B) by redesignating such subsection as subsection 
                (f);
          (2) by striking paragraph (4) of section 203(s) (12 U.S.C. 
        1709(s)(4)) and inserting the following new paragraph:
          ``(4) the Secretary of Agriculture;''; and
          (3) by transferring subsection (s) of section 203 (as amended 
        by paragraph (2) of this section) to section 202, inserting 
        such subsection after subsection (d) of section 202, and 
        redesignating such subsection as subsection (e).

SEC. 15. INSURANCE OF CONDOMINIUMS AND MANUFACTURED HOUSING.

  (a) In General.--Section 234 of the National Housing Act (12 U.S.C. 
1715y) is amended--
          (1) in subsection (c)--
                  (A) in the first sentence--
                          (i) by striking ``and'' before ``(2)''; and
                          (ii) by inserting before the period at the 
                        end the following: ``, and (3) the project has 
                        a blanket mortgage insured by the Secretary 
                        under subsection (d)''; and
                  (B) in clause (B) of the third sentence, by striking 
                ``thirty-five years'' and inserting ``forty years''; 
                and
          (2) in subsection (g), by striking ``, except that'' and all 
        that follows and inserting a period.
  (b) Definition of Mortgage.--Section 201(a) of the National Housing 
Act (12 U.S.C. 1707(a)) is amended--
          (1) before ``a first mortgage'' insert ``(A)'';
          (2) by striking ``or on a leasehold (1)'' and inserting ``(B) 
        a first mortgage on a leasehold on real estate (i)'';
          (3) by striking ``or (2)'' and inserting ``, or (ii)''; and
          (4) by inserting before the semicolon the following: ``, or 
        (C) a first mortgage given to secure the unpaid purchase price 
        of a fee interest in, or long-term leasehold interest in, real 
        estate consisting of a one-family unit in a multifamily 
        project, including a project in which the dwelling units are 
        attached, or are manufactured housing units, semi-detached, or 
        detached, and an undivided interest in the common areas and 
        facilities which serve the project''.
  (c) Definition of Real Estate.-- Section 201 of the National Housing 
Act (12 U.S.C. 1707), as amended by the preceding provisions of this 
Act, is further amended by adding at the end the following new 
subsection:
  ``(h) The term `real estate' means land and all natural resources and 
structures permanently affixed to the land, including residential 
buildings and stationary manufactured housing. The Secretary may not 
require, for treatment of any land or other property as real estate for 
purposes of this title, that such land or property be treated as real 
estate for purposes of State taxation.''.

SEC. 16. MUTUAL MORTGAGE INSURANCE FUND.

  (a) In General.--Subsection (a) of section 202 of the National 
Housing Act (12 U.S.C. 1708(a)) is amended to read as follows:
  ``(a) Mutual Mortgage Insurance Fund.--
          ``(1) Establishment.--Subject to the provisions of the 
        Federal Credit Reform Act of 1990, there is hereby created a 
        Mutual Mortgage Insurance Fund (in this title referred to as 
        the `Fund'), which shall be used by the Secretary to carry out 
        the provisions of this title with respect to mortgages insured 
        under section 203. The Secretary may enter into commitments to 
        guarantee, and may guarantee, such insured mortgages.
          ``(2) Limit on loan guarantees.--The authority of the 
        Secretary to enter into commitments to guarantee such insured 
        mortgages shall be effective for any fiscal year only to the 
        extent that the aggregate original principal loan amount under 
        such mortgages, any part of which is guaranteed, does not 
        exceed the amount specified in appropriations Acts for such 
        fiscal year.
          ``(3) Fiduciary responsibility.--The Secretary has a 
        responsibility to ensure that the Mutual Mortgage Insurance 
        Fund remains financially sound.
          ``(4) Annual independent actuarial study.--The Secretary 
        shall provide for an independent actuarial study of the Fund to 
        be conducted annually, which shall analyze the financial 
        position of the Fund. The Secretary shall submit a report 
        annually to the Congress describing the results of such study 
        and assessing the financial status of the Fund. The report 
        shall recommend adjustments to underwriting standards, program 
        participation, or premiums, if necessary, to ensure that the 
        Fund remains financially sound.
          ``(5) Quarterly reports.--During each fiscal year, the 
        Secretary shall submit a report to the Congress for each 
        quarter, which shall specify for mortgages that are obligations 
        of the Fund--
                  ``(A) the cumulative volume of loan guarantee 
                commitments that have been made during such fiscal year 
                through the end of the quarter for which the report is 
                submitted;
                  ``(B) the types of loans insured, categorized by 
                risk;
                  ``(C) any significant changes between actual and 
                projected claim and prepayment activity;
                  ``(D) projected versus actual loss rates; and
                  ``(E) updated projections of the annual subsidy rates 
                to ensure that increases in risk to the Fund are 
                identified and mitigated by adjustments to underwriting 
                standards, program participation, or premiums, and the 
                financial soundness of the Fund is maintained.
        The first quarterly report under this paragraph shall be 
        submitted on the last day of the first quarter of fiscal year 
        2008, or upon the expiration of the 90-day period beginning on 
        the date of the enactment of the Expanding American 
        Homeownership Act of 2007, whichever is later.
          ``(6) Adjustment of premiums.--If, pursuant to the 
        independent actuarial study of the Fund required under 
        paragraph (5), the Secretary determines that the Fund is not 
        meeting the operational goals established under paragraph (8) 
        or there is a substantial probability that the Fund will not 
        maintain its established target subsidy rate, the Secretary may 
        either make programmatic adjustments under section 203 as 
        necessary to reduce the risk to the Fund, or make appropriate 
        premium adjustments.
          ``(7) Operational goals.--The operational goals for the Fund 
        are--
                  ``(A) to charge borrowers under loans that are 
                obligations of the Fund an appropriate premium for the 
                risk that such loans pose to the Fund;
                  ``(B) to minimize the default risk to the Fund and to 
                homeowners;
                  ``(C) to curtail the impact of adverse selection on 
                the Fund; and
                  ``(D) to meet the housing needs of the borrowers that 
                the single family mortgage insurance program under this 
                title is designed to serve.''.
  (b) Obligations of Fund.--The National Housing Act is amended as 
follows:
          (1) Homeownership voucher program mortgages.--In section 
        203(v) (12 U.S.C. 1709(v))--
                  (A) by striking ``Notwithstanding section 202 of this 
                title, the'' and inserting ``The''; and
                  (B) by striking ``General Insurance Fund'' the first 
                place such term appears and all that follows and 
                inserting ``Mutual Mortgage Insurance Fund.''.
          (2) Home equity conversion mortgages.--Section 255(i)(2)(A) 
        of the National Housing Act (12 U.S.C. 1715z-20(i)(2)(A)) is 
        amended by striking ``General Insurance Fund'' and inserting 
        ``Mutual Mortgage Insurance Fund''.
  (c) Conforming Amendments.--The National Housing Act is amended--
          (1) in section 205 (12 U.S.C. 1711), by striking subsections 
        (g) and (h); and
          (2) in section 519(e) (12 U.S.C. 1735c(e)), by striking 
        ``203(b)'' and all that follows through ``203(i)'' and 
        inserting ``203, except as determined by the Secretary''.

SEC. 17. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.

  (a) Hawaiian Home Lands.--Section 247(c) of the National Housing Act 
(12 U.S.C. 1715z-12) is amended--
          (1) by striking ``General Insurance Fund established in 
        section 519'' and inserting ``Mutual Mortgage Insurance Fund''; 
        and
          (2) in the second sentence, by striking ``(1) all 
        references'' and all that follows through ``and (2)''.
  (b) Indian Reservations.--Section 248(f) of the National Housing Act 
(12 U.S.C. 1715z-13) is amended--
          (1) by striking ``General Insurance Fund'' the first place it 
        appears and all that follows through ``519'' and inserting 
        ``Mutual Mortgage Insurance Fund''; and
          (2) in the second sentence, by striking ``(1) all 
        references'' and all that follows through ``and (2)''.

SEC. 18. CONFORMING AND TECHNICAL AMENDMENTS.

  (a) Repeals.--The following provisions of the National Housing Act 
are repealed:
          (1) Subsection (i) of section 203 (12 U.S.C. 1709(i)).
          (2) Subsection (o) of section 203 (12 U.S.C. 1709(o)).
          (3) Subsection (p) of section 203 (12 U.S.C. 1709(p)).
          (4) Subsection (q) of section 203 (12 U.S.C. 1709(q)).
          (5) Section 222 (12 U.S.C. 1715m).
          (6) Section 237 (12 U.S.C. 1715z-2).
          (7) Section 245 (12 U.S.C. 1715z-10).
  (b) Definition of Area.--Section 203(u)(2)(A) of the National Housing 
Act (12 U.S.C. 1709(u)(2)(A)) is amended by striking ``shall'' and all 
that follows and inserting ``means a metropolitan statistical area as 
established by the Office of Management and Budget;''.
  (c) Definition of State.--Section 201(d) of the National Housing Act 
(12 U.S.C. 1707(d)) is amended by striking ``the Trust Territory of the 
Pacific Islands'' and inserting ``the Commonwealth of the Northern 
Mariana Islands''.

SEC. 19. HOME EQUITY CONVERSION MORTGAGES.

  (a) In General.--Section 255 of the National Housing Act (12 U.S.C. 
1715z-20) is amended--
          (1) in subsection (b)(2), insert `` `real estate', '' after 
        `` `mortgagor','';
          (2) in subsection (g)--
                  (A) by striking the first sentence; and
                  (B) by striking ``established under section 
                203(b)(2)'' and all that follows through ``located'' 
                and inserting ``limitation established under section 
                305(a)(2) of the Federal Home Loan Mortgage Corporation 
                Act for a 1-family residence'';
          (3) in subsection (i)(1)(C), by striking ``limitations'' and 
        inserting ``limitation''; and
          (4) by adding at the end the following new subsection:
  ``(o) Authority To Insure Home Purchase Mortgage.--
          ``(1) In general.--Notwithstanding any other provision in 
        this section, the Secretary may insure, upon application by a 
        mortgagee, a home equity conversion mortgage upon such terms 
        and conditions as the Secretary may prescribe, when the primary 
        purpose of the home equity conversion mortgage is to enable an 
        elderly mortgagor to purchase a 1- to 4-family dwelling in 
        which the mortgagor will occupy or occupies one of the units.
          ``(2) Limitation on principal obligation.--A home equity 
        conversion mortgage insured pursuant to paragraph (1) shall 
        involve a principal obligation that does not exceed the dollar 
        amount limitation determined under section 305(a)(2) of the 
        Federal Home Loan Mortgage Corporation Act for a residence of 
        the applicable size.''.
  (b) Mortgages for Cooperatives.--Subsection (b) of section 255 of the 
National Housing Act (12 U.S.C. 1715z-20(b)) is amended--
          (1) in paragraph (4)--
                  (A) by inserting ``a first or subordinate mortgage or 
                lien'' before ``on all stock'';
                  (B) by inserting ``unit'' after ``dwelling''; and
                  (C) by inserting ``a first mortgage or first lien'' 
                before ``on a leasehold''; and
          (2) in paragraph (5), by inserting ``a first or subordinate 
        lien on'' before ``all stock''.
  (c) Limitation on Origination Fees.--Section 255 of the National 
Housing Act (12 U.S.C. 1715z--20), as amended by the preceding 
provisions of this section, is further amended--
          (1) by redesignating subsections (k), (l), and (m) as 
        subsections (l), (m), and (n), respectively; and
          (2) by inserting after subsection (j) the following new 
        subsection:
  ``(k) Limitation on Origination Fees.--The Secretary shall establish 
limits on the origination fee that may be charged to a mortgagor under 
a mortgage insured under this section, which limitations shall--
          ``(1) equal two percent of the original principal limit of 
        the mortgage;
          ``(2) be subject to a minimum allowable amount;
          ``(3) provide that the origination fee may be fully financed 
        with the mortgage; and
          ``(4) include any fees paid to correspondent mortgagees 
        approved by the Secretary or to mortgage brokers.''.
  (d) Study Regarding Mortgage Insurance Premiums.--The Secretary of 
Housing and Urban Development shall conduct a study regarding mortgage 
insurance premiums charged under the program under section 255 of the 
National Housing Act (12 U.S.C. 1715z-20) for insurance of home equity 
conversion mortgages to analyze and determine the effects of reducing 
the amounts of such premiums from the amounts charged as of the date of 
the enactment of this Act on (1) costs to mortgagors, and (2) the 
financial soundness of the program. Not later than the expiration of 
the 12-month period beginning on the date of the enactment of this Act, 
the Secretary shall submit a report to the Congress setting forth the 
results and conclusions of the study.

SEC. 20. PARTICIPATION OF MORTGAGE BROKERS AND CORRESPONDENT LENDERS.

  (a) In General.--
          (1) Definitions.--
                  (A) In general.--Section 201 of the National Housing 
                Act (12 U.S.C. 1707), as amended by the preceding 
                provisions of this Act, is further amended--
                          (i) by striking ``As used in section 203 of 
                        this title--'' and inserting ``As used in this 
                        title and for purposes of participation in 
                        insurance programs under this title, except as 
                        specifically provided otherwise, the following 
                        definitions shall apply:'';
                          (ii) by striking subsection (b) and inserting 
                        the following:
          ``(2) The term `mortgagee' means any of the following 
        entities, and its successors and assigns, to the extent such 
        entity is approved by the Secretary:
                  ``(A) Qualification by audit and net worth.--A 
                lender, or mortgage broker, or correspondent lender, 
                who--
                          ``(i) makes, underwrites, and services 
                        mortgages;
                          ``(ii) submits to the Secretary such 
                        financial audits performed in accordance with 
                        the standards for financial audits of the 
                        Government Auditing Standards issued by the 
                        Comptroller General of the United States;
                          ``(iii) meet the minimum net worth 
                        requirement that the Secretary shall establish; 
                        and
                          ``(iv) complies with such other requirements 
                        as the Secretary may establish.
                  ``(B) Qualification of correspondent lenders by 
                surety bond.--Except as provided in subparagraph (D), a 
                correspondent lender who--
                          ``(i) closes a mortgage in its name but does 
                        not underwrite or service the mortgage;
                          ``(ii) posts a surety bond, in lieu of any 
                        requirement to provide audited financial 
                        statements or meet a minimum net worth 
                        requirement, in--
                                  ``(I) a form satisfactory to the 
                                Secretary; and
                                  ``(II) an amount of $75,000, as such 
                                amount is adjusted annually by the 
                                Secretary (as determined under 
                                regulations of the Secretary) by the 
                                change for such year in the Consumer 
                                Price Index for All Urban Consumers 
                                published monthly by the Bureau of 
                                Labor Statistics of the Department of 
                                Labor; and
                          ``(iii) complies with such other requirements 
                        as the Secretary may establish.
                  ``(C) Qualification of brokers by surety bond.--
                Except as provided in subparagraph (D), a mortgage 
                broker who--
                          ``(i) closes the mortgage in the name of the 
                        lender and does not make, underwrite, or 
                        service the mortgage;
                          ``(ii) is licensed, under the laws of the 
                        State in which the property that is subject to 
                        the mortgage is located, to act as a mortgage 
                        broker in such State;
                          ``(iii) posts a surety bond in accordance 
                        with the requirements of subparagraph (B)(ii); 
                        and
                          ``(iv) complies with such other requirements 
                        as the Secretary may establish.
                  ``(D) Conditions for continued applicability.--(i) 
                Subparagraphs (B) and (C) shall continue to apply after 
                the expiration of the 5-year period beginning on the 
                date of the enactment of the Expanding American 
                Homeownership Act of 2007 only if, after the expiration 
                of the 4-year period beginning upon such date of 
                enactment and taking into consideration the report 
                submitted in accordance with section 19(b) of such Act, 
                the Secretary--
                          ``(I) makes a determination that such 
                        subparagraphs provide protection to mortgage 
                        insurance funds for mortgages insured under 
                        this title that are comparable to the 
                        protection provided by the requirements for 
                        mortgagees under this title as in effect 
                        immediately before the enactment of such Act; 
                        and
                          ``(II) publishes in the Federal Register a 
                        notice of such determination and an order 
                        extending the applicability of such 
                        subparagraphs.
                  ``(ii) If, taking into consideration such report, the 
                Secretary makes a determination after the expiration of 
                such 4-year period that subparagraphs (B) and (C) do 
                not provide protection as referred to in clause (i) of 
                this subparagraph, the Secretary may, by order 
                published in the Federal Register, provide for the 
                participation, after the expiration of the 5-year 
                period referred to in clause (i), of correspondent 
                lenders and mortgage brokers as mortgagees in the 
                insurance programs under this title in accordance with 
                subparagraphs (B) and (C) as modified by the Secretary 
                as the Secretary considers appropriate to provide such 
                protection.
                  ``(E) Additional mortgage broker requirements.--
                          ``(i) In addition to the requirements under 
                        subparagraphs (A) and (C) and to duties imposed 
                        under other statutes or common law, to be 
                        eligible as a mortgagee under this section, a 
                        broker shall--
                                  ``(I) safeguard and account for any 
                                money handled for the borrower;
                                  ``(II) follow reasonable and lawful 
                                instructions from the borrower; and
                                  ``(III) act with reasonable skill, 
                                care, and diligence.
                          ``(ii) For purposes of this subparagraph, a 
                        loan correspondent shall be considered to be a 
                        mortgage broker.
                          ``(iii) The duties and standards of care 
                        created in this subparagraph shall not be 
                        waived or modified.
                          ``(iv) Any broker found by the Secretary to 
                        have violated the requirements of this 
                        subparagraph may not originate mortgage loans 
                        insured under this title.
          ``(3) The term `mortgagor' includes the original borrower 
        under a mortgage and the successors and assigns of the original 
        borrower.''; and
                          (iii) by redesignating subsections (a), (c), 
                        (d), (e), (f), (g), and (h) as paragraphs (1), 
                        (4), (5), (6), (7), (8), and (9), respectively, 
                        and indenting such paragraphs two ems so as to 
                        align the left margins of such paragraphs with 
                        the left margins of paragraphs (2) and (3) (as 
                        added by clause (ii) of this subparagraph).
                  (B) Mortgagee review.--Section 202(c)(7) of the 
                National Housing Act (12 U.S.C. 1708(c)(7)) is 
                amended--
                          (i) in subparagraph (A), by inserting ``, as 
                        defined in section 201,'' after ``mortgagee'';
                          (ii) by striking subparagraph (B); and
                          (iii) by redesignating subparagraphs (C) and 
                        (D) as subparagraphs (B) and (C), respectively.
                  (C) Multifamily rental housing insurance.--Section 
                207(a)(2) of the National Housing Act (12 U.S.C. 
                1713(a)(2)) is amended by striking ``means the original 
                lender under a mortgage, and its successors and 
                assigns, and'' and inserting ``has the meaning given 
                such term in section 201, except that such term also''.
                  (D) War housing insurance.--Section 601(b) of the 
                National Housing Act (12 U.S.C. 1736(b)) is amended by 
                striking ``includes the original lender under a 
                mortgage, and his successors and assigns approved by 
                the Secretary'' and inserting ``has the meaning given 
                such term in section 201''.
                  (E) Armed services housing mortgage insurance.--
                Section 801(b) of the National Housing Act (12 U.S.C. 
                1748(b)) is amended by striking ``includes the original 
                lender under a mortgage, and his successors and assigns 
                approved by the Secretary'' and inserting ``has the 
                meaning given such term in section 201''.
                  (F) Group practice facilities mortgage insurance.--
                Section 1106(8) of the National Housing Act (12 U.S.C. 
                1749aaa-5(8)) is amended by striking ``means the 
                original lender under a mortgage, and his or its 
                successors and assigns, and'' and inserting ``has the 
                meaning given such term in section 201, except that 
                such term also''.
          (2) Eligibility for insurance.--
                  (A) Title i.--Paragraph (1) of section 8(b) of the 
                National Housing Act (12 U.S.C. 1706c(b)(1)) is 
                amended--
                          (i) by striking ``, and be held by,''; and
                          (ii) by striking ``as responsible and able to 
                        service the mortgage properly''.
                  (B) Single family housing mortgage insurance.--
                Paragraph (1) of section 203(b) of the National Housing 
                Act (12 U.S.C. 1709(b)(1)) is amended--
                          (i) by striking ``, and be held by,''; and
                          (ii) by striking ``as responsible and able to 
                        service the mortgage properly''.
                  (C) Section 221 mortgage insurance.--Paragraph (1) of 
                section 221(d) of the National Housing Act (12 U.S.C. 
                1715l(d)(1)) is amended--
                          (i) by striking ``and be held by''; and
                          (ii) by striking ``as responsible and able to 
                        service the mortgage properly''.
                  (D) Home equity conversion mortgage insurance.--
                Paragraph (1) of section 255(d) of the National Housing 
                Act (12 U.S.C. 1715z-20(d)(1)) is amended by striking 
                ``as responsible and able to service the mortgage 
                properly''.
                  (E) War housing mortgage insurance.--Paragraph (1) of 
                section 603(b) of the National Housing Act (12 U.S.C. 
                1738(b)(1)) is amended--
                          (i) by striking ``, and be held by,''; and
                          (ii) by striking ``as responsible and able to 
                        service the mortgage properly''.
                  (F) War housing mortgage insurance for large-scale 
                housing projects.--Paragraph (1) of section 611(b) of 
                the National Housing Act (12 U.S.C. 1746(b)(1)) is 
                amended--
                          (i) by striking ``and be held by''; and
                          (ii) by striking ``as responsible and able to 
                        service the mortgage properly''.
                  (G) Group practice facility mortgage insurance.--
                Section 1101(b)(2) of the National Housing Act (12 
                U.S.C. 1749aaa(b)(2)) is amended--
                          (i) by striking ``and held by''; and
                          (ii) by striking ``as responsible and able to 
                        service the mortgage properly''.
                  (H) National defense housing insurance.--Paragraph 
                (1) of section 903(b) of the National Housing Act (12 
                U.S.C. 1750b(b)(1)) is amended--
                          (i) by striking ``, and be held by,''; and
                          (ii) by striking ``as responsible and able to 
                        service the mortgage properly''.
                  (I) Contingent repeal.--Unless there is published in 
                the Federal Register, before the expiration of the 5-
                year period beginning on the date of the enactment of 
                this Act, an order under clause (i) or (ii) of section 
                201(2)(D) of the National Housing Act (12 U.S.C. 
                1707(2)(D)), as added by paragraph (1)(A)(2) of this 
                subsection, upon the expiration of such period the 
                provisions of such Act amended by this paragraph are 
                amended to read as such provisions would be in effect 
                upon such expiration if this Act had not been enacted 
                (taking into consideration any amendments, after such 
                date of enactment, to such provisions other than under 
                this Act).
  (b) GAO Study and Report.--
          (1) Study.--The Comptroller General of the United States 
        shall conduct a study, upon the expiration of the 42-month 
        period beginning on the date of the enactment of this Act, 
        regarding the effect of the amendments made by subsection (a), 
        which shall analyze and determine--
                  (A) the extent to which such amendments have resulted 
                in increased participation, by mortgage brokers and 
                correspondent lenders, in the mortgage insurance 
                programs under the National Housing Act, as measured by 
                the number and amounts of such insured mortgages, 
                disaggregated by the States in which the properties 
                subject to such mortgages are located;
                  (B) with respect to mortgages insured under such Act, 
                a comparison in the numbers and rate of defaults, 
                foreclosures, and mortgage insurance claims on such 
                mortgages originated by mortgage brokers and 
                correspondent lenders authorized to participate in the 
                programs under such Act pursuant to the amendments made 
                by subsection (a) to such numbers and rates on such 
                mortgages originated by lenders who would be authorized 
                to participate in such programs notwithstanding such 
                amendments;
                  (C) any impact of such amendments on the costs to the 
                Secretary of Housing and Urban Development of 
                administering the mortgage insurance programs under 
                such title; and
                  (D) the extent and effectiveness of the supervision 
                and enforcement, by the Secretary, of the additional 
                authority provided under the amendments made by 
                subsection (a).
          (2) Report.--Not later than the expiration of 4-year period 
        beginning on the date of the enactment of this Act, the 
        Comptroller General shall submit a report to the Congress and 
        the Secretary of Housing and Urban Development setting forth 
        the results and conclusions of the study conducted pursuant to 
        paragraph (1).

SEC. 21. CONFORMING LOAN LIMIT IN DISASTER AREAS.

  Section 203(h) of the National Housing Act (12 U.S.C. 1709) is 
amended--
          (1) by inserting after ``property'' the following: ``plus any 
        initial service charges, appraisal, inspection and other fees 
        in connection with the mortgage as approved by the 
        Secretary,'';
          (2) by striking the second sentence (as added by chapter 7 of 
        the Emergency Supplemental Appropriations Act of 1994 (Public 
        Law 103-211; 108 Stat. 12)); and
          (3) by adding at the end the following new sentence: ``In any 
        case in which the single family residence to be insured under 
        this subsection is within a jurisdiction in which the President 
        has declared a major disaster to have occurred, the Secretary 
        is authorized, for a temporary period not to exceed 36 months 
        from the date of such Presidential declaration, to enter into 
        agreements to insure a mortgage which involves a principal 
        obligation of up to 100 percent of the dollar limitation 
        determined under section 305(a)(2) of the Federal Home Loan 
        Mortgage Corporation Act for a single family residence, and 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.''.

SEC. 22. FAILURE TO PAY AMOUNTS FROM ESCROW ACCOUNTS FOR SINGLE FAMILY 
                    MORTGAGES.

  (a) Penalties.--Section 536 of the National Housing Act (12 U.S.C. 
1735f-14) is amended--
          (1) in subsection (a)(1), by inserting ``servicers (including 
        escrow account servicers),'' after ``appraisers,'';
          (2) in subsection (b)(1)--
                  (A) in the matter preceding subparagraph (A), by 
                inserting ``or other participant referred to in 
                subsection (a),'' after ``lender,'' ; and
                  (B) by inserting at the end the following new 
                subparagraphs:
                  ``(K) In the case of a mortgage for a 1- to 4-family 
                residence insured under title II that requires the 
                mortgagor to make payments to the mortgagee or other 
                servicer of the mortgage for deposit into an escrow 
                account for the purpose of assuring payment of taxes, 
                insurance premiums, and other charges with respect to 
                the property, failure on the part of the servicer to 
                make any such payment from the escrow account by the 
                deadline to avoid a penalty with respect to such 
                payment provided for in the mortgage, unless the 
                servicer was not provided notice of such deadline.
                  ``(L) In the case of any failure to make any payment 
                as described in subparagraph (K), submitting any 
                information to a consumer reporting agency (as such 
                term is defined in section 603(f) of the Fair Credit 
                Reporting Act (15 U.S.C. 1681a(f))) regarding such 
                failure that is adverse to the credit rating or 
                interest of the mortgagor.''; and
          (3) in subsection (c)(3), by adding at the end the following: 
        ``In the case of any failure to make a payment described in 
        subsection (b)(1)(K) for which the servicer fails to reimburse 
        the mortgagor (A) before the expiration of the 60-day period 
        beginning on the deadline to avoid a penalty with respect to 
        such payment, in the sum of the amount not paid from the escrow 
        account by such deadline and the amount of any penalties 
        accruing to the mortgagor that are attributable to such 
        failure, or (B) in the amount of any attorneys fees incurred by 
        the mortgagor and attributable to such failure, the Secretary 
        shall increase the amount of the penalty under subsection (a) 
        for any such failure to reimburse, unless the Secretary 
        determines there are mitigating circumstances.''.
  (b) Prohibition on Submission of Information by HUD.--Title II of the 
National Housing Act (12 U.S.C. 1707 et seq.) is amended by adding at 
the end the following new section:

``SEC. 257. PROHIBITION REGARDING FAILURE ON PART OF SERVICER TO MAKE 
                    ESCROW PAYMENTS.

  ``In the case of any failure to make any payment as described in 
section 536(b)(1)(K), the Secretary may not submit any information to a 
consumer reporting agency (as such term is defined in section 603(f) of 
the Fair Credit Reporting Act (15 U.S.C. 1681a(f))) regarding such 
failure that is adverse to the credit rating or interest of the 
mortgagor.''.

SEC. 23. ACCEPTABLE IDENTIFICATION FOR FHA MORTGAGORS.

  (a) In General.--Title II of the National Housing Act is amended by 
inserting after section 209 (12 U.S.C. 1715) the following new section:

``SEC. 210. FORMS OF ACCEPTABLE IDENTIFICATION.

  ``The Secretary may not insure a mortgage under any provision of this 
title unless the mortgagor under the mortgage provides personal 
identification in one of the following forms:
          ``(1) Social security card with photo identification card or 
        real id act identification.--
                  ``(A) A social security card accompanied by a photo 
                identification card issued by the Federal Government or 
                a State Government; or
                  ``(B) A driver's license or identification card 
                issued by a State in the case of a State that is in 
                compliance with title II of the REAL ID Act of 2005 
                (title II of division B of Public Law 109-13; 49 U.S.C. 
                30301 note).
          ``(2) Passport.--A passport issued by the United States or a 
        foreign government.
          ``(3) USCIS photo identification card.--A photo 
        identification card issued by the Secretary of Homeland 
        Security (acting through the Director of the United States 
        Citizenship and Immigration Services).''.
  (b) Effective Date.--The requirements of section 210 of the National 
Housing Act (as added by subsection (a) of this section) shall take 
effect six months after the date of the enactment of this Act.

SEC. 24. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT 
                    SUFFICIENT CREDIT HISTORY.

  (a) Establishment.--Title II of the National Housing Act (12 U.S.C. 
1707 et seq.), as amended by the preceding provisions of this Act, is 
further amended by adding at the end the following new section:

``SEC. 258. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT 
                    SUFFICIENT CREDIT HISTORY.

  ``(a) Establishment.--The Secretary shall carry out a pilot program 
to establish, and make available to mortgagees, an automated process 
for providing alternative credit rating information for mortgagors and 
prospective mortgagors under mortgages on 1- to 4-family residences to 
be insured under this title who have insufficient credit histories for 
determining their creditworthiness. Such alternative credit rating 
information may include rent, utilities, and insurance payment 
histories, and such other information as the Secretary considers 
appropriate.
  ``(b) Scope.--The Secretary may carry out the pilot program under 
this section on a limited basis or scope, and may consider limiting the 
program--
          ``(1) to first-time homebuyers; or
          ``(2) metropolitan statistical areas significantly impacted 
        by subprime lending.
  ``(c) Limitation.--In any fiscal year, the aggregate number of 
mortgages insured pursuant to the automated process established under 
this section may not exceed 5 percent of the aggregate number of 
mortgages for 1- to 4-family residences insured by the Secretary under 
this title during the preceding fiscal year.
  ``(d) Sunset.--After the expiration of the 5-year period beginning on 
the date of the enactment of the Expanding American Homeownership Act 
of 2007, the Secretary may not enter into any new commitment to insure 
any mortgage, or newly insure any mortgage, pursuant to the automated 
process established under this section.''.
  (b) GAO Report.--Not later than the expiration of the two-year period 
beginning on the date of the enactment of this Act, the Comptroller 
General of the United States shall submit to the Congress a report 
identifying the number of additional mortgagors served using the 
automated process established pursuant to section 258 of the National 
Housing Act (as added by the amendment made by subsection (a) of this 
section) and the impact of such process and the insurance of mortgages 
pursuant to such process on the safety and soundness of the insurance 
funds under the National Housing Act of which such mortgages are 
obligations.

SEC. 25. SENSE OF CONGRESS REGARDING TECHNOLOGY FOR FINANCIAL SYSTEMS.

  (a) Congressional Findings.--The Congress finds the following:
          (1) The Government Accountability Office has cited the FHA 
        single family housing mortgage insurance program as a ``high-
        risk'' program, with a primary reason being non-integrated and 
        out-dated financial management systems.
          (2) The ``Audit of the Federal Housing Administration's 
        Financial Statements for Fiscal Years 2004 and 2003'', 
        conducted by the Inspector General of the Department of Housing 
        and Urban Development reported as a material weakness that 
        ``HUD/FHA's automated data processing [ADP] system environment 
        must be enhanced to more effectively support FHA's business and 
        budget processes''.
          (3) Existing technology systems for the FHA program have not 
        been updated to meet the latest standards of the Mortgage 
        Industry Standards Maintenance Organization and have numerous 
        deficiencies that lenders have outlined.
          (4) Improvements to technology used in the FHA program will--
                  (A) allow the FHA program to improve the management 
                of the FHA portfolio, garner greater efficiencies in 
                its operations, and lower costs across the program;
                  (B) result in efficiencies and lower costs for 
                lenders participating in the program, allowing them to 
                better use the FHA products in extending homeownership 
                opportunities to higher credit risk or lower-income 
                families, in a sound manner.
          (5) The Mutual Mortgage Insurance Fund operates without cost 
        to the taxpayers and generates revenues for the Federal 
        Government.
  (b) Sense of Congress.--It is the sense of the Congress that--
          (1) the Secretary of Housing and Urban Development should use 
        a portion of the funds received from premiums paid for FHA 
        single family housing mortgage insurance that are in excess of 
        the amounts paid out in claims to substantially increase the 
        funding for technology used in such FHA program;
          (2) the goal of this investment should be to bring the 
        technology used in such FHA program to the level and 
        sophistication of the technology used in the conventional 
        mortgage lending market, or to exceed such level; and
          (3) the Secretary of Housing and Urban Development should 
        report to the Congress not later than 180 days after the date 
        of the enactment of this Act regarding the progress the 
        Department is making toward such goal and if progress is not 
        sufficient, the resources needed to make greater progress.

SEC. 26. MULTIFAMILY HOUSING MORTGAGE LIMITS IN HIGH COST AREAS.

  The National Housing Act is amended--
          (1) in sections 207(c)(3), 213(b)(2)(B)(i), 
        221(d)(3)(ii)(II), 221(d)(4)(ii)(II), 231(c)(2)(B), and 
        234(e)(3)(B) (12 U.S.C. 1713(c)(3), 1715e(b)(2)(B)(i), 
        1715l(d)(3)(ii)(II), 1715l(d)(4)(ii)(II), 1715v(c)(2)(B), and 
        1715y(e)(3)(B))--
                  (A) by striking ``140 percent'' each place such term 
                appears and inserting ``170 percent''; and
                  (B) by striking ``170 percent in high cost areas'' 
                each place such term appears and inserting ``215 
                percent in high cost areas''; and
          (2) in section 220(d)(3)(B)(iii)(III) (12 U.S.C. 
        1715k(d)(3)(B)(iii)(III)) by striking ``206A'' and all that 
        follows through ``project-by-project basis'' and inserting the 
        following: ``206A of this Act) by not to exceed 170 percent in 
        any geographical area where the Secretary finds that cost 
        levels so require and by not to exceed 170 percent, or 215 
        percent in high cost areas, where the Secretary determines it 
        necessary on a project-by-project basis''.

SEC. 27. VALUATION OF MULTIFAMILY PROPERTIES IN NONCOMPETITIVE SALES BY 
                    HUD TO STATES AND LOCALITIES.

  Subtitle A of title II of the Deficit Reduction Act of 2005 (Public 
Law 109-171; 120 Stat. 7) is amended by adding at the end the following 
new section:

``SEC. 2004. VALUATION OF MULTIFAMILY PROPERTIES IN NONCOMPETITIVE 
                    SALES BY HUD TO STATES AND LOCALITIES.

  ``Notwithstanding any other provision of law and with respect to any 
fiscal year, in determining the market value of any multifamily real 
property or multifamily loan for any noncompetitive sale to a State or 
local government entity, the Secretary shall consider, but not be 
limited to, industry standard appraisal practices, including the cost 
of repairs needed to bring the property at least to minimum State and 
local code standards and of maintaining the existing affordability 
restrictions imposed by the Secretary on the multifamily real property 
or multifamily loan.''.

SEC. 28. CLARIFICATION OF DISPOSITION OF CERTAIN PROPERTIES.

  Notwithstanding any other provision of law, subtitle A of title II of 
the Deficit Reduction Act of 2005 (12 U.S.C. 1701z-11 note) and the 
amendments made by such title shall not apply to any transaction 
regarding a multifamily real property for which--
          (1) the Secretary of Housing and Urban Development has 
        received, before the date of the enactment of such Act, written 
        expressions of interest in purchasing the property from both a 
        city government and the housing commission of such city;
          (2) after such receipt, the Secretary acquires title to the 
        property at a foreclosure sale; and
          (3) such city government and housing commission have resolved 
        a previous disagreement with respect to the disposition of the 
        property.

SEC. 29. USE OF FHA SAVINGS FOR COSTS OF MORTGAGE INSURANCE, HOUSING 
                    COUNSELING, FHA TECHNOLOGIES, PROCEDURES, AND 
                    PROCESSES, AND FOR AFFORDABLE HOUSING GRANT FUND, 
                    AND STUDY.

  (a) In General.--Subject to subsection (c), there is authorized to be 
appropriated for each fiscal year an amount equal to the net increase 
for such fiscal year in, except as provided in subsection (b), the 
negative credit subsidy for the mortgage insurance programs under title 
II of the National Housing Act resulting from this Act and the 
amendments made by this Act, for the following purposes in the 
following amounts:
          (1) Single family housing mortgage insurance.--For each 
        fiscal year, for costs (as such term is defined in section 502 
        of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of 
        mortgage insurance provided pursuant to section 203(b) of the 
        National Housing Act (12 U.S.C. 1709(b)), the additional amount 
        (not including any costs of such mortgage insurance resulting 
        from this Act or the amendments made by this Act), if any, 
        necessary to ensure that the credit subsidy cost of such 
        mortgage insurance for such fiscal year is $0.
          (2) Housing counseling.--For each of fiscal years 2008 
        through 2012, the amount needed to increase funding, for the 
        housing counseling program under section 106 of the Housing and 
        Urban Development Act of 1968 (12 U.S.C. 1701x), in connection 
        with homebuyers and homeowners with mortgages insured under 
        title II of the National Housing Act, from the amount 
        appropriated for the preceding fiscal year to $100,000,000.
          (3) Mortgage insurance technology, procedures, processes, 
        program performance, and salaries.--For each of fiscal years 
        2008 through 2012, $25,000,000 for increasing funding for the 
        purpose of improving technology, procedures, processes, and 
        program performance, and salaries in connection with the 
        mortgage insurance programs under title II of the National 
        Housing Act.
          (4) Affordable housing fund.--For each fiscal year, for an 
        affordable housing fund available for use only for grants to 
        provide affordable rental housing and affordable homeownership 
        opportunities for low-income families, the amount remaining 
        under this section after amounts are made available for such 
        fiscal year in accordance with paragraphs (1), (2), and (3).
  (b) Exclusion of Earnings From the Single Family Mortgage Insurance 
Program.--With respect to a fiscal year, the negative credit subsidy 
determined under subsection (a) shall not include the negative credit 
subsidy cost for such fiscal year, if any, for mortgage insurance 
provided pursuant to section 203(b) of the National Housing Act.
  (c) Certification.--Subsection (a) shall not be effective for a 
fiscal year unless the Secretary of Housing and Urban Development has, 
by rule making in accordance with section 553 of title 5, United States 
Code (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such 
section), made a determination that premiums being, or to be, charged 
during such fiscal year for mortgage insurance under title II of the 
National Housing Act are established at the minimum amount sufficient 
to comply with the requirements of section 205(f) of such Act (relating 
to required capital ratio for the Mutual Mortgage Insurance Fund) and 
ensure the safety and soundness of the other mortgage insurance funds 
under such Act, and any negative credit subsidy for such fiscal year 
resulting from such mortgage insurance programs adequately ensures the 
efficient delivery and availability of such programs.
  (d) Study and Report.--The Secretary of Housing and Urban Development 
shall conduct a study to obtain recommendations from participants in 
the private residential mortgage lending business and the secondary 
market for such mortgages on how best to update and upgrade procedures, 
processes, and technologies for the mortgage insurance programs under 
title II of the National Housing Act so that the policies and 
procedures for originating, insuring, and servicing of such mortgages 
conform with those customarily used by secondary market purchasers of 
residential mortgage loans. Not later than the expiration of the 12-
month period beginning on the date of the enactment of this Act, the 
Secretary shall submit a report to the Congress describing the progress 
made and to be made toward updating and upgrading such procedures, 
processes, and technology, and providing appropriate staffing for such 
mortgage insurance programs.

SEC. 30. LIMITATION ON MORTGAGE INSURANCE PREMIUM INCREASES.

  Notwithstanding any other provision of law, including any provision 
of this Act and any amendment made by this Act--
          (1) the premiums charged for mortgage insurance under any 
        program under the National Housing Act may not be increased 
        above the premium amounts in effect under such program on 
        October 1, 2006, unless the Secretary of Housing and Urban 
        Development determines that, absent such increase, insurance of 
        additional mortgages under such program would, under the 
        Federal Credit Reform Act of 1990, require the appropriation of 
        new budget authority to cover the costs (as such term is 
        defined in section 502 of the Federal Credit Reform Act of 1990 
        (2 U.S.C. 661a) of such insurance; and
          (2) a premium increase pursuant to paragraph (1) may be made 
        only by rule making in accordance with the procedures under 
        section 553 of title 5, United States Code (notwithstanding 
        subsections (a)(2), (b)(B), and (d)(3) of such section).

SEC. 31. SAVINGS PROVISION.

  Any mortgage insured under title II of the National Housing Act 
before the date of enactment of this title shall continue to be 
governed by the laws, regulations, orders, and terms and conditions to 
which it was subject on the day before the date of the enactment of 
this Act.

SEC. 32. IMPLEMENTATION.

  Except as provided in section 23(b), the Secretary of Housing and 
Urban Development shall by notice establish any additional requirements 
that may be necessary to immediately carry out the provisions of this 
Act. The notice shall take effect upon issuance.

                          Purpose and Summary

    H.R. 1852, the ``Expanding American Homeownership Act of 
2007,'' contains a number of provisions designed to expand the 
use and improve the efficiency of Federal Housing 
Administration (FHA) insured loan programs. A major focus of 
the bill is to modernize the FHA Title II single family loan 
program, through provisions to raise loan limits in high cost 
areas, to authorize zero downpayment loans, to permit risk-
based pricing, and to direct HUD to modify underwriting 
guidelines in order to serve higher credit risk borrowers. 
These changes are augmented by disclosure requirements to 
ensure that borrowers make informed mortgage choices and 
consumer protections for higher risk borrowers and borrowers 
with reduced down payments.
    The bill also makes changes to other FHA loan programs, 
including FHA reverse mortgage loans, multifamily housing 
loans, and Section 234 condominium loans. Finally, the bill 
authorizes use of increased taxpayer profits (negative credit 
subsidies) resulting from the bill for housing counseling, for 
FHA information technology, and for affordable housing grant 
purposes.

                  Background and Need for Legislation


             MODERNIZING THE FHA SINGLE FAMILY LOAN PROGRAM

    The FHA was established in the 1930s to provide a reliable 
source of affordable long-term amortizing mortgage loans to 
enable families to become first time homebuyers. Since then, 
FHA has provided home financing for millions of Americans. It 
has done so by offering mortgage loans at affordable rates and 
fees to homebuyers who did not qualify for the most competitive 
mortgage rates and terms offered by private sector lenders. FHA 
has also been at the forefront of standardizing financial 
products, especially for low and moderate income and 
underserved borrowers. FHA has historically maintained its 
presence in turbulent mortgage markets and in geographic areas 
experiencing housing downturns, serving as a source of 
stability at precisely the time when private sector lenders 
have pulled back or exited such difficult markets.
    The hearing on H.R. 1852 raised a number of mortgage 
issues, including predatory lending practices, risky loan 
products such as teaser rate loans, and the high rates and 
costs associated with subprime loans. The hearing cited these 
types of factors not just as a problem, but also as an 
opportunity for FHA to reassert its traditional role of meeting 
unmet mortgage market needs.
    The distinction was drawn between predatory loan practices 
and subprime lending. Subprime lending can perform the 
important task of providing affordable mortgage credit to 
borrowers with less than perfect credit histories, but who are 
still creditworthy. Predatory lending occurs when lenders take 
advantage of the lack of loan opportunities for subprime 
borrowers to impose excessive rates and fees, prepayment 
penalties, and reset terms that can result in exorbitant 
interest rate increases. Witnesses testified that FHA could 
serve subprime borrowers at more attractive rates and terms 
than might otherwise be available in the market, while 
maintaining underwriting standards and fees sufficient to 
maintain FHA's financial health.
    As recently as the year 2000, the FHA single family loan 
program was insuring loans for almost a million families a year 
and generating profits [``negative credit subsidy''] of over $2 
billion a year. Unfortunately, over the last several years, FHA 
loan volume has fallen significantly. The FHA Commissioner, in 
his testimony on this bill, identified a number of statutory 
impediments that have contributed to FHA's declining role in 
the single family mortgage market. H.R. 1852 makes a number of 
changes designed to address these impediments, with the goal of 
increasing FHA participation by private sector loan originators 
and of increasing loan opportunities for underserved but 
creditworthy borrowers that would otherwise be shut out of 
mortgage markets, pay higher rates or be the victims of 
predatory loan practices.
    Loan Limits. The bill raises FHA loan limits to expand the 
availability of FHA loans. By statute, an FHA single family 
loan cannot exceed the lower of 95 percent of the local area 
median home price or 87 percent of the national GSE conforming 
loan limit. In 2007, this means that no FHA loan may exceed 
$362,790. As a result, FHA is of little or no practical value 
in higher cost areas where median home prices exceed this 
limit. The bill would address this limitation by raising the 
maximum FHA loan limit up to the GSE conforming loan limit 
(currently $417,000). The bill also makes changes designed to 
make the program more useful in more moderately priced areas. 
It raises the local component of the two-part maximum loan 
limit calculation from 95 percent of the local median home 
price up to 100 percent of such price, and it raises the 
current FHA loan floor of 48 percent of the GSE conforming loan 
limit up to 65 percent of such limit.
    The bill provides for a more rational process for setting 
loan limits on FHA single family loans for 2-, 3-, and 4-unit 
properties. Currently such limits are set by statute at 107, 
130, and 150 percent, respectively, of the 1-unit limit in each 
local area. The bill revises this method to instead calculate 
such limits by applying the same ratio that 2-, 3-, and 4-unit 
GSE conforming loan limits bear to the conforming 1-unit limit. 
The bill additionally permits an increase in FHA single family 
loan limits of up to 25 percent higher than the customary loan 
limit for any home which includes space used for a licensed 
child care facility, subject to the requirement that such 
increase must be proportional to the amount of space that will 
be used for the facility. The bill also gives HUD authority to 
increase FHA single family loan limits up to 100 percent of the 
appraised value plus closing costs and up to the nationwide GSE 
conforming loan limit for a period of up to 36 months in 
Presidentially-declared disaster areas.
    Down Payment Requirements. The bill simplifies and reduces 
down payment requirements. By statute, the maximum FHA loan-to-
value (LTV) calculation is a complicated one, varying based on 
factors that include the size of the loan and whether the loan 
is located in a state with high closing costs. The bill would 
greatly simplify this basic calculation, while maintaining 
comparable overall levels, by establishing a maximum loan to 
value of 97.75 percent of the home price, plus the upfront FHA 
premium. The bill also retains the current statutory 
requirement that each borrower must make at least a 3 percent 
down payment in cash.
    To better reflect private sector loan practices, the bill 
also authorizes FHA to reduce down payment requirements, 
including the authority to offer zero down payment loans. It 
does so by identifying a separate class of loans for borrowers 
that do not comply with either the basic LTV or the cash down 
payment requirement. To cover the increased risk of such lower 
down payment loans, the maximum upfront FHA premium HUD can 
charge for such loans is increased from 2.25 percent to 3 
percent, and the maximum annual premium that can be charged for 
such borrowers is raised from .55 to .75 percent. To avoid 
unfairly imposing fee burdens on borrowers that ultimately meet 
their loan obligations, the bill includes a ``Payment 
Incentives'' provision. This provision requires HUD to reduce 
annual premiums for borrowers that make 5 years of on-time 
payments down to the existing statutory maximum of .55 percent 
in subsequent years. HUD is also authorized to reduce such 
premiums for borrowers that make three years of on-time 
payments.
    Maximum Loan Term. The bill increases the maximum 
amortization term for FHA single family loans from 35 years to 
40 years. This would permit a slight reduction in a borrower's 
monthly payment.
    Higher Risk Borrowers. The bill directs HUD to underwrite 
loans for Higher Risk borrowers than it currently serves, 
defining this category as borrowers with a FICO-equivalent 
score of 560 or below. To cover the increased risk of such 
loans, FHA may charge upfront premiums of up to 3 percent. The 
bill also includes Payment Incentive annual loan fee reductions 
for Higher Risk borrowers that make on-time payments, as well 
as a refund at the time of loan repayment of the higher upfront 
premium that was charged because the borrower was classified as 
a Higher Risk borrower.
    To further expand FHA loan opportunities, the bill requires 
HUD to carry out a pilot program to establish an automated 
process to provide alternative credit rating information for 
borrowers with insufficient credit histories to determine their 
creditworthiness. The number of such loans is capped at 5 
percent of the number of FHA loans insured in the preceding 
year, and this pilot sunsets after five years.
    Risk-based Pricing. To provide for more accurate pricing of 
FHA loans in conjunction with these higher levels of authorized 
FHA premiums, the bill authorizes ``risk-based pricing.'' 
Historically, FHA has charged the same level of premiums for 
all its borrowers, resulting in cross-subsidization between 
higher and lower credit risk borrowers. Authority for risk-
based pricing is designed to more accurately align fees paid 
with the loan risk borne by the FHA. It is also designed to 
retain potential lower risk borrowers who might otherwise forgo 
FHA loans because the fees are not competitive. However, the 
bill retains some degree of cross-subsidization, through 
reasonable fee caps and Payment Incentive provisions. Finally, 
the bill authorizes risk-based pricing based on the type of 
loan product. This would permit, for example, higher premiums 
on riskier Adjustable Rate Mortgages [ARMs] than on fixed rate 
mortgages.
    Consumer Protections. To address the increased risks 
associated with these program changes, the bill includes a 
number of protections for Higher Risk borrowers and borrowers 
with zero and lower down payment loans. HUD is given authority 
to require pre-purchase counseling for such borrowers. If HUD 
establishes such a requirement, it is intended that it would be 
established only for riskier classes of borrowers, based on a 
determination that such a requirement is essential either to 
mitigate against the risk of such loans, or to ensure that such 
class of borrower is fully prepared for the risks of buying a 
home. In addition, FHA mortgage loan originators are required 
to provide to zero and lower down payment and Higher Risk 
borrowers a list of local HUD-approved counseling agencies at 
the time of loan application. And, such borrowers who become 60 
days delinquent on their FHA loan must be given notice by a 
housing counseling entity of the availability of foreclosure 
prevention counseling.
    The bill also requires a number of written disclosures, 
provided either through counseling or at the time of loan 
application. Such disclosures must include identification of 
other mortgage loan options, the additional costs associated 
with lower down payment loans, and the appreciation needed to 
pay off zero and lower down payment loans, taking into account 
real estate sales costs. Borrowers must also be given 
disclosures at loan closing of their Payment Incentive and loss 
mitigation rights.
    To track the impact of the bill on the financial soundness 
of the FHA program, H.R. 1852 requires HUD to report annually 
on the rates of default and foreclosure of zero and lower down 
payment and Higher Risk borrowers. HUD is also required to 
report on loss mitigation actions it has taken.

                         FHA MULTI-FAMILY LOANS

    Four years ago, Congress raised the maximum loan limit for 
FHA-insured multi-family loans in high cost areas, but did not 
provide the increase needed to fully cover construction costs 
in the nation's highest cost housing markets. The bill would 
complete this effort, by raising the maximum loan limit in high 
cost areas from 140 percent of the basic loan limit to 170 
percent of such limit, and by raising the maximum loan limit on 
a case-by-case basis from 170 percent of the basic loan limit 
to 215 percent of such limit.
    In addition, the bill would clarify implementation of the 
2005 Reconciliation Act provision that prohibits discount loan 
sales and upfront grants to localities of foreclosed FHA-
insured multifamily properties. The bill states that HUD must 
take into account, consistent with normal appraisal practices, 
the cost of rehabilitation and maintaining affordability 
restrictions in establishing the market price to be offered to 
localities under their statutory first right of refusal to 
purchase such properties. The bill would also clarify the 
provision in the 2005 Act grandfathering existing purchase 
proposals from the prohibition against discount sales. The bill 
states that this grandfather status would apply to transactions 
in which HUD received an expression of interest from both a 
local city and housing authority prior to enactment of the 2005 
Act, provided that a disagreement between such two entities was 
subsequently resolved.

                       FHA REVERSE MORTGAGE LOANS

    The bill would permanently eliminate the statutory volume 
cap on the total number of FHA Home Equity Conversion Mortgage 
loans [HECMs, also known as reverse mortgage loans] which HUD 
can insure. Without a removal of this cap, the program could 
otherwise be forced to be shut down.
    The bill also decouples FHA reverse mortgage loan limits 
from the general FHA loan limit calculation which caps limits 
at the local median home price. Instead, the bill establishes a 
unified maximum reverse mortgage loan limit equal to the GSE 
conforming loan limit. This change is made to reflect the fact 
that reverse mortgage loans are not used to buy a home or 
refinance a loan, but rather to pay other costs which are not 
generally tied to home prices (e.g., health care costs). The 
bill would also set a cap on the maximum loan fee that an FHA 
reverse mortgage loan originator can charge, setting such cap 
at 2 percent of the ``original principal limit'' of the 
mortgage. Finally, the bill requires HUD to conduct a study to 
analyze the effects of reducing FHA reverse mortgage premiums 
on both the cost to borrowers and the financial soundness of 
the program.

    USE OF FHA SAVINGS FOR COUNSELING, TECHNOLOGY IMPROVEMENTS, AND 
                 AFFORDABLE HOUSING GRANT FUND PURPOSES

    Over the last five years, FHA has produced over $10 billion 
in profits to federal taxpayers, as calculated by CBO's 
determination of negative credit subsidies for all the FHA loan 
programs. The practice has been to simply return these funds to 
the Federal treasury.
    The bill would instead authorize a reinvestment of such 
profits into both the FHA specifically, and into housing more 
generally. The bill would calculate the net negative credit 
subsidies over each of the next five years that are created by 
the bill's provisions, and would authorize appropriations of 
such amounts for certain specified purposes. First, funds would 
be authorized for any credit subsidy appropriation that might 
be needed to keep the basic FHA single family 203(b) loan 
program in the black that year (i.e., avoid any credit subsidy 
appropriation that might be needed). Secondly, $58 million a 
year would be authorized to bring funding for housing 
counseling up from the current level of $42 million to $100 
million a year. Third, $25 million would be authorized each 
year for FHA information technology, procedures, and processes.
    Finally, an authorization is provided for all net negative 
credit subsidies that remain after such deductions for use as 
an affordable housing fund, for grants to provide affordable 
rental housing and homeownership opportunities for low income 
families. As a further condition no funds may be used in any 
year for such purpose unless HUD, by rule, makes a 
determination that FHA premiums being charged that year are 
sufficient to comply with the Section 205(f) MMIF capital ratio 
requirement and are also sufficient to ensure the safety and 
soundness of the other FHA mortgage insurance funds. Moreover, 
no negative credit subsidies from the Section 203(b) single 
family loan program may be used for affordable housing fund 
purposes.
    HUD is required to conduct a study on how best to update 
and upgrade FHA procedures, processes, and technologies. The 
bill also includes a Sense of Congress stating that HUD should 
use a portion of the funds FHA receives from premiums in excess 
of what it pays out in claims to upgrade FHA's current 
technology. FHA is also encouraged to submit a report to 
Congress detailing the progress it is making towards this goal 
and any resources it may need to make greater progress.

                            OTHER PROVISIONS

    The bill includes a number of provisions designed to 
enhance pro- gram flexibility, increase mortgage originator 
participation in FHA loans, limit unnecessary FHA premiums, and 
protect the financial soundness of FHA.
    The bill revises the definition of condominium mortgages 
which may be insured, to provide that condominiums may be in 
the form of manufactured housing units. The bill also modifies 
the definition of real estate to permit manufactured homes 
sited on land under a long term lease to be financed under 
Title II, even if they are not taxed as real property. The 
purpose is to permit such FHA loans in states that do not tax 
such homes as real estate, and therefore do not meet the 
current HUD definition of real estate for the purpose of 
insuring FHA Title II loans.
    The bill also includes a provision to encourage increased 
participation of mortgage brokers and correspondent lenders in 
FHA. The current FHA net worth and annual audit requirement is 
commonly cited as a barrier to increased participation in FHA 
by mortgage brokers and loan correspondents. The bill gives 
such entities the option of posting a $75,000 surety bond in 
lieu of the existing net worth and annual audit requirements. 
Such authority would expire after five years, unless HUD 
extends the provision pursuant to a determination that it 
provides comparable protections or modifies it to provide for 
comparable protection. The bill also requires GAO to conduct a 
study and report to Congress within 4 years on the effect of 
provision.
    The bill also imposes additional requirements for mortgage 
brokers participating in FHA loans. Among other things, 
mortgage brokers are required to safeguard and account for any 
money handled for the borrower, to follow reasonable and lawful 
instructions from the borrower, and to act with reasonable 
skill, care, and diligence. Any mortgage broker found by HUD to 
have violated these provisions may not originate any FHA-
insured loans.
    The bill includes a provision to bar unnecessary fee hikes 
in FHA programs. Specifically, it prohibits HUD from increasing 
any FHA premiums above the level in effect at the beginning of 
FY 2007 unless HUD determines that such an increase is 
necessary to avoid a credit subsidy appropriation. This 
provision is designed to ensure that FHA fees are used solely 
to cover the risk associated with the loan, and not to 
supplement general fund revenues.
    The bill requires FHA mortgage servicers that establish 
escrow accounts to make required payments by any deadline 
required to avoid a penalty, unless such servicer was not 
provided notice of such deadline. HUD is authorized to increase 
the amount of penalty for servicers that fail to reimburse 
borrowers per this requirement. The bill also prohibits 
submission of information by HUD or servicers that is adverse 
to the credit rating or interest of the borrower, if such 
information is based on the servicer's failure to make a 
payment by any deadline.

    The bill makes a number of changes to provisions of the 
Credit Reform Act of 1990 which are designed to insure that the 
Mutual Mortgage Insurance Fund (MMIF) remains financially 
sound. These include transferring a number of FHA programs into 
the MMIF, including Section 234 condominium loans, Section 
203(k) purchase-rehabilitation loans, reverse mortgage loans, 
Section 247 loans insured on Hawaiian Home Lands, and Section 
248 loans in Indian Reservations.
    The bill also prohibits HUD from insuring any FHA loan 
unless the borrower provides personal identification, which may 
include a Social Security card along with a photo ID issued by 
the Federal or a state government, a drivers license or ID card 
issued by a state in accordance with the REAL ID Act of 2005, a 
passport, and a USCIS photo identification card.

                                Hearings

    The Subcommittee on Housing and Community Opportunity held 
a hearing on April 19, 2007 entitled ``The Expanding American 
Homeownership Act of 2007: H.R. 1852 and Related FHA 
Modernization Issues.'' The following witnesses testified:

Panel One:
          The Honorable Brian D. Montgomery, Assistant 
        Secretary for Housing-Federal Housing Commissioner, 
        U.S. Department of Housing and Urban Development
Panel Two:
           Ms. Iona Harrison, GRI, National Association 
        of Realtors
           Mr. Lautaro ``Lot'' Diaz, Vice President, 
        Community Development, National Council of La Raza
           Mr. John M. Robbins, CMB, Chairman, Mortgage 
        Bankers Association
           Mr. Ed Smith, Jr., Chairman, CAMB Government 
        Affairs Committee, Chief Executive Officer, Plaza 
        Financial Group, California Association of Mortgage 
        Brokers
           Mr. William P. Killmer, National Association 
        of Home Builders, Group Executive Vice President for 
        Advocacy

                        Committee Consideration

    The Committee on Financial Services met in open session on 
May 2, 2007, and on May 3, 2007, ordered H.R. 1852, the 
Expanding American Homeownership Act of 2007, as amended, 
favorably reported to the House by a record vote of 45 yeas and 
19 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Frank to report the bill, as amended, to the 
House with a favorable recommendation was agreed to by a record 
vote of 45 yeas and 19 nays (Record vote FC-46). The names of 
Members voting for and against follow:

                                              RECORD VOTE NO. FC-46
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................        X   ........  .........  Mr. Baker........  ........        X   .........
Ms. Waters.....................        X   ........  .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................        X   ........  .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................        X   ........  .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................        X   ........  .........  Mr. Royce........  ........        X   .........
Mr. Watt.......................        X   ........  .........  Mr. Lucas........  ........        X   .........
Mr. Ackerman...................  ........  ........  .........  Mr. Paul.........  ........  ........  .........
Ms. Carson.....................        X   ........  .........  Mr. Gillmor......        X   ........  .........
Mr. Sherman....................        X   ........  .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................        X   ........  .........  Mr. Manzullo.....  ........        X   .........
Mr. Moore (KS).................        X   ........  .........  Mr. Jones........  ........  ........  .........
Mr. Capuano....................        X   ........  .........  Mrs. Biggert.....  ........        X   .........
Mr. Hinojosa...................        X   ........  .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................        X   ........  .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................        X   ........  .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................        X   ........  .........  Mr. Feeney.......  ........        X   .........
Mr. Lynch......................        X   ........  .........  Mr. Hensarling...  ........        X   .........
Mr. Miller (NC)................        X   ........  .........  Mr. Garrett (NJ).  ........        X   .........
Mr. Scott......................        X   ........  .........  Ms. Brown-Waite    ........        X   .........
                                                                 (FL).
Mr. Green......................        X   ........  .........  Mr. Barrett (SC).  ........        X   .........
Mr. Cleaver....................        X   ........  .........  Mr. Gerlach......        X   ........  .........
Ms. Bean.......................        X   ........  .........  Mr. Pearce.......  ........  ........  .........
Ms. Moore (WI).................        X   ........  .........  Mr. Neugebauer...  ........        X   .........
Mr. Davis (TN).................        X   ........  .........  Mr. Price (GA)...  ........        X   .........
Mr. Sires......................        X   ........  .........  Mr. Davis (KY)...  ........        X   .........
Mr. Hodes......................        X   ........  .........  Mr. McHenry......  ........  ........  .........
Mr. Ellison....................        X   ........  .........  Mr. Campbell.....  ........        X   .........
Mr. Klein......................        X   ........  .........  Mr. Putnam.......  ........        X   .........
Mr. Mahoney (FL)...............        X   ........  .........  Mrs. Bachmann....  ........        X   .........
Mr. Wilson.....................        X   ........  .........  Mr. Roskam.......  ........        X   .........
Mr. Perlmutter.................        X   ........  .........  Mr. Marchant.....  ........        X   .........
Mr. Murphy.....................        X   ........  .........
Mr. Donnelly...................        X   ........  .........
Mr. Wexler.....................        X   ........  .........
Mr. Marshall...................        X   ........  .........
Mr. Boren......................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

The following amendments were disposed of by record votes. The 
names of Members voting for and against follow:
    An amendment by Mr. Garrett, No. 9, regarding temporary 
reinstatement of downpayment and premium requirements in event 
of increased defaults, was not agreed to by a record vote of 29 
yeas and 34 nays (Record vote FC-38):

                                              RECORD VOTE NO. FC-38
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........        X   ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........  ........  ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......  ........  ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite          X   ........  .........
                                                                 (FL).
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........  ........  .........  Mr. Gerlach......        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Campbell.....  ........  ........  .........
Mr. Klein......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Murphy.....................  ........        X   .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Frank, No. 15, regarding use of FHA 
savings for costs of mortgage insurance, housing counseling, 
and affordable housing grant fund, was agreed to by a record 
vote of 37 yeas and 15 nays (Record vote FC-39):

                                              RECORD VOTE NO. FC-39
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................        X   ........  .........  Mr. Baker........        X   ........  .........
Ms. Waters.....................  ........  ........  .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................        X   ........  .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........  ........  .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................        X   ........  .........  Mr. Royce........  ........        X   .........
Mr. Watt.......................        X   ........  .........  Mr. Lucas........  ........        X   .........
Mr. Ackerman...................  ........  ........  .........  Mr. Paul.........  ........  ........  .........
Ms. Carson.....................        X   ........  .........  Mr. Gillmor......  ........  ........  .........
Mr. Sherman....................        X   ........  .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................        X   ........  .........  Mr. Manzullo.....  ........  ........  .........
Mr. Moore (KS).................        X   ........  .........  Mr. Jones........  ........  ........  .........
Mr. Capuano....................        X   ........  .........  Mrs. Biggert.....  ........        X   .........
Mr. Hinojosa...................  ........  ........  .........  Mr. Shays........  ........  ........  .........
Mr. Clay.......................        X   ........  .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................        X   ........  .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........  ........  .........  Mr. Feeney.......  ........        X   .........
Mr. Lynch......................        X   ........  .........  Mr. Hensarling...  ........        X   .........
Mr. Miller (NC)................        X   ........  .........  Mr. Garrett (NJ).  ........        X   .........
Mr. Scott......................        X   ........  .........  Ms. Brown-Waite    ........        X   .........
                                                                 (FL).
Mr. Green......................        X   ........  .........  Mr. Barrett (SC).  ........        X   .........
Mr. Cleaver....................        X   ........  .........  Mr. Gerlach......  ........        X   .........
Ms. Bean.......................        X   ........  .........  Mr. Pearce.......  ........  ........  .........
Ms. Moore (WI).................        X   ........  .........  Mr. Neugebauer...  ........  ........  .........
Mr. Davis (TN).................        X   ........  .........  Mr. Price (GA)...  ........        X   .........
Mr. Sires......................        X   ........  .........  Mr. Davis (KY)...  ........        X   .........
Mr. Hodes......................        X   ........  .........  Mr. McHenry......  ........  ........  .........
Mr. Ellison....................  ........  ........  .........  Mr. Campbell.....  ........        X   .........
Mr. Klein......................        X   ........  .........  Mr. Putnam.......  ........  ........  .........
Mr. Mahoney (FL)...............        X   ........  .........  Mrs. Bachmann....  ........        X   .........
Mr. Wilson.....................        X   ........  .........  Mr. Roskam.......  ........        X   .........
Mr. Perlmutter.................        X   ........  .........  Mr. Marchant.....  ........  ........  .........
Mr. Murphy.....................  ........  ........  .........
Mr. Donnelly...................        X   ........  .........
Mr. Wexler.....................        X   ........  .........
Mr. Marshall...................        X   ........  .........
Mr. Boren......................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mrs. Biggert, No. 16, regarding use of FHA 
savings for Title II single family mortgage insurance programs, 
was not agreed to by a record vote of 22 yeas and 38 nays 
(Record vote FC-40):

                                              RECORD VOTE NO. FC-40
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Baker........        X   ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........  ........  .........  Mr. Paul.........  ........  ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...  ........        X   .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........  ........        X   .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......  ........  ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite          X   ........  .........
                                                                 (FL).
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Gerlach......  ........        X   .........
Ms. Bean.......................  ........        X   .........  Mr. Pearce.......  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McHenry......  ........  ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Putnam.......  ........  ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Marchant.....  ........  ........  .........
Mr. Murphy.....................  ........  ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Bachus, No. 17, limiting housing fund 
increases, was not agreed to by a record vote of 26 yeas and 36 
nays (Record vote FC-41):

                                              RECORD VOTE NO. FC-41
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Baker........        X   ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........  ........  .........  Mr. Paul.........  ........  ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........  ........  ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite          X   ........  .........
                                                                 (FL).
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Pearce.......  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McHenry......  ........  ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Murphy.....................  ........        X   .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Price (GA), No. 21, requiring offsets, 
was not agreed to by a record vote of 27 yeas and 37 nays 
(Record vote FC-42):

                                              RECORD VOTE NO. FC-42
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Baker........        X   ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........  ........  .........  Mr. Paul.........  ........  ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........        X   .........
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite          X   ........  .........
                                                                 (FL).
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Pearce.......  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McHenry......  ........  ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Murphy.....................  ........        X   .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Price (GA), No. 22, regarding 
protection of senior citizen homeowners, was not agreed to by a 
record vote of 28 yeas and 36 nays (Record note FC-43):

                                              RECORD VOTE NO. FC-43
----------------------------------------------------------------------------------------------------------------
        Representative            Aye        Nay      Present    Representative     Aye        Nay      Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank....................  .........         X   .........  Mr. Bachus.....         X   .........  .........
Mr. Kanjorski................  .........         X   .........  Mr. Baker......         X   .........  .........
Ms. Waters...................  .........         X   .........  Ms. Pryce (OH).         X   .........  .........
Mrs. Maloney.................  .........         X   .........  Mr. Castle.....         X   .........  .........
Mr. Gutierrez................  .........         X   .........  Mr. King (NY)..         X   .........  .........
Ms. Velazquez................  .........         X   .........  Mr. Royce......         X   .........  .........
Mr. Watt.....................  .........         X   .........  Mr. Lucas......         X   .........  .........
Mr. Ackerman.................  .........  .........  .........  Mr. Paul.......  .........  .........  .........
Ms. Carson...................  .........         X   .........  Mr. Gillmor....         X   .........  .........
Mr. Sherman..................  .........         X   .........  Mr. LaTourette.         X   .........  .........
Mr. Meeks....................  .........         X   .........  Mr. Manzullo...         X   .........  .........
Mr. Moore (KS)...............  .........         X   .........  Mr. Jones......  .........  .........  .........
Mr. Capuano..................  .........         X   .........  Mrs. Biggert...         X   .........  .........
Mr. Hinojosa.................  .........         X   .........  Mr. Shays......         X   .........  .........
Mr. Clay.....................  .........         X   .........  Mr. Miller (CA)         X   .........  .........
Mrs. McCarthy................  .........         X   .........  Mrs. Capito....         X   .........  .........
Mr. Baca.....................  .........         X   .........  Mr. Feeney.....         X   .........  .........
Mr. Lynch....................  .........         X   .........  Mr. Hensarling.         X   .........  .........
Mr. Miller (NC)..............  .........         X   .........  Mr. Garrett             X   .........  .........
                                                                 (NJ).
Mr. Scott....................  .........         X   .........  Ms. Brown-Waite         X   .........  .........
                                                                 (FL).
Mr. Green....................  .........         X   .........  Mr. Barrett             X   .........  .........
                                                                 (SC).
Mr. Cleaver..................  .........         X   .........  Mr. Gerlach....         X   .........  .........
Ms. Bean.....................  .........         X   .........  Mr. Pearce.....  .........  .........  .........
Ms. Moore (WI)...............  .........         X   .........  Mr. Neugebauer.         X   .........  .........
Mr. Davis (TN)...............  .........         X   .........  Mr. Price (GA).         X   .........  .........
Mr. Sires....................  .........         X   .........  Mr. Davis (KY).         X   .........  .........
Mr. Hodes....................  .........         X   .........  Mr. McHenry....  .........  .........  .........
Mr. Ellison..................  .........         X   .........  Mr. Campbell...         X   .........  .........
Mr. Klein....................  .........         X   .........  Mr. Putnam.....         X   .........  .........
Mr. Mahoney (FL).............  .........         X   .........  Mrs. Bachmann..         X   .........  .........
Mr. Wilson...................  .........         X   .........  Mr. Roskam.....         X   .........  .........
Mr. Perlmutter...............  .........         X   .........  Mr. Marchant...         X   .........  .........
Mr. Murphy...................  .........         X   .........
Mr. Donnelly.................  .........         X   .........
Mr. Wexler...................  .........         X   .........
Mr. Marshall.................  .........         X   .........
Mr. Boren....................  .........         X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Garrett, No. 23, regarding suspension 
of contributions, was not agreed to by a record vote of 28 yeas 
and 36 nays (Record vote FC-44):

                                              RECORD VOTE NO. FC-44
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Baker........        X   ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........  ........  .........  Mr. Paul.........  ........  ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite          X   ........  .........
                                                                 (FL).
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Pearce.......  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McHenry......  ........  ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Murphy.....................  ........        X   .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Biggert, No. 24, an amendment in the 
na- ture of a substitute, was not agreed to by a record vote of 
28 yeas and 36 nays (Record vote FC-45):

                                              RECORD VOTE NO. FC-45
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Baker........        X   ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........  ........  .........  Mr. Paul.........  ........  ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite          X   ........  .........
                                                                 (FL).
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Pearce.......  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McHenry......  ........  ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Murphy.....................  ........        X   .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    The following other amendments were also considered by the 
Committee:
    An amendment by Mr. Hodes, No. 1, regarding failure to pay 
amounts from escrow accounts for single family mortgages, was 
agreed to by a voice vote.
    An amendment by Mr. Donnelly, No. 2, adding manufactured 
housing, was agreed to by a voice vote.
    An amendment by Mr. Donnelly, No. 3, adding the definition 
of real estate, was agreed to by a voice vote.
    An amendment by Mrs. McCarthy, No. 4, requiring a mandatory 
notice, was agreed to by a voice vote.
    An amendment by Mr. Frank, No. 5, adding participation of 
mortgage brokers and correspondent lenders, was agreed to, as 
amended, by a voice vote.
    An amendment by Mr. Green to the amendment offered by Mr. 
Frank, No. 5a, adding additional mortgage brokers and 
correspondent lenders, was agreed to, as modified by unanimous 
consent, by a voice vote.
    An amendment by Ms. Waters to the amendment offered by Mr. 
Frank, No. 5b, inserting mortgage bankers, was agreed to by a 
voice vote.
    An amendment by Mrs. Maloney, No. 6, providing insurance 
for single family homes with licensed day care facilities, was 
agreed to by a voice vote.
    An amendment by Mr. Moore of Kansas, No. 7, limiting 
mortgage insurance premiums was agreed to by a voice vote.
    An amendment by Mr. Frank, No. 8, clarifying disposition of 
certain properties, was agreed to by a voice vote.
    An amendment by Mr. Marshall, No. 10, putting a limitation 
on origination fees, was agreed to by a voice vote.
    An amendment by Mrs. Capito, No. 11, requiring acceptable 
forms of identification for FHA mortgagors, was agreed to by a 
voice vote.
    An amendment by Mr. Green, No. 12, establishing a pilot 
program for automated process for borrowers without sufficient 
credit history, was agreed to by a voice vote.
    An amendment by Mrs. Biggert, No. 13, requiring 
notification and availability to mortgagor, was not agreed to 
by a voice vote.
    An amendment by Mr. McHenry, No. 14, requiring mortgage 
disclosures, was offered and withdrawn.
    An amendment by Ms. Waters, No. 18, expanding underwriting 
standards, was agreed to by a voice vote.
    An amendment by Mr. Miller of California, No. 19, regarding 
certification requirements, was agreed to by a voice vote.
    An amendment by Mr. Neugebauer, No. 20, the question was 
divided: The first part, dealing with authorization of 
appropriations, was not agreed to by a voice vote. The second 
part, authorizing a HUD study and report, was agreed to by a 
voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 1852 contains a number of provisions designed to 
expand the use and improve the efficiency of Federal Housing 
Administration (FHA) insured loan programs. A major focus of 
the bill is to modernize the FHA Title II single family loan 
program, through provisions to raise loan limits in high cost 
areas, to authorize zero down payment loans, to permit risk-
based pricing, and to direct HUD to modify underwriting 
guidelines in order to serve higher credit risk borrowers. 
These changes are augmented by disclosure requirements to 
ensure that borrowers make informed mortgage choices and 
consumer protections for higher risk borrowers and borrowers 
with reduced down payments.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                     June 11, 2007.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1852, the 
Expanding American Homeownership Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susanne S. 
Mehlman.
            Sincerely,
                                                   Peter R. Orszag.
    Enclosure.

H.R. 1852--Expanding American Homeownership Act of 2007

    Summary: H.R. 1852 would amend the National Housing Act to 
authorize the Federal Housing Administration (FHA) to implement 
a new pricing structure for the mortgage guarantees it offers. 
This legislation also would remove the statutory limitation on 
the number of reverse mortgages that FHA can insure and would 
make other changes to the Home Equity Conversion Mortgage 
(HECM) program. In addition, this legislation would authorize 
the appropriation of funds to provide certain borrowers with 
financial counseling and to establish a new affordable housing 
fund.
    Enacting H.R. 1852 would increase direct spending by 
allowing the Department of Housing and Urban Development (HUD) 
to sell certain properties at below-market prices without an 
appropriation of funds to offset any forgone sales proceeds. 
That provision would modify the cost of some previous and 
outstanding loan guarantees. As a result, CBO estimates that 
enacting H.R. 1852 would increase direct spending by $16 
million in 2007.
    CBO also estimates that implementing H.R. 1852 would result 
in a net increase in offsetting collections (a credit against 
discretionary spending) of $313 million in 2008 and $628 
million over the 2008-2012 period, assuming that appropriation 
laws necessary to implement the FHA programs and the Mortgage-
Backed Securities (MBS) program of the Government National 
Mortgage Association (GNMA) are enacted.
    H.R. 1852 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1852 is shown in the following table. 
The cost of this legislation falls within budget functions 370 
(mortgage and housing credit) and 600 (income security).

                                TABLE 1. ESTIMATED BUDGETARY IMPACT OF H.R. 1852
----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2007     2008     2009     2010     2011     2012
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Discounted Multifamily Sale
    Estimated Budget Authority............................        2        0        0        0        0        0
    Estimated Outlays.....................................        2        0        0        0        0        0
Noncompetitive Multifamily Sales
    Estimated Budget Authority............................       14        0        0        0        0        0
    Estimated Outlays.....................................       14        0        0        0        0        0
Total Changes
    Estimated Budget Authority............................       16        0        0        0        0        0
    Estimated Outlays.....................................       16        0        0        0        0        0

                                        SPENDING SUBJECT TO APPROPRIATION

Net FHA and GNMA Spending, and Spending for Housing
 Counseling Under Current Law \1\
    Estimated Authorization Level.........................     -900     -402     -425     -425     -425     -425
    Estimated Outlays.....................................     -900     -365     -419     -425     -425     -425
    Total Changes
        Estimated Authorization Level.....................        0      -12      -16      -17      -22      -28
        Estimated Outlays.................................        0     -313     -139      -36      -65      -75
Net Spending Under H.R. 1852
    Estimated Authorization Level.........................     -900     -414     -441     -442     -447     -453
    Estimated Outlays.....................................     -900     -678     -558     -461     -490    -500
----------------------------------------------------------------------------------------------------------------
\1\ The figures for 2007 are CBO's current estimates of budget authority and outlays for FHA's multifamily and
  single-family programs, the HECM program, HUD's housing counseling program, and for GNMA's MBS program under
  the enacted appropriation levels for this year. The 2008-2012 levels are CBO's baseline estimates of the net
  offsetting collections that would be generated by those programs, assuming that appropriation laws necessary
  to implement FHA and GNMA programs are enacted.
Note: GNMA = Government National Mortgage Association; HECM = Home Equity Conversion Mortgage; MBS = Mortgage-
  Backed Securities; HUD = Department of Housing and Urban Development; FHA = Federal Housing Administration.

    Basis of Estimate: For this estimate, CBO assumes that H.R. 
1852 will be enacted before the end of fiscal year 2007, that 
the amounts necessary to implement the bill will be 
appropriated for each year, and that appropriation laws 
necessary to implement the FHA and GNMA programs will be 
enacted each year.

Changes in direct spending

    Prior to the enactment of the Deficit Reduction Act (DRA) 
of 2005, HUD often sold foreclosed multifamily properties to 
state and local governments as part of its right of first 
refusal program (that is, a noncompetitive program in which HUD 
negotiated directly with the buyer). Frequently, state and 
local governments purchased those properties for nominal 
amounts, such as $1. The DRA bars HUD from taking into account 
the cost of rehabilitating the foreclosed property and the 
expense of maintaining existing affordability restrictions on 
the property (for example, limiting the amount of rent paid by 
tenants) when setting the price for a noncompetitive property 
sale. As a result, noncompetitive sales no longer occur. 
Potential buyers (including state and local governments) have 
concluded that the price HUD sets for a noncompetitive sale 
exceeds the amount that bidders would offer in a competitive 
auction. DRA authorizes HUD to sell foreclosed properties at 
lower prices only if funds have been appropriated to offset the 
forgone sales proceeds through 2010. Since the enactment of DRA 
in 2006, no such appropriations have been provided.
    Both sections 27 and 28 would result in below-market sales 
in certain circumstances without further appropriation action. 
Enacting those sections would increase direct spending because 
the cash flows associated with some previous and existing loan 
guarantees would be modified. The cost of a loan modification 
is estimated on a net-present-value basis and recorded in the 
year in which the legislation is enacted. CBO estimates that 
enacting the two sections would result in a cost of $16 million 
in 2007, as discussed below.
    Valuation of Multifamily Properties in Noncompetitive Sales 
by HUD to States and Localities. Section 27 would require HUD 
to adjust for the cost of rehabilitating and maintaining 
existing affordability restrictions when appraising foreclosed 
properties for the purpose of calculating the price for sales 
to states and localities. CBO expects that this legislation 
would allow noncompetitive sales to become an attractive 
alternative to competitive auctions for some state and local 
governments. Consequently, we estimate that the volume of 
noncompetitive sales of foreclosed properties would return to 
levels that existed prior to the enactment of the DRA--about 10 
property sales each year.
    Based on information from HUD, CBO estimates that the price 
paid in noncompetitive sales prior to enactment of DRA averaged 
$1.3 million less than the price paid in competitive sales for 
similar properties. Based on information from HUD, we do not 
expect that HUD would return to its pre-DRA practice of 
negotiating sales prices for nominal amounts. However, CBO 
estimates that it is likely that the sales price in half of the 
negotiated sales that would occur under H.R. 1852 would be less 
than the price that would be received in an auction. 
Consequently, we estimate that, on average, the government 
would forgo receipts of about $5 million per year--$l million 
each for about five properties per year that would be sold in 
noncompetitive sales over the 2008-2010 period.
    Because enacting this provision would change the expected 
cash flows associated with the multifamily insurance program, 
this loss of sales proceeds (which are recoveries on defaulted 
loans) would be considered a modification of existing federal 
loan guarantees. Under credit reform procedures, the costs of 
such modifications are estimated on a net-present-value basis 
and recorded in the year in which the legislation is enacted. 
Assuming the bill is enacted late in fiscal year 2007, CBO 
estimates that enacting this provision would result in an 
increase in direct spending of $14 million in 2007. (Such 
estimated costs would be recorded in 2008 if the bill is 
enacted after September 30, 2007.)
    Clarification of Disposition of Certain Properties. Section 
28 would, under certain circumstances, exempt properties from 
the sale requirements specified in the DRA. Based on 
information from HUD, CBO estimates that this provision would 
affect the sale of one property located in Michigan by allowing 
its sale to the city government at a price below market value. 
CBO estimates that the market value of the property is about $2 
million, and that, under current law, it will be sold at a 
competitive auction; under this provision, the property could 
instead be sold to the city government for a nominal amount. 
Because this section would result in a change to the cash flows 
associated with the original loan guarantee, this loss of 
receipts would be considered a loan modification. As a result, 
CBO estimates that enacting this section would increase direct 
spending by about $2 million in 2007.

Spending subject to appropriation

    CBO estimates that implementing H.R. 1852 would result in 
an increase in offsetting collections of $313 million in 2008 
and $628 million over the 2008-2012 period, assuming enactment 
of appropriation laws necessary to implement the FHA and GNMA 
programs. The estimated additional offsetting collections would 
stem from the authority in H.R. 1852 to expand FHA's HECM loan 
program and to raise the loan limits for FHA's multifamily 
program. The latter change also would result in more offsetting 
collections for GNMA. Additional discretionary costs associated 
with limiting a planned increase in mortgage insurance fees, 
providing payment incentives to certain FHA borrowers, and 
authorizing the appropriation of funds for housing counseling 
and for a new affordable housing fund would be netted against 
those new offsetting collections.
    CBO expects that other provisions of the bill would have no 
significant budgetary impact over the next 5 years. The major 
provisions of the bill are discussed below. Table 2 details the 
components of estimated spending subject to appropriation under 
H.R. 1852.
    Amendments to the HECM Loan Insurance Program. HECM loans 
are considered to be ``reverse mortgages'' because they enable 
homeowners who are at least 62 years of age to withdraw some of 
the equity in their homes in the form of monthly payments, in a 
lump sum, or through a line of credit. Under current law, FHA 
is permitted to guarantee up to a cumulative total of 275,000 
such loans, although this limitation has been waived through 
fiscal year 2007. This cap has already been reached this year; 
consequently, the program will be inactive beginning in 2008 
unless the cap is amended.
    Loan size is tied to loan limits that vary by geographic 
region, and such loans cannot be used to purchase another home. 
In addition, the origination fee charged by lenders is 
calculated as a percentage of the home's value.
    Enacting this legislation would remove the statutory 
limitation on the number of loans that could be guaranteed, set 
a single nationwide limit on the dollar amount of a HECM loan 
that would be tied to the conforming loan amount, limit the 
origination fee to 2 percent of the loan amount (subject to a 
minimum allowable amount), and allow borrowers to use HECM 
loans to purchase a new home. (Conforming loans have terms and 
conditions that follow the guidelines set forth by the 
Government Sponsored Enterprises (GSEs); the conforming loan 
amount is $417,000.)
    Implementation of the HECM program, like all of FHA's 
insurance programs, is contingent on the enactment of 
appropriation laws that provide annual loan commitment 
authority. Thus, the estimated budgetary impact of this 
proposal is considered to be discretionary, and it is tied to 
the demand for HECM loans and the estimated subsidy cost of the 
loan guarantees.
    Because, under credit reform procedures, guarantees of HECM 
loans are estimated to have negative subsidies (that is, they 
earn money for the government), CBO estimates that implementing 
those amendments would increase offsetting collections by about 
$2.1 billion over the 2008-2012 period.

                  TABLE 2. ESTIMATED EFFECTS OF H.R. 1852 ON SPENDING SUBJECT TO APPROPRIATION
----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2007     2008     2009     2010     2011     2012
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Net FHA and GNMA Spending, and Spending for Housing
 Counseling Under Current Law \1\
    Estimated Authorization Level.........................     -900     -402     -425     -425     -425     -425
    Estimated Outlays.....................................     -900     -365     -419     -425     -425     -425
Proposed Changes
    Amendments to HECM Loan Program
        Estimated Authorization Level.....................        0     -370     -385     -410     -445     -480
        Estimated Outlays.................................        0     -370     -385     -410     -445     -480
    Higher Loan Limits for Multifamily Program
        Estimated Authorization Level.....................        0      -19      -19      -19      -19      -19
        Estimated Outlays.................................        0      -19      -19      -19      -19      -19
    Additional GNMA Offsetting Collections
        Estimated Authorization Level.....................        0      -12      -17      -19      -26      -34
        Estimated Outlays.................................        0      -12      -17      -19      -26      -34
    Limit on Premium Increases for Mortgage Insurance
        Estimated Authorization Level.....................        0       20       43       43       43       43
        Estimated Outlays.................................        0       20       43       43       43       43
    Cost of Payment Incentives
        Estimated Authorization Level.....................        0       16       16       16       16       16
        Estimated Outlays.................................        0       16       16       16       16       16
    Housing Counseling Program
        Estimated Authorization Level.....................        0       58       58       58       58       58
        Estimated Outlays.................................        0        6       49       58       58       58
    FHA Technology Support Costs
        Authorization Level...............................        0       25       25       25       25       25
        Estimated Outlays.................................        0       19       25       25       25       25
    Affordable Housing Fund
        Estimated Authorization Level.....................        0      270      262      287      322      357
        Estimated Outlays.................................        0       27      148      268      279      310
        Total Changes
            Estimated Authorization Level.................        0      -12      -16      -17      -22      -28
            Estimated Outlays.............................        0     -313     -139      -36      -65      -75
    Net Spending Under H.R. 1852
        Estimated Authorization Level.....................     -900     -414     -441     -442     -447     -453
        Estimated Outlays.................................     -900     -678     -558     -461     -490     -500
----------------------------------------------------------------------------------------------------------------
\1\ The figures for 2007 are CBO's current estimates of budget authority and outlays for FHA's multifamily and
  single-family programs, the HECM program, HUD's housing counseling program, and for GNMA's MBS program under
  the enacted appropriation levels for this year. The 2008-2012 levels are CBO's baseline estimates of the net
  offsetting collections that would be generated by those programs, assuming that appropriation laws necessary
  to implement FHA and GNMA programs are enacted.
Note: GNMA = Government National Mortgage Association; HECM = Home Equity Conversion Mortgage; MBS = Mortgage-
  Backed Securities; HUD = Department of Housing and Urban Development; FHA = Federal Housing Administration.

    Demand for HECM Loans. According to the National Reverse 
Mortgage Lenders Association (NRMLA) and other industry 
experts, the HECM program has risen in popularity in recent 
years. As more consumers are becoming aware ofthe product, more 
households are becoming eligible for the program (currently 
over 17 million households have owners who are age 65 or older, 
according to census data), and more seniors view the product as 
an alternative approach to financing home-improvement projects, 
medical costs, and other needs. In addition, sources in the 
mortgage industry have observed an increasing demand among 
seniors for new housing within senior communities. The number 
of HECM loans insured by FHA more than doubled from 2003 to 
2006 (18,000 loans were insured in 2003, compared with 76,000 
loans in 2006). Furthermore, based on the number of HECM loans 
insured as of April 2006, that volume could reach over 100,000 
loans by the end of fiscal year 2007.
    Based on information from FHA, NRMLA, and other industry 
experts, CBO estimates that setting a single nationwide loan 
limit and permitting borrowers to use HECM loans to purchase a 
new home would result in a product that would be more 
attractive to borrowers and more easily marketed by lenders, 
resulting in increased demand for HECM loans. On the other 
hand, the limit on the origination fee could result in a 
program that is less profitable for certain lenders, causing 
some to end or limit their participation in the program. A 
lower origination fee, however, could increase the program's 
attractiveness to some borrowers, assuming lenders do not 
increase interest rates significantly to compensate for lower 
origination fees.
    Currently, the market for FHA's HECM loans appears to be 
very robust, and under this bill, FHA would probably insure 
more than 100,000 loans annually over the next several years. 
Also, GNMA's recent decision to begin securitizing HECM loans 
could result in increased activity by lenders, as investors in 
the secondary mortgage market begin to invest in mortgage-
backed securities that include this product. Whether the number 
of guarantees could exceed 100,000 loans on a continued basis 
each year would depend on FHA's ability to administer and 
manage the program in an efficient manner and on the market's 
response to this bill, especially the change in the origination 
fee. Based on information from FHA, CBO estimates that the 
agency could insure about 110,000 loans (with a face value of 
about $27 billion) in 2008. In subsequent years, we estimate 
that demand would increase at the estimated rates for 
appreciation in housing prices--about 2 percent to 4 percent a 
year.
    Subsidy Cost. Under current law, FHA guarantees of HECM 
loans are estimated to result in net offsetting collections to 
the federal government because guarantee fees for those 
mortgages are currently estimated to more than offset the costs 
of expected defaults. For 2008, the Administration's subsidy 
estimate for HECM guarantees is -1.9 percent. Under the 
expanded program authorized by H.R. 1852, CBO estimates that 
the subsidy rate for the HECM loans would be -1.35 percent. 
This reduction from the estimated rate for 2008 is due to the 
increased risk FHA would experience under the proposed 
nationwide loan limitation. With larger loan sizes, the 
``equity cushion'' (that is the difference between the home's 
value and the potential cost of a claim payment) would 
decrease, leading to potentially more costly claims for FHA.
    This estimated subsidy rate of -1.35 percent assumes that 
the HECM loan program would not be subject to the risk-based 
pricing structure authorized by the bill and described below. 
CBO assumes that FHA would continue to charge fixed, up-front, 
and annual fees for all HECM borrowers, regardless of any 
specific evaluation of their individual risk of default. CBO 
estimates that implementing this legislation would result in 
additional offsetting collections of $370 million in 2008 and 
$2.1 billion over the 2008-2012 period, contingent on enactment 
of appropriation bills that would establish the authority to 
make HECM loan guarantees by specifying annual loan commitment 
levels.
    Estimated Impact on Demand for Multifamily Loan Guarantees. 
GNMA is responsible for guaranteeing securities backed by pools 
of mortgages that are insured by the federal government. In 
exchange for a fee charged to lenders or issuers of the 
securities, GNMA guarantees the timely payments of scheduled 
principal and interest due on the pooled mortgages that back 
those securities. Because, under credit reform procedures, the 
value of the fees collected by GNMA is estimated to exceed the 
cost of loan defaults in each year, the Administration 
estimates that the GNMA MBS program will have a subsidy rate of 
-0.21 percent in 2008, resulting in the net collection of 
receipts to the federal government.
    Currently GNMA does not securitize HECM loans; according to 
GNMA, however, securitization of those loans will begin in 2008 
if the program has authority to operate beyond 2007. Under the 
bill, CBO estimates that in 2008 about 5 percent of the HECM 
loans would be included in GNMA's MBS program. We estimate that 
in subsequent years, 10 percent to 20 percent of the HECM loans 
would be securitized by GNMA. Thus, CBO estimates that those 
proposed changes to the HECM program would result in additional 
offsetting collections to GNMA, totaling about $40 million over 
the 2008-2012 period, assuming appropriation action to 
establish a dollar limitation for the GNMA securities program.
    Higher Loan Limits for the Multifamily Program. Under the 
National Housing Act, FHA is authorized to insure private loans 
used to finance certain multifamily homes, subject to loan 
limitations specified in appropriation acts. Section 26 would 
increase the current limit on the value of individual loans 
that FHA can guarantee in certain high-cost areas of the 
country under 12 of its 20 multifamily loan guarantee programs. 
(High-cost housing markets are designated by FHA and include 
such cities as Boston, San Francisco, and Los Angeles.)
    The maximum amount of a loan that FHA can guarantee for 
multifamily housing depends on the base loan levels established 
by FHA, which vary by type and size of housing within a 
project. For example, the base loan limit for each unit of a 
building with two-bedroom apartments without elevators is 
roughly $54,000. Currently, in regions designated by FHA as 
high-cost areas, the base loan limit can be increased by up to 
170 percent. Thus, in a high-cost region, the loan limit for 
each unit in a building with two-bedroom apartments without 
elevators can be as high as $146,000 (that is, 270 percent of 
the base limit). Under H.R. 1852, FHA could increase the base 
loan limit by up to 215 percent in high-cost areas. (In this 
example, the loan limit for that two-bedroom apartment could be 
as high as $170,000.)
    Estimated Impact on Demand for Multifamily Loan Guarantees. 
The Federal Credit Reform Act of 1990 requires an appropriation 
of the subsidy costs and administrative costs associated with 
loan guarantees and direct loans. The subsidy cost is the 
estimated long-term cost to the government of a loan guarantee 
or a direct loan, calculated on a net-present-value basis, 
excluding administrative costs. Under current law, FHA's 
guarantees of multifamily loans are estimated to result in net 
offsetting collections (that is, negative outlays) because the 
Administration estimates that guarantee fees collected on those 
mortgages will more than offset the costs of expected defaults, 
calculated on a present-value basis. For 2008, CBO estimates 
that the weighted average subsidy cost for the multifamily 
programs subject to the loan limit increases under this 
legislation is -1.9 percent. This estimate takes into account 
the prohibition on increases in certain premium fees in section 
30 of this legislation. In addition, CBO estimates that, under 
current law, FHA will insure $4 billion to $5 billion in 
multifamily loans in 2008.
    If FHA made more loan guarantees as a result of the higher 
cap on the value of loans in high-cost areas, the agency would 
record additional offsetting collections (which would be a 
reduction in discretionary spending). According to industry 
experts, the current loan limits constrain new construction and 
rehabilitation of multifamily housing. Based on information 
from FHA field offices and realtors in certain high-cost areas, 
CBO expects that, under H.R. 1852, FHA would insure an 
additional 35 to 45 loans a year for multifamily projects with 
a total face value of about $1 billion. We expect that the 
subsidy rate for those loans over the 2008-2012 period would be 
similar to the program's estimated rate of -1.9 percent for 
2008 under H.R. 1852. Thus, CBO estimates that those additional 
loan guarantees would increase offsetting collections to FHA 
(and thus reduce outlays) by about $19 million annually over 
the 2008-2012 period.
    Effects on GNMA's Subsidy Costs. Because most FHA 
multifamily loan guarantees are included in GNMA's MBS program, 
CBO estimates that raising the loan limit would result in 
additional GNMA collections of about $2 million a year over the 
2008-2012 period. Those savings would affect discretionary 
spending because, like FHA, GNMA requires appropriation action 
to establish the total amount of its guarantees.
    Raising Loan Limits for the Single-Family Program. Section 
3 would raise FHA's loan limit--the dollar amount of a mortgage 
that FHA can insure--for its single-family program from 87 
percent of the conforming loan amount to 100 percent of the 
conforming loan limit in certain geographic regions where the 
cost of housing is very high. Effectively, this would be a 
change from insuring loans of $362,790 today to insuring loans 
of up to $417,000 in certain parts of the country. In less 
expensive markets, the limit would be raised from 48 percent to 
65 percent of the conforming loan limit, or a change from loan 
guarantees of up to $200,160 to loan guarantees of up to 
$271,050 under the bill.
    CBO estimates that implementing this provision would 
increase loan volume by about 8 percent a year--about $4 
billion annually in additional loan guarantees--over the next 
five years. This increase would stem mostly from increasing the 
limit in the less expensive housing markets. Despite this 
estimated increase in loan volume, CBO estimates that no 
additional offsetting collections would be realized because we 
expect the subsidy rate for the single-family program to be 
zero over the next five years. However, because most FHA 
single-family loan guarantees are included in GNMA's MBS 
program, CBO estimates that raising the loan limit would result 
in additional offsetting collections to GNMA of about $45 
million over the 2008-2012 period. As mentioned earlier, GNMA 
requires appropriation action to establish its dollar 
limitation for the securities program, so those savings would 
be offsets to discretionary spending.
    Limit on Increases in Fees for Mortgage Insurance. 
Currently, FHA has the authority to adjust fees for its 
mortgage insurance programs through administrative action. 
Section 30 would prohibit FHA from increasing fees unless the 
increase is required to maintain the estimated credit subsidy 
for the program at zero, but not less than zero. According to 
the Administration, annual fees for new loan guarantees for the 
apartment development and refinance programs will increase by 
about 16 basis points beginning in 2008. CBO estimates that 
those fee increases would affect about $2.6 billion in loan 
guarantees in 2008 and over $3 billion in loan guarantees 
annually in subsequent years. Furthermore, we estimate that 
those fee increases would increase offsetting collections for 
this program by $192 million over the 2008-2012 period. Thus, 
prohibiting those fee increases would result in a loss of $192 
million in discretionary offsetting collections over the next 
five years.
    Cost of Payment Incentives. Section 9 would authorize HUD 
to provide certain payment incentives to borrowers after three 
years of timely premium payments; after five years of timely 
premium payments, FHA would be required to provide payment 
incentives. Borrowers who have taken out zero down payment 
loans or who are considered to be a higher risk of default 
would be eligible for some of those incentives, which include 
reductions in annual premiums and refunds of up-front premiums 
upon payment of the full mortgage. CBO estimates that the 
borrowers of about $7 billion in FHA-guaranteed mortgages made 
annually would eventually be eligible for certain payment 
incentives. Furthermore, we estimate that those payment 
incentives would increase the subsidy rate for the affected 
loan guarantees by an average of 0.23 percent. Under the 
Federal Credit Reform Act of 1990, such costs require the 
appropriation of funds. CBO estimates that appropriations of 
about $16 million would be required annually over the 2008-2012 
period. Section 29, which is discussed below, would authorize 
appropriations for any credit subsidy required for the single-
family loan guarantee program.
    Additional Authorizations of Appropriations. Section 29 of 
this legislation would authorize the appropriation of funds for 
various purposes in amounts that equal the net increase in 
negative credit subsidy for the FHA programs resulting from 
this legislation. Such appropriations would be used to provide 
credit subsidies for the single-family loan guarantee program 
(to the extent needed), funding for the housing counseling 
program, funding to support the improvement of FHA's 
technologies and processes, and funding for an affordable 
housing fund, which would provide grants to support affordable 
rental housing and affordable homeownership opportunities for 
low-income families. Those funds are not authorized to be 
appropriated each year unless HUD, by rule, determines that FHA 
premiums being charged that year are sufficient to comply with 
the Mutual Mortgage Insurance Fund's (MMIFs) capital ratio 
requirement and are also sufficient to ensure the safety and 
soundness of other FHA mortgage insurance funds.
    Based on the amounts CBO estimates for the provisions 
affecting the HECM and multifamily programs, we estimate that 
about $2 billion would be authorized to be appropriated over 
the 2008-2012 period. We further estimate that, over the next 
five years, implementing these provisions would cost about $80 
million for the credit subsidies associated with the payment 
incentives, $229 million for the housing counseling program, 
$119 million for FHA program support, and $1 billion for the 
affordable housing fund.
    Risk-based Pricing and Flexible Downpayment Requirements. 
Currently, FHA's single-family loan guarantee program has a 
flat premium structure under which all borrowers pay the same 
up-front and annual fees, regardless of the borrower's 
individual risk of default. According to the FHA, the up-front 
fee in 2008 is expected to increase from 1.5 percent to 1.66 
percent and the annual fee will rise from 0.5 percent to 0.55 
percent. Furthermore, the Administration estimates that those 
fee increases will result in a subsidy rate of zero for the 
single-family program for 2008.
    Under this legislation, FHA would have the authority to 
match the fees it charges with the borrowers' risk of default 
or the risk associated with a particular loan product, and to 
offer guarantees for loans with little or no down payment. For 
certain borrowers and types of loan products, the up-front fee 
could be as high as 3 percent and the annual fee could be as 
high as 0.75 percent. CBO estimates that implementing this 
risk-based pricing proposal would result in a weighted subsidy 
rate that is about zero. Because the subsidy rate for 2008 is 
estimated to be zero under current law, CBO expects that FHA 
would charge rates under H.R. 1852 that would produce a similar 
result.
    Intergovernmental and private-sector impact: H.R. 1852 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal costs: Susanne S. Mehlman; 
impact on state, local, and tribal governments: Teri Gullo; 
impact on the private sector: Paige Piper/Bach.
    Estimate spproved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
man- dates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    In compliance with clause 9 of rule XXI, the Committee is 
in re- ceipt of the following correspondence: Regarding section 
28, the City of Ypsilanti, Michigan, submitted by Mr. Dingell:

                     Congress of the United States,
                                  House of Representatives,
                                     Washington, DC, June 15, 2007.
Hon. Barney Frank,
Chairman, House Committee on Financial Services,
Washington, DC.
Hon. Spencer Bachus,
Ranking Member, House Committee on Financial Services,
Washington, DC.
    Dear Gentlemen: I am requesting the legislative language 
found in Section 28 of H.R. 1852 for the City of Ypsilanti, 
Michigan in fiscal year 2008. The entity that would benefit 
from this provision is the City of Ypsilanti, located at City 
Hall, One South Huron Street, Ypsilanti, MI 48197. The 
provision would allow HUD to sell the Parkview Apartments, 
located at 596 S. Hamilton Street, Ypsilanti, Michigan 48197, 
at a below market rate. I certified that neither I nor my 
spouse has any financial interested in this project.
            Sincerely,
                                           John D. Dingell,
                                                Member of Congress.

             Section-by-Section Analysis of the Legislation


Section 1. Short title and table of contents

    Includes a table of contents and the short title of the 
bill, which is the ``Expanding American Homeownership Act of 
2007.''

Section 2. Findings and purposes

    Includes the findings and purposes of the Act.

Section 3. Maximum principal loan obligation

    Increases FHA Section 203(b)(2) single family mortgage loan 
limits. Under current law, the maximum insurable mortgage loan 
amount for a Single Family residence is the lesser of (a) 95 
percent of the local median home price, or (b) 87 percent of 
the nationwide GSE conforming loan limit--except that 
notwithstanding the local median home price determination, 
there is a national loan floor equal to 48 percent of the 
nationwide GSE conforming loan limit. This section raises the 
loan limit to the lesser of: (a) 100 percent of the local 
median home price, or (b) the nationwide GSE conforming loan 
limit. It also raises the nationwide loan floor from 48 percent 
to 65 percent of the GSE conforming limit. In 2007, the 
nationwide GSE conforming loan limit is $417,000.
    Under current law, FHA loan limits for 2-, 3- and 4-unit 
mortgages are statutorily set as 107 percent, 130 percent, and 
150 percent of the FHA single family 1-unit median home price, 
respectively. This section changes this calculation, so that 
the ratio of loan limits for 2-, 3-, and 4-unit mortgages to 
the FHA 1-unit mortgage limit is conformed to the same ratios 
that the GSE conforming loan limits for 2-, 3-, and 4-unit 
mortgages bear to the GSE conforming 1-unit loan limit.

Section 4. Extension of mortgage term

    Extends the maximum loan term on FHA single family loans 
from 35 to 40 years.

Section 5. Down payment simplification

    The current loan-to-value (LTV) limit for an FHA single 
family loan is generally 97.75 percent of a home's appraised 
value, plus the upfront FHA premium--except that there are 
separate LTV limits for loans of lower amounts and for loans in 
states that do not have high closing costs. This section 
simplifies the FHA single family statutory LTV limits to permit 
loans up to 97.75 percent of appraised value, plus the upfront 
FHA mortgage premium. It also creates new statutory authority 
to waive this limit for ``zero- and lower-down payment 
borrowers,'' as are defined in Section 6.
    Also retains the current statutory 3 percent cash down 
payment requirement--except for ``zero- and lower-down payment 
borrowers,'' as are identified in Section 6.

Section 6. Mortgage insurance premiums for zero and lower down payment 
        borrowers

    Defines ``zero- and lower down payment borrowers'' as 
first-time homebuyers who do not comply with either the 97.75 
percent LTV limit or the 3 percent cash down requirement, 
referenced in Section 5.
    FHA is authorized to charge upfront premiums for such 
borrowers in an amount up to 3 percent, and annual premiums for 
such borrowers up to .75 percent of the loan balance.

Section 7. Higher risk borrowers

    Creates a definition of a ``Standard Risk'' borrower as a 
borrower with a 560 or higher equivalent FICO score that 
complies with LTV and 3 percent down payment requirements. Also 
defines a ``Higher Risk'' borrower as one with a FICO 
equivalent score below 560. Directs HUD to underwrite loans for 
Higher Risk borrowers. Raises the existing statutory upfront 
cap for Higher Risk borrowers from 2.25 percent to 3 percent, 
but retains the .55 percent annual premium cap for such 
borrowers.

Section 8. Risk-based premiums

    Authorizes risk-based premiums for Zero and Lower Down 
borrowers'' and ``Higher Risk'' borrowers (as defined in 
Sections 6 and 7). Establishes procedures for HUD to establish 
and change premiums, including a list of factors to be 
considered in establishing such premiums. Also authorizes risk-
based pricing based on product type--such as fixed rate vs. 
ARM, and Section 203(b) vs. Section 234 condominium loans.

Section 9. Payment incentives

    Requires HUD to provide ``Payment Incentives'' for 
borrowers that make on-time payments for at least the first 5 
years of the loan. For zero down borrowers, such Payment 
Incentives would result in a reduction of annual premiums after 
such period down to statutory maximum of .55 percent. For 
higher risk borrowers, Payment Incentives would result in a 
reduction of annual payments after such period down to the 
level that would have been charged had they not been higher 
risk, plus a refund equal to the difference between the higher 
upfront premium such borrowers paid and the premium paid by 
Standard Risk Borrowers. HUD is also authorized to offer these 
Payment Incentives to borrowers after a period of 3 years of 
on-time payments.

Section 10. Borrower protections for higher risk mortgages

    Authorizes HUD to require pre-purchase counseling for zero 
and lower down payment borrowers and higher risk borrowers. 
Requires the mortgagee to provide the borrower at loan 
application a list of HUD-approved housing counseling agencies 
in the area. In addition, borrowers who become 60-days 
delinquent on their loan must be given notice by a housing 
counseling entity of the availability of foreclosure prevention 
counseling.
    Requires borrowers applying for zero down and lower down 
payment loans to be provided written disclosures, either 
through counseling or at loan application, regarding other 
mortgage loan options, the additional costs associated with 
lower down payment loans and the appreciation needed to pay off 
the loan, including selling costs. Also at closing, borrowers 
are to be given disclosures of their payment incentive rights 
and rights to loss mitigation.

Section 11. Annual reports on new programs and loss mitigation

    Requires HUD to report annually on the rates of default and 
foreclosure of zero and lower down payment and higher risk 
borrowers, as well as actions HUD has taken with respect to 
loss mitigation.

Section 12. Insurance for single family homes with licensed child care 
        facilities

    Permits an increase in FHA single family loan limits of up 
to 25 percent higher than the customary loan limit for any home 
which includes space used for a licensed child care facility. 
Such increase must be proportional to the amount of space that 
will be used for the child care facility.

Section 13. Rehabilitation loans

    Deletes obsolete language in existing section 203(k)(1) FHA 
rehabilitation loans. Also makes the Section 203(k) program an 
obligation of the Mutual Mortgage Insurance Fund (MMIF), 
instead of its current status as an obligation of the General 
Insurance Fund.

Section 14. Discretionary action

    Moves existing language contained in section 203(s) of the 
National Housing Act, dealing with notification requirements 
about actions taken by the Secretary to suspend or revoke the 
approval of a mortgagee to participate in FHA programs, to 
section 202 of the National Housing Act, which contains the 
basic authority of the Mortgagee Review Board.

Section 15. Insurance of condominiums and manufactured housing

    Establishes a new limitation on the existing Section 234(c) 
condominium program, to limit such loans in the future to take 
out financing for multifamily blanket mortgages on FHA insured 
section 234(d) condominium projects. Contains a conforming 
amendment to Section 234(c) of the National Housing Act to 
permit 40 year mortgages. Amends section 201(a) of the National 
Housing Act to add a definition of condominium mortgage to the 
definition section, consistent with the intent to insure 
condominium mortgages under section 203 of the National Housing 
Act, and to provide that condominiums may be in the form of 
manufactured housing units. Modifies the definition of real 
estate to permit manufactured homes to be financed, even though 
they are not taxed as real property.

Section 16. Mutual mortgage insurance fund

    Clarifies that the MMIF is subject to the provisions of the 
Credit Reform Act of 1990, and the use of `guarantee' and 
`commitment to guarantee' reflects that purpose. Directs HUD to 
ensure that the MMIF remains financially sound. Also requires 
HUD to provide an independent actuarial report to Congress 
annually on the financial status of the Fund, and requires HUD 
to submit a quarterly report on the financial status and 
soundness of the Fund. Grants HUD the authority to change 
premiums or underwriting standards if the Fund is at risk in 
accordance with other sections of this bill.
    Establishes operational goals for the Fund, which include 
charging appropriate premiums commensurate with the borrower's 
risk, minimizing the default risk to the Fund and to 
homeowners, curtailing the impact of adverse selection on the 
Fund, and meeting the housing needs of the borrowers that this 
bill is designed to serve.
    Makes insured mortgages that are used in conjunction with 
the Homeownership Voucher program obligations of the MMIF and 
makes reverse mortgages insured under section 255 of the 
National Housing Act obligations of the MMIF.

Section 17. Hawaiian home land and Indian reservations

    Makes single family mortgages insured on Hawaiian Home 
Lands under section 247 of the National Housing Act and single 
family mortgages insured on Indian Reservations under section 
248 of the National Housing Act obligations of the MMIF.

Section 18. Conforming and technical amendments

    Repeals certain obsolete or little used programs and makes 
two other technical and conforming amendments. The programs 
repealed include:
          * Section 203(i) mortgage insurance for outlying 
        areas.
          * Sections 203(o), (p) and (q) relating to certain 
        mortgage insurance on Indian lands.
          * Section 222 mortgage insurance for servicemen. The 
        program is not operational and the benefits of mortgage 
        insurance are otherwise available under section 203.
          * Section 237 special mortgage insurance for low 
        income families.
          * Section 245 graduated payment mortgage program.

Section 19. Home equity conversion mortgages

    Eliminates the current mortgage volume cap on FHA reverse 
mortgages [also know as Home Equity Conversion (HECM) 
mortgages]. Also provides for a uniform nationwide mortgage 
loan cap on FHA reverse mortgage loans, equal to the GSE 
conforming loan limit [thus eliminating the local median home 
price determination otherwise used for Section 203(b) loans]. 
Requires HUD to establish limits on the origination fee that 
may be charged for a reverse mortgage loan, which shall equal 2 
percent of the original principal limit of the mortgage, be 
subject to a minimum allowable amount, and provide that the 
origination fee may be financed by the mortgage. Permits FHA 
reverse mortgage loans to be used in cooperative units. 
Requires HUD to conduct a study, to analyze the effects of 
reducing premiums on both the cost to the borrowers and the 
financial soundness of the program.

Section 20. Participation of mortgage brokers and correspondent lenders

    Gives mortgage brokers and correspondent lenders the option 
of posting a $75,000 surety bond in lieu of the existing net 
worth and annual audit requirements for participation in the 
FHA single family loan program. Requires GAO to conduct a study 
and report to Congress within 4 years of the date of enactment 
on the effect of this change, with respect to extent of 
increased participation, comparison of defaults, foreclosures, 
and insurance claims, and HUD supervision of the provision. 
This option is repealed after five years unless HUD either 
extends it based on a determination that such alternative 
treatment provides comparable protection to the existing audit 
and net worth requirements or modifies it pursuant to a 
determination published in the Federal Register as HUD 
considers appropriate to provide for such comparable 
protection.
    Imposes additional requirements for mortgage brokers and 
correspondent lenders participating in FHA loans, including 
requiring them to safeguard and account for any money handled 
for the borrower, to follow reasonable and lawful instructions 
from the borrower, and to act with reasonable skill, care, and 
diligence.

Section 21. Conforming loan limit in disaster areas

    Gives HUD the authority to increase FHA single family loan 
limits up to 100 percent of the appraised value plus closing 
costs and up to the nationwide GSE conforming loan limit for a 
period of up to 36 months in Presidentially-declared disaster 
areas.

Section 22. Failure to pay amounts from escrow accounts for single 
        family mortgages

    Requires FHA mortgage servicers that establish escrow 
accounts to make required payments by any deadline required to 
avoid a penalty, unless such servicer was not provided notice 
of such deadline. Authorizes HUD to increase the amount of 
penalty for servicers that fail to reimburse borrowers, 
including for attorneys fees incurred by the borrower, within 
60 days of the failure to make a payment by a deadline. Also 
prohibits submission of information by HUD or servicers that is 
adverse to the credit rating or interest of the borrower, which 
is based on the servicer's failure to make a payment by any 
deadline.

Section 23. Acceptable identification for FHA mortgagors

    Prohibits HUD from insuring any FHA loan unless the 
borrower provides personal identification. Permissible forms of 
identification include a Social Security card along with a 
photo ID issued by the Federal or a state government, a drivers 
license or ID care issued by a state in accordance with the 
REAL ID Act of 2005, a passport, and a USCIS photo 
identification card.

Section 24. Pilot program for automated process for borrowers without a 
        sufficient credit history

    Requires HUD to carry out a pilot program to establish an 
automated process for providing alternative credit rating 
information for borrowers who have insufficient credit 
histories for determining their creditworthiness. HUD may not 
insure a number of mortgages under this pilot which exceeds 5 
percent of the aggregate number of FHA insured mortgages in the 
preceding year. Within 2 years of the bill's enactment, GAO is 
required to send Congress a report identifying the number of 
additional borrowers under this pilot and the impact of the 
pilot on safety and soundness. This pilot sunsets after 5 years 
of the bill's enactment.

Section 25. Sense of Congress regarding technology for financial 
        systems

    Sense of Congress stating that HUD should use a portion of 
the funds FHA receives from premiums in excess of what it pays 
out in claims to upgrade FHA's current technology. FHA is also 
encouraged to submit a report to Congress detailing the 
progress it is making towards this goal and any resources it 
may need to make greater progress.

Section 26. Multifamily housing mortgage limits in high cost areas

    Increases maximum FHA multifamily loan limits in high cost 
areas from 140 percent of the basic loan limit to 170 percent 
and raises such maximum loan limits on a case by case basis 
from 170 percent of the basic limit to 215 percent of such 
limit.

Section 27. Valuation of multifamily properties in noncompetitive sales 
        by HUD to State and localities

    Requires HUD to take into account the cost of 
rehabilitation and maintaining existing affordability 
restrictions when appraising FHA foreclosed multifamily loan 
properties for the purposes of calculating the sale price under 
states' and localities' first right of refusal to purchase such 
properties.

Section 28. Clarification of disposition of certain properties

    Clarifies grandfather provisions relating to continued 
eligibility for discounted sales under the first right of 
refusal of foreclosed FHA multifamily properties with respect 
to the 2005 Deficit Reduction Act which eliminated such 
discounted sales--by permitting transitions for which HUD 
received an expression of interest in purchasing a property 
from both a city government and housing commission of the city, 
and for which such city government and housing commission have 
resolved a previous disagreement with respect to disposition of 
the property.

Section 29. Use of FHA savings for costs of mortgage insurance, housing 
        counseling, and affordable housing grant fund

    Authorizes appropriations, in the amount equal to the net 
increase in negative credit subsidy created by the bill's 
provisions, for use as an affordable housing fund, for grants 
to provide affordable rental housing and homeownership 
opportunities for low income families--after first deducting 
all of the following: (1) the amount, if any, needed to avoid a 
credit subsidy appropriation for the FHA 203(b) single family 
loan program in that year, (2) the amount needed to increase 
nationwide funding for housing counseling grants from the 
current level of $42 million to $100 million a year for each of 
the next five years, and (3) $25 million each of the next five 
years to increase funding for improving FHA technology, 
procedures, processes, and program performance, and salaries. 
No funds may be expended under this section in any year unless 
HUD, by rule, makes a determination that FHA premiums being 
charged that year are sufficient to comply with the Section 
205(f) MMIF capital ratio requirement and are also sufficient 
to ensure the safety and soundness of the other FHA mortgage 
insurance funds. No negative credit subsidies from the Section 
203(b) single family loan program may be used to fund 
expenditures under this section. HUD shall conduct a study on 
how best to update and upgrade FHA procedures, processes, and 
technologies.

Section 30. Limitation on mortgage insurance premium increases

    Prohibits HUD from increasing any FHA premiums above the 
level in effect at the beginning of FY 2007 unless the HUD 
Secretary determines that, absent such increase, a program 
would require a credit subsidy appropriation.

Section 31. Savings provision

    Provides that any mortgage insured before the bill's date 
of enactment shall continue to be governed by laws, 
regulations, orders, and terms and conditions that existed 
prior to the bill's enactment.

Section 32. Implementation

    Requires HUD to establish by notice any additional 
requirements necessary to carry out the provisions of this 
bill, which notice shall take immediate effect.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

NATIONAL HOUSING ACT

           *       *       *       *       *       *       *



TITLE I--HOUSING RENOVATION AND MODERNIZATION

           *       *       *       *       *       *       *



                         insurance of mortgages

    Sec. 8. (a) * * *
    (b) To be eligible for insurance under this section, a 
mortgage shall--
          (1) have been made to[, and be held by,] a mortgagee 
        approved by the Secretary [as responsible and able to 
        service the mortgage properly];

           *       *       *       *       *       *       *


                      TITLE II--MORTGAGE INSURANCE


                              definitions

    Sec. 201. [As used in section 203 of this title--] As used 
in this title and for purposes of participation in insurance 
programs under this title, except as specifically provided 
otherwise, the following definitions shall apply:
          [(a)] (1) The term ``mortgage'' means (A) a first 
        mortgage on real estate, in fee simple, [or on a 
        leasehold (1)] (B) a first mortgage on a leasehold on 
        real estate (i) under a lease for not less than ninety-
        nine years which is renewable [or (2)], or (ii) under a 
        lease having a period of not less than ten years to run 
        beyond the maturity date of the mortgage, or (C) a 
        first mortgage given to secure the unpaid purchase 
        price of a fee interest in, or long-term leasehold 
        interest in, real estate consisting of a one-family 
        unit in a multifamily project, including a project in 
        which the dwelling units are attached, or are 
        manufactured housing units, semi-detached, or detached, 
        and an undivided interest in the common areas and 
        facilities which serve the project; and the term 
        ``first mortgage'' means such classes of first liens as 
        are commonly 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.
      [(b) The term ``mortgagee'' includes the original lender 
under a mortgage, and his successors and assigns approved by 
the Secretary; and the term ``mortgagor'' includes the original 
borrower under a mortgage and his successors and assigns.]
          (2) The term ``mortgagee'' means any of the following 
        entities, and its successors and assigns, to the extent 
        such entity is approved by the Secretary:
                  (A) Qualification by audit and net worth.--A 
                lender, or mortgage broker, or correspondent 
                lender, who--
                          (i) makes, underwrites, and services 
                        mortgages;
                          (ii) submits to the Secretary such 
                        financial audits performed in 
                        accordance with the standards for 
                        financial audits of the Government 
                        Auditing Standards issued by the 
                        Comptroller General of the United 
                        States;
                          (iii) meet the minimum net worth 
                        requirement that the Secretary shall 
                        establish; and
                          (iv) complies with such other 
                        requirements as the Secretary may 
                        establish.
                  (B) Qualification of correspondent lenders by 
                surety bond.--Except as provided in 
                subparagraph (D), a correspondent lender who--
                          (i) closes a mortgage in its name but 
                        does not underwrite or service the 
                        mortgage;
                          (ii) posts a surety bond, in lieu of 
                        any requirement to provide audited 
                        financial statements or meet a minimum 
                        net worth requirement, in--
                                  (I) a form satisfactory to 
                                the Secretary; and
                                  (II) an amount of $75,000, as 
                                such amount is adjusted 
                                annually by the Secretary (as 
                                determined under regulations of 
                                the Secretary) by the change 
                                for such year in the Consumer 
                                Price Index for All Urban 
                                Consumers published monthly by 
                                the Bureau of Labor Statistics 
                                of the Department of Labor; and
                          (iii) complies with such other 
                        requirements as the Secretary may 
                        establish.
                  (C) Qualification of brokers by surety 
                bond.--Except as provided in subparagraph (D), 
                a mortgage broker who--
                          (i) closes the mortgage in the name 
                        of the lender and does not make, 
                        underwrite, or service the mortgage;
                          (ii) is licensed, under the laws of 
                        the State in which the property that is 
                        subject to the mortgage is located, to 
                        act as a mortgage broker in such State;
                          (iii) posts a surety bond in 
                        accordance with the requirements of 
                        subparagraph (B)(ii); and
                          (iv) complies with such other 
                        requirements as the Secretary may 
                        establish.
                  (D) Conditions for continued applicability.--
                (i) Subparagraphs (B) and (C) shall continue to 
                apply after the expiration of the 5-year period 
                beginning on the date of the enactment of the 
                Expanding American Homeownership Act of 2007 
                only if, after the expiration of the 4-year 
                period beginning upon such date of enactment 
                and taking into consideration the report 
                submitted in accordance with section 19(b) of 
                such Act, the Secretary--
                          (I) makes a determination that such 
                        subparagraphs provide protection to 
                        mortgage insurance funds for mortgages 
                        insured under this title that are 
                        comparable to the protection provided 
                        by the requirements for mortgagees 
                        under this title as in effect 
                        immediately before the enactment of 
                        such Act; and
                          (II) publishes in the Federal 
                        Register a notice of suchdetermination 
                        and an order extending the 
                        applicability of such subparagraphs.
                  (ii) If, taking into consideration such 
                report, the Secretary makes a determination 
                after the expiration of such 4-year period that 
                subparagraphs (B) and (C) do not provide 
                protection as referred to in clause (i) of this 
                subparagraph, the Secretary may, by order 
                published in the Federal Register, provide for 
                the participation, after the expiration of the 
                5-year period referred to in clause (i), of 
                correspondent lenders and mortgage brokers as 
                mortgagees in the insurance programs under this 
                title in accordance with subparagraphs (B) and 
                (C) as modified by the Secretary as the 
                Secretary considers appropriate to provide such 
                protection.
                  (E) Additional mortgage broker 
                requirements.--
                          (i) In addition to the requirements 
                        under subparagraphs (A) and (C) and to 
                        duties imposed under other statutes or 
                        common law, to be eligible as a 
                        mortgagee under this section, a broker 
                        shall--
                                  (I) safeguard and account for 
                                any money handled for the 
                                borrower;
                                  (II) follow reasonable and 
                                lawful instructions from the 
                                borrower; and
                                  (III) act with reasonable 
                                skill, care, and diligence.
                          (ii) For purposes of this 
                        subparagraph, a loan correspondent 
                        shall be considered to be a mortgage 
                        broker.
                          (iii) The duties and standards of 
                        care created in this subparagraph shall 
                        not be waived or modified.
                          (iv) Any broker found by the 
                        Secretary to have violated the 
                        requirements of this subparagraph may 
                        not originate mortgage loans insured 
                        under this title.
          (3) The term ``mortgagor'' includes the original 
        borrower under a mortgage and the successors and 
        assigns of the original borrower.
          [(c)] (4) The term ``maturity date'' means the date 
        on which the mortgage indebtedness would be 
        extinguished if paid in accordance with periodic 
        payments provided for in the mortgage.
          [(d)] (5) The term ``State'' includes the several 
        States and Puerto Rico, the District of Columbia, Guam, 
        [the Trust Territory of the Pacific Islands] the 
        Commonwealth of the Northern Mariana Islands, American 
        Samoa, and the Virgin Islands.
          [(e)] (6) The term ``family member'' means, with 
        respect to a mortgagor under such section, a child, 
        parent, or grandparent of the mortgagor (or the 
        mortgagor's spouse). In determining whether any of the 
        relationships referred to in the preceding sentence 
        exist, a legally adopted son or daughter of an 
        individual (and a child who is a member of an 
        individual's household, if placed with such individual 
        by an authorized placement agency for legal adoption by 
        such individual), and a foster child of an individual, 
        shall be treated as a child of such individual by 
        blood.
          [(f)] (7) The term ``child'' means, with respect to a 
        mortgagor under such section, a son, stepson, daughter, 
        or stepdaughter of such mortgagor.
          (8) The term ``child care facility'' means a facility 
        that--
                  (A) has as its purpose the care of children 
                who are less than 12 years of age; and
                  (B) is licensed or regulated by the State in 
                which it is located (or, if there is no State 
                law providing for such licensing and regulation 
                by the State, by the municipality or other 
                political subdivision in which the facility is 
                located).
        Such term does not include facilities for school-age 
        children primarily for use during normal school hours.
          (9) The term ``real estate'' means land and all 
        natural resources and structures permanently affixed to 
        the land, including residential buildings and 
        stationary manufactured housing. The Secretary may not 
        require, for treatment of any land or other property as 
        real estate for purposes of this title, that such land 
        or property be treated as real estate for purposes of 
        State taxation.

               FEDERAL HOUSING ADMINISTRATION OPERATIONS

      Sec. 202. [(a) Mutual Mortgage Insurance Fund.--There is 
hereby created a Mutual Mortgage Insurance Fund (hereinafter 
referred to as the ``Fund''), which shall be used by the 
Secretary as a revolving fund for carrying out the provisions 
of this title with respect to mortgages insured under section 
203 as hereinafter provided, and there shall be allocated 
immediately to such Fund the sum of $10,000,000 out of funds 
made available to the Secretary for the purposes of this 
title.]
  (a) Mutual Mortgage Insurance Fund.--
          (1) Establishment.--Subject to the provisions of the 
        Federal Credit Reform Act of 1990, there is hereby 
        created a Mutual Mortgage Insurance Fund (in this title 
        referred to as the ``Fund''), which shall be used by 
        the Secretary to carry out the provisions of this title 
        with respect to mortgages insured under section 203. 
        The Secretary may enter into commitments to guarantee, 
        and may guarantee, such insured mortgages.
          (2) Limit on loan guarantees.--The authority of the 
        Secretary to enter into commitments to guarantee such 
        insured mortgages shall be effective for any fiscal 
        year only to the extent that the aggregate original 
        principal loan amount under such mortgages, any part of 
        which is guaranteed, does not exceed the amount 
        specified in appropriations Acts for such fiscal year.
          (3) Fiduciary responsibility.--The Secretary has a 
        responsibility to ensure that the Mutual Mortgage 
        Insurance Fund remains financially sound.
          (4) Annual independent actuarial study.--The 
        Secretary shall provide for an independent actuarial 
        study of the Fund to be conducted annually, which shall 
        analyze the financial position of the Fund. The 
        Secretary shall submit a report annually to the 
        Congress describing the results of such study and 
        assessing the financial status of the Fund. The report 
        shall recommend adjustments to underwriting standards, 
        program participation, or premiums, if necessary, to 
        ensure that the Fund remains financially sound.
          (5) Quarterly reports.--During each fiscal year, the 
        Secretary shall submit a report to the Congress for 
        each quarter, which shall specify for mortgages that 
        are obligations of the Fund--
                  (A) the cumulative volume of loan guarantee 
                commitments that have been made during such 
                fiscal year through the end of the quarter for 
                which the report is submitted;
                  (B) the types of loans insured, categorized 
                by risk;
                  (C) any significant changes between actual 
                and projected claim and prepayment activity;
                  (D) projected versus actual loss rates; and
                  (E) updated projections of the annual subsidy 
                rates to ensure that increases in risk to the 
                Fund are identified and mitigated by 
                adjustments to underwriting standards, program 
                participation, or premiums, and the financial 
                soundness of the Fund is maintained.
        The first quarterly report under this paragraph shall 
        be submitted on the last day of the first quarter of 
        fiscal year 2008, or upon the expiration of the 90-day 
        period beginning on the date of the enactment of the 
        Expanding American Homeownership Act of 2007, whichever 
        is later.
          (6) Adjustment of premiums.--If, pursuant to the 
        independent actuarial study of the Fund required under 
        paragraph (5), the Secretary determines that the Fund 
        is not meeting the operational goals established under 
        paragraph (8) or there is a substantial probability 
        that the Fund will not maintain its established target 
        subsidy rate, the Secretary may either make 
        programmatic adjustments under section 203 as necessary 
        to reduce the risk to the Fund, or make appropriate 
        premium adjustments.
          (7) Operational goals.--The operational goals for the 
        Fund are--
                  (A) to charge borrowers under loans that are 
                obligations of the Fund an appropriate premium 
                for the risk that such loans pose to the Fund;
                  (B) to minimize the default risk to the Fund 
                and to homeowners;
                  (C) to curtail the impact of adverse 
                selection on the Fund; and
                  (D) to meet the housing needs of the 
                borrowers that the single family mortgage 
                insurance program under this title is designed 
                to serve.

           *       *       *       *       *       *       *

      (c) Mortgagee Review Board.--
          (1) * * *

           *       *       *       *       *       *       *

          (7) Definition of ``mortgagee''.--For purposes of 
        this subsection, the term ``mortgagee'' means--
                  (A) a mortgagee, as defined in section 201, 
                approved under this Act;
                  [(B) a lender or a loan correspondent 
                approved under title I of this Act;]
                  [(C)] (B) a branch office or subsidiary of 
                the mortgagee, lender, or loan correspondent; 
                or
                  [(D)] (C) a director, officer, employee, 
                agent, or other person participating in the 
                conduct of the affairs of the mortgagee, 
                lender, or loan correspondent.

           *       *       *       *       *       *       *

      [(s)] (e) Whenever the Secretary has taken any 
discretionary action to suspend or revoke the approval of any 
mortgagee to participate in any mortgage insurance program 
under this title, the Secretary shall provide prompt notice of 
the action and a statement of the reasons for the action to--
          (1) * * *

           *       *       *       *       *       *       *

          [(4) the Administrator of the Farmers Home 
        Administration;]
          (4) the Secretary of Agriculture;

           *       *       *       *       *       *       *

      [(e)] (f) Appraisal Standards.--(1) * * *

           *       *       *       *       *       *       *

      (3) Direct Endorsement Program.--
          (A) * * *
          (B) Any appraisal conducted pursuant to subparagraph 
        (A) shall be conducted by an individual who complies 
        with the qualifications or standards for appraisers 
        established by the Secretary pursuant to [section 
        202(e) of the National Housing Act] this subsection.

           *       *       *       *       *       *       *


                         insurance of mortgages

      Sec. 203. (a) * * *
      (b) To be eligible for insurance under this section a 
mortgage shall comply with the following:
          (1) Have been made to[, and be held by,] a mortgagee 
        approved by the Secretary [as responsible and able to 
        service the mortgage properly].
          (2) Involve a principal obligation (including such 
        initial service charges, appraisal, inspection, and 
        other fees as the Secretary shall approve) in an 
        amount--
          [(A) not to exceed the lesser of--
                          [(i) in the case of a 1-family 
                        residence, 95 percent of the median 1-
                        family house price in the area, as 
                        determined by the Secretary; in the 
                        case of a 2-family residence, 107 
                        percent of such median price; in the 
                        case of a 3-family residence, 130 
                        percent of such median price; or in the 
                        case of a 4-family residence, 150 
                        percent of such median price; or
                          [(ii) 87 percent of the dollar amount 
                        limitation determined under section 
                        305(a)(2) of the Federal Home Loan 
                        Mortgage Corporation Act for a 
                        residence of the applicable size; 
                        except that the dollar amount 
                        limitation in effect for any area under 
                        this subparagraph may not be less than 
                        the greater of the dollar amount 
                        limitation in effect under this section 
                        for the area on the date of the 
                        enactment of the Departments of 
                        Veterans Affairs and Housing and Urban 
                        Development, and Independent Agencies 
                        Appropriations Act for Fiscal Year 1999 
                        or 48 percent of the dollar limitation 
                        determined under section 305(a)(2) of 
                        the Federal Home Loan Mortgage 
                        Corporation Act for a residence of the 
                        applicable size; and
                  [(B) not to exceed an amount equal to the sum 
                of--
                          [(i) the amount of the mortgage 
                        insurance premium paid at the time the 
                        mortgage is insured; and
                          [(ii) in the case of--
                                  [(I) a mortgage for a 
                                property with an appraised 
                                value equal to or less than 
                                $50,000, 98.75 percent of the 
                                appraised value of the 
                                property;
                                  [(II) a mortgage for a 
                                property with an appraised 
                                value in excess of $50,000 but 
                                not in excess of $125,000, 
                                97.65 percent of the appraised 
                                value of the property;
                                  [(III) a mortgage for a 
                                property with an appraised 
                                value in excess of $125,000, 
                                97.15 percent of the appraised 
                                value of the property; or
                                  [(IV) notwithstanding 
                                subclauses (II) and (III), a 
                                mortgage for a property with an 
                                appraised value in excess of 
                                $50,000 that is located in an 
                                area of the State for which the 
                                average closing cost exceeds 
                                2.10 percent of the average, 
                                for the State, of the sale 
                                price of properties located in 
                                the State for which mortgages 
                                have been executed, 97.75 
                                percent of the appraised value 
                                of the property.]
                  (A) not to exceed the lesser of--
                          (i) in the case of a 1-family 
                        residence, the median 1-family house 
                        price in the area, as determined by the 
                        Secretary; and in the case of a 2-, 3-, 
                        or 4-family residence, the percentage 
                        of such median price that bears the 
                        same ratio to such median price as the 
                        dollar amount limitation in effect 
                        under section 305(a)(2) of the Federal 
                        Home Loan Mortgage Corporation Act (12 
                        U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-
                        family residence, respectively, bears 
                        to the dollar amount limitation in 
                        effect under such section for a 1-
                        family residence; or
                          (ii) the dollar amount limitation 
                        determined under such section 305(a)(2) 
                        for a residence of the applicable size;
                except that the dollar amount limitation in 
                effect for any area under this subparagraph may 
                not be less than the greater of (I) the dollar 
                amount limitation in effect under this section 
                for the area on October 21, 1998, or (II) 65 
                percent of the dollar limitation determined 
                under such section 305(a)(2) for a residence of 
                the applicable size; and
                  (B) not to exceed an amount equal to the sum 
                of--
                          (i) the amount of the mortgage 
                        premium paid at the time the mortgage 
                        is insured; and
                          (ii)(I) except as provided in 
                        subclause (II), 97.75 percent of the 
                        appraised value of the property; or
                          (II) in the case only of a mortgage 
                        described in subsection (c)(3), 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.
        For purposes of the preceding sentence, the term 
        ``area'' means a metropolitan statistical area as 
        established by the Office of Management and Budget; and 
        the median 1-family house price for an area shall be 
        equal to the median 1-family house price of the county 
        within the area that has the highest such median price. 
        [For purposes of this paragraph, the term ``average 
        closing cost'' means, with respect to a State, the 
        average, for mortgages executed for properties that are 
        located within the State, of the total amounts (as 
        determined by the Secretary) of initial service 
        charges, appraisal, inspection, and other fees (as the 
        Secretary shall approve) that are paid in connection 
        with such mortgages. Notwithstanding any other 
        provision of this section, in any case where the 
        dwelling is not approved for mortgage insurance prior 
        to the beginning of construction, such mortgage shall 
        not exceed 90 per centum of the entire appraised value 
        of the property as of the date the mortgage is accepted 
        for insurance, unless (i) the dwelling was completed 
        more than one year prior to the application for 
        mortgage insurance, or (ii) the dwelling was approved 
        for guaranty, insurance, or a direct loan under chapter 
        37 of title 38, United States Code, prior to the 
        beginning of construction, or (iii) the dwelling is 
        covered by a consumer protection or warranty plan 
        acceptable to the Secretary and satisfies all 
        requirements which would have been applicable if such 
        dwelling had been approved for mortgage insurance prior 
        to the beginning of construction. As used herein, the 
        term ``veteran'' means any person who served on active 
        duty in the armed forces of the United States for a 
        period of not less than 90 days (or as certified by the 
        Secretary of Defense as having performed extra-
        hazardous service), and who was discharged or released 
        therefrom under conditions other than dishonorable, 
        except that persons enlisting in the armed forces after 
        September 7, 1980, or entering active duty after 
        October 16, 1981, shall have their eligibility 
        determined in accordance with section 3103A(d) of title 
        38, United States Code.]

           *       *       *       *       *       *       *

          [Notwithstanding any other provision of this 
        paragraph, the Secretary may not insure, or enter into 
        a commitment to insure, a mortgage under this section 
        that is executed by a first-time homebuyer and that 
        involves a principal obligation (including such initial 
        service charges, appraisal, inspection, and other fees 
        as the Secretary shall approve) in excess of 97 percent 
        of the appraised value of the property unless the 
        mortgagor has completed a program of counseling with 
        respect to the responsibilities and financial 
        management involved in homeownership that is approved 
        by the Secretary; except that the Secretary may, in the 
        discretion of the Secretary, waive the applicability of 
        this requirement.]
          Notwithstanding any other provision of this 
        paragraph, the amount that may be insured under this 
        section may be increased by up to 25 percent if such 
        increase is necessary to account for the increased cost 
        of the residence due to an increased need of space in 
        the residence for locating and operating a child care 
        facility (as such term is defined in section 201) 
        within the residence, but only if a valid license or 
        certificate of compliance with regulations described in 
        section 201(g)(2) has been issued for such facility as 
        of the date of the execution of the mortgage, and only 
        if such increase in the amount insured is proportional 
        to the amount of space of such residence that will be 
        used for such facility.
          (3) Have a maturity satisfactory to the Secretary, 
        but not to exceed, in any event, [thirty-five years (or 
        thirty years if such mortgage is not approved for 
        insurance prior to construction)] forty years from the 
        date of the beginning of amortization of the mortgage.

           *       *       *       *       *       *       *

          [(9) Be executed by a mortgagor who shall have paid 
        on account of the property (except with respect to a 
        mortgage executed by a mortgagor who is a veteran) at 
        least 3 per centum, or such larger amount as the 
        Secretary may determine, of the Secretary's estimate of 
        the cost of acquisition (excluding the mortgage 
        insurance premium paid at the time the mortgage is 
        insured) in cash or its equivalent: Provided, That with 
        respect to a mortgage executed by a mortgagor who is 
        sixty years of age or older as of the date the mortgage 
        is endorsed for insurance or with respect to a mortgage 
        meeting the requirements of subsection (i) of this 
        section, or with respect to a mortgage covering a 
        single-family home being purchased under the low-income 
        housing demonstration project assisted pursuant to 
        section 207 of the Housing Act of 1961, or with respect 
        to a mortgage covering a housing unit in connection 
        with a homeownership program under the Homeownership 
        and Opportunity Through HOPE Act, the mortgagor's 
        payment required by this subsection may be paid by a 
        corporation or person other than the mortgagor under 
        such terms and conditions as the Secretary may 
        prescribe: Provided further, That for]
          (9) Except in the case of a mortgage described in 
        subsection (c)(3), be executed by a mortgagor who shall 
        have paid on account of the property, in cash or its 
        equivalent, at least 3 percent of the Secretary's 
        estimate of the cost of acquisition (excluding the 
        mortgage insurance premium paid at the time the 
        mortgage is insured). For purposes of this paragraph, 
        the Secretary shall consider as cash or its equivalent 
        any amounts borrowed from a family member (as such term 
        is defined in section 201), subject only to the 
        requirements that, in any case in which the repayment 
        of such borrowed amounts is secured by a lien against 
        the property, such lien shall be subordinate to the 
        mortgage and the sum of the principal obligation of the 
        mortgage and the obligation secured by such lien may 
        not exceed 100 percent of the appraised value of the 
        property plus any initial service charges, appraisal, 
        inspection, and other fees in connection with the 
        mortgage.
          (10) Borrower protections for certain mortgages.--
        Except as otherwise specifically provided in this 
        paragraph, in the case of any mortgage referred to in 
        paragraph (2)(C) or (3) of subsection (c), the 
        following requirements shall apply:
                  (A) Disclosures.--
                          (i) Required disclosures.--In 
                        addition to any disclosures that are 
                        otherwise required by law or by the 
                        Secretary for single family mortgages, 
                        the mortgagee shall disclose to the 
                        mortgagor the following information:
                                  (I) At application.--At the 
                                time of application for the 
                                loan involved in the mortgage--
                                          (aa) a list of 
                                        counseling agencies 
                                        approved by the 
                                        Secretary in the area 
                                        of the applicant; and
                                          (bb) if the mortgagor 
                                        is not provided 
                                        counseling in 
                                        accordance with 
                                        subparagraph (B), the 
                                        information required 
                                        under subclauses (I), 
                                        (II), and (III) of 
                                        subparagraph (B)(iii) 
                                        to be provided to the 
                                        mortgagor.
                                  (II) At execution.--At the 
                                time of entering into the 
                                mortgage--
                                          (aa) the terms of the 
                                        mandatory 5-year 
                                        payment incentive 
                                        required under 
                                        subsection 
                                        (c)(7)(A)(ii); and
                                          (bb) a statement that 
                                        the mortgagor has a 
                                        right under contract to 
                                        loss mitigation.
                                  (III) Other information.--Any 
                                other additional information 
                                that the Secretary determines 
                                is appropriate to ensure that 
                                the mortgagor has received 
                                timely and accurate information 
                                about the program under 
                                paragraph (2)(C) or (3) of 
                                subsection (c), as applicable.
                          (ii) Penalties for failure to provide 
                        required disclosures.--The Secretary 
                        may establish and impose appropriate 
                        penalties for failure of a mortgagee to 
                        provide any disclosure required under 
                        clause (i).
                          (iii) No private right of action.--
                        This subparagraph shall not create any 
                        private right of action on behalf of 
                        the mortgagor.
                  (B) Counseling.--
                          (i) Allowable requirement.--The 
                        Secretary may, in the discretion of the 
                        Secretary, require that the mortgagor 
                        shall have received counseling that 
                        complies with the requirements of this 
                        subparagraph.
                          (ii) Terms of counseling.--Counseling 
                        under this subparagraph shall be 
                        provided--
                                  (I) prior to application for 
                                the loan involved in the 
                                mortgage;
                                  (II) 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;
                                  (III) on an individual basis 
                                to the mortgagor by a 
                                representative of the approved 
                                third-party counseling entity; 
                                and
                                  (IV) in person, to the 
                                maximum extent possible.
                          (iii) Topics.--In the case only of a 
                        mortgage referred to in subsection 
                        (c)(3), counseling under this 
                        subparagraph shall include providing 
                        to, and discussing with, the 
                        mortgagor--
                                  (I) information regarding 
                                homeownership options other 
                                than a mortgage that is subject 
                                to this paragraph, 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 subject 
                                to this paragraph), and any 
                                other information that the 
                                Secretary may require;
                                  (II) a written disclosure 
                                that sets forth the amount and 
                                the percentage by which a 
                                property with a mortgage that 
                                is subject to this paragraph 
                                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; and
                                  (III) 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 
                                that is referred to in 
                                subsection (c)(3) exceeds the 
                                maximum amount that could be 
                                borrowed under a mortgage 
                                insured under this subsection 
                                that is not a mortgage referred 
                                to in such subsection, 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; the disclosure 
                                required under this subclause 
                                may be provided in conjunction 
                                with the notice required under 
                                subsection (f).
                          (iv) 2- and 3-family residences.--In 
                        the case of a mortgage involving a 2- 
                        or 3-family residence, counseling under 
                        this subparagraph shall include (in 
                        addition to the information required 
                        under clause (iii)) information 
                        regarding real estate property 
                        management.
                  (C) Notice of foreclosure prevention 
                counseling availability.--
                          (i) Written agreement.--To be 
                        eligible for insurance under this 
                        subsection, the mortgagee shall provide 
                        the mortgagor, at the time of the 
                        execution of the mortgage, a written 
                        agreement which shall be signed by the 
                        mortgagor and under which the mortgagee 
                        shall provide notice described in 
                        clause (ii) to a housing counseling 
                        entity that has agreed to provide the 
                        notice and counseling required under 
                        clause (iii) and is approved by the 
                        Secretary.
                          (ii) Notice to counseling agency.--
                        The notice described in this clause, 
                        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.
                          (iii) 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.
                          (iv) Ability to cure.--Failure to 
                        provide the written agreement required 
                        under clause (i) 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 clause.
                          (v) Penalties for failure to provide 
                        agreement.--The Secretary may establish 
                        and impose appropriate penalties for 
                        failure of a mortgagee to provide the 
                        written agreement required under clause 
                        (i).
                          (vi) 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 clause (iii).
                          (vii) No private right of action.--
                        This subparagraph shall not create any 
                        private right of action on behalf of 
                        the mortgagor.
                          (viii) Delinquency period.--For 
                        purposes of this subparagraph, 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.
      (c)(1) * * *
      [(2) Notwithstanding any other provision of this section, 
each mortgage secured by a 1- to 4-family dwelling that is an 
obligation of the Mutual Mortgage Insurance Fund or of the 
General Insurance Fund pursuant to subsection (v) and each 
mortgage that is insured under subsection (k) or section 
234(c),, shall be subject to the following requirements:]
  (2) Standard-Risk Mortgages.--In the case of any mortgage 
that is secured by a 1- to 4-family dwelling, is an obligation 
of the Mutual Mortgage Insurance Fund or of the General 
Insurance Fund pursuant to subsection (v) of this section or is 
insured under subsection (k) of this section or section 234(c), 
for which the mortgagor has paid on account of the property, in 
cash or its equivalent, at least 3 percent of the Secretary's 
estimate of the cost of acquisition (excluding the mortgage 
insurance premium paid at the time the mortgage is insured), 
and that involves a principal obligation that complies with 
subclause (I) of subsection (b)(2)(B)(ii), the following 
requirements shall apply:
          (A) * * *

           *       *       *       *       *       *       *

          (C) Higher-risk borrowers.--The Secretary shall 
        establish underwriting standards that provide for 
        insurance under this section of mortgages described in 
        the matter in this paragraph preceding subparagraph (A) 
        for which the mortgagor has a credit score equivalent 
        to a FICO score of less than 560, and may insure, and 
        make commitments to insure, such mortgages. Such 
        underwriting standards shall include establishing and 
        collecting premium payments that comply with the 
        requirements of this paragraph, except that 
        notwithstanding subparagraph (A), the single premium 
        payment collected at the time of insurance may be 
        established in an amount that does not exceed 3.0 
        percent of the amount of the original insured principal 
        obligation of the mortgage.
  (3) Zero- and Lower-Downpayment Borrowers.--
          (A) Applicability.--This paragraph shall apply to any 
        mortgage that--
                  (i) is secured by a 1- to 4-family dwelling;
                  (ii)(I) is an obligation of the Mutual 
                Mortgage Insurance Fund or of the General 
                Insurance Fund pursuant to subsection (v) of 
                this section; or
                  (II) is insured under subsection (k) of this 
                section or section 234(c);
                  (iii) is executed by a mortgagor who is a 
                first-time homebuyer; and
                  (iv)(I) involves a principal obligation that 
                does not comply with subclause (I) of 
                subsection (b)(2)(B)(ii) (relating to loan-to-
                value ratio); or
                  (II) is executed by a mortgagor who has not 
                paid on account of the property, in cash or its 
                equivalent, at least 3 percent of the 
                Secretary's estimate of the cost of acquisition 
                (excluding the mortgage insurance premium paid 
                at the time the mortgage is insured).
          (B) Up-front premiums.--The amount of any single 
        premium payment collected at the time of insurance may 
        not exceed 3.0 percent of the amount of the original 
        insured principal obligation of the mortgage.
          (C) Annual premiums.--Except as provided in 
        subparagraph (D), the amount of any annual premium 
        payment collected may not exceed 0.75 percent of the 
        remaining insured principal obligation of the mortgage.
          (D) Annual redetermination of premium rate.--The 
        Secretary shall redetermine the rates of premiums not 
        less than once every 12 months.
  (4) Flexible Risk-Based Premiums.--In the case of a mortgage 
referred to in paragraph (2)(C) or (3)(A) for which the loan 
application is received by the mortgagee on or after October 1, 
2007:
          (A) In general.--The Secretary may establish a 
        mortgage insurance premium structure involving a single 
        premium payment collected prior to the insurance of the 
        mortgage or annual payments (which may be collected on 
        a periodic basis), or both, subject to the requirements 
        of subparagraph (B) and paragraph (5). Under such 
        structure, the rate of premiums for such a mortgage may 
        vary according to the credit risk associated with the 
        mortgage and the rate of any annual premium for such a 
        mortgage may vary during the mortgage term as long as 
        the basis for determining the variable rate is 
        established before the execution of the mortgage. The 
        Secretary may change a premium structure established 
        under this subclause but only to the extent that such 
        change is not applied to any mortgage already executed.
          (B) Establishment and alteration of premium 
        structure.--A premium structure shall be established or 
        changed under subparagraph (A) only by providing notice 
        to mortgagees and to the Congress, at least 30 days 
        before the premium structure is established or changed.
          (C) Annual report regarding premiums.--The Secretary 
        shall submit a report to the Congress annually setting 
        forth the rate structures and rates established and 
        altered pursuant to this paragraph during the preceding 
        12-month period and describing how such rates were 
        determined.
  (5) Considerations for Premium Structure.--When establishing 
premiums for mortgages referred to in paragraph (2)(C), 
establishing premiums pursuant to paragraph (3), establishing a 
premium structure under paragraph (4), and when changing such a 
premium structure, the Secretary shall consider the following:
          (A) The effect of the proposed premiums or structure 
        on the Secretary's ability to meet the operational 
        goals of the Mutual Mortgage Insurance Fund as provided 
        in section 202(a).
          (B) Underwriting variables.
          (C) The extent to which new pricing under the 
        proposed premiums or structure has potential for 
        acceptance in the private market.
          (D) The administrative capability of the Secretary to 
        administer the proposed premiums or structure.
          (E) The effect of the proposed premiums or structure 
        on the Secretary's ability to maintain the availability 
        of mortgage credit and provide stability to mortgage 
        markets.
  (6) Authority to Base Premium Prices on Product Risk.--
          (A) Authority.--In establishing premium rates under 
        paragraphs (2), (3), and (4), the Secretary may provide 
        for variations in such rates according to the credit 
        risk associated with the type of mortgage product that 
        is being insured under this title, which may include 
        providing that premium rates differ between fixed-rate 
        mortgages and adjustable-rate mortgages insured 
        pursuant to section 251, between mortgages insured 
        pursuant to section 203(b) and mortgages for 
        condominiums insured pursuant to section 234, and 
        between such other products as the Secretary considers 
        appropriate.
          (B) Limitation.--Subparagraph (A) may not be 
        construed to authorize the Secretary to establish, for 
        any mortgage product, any mortgage insurance premium 
        rate that does not comply with the requirements and 
        limitations under paragraphs (2) through (5).
  (7) Payment Incentives.--
          (A) Authority.--With respect to mortgages referred to 
        in paragraph (2)(C) or (3):
                  (i) Discretionary 3-year payment incentive.--
                The Secretary may provide, in the discretion of 
                the Secretary, that the payment incentive under 
                subparagraph (B) shall apply upon the 
                expiration of the 3-year period beginning upon 
                the time of insurance of such a mortgage.
                  (ii) Mandatory 5-year payment incentive.--The 
                Secretary shall provide that the payment 
                incentive under subparagraph (B) applies upon 
                the expiration of the 5-year period beginning 
                upon the time of insurance of such a mortgage.
          (B) Payment incentive.--In the case of any mortgage 
        to which the payment incentive under this subparagraph 
        applies, if, during the period referred to in clause 
        (i) or (ii) of subparagraph (A), as applicable, all 
        mortgage insurance premiums for such mortgage have been 
        paid on a timely basis, upon the expiration of such 
        period the Secretary shall--
                  (i) reduce the amount of the annual premium 
                payments otherwise due thereafter under such 
                mortgage--
                          (I) in the case of a mortgage 
                        referred to in paragraph (3), to an 
                        amount that does not exceed the amount 
                        of the maximum annual premium allowable 
                        under paragraph (2)(B); and
                          (II) in the case of a mortgage 
                        referred to in paragraph (2)(C), to an 
                        amount that does not exceed the amount 
                        of the annual premium payable at the 
                        time of insurance of the mortgage on a 
                        mortgage of the same product type 
                        having the same terms, but for which 
                        the mortgagor has a credit score 
                        equivalent to a FICO score of 560 or 
                        more; and
                  (ii) in the case only of a mortgage referred 
                to in paragraph (2)(C), refund to the 
                mortgagor, upon payment in full of the 
                obligation of the mortgage, any amount by which 
                the single premium payment for such mortgage 
                collected at the time of insurance exceeded the 
                amount of the single premium payment chargeable 
                under paragraph (2)(A) at the time of insurance 
                for a mortgage of the same product type having 
                the same terms, but for which the mortgagor has 
                a credit score equivalent to a FICO score of 
                560 or more.

           *       *       *       *       *       *       *

    (h) Notwithstanding any other provision of this section, 
the Secretary is authorized to insure any mortgage which 
involves a principal obligation not in excess of the applicable 
maximum dollar limit under subsection (b) and not in excess of 
100 per centum of the appraised value of a property plus any 
initial service charges, appraisal, inspection and other fees 
in connection with the mortgage as approved by the Secretary, 
upon which there is located a dwelling designed principally for 
a single-family residence, where the mortgagor establishes (to 
the satisfaction of the Secretary) that his home which he 
occupied as an owner or as a tenant was destroyed or damaged to 
such an extent that reconstruction is required as a result of a 
flood, fire, hurricane, earthquake, storm, or other 
catastrophe, which the President, pursuant to Robert T. 
Stafford Disaster Relief and Emergency Assistance Act, has 
determined to be a major disaster. [In any case in which the 
single family residence to be insured under this subsection is 
within a jurisdiction in which the President has declared a 
major disaster to have occurred, the Secretary is authorized, 
for a temporary period not to exceed 18 months from the date of 
such Presidential declaration, to enter into agreements to 
insure a mortgage which involves a principal obligation of up 
to 100 percent of the dollar limitation determined under 
section 305(a)(2) of the Federal Home Loan Mortgage Corporation 
Act for single family residence, and not in excess of 100 
percent of the appraised value.] In any case in which the 
single family residence to be insured under this subsection is 
within a jurisdiction in which the President has declared a 
major disaster to have occurred, the Secretary is authorized, 
for a temporary period not to exceed 36 months from the date of 
such Presidential declaration, to enter into agreements to 
insure a mortgage which involves a principal obligation of up 
to 100 percent of the dollar limitation determined under 
section 305(a)(2) of the Federal Home Loan Mortgage Corporation 
Act for a single family residence, and 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.
    [(i) The Secretary is authorized to insure under this 
section, any mortgage meeting the requirements of subsection 
(b) of this section, except as modified by this subsection, 
which involves a principal obligation not in excess of 75 per 
centum of the limit on the principal obligation applicable to a 
one-family residence under subsection (b) of this section and 
not in excess of 97 per centum (or, in any case where the 
dwelling is not approved for mortgage insurance prior to the 
beginning of construction, unless the construction of the 
dwelling was completed more than one year prior to the 
application for mortgage insurance or the dwelling was approved 
for guaranty, insurance, or direct loan under chapter 37 of 
title 38, United States Code, prior to the beginning of 
construction, 90 per centum) of the appraised value of a 
property located in an area where the Secretary finds it is not 
practicable to obtain conformity with many of the requirements 
essential to the insurance of mortgages on housing in built-up 
urban areas, upon which there is located a dwelling designed 
principally for a single-family residence: Provided, That the 
Secretary finds that the property with respect to which the 
mortgage is executed is an acceptable risk, giving 
consideration to the need for providing adequate housing for 
families of low and moderate income particularly in suburban 
and outlying areas or small communities: Provided further, That 
under the foregoing provisions of this subsection the Secretary 
is authorized to insure any mortgage issued with respect to a 
farm home on a plot of land two and one-half or more acres in 
size adjacent to an all-weather public road.]

           *       *       *       *       *       *       *

    (k)(1) The Secretary may, in order to assist in the 
rehabilitation of one- to four-family structures used primarily 
for residential purposes, insure and make commitments to insure 
rehabilitation loans (including advances made during 
rehabilitation) made by financial institutions [on and after 
180 days following the date of enactment of the Housing and 
Community Development Amendments of 1978]. Such commitments to 
insure and such insurance shall be made upon such terms and 
conditions which the Secretary may prescribe and which are 
consistent with the provisions of subsections (b), (c), (e), 
(i) and (j) of this section, except as modified by the 
provisions of this subsection.

           *       *       *       *       *       *       *

    (5) All funds received and all disbursements made pursuant 
to the authority established by this subsection shall be 
credited or charged as appropriate, to the [General Insurance 
Fund] Mutual Mortgage Insurance Fund, and insurance benefits 
shall be paid in cash out of such Fund or in debentures 
executed in the name of such Fund. Insurance benefits paid with 
respect to loans secured by a first mortgage and insured under 
this subsection shall be paid in accordance with section 204[, 
except that all references in section 204 to the Mutual 
Mortgage Insurance Fund shall be construed as referring to the 
General Insurance Fund]. Insurance benefits paid with respect 
to loans secured by a mortgage other than a first mortgage and 
insured under this subsection shall be paid in accordance with 
paragraphs (6) and (7) of section 220(h), except that reference 
to ``this subsection'' in such paragraphs shall be construed as 
referring to this subsection.

           *       *       *       *       *       *       *

    [(o)(1) Notwithstanding any other provision of this section 
or any other section of this title, the Secretary is authorized 
to insure, and to commit to insure, under subsection (b) of 
this section as modified by this subsection a mortgage which 
meets both the requirements of this subsection and such 
criteria as the Secretary by regulation may prescribe to 
further the purpose of this subsection, in any community where 
the Secretary determines that--
          [(A) temporary adverse economic conditions exist 
        throughout the community as a direct and primary result 
        of outstanding claims to ownership of land in the 
        community by an American Indian tribe, band, or Nation;
          [(B) such ownership claims are reasonably likely to 
        be settled, by court action or otherwise;
          [(C) as a direct result of the community's 
        temporarily impaired economic condition, owner 
        occupants of homes in the community have been 
        involuntarily unemployed or underemployed and have thus 
        incurred substantial reductions in income which 
        significantly impair their ability to continue timely 
        payment of their mortgages;
          [(D) as a result, widespread mortgage foreclosures 
        and distress sales of homes are likely in the 
        community; and
          [(E) fifty or more individual homeowners were joined 
        as parties defendant or were members of a defendant 
        class prior to December 31, 1976, in litigation 
        involving claims to ownership of land in the community 
        by an American Indian tribe, band, or Nation.
    [(2) A mortgage shall be eligible for insurance under 
subsection (b) of this section as modified by this subsection 
without regard to limitations in this title relating to a 
mortgagor's reasonable ability to pay, economic soundness, 
marketability of title, or any other statutory restriction 
which the Secretary determines is contrary to the purpose of 
this subsection, but only if the mortgagor is an owner of a 
home in a community specified in paragraph (1) who, as a direct 
result of the community's temporarily impaired economic 
condition, has been involuntarily unemployed or underemployed 
and has thus incurred a substantial reduction in income which 
significantly impairs the owner's ability to continue timely 
payment of the mortgage. The Secretary is authorized to 
encourage or afford directly to or on behalf of mortgagors 
whose mortgages are insured under subsection (b) as modified by 
this subsection forebearance, assignment of mortgages to the 
Secretary, or such other relief as the Secretary deems 
appropriate and consistent with the purpose of this subsection. 
The Secretary, in connection with any mortgage insured under 
subsection (b) as modified by this subsection, shall have all 
statutory powers, authority, and responsibilities which the 
Secretary has with respect to other mortgages insured under 
subsection (b), except that the Secretary may modify such 
powers, authority, or responsibilities where the Secretary 
deems such action to be necessary because of the special nature 
of the mortgage involved. Notwithstanding section 202 of this 
title, the insurance of a mortgage under subsection (b) of this 
section as modified by this subsection shall be the obligation 
of the Special Risk Insurance Fund created pursuant to section 
238 of this title.
    [(p)(1) Notwithstanding any other provision of this section 
or any other section of this title, the Secretary is authorized 
to insure, and to commit to insure, under subsection (b) of 
this section as modified by this subsection a mortgage which 
meets both the requirements of this subsection and such 
criteria as the Secretary by regulation shall prescribe to 
further the purpose of this subsection, in any community where 
the Secretary determines that--
          [(A) temporary adverse economic conditions exist 
        throughout the community as a direct and primary result 
        of outstanding claims to ownership of land in the 
        community by an American Indian tribe, band, or nation;
          [(B) such ownership claims are reasonably likely to 
        be settled, by court action or otherwise; and
          [(C) fifty or more individual homeowners were joined 
        as parties defendant or were members of a defendant 
        class prior to April 1, 1980, in ligitation involving 
        claims to ownership of land in the community by an 
        American Indian tribe, band, group, or nation pursuant 
        to a dispute involving the Articles of Confederation, 
        Trade and Intercourse Act of 1790, or any similar State 
        or Federal law.
    [(2) A mortgage shall be eligible for insurance under 
subsection (b) of this section as modified by this subsection 
without regard to limitations in this title relating to 
marketability of title, or any other statutory restriction 
which the Secretary determines is contrary to the purpose of 
this subsection, but only if the mortgagor is an owner of a 
home in a community specified in paragraph (1). The Secretary, 
in connection with any mortgage insured under subsection (b) as 
modified by this subsection, shall have all statutory powers, 
authority, and responsibilities which the Secretary has with 
respect to other mortgages insured under subsection (b), except 
that the Secretary may modify such powers, authority, or 
responsibilities where the Secretary deems such action to be 
necessary because of the special nature of the mortgage 
involved. Notwithstanding section 202 of this title, the 
insurance of a mortgage under subsection (b) of this section as 
modified by this subsection shall be the obligation of the 
Special Risk Insurance Fund created pursuant to section 238 of 
this title.
    [(q)(1) Notwithstanding any other provision of this section 
or any other section of this title, the Secretary shall insure 
and commit to insure, under subsection (b) as modified by this 
subsection, any mortgage secured by property located on land 
that--
          [(A) is within the Allegany Reservation of the Seneca 
        Nation of New York Indians; and
          [(B) is subject to a lease entered into for a term of 
        99 years pursuant to the Act of February 19, 1875 
        (Chapter 90; 18 Stat. 330) and the Act of September 30, 
        1890 (Chapter 1132; 26 Stat. 558).
    [(2) A mortgage shall be eligible for insurance under 
subsection (b) as modified by this subsection without regard to 
limitations in this title relating to marketability of title or 
any other statutory restriction that the Secretary determines 
is contrary to the purpose of this subsection.
    [(3) The Secretary, in connection with any mortgage insured 
under subsection (b) as modified by this subsection, shall have 
all statutory powers, authority, and responsibilities that the 
Secretary has with respect to other mortgages insured under 
subsection (b), except that the Secretary may modify such 
powers, authority, or responsibilities if the Secretary 
determines such action to be necessary because of the special 
nature of the mortgage involved.
    [(4) Notwithstanding section 202, the insurance of a 
mortgage under subsection (b) as modified by this subsection 
shall be the obligation of the Special Risk Insurance Fund 
created in section 238.]

           *       *       *       *       *       *       *

      (u)(1) * * *
      (2) For purposes of this subsection--
          (A) the term ``area'' [shall have the meaning given 
        the term under subsection (b)(2);] means a metropolitan 
        statistical area as established by the Office of 
        Management and Budget;

           *       *       *       *       *       *       *

  (v) [Notwithstanding section 202 of this title, the] The 
insurance of a mortgage under this section in connection with 
the assistance provided under section 8(y) of the United States 
Housing Act of 1937 shall be the obligation of the [General 
Insurance Fund created pursuant to section 519 of this title. 
The provisions of subsections (a) through (h), (j), and (k) of 
section 204 shall apply to such mortgages, except that (1) all 
references in section 204 to the Mutual Mortgage Insurance Fund 
or the Fund shall be construed to refer to the General 
Insurance Fund, and (2) any excess amounts described in section 
204(f)(1) shall be retained by the Secretary and credited to 
the General Insurance Fund. The report required under this 
subsection shall include the report required under section 
540(c) and the report required under section 205(g).] Mutual 
Mortgage Insurance Fund

           *       *       *       *       *       *       *


             classification of mortgages and insurance fund

      Sec. 205. (a) * * *

           *       *       *       *       *       *       *

    [(g) The Secretary shall provide for an independent 
actuarial study of the Mutual Mortage Insurance Fund to be 
conducted annually and shall report annually to the Congress 
regarding the financial status of the Fund.
    [(h)(1) If, pursuant to the independent annual actuarial 
study of the Mutual Mortgage Insurance Fund required under 
subsection (g), the Secretary determines that the Mutual 
Mortgage Insurance Fund is not meeting the operational goals 
under paragraph (2), the Secretary may not issue distributions, 
and may, by regulation, propose and implement any adjustments 
to the insurance premiums under section 203(c) or section 
2103(b) of the Omnibus Budget Reconciliation Act of 1990. Upon 
determining that a premium change is appropriate under the 
preceding sentence, the Secretary shall immediately notify 
Congress of the proposed change and the reasons for the change. 
Any such premium change shall not take effect before the 
expiration of the 90-day period beginning upon such 
notification.
    [(2) The operational goals referred to in paragraph (1) 
shall be--
          [(A) maintaining an adequate capital ratio;
          [(B) meeting the needs of homebuyers with low 
        downpayments and first-time homebuyers by providing 
        access to mortgage credit;
          [(C) minimizing the risk to the Fund and to 
        homeowners from homeowner default; and
          [(D) avoiding adverse selection.]

           *       *       *       *       *       *       *


                        rental housing insurance

    Sec. 207. (a) As used in this section--
    (1) * * *
    (2) The term ``mortgagee'' [means the original lender under 
a mortgage, and its successors and assigns, and] has the 
meaning given such term in section 201, except that such term 
also includes 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.

           *       *       *       *       *       *       *

    (c) To be eligible for insurance under this section a 
mortgage on any property or project shall involve a principal 
obligation in an amount--
          (2) * * *
          (3)(A) not to exceed, for such part of the property 
        or projects as may be attributable to dwelling use 
        (excluding exterior and land improvements as defined by 
        the Secretary), $38,025 per family unit without 
        bedroom, $42,120 per family unit with one bedroom, 
        $50,310 per family unit with two bedrooms, $62,010 per 
        family unit with three bedrooms, and $70,200 per family 
        unit with four or more bedrooms, or not to exceed 
        $17,460 per space; except that as to projects to 
        consist of elevator-type structures the Secretary may, 
        in his discretion, increase the dollar amount 
        limitations per family unit to not to exceed $43,875 
        per family unit without a bedroom, $49,140 per family 
        unit with one bedroom, $60,255 per family unit with two 
        bedrooms, $75,465 per family unit with three bedrooms, 
        and $85,328 per family unit with four or more bedrooms, 
        as the case may be, to compensate for the higher costs 
        incident to the construction of elevator type 
        structures of sound standards of construction and 
        design; and except that the Secretary may, by 
        regulation, increase any of the foregoing dollar amount 
        limitations contained in this paragraph by not to 
        exceed [140 percent] 170 percent in any geographical 
        area where the Secretary finds that cost levels so 
        require and by not to exceed [140 percent] 170 percent, 
        or [170 percent in high cost areas] 215 percent in high 
        cost areas, where the Secretary determines it necessary 
        on a project-by-project basis, but in no case may any 
        such increase exceed 90 percent where the Secretary 
        determines that a mortgage purchased or to be purchased 
        by the Government National Mortgage Association in 
        implementing its special assistance functions under 
        section 305 of this Act (as such section existed 
        immediately before November 30, 1983) is involved.

           *       *       *       *       *       *       *


SEC. 210. FORMS OF ACCEPTABLE IDENTIFICATION.

  The Secretary may not insure a mortgage under any provision 
of this title unless the mortgagor under the mortgage provides 
personal identification in one of the following forms:
          (1) Social security card with photo identification 
        card or real id act identification.--
                  (A) A social security card accompanied by a 
                photo identification card issued by the Federal 
                Government or a State Government; or
                  (B) A driver's license or identification card 
                issued by a State in the case of a State that 
                is in compliance with title II of the REAL ID 
                Act of 2005 (title II of division B of Public 
                Law 109-13; 49 U.S.C. 30301 note).
          (2) Passport.--A passport issued by the United States 
        or a foreign government.
          (3) USCIS photo identification card.--A photo 
        identification card issued by the Secretary of Homeland 
        Security (acting through the Director of the United 
        States Citizenship and Immigration Services).

           *       *       *       *       *       *       *


                     cooperative housing insurance

    Sec. 213. (a) * * *
    (b) To be eligible for insurance under this section a 
mortgage on any property or project of a corporation or trust 
of the character described in paragraph numbered (1) of 
subsection (a) of this section shall involve a principal 
obligation in an amount--
          (2)(A) not to exceed, for such part of the property 
        or project as may be attributable to dwelling use 
        (excluding exterior land improvements as defined by the 
        Secretary), $41,207 per family unit without a bedroom, 
        $47,511 per family unit with one bedroom, $57,300 per 
        family unit with two bedrooms, $73,343 per family unit 
        with three bedrooms, and $81,708 per family unit with 
        four or more bedrooms, and not to exceed 98 per centum 
        of the amount which the Secretary estimates will be the 
        replacement cost of the property or project when the 
        proposed physical improvements are completed: Provided, 
        That as to projects to consist of elevator-type 
        structures the Secretary may, in his discretion, 
        increase the dollar amount limitations per family unit 
        to not to exceed $43,875 per family unit without a 
        bedroom, $49,710 per family unit with one bedroom, 
        $60,446 per family unit with two bedrooms, $78,197 per 
        family unit with three bedrooms, and $85,836 per family 
        unit with four or more bedrooms, as the case may be, to 
        compensate for the higher cost incident to the 
        construction of elevator-type structures of sound 
        standards of construction and design; (B)(i) the 
        Secretary may, by regulation, increase any of the 
        dollar amount limitations in subparagraph (A) (as such 
        limitations may have been adjusted in accordance with 
        section 206A of this Act) by not to exceed [140 
        percent] 170 percent in any geographical area where the 
        Secretary finds that cost levels so require and by not 
        to exceed [140 percent] 170 percent, or [170 percent in 
        high cost areas] 215 percent in high cost areas, where 
        the Secretary determines it necessary on a project-by-
        project basis, but in no case may any such increase 
        exceed 90 percent where the Secretary determines that a 
        mortgage purchased or to be purchased by the Government 
        National Mortgage Association in implementing its 
        special assistance functions under section 305 of this 
        Act (as such section existed immediately before 
        November 30, 1983) is involved; and (ii) in the case of 
        a mortgagor of the character described in paragraph (3) 
        of subsection (a) the mortgage shall involve a 
        principal obligation in an amount not to exceed 90 per 
        centum of the amount which the Secretary estimates will 
        be the replacement cost of the property or project when 
        the proposed physical improvements are completed; and 
        (iii) upon the sale of a property or project by a 
        mortgagor of the character described in paragraph (3) 
        of subsection (a) to a nonprofit cooperative ownership 
        housing corporation or trust within two years after the 
        completion of such property or project the mortgage 
        given to finance such sale shall involve a principal 
        obligation in an amount not to exceed the maximum 
        amount computed in accordance with this subparagraph 
        (B)(i)..

           *       *       *       *       *       *       *


     rehabilitation and neighborhood conservation housing insurance

    Sec. 220. (a) * * *

           *       *       *       *       *       *       *

    (d) To be eligible for insurance under this section a 
mortgage shall meet the following conditions:
    (1) * * *

           *       *       *       *       *       *       *

    (3) The mortgage shall--
          (A) * * *
          (B)(ii) * * *
          (iii)(I) not to exceed, for such part of the property 
        or project as may be attributable to dwelling use 
        (excluding exterior land improvements as defined by the 
        Secretary), $38,025 per family unit without a bedroom, 
        $42,120 per family unit with one bedroom, $50,310 per 
        family unit with two bedrooms, $62,010 per family unit 
        with three bedrooms, and $70,200 per family unit with 
        four or more bedrooms, except that as to projects to 
        consist of elevator-type structures the Secretary may, 
        in his discretion, increase the dollar amount 
        limitations per family unit not to exceed $43,875 per 
        family unit without a bedroom, $49,140 per family unit 
        with one bedroom, $60,255 per family unit with two 
        bedrooms, $75,465 per family unit with three bedrooms, 
        and $85,328 per family unit with four or more bedrooms, 
        as the case may be, to compensate for the higher costs 
        incident to the construction of elevator-type 
        structures of sound standards of construction and 
        design; and (II) with respect to rehabilitation 
        projects involving not more than five family units, the 
        Secretary may by regulation increase by 25 per centum 
        any of the dollar amount limitations in subparagraph 
        (B)(iii)(I) (as such limitations may have been adjusted 
        in accordance with section 206A of this Act) which are 
        applicable to units with two, three, or four or more 
        bedrooms; (III) the Secretary may, by regulation, 
        increase the dollar amount limitations contained in 
        subparagraph (B)(iii)(I) (as such limitations may have 
        been adjusted in accordance with section [206A of this 
        Act)) by not to exceed 110 percent in any geographical 
        area where the Secretary finds that cost levels so 
        require and by not to exceed 140 percent where the 
        Secretary determines it necessary on a project-by-
        project basis] 206A of this Act) by not to exceed 170 
        percent in any geographical area where the Secretary 
        finds that cost levels so require and by not to exceed 
        170 percent, or 215 percent in high cost areas, where 
        the Secretary determines it necessary on a project-by-
        project basis, but in no case may any such increase 
        exceed 90 percent where the Secretary determines that a 
        mortgage purchased or to be purchased by the Government 
        National Mortgage Association in implementing its 
        special assistance functions under section 305 of this 
        Act (as such section existed immediately before 
        November 30, 1983) is involved); (IV) That nothing 
        contained in this subparagraph (B)(iii)(I) shall 
        preclude the insurance of mortgages covering existing 
        multifamily dwellings to be rehabilitated or 
        reconstructed for the purposes set forth in subsection 
        (a) of this section; (V) the Secretary may further 
        increase any of the dollar limitations which would 
        otherwise apply to such projects by not to exceed 20 
        per centum if such increase is necessary to account for 
        the increased cost of the project due to the 
        installation therein of a solar energy system (as 
        defined in subparagraph (3) of the last paragraph of 
        section 2(a) of this Act) or residential energy 
        conservation measures (as defined in section 210(11)(A) 
        through (G) and (I) of Public Law 95-619) in cases 
        where the Secretary determines that such measures are 
        in addition to those required under the minimum 
        property standards and will be cost-effective over the 
        life of the measure; and

           housing for moderate income and displaced families

    Sec. 221. (a) * * *

           *       *       *       *       *       *       *

    (d) To be eligible for insurance under this section, a 
mortgage shall--
          (1) have been made to [and be held by] a mortgagee 
        approved by the Secretary [as responsible and able to 
        service the mortgage properly];

           *       *       *       *       *       *       *

          (3) if executed by a mortgagor which is a public body 
        or agency (and, except with respect to a project 
        assisted or to be assisted pursuant to section 8 of the 
        United States Housing Act of 1937, which certifies that 
        it is not receiving financial assistance from the 
        United States exclusively pursuant to such Act), a 
        cooperative (including an investor-sponsor who meets 
        such requirements as the Secretary may impose to assure 
        that the consumer interest is protected), or a limited 
        dividend corporation (as defined by the Secretary), or 
        a private nonprofit corporation or association, or 
        other mortgagor approved by the Secretary, and 
        regulated or supervised under Federal or State laws or 
        by political subdivisions of States, or agencies 
        thereof, or by the Secretary under a regulatory 
        agreement or otherwise, as to rents, charges, and 
        methods of operation, in such form and in such manner 
        as in the opinion of the Secretary will effectuate the 
        purposes of this section--
                  (ii)(I) not exceed, for such part of the 
                property or project as may be attributable to 
                dwelling use (excluding exterior land 
                improvements as defined by the Secretary), 
                $42,048 per family unit without a bedroom, 
                $48,481 per family unit with one bedroom, 
                58,469 per family unit with two bedrooms, 
                $74,840 per family unit with three bedrooms, 
                and $83,375 per family unit with four or more 
                bedrooms; except that as to projects to consist 
                of elevator-type structures the Secretary may, 
                in his discretion, increase the dollar amount 
                limitations per family unit to not to exceed 
                $44,250 per family unit without a bedroom, 
                $50,724 per family unit with one bedroom, 
                $61,680 per family unit with two bedrooms, 
                $79,793 per family unit with three bedrooms, 
                and $87,588 per family unit with four or more 
                bedrooms, as the case may be, to compensate for 
                the higher costs incident to the construction 
                of elevator-type structures of sound standards 
                of construction and design; (II) the Secretary 
                may, by regulation, increase any of the dollar 
                amount limitations in subclause (I) (as such 
                limitations may have been adjusted in 
                accordance with section 206A of this Act) by 
                not to exceed [140 percent] 170 percent in any 
                geographical area where the Secretary finds 
                that cost levels so require and by not to 
                exceed [140 percent] 170 percent, or [170 
                percent in high cost areas] 215 percent in high 
                cost areas, where the Secretary determines it 
                necessary on a project-by-project basis, but in 
                no case may any such increase exceed 90 percent 
                where the Secretary determines that a mortgage 
                purchased or to be purchased by the Government 
                National Mortgage Association in implementing 
                its special assistance functions under section 
                305 of this Act (as such section existed 
                immediately before November 30, 1983) is 
                involved; and

           *       *       *       *       *       *       *

          (4) if executed by a mortgagor and which is approved 
        by the Secretary--
                  (ii)(I) not exceed, or such part of the 
                property or project as may be attributable to 
                dwelling use (excluding exterior land 
                improvements as defined by the Secretary), 
                $37,843 per family unit without a bedroom, 
                $42,954 per family unit with one bedroom, 
                $51,920 per family unit with two bedrooms, 
                $65,169 per family unit with three bedrooms, 
                and $73,846 per family unit with four or more 
                bedrooms; except that as to projects to consist 
                of elevator-type structures the Secretary may, 
                in his discretion, increase the dollar amount 
                limitations per family unit to not to exceed 
                $40,876 per family unit without a bedroom, 
                $46,859 per family unit with one bedroom, 
                $56,979 per family unit with two bedrooms, 
                $73,710 per family unit with three bedrooms, 
                and $80,913 per family unit with four or more 
                bedrooms, as the case may be, to compensate for 
                the higher costs incident to the construction 
                of elevator-type structures of sound standards 
                of construction and design; (II) the Secretary 
                may, by regulation, increase any of the dollar 
                limitations in subclause (I) (as such 
                limitations may have been adjusted in 
                accordance with section 206A of this Act) by 
                not to exceed [140 percent] 170 percent in any 
                geographical area where the Secretary finds 
                that cost levels so require and by not to 
                exceed [140 percent] 170 percent, or [170 
                percent in high cost areas] 215 percent in high 
                cost areas, where the Secretary determines it 
                necessary on a project-by-project basis, but in 
                no case may any such increase exceed 90 percent 
                where the Secretary determines that a mortgage 
                purchased or to be purchased by the Government 
                National Mortgage Association in implementing 
                its special assistance functions under section 
                305 of this Act (as such section existed 
                immediately before November 30, 1983) is 
                involved;

           *       *       *       *       *       *       *


                  [mortgagor insurance for servicemen

    [Sec. 222. (a) The purpose of this section is to aid in the 
provision of housing accommodations for servicemen in the Armed 
Forces of the United States, servicemen in the United States 
Coast Guard and their families, and servicemen in the United 
States National Oceanic and Atmospheric Administration and 
their families by supplementing the insurance of mortgages 
under section 203 of this title with a system of mortgage 
insurance specially designed to assist the financing required 
for the construction or purchase of dwellings by those persons. 
As used in this section, a ``servicemen'' means a person to 
whom the Secretary of Defense (or any officer or employee 
designated by him), the Secretary of Homeland Security (or any 
officer or employee designated by him), or the Secretary of 
Commerce (or any officer or employee designated by him), as the 
case may be, has issued a certificate hereunder indicating that 
such person requires housing, is serving on active duty in the 
Armed Forces of the United States, in the United States Coast 
Guard, or in the United States National Oceanic and Atmospheric 
Administration and has served on active duty for more than two 
years, but a certificate shall not be issued hereunder to any 
person ordered to active duty for training purposes only. The 
Secretary of Defense, the Secretary of Homeland Security, and 
the Secretary of Commerce, respectively, are authorized to 
prescribe rules and regulations governing the issuance of such 
certificates and may withhold issuance of more than one such 
certificate to a serviceman whenever in his discretion issuance 
is not justified due to circumstances resulting from military 
assignment, or, in the case of the United States Coast Guard or 
the United States National Oceanic and Atmospheric 
Administration, other assignment.
    [(b) To be eligible for insurance under this section a 
mortgage shall--
          [(1) meet the requirements of section 203(b) or 
        203(i), or 221(d)(2), or 234(c), except as such 
        requirements are modified by this section;
          [(2) involve a dwelling designed principally for a 
        one-family residence or a one-family unit in a 
        condominium project;
          [(3) have a principal obligation not in excess of the 
        sum of (i) 97 per centum of $25,000 of the appraised 
        value of the property as of the date the mortgage is 
        accepted for insurance, and (ii) 95 per centum of such 
        value in excess of $25,000; and
          [(4) be executed by a mortgagor who at the time of 
        application for insurance is certified as a 
        ``serviceman'' and who at the time of insurance is the 
        owner of the property and either occupies the property 
        as a principal residence or certifies that his failure 
        to do so is the result of his military assignment, or 
        in the case of the United States Coast Guard or the 
        United States National Oceanic and Atmospheric 
        Administration, other assignment.
    [(c) The Secretary may prescribe the manner in which a 
mortgage may be accepted for insurance under this section. 
Premiums fixed by the Secretary under section 203 with resepct 
to, or payable during, the period of ownership by a serviceman 
of the property involved shall not be payable by the mortgagee 
but shall be paid not less frequently than once each year, upon 
request of the Secretary to the Secretary of Defense, the 
Secretary of Homeland Security, or the Secretary of Commerce, 
as the case may be, from the respective appropriations 
available for pay and allowances of persons eligible for 
mortgage insurance under this section. As used herein, ``the 
period of ownership by a serviceman'' means the period, for 
which premiums are fixed, prior to the date that the Secretary 
of Defense (or any officer or employee or other persons 
designated by him), the Secretary of Transporation (or any 
officer or employee or other person designated by him), or the 
Secretary of Commerce (or any officer or employee or other 
person designated by him), as the case may be, furnishes the 
Secretary with a certification that such ownership (as defined 
by the Secretary), has terminated.
    [(d) Any mortgagee under a mortgage insured under this 
section is entitled to the benefits of the insurance as 
provided in section 204(a) with respect to mortgages insured 
under section 203.
    [(e) The provisions of subsections (b), (c), (d), (e), (f), 
(g), (h), (j), and (k) of section 204 shall apply to mortgages 
insured under this section, except that as applied to those 
mortgages (1) all references to the ``Fund,'' or ``Mutual 
Mortgage Insurance Fund,'' shall refer to the General Insurance 
Fund, and (2) all references to ``section 203'' shall refer to 
this section.
    [(f) The Secretary is authorized to transfer to this 
section the insurance on any mortgage covering a single-family 
dwelling or a one-family unit in a condominium project insured 
under this Act, if the mortgage indebtedness thereof has been 
assumed by a serviceman who at the time of assumption is the 
owner of the property and either occupies the property as a 
principal residence or certifies that his failure to do so is 
the result of his military assignment, or, in the case of the 
United States Coast Guard or the United States National Oceanic 
and Atmospheric Administration, other assignment.
    [(g) Where a serviceman dies while on active duty in the 
Armed Forces of the United States or in the United States Coast 
Guard or in the United States National Oceanic and Atmospheric 
Administration, leaving a surviving widow as owner of the 
property, the period of ownership by the serviceman (within the 
meaning of subsection (c) of this section) shall extend for two 
years beyond the date of the serviceman's death or until the 
date the widow disposes of the property, whichever date occurs 
first. The Secretary of Defense or the Secretary of Homeland 
Security, or the Secretary of Commerce, as the case may be, 
shall notify such widow promptly following the serviceman's 
death of the additional costs to be borne by the mortgagor 
following termination of the two year period.]

           *       *       *       *       *       *       *


                      housing for elderly persons

    Sec. 231. (a) * * *

           *       *       *       *       *       *       *

    (c) To be eligible for insurance under this section, a 
mortgage to provide housing for elderly persons shall--
          (2)(A) not to exceed, for such part of the property 
        or project as may be attributable to dwelling use 
        (excluding exterior land improvement as defined by the 
        Secretary), $35,978 per family unit without a bedroom, 
        $40,220 per family unit with one bedroom, $48,029 per 
        family unit with two bedrooms, $57,798 per family unit 
        with three bedrooms, and $67,950 per family unit with 
        four or more bedrooms; except that as to projects to 
        consist of elevator-type structures the Secretary may, 
        in his discretion, increase the dollar amount 
        limitations per family unit to not to exceed $40,876 
        per family unit without a bedroom, $46,859 per family 
        unit with one bedroom, $56,979 per family unit with two 
        bedrooms, $73,710 per family unit with three bedrooms, 
        and $80,913 per family unit with four or more bedrooms, 
        as the case may be, to compensate for the higher costs 
        incident to the construction of elevator-type 
        structures of sound standards of construction and 
        design; (B) the Secretary may, by regulation, increase 
        any of the dollar limitations in subparagraph (A) (as 
        such limitations may have been adjusted in accordance 
        with section 206A of this Act) by not to exceed [140 
        percent] 170 percent in any geographical area where the 
        Secretary finds that cost levels so require and by not 
        to exceed [140 percent] 170 percent, or [170 percent in 
        high cost areas] 215 percent in high cost areas, where 
        the Secretary determines it necessary on a project-by-
        project basis, but in no case may any such increase 
        exceed 90 percent where the Secretary determines that a 
        mortgage purchased or to be purchased by the Government 
        National Mortgage Association in implementing its 
        special assistance functions under section 305 of this 
        Act (as such section existed immediately before 
        November 30, 1983) is involved; (C) the Secretary may, 
        by regulation, increase any of the dollar limitations 
        in subparagraph (A) (as such limitations may have been 
        adjusted in accordance with section 206A of this Act) 
        by not to exceed 20 per centum if such increase is 
        necessary to account for the increased cost of the 
        project due to the installation therein of a solar 
        energy system (as defined in subparagraph (3) of the 
        last paragraph of section 2(a) of this Act) or 
        residential energy conservation measures (as defined in 
        section 210(11) (A) through (G) and (I) of Public Law 
        95-619) in cases where the Secretary determines that 
        such measures are in addition to those required under 
        the minimum property standards and will be cost-
        effective over the life of the measure;

           *       *       *       *       *       *       *


                  mortgage insurance for condominiums

    Sec. 234. (a) * * *

           *       *       *       *       *       *       *

    (c) The Secretary is authorized, in his discretion and 
under such terms and conditions as he may prescribe (including 
the minimum number of family units in the project which shall 
be offered for sale and provisions for the protection of the 
consumer and the public interest), to insure any mortgage 
covering a one-family unit in a multifamily project and an 
undivided interest in the common areas and facilities which 
serve the project if (1) the mortgage meets the requirements of 
this subsection and of section 203(b), except as that section 
is modified by this subsection, [and] (2) at least 80 percent 
of the units in the project covered by mortgages insured under 
this title are occupied by the mortgagors or comortgagors, and 
(3) the project has a blanket mortgage insured by the Secretary 
under subsection (d). Any project proposed to be constructed or 
rehabilitated after the date of enactment of the Housing Act of 
1961 with the assistance of mortgage insurance under this Act, 
where the sale of family units is to be assisted with mortgage 
insurance under this subsection, shall be subject to such 
requirements as the Secretary may prescribe. To be eligible for 
insurance pursuant to this subsection, a mortgage shall (A) 
involve a principal obligation in an amount not to exceed the 
maximum principal obligation of a mortgage which may be insured 
in the area pursuant to section 203(b)(2) or pursuant to 
section 203(h) under the conditions described in section 203(h) 
or pursuant to section 203(h) under the conditions described in 
section 203(h), and (B) have a maturity satisfactory to the 
Secretary, but not to exceed, in any event, [thirty-five years] 
forty years from the date of the beginning of amortization of 
the mortgages. The mortgage shall contain such provisions as 
the Secretary determines to be necessary for the maintenance of 
common areas and facilities and the multifamily project. The 
mortgagor shall have exclusive right to the use of the one-
family unit covered by the mortgage and, together with the 
owners of other units in the multifamily project, shall have 
the right to the use of the common areas and facilities serving 
the project and the obligation of maintaining all such common 
areas and facilities. The Secretary may require that the rights 
and obligations of the mortgagor and the owners of other 
dwelling units in the project shall be subject to such controls 
as he determines to be necessary and feasible to promote and 
protect individual owners, the multifamily project and its 
occupants. For the purposes of this subsection, the Secretary 
is authorized in his discretion and under such terms and 
conditions as he may prescribe to permit one-family units and 
interests in common areas and facilities in multifamily 
projects covered by mortgages insured under any section of this 
Act other than section 213(a) (1) and (2) to be released from 
the liens of those mortgages.

           *       *       *       *       *       *       *

    (e) To be eligible for insurance, a blanket mortgage on any 
multi-family project of a mortgagor of the character described 
in subsection (d) shall involve a principal obligation in an 
amount--
          (2) * * *
          (3)(A) not to exceed, for such part of the project as 
        may be attributable to dwelling use (excluding exterior 
        land improvements as defined by the Secretary), $42,048 
        per family unit without a bedroom, $48,481 per family 
        unit with one bedroom, $58,469 per family unit with two 
        bedrooms, $74,840 per family unit with three bedrooms, 
        and $83,375 per family unit with four or more bedrooms; 
        except that as to projects to consist of elevator-type 
        structures the Secretary may, in his discretion, 
        increase the dollar amount limitations per family unit 
        to not to exceed $44,250 per family unit without a 
        bedroom, $50,724 per family unit with one bedroom, 
        $61,680 per family unit with two bedrooms, $79,793 per 
        family unit with three bedrooms, and $87,588 per family 
        unit with four or more bedrooms, as the case may be, to 
        compensate for higher costs incident to the 
        construction of elevator-type structures of sound 
        standards of construction and design; (B) the Secretary 
        may, by regulation, increase any of the dollar 
        limitations in subparagraph (A) (as such limitations 
        may have been adjusted in accordance with section 206A 
        of this Act) by not to exceed [140 percent] 170 percent 
        in any geographical area where the Secretary finds that 
        cost levels so require and by not to exceed [140 
        percent] 170 percent, or [170 percent in high cost 
        areas] 215 percent in high cost areas, where the 
        Secretary determines it necessary on a project-by-
        project basis, but in no case may any such increase 
        exceed 90 percent where the Secretary determines that a 
        mortgage purchased or to be purchased by the Government 
        National Mortgage Association in implementing its 
        special assistance functions under section 305 of this 
        Act (as such section existed immediately before 
        November 30, 1983) is involved; and

           *       *       *       *       *       *       *

    (g) Any mortgagee under a mortgage insured under subsection 
(c) of this section is entitled to receive the benefits of the 
insurance as provided in section 204(a) of this Act with 
respect to mortgages insured under section 203, and the 
provisions of subsections (b), (c), (d), (e), (f), (g), (h), 
(j), and (k) of section 204 shall be applicable to the 
mortgages insured under subsection (c) of this section[, except 
that (1) all references in section 204 of the Mutual Mortgage 
Insurance Fund or the Fund shall be construed to refer to the 
General Insurance Fund, (2) all references therein to section 
203 shall be construed to refer to subsection (c) of this 
section, and (3) the excess remaining, referred to in section 
204(f)(1), shall be retained by the Secretary and credited to 
the General Insurance Fund].

           *       *       *       *       *       *       *


                 [special mortgage insurance assistance

    [Sec. 237. (a) The purpose of this section is to help 
provide adequate housing for families of low and moderate 
income, including those who, for reasons of credit history, 
irregular income patterns caused by seasonal employment, or 
other factors, are unable to meet the credit requirements of 
the Secretary for the purchase of a single-family home financed 
by a mortgage insured under section 203, 220, 221, 234, or 
235(j)(4), but who, through the incentive of homeownership and 
counseling assistance, appear to be able to achieve 
homeownership.
    [(b) The Secretary is authorized upon application by the 
mortgagee to insure under this section not more than 26 percent 
of the total principal obligation (including such initial 
service charges, and such appraisal, inspection, and other fees 
as the Secretary shall approve) of any mortgage meeting the 
requirements of this section.
    [(c) To be eligible for insurance under this section, a 
mortgage shall--
          [(1) meet the requirements of section 203 (except 
        subsection (m)), 220(d)(3)(A), 221(d)(2), 221(h)(5), 
        221(i), 234(c), or 235(j)(4), except as such 
        requirements are modified by this section;
          [(2) involve a principal obligation (including such 
        initial service charges, and such appraisal, 
        inspection, and other fees, as the Secretary shall 
        approve) in an amount not to exceed $70,000;
          [(3) be executed by a mortgagor who the Secretary has 
        determined, after a full and complete study of the 
        case, would not be an acceptable credit risk for 
        mortgage insurance purposes under sections 203, 220, 
        221, 234, or 235(j)(4), because of his credit standing, 
        debt obligations, total annual income, or income 
        characteristics but who the Secretary is satisfied 
        would be a reasonably satisfactory credit risk, 
        consistent with the objectives stated in subsection 
        (a), if he were to receive budget, debt management, and 
        related counseling, prior to and during the 12 months 
        immediately following the purchase of the property, 
        from a community development financial institution 
        under section 103(5) of the Community Development 
        Banking and Financial Institutions Act of 1994: 
        Provided, That, in determining whether the mortgagor is 
        a reasonably satisfactory credit risk, the Secretary 
        shall review the credit history of the applicant giving 
        special consideration to those delinquent accounts 
        which were ultimately paid by the applicant and to 
        extenuating factors which may have caused credit 
        accounts of the applicant to become delinquent; and the 
        Secretary shall also give special consideration to 
        income characteristics of applicants whose total income 
        over the two years prior to their applications has 
        remained at levels of eligibility (as required under 
        paragraph (4) of this subsection), but who, because of 
        the character of their seasonal employment or for other 
        reasons, have not maintained continuous employment 
        under one employer during that time;
          [(4) require monthly payments which, in combination 
        with local real estate taxes on the property involved, 
        do not exceed 36 per centum of the applicant's income, 
        based on his average monthly income during the year 
        prior to his application or the average monthly income 
        during the three years prior to his application, 
        whichever is higher; and
          [(5) require the mortgagor to be subject, if 
        necessary, to a default mitigation effort undertaken by 
        an intermediary community development financial 
        institution under section 103(5) of the Community 
        Development Banking and Financial Institutions Act of 
        1994, that is acting as a sponsor and pass-through of 
        insurance under section 203 and is approved by the 
        Secretary;
          [(6) involve a total principal obligation (including 
        such initial service charges, and such appraisal, 
        inspection, and other fees as the Secretary shall 
        approve) that is not more than 90 percent of the value 
        of the property for which the mortgage is provided; and
          [(7) involve a total principal obligation (including 
        such initial service charges, and such appraisal, 
        inspection, and other fees as the Secretary shall 
        approve) in which the mortgagor has equity (as defined 
        by the Secretary) of not less than 10 percent and such 
        equity shall be subordinate to the interest of the 
        Secretary in the mortgaged property.
    [(d) The Secretary shall give preference in approving 
mortgage insurance applications and in providing counseling 
services under this section (1) to families which are eligible 
for assistance payments under section 235, (2) to families 
living in empowerment zones and enterprise communities (as 
those terms are defined in section 1393(b) of the Internal 
Revenue Code of 1986 (26 U.S.C. 1393(b)) who are eligible for 
homeownership assistance, and (3) to families living in public 
housing units, especially those families required to leave 
public housing because their incomes have risen beyond the 
maximum prescribed income limits, and families eligible for 
residence in public housing who have been displaced from 
federally assisted urban renewal areas.
    [(e) The Secretary is authorized to provide, or contract 
with community development financial institutions under section 
103(5) of the Community Development Banking and Financial 
Institutions Act of 1994 to provide, such budget, debt 
management, and related counseling services to mortgagors whose 
mortgages are insured under this section as he determines to be 
necessary to meet the objectives of this section. The Secretary 
may also provide such counseling to otherwise eligible families 
who lack sufficient funds to supply a down payment to help them 
to save an amount necessary for that purpose.
    [(f) The aggregate principal balance of the portions of 
mortgages insured under this section and outstanding at one 
time shall not exceed $200,000,000.
    [(g) Mortgages insured under this section shall be subject 
to an insurance premium fee of not more than 1.25 percent of 
the total mortgage principal obligation (including such initial 
service charges, and such appraisal, inspection, and other fees 
as the Secretary shall approve).
    [(h) Before insuring a mortgage under this section, the 
Secretary shall enter into such contracts or other agreements 
as may be necessary to ensure that the mortgagee or other 
holder of the mortgage shall assume not less than 10 percent 
and not more than 50 percent of any loss on the insured 
mortgage, subject to any reasonable limit on the liability of 
the mortgagee or holder of the mortgage that may be specified 
in the event of unusual or catastrophic losses that may be 
incurred by any one mortgagee or mortgage holder.
    [(i) No guarantees may be issued under section 306(g) for 
the timely payment of interest or principal on securities 
backed, in whole or in part, by mortgages insured under this 
section.
    [(j) There are authorized to be appropriated such sums as 
may be necessary to carry out the provisions of subsection (e) 
of this section.]

           *       *       *       *       *       *       *


                [GRADUATED PAYMENT AND INDEXED MORTGAGES

    [Sec. 245. (a) The Secretary may insure under any provision 
of this title mortgages and loans with provisions of varying 
rates of amortization corresponding to anticipated variations 
in family income or with monthly payments and outstanding 
balances adjusted by a percentage change in a selected price 
index to the extent he determines such mortgages or loans (1) 
have promise for expanding housing opportunities or meet 
special needs, (2) can be developed to include any safeguards 
for mortgagors or purchasers that may be necessary to offset 
special risks of such mortgages, and (3) have a potential for 
acceptance in the private market. Notwithstanding any other 
provision of this title, except as provided in subsections (b) 
and (c) of this section, the principal obligation (including 
all interest to be deferred and added to principal) of a 
mortgage insured pursuant to this section may not exceed 97 per 
centum of the appraised value of the property covered by the 
mortgage as of the date the mortgage is accepted for insurance.
    [(b) Notwithstanding the provisions of subsection (a), the 
Secretary may insure under any provision of this title a 
mortgage or loan which meets the requirements of the first 
sentence of subsection (a) and which has provisions for varying 
rates of amortization if the Secretary determines--
          [(1) the mortgagor could not reasonably afford to 
        purchase the dwelling unit by means of a mortgage 
        insured under subsection (a) or any other mortgage 
        insurance program under this title;
          [(2) the principal obligation of the mortgage or loan 
        initially does not exceed the percentage of the initial 
        appraised value of the property specified in section 
        203(b) of this title as of the date the mortgage or 
        loan is accepted for insurance;
          [(3) the principal obligation of the mortgage or loan 
        thereafter (including all interest to be deferred and 
        added to principal) will not at any time be scheduled 
        to exceed 97 per centum of the projected value of the 
        property; and
          [(4) the principal obligation of the mortgage 
        thereafter will not exceed 113 per centum of the 
        initial appraised value of the property.
Mortgage insurance under this subsection shall be limited to 
mortgages executed by mortgagors who, as determined by the 
Secretary, have not owned dwelling units within the preceding 
three years. For the purpose of this subsection, the projected 
value of the property shall be calculated by the Secretary by 
increasing the initial appraised value of the property at a 
rate not in excess of 2\1/2\ per centum per annum. The number 
of mortgages which are insured in accordance with this 
subsection in any fiscal year may not exceed (A) that number of 
mortgages the aggregate initial principal obligation of which 
equals 10 per centum of the aggregate amount of the initial 
principal obligation of all mortgages secured by properties 
improved by one- to four-family residences which are insured 
under this title during the preceding fiscal year, or (B) 
50,000 mortgages, whichever is greater. No loan or mortgage may 
be insured under this subsection after the date of the 
enactment of the Housing and Community Development Act of 1987, 
except pursuant to a commitment to insure entered into on or 
before such date.
    [(c) Notwithstanding the provisions of subsection (a), the 
Secretary may insure under any provision of this title a 
mortgage or loan that meets the requirements of the first 
sentence of subsection (a) and that has provisions permitting 
adjustment of monthly payments and outstanding principal 
according to changes or percentages of changes in a selected 
price index if the Secretary determines--
          [(1) the principal obligation of the mortgage or loan 
        initially does not exceed the percentage of the initial 
        appraised value of the property specified in section 
        203(b) as of the date the mortgage or loan is accepted 
        for insurance; and
          [(2) the monthly payments and principal obligation of 
        the mortgage or loan thereafter will not at any time be 
        increased at a rate greater than the percentage change 
        in the price index stipulated in the initial mortgage 
        or loan contract.
In carrying out this subsection, the Secretary shall give a 
priority to mortgages executed by mortgagors who, as determined 
by the Secretary, have not owned dwelling units within the 
preceding 3 years. The Secretary shall, not later than March 
31, 1984, prescribe regulations establishing guidelines 
governing mortgages and loans described in this subsection and 
shall, to the extent practicable, conduct a demonstration 
program to insure mortgages and loans in accordance with this 
subsection during fiscal years 1984 and 1985. The aggregate 
number of mortgages and loans insured under this subsection and 
section 252 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.
    [(d)(1) The Secretary may insure, under any provision of 
this title relating to multifamily housing projects, mortgages 
and loans with provisions of varying rates of amortization 
corresponding to anticipated variations in project income, to 
the extent the Secretary determines such mortgages or loans (A) 
have promise for expanding housing opportunities or meet 
special needs; (B) can be developed to include any safeguards 
for mortgagors, tenants, or purchasers that may be necessary to 
offset special risks of such mortgages; and (C) have a 
potential for acceptances in the private market.
    [(2) Notwithstanding any other provision of this title, the 
principal obligation of a mortgage or loan insured pursuant to 
this subsection--
          [(A) may not exceed initially the percentage of the 
        initial appraised value or replacement cost of the 
        property involved that is required by the provision of 
        this title under which such property is insured; and
          [(B) thereafter (including all interest to be 
        deferred and added to principal) may not at any time be 
        scheduled to exceed 100 percent of the projected value 
        of such property.
    [(3) For purposes of this subsection, the projected value 
of a property shall be calculated by the Secretary by 
increasing the initial appraised value of such property at a 
rate not in excess of 2.5 percent per annum.
    [(e) Any mortgage or loan insured pursuant to this section 
which contains or sets forth any graduated mortgage provisions 
(including but not limited to provisions for adding deferred 
interest to principal) which are authorized under this section 
and applicable regulations, or which have been insured on the 
basis of their being so authorized, shall not be subject to any 
State constitution, statute, court decree, common law, or rule 
of public policy (1) limiting the amount of interest which may 
be charged, taken, received, or reserved, or the manner of 
calculating such interest (including but not limited to 
prohibitions against the charging of interest on interest), if 
such constitution, statute, court decree, common law, or rule 
would not apply to the mortgage or loan in the absence of such 
graduated payment mortgage provisions, or (2) requiring a 
minimum amortization of principal under the mortgage or loan.]

           *       *       *       *       *       *       *


        single-family mortgage insurance on hawaiian home lands

    Sec. 247. (a) * * *

           *       *       *       *       *       *       *

  (c) Notwithstanding any other provision of this Act, the 
insurance of a mortgage using the authority contained in this 
section shall be the obligation of the [General Insurance Fund 
established in section 519] Mutual Mortgage Insurance Fund. The 
mortgagee shall be eligible to receive the benefits of 
insurance as provided in section 204 with respect to mortgages 
insured pursuant to this section, except that [(1) all 
references in section 204 to the Mutual Mortgage Insurance Fund 
or the Fund shall be construed to refer to the General 
Insurance Fund; and (2)] all references in section 204 to 
section 203 shall be construed to refer to the section under 
which the mortgage is insured.

           *       *       *       *       *       *       *


        single family mortgage insurance on indian reservations

    Sec. 248. (a) * * *

           *       *       *       *       *       *       *

    (f) Notwithstanding any other provision of this Act, the 
insurance of a mortgage using the authority contained in this 
section shall be the obligation of the [General Insurance Fund 
established in section 519] Mutual Mortgage Insurance Fund. The 
mortgagee shall be eligible to receive the benefits of 
insurance as provided in section 204 with respect to mortgages 
insured pursuant to this section, except that [(1) all 
references in section 204 to the Mutual Mortgage Insurance Fund 
or the Fund shall be construed to refer to the General 
Insurance Fund; and (2)] all references in section 204 to 
section 203 shall be construed to refer to the section under 
which the mortgage is insured.

           *       *       *       *       *       *       *


  INSURANCE OF HOME EQUITY CONVERSION MORTGAGES FOR ELDERLY HOMEOWNERS

    Sec. 255. (a) * * *
    (b) Definitions.--For purposes of this section:
          (1) * * *
          (2) The terms ``mortgagee'', ``mortgagor'', ``real 
        estate,'' and ``State'' have the meanings given such 
        terms in section 201.

           *       *       *       *       *       *       *

          (4) Mortgage.--The term ``mortgage'' means a first 
        mortgage or first lien on real estate, in fee simple, a 
        first or subordinate mortgage or lien on all stock 
        allocated to a dwelling unit in a residential 
        cooperative housing corporation, or a first mortgage or 
        first lien on a leasehold--
                  (A) * * *

           *       *       *       *       *       *       *

          (5) First mortgage.--The term ``first mortgage'' 
        means such classes of first liens as are commonly given 
        to secure advances on, or the unpaid purchase price of, 
        real estate or a first or subordinate lien on all stock 
        allocated to a dwelling unit in a residential 
        cooperative housing corporation, under the laws of the 
        State in which the real estate or dwelling unit is 
        located, together with the credit instruments, if any, 
        secured thereby.

           *       *       *       *       *       *       *

  (d) Eligibility Requirements.--To be eligible for insurance 
under this section, a mortgage shall--
          (1) have been made to a mortgagee approved by the 
        Secretary [as responsible and able to service the 
        mortgage properly];

           *       *       *       *       *       *       *

  (g) Limitation on Insurance Authority.--[The aggregate number 
of mortgages insured under this section may not exceed 
275,000.] In no case may the benefits of insurance under this 
section exceed the maximum dollar amount [established under 
section 203(b)(2) for 1-family residences in the area in which 
the dwelling subject to the mortgage under this section is 
located] limitation established under section 305(a)(2) of the 
Federal Home Loan Mortgage Corporation Act for a 1-family 
residence.

           *       *       *       *       *       *       *

  (i) Protection of Homeowner and Lender.--
          (1) Notwithstanding any other provision of law, and 
        in order to further the purposes of the program 
        authorized in this section, the Secretary shall take 
        any action necessary--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) to provide any mortgagee under this 
                section with funds not to exceed the 
                [limitations] limitation in subsection (g) to 
                which the mortgagee is entitled under the terms 
                of the insured mortgage or ancillary contracts 
                authorized in this section.
          (2) Actions under paragraph (1) may include--
                  (A) disbursing funds to the mortgagor or 
                mortgagee from the [General Insurance Fund] 
                Mutual Mortgage Insurance Fund;

           *       *       *       *       *       *       *

  (k) Limitation on Origination Fees.--The Secretary shall 
establish limits on the origination fee that may be charged to 
a mortgagor under a mortgage insured under this section, which 
limitations shall--
          (1) equal two percent of the original principal limit 
        of the mortgage;
          (2) be subject to a minimum allowable amount;
          (3) provide that the origination fee may be fully 
        financed with the mortgage; and
          (4) include any fees paid to correspondent mortgagees 
        approved by the Secretary or to mortgage brokers.
  [(k)] (l) Insurance Authority for Refinancings.--
          (1) * * *

           *       *       *       *       *       *       *

  [(l)] (m) Waiver of Up-Front Premiums for Mortgages to Fund 
Long-Term Care Insurance.--
          (1) * * *

           *       *       *       *       *       *       *

  [(m)] (n) Funding for Counseling and Consumer Education and 
Outreach.--Of any amounts made available for any of fiscal 
years 2000 through 2003 for housing counseling under section 
106 of the Housing and Urban Development Act of 1968, up to a 
total of $1,000,000 shall be available to the Secretary in each 
such fiscal year, in such amounts as the Secretary determines 
appropriate, for the following purposes in connection with home 
equity conversion mortgages insured under this section:
          (1) * * *

           *       *       *       *       *       *       *

  (o) Authority To Insure Home Purchase Mortgage.--
          (1) In general.--Notwithstanding any other provision 
        in this section, the Secretary may insure, upon 
        application by a mortgagee, a home equity conversion 
        mortgage upon such terms and conditions as the 
        Secretary may prescribe, when the primary purpose of 
        the home equity conversion mortgage is to enable an 
        elderly mortgagor to purchase a 1- to 4-family dwelling 
        in which the mortgagor will occupy or occupies one of 
        the units.
          (2) Limitation on principal obligation.--A home 
        equity conversion mortgage insured pursuant to 
        paragraph (1) shall involve a principal obligation that 
        does not exceed the dollar amount limitation determined 
        under section 305(a)(2) of the Federal Home Loan 
        Mortgage Corporation Act for a residence of the 
        applicable size.

           *       *       *       *       *       *       *


SEC. 257. PROHIBITION REGARDING FAILURE ON PART OF SERVICER TO MAKE 
                    ESCROW PAYMENTS.

  In the case of any failure to make any payment as described 
in section 536(b)(1)(K), the Secretary may not submit any 
information to a consumer reporting agency (as such term is 
defined in section 603(f) of the Fair Credit Reporting Act (15 
U.S.C. 1681a(f))) regarding such failure that is adverse to the 
credit rating or interest of the mortgagor.

SEC. 258. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT 
                    SUFFICIENT CREDIT HISTORY.

  (a) Establishment.--The Secretary shall carry out a pilot 
program to establish, and make available to mortgagees, an 
automated process for providing alternative credit rating 
information for mortgagors and prospective mortgagors under 
mortgages on 1- to 4-family residences to be insured under this 
title who have insufficient credit histories for determining 
their creditworthiness. Such alternative credit rating 
information may include rent, utilities, and insurance payment 
histories, and such other information as the Secretary 
considers appropriate.
  (b) Scope.--The Secretary may carry out the pilot program 
under this section on a limited basis or scope, and may 
consider limiting the program--
          (1) to first-time homebuyers; or
          (2) metropolitan statistical areas significantly 
        impacted by subprime lending.
  (c) Limitation.--In any fiscal year, the aggregate number of 
mortgages insured pursuant to the automated process established 
under this section may not exceed 5 percent of the aggregate 
number of mortgages for 1- to 4-family residences insured by 
the Secretary under this title during the preceding fiscal 
year.
  (d) Sunset.--After the expiration of the 5-year period 
beginning on the date of the enactment of the Expanding 
American Homeownership Act of 2007, the Secretary may not enter 
into any new commitment to insure any mortgage, or newly insure 
any mortgage, pursuant to the automated process established 
under this section.

           *       *       *       *       *       *       *


TITLE V--MISCELLANEOUS

           *       *       *       *       *       *       *


                establishment of general insurance fund

    Sec. 519. (a) * * *

           *       *       *       *       *       *       *

    (e) The General Insurance Fund shall not be used for 
carrying out the provisions of sections [203(b) (except as 
provided in section 203(v)), 203(h) and 203(i)] 203, except as 
determined by the Secretary, or the provisions of section 213 
to the extent that they involve mortgages the insurance for 
which is the obligation of the Cooperative Management Housing 
Insurance Fund created by section 213(k), or the provisions of 
sections 223(e), 233(a)(2), 235, 236 and 237; and nothing in 
this section shall apply to or affect mortgages, loans, 
commitments, or insurance under such provisions.

           *       *       *       *       *       *       *


SEC. 536. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS, AND OTHER 
                    PARTICIPANTS IN FHA PROGRAMS.

    (a) In General.--
          (1) Authority.--If a mortgagee approved under the 
        Act, a lender holding a contract of insurance under 
        title I, or a principal, officer, or employee of such 
        mortgagee or lender, or other person or entity 
        participating in either an insured mortgage or title I 
        loan transaction under this Act or providing assistance 
        to the borrower in connection with any such loan, 
        including sellers of the real e
          (state involved, borrowers, closing agents, title 
        companies, real estate agents, mortgage brokers, 
        appraisers, servicers (including escrow account 
        servicers), loan correspondents and dealers, knowingly 
        and materially violates any applicable provision of 
        subsection (b), the Secretary may impose a civil money 
        penalty on the mortgagee or lender, or such other 
        person or entity, in accordance with this section. The 
        penalty under this paragraph shall be in addition to 
        any other available civil remedy or any available 
        criminal penalty, and may be imposed whether or not the 
        Secretary imposes other administrative sanctions. The 
        penalty shall be in addition to any other available 
        civil remedy or any available criminal penalty, and may 
        be imposed whether or not the Secretary imposes other 
        administrative sanctions.

           *       *       *       *       *       *       *

    (b) Violations for Which a Penalty May Be Imposed.--
          (1) Violations.--The Secretary may impose a civil 
        money penalty under subsection (a) for any knowing and 
        material violation by a mortgagee or lender, or other 
        participant referred to in subsection (a), as follows:
                  (A) * * *

           *       *       *       *       *       *       *

                  (K) In the case of a mortgage for a 1- to 4-
                family residence insured under title II that 
                requires the mortgagor to make payments to the 
                mortgagee or other servicer of the mortgage for 
                deposit into an escrow account for the purpose 
                of assuring payment of taxes, insurance 
                premiums, and other charges with respect to the 
                property, failure on the part of the servicer 
                to make any such payment from the escrow 
                account by the deadline to avoid a penalty with 
                respect to such payment provided for in the 
                mortgage, unless the servicer was not provided 
                notice of such deadline.
                  (L) In the case of any failure to make any 
                payment as described in subparagraph (K), 
                submitting any information to a consumer 
                reporting agency (as such term is defined in 
                section 603(f) of the Fair Credit Reporting Act 
                (15 U.S.C. 1681a(f))) regarding such failure 
                that is adverse to the credit rating or 
                interest of the mortgagor.

           *       *       *       *       *       *       *

    (c) Agency Procedures.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Factors in determining amount of penalty.--In 
        determining the amount of a penalty under subsection 
        (a), consideration shall be given to such factors as 
        the gravity of the offense, any history of prior 
        offenses (including those before enactment of this 
        section), ability to pay the penalty, injury to the 
        public, benefits received, deterrence of future 
        violations, and such other factors as the Secretary may 
        determine in regulations to be appropriate. In the case 
        of any failure to make a payment described in 
        subsection (b)(1)(K) for which the servicer fails to 
        reimburse the mortgagor (A) before the expiration of 
        the 60-day period beginning on the deadline to avoid a 
        penalty with respect to such payment, in the sum of the 
        amount not paid from the escrow account by such 
        deadline and the amount of any penalties accruing to 
        the mortgagor that are attributable to such failure, or 
        (B) in the amount of any attorneys fees incurred by the 
        mortgagor and attributable to such failure, the 
        Secretary shall increase the amount of the penalty 
        under subsection (a) for any such failure to reimburse, 
        unless the Secretary determines there are mitigating 
        circumstances.

           *       *       *       *       *       *       *


   INFORMATION REGARDING EARLY DEFAULTS AND FORECLOSURES ON INSURED 
                               MORTGAGES

  Sec. 540. (a) * * *
    (b) Contents.--
          (1) * * *
          (2) Other information.--Information collected under 
        this section shall also include the following:
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) The rates of default and foreclosure for 
                the applicable collection period for mortgages 
                insured pursuant to the programs for mortgage 
                insurance under paragraphs (2)(C) and (3) of 
                section 203(c).
                  (D) Actions taken by the Secretary during the 
                applicable collection period with respect to 
                loss mitigation on mortgages insured pursuant 
                to section 203.

           *       *       *       *       *       *       *


                  TITLE VI--DEFENSE HOUSING INSURANCE

  Sec. 601. As used in this title--
  (a) * * *
  (b) The term ``mortgagee'' [includes the original lender 
under a mortgage, and his successors and assigns approved by 
the Secretary] has the meaning given such term in section 201; 
and the term ``mortgagor'' includes the original borrower under 
a mortgage and his successors and assigns.

           *       *       *       *       *       *       *

  Sec. 603. (a) * * *
  (b) To be eligible for insurance under this section a 
mortgage shall--
          (1) have been made to[, and be held by,] a mortgagee 
        approved by the Secretary [as responsible and able to 
        service the mortgage properly];

           *       *       *       *       *       *       *

  Sec. 611. (a) * * *
  (b) To be eligible for insurance under this section, a 
morgage shall--
          (1) have been made to [and be held by] a mortgagee 
        approved by the Secretary [as responsible and able to 
        service the mortgage properly];

           *       *       *       *       *       *       *


         TITLE VIII--ARMED SERVICES HOUSING MORTGAGE INSURANCE

    Sec. 801. As used in this title--
    (a) * * *
    (b) The term ``mortgagee'' [includes the original lender 
under a mortgage, and his successors and assigns approved by 
the Secretary] has the meaning given such term in section 201; 
and the term ``mortgagor'' includes the original borrower under 
a mortgage, his successors and assigns.

           *       *       *       *       *       *       *


TITLE VI--NATIONAL DEFENSE HOUSING INSURANCE

           *       *       *       *       *       *       *


  Sec. 903. (a) * * *
  (b) To be eligible for insurance under this section a 
mortgage shall--
          (1) have been made to[, and be held by,] a mortgagee 
        approved by the Secretary [as responsible and able to 
        service the mortgage properly];

           *       *       *       *       *       *       *


       TITLE XI--MORTGAGE INSURANCE FOR GROUP PRACTICE FACILITIES

                         insurance of mortgages

    Sec. 1101. (a) * * *
    (b) To be eligible for insurance under this title, the 
mortgage shall (1) be executed by a mortgagor that is a group 
practice unit or organization or other mortgagor, approved by 
the Secretary, (2) be made to [and held by] a mortgagee 
approved by the Secretary [as responsible and able to service 
the mortgage properly], and (3) cover a property or project 
which is approved for mortgage insurance prior to the beginning 
of construction or rehabilitation and is designed for use as a 
group practice facility or medical practice facility which the 
Secretary finds will be constructed in an economical manner, 
will not be of elaborate or extravagant design or materials, 
and will be adequate and suitable for carrying out the purposes 
of this title. No mortgage shall be insured under this title 
unless it is shown to the satisfaction of the Secretary that 
the applicant would be unable to obtain the mortgage loan 
without such insurance on terms comparable to those specified 
in subsection (c).

           *       *       *       *       *       *       *


                              definitions

    Sec. 1106. For the purposes of this title--
    (1) * * *

           *       *       *       *       *       *       *

    (8) The term ``mortgagee'' [means the original lender under 
a mortgage, and his or its successors and assigns, and] has the 
meaning given such term in section 201, except that such term 
also includes 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 named therein.

           *       *       *       *       *       *       *

                              ----------                              


                     DEFICIT REDUCTION ACT OF 2005



           *       *       *       *       *       *       *
           TITLE II--HOUSING AND DEPOSIT INSURANCE PROVISIONS

Subtitle A--FHA Asset Disposition

           *       *       *       *       *       *       *


SEC. 2004. VALUATION OF MULTIFAMILY PROPERTIES IN NONCOMPETITIVE SALES 
                    BY HUD TO STATES AND LOCALITIES.

  Notwithstanding any other provision of law and with respect 
to any fiscal year, in determining the market value of any 
multifamily real property or multifamily loan for any 
noncompetitive sale to a State or local government entity, the 
Secretary shall consider, but not be limited to, industry 
standard appraisal practices, including the cost of repairs 
needed to bring the property at least to minimum State and 
local code standards and of maintaining the existing 
affordability restrictions imposed by the Secretary on the 
multifamily real property or multifamily loan.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    H.R. 1852, THE ``EXPANDING AMERICAN HOMEOWNERSHIP ACT OF 2007''

    The Federal Housing Administration (FHA) was established by 
the National Housing Act of 1934 to broaden homeownership, 
protect lending institutions, and stimulate the building 
industry. Prior to the creation of FHA, home mortgages 
typically did not exceed 50 percent of the home value or extend 
beyond five years. At the end of the five years, mortgages had 
to be repaid or renegotiated. During the Great Depression, 
lenders were unable or unwilling to renegotiate many loans as 
they came due. Consequently, many borrowers lost their homes 
and lenders lost money because property values declined 
significantly. The FHA program, which is administered by the 
Department of Housing and Urban Development (HUD), was 
established to provide stability and liquidity in the market. 
Its creation fostered the development of the 30-year mortgage 
product and led to standardized mortgage instruments.
    Since 1934, FHA has insured more than 33 million loans and 
is the largest insurer of mortgages in the world. During the 
1940s, FHA helped finance military housing and homes for 
returning veterans. In the 1980s, FHA helped to steady falling 
home prices and made it possible for potential homebuyers to 
obtain financing at a time when the private sector was 
withdrawing from targeted geographical regions, such as the 
oil-producing states.
    While there is a lack of familiarity with FHA, and a 
mistaken belief that FHA directly provides mortgage loans, the 
agency actually only provides mortgage insurance for those 
loans that meet FHA-established underwriting standards. 
Moreover, these FHA-insured loans are available to owner-
occupants who can demonstrate the ability to repay the loans. 
In contrast to loans in the conventional market, primarily 
purchased and meeting guidelines established by Government 
Sponsored Enterprises (GSEs) or the Jumbo Market, FHA 
underwriting standards allow for more flexibility in 
calculating household income and debt/payment ratios. The cost 
of mortgage insurance is passed along to the homeowner in the 
form of an up front premium paid at the time of the closing and 
a second premium charged on an annual basis and typically paid 
monthly.
    FHA is one of the few government agencies to operate 
entirely based on the fee income derived from its programs, 
which means the taxpayer does not pay for or subsidize the 
agency. There are two funds operated by FHA: (1) Mutual 
Mortgage Insurance Fund (MMIF), and the General Insurance/
Special Risk Fund (GI/SRI). Despite FHA's ability to pay for 
itself, there has been considerable debate on the proper role 
of a government agency in promoting homeownership, which 
includes the question of whether the agency should be involved 
in mortgage insurance activities where a private sector 
industry exists to meet the need. Arguably, FHA is primarily 
used for first-time, inner-city, and rural homebuyers, a market 
where private sector activity has been thought to lag behind. 
However, the private sector has argued that it is using new 
technologies to market its products more aggressively in these 
typically underserved areas and markets.
    Many FHA proponents believe that the program must be 
reformed in order for it to maintain its relevance in the 
marketplace. While FHA was previously considered an innovator, 
its products currently lag behind private-market offerings, 
often leaving consumers with the sole option of obtaining 
costly, more risky loans available in the subprime market. The 
FHA program is also cumbersome and antiquated technologically, 
leading many lenders to forgo FHA product origination.
    On the same day that Housing Subcommittee Chairwoman Maxine 
Waters and Financial Services Chairman Barney Frank introduced 
H.R. 1852, the ``Expanding American Homeownership Act of 
2007,'' Housing Subcommittee Ranking Member Judy Biggert and 
Full Committee Ranking Member Spencer Bachus introduced H.R. 
1752, also entitled ``The Expanding American Homeownership Act 
of 2007.'' H.R. 1752 is identical to H.R. 5121, bipartisan 
legislation that passed the House last Congress by a margin of 
415-7.
    H.R. 1752 proposes comprehensive reform of FHA's single-
family mortgage insurance activities. The legislation would 
allow FHA to base each borrower's mortgage insurance premiums 
upon the risk that the borrower poses to the FHA Mortgage 
Insurance Fund, with slight variations. Under this proposal, 
mortgage insurance premiums would be based on the borrower's 
credit history, loan-to-value ratio, debt-to-income ratio, and 
on FHA's historical experience with similar borrowers. The 
Administration has stated it believes that this change would 
decrease premiums for many of FHA's traditional borrowers, 
thereby increasing access to homeownership.
    H.R. 1752 would also amend the National Housing Act to 
change the factors used to determine the maximum single family 
mortgage amounts insurable by FHA. Generally, under current 
law, the maximum insurable mortgage is the lesser of a maximum 
allowable dollar amount and an amount based on a maximum 
percentage of appraised value plus the mortgage insurance 
premium.
    Currently, FHA maximum mortgage dollar amounts are 
established with reference to the median home price for the 
area in which the property is located. For a single-family 
residence, the maximum dollar amount that can be insured is 95% 
of the median home price for the area. For two-, three- and 
four-family residences the maximum dollar amounts that can be 
insured are 107%, 130% and 150% of such median price, 
respectively. These amounts are capped and cannot exceed 87% of 
the Federal Home Loan Mortgage Corporation Association 
conforming loan limit, which now stands at $362,790 for a one-
unit property. There is also a statutory ``floor'' amount below 
which the maximum mortgage dollar amount cannot be set. The 
current ``floor'' is set at 48% of the FHLMC conforming loan 
limit, now $200,160 for a one-unit property.
    In addition, under H.R. 1752, FHA would be allowed to 
insure up to the full median house price in the area, as 
opposed to 95% of the median house price. Moreover, for 
consistency, the references to the percentages for two-, three- 
and four-family residences would be removed from the statute. 
This proposal strikes the 87% cap, and allows FHA to insure up 
to 100% of the FHLMC loan limit. Also, the bill increases the 
``floor'' to 65% of the FHLMC conforming loan limit.
    Although H.R. 1852 contains many of the reforms included in 
H.R. 1752, it also features several significant departures from 
last Congress's House-passed bill. These important differences 
include:
           H.R. 1852 limits eligibility for low- and 
        no-downpayment FHA loans to first time homebuyers, 
        while H.R. 1752 allows participation by any FHA-
        qualified borrower, including those seeking to 
        refinance an existing loan;
           H.R. 1852 includes a directive for FHA to 
        serve high-risk borrowers (those with FICO scores of 
        560 or lower), while H.R. 1752 includes no such 
        mandate;
           H.R. 1852 caps annual premiums for borrowers 
        making at least a 3% down payment (including borrowers 
        deemed high-risk) at current levels, while H.R. 1752 
        gives HUD greater flexibility to devise a truly risk-
        based pricing structure for the FHA program that more 
        closely matches the premiums paid by an individual 
        borrower to that borrower's credit history; and
           H.R. 1852 authorizes the use of surpluses 
        generated by the FHA program to support the creation of 
        a grant program to fund affordable rental housing and 
        affordable homeownership opportunities for low-income 
        families, while H.R. 1752 contains no such provision.
    H.R. 1852's provisions to divert a portion of FHA surpluses 
to fund a new, unrelated, and as yet undefined government 
housing program caused the greatest concern among Republicans 
during the Committee's consideration of the legislation. These 
concerns are shared by the Administration. On May 1, 2007, HUD 
transmitted a letter to Chairman Frank outlining its views on 
H.R. 1852. Regarding the affordable housing fund, the letter 
stated:

    H.R. 1852 also includes provisions that would have an 
adverse budgetary effect. The act would create an Affordable 
Housing Grant Fund with savings from increased FHA receipts. 
This is potentially disruptive to the existing appropriations 
process. All FHA receipts are currently netted against HUD's 
spending totals and taken into consideration during 
appropriations for the Department. The proposal's details are 
also undefined and unclear; therefore, the specifics may raise 
additional policy concerns. In addition, the act revises 
certain recently enacted asset disposition reforms for FHA 
multifamily programs.

    The bulk of the surplus generated by FHA under H.R. 1852 
would result from the negative credit subsidy created by HUD's 
collection of premiums under the Home Equity Conversion 
Mortgage (HECM) program. HECM loans are reverse mortgages that 
allow homeowners over the age of 62 to tap the equity in their 
homes in the form of monthly payments, lump sum distributions, 
or lines of credit. Republicans believe that excess premiums 
under the HECM program should remain in FHA for the benefit of 
senior citizens and other FHA beneficiaries, rather than being 
redirected to an amorphous affordable housing fund.
    To address concerns about the affordable housing fund and 
the other key differences between the Republican and Democratic 
approaches to FHA modernization identified above, Republicans 
offered a series of amendments at the markup of H.R. 1852. Most 
notably, Mrs. Biggert offered an amendment to substitute the 
text of H.R. 1752 for H.R. 1852, and Ranking Member Bachus 
offered an amendment to postpone the new spending authorized by 
H.R. 1852 to finance the affordable housing fund until such 
time as Congress stops raiding the Social Security surplus to 
pay for unrelated government initiatives. Both amendments were 
defeated, prompting a majority of Committee Republicans to vote 
against favorably reporting the legislation to the full House.
    While we support legislation that modernizes the FHA 
program and reestablishes it as a viable alternative for low- 
and middle-income homebuyers, we will continue to oppose 
legislation that siphons funds away from the FHA program as 
seed money for an affordable housing agenda that has not been 
adequately delineated or explained by its proponents.
                                   Spencer Bachus.
                                   K. Marchant.
                                   Adam H. Putnam.
                                   Tom Feeney.
                                   Donald A. Manzullo.
                                   Frank D. Lucas.
                                   Judy Biggert.
                                   Geoff Davis.
                                   Paul Gillmor.
                                   Randy Neugebauer.
                                   Ginny Brown-Waite.
                                   Stevan Pearce.