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116th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 116-197
======================================================================
HOMEOWNERSHIP FOR DREAMERS ACT
_______
September 6, 2019.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Ms. Waters, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 3154]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 3154) to clarify that eligibility of certain
mortgages with Federal credit enhancement may not be
conditioned on the status of a mortgagor as a DACA recipient if
all other eligibility criteria are satisfied, 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
Page Purpose and Summary......................................... 2
Background and Need for Legislation.............................. 3
Section-by-Section Analysis...................................... 3
Hearings......................................................... 3
Committe Consideration........................................... 4
Committee Votes and Roll Call Votes.............................. 4
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 6
Statement of Performance Goals and Objectives.................... 6
New Budget Authority and CBO Cost Estimate....................... 6
Committee Cost Estimate.......................................... 8
Unfunded Mandate Statement....................................... 8
Advisory Committee............................................... 8
Application of Law to the Legislative Branch..................... 8
Earmark Statement................................................ 8
Duplication of Federal Programs.................................. 8
Changes to Existing Law.......................................... 9
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Homeownership for DREAMers Act''.
SEC. 2. DACA RECIPIENT ELIGIBILITY.
(a) FHA.--Section 203 of the National Housing Act (12 U.S.C. 1709) is
amended by inserting after subsection (h) the following:
``(i) DACA Recipient Eligibility.--
``(1) In general.--The Secretary may not--
``(A) prescribe terms that limit the eligibility of a
single family mortgage for insurance under this title
because of the status of the mortgagor as a DACA
recipient; or
``(B) issue any limited denial of participation in
the program for such insurance because of the status of
the mortgagor as a DACA recipient.
``(2) DACA recipient defined.--For the purposes of this
subsection, the term `DACA recipient' means an alien who, at
any time before, on, or after the date of the enactment of this
subsection, is or was in deferred action status pursuant to the
Deferred Action for Childhood Arrivals (`DACA') Program
announced by the Secretary of Homeland Security on June 15,
2012.
``(3) Exemption.--
``(A) Denial for failure to satisfy valid eligibility
requirements.--Nothing in this title prohibits the
denial of insurance based on failure to satisfy valid
eligibility requirements.
``(B) Invalid eligibility requirements.--Valid
eligibility requirements do not include criteria that
were adopted with the purpose of denying eligibility
for insurance because of race, color, religion, sex,
familial status, national origin, disability, or the
status of a mortgagor as a DACA recipient.''.
(b) Rural Housing Service.--Section 501 of the Housing Act of 1949
(42 U.S.C. 1472) is amended by adding at the end the following:
``(k) DACA Recipient Eligibility.--
``(1) In general.--The Secretary may not prescribe terms that
limit eligibility for a single family mortgage made, insured,
or guaranteed under this title because of the status of the
mortgagor as a DACA recipient.
``(2) DACA recipient defined.--For the purposes of this
paragraph, the term `DACA recipient' means an alien who, at any
time before, on, or after the date of the enactment of this
paragraph, is or was in deferred action status pursuant to the
Deferred Action for Childhood Arrivals (`DACA') Program
announced by the Secretary of Homeland Security on June 15,
2012.''.
(c) Fannie Mae.--Section 302(b) of the National Housing Act (12
U.S.C. 1717(b)) is amended by adding at the end the following:
``(8) DACA recipient eligibility.--
``(A) In general.--The corporation may not condition
purchase of a single-family residence mortgage by the
corporation under this subsection on the status of the
borrower as a DACA recipient.
``(B) DACA recipient defined.--For the purposes of
this paragraph, the term `DACA recipient' means an
alien who, at any time before, on, or after the date of
the enactment of this paragraph, is or was in deferred
action status pursuant to the Deferred Action for
Childhood Arrivals (`DACA') Program announced by the
Secretary of Homeland Security on June 15, 2012.''.
(d) Freddie Mac.--Section 305(a) of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454) is amended by adding at the end the
following:
``(6) DACA recipient eligibility.--
``(A) In general.--The Corporation may not condition
purchase of a single-family residence mortgage by the
corporation under this subsection on the status of the
borrower as a DACA recipient.
``(B) DACA recipient defined.--For the purposes of
this subsection, the term `DACA recipient' means an
alien who, at any time before, on, or after the date of
the enactment of this subsection, is or was in deferred
action status pursuant to the Deferred Action for
Childhood Arrivals (`DACA') Program announced by the
Secretary of Homeland Security on June 15, 2012.''.
Purpose and Summary
On June 5, 2019, Rep. Juan Vargas introduced H.R. 3154, the
``Homeownership for DREAMers Act,'' a bill which clarifies that
recipients of Deferred Action for Childhood Arrivals (DACA)
cannot be deemed ineligible for mortgage loans backed by
Federal Housing Administration (FHA), Fannie, Freddie, or the
U.S. Department of Agriculture (USDA) solely on the basis of
their status as DACA recipients.
Background and Need for Legislation
On December 14, 2018, it was reported that the Trump
Administration had begun to deny FHA loans to DACA
recipients.\1\ The initial media report from BuzzFeed included
interviews with employees of lenders who had been successfully
originating FHA loans for DACA recipients for years with FHA
approval, but under direction from the Trump Administration,
had started receiving denials. Representatives of the
Department of Housing and Urban Development denied making any
formal change to its policies.
---------------------------------------------------------------------------
\1\BuzzFeed, ``The Trump Administration Is Quietly Denying Federal
Housing Loans To DACA Recipients,'' Dec. 14, 2018.
---------------------------------------------------------------------------
Fannie Mae has since clarified that DACA recipients are and
will continue to be eligible for loans that they back.\2\
Freddie Mac and USDA do not appear to have clarified their
policies in this respect.
---------------------------------------------------------------------------
\2\HousingWire, ``Fannie Mae declares support for DACA mortgage
borrowers,'' Mar. 26, 2019.
---------------------------------------------------------------------------
The following organizations support this bill: the Asian
Pacific American Community Development (National CAPACD), the
Asian Real Estate Association of America, the Center for
Responsible Lending (CRL), The Leadership Conference on Civil
and Human Rights, the Mortgage Bankers Association (MBA), the
NAACP, the National Association of Hispanic Real Estate
Professionals (NAHREP), the National Fair Housing Alliance
(NFHA), UnidosUS, and United We Dream.
Section-by-Section Analysis
Section 1. Short title
This section states that the title of the bill is the
``Homeownership for Dreamers Act.''
Section 2. DACA recipient eligibility
This section amends Sections 203, 501, 302, and 305 of the
National Housing Act (12 U.S.C. 1709) by inserting language
that defines ``DACA recipient'' and by also clarifying that
FHA, USDA Rural Housing Service, Fannie Mae, and Freddie Mac
may not limit a borrower's eligibility based on their status as
a DACA recipient.
Hearings
For the purposes of section 103(i) of H. Res. 6 for the
116th Congress, the Committee on Financial Services held a
hearing to consider a draft version of H.R. 3154 entitled, ``A
Review of the State of and Barriers to Minority Homeownership''
on May 8, 2019. Testifying before the Committee were Alanna
McCargo, Vice President, Housing Finance Policy, the Urban
Institute; Nikitra Bailey, Executive Vice President, Center for
Responsible Lending; Joseph Nery, Partner, Nery & Richardson
LLC and Past President of the National Association of Hispanic
Real Estate Professionals (NAHREP), current National Board
Member; Jeffrey Hicks, President, National Association of Real
Estate Brokers; Carmen Castro-Conroy, Managing Counselor,
Montgomery County, Housing Initiative Partnership, Inc.; JoAnne
Poole, 2019 Vice Chair, Multicultural Real Estate Leadership
Advisory Group, National Association of Realtors; and Joel
Griffith, Research Fellow, Financial Regulations, the Heritage
Foundation
Committee Consideration
The Committee on Financial Services met in open session on
June 11, 2019 and ordered H.R. 3154 to be reported favorably to
the House with an amendment in the nature of a substitute by a
vote of 33 yeas and 25 nays, a quorum being present.
Committee Votes and Roll Call Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following roll call votes occurred during the Committee's
consideration of H.R. 3154.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
Statement of Performance Goals and Objectives
Pursuant to clause (3)(c) of rule XIII of the Rules of the
House of Representatives, the goals of H.R. 3154 are to clarify
that borrowers are not denied lending opportunities by FHA,
USDA, Fannie Mae, or Freddie Mac based on their status as DACA
recipients.
New Budget Authority and CBO Cost Estimate
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the
House of Representatives and section 308(a) of the
Congressional Budget Act of 1974, and pursuant to clause
3(c)(3) of rule XIII of the Rules of the House of
Representatives and section 402 of the Congressional Budget Act
of 1974, the Committee has received the following estimate for
H.R. 3154 from the Director of the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 8, 2019.
Hon. Maxine Waters,
Chairwoman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Madam Chairwoman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3154, the
Homeownership for DREAMers Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Aurora
Swanson.
Sincerely,
Phillip L. Swagel,
Director.
Enclosure.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
H.R. 3154 would clarify that noncitizens in deferred action
status under the Deferred Action for Childhood Arrivals (DACA)
program are eligible to obtain federally guaranteed mortgages
for single-family homes. Most federal mortgage guarantees are
offered by the Federal Housing Administration (FHA), and two
government-sponsored enterprises (GSEs)--Fannie Mae and Freddie
Mac. FHA guidelines are not explicit about the eligibility of
those with DACA status for its mortgage guarantee program, but
FHA requires mortgage lenders to determine the likelihood that
a noncitizen's work authorization will be renewed when
evaluating the risk of issuing a mortgage that will be
guaranteed by FHA.
The Administration has proposed to terminate the DACA
program that currently provides lawful presence and work
authorization to nearly 700,000 inadmissible or deportable
aliens. That policy proposal is currently subject to a
nationwide injunction but CBO's baseline incorporates the
assumption that the Administration's proposed policy will be
implemented by October 1, 2021. If that occurs, deferred-action
status under DACA will be revoked, including the authorization
of those noncitizens to work legally in the United States.
CBO estimates that enacting H.R. 3154 could have an
insignificant effect on spending subject to appropriation over
the 2019-2024 period. Although more borrowers might seek an FHA
guaranteed mortgage under the bill, those applicants would
continue to face the financial risk of the pending termination
of DACA and their right to work legally in the United States.
CBO estimates that enacting H.R. 3154 would not change how
lenders evaluate that risk when determining whether to issue
mortgages to those with DACA status. Thus, CBO expects that
enacting H.R. 3154 would not lead to a significant increase in
the number or value of federal mortgage guarantees.
Under current law, the GSEs treat certain noncitizens as
eligible to obtain mortgage guarantees. Using information from
the GSEs, and their regulator, the Federal Housing Finance
Administration, CBO estimates that implementing the bill would
not affect mortgage guarantees issued by the GSEs because DACA
recipients already are explicitly eligible for mortgages under
those programs.
The CBO staff contact for this estimate is Aurora Swanson.
The estimate was reviewed by H. Samuel Papenfuss, Deputy
Assistant Director for Budget Analysis.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 3154.
However, clause 3(d)(2)(B) of that rule provides that this
requirement does not apply when the committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act.
Unfunded Mandate Statement
Pursuant to Section 423 of the Congressional Budget and
Impoundment Control Act (as amended by Section 101(a)(2) of the
Unfunded Mandates Reform Act, Pub. L. 104-4), the Committee
adopts as its own the estimate of federal mandates regarding
H.R. 3154, as amended, prepared by the Director of the
Congressional Budget Office.
Advisory Committee
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Application of Law to the Legislative Branch
Pursuant to section 102(b)(3) of the Congressional
Accountability Act, Pub. L. No. 104-1, H.R. 3154, as amended,
does not apply to terms and conditions of employment or to
access to public services or accommodations within the
legislative branch.
Earmark Statement
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives H.R. 3154 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as described in clauses 9(e), 9(f), and 9(g) of rule
XXI.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of H.R. 3154 establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
federal program, a program that was included in any report from
the Government Accountability Office to Congress pursuant to
section 21 of Public Law 111-139, or a program related to a
program identified in the most recent Catalog of Federal
Domestic Assistance.
Changes to Existing Law
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, H.R. 3154, as reported, are shown as follows:
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 (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
NATIONAL HOUSING ACT
* * * * * * *
TITLE II--MORTGAGE INSURANCE
* * * * * * *
insurance of mortgages
Sec. 203. (a) The Secretary is authorized, upon application
by the mortgagee, to insure as hereinafter provided any
mortgage offered to him which is eligible for insurance as
hereinafter provided, and, upon such terms as the Secretary may
prescribe, to make commitments for the insuring of such
mortgages prior to the date of their execution or disbursement
thereon.
(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, 115 percent of 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 determined under the
sixth sentence of 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 determined under such
section for a 1-family residence; or
(ii) 150 percent of the dollar amount
limitation determined under the sixth
sentence of such section 305(a)(2) for
a residence of applicable size;
except that the dollar amount limitation in
effect under this subparagraph for any size
residence for any area 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 amount limitation determined under the
sixth sentence of such section 305(a)(2) for a
residence of the applicable size; and
(B) not to exceed 100 percent of the
appraised value of the property.
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.
Notwithstanding any other provision of this
paragraph, the amount which may be insured under this
section may be increased by up to 20 percent if such
increase is necessary to account for the increased cost
of the residence due to the installation of a solar
energy system (as defined in subparagraph (3) of the
last paragraph of section 2(a) of this Act) therein.
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.
(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) from the date of the
beginning of amortization of the mortgage.
(4) Contain complete amortization provisions
satisfactory to the Secretary requiring periodic
payments by the mortgagor not in excess of his
reasonable ability to pay as determined by the
Secretary.
(5) Bear interest at such rate as may be agreed upon
by the mortgagor and the mortgagee.
(6) Provide, in a manner satisfactory to the
Secretary, for the application of the mortgagor's
periodic payments (exclusive of the amount allocated to
interest and to the premium charge which is required
for mortgage insurance as hereinafter provided) to
amortization of the principal of the mortgage.
(7) Contain such terms and provisions with respect to
insurance, repairs, alterations, payment of taxes,
default reserves, delinquency charges, foreclosure
proceedings, anticipation of maturity, additional and
secondary liens, and other matters as the Secretary may
in his discretion prescribe.
(9) Cash investment requirement.--
(A) In general.--A mortgage insured under
this section shall be executed by a mortgagor
who shall have paid, in cash or its equivalent,
on account of the property an amount equal to
not less than 3.5 percent of the appraised
value of the property or such larger amount as
the Secretary may determine.
(B) Family members.--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, that--
(i) such lien shall be subordinate to
the mortgage; and
(ii) 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.
(C) Prohibited sources.--In no case shall the
funds required by subparagraph (A) consist, in
whole or in part, of funds provided by any of
the following parties before, during, or after
closing of the property sale:
(i) The seller or any other person or
entity that financially benefits from
the transaction.
(ii) Any third party or entity that
is reimbursed, directly or indirectly,
by any of the parties described in
clause (i).
This subparagraph shall apply only to mortgages
for which the mortgagee has issued credit
approval for the borrower on or after October
1, 2008.
(c)(1) The Secretary is authorized to fix premium charge for
the insurance of mortgages under the separate sections of this
title but in the case of any mortgage such charge shall be not
less than an amount equivalent to one-fourth of 1 per centum
per annum nor more than an amount equivalent to 1 per centum
per annum of the amount of the principal obligation of the
mortgage outstanding at any time, without taking into account
delinquent payments or prepayments: Provided, That premium
charges fixed for insurance (1) under section 245, 247, 251,
252, or 253, or any other financing mechanism providing
alternative methods for repayment of a mortgage that is
determined by the Secretary to involve additional risk, or (2)
under subsection (n) are not required to be the same as the
premium charges for mortgages insured under the other
provisions of this section, but in no case shall premium
charges under subsection (n) exceed 1 per centum per annum:
Provided, That any reduced premium charge so fixed and computed
may, in the discretion of the Secretary, also be made
applicable in such manner as the Secretary shall prescribe to
each insured mortgage outstanding under the section or sections
involved at the time the reduced premium charge is fixed. Such
premium charges shall be payable by the mortgagee, either in
cash, or in debentures issued by the Secretary under this title
at par plus accrued interest, in such manner as may be
prescribed by the Secretary: Provided, That debentures
presented in payment of premium charges shall represent
obligations of the particular insurance fund or account to
which such premium charges are to be credited: Provided
further, That the Secretary may require the payment of one or
more such premium charges at the time the mortgage is insured,
at such discount rate as he may prescribe not in excess of the
interest rate specified in the mortgage. If the Secretary finds
upon the presentation of a mortgage for insurance and the
tender of the initial premium charge or charges so required
that the mortgage complies with the provisions of this section,
such mortgage may be accepted for insurance by endorsement or
otherwise as the Secretary may prescribe; but no mortgage shall
be accepted for insurance under this section unless the
Secretary finds that the project with respect to which the
mortgage is executed is economically sound. In the event that
the principal obligation of any mortgage accepted for insurance
under this title is paid in full prior to the maturity date,
the Secretary is further authorized in his discretion to
require the payment by the mortgagee of an adjusted premium
charge in such amount as the Secretary determines to be
equitable, but not in excess of the aggregate amount of the
premium charges that the mortgagee would otherwise have been
required to pay if the mortgage had continued to be insured
until such maturity date; and in the event that the principal
obligation is paid in full as herein set forth, the Secretary
is authorized to refund to the mortgagee for the account of the
mortgagor all, or such portion as he shall determine to be
equitable, of the current unearned premium charges theretofore
paid: Provided, That with respect to mortgages (1) for which
the Secretary requires, at the time the mortgage is insured,
the payment of a single premium charge to cover the total
premium obligation for the insurance of the mortgage, and (2)
on which the principal obligation is paid before the number of
years on which the premium with respect to a particular
mortgage was based, or the property is sold subject to the
mortgage or is sold and the mortgage is assumed prior to such
time, the Secretary shall provide for refunds, where
appropriate, of a portion of the premium paid and shall provide
for appropriate allocation of the premium cost among the
mortgagors over the term of the mortgage, in accordance with
procedures established by the Secretary which take into account
sound financial and actuarial considerations.
(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 shall be
subject to the following requirements:
(A) The Secretary shall establish and collect, at the
time of insurance, a single premium payment in an
amount not exceeding 3 percent of the amount of the
original insured principal obligation of the mortgage.
In the case of a mortgage for which the mortgagor is a
first-time homebuyer who completes a program of
counseling with respect to the responsibilities and
financial management involved in homeownership that is
approved by the Secretary, the premium payment under
this subparagraph shall not exceed 2.75 percent of the
amount of the original insured principal obligation of
the mortgage. Upon payment in full of the principal
obligation of a mortgage prior to the maturity date of
the mortgage, the Secretary shall refund all of the
unearned premium charges paid on the mortgage pursuant
to this subparagraph, provided that the mortgagor
refinances the unpaid principal obligation under title
II of this Act.
(B) In addition to the premium under subparagraph
(A), the Secretary may establish and collect annual
premium payments in an amount not exceeding 1.5 percent
of the remaining insured principal balance (excluding
the portion of the remaining balance attributable to
the premium collected under subparagraph (A) and
without taking into account delinquent payments or
prepayments) for the following periods:
(i) For any mortgage involving an original
principal obligation (excluding any premium
collected under subparagraph (A)) that is less
than 90 percent of the appraised value of the
property (as of the date the mortgage is
accepted for insurance), for the first 11 years
of the mortgage term.
(ii) For any mortage involving an original
principal obligation (excluding any premium
collected under subparagraph (A)) that is
greater than or equal to 90 percent of such
value, for the first 30 years of the mortgage
term; except that notwithstanding the matter
preceding clause (i), for any mortgage
involving an original principal obligation
(excluding any premium collected under
subparagraph (A)) that is greater than 95
percent of such value, the annual premium
collected during the 30-year period under this
clause may be in an amount not exceeding 1.55
percent of the remaining insured principal
balance (excluding the portion of the remaining
balance attributable to the premium collected
under subparagraph (A) and without taking into
account delinquent payments or prepayments).
(C)(i) In addition to the premiums under
subparagraphs (A) and (B), the Secretary shall
establish and collect annual premium payments for any
mortgage for which the Secretary collects an annual
premium payment under subparagraph (B), in an amount
described in clause (ii).
(ii)(I) Subject to subclause (II), with respect to a
mortgage, the amount described in this clause is 10
basis points of the remaining insured principal balance
(excluding the portion of the remaining balance
attributable to the premium collected under
subparagraph (A) and without taking into account
delinquent payments or prepayments).
(II) During the 2-year period beginning on the date
of enactment of this subparagraph, the Secretary shall
increase the number of basis points of the annual
premium payment collected under this subparagraph
incrementally, as determined appropriate by the
Secretary, until the number of basis points of the
annual premium payment collected under this
subparagraph is equal to the number described in
subclause (I).
(d)(1) Except as provided in paragraph (2) of this
subsection, notwithstanding provision of this title governing
maximum mortgage amounts for insuring a mortgage secured by a
one- to four-family dwelling, the maximum amount of the
mortgage determined under any such provision may be increased
by the amount of the mortgage insurance premium paid at the
time the mortgage is insured.
(2) The maximum amount of a mortgage determined under
subsection (b)(2)(B) of this section may not be increased as
provided in paragraph (1).
(e) Any contract of insurance heretofore or hereafter
executed by the Secretary under this title shall be conclusive
evidence of the eligibility of the loan or mortgage for
insurance, and the validility of any contract of insurance so
executed shall be incontestable in the hands of an approved
financial institution or approved mortgagee from the date of
the execution of such contract, except for fraud or
misrepresentation on the part of such approved financial
institution or approved mortgagee.
(f) Disclosure of Other Mortgage Products.--
(1) In general.--In conjunction with any loan insured
under this section, an original lender shall provide to
each prospective borrower a disclosure notice that
provides a 1-page analysis of mortgage products offered
by that lender and for which the borrower would
qualify.
(2) Notice.--The notice required under paragraph (1)
shall include--
(A) a generic analysis comparing the note
rate (and associated interest payments),
insurance premiums, and other costs and fees
that would be due over the life of the loan for
a loan insured by the Secretary under
subsection (b) with the note rates, insurance
premiums (if applicable), and other costs and
fees that would be expected to be due if the
mortgagor obtained instead other mortgage
products offered by the lender and for which
the borrower would qualify with a similar loan-
to-value ratio in connection with a
conventional mortgage (as that term is used in
section 305(a)(2) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1454(a)(2))
or section 302(b)(2) of the Federal National
Mortgage Association Charter Act (12 U.S.C.
1717(b)(2)), as applicable), assuming
prevailing interest rates; and
(B) a statement regarding when the
requirement of the mortgagor to pay the
mortgage insurance premiums for a mortgage
insured under this section would terminate, or
a statement that the requirement shall
terminate only if the mortgage is refinanced,
paid off, or otherwise terminated.
(g)(1) The Secretary may insure a mortgage under this title
that is secured by a 1- to 4-family dwelling, or approve a
substitute mortgagor with respect to any such mortgage, only if
the mortgagor is to occupy the dwelling as his or her principal
residence or as a secondary residence, as determined by the
Secretary. In making this determination with respect to the
occupancy of secondary residences, the Secretary may not insure
mortgages with respect to such residences unless the Secretary
determines that it is necessary to avoid undue hardship to the
mortgagor. In no event may a secondary residence under this
subsection include a vacation home, as determined by the
Secretary.
(2) The occupancy requirement established in paragraph (1)
shall not apply to any mortgagor (or co-mortgagor, as
appropriate) that is--
(A) a public entity, as provided in section 214 or
247, or any other State or local government or an
agency thereof;
(B) a private nonprofit or public entity, as provided
in section 221(h) or 235(j), or other private nonprofit
organization that is exempt from taxation under section
501(c)(3) of the Internal Revenue Code of 1986 and
intends to sell or lease the mortgage property to low
or moderate-income persons, as determined by the
Secretary;
(C) an Indian tribe, as provided in section 248;
(D) a serviceperson who is unable to meet such
requirement because of his or her duty assignment, as
provided in section 216 or subsection (b)(4) or (f) of
section 222;
(E) a mortgagor or co-mortgagor under subsection (k);
or
(F) a mortgagor that, pursuant to section 223(a)(7),
is refinancing an existing mortgage insured under this
Act for not more than the outstanding balance of the
existing mortgage, if the amount of the monthly payment
due under the refinancing mortgage is less than the
amount due under the existing mortgage for the month in
which the refinancing mortgage is executed.
(3) For purposes of this subsection, the term ``substitute
mortgagor'' means a person who, upon the release by a mortgagee
of a previous mortgagor from personal liability on the mortgage
note, assumes such liability and agrees to pay the mortgage
debt.
(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 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.
(i) DACA Recipient Eligibility.--
(1) In general.--The Secretary may not--
(A) prescribe terms that limit the
eligibility of a single family mortgage for
insurance under this title because of the
status of the mortgagor as a DACA recipient; or
(B) issue any limited denial of participation
in the program for such insurance because of
the status of the mortgagor as a DACA
recipient.
(2) DACA recipient defined.--For the purposes of this
subsection, the term ``DACA recipient'' means an alien
who, at any time before, on, or after the date of the
enactment of this subsection, is or was in deferred
action status pursuant to the Deferred Action for
Childhood Arrivals (`DACA') Program announced by the
Secretary of Homeland Security on June 15, 2012.
(3) Exemption.--
(A) Denial for failure to satisfy valid
eligibility requirements.--Nothing in this
title prohibits the denial of insurance based
on failure to satisfy valid eligibility
requirements.
(B) Invalid eligibility requirements.--Valid
eligibility requirements do not include
criteria that were adopted with the purpose of
denying eligibility for insurance because of
race, color, religion, sex, familial status,
national origin, disability, or the status of a
mortgagor as a DACA recipient.
[(i)]
(j) Loans secured by mortgages insured under this section
shall not be taken into account in determining the amount of
real estate loans which a national bank may make in relation to
its capital and surplus or its time and savings deposits.
(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. 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.
(2) For the purpose of this subsection--
(A) the term ``rehabilitation loan'' means a loan,
advance of credit, or purchase of an obligation
representing a loan or advance of credit, made for the
purpose of financing--
(i) the rehabilitation of an existing one- to
four-unit structure which will be used
primarily for residential purposes;
(ii) the rehabilitation of such a structure
and the refinancing of the outstanding
indebtedness on such structure and the real
property on which the structure is located; or
(iii) the rehabilitation of such a structure
and the purchase of the structure and the real
property on which it is located; and
(B) the term ``rehabilitation'' means the improvement
(including improvements designed to meet cost-effective
energy conservation standards prescribed by the
Secretary) or repair of a structure, or facilities in
connection with a structure, and may include the
provision of such sanitary or other facilities as are
required by applicable codes, a community development
plan, or a statewide property insurance plan to be
provided by the owner or tenant of the project. The
term ``rehabilitation'' may also include measures to
evaluate and reduce lead-based paint hazards, as such
terms are defined in section 1004 of the Residential
Lead-Based Paint Hazard Reduction Act of 1992.
(3) To be eligible for insurance under this subsection, a
rehabilitation loan shall--
(A) involve a principal obligation (including such
initial service charges, appraisal, inspection, and
other fees as the Secretary shall approve) in an amount
which does not exceed, when added to any outstanding
indebtedness of the borrower which is secured by the
structure and the property on which it is located, the
amount specified in subsection (b)(2); except that, in
determining the amount of the principal obligation for
purposes of this subsection, the Secretary shall
establish as the appraised value of the property an
amount not to exceed the sum of the estimated cost of
rehabilitation and the Secretary's estimate of the
value of the property before rehabilitation;
(B) bear interest at such rate as may be agreed upon
by the borrower and the financial institution;
(C) be an acceptable risk, as determined by the
Secretary; and
(D) comply with such other terms, conditions, and
restrictions as the Secretary may prescribe.
(4) Any rehabilitation loan insured under this subsection may
be refinanced and extended in accordance with such terms and
conditions as the Secretary may prescribe, but in no event for
an additional amount or term which exceeds the maximum provided
for in 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 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. 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.
(6) The Secretary is authorized, for a temporary
period not to exceed 18 months from the date on which
the President has declared a major disaster to have
occurred, to enter into agreements to insure a
rehabilitation loan under this subsection 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 residence of the applicable size, if such
loan is secured by a structure and property that are
within a jurisdiction in which the President has
declared such disaster, pursuant to the Robert T.
Stafford Disaster Relief and Emergency Assistance Act,
and if such loan otherwise conforms to the loan-to-
value ratio and other requirements of this subsection.
(n)(1) 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. To be
eligible, the mortgage shall involve a dwelling unit in a
cooperative housing project which is covered by a blanket
mortgage insured under this Act or the construction of which
was completed more than a year prior to the application for the
mortgage insurance. The mortgage amount as determined under the
other provisions of subsection (b) of this section shall be
reduced by an amount equal to the portion of the unpaid balance
of the blanket mortgage covering the project which is
attributable (as of the date the mortgage is accepted for
insurance) to such unit.
(2) For the purpose of this subsection--
(A) The terms ``home mortgage'' and ``mortgage''
include a first or subordinate mortgage or lien given
(in accordance with the laws of the State where the
property is located and accompanied by such security
and other undertakings as may be required under
regulations of the Secretary) to secure a loan made to
finance the purchase of stock or membership in a
cooperative ownership housing corporation the permanent
occupancy of the dwelling units of which is restricted
to members of such corporation, where the purchase of
such stock or membership will entitle the purchaser to
the permanent occupancy of one of such units.
(B) The terms ``appraised value of the property'',
``value of the property'', and ``value'' include the
appraised value of a dwelling unit in a cooperative
housing project of the type described in subparagraph
(A) where the purchase of the stock or membership
involved will entitle the purchaser to the permanent
occupancy of that unit; and the term ``property''
includes a dwelling unit in such a cooperative project.
(C) The terms ``mortgagor'' includes a person or
persons giving a first or subordinate mortgage or lien
(of the type described in subparagraph (A)) to secure a
loan to finance the purchase of stock or membership in
a cooperative housing corporation.
(r) The Secretary shall take appropriate actions to reduce
losses under the single-family mortgage insurance programs
carried out under this title. Such actions shall include--
(1) an annual review by the Secretary of the rate of
early serious defaults and claims, in accordance with
section 533;
(2) requiring that at least one person acquiring
ownership of a one- to four-family residential property
encumbered by a mortgage insured under this title be
determined to be credit-worthy under standards
prescribed by the Secretary, whether or not such person
assumes personal liability under the mortgage (except
that acquisitions by devise or descent shall not be
subject to this requirement);
(3) in any case where personal liability under a
mortgage is assumed, requiring that the original
mortgagor be advised of the procedures by which he or
she may be released from liability; and
(4) providing counseling, either directly or through
third parties, to delinquent mortgagors whose mortgages
are insured under this section 203 (12 U.S.C. 1709),
using the Fund to pay for such counseling.
In any case where the homeowner does not request a release from
liability, the purchaser and the homeowner shall have joint and
several liability for any default for a period of 5 years
following the date of the assumption. After the close of such
5-year period, only the purchaser shall be liable for any
default on the mortgage unless the mortgage is in default at
the time of the expiration of the 5-year period.
(t)(1) Each mortgagee (or servicer) with respect to a
mortgage under this section shall provide each mortgagor of
such mortgagee (or servicer) written notice, not less than
annually, containing a statement of the amount outstanding for
prepayment of the principal amount of the mortgage and
describing any requirements the mortgagor must fulfill to
prevent the accrual of any interest on such principal amount
after the date of any prepayment. This paragraph shall apply to
any insured mortgage outstanding on or after the expiration of
the 90-day period beginning on the date of effectiveness of
final regulations implementing this paragraph.
(2) Each mortgagee (or servicer) with respect to a mortgage
under this section shall, at or before closing with respect to
any such mortgage, provide the mortgagor with written notice
(in such form as the Secretary shall prescribe, by regulation,
before the expiration of the 90-day period beginning upon the
date of the enactment of the Cranston-Gonzalez National
Affordable Housing Act) describing any requirements the
mortgagor must fulfill upon prepayment of the principal amount
of the mortgage to prevent the accrual of any interest on the
principal amount after the date of such prepayment. This
paragraph shall apply to any mortgage executed after the
expiration of the period under paragraph (1).
(u)(1) No mortgagee may make or hold mortgages insured under
this section if the customary lending practices of the
mortgagee, as determined by the Secretary pursuant to section
539, provide for a variation in mortgage charge rates that
exceeds 2 percent for insured mortgages made by the mortgagee
on dwellings located within an area. The Secretary shall ensure
that any permissible variations in the mortgage charge rates of
any mortgagee are based only on actual variations in fees or
costs to the mortgagee to make the loan.
(2) For purposes of this subsection--
(A) the term ``area'' means a metropolitan
statistical area as established by the Office of
Management and Budget;
(B) the term ``mortgage charges'' includes the
interest rate, discount points, loan origination fee,
and any other amount charged to a mortgagor with
respect to an insured mortgage; and
(C) the term ``mortgage charge rate'' means the
amount of mortgage charges for an insured mortgage
expressed as a percentage of the initial principal
amount of the mortgage.
(v) 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 Mutual Mortgage Insurance Fund.
(w) Annual Report.--The Secretary of Housing and Urban
Development shall submit to the Congress an annual report on
the single family mortgage insurance program under this
section. Each report shall set forth--
(1) an analysis of the income groups served by the
single family insurance program, including--
(A) the percentage of borrowers whose incomes
do not exceed 100 percent of the median income
for the area;
(B) the percentage of borrowers whose incomes
do not exceed 80 percent of the median income
for the area; and
(C) the percentage of borrowers whose incomes
do not exceed 60 percent of the median income
for the area;
(2) an analysis of the percentage of minority
borrowers annually assisted by the program; the
percentage of central city borrowers assisted and the
percentage of rural borrowers assisted by the program;
(3) the extent to which the Secretary in carrying out
the program has employed methods to ensure that needs
of low and moderate income families, underserved areas,
and historically disadvantaged groups are served by the
program; and
(4) the current impediments to having the program
serve low and moderate income borrowers; borrowers from
central city areas; borrowers from rural areas; and
minority borrowers.
(x) Management Deficiencies Report.--
(1) In general.--Not later than 60 days after the
date of the enactment of this subsection, and annually
thereafter, the Secretary shall submit to Congress a
report on the plan of the Secretary to address each
material weakness, reportable condition, and
noncompliance with an applicable law or regulation (as
defined by the Director of the Office of Management and
Budget) identified in the most recent audited financial
statement of the Federal Housing Administration
submitted under section 3515 of title 31, United States
Code.
(2) Contents of annual report.--Each report submitted
under paragraph (1) shall include--
(A) an estimate of the resources, including
staff, information systems, and contract
assistance, required to address each material
weakness, reportable condition, and
noncompliance with an applicable law or
regulation described in paragraph (1), and the
costs associated with those resources;
(B) an estimated timetable for addressing
each material weakness, reportable condition,
and noncompliance with an applicable law or
regulation described in paragraph (1); and
(C) the progress of the Secretary in
implementing the plan of the Secretary included
in the report submitted under paragraph (1) for
the preceding year, except that this
subparagraph does not apply to the initial
report submitted under paragraph (1).
(y) Requirements for Mortgages for Condominiums.--
(1) Project recertification requirements.--
Notwithstanding any other law, regulation, or guideline
of the Secretary, including chapter 2.4 of the
Condominium Project Approval and Processing Guide of
the FHA, the Secretary shall streamline the project
certification requirements that are applicable to the
insurance under this section for mortgages for
condominium projects so that recertifications are
substantially less burdensome than certifications. The
Secretary shall consider lengthening the time between
certifications for approved properties, and allowing
updating of information rather than resubmission.
(2) Commercial space requirements.--Notwithstanding
any other law, regulation, or guideline of the
Secretary, including chapter 2.1.3 of the Condominium
Project Approval and Processing Guide of the FHA, in
providing for exceptions to the requirement for the
insurance of a mortgage on a condominium property under
this section regarding the percentage of the floor
space of a condominium property that may be used for
nonresidential or commercial purposes, the Secretary
shall provide that--
(A) any request for such an exception and the
determination of the disposition of such
request may be made, at the option of the
requester, under the direct endorsement lender
review and approval process or under the HUD
review and approval process through the
applicable field office of the Department; and
(B) in determining whether to allow such an
exception for a condominium property, factors
relating to the economy for the locality in
which such project is located or specific to
project, including the total number of family
units in the project, shall be considered.
Not later than the expiration of the 90-day period
beginning on the date of the enactment of this
paragraph, the Secretary shall issue regulations to
implement this paragraph, which shall include any
standards, training requirements, and remedies and
penalties that the Secretary considers appropriate.
(3) Transfer fees.--Notwithstanding any other law,
regulation, or guideline of the Secretary, including
chapter 1.8.8 of the Condominium Project Approval and
Processing Guide of the FHA and section 203.41 of the
Secretary's regulations (24 CFR 203.41), existing
standards of the Federal Housing Finance Agency
relating to encumbrances under private transfer fee
covenants shall apply to the insurance of mortgages by
the Secretary under this section to the same extent and
in the same manner that such standards apply to the
purchasing, investing in, and otherwise dealing in
mortgages by the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation. If the
provisions of part 1228 of the Director of the Federal
Housing Finance Agency's regulations (12 CFR part 1228)
are amended or otherwise changed after the date of the
enactment of this paragraph, the Secretary of Housing
and Urban Development shall adopt any such amendments
or changes for purposes of this paragraph, unless the
Secretary causes to be published in the Federal
Register a notice explaining why the Secretary will
disregard such amendments or changes within 90 days
after the effective date of such amendments or changes.
(4) Owner-occupancy requirement.--
(A) Establishment of percentage
requirement.--Not later than the expiration of
the 90-day period beginning on the date of the
enactment of this paragraph, the Secretary
shall, by rule, notice, or mortgagee letter,
issue guidance regarding the percentage of
units that must be occupied by the owners as a
principal residence or a secondary residence
(as such terms are defined by the Secretary),
or must have been sold to owners who intend to
meet such occupancy requirements, including
justifications for the percentage requirements,
in order for a condominium project to be
acceptable to the Secretary for insurance under
this section of a mortgage within such
condominium property.
(B) Failure to act.--If the Secretary fails
to issue the guidance required under
subparagraph (A) before the expiration of the
90-day period specified in such clause, the
following provisions shall apply:
(i) 35 percent requirement.--In order
for a condominium project to be
acceptable to the Secretary for
insurance under this section, at least
35 percent of all family units
(including units not covered by FHA-
insured mortgages) must be occupied by
the owners as a principal residence or
a secondary residence (as such terms
are defined by the Secretary), or must
have been sold to owners who intend to
meet such occupancy requirement.
(ii) Other considerations.--The
Secretary may increase the percentage
applicable pursuant to clause (i) to a
condominium project on a project-by-
project or regional basis, and in
determining such percentage for a
project shall consider factors relating
to the economy for the locality in
which such project is located or
specific to project, including the
total number of family units in the
project.
* * * * * * *
TITLE III--NATIONAL MORTGAGE ASSOCIATIONS
* * * * * * *
creation of association
Sec. 302. (a)(1) There is hereby created a body corporate to
be known as the ``Federal National Mortgage Association'' which
shall be in the Department of Housing and Urban Development.
The Association shall have succession until dissolved by Act of
Congress. It shall maintain its principal office in the
District of Columbia and shall be deemed, for purposes of venue
in civil actions, to be a resident thereof. Agencies or offices
may be established by the Association in such other place or
places as it may deem necessary or appropriate in the conduct
of its business.
(2) On September 1, 1968, the body corporate described in the
foregoing paragraph shall cease to exist in that form and is
hereby partitioned into two separate and distinct bodies
corporate, each of which shall have continuity and corporate
succession as a separated portion of the previously existing
body corporate, as follows:
(A) One of such separated portions shall be a body corporate
without capital stock to be known as the Government National
Mortgage Association (hereinafter referred to as the
``Association''), which shall be in the Department of Housing
and Urban Development and which shall retain the assets and
liabilities acquired and incurred under sections 305 and 306
prior to such date, including any and all liabilities incurred
pursuant to section 302(c). The Association shall have
succession until dissolved by Act of Congress. It shall
maintain its principal office in the District of Columbia or
the metropolitan area thereof and shall be deemed, for purposes
of jurisdiction and venue in civil actions, to be a District of
Columbia corporation. Agencies or offices may be established by
the Association in such other place or places as it may deem
necessary or appropriate in the conduct of its business.
(B) The other such separated portion shall be a body
corporate to be known as Federal National Mortgage Association
(hereinafter referred to as the ``corporation''), which shall
retain the assets and liabilities acquired and incurred under
sections 303 and 304 prior to such date. The corporation shall
have succession until dissolved by Act of Congress. It shall
maintain its principal office in the District of Columbia or
the metropolitan area thereof and shall be deemed, for purposes
of jurisdiction and venue in civil actions to be a District of
Columbia corporation.
(3) The partition transaction effected pursuant to the
foregoing paragraph constitutes a reorganization within the
meaning of section 368(a)(1)(E) of the Internal Revenue Code of
1954; and for the purposes of such Code, no gain or loss is
recognized by the previously existing body corporate's by
reason of the partition, and the basis and holding period of
the assets of the corporation immediately following such
partition are the same as the basis and holding period of such
assets immediately prior to such partition.
(b)(1) For the purposes set forth in section 301 and subject
to the limitations and restrictions of this title, each of the
bodies corporate named in subsection (a)(2) is authorized,
pursuant to commitments or otherwise, to purchase, service,
sell, or otherwise deal in any mortgages which are insured
under the National Housing Act or title V of the Housing Act of
1949, or which are insured or guaranteed under the Servicemen's
Readjustment Act of 1944 or chapter 37 of title 38, United
States Code; and to purchase, service, sell, or otherwise deal
in any loans made or guaranteed under part B of title VI of the
Public Health Service Act; and the corporation is authorized to
lend on the security of any such mortgages and to purchase,
sell, or otherwise deal in any securities guaranteed by the
Association under section 306(g): Provided, That (1) the
Association may not purchase any mortgage at a price exceeding
100 per centum of the unpaid principal amount thereof at the
time of purchase, with adjustments for interest and any
comparable items; (2) the Association may not purchase any
mortgage, except a mortgage insured under title V of the
Housing Act of 1949, if it offered by, or covers property held
by a State, territorial, or municipal instrumentality; and (3)
the Association may not purchase any mortgage under section
305, except a mortgage insured under section 220 or title VIII
or section 203(k) or under title X with respect to a new
community approved under section 1004 thereof, or insured under
section 213 and covering property located in an urban renewal
area, or a mortgage covering property located in Alaska, Guam,
or Hawaii, if the original principal obligation thereof exceeds
or exceeded $55,000 in the case of property upon which is
located a dwelling designed principally for a one-family
residence; or $60,000 in the case of a two- or three-family
residence, or $68,750 in the case of a four-family residence;
or in the case of a property containing more than four dwelling
units, $38,000 per dwelling unit (or such higher amount not in
excess of $45,000 per dwelling unit as the Secretary may by
regulation specify in any geographical area where the Secretary
finds that cost levels so require) for that part of the
property (attributable to dwelling use). Notwithstanding the
provisions of clause (3) of the preceding sentence, the
Association may purchase a mortgage under section 305 with an
original principal obligation which exceeds the otherwise
applicable maximum amount per dwelling unit if the mortgage is
insured under section 207(c)(3), 213(b)(2), 220(d)(3)(B)(iii),
221(d)(3)(ii), 221(d)(4)(ii), 231(c)(2), 234(e)(3), or 236. For
the purposes of this title, the term ``mortgages'' and ``home
mortgages'' shall be inclusive of any mortgages or other loans
insured under any of the provisions of the National Housing Act
or title V of the Housing Act of 1949.
(2) For the purposes set forth in section 301(a), the
corporation is authorized, pursuant to commitments or
otherwise, to purchase, service, sell, lend on the security of,
or otherwise deal in mortgages which are not insured or
guaranteed as provided in paragraph (1) (such mortgages
referred to hereinafter as ``conventional mortgages''). No such
purchase of a conventional mortgage secured by a property
comprising one- to four-family dwelling units shall be made if
the outstanding principal balance of the mortgage at the time
of purchase exceeds 80 per centum of the value of the property
securing the mortgage, unless (A) the seller retains a
participation of not less than 10 per centum in the mortgage;
(B) for such period and under such circumstances as the
corporation may require, the seller agrees to repurchase or
replace the mortgage upon demand of the corporation in the
event that the mortgage is in default; or (C) that portion of
the unpaid principal balance of the mortgage which is in excess
of such 80 per centum is guaranteed or insured by a qualified
insurer as determined by the corporation. The corporation shall
not issue a commitment to purchase a conventional mortgage
prior to the date the mortgage is originated, if such mortgage
is eligible for purchase under the preceding sentence only by
reason of compliance with the requirements of clause (A) of
such sentence. The corporation may purchase a conventional
mortgage which was originated more than one year prior to the
purchase date only if the seller is the Federal Deposit
Insurance Corporation, the Resolution Trust Corporation, the
National Credit Union Administration, or any other seller
currently engaged in mortgage lending or investing activities.
For the purpose of this section, the term ``conventional
mortgages'' shall include a mortgage, lien, or other security
interest on the stock or membership certificate issued to a
tenant-stockholder or resident-member of a cooperative housing
corporation, as defined in section 216 of the Internal Revenue
Code of 1954, and on the proprietary lease, occupancy
agreement, or right of tenancy in the dwelling unit of the
tenant-stockholder or resident-member in such cooperative
housing corporation. The corporation shall establish
limitations governing the maximum original principal obligation
of conventional mortgages that are purchased by it; in any case
in which the corporation purchases a participation interest in
such a mortgage, the limitation shall be calculated with
respect to the total original principal obligation of the
mortgage and not merely with respect to the interest purchased
by the corporation. Such limitations shall not exceed $417,000
for a mortgage secured by a single-family residence, $533,850
for a mortgage secured by a 2-family residence, $645,300 for a
mortgage secured by a 3-family residence, and $801,950 for a
mortgage secured by a 4-family residence, except that such
maximum limitations shall be adjusted effective January 1 of
each year beginning after the effective date of the Federal
Housing Finance Regulatory Reform Act of 2008, subject to the
limitations in this paragraph. Each adjustment shall be made by
adding to each such amount (as it may have been previously
adjusted) a percentage thereof equal to the percentage
increase, during the most recent 12-month or 4-quarter period
ending before the time of determining such annual adjustment,
in the housing price index maintained by the Director of the
Federal Housing Finance Agency (pursuant to section 1322 of the
Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4541)). If the change in such house price
index during the most recent 12-month or 4-quarter period
ending before the time of determining such annual adjustment is
a decrease, then no adjustment shall be made for the next year,
and the next adjustment shall take into account prior declines
in the house price index, so that any adjustment shall reflect
the net change in the house price index since the last
adjustment. Declines in the house price index shall be
accumulated and then reduce increases until subsequent
increases exceed prior declines. The foregoing limitations may
be increased by not to exceed 50 per centum with respect to
properties located in Alaska, Guam, Hawaii, and the Virgin
Islands. Such foregoing limitations shall also be increased,
with respect to properties of a particular size located in any
area for which 115 percent of the median house price for such
size residence exceeds the foregoing limitation for such size
residence, to the lesser of 150 percent of such limitation for
such size residence or the amount that is equal to 115 percent
of the median house price in such area for such size residence.
(3) The corporation is authorized to purchase, service, sell,
lend on the security of, and otherwise deal in loans or
advances of credit for the purchase and installation of home
improvements, including energy conserving improvements or solar
energy systems described in the last paragraph of section 2(a)
of the National Housing Act and residential energy conservation
measures as described in section 210(11) of the National Energy
Conservation Policy Act and financed by a public utility in
accordance with the requirements of title II of such Act. To be
eligible for purchase, any such loan or advance of credit
(other than a loan or advance made with respect to energy
conserving improvements or solar energy systems or residential
energy conservation measures) not insured under title I of the
National Housing Act shall be secured by a lien against the
property to be improved.
(4) The corporation is authorized to purchase, service, sell,
lend on the security of, and otherwise deal in loans or
advances of credit secured by mortgages or other liens against
manufactured homes.
(5)(A) The corporation is authorized to purchase, service,
sell, lend on the security of, and otherwise deal in (i)
conventional mortgages that are secured by a subordinate lien
against a one-to-four-family residence that is the principal
residence of the mortgagor; and (ii) conventional mortgages
that are secured by a subordinate lien against a property
comprising five or more family dwelling units. If the
corporation, pursuant to paragraphs (1) through (4), shall have
purchased, serviced, sold, or otherwise dealt with any other
outstanding mortgage secured by the same residence, the
aggregate original amount of such other mortgage and the
mortgage authorized to be purchased, serviced, sold, or
otherwise dealt with under this paragraph shall not exceed the
applicable limitation determined under paragraph (2).
(B) The corporation shall establish limitations governing the
maximum original principal obligation of conventional mortgages
described in subparagraph (A). In any case in which the
corporation purchases a participation interest in such a
mortgage, the limitation shall be calculated with respect to
the total original principal obligation of such mortgage
described in subpargraph (A) and not merely with respect to the
interest purchased by the corporation. Such limitations shall
not exceed (i) with respect to mortgages described in
subparagraph (A)(i), 50 per centum of the single-family
residence mortgage limitation determined under paragraph (2);
and (ii) with respect to mortgages described in subparagraph
(A)(ii), the applicable limitation determined under paragraph
(2).
(C) No subordinate mortgage against a one- to four-family
residence shall be purchased by the corporation if the total
outstanding indebtedness secured by the property as a result of
such mortgage exceeds 80 per centum of the value of such
property unless (i) that portion of such total outstanding
indebtedness that exceeds such 80 per centum is guaranteed or
insured by a qualified insurer as determined by the
corporation; (ii) the seller retains a participation of not
less than 10 per centum in the mortgage; or (iii) for such
period and under such circumstances as the corporation may
require, the seller agrees to repurchase or replace the
mortgage upon demand of the corporation in the event that the
mortgage is in default. The corporation shall not issue a
commitment to purchase a subordinate mortgage prior to the date
the mortgage is originated, if such mortgage is eligible for
purchase under the preceding sentence only by reason of
compliance with the requirements of clause (ii) of such
sentence.
(6) The corporation may not implement any new program (as
such term is defined in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992) before
obtaining the approval of the Secretary under section 1322 of
such Act.
(7)(A) Definitions.--In this paragraph--
(i) the term ``credit score'' means a numerical value
or a categorization created by a third party derived
from a statistical tool or modeling system used by a
person who makes or arranges a loan to predict the
likelihood of certain credit behaviors, including
default; and
(ii) the term ``residential mortgage'' has the
meaning given the term in section 302 of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1451).
(B) Use of credit scores.--The corporation shall condition
purchase of a residential mortgage by the corporation under
this subsection on the provision of a credit score for the
borrower only if--
(i) the credit score is derived from any credit
scoring model that has been validated and approved by
the corporation under this paragraph; and
(ii) the corporation provides for the use of the
credit score by all of the automated underwriting
systems of the corporation and any other procedures and
systems used by the corporation to purchase residential
mortgages that use a credit score.
(C) Validation and approval process.--The corporation shall
establish a validation and approval process for the use of
credit score models, under which the corporation may not
validate and approve a credit score model unless the credit
score model--
(i) satisfies minimum requirements of integrity,
reliability, and accuracy;
(ii) has a historical record of measuring and
predicting default rates and other credit behaviors;
(iii) is consistent with the safe and sound operation
of the corporation;
(iv) complies with any standards and criteria
established by the Director of the Federal Housing
Finance Agency under section 1328(1) of the Federal
Housing Enterprises Financial Safety and Soundness Act
of 1992; and
(v) satisfies any other requirements, as determined
by the corporation.
(D) Replacement of credit score model.--If the corporation
has validated and approved 1 or more credit score models under
subparagraph (C) and the corporation validates and approves an
additional credit score model, the corporation may determine
that--
(i) the additional credit score model has replaced
the credit score model or credit score models
previously validated and approved; and
(ii) the credit score model or credit score models
previously validated and approved shall no longer be
considered validated and approved for the purposes of
subparagraph (B).
(E) Public disclosure.--Upon establishing the validation and
approval process required under subparagraph (C), the
corporation shall make publicly available a description of the
validation and approval process.
(F) Application.--Not later than 30 days after the effective
date of this paragraph, the corporation shall solicit
applications from developers of credit scoring models for the
validation and approval of those models under the process
required under subparagraph (C).
(G) Timeframe for determination; notice.--
(i) In general.--The corporation shall make a
determination with respect to any application submitted
under subparagraph (F), and provide notice of that
determination to the applicant, before a date
established by the corporation that is not later than
180 days after the date on which an application is
submitted to the corporation.
(ii) Extensions.--The Director of the Federal Housing
Finance Agency may authorize not more than 2 extensions
of the date established under clause (i), each of which
shall not exceed 30 days, upon a written request and a
showing of good cause by the corporation.
(iii) Status notice.--The corporation shall provide
notice to an applicant regarding the status of an
application submitted under subparagraph (F) not later
than 60 days after the date on which the application
was submitted to the corporation.
(iv) Reasons for disapproval.--If an application
submitted under subparagraph (F) is disapproved, the
corporation shall provide to the applicant the reasons
for the disapproval not later than 30 days after a
determination is made under this subparagraph.
(H) Authority of director.--If the corporation elects to use
a credit score model under this paragraph, the Director of the
Federal Housing Finance Agency shall require the corporation to
periodically review the validation and approval process
required under subparagraph (C) as the Director determines
necessary to ensure that the process remains appropriate and
adequate and complies with any standards and criteria
established pursuant to section 1328(1) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992.
(I) Extension.--If, as of the effective date of this
paragraph, a credit score model has not been approved under
subparagraph (C), the corporation may use a credit score model
that was in use before the effective date of this paragraph, if
necessary to prevent substantial market disruptions, until the
earlier of--
(i) the date on which a credit score model is
validated and approved under subparagraph (C); or
(ii) the date that is 2 years after the effective
date of this paragraph.
(8) DACA recipient eligibility.--
(A) In general.--The corporation may not condition
purchase of a single-family residence mortgage by the
corporation under this subsection on the status of the
borrower as a DACA recipient.
(B) DACA recipient defined.--For the purposes of this
paragraph, the term ``DACA recipient'' means an alien
who, at any time before, on, or after the date of the
enactment of this paragraph, is or was in deferred
action status pursuant to the Deferred Action for
Childhood Arrivals (``DACA'') Program announced by the
Secretary of Homeland Security on June 15, 2012.
(c)(1) Notwithstanding any other provision of this Act or of
any other law, the Association is authorized under section 306
to create, accept, execute, and otherwise administer in all
respects such trusts, receiverships, conservatorships,
liquidating or other agencies, or other fiduciary and
representative undertakings and activities, hereinafter in this
subsection called ``trusts'', as might be appropriate for
financing purposes; and in relation thereto the Association may
acquire, hold and manage, dispose of, and otherwise deal in any
mortgages or other types of obligations in which any department
or agency of the United States listed in paragraph (2) of this
subsection may have a financial interest. The Association may
join in any such undertakings and activities notwithstanding
that it is also serving in a fiduciary or representative
capacity; and is authorized to guarantee any participations or
other instruments, whether evidence of property rights or debt,
issued for such financing purposes. Participations or other
instruments issued by the Association pursuant to this
subsection shall to the same extent as securities which are
direct obligations of or obligations guaranteed as to principal
or interest by the United States be deemed to be exempt
securities within the meaning of laws administered by the
Securities and Exchange Commission. The amounts of any
mortgages and other obligations acquired by the Association
under section 306, pursuant to this subsection, shall not be
included in the total amounts set forth in section 306(c).
(2) Subject to the limitations provided in paragraph (4) of
this subsection, one or more trusts may be established as
provided in this subsection by each of the following
departments or agencies:
(A) The Farmers Home Administration of the Department
of Agriculture, but only with respect to operating
loans, direct farm ownership loans, direct housing
loans, and direct soil and water loans. Such trusts may
not be established with respect to loans for housing
for the elderly under sections 502 and 515(a) of the
Housing Act of 1949, nor with respect to loans for
nonfarm recreational development.
(B) The Department of Education, but only with
respect to loans made by the Secretary of Education for
construction of academic facilities, and loans to help
finance student loan programs.
(C) The Department of Housing and Urban Development.
(D) The Department of Veterans Affairs.
(E) The Export-Import Bank.
(F) The Small Business Administration.
The head of each such department or agency, hereinafter in this
subsection called the ``trustor'', is authorized to set aside a
part or all of any obligations held by the trustor and subject
them to a trust or trusts and, incident thereto, shall
guarantee to the trustee timely payment thereof. The trust
instrument may provide for the issuance and sale of beneficial
interests or participations, by the trustee, in such
obligations or in the right to receive interest and principal
collections therefrom; and may provide for the substitution or
withdrawal of such obligations, or for the substitution of cash
for obligations. The trust or trusts shall be exempt from all
taxation. The trust instrument may also contain other
appropriate provisions in keeping with the purposes of this
subsection. The Association shall be named and shall act as
trustee of any such trusts and, for the purposes thereof, the
title to such obligations shall be deemed to have passed to the
Association in trust. The trust instrument shall provide that
custody, control, and administration of the obligations shall
remain in the trustor subjecting the obligations to the trust,
subject to transfer to the trustee in event of default or
probable default, as determined by the trustee, in the payment
of principal and interest of the beneficial interests or
participations. Collections from obligations subject to the
trusts shall be dealt with as provided in the instrument
creating the trust. The trust instrument shall provide that the
trustee will promptly pay to the trustor the full net proceeds
of any sale of beneficial interests or participations to the
extent they are based upon such obligations or collections.
Such proceeds shall be dealt with as otherwise provided by law
for sales or repayment of such obligations. The effect of both
past and future sales of any issue of beneficial interests or
participations shall be the same, to the extent of the
principal of such issue, as the direct sale with recourse of
the obligations subject to the trust. Any trustor creating a
trust or trusts hereunder is authorized to purchase, through
the facilities of the trustee, outstanding beneficial interests
or participations to the extent of the amount of the trustor's
responsibility to the trustee on beneficial interests or
participations outstanding, and to pay the trustor's proper
share of the costs and expenses incurred by the Association as
trustee pursuant to the trust instrument.
(3) When any trustor guarantees to the trustee the timely
payment of obligations the trustor subjects to a trust pursuant
to this subsection, and it becomes necessary for such trustor
to meet his responsibilities under such guaranty, the trustor
is authorized to fulfill such guaranty.
(4) Beneficial interests or participations shall not be
issued for the account of any trustor in an aggregate principal
amount greater than is authorized with respect to such trustor
in an appropriation Act. Any such authorization shall remain
available only for the fiscal year for which it is granted and
for the succeeding fiscal year.
(5) The Association, as trustee, is authorized to issue and
sell beneficial interests or participations under this
subsection, notwithstanding that there may be insufficiency in
aggregate receipts from obligations subject to the related
trust to provide for the payment by the trustee (on a timely
basis out of current receipts or otherwise) of all interest or
principal on such interests or participations (after provision
for all costs and expenses incurred by the trustee, fairly
prorated among trustors). There are authorized to be
appropriated without fiscal year limitation such sums as may be
necessary to enable any trustor to pay the trustee such
insufficiency as the trustee may require on account of
outstanding beneficial interests or participations authorized
to be issued pursuant to paragraph (4) of this subsection. Such
trustor shall make timely payments to the trustee from such
appropriations, subject to and in accord with the trust
instrument. In the event that the insufficiency required by the
trustee is on account of principal maturities of outstanding
beneficial interests or participations authorized to be issued
pursuant to paragraph (4) of this subsection, or pursuant
hereto, the trustee is authorized to elect to issue additional
beneficial interests or participations for refinancing purposes
in lieu of requiring any trustor or trustors to make payments
to the trustee from appropriated funds or other sources. Each
such issue of beneficial interests or participations shall be
in an amount determined by the trustee but not in excess of the
aggregate amount which the trustee would otherwise require the
trustor or trustors to pay from appropriated funds or other
sources, and may be issued without regard to the provisions of
paragraph (4) of this subsection. All refinancing issues of
beneficial interests or participations shall be deemed to have
been issued pursuant to the authority contained in the
appropriation Act or Acts under which the beneficial interests
or participations were originally issued.
* * * * * * *
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HOUSING ACT OF 1949
* * * * * * *
TITLE V--FARM HOUSING
financial assistance by the secretary of agriculture
Sec. 501. (a) The Secretary of Agriculture (hereinafter
referred to as the ``Secretary'') is authorized, subject to the
terms and conditions of this title, to extend financial
assistance, through the Farmers Home Administration, (1) to
owners of farms in the United States and in the Commonwealth of
Puerto Rico, the Virgin Islands, the territories and
possessions of the United States, and the Trust Territory of
the Pacific Islands, to enable them to construct, improve,
alter, repair, or replace dwellings and other farm buildings on
their farms, and to purchase buildings and land constituting a
minimum adequate site, in order to provide them, their tenants,
lessees, sharecroppers, and laborers with decent, safe and
sanitary living conditions and adequate farm buildings as
specified in this title, and (2) to owners of other real estate
in rural areas for the construction, improvement, alteration,
or repair of dwellings, related facilities, and farm buildings,
and to rural residents, including persons who reside in
reservations or villages of Indian tribes, for such purposes
and for the purchase of buildings and the purchase of land
constituting a minimum adequate site, in order to enable them
to provide dwellings and related facilities for their own use
and buildings adequate for their farming operations, and (3) to
elderly or handicapped persons or families who are or will be
the owners of land in rural areas for the construction,
improvement, alteration, or repair of dwellings and related
facilities, the purchase of dwellings and related facilities
and the purchase of land constituting a minimum adequate site,
in order to provide them with adequate dwellings and related
facilities for their own use and (4) to an owner described in
clause (1), (2), or (3) for refinancing indebtedness which--
(A) was incurred for an eligible purpose described in
such clause, and
(B)(i) if not refinanced, is likely to result
(because of circumstances beyond the control of the
applicant) at an early date in the loss of the
applicant's necessary dwelling or essential farm
service buildings, or
(ii) if combined (in the case of a dwelling that the
Secretary finds not to be decent, safe, and sanitary)
with a loan for improvement, rehabilitation, or repairs
and not refinanced, is likely to result in the
applicant's continuing to be deprived of a decent,
safe, and sanitary dwelling.
(5) Definitions.--For purposes of this title, the
terms ``repair'', ``repairs'', ``rehabilitate'', and
``rehabilitation'' include measures to evaluate and
reduce lead-based paint hazards, as such terms are
defined in section 1004 of the Residential Lead-Based
Paint Hazard Reduction Act of 1992.
(b)(1) For the purpose of this title, the term ``farm'' shall
mean a parcel or parcels of land operated as a single unit
which is used for the production of one or more agricultural
commodities and which customarily produces or is capable of
producing such commodities for sale and for home use of a gross
annual value of not less than the equivalent of gross annual
value of $400 in 1944, as determined by the Secretary. The
Secretary shall promptly determine whether any parcel or
parcels of land constitute a farm for the purposes of this
title whenever requested to do so by any interested Federal,
State, or local public agency, and his determination shall be
conclusive.
(2) For the purposes of this title, the terms ``owner'' and
``mortgage'' shall be deemed to include, respectively, the
lessee and other security interest in, any leasehold interest
which the Secretary determines has an unexpired term (A) in the
case of a loan, for a period sufficiently beyond the repayment
period of the loan to provide adequate security and a
reasonable probability of accomplishing the objectives for
which the loan is made, and (B) in the case of a grant for a
period sufficient to accomplish the objectives for which the
grant is made.
(3) For the purposes of this title, the term ``elderly or
handicapped persons or families'' means families which consist
of two or more persons, the head of which (of his or her
spouse) is at least sixty-two years of age or is handicapped.
Such term also means a single person who is at least sixty-two
years of age or is handicapped. A person shall be considered
handicapped if such person is determined, pursuant to
regulations issued by the Secretary, to have an impairment
which (A) is expected to be of long-continued and indefinite
duration, (B) substantially impedes his ability to live
independently, and (C) is of such a nature of such ability
could be improved by more suitable housing conditions, or if
such person has a developmental disability as defined in
section 102 of the Developmental Disabilities Assistance and
Bill of Rights Act of 2000. The Secretary shall prescribe such
regulations as may be necessary to prevent abuses in
determinig, under the definitions contained in this paragraph,
eligibility of families and persons for admission to and
occupancy of housing constructed wih assistance under this
title. Notwithstanding the preceding provisions of this
paragraph, such term also includes two or more elderly (sixty-
two years of age or over) or handicapped persons living
together, one or more such persons living with another person
who is determined (under regulations prescribed by the
Secretary) to be essential to the care or well-being of such
persons, and the surviving member or members of any family
described in the first sentence of this paragraph who were
living, in a unit assisted under this title, with the deceased
member of the family at the time of his or her death.
(4) For the purpose of this title, the terms ``low income
families or persons'' and ``very low-income families or
persons'' means those families and persons whose incomes do not
exceed the respective levels established for lower income
families and very low-income families under the United States
Housing Act of 1937. Notwithstanding the preceding sentence,
the maximum income levels established for purposes of this
title for such families and persons in the Virgin Islands shall
not be less than the highest such levels established for
purposes of this title for such families and persons in
American Samoa, Guam, the Northern Mariana Islands, and the
Trust Territory of the Pacific Islands. The temporary absence
of a child from the home due to placement in foster care should
not be considered in considering family composition and family
size.
(5)(A) For the purpose of this title, the terms ``income''
and ``adjusted income'' have the meanings given by sections
3(b)(4) and 3(b)(5), respectively, of the United States Housing
Act of 1937.
(B) For purposes of this title, the term ``income''
does not include dividends received from the Alaska
Permanent Fund by a person who was under the age of 18
years when that person qualified for the dividend.
(6) For the purposes of this title, the term ``Indian tribe''
means any Indian tribe, band, group, and nation, including
Alaska Indians, Aleuts, and Eskimos, and any Alaskan Native
Village, of the United States, which is considered an eligible
recipient under the Indian Self-Determination and Education
Assistance Act (Public Law 93-638) or was considered an
eligible recipient under chapter 67 of title 31, United States
Code, prior to the repeal of such chapter.
(7) For the purpose of this title, the term ``rural
resident'' shall include a family or a person who is a renter
of a dwelling unit in a rural area.
(8) For the purposes of this title, the term ``adequate
dwelling'' means a decent, safe, and sanitary dwelling unit.
(c) In order to be eligible for the assistance authorized by
paragraph (a), the applicant must show (1) that he is the owner
of a farm which is without a decent, safe, and sanitary
dwelling for himself and his family and necessary resident farm
labor, or for the family of the operating tenant, lessee, or
sharecropper or without other farm buildings adequate for the
type of farming in which he engages or desires to engage or
that he is the owner of other real estate in a rural area or a
rural resident without an adequate dwelling or related
facilities for his own use or buildings adequate for his
farming operations, or that the applicant is an elderly or
handicapped person or family in a rural area without an
adequate dwelling or related facility for its own use or that
he is the owner of a farm or other real estate in a rural area
who needs refinancing of indebtedness described in clause (4)
of subsection (a); (2) that he is without sufficient resources
to provide the necessary housing and buildings on his own
account; and (3) that he is unable to secure the credit
necessary for such housing and buildings from other sources
upon terms and conditions which he could reasonably be expected
to fulfill. If an applicant is a State or local public agency
or Indian tribe--
(A) the provisions of clause (3) shall not apply to
its application; and
(B) the applicant shall be eligible to participate in
any program under this title if the persons or families
to be served by the applicant with the assistance being
sought would be eligible to participate in such
program.
(d) As used in this title (except in sections 503 and
504(b)), the terms ``farm,''``farm dwelling,'' and ``farm
housing'' shall include dwellings or other essential buildings
of eligible applicants.
(e) The Secretary shall establish procedures under which
borrowers under this title are required to make periodic
payments for the purpose of taxes, insurance, and other
necessary expenses as the Secretary may deem appropriate.
Notwithstanding any other provision of law, such payments shall
not be considered public funds. The Secretary shall direct the
disbursement of the funds at the appropriate time or times for
the purposes for which the funds were escrowed. The Secretary
shall pay the same rate of interest on escrowed funds as is
required to be paid on escrowed funds held by other lenders in
any State where State law requires payment of interest on
escrowed funds, subject to appropriations to the extent that
additional budget authority is necessary to carry out this
sentence. If the prepayments made by the borrower are not
sufficient to pay the amount due, advances may be made by the
Secretary to pay the costs in full, which advances shall be
charged to the account of the borrower, bear interest, and be
payable in a timely fashion as determined by the Secretary. The
Secretary shall notify a borrower in writing when loan payments
are delinquent.
(f) With respect to any limitation on the amount of any loan
which may be made, insured, or guaranteed under this title for
the purchase of a dwelling unit, the Secretary may increase
such amount by up to 20 percent if such increase is necessary
to account for the increased cost of the dwelling unit due to
the installation of a solar energy system (as defined in
subparagraph (3) of the last paragraph of section 2(a) of the
National Housing Act) therein.
(g) The programs authorized by this title shall be carried
out, consistent with program goals and objectives so that the
involuntary displacement of families and businesses is avoided.
(h) The Secretary may not restrict the availability of
assistance under this title for any alien for whom assistance
may not be restrictedunder section 214 of the Housing and
Community Development Act of 1980.
(i) For the purposes of this title, the term ``development
cost'' shall include the packaging of loan and grant
applications and actions related thereto by public and private
nonprofit organizations tax exempt under the Internal Revenue
Code of 1986.
(j) Program Transfers.--Notwithstanding any other provision
of law, the Secretary shall not transfer any program authorized
by this title to the Rural Development Administration.
(k) DACA Recipient Eligibility.--
(1) In general.--The Secretary may not prescribe
terms that limit eligibility for a single family
mortgage made, insured, or guaranteed under this title
because of the status of the mortgagor as a DACA
recipient.
(2) DACA recipient defined.--For the purposes of this
paragraph, the term ``DACA recipient'' means an alien
who, at any time before, on, or after the date of the
enactment of this paragraph, is or was in deferred
action status pursuant to the Deferred Action for
Childhood Arrivals (`DACA') Program announced by the
Secretary of Homeland Security on June 15, 2012.
* * * * * * *
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FEDERAL HOME LOAN MORTGAGE CORPORATION ACT
* * * * * * *
TITLE III--FEDERAL HOME LOAN MORTGAGE CORPORATION
* * * * * * *
mortgage operations
Sec. 305. (a)(1) The Corporation is authorized to purchase,
and make commitments to purchase, residential mortgages. The
Corporation may hold and deal with, and sell or otherwise
dispose of, pursuant to commitments or otherwise, any such
mortgage or interest therein. The operations of the Corporation
under this section shall be confined so far as practicable to
residential mortgages which are deemed by the Corporation to be
of such quality, type, and class as to meet generally the
purchase standards imposed by private institutional mortgage
investors. The Corporation may establish requirements, and
impose charges or fees, which may be regarded as elements of
pricing, for different classes of sellers or servicers, and for
such purposes the Corporation is authorized to classify sellers
or services according to type, size, location, assets, or,
without limitation on the generality of the foregoing, on such
other basis or bases of differentiation as the Corporation may
consider necessary or appropriate to effectuate the purposes or
provisions of this Act. The Corporation may specify
requirements concerning among other things, (A) minimum net
worth; (B) supervisory mechanisms; (C) warranty compensation
mechanisms; (D) prior approval of facilities; (E) prior
origination and servicing experience with respect to different
types of mortgages; (F) capital contributions and substitutes;
(G) mortgage purchase volume limits; and (H) reduction of
mortgage purchases during periods of borrowing. With respect to
any particular type of seller, the Corporation shall not be
required to make available programs involving prior approval of
mortgages, optional delivery of mortgages, and purchase of
other than conventional mortgages to an extent greater than the
Corporation elects to make such programs available to other
types of eligible sellers. Any requirements specified by the
Corporation pursuant to the preceding three sentences must bear
a rational relationship to the purposes or provisions of this
Act, but will not be considered discriminatory solely on the
grounds of differential effects on types of eligible sellers.
Insofar as is practicable, the Corporation shall make
reasonable efforts to encourage participation in its programs
by each type of eligible seller. Nothing in this section
authorizes the Corporation to impose any charge or fee upon any
mortgagee approved by the Secretary of Housing and Urban
Development for participation in any mortgage insurance program
under the National Housing Act solely because of such status.
(2) No conventional mortgages secured by a property
comprising one- to four-family dwelling units shall be
purchased under this section if the outstanding principal
balance of the mortgage at the time of purchase exceeds 80 per
centum of the value of the property securing the mortgage,
unless (A) the seller retains a participation of not less than
10 per centum in the mortgage; (B) for such period and under
such circumstances as the Corporation may require, the seller
agrees to repurchase or replace the mortgage upon demand of the
Corporation in the event that the mortgage is in default; or
(C) that portion of the unpaid principal balance of the
mortgage which is in excess of such 80 per centum is guaranteed
or insured by a qualified insurer as determined by the
Corporation. The Corporation shall not issue a commitment to
purchase a conventional mortgage prior to the date the mortgage
is originated, if such mortgage is eligible for purchase under
the preceding sentence only by reason of compliance with the
requirements of clause (A) of such sentence. The Corporation
may purchase a conventional mortgage which was originated more
than one year prior to the purchase date only if the seller is
the Federal Deposit Insurance Corporation, the Resolution Trust
Corporation, the National Credit Union Administration, or any
other seller currently engaged in mortgage lending or investing
activities. With respect to any transaction in which a seller
contemporaneously sells mortgages originated more than one year
old prior to the date of sale to the Corporation and receives
in payment for such mortgages securities representing undivided
interests only in those mortgages, the Corporation shall not
impose any fee or charge upon an eligible seller which is not a
member of a Federal Home Loan Bank which differs from that
imposed upon an eligible seller which is such a member. The
Corporation shall establish limitations governing the maximum
original principal obligation of conventional mortgages that
are purchased by it; in any case in which the Corporation
purchases a participation interest in such a mortgage, the
limitation shall be calculated with respect to the total
original principal obligation of the mortgage and not merely
with respect to the interest purchased by the Corporation. Such
limitations shall not exceed $417,000 for a mortgage secured by
a single-family residence, $533,850 for a mortgage secured by a
2-family residence, $645,300 for a mortgage secured by a 3-
family residence, and $801,950 for a mortgage secured by a 4-
family residence, except that such maximum limitations shall be
adjusted effective January 1 of each year beginning after the
effective date of the Federal Housing Finance Regulatory Reform
Act of 2008, subject to the limitations in this paragraph. Each
adjustment shall be made by adding to each such amount (as it
may have been previously adjusted) a percentage thereof equal
to the percentage increase, during the most recent 12-month or
4-quarter period ending before the time of determining such
annual adjustment, in the housing price index maintained by the
Director of the Federal Housing Finance Agency (pursuant to
section 1322 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4541)). If the
change in such house price index during the most recent 12-
month or 4-quarter period ending before the time of determining
such annual adjustment is a decrease, then no adjustment shall
be made for the next year, and the next adjustment shall take
into account prior declines in the house price index, so that
any adjustment shall reflect the net change in the house price
index since the last adjustment. Declines in the house price
index shall be accumulated and then reduce increases until
subsequent increases exceed prior declines. The foregoing
limitations may be increased by not to exceed 50 per centum
with respect to properties located in Alaska, Guam, Hawaii, and
the Virgin Islands. Such foregoing limitations shall also be
increased, with respect to properties of a particular size
located in any area for which 115 percent of the median house
price for such size residence exceeds the foregoing limitation
for such size residence, to the lesser of 150 percent of such
limitation for such size residence or the amount that is equal
to 115 percent of the median house price in such area for such
size residence.
(3) The sale or other disposition by the Corporation of a
mortgage under this section may be with or without recourse,
and shall be upon such terms and conditions relating to resale,
repurchase, guaranty, substitution, replacement, or otherwise
as the Corporation may prescribe.
(4)(A) The Corporation is authorized to purchase, service,
sell, lend on the security of, and otherwise deal in (i)
residential mortgages that are secured by a subordinate lien
against a one- to four-family residence that is the principal
residence of the mortgagor; and (ii) residential mortgages that
are secured by a subordinate lien against a property comprising
five or more family dwelling units. If the Corporation shall
have purchased, serviced, sold, or otherwise dealt with any
other outstanding mortgage, secured by the same residence, the
aggregate original amount of such other mortgages and the
mortgage authorized to be purchased, serviced, sold, or
otherwise dealt with under this paragraph shall not exceed the
applicable limitation determined under paragraph (2).
(B) The Corporation shall establish limitations governing the
maximum original principal obligation of such mortgages. In any
case in which the Corporation purchases a participation
interest in such a mortgage, the limitation shall be calculated
with respect to the total original principal obligation of such
mortgage secured by a subordinate lien and not merely with
respect to the interest purchased by the Corporation. Such
limitations shall not exceed (i) with respect to mortgages
described in subparagraph (A)(i), 50 per centum of the single-
family residence mortgage limitation determined under paragraph
(2); and (ii) with respect to mortgages described in
subparagraph (A)(ii), the applicable limitation determined
under paragraph (2).
(C) No subordinate mortgage against a one- to four-family
residence shall be purchased by the Corporation if the total
outstanding indebtedness secured by the property as a result of
such mortgage exceeds 80 per centum of the value of such
property unless (i) that portion of such total outstanding
indebtedness that exceeds such 80 per centum is guaranteed or
insured by a qualified insurer as determined by the
Corporation; (ii) the seller retains a participation of not
less than 10 per centum in the mortgage; or (iii) for such
period and under such circumstances as the Corporation may
require, the seller agrees to repurchase or replace the
mortgage upon demand of the Corporation in the event that the
mortgage is in default. The Corporation shall not issue a
commitment to purchase a subordinate mortgage prior to the date
the mortgage is originated, if such mortgage is eligible for
purchase under the preceding sentence only by reason of
compliance with the requirements of clause (iii) of such
sentence.
(5) The Corporation is authorized to lend on the security of,
and to make commitments to lend on the security of, any
mortgage that the Corporation is authorized to purchase under
this section. The volume of the Corporation's lending
activities and the establishment of its loan ratios, interest
rates, maturities, and charges or fees in its secondary market
operations under this paragraph, shall be determined by the
Corporation from time to time; and such determinations shall be
consistent with the objectives that the lending activities
shall be conducted on such terms as will reasonably prevent
excessive use of the Corporation's facilities, and that the
operations of the Corporation under this paragraph shall be
within its income derived from such operations and that such
operations shall be fully self-supporting. The corporation
shall not be permitted to use its lending authority under this
paragraph (A) to advance funds to a mortgage seller on an
interim basis, using mortgage loans as collateral, pending the
sale of the mortgages in the secondary market; or (B) to
originate mortgage loans. Notwithstanding any Federal, State,
or other law to the contrary, the Corporation is hereby
empowered, in connection with any loan under this paragraph,
whether before or after any default, to provide by contract
with the borrower for the settlement or extinguishment, upon
default, of any redemption, equitable, legal, or other right,
title, or interest of the borrower in any mortgage or mortgages
that constitute the security for the loan; and with respect to
any such loan, in the event of default and pursuant otherwise
to the terms of the contract, the mortgages that constitute
such security shall become the absolute property of the
Corporation.
(6) DACA recipient eligibility.--
(A) In general.--The Corporation may not condition
purchase of a single-family residence mortgage by the
corporation under this subsection on the status of the
borrower as a DACA recipient.
(B) DACA recipient defined.--For the purposes of this
subsection, the term ``DACA recipient'' means an alien
who, at any time before, on, or after the date of the
enactment of this subsection, is or was in deferred
action status pursuant to the Deferred Action for
Childhood Arrivals (``DACA'') Program announced by the
Secretary of Homeland Security on June 15, 2012.
(b) Notwithstanding any other law, authority to enter into
and to perform and carry out any transactions or matter
referred to in this section is conferred on any Federal home
loan bank, Resolution Trust Corporation, the Federal Deposit
Insurance Corporation, the National Credit Union
Administration, any Federal savings and loan association, any
Federal home loan bank member, and any other financial
institution the deposits or accounts of which are insured by
any agency of the United States to the extent that Congress has
the power to confer such authority.
(c) The Corporation may not implement any new program (as
such term is defined in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992) before
obtaining the approval of the Secretary under section 1322 of
such Act.
(d)(1) Definition.--In this subsection, the term ``credit
score'' means a numerical value or a categorization created by
a third party derived from a statistical tool or modeling
system used by a person who makes or arranges a loan to predict
the likelihood of certain credit behaviors, including default.
(2) Use of credit scores.--The Corporation shall condition
purchase of a residential mortgage by the Corporation under
this section on the provision of a credit score for the
borrower only if--
(A) the credit score is derived from any credit
scoring model that has been validated and approved by
the Corporation under this subsection; and
(B) the Corporation provides for the use of the
credit score by all of the automated underwriting
systems of the Corporation and any other procedures and
systems used by the Corporation to purchase residential
mortgages that use a credit score.
(3) Validation and approval process.--The Corporation shall
establish a validation and approval process for the use of
credit score models, under which the Corporation may not
validate and approve a credit score model unless the credit
score model--
(A) satisfies minimum requirements of integrity,
reliability, and accuracy;
(B) has a historical record of measuring and
predicting default rates and other credit behaviors;
(C) is consistent with the safe and sound operation
of the corporation;
(D) complies with any standards and criteria
established by the Director of the Federal Housing
Finance Agency under section 1328(1) of the Federal
Housing Enterprises Financial Safety and Soundness Act
of 1992; and
(E) satisfies any other requirements, as determined
by the Corporation.
(4) Replacement of credit score model.--If the Corporation
has validated and approved 1 or more credit score models under
paragraph (3) and the Corporation validates and approves an
additional credit score model, the Corporation may determine
that--
(A) the additional credit score model has replaced
the credit score model or credit score models
previously validated and approved; and
(B) the credit score model or credit score models
previously validated and approved shall no longer be
considered validated and approved for the purposes of
paragraph (2).
(5) Public disclosure.--Upon establishing the validation and
approval process required under paragraph (3), the Corporation
shall make publicly available a description of the validation
and approval process.
(6) Application.--Not later than 30 days after the effective
date of this subsection, the Corporation shall solicit
applications from developers of credit scoring models for the
validation and approval of those models under the process
required under paragraph (3).
(7) Timeframe for determination; notice.--
(A) In general.--The Corporation shall make a
determination with respect to any application submitted
under paragraph (6), and provide notice of that
determination to the applicant, before a date
established by the Corporation that is not later than
180 days after the date on which an application is
submitted to the Corporation.
(B) Extensions.--The Director of the Federal Housing
Finance Agency may authorize not more than 2 extensions
of the date established under subparagraph (A), each of
which shall not exceed 30 days, upon a written request
and a showing of good cause by the Corporation.
(C) Status notice.--The Corporation shall provide
notice to an applicant regarding the status of an
application submitted under paragraph (6) not later
than 60 days after the date on which the application
was submitted to the Corporation.
(D) Reasons for disapproval.--If an application
submitted under paragraph (6) is disapproved, the
Corporation shall provide to the applicant the reasons
for the disapproval not later than 30 days after a
determination is made under this paragraph.
(8) Authority of director.--If the Corporation elects to use
a credit score under this subsection, the Director of the
Federal Housing Finance Agency shall require the Corporation to
periodically review the validation and approval process
required under paragraph (3) as the Director determines
necessary to ensure that the process remains appropriate and
adequate and complies with any standards and criteria
established pursuant to section 1328(1) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992.
(9) Extension.--If, as of the effective date of this
subsection, a credit score model has not been approved under
paragraph (3), the Corporation may use a credit score model
that was in use before the effective date of this subsection,
if necessary to prevent substantial market disruptions, until
the earlier of--
(A) the date on which a credit score model is
validated and approved under paragraph (3); or
(B) the date that is 2 years after the effective date
of this subsection.
* * * * * * *
MINORITY VIEWS
H.R. 3154, the Homeownership for Dreamers Act, would
prohibit the Federal Housing Administration (FHA), as well as
other government mortgage-financing entities, from limiting
eligibility on the basis of Deferred Action for Childhood
Arrivals (DACA) status, if a potential borrower meets all other
eligibility requirements.
Contrary to some unsubstantiated reports, FHA currently has
no rule, policy, or guidance in place that singles out those
with DACA status for different or discriminatory treatment.
FHA's mortgage eligibility requirements are outlined in its
FHA's Single Family Housing Policy Handbook. The Handbook's
provisions regarding legal residency status, which were written
first in 2003 and then later affirmed in 2014 by the Obama
Administration, state that FHA mortgage eligibility is based
upon an individual's lawful residency, not on their status as a
DACA recipient. No changes have been made to the FHA handbook
since 2014.
Furthermore, the FHA Handbook states that ``U.S.
citizenship is not required for Mortgage eligibility'' however
``Non-U.S. citizens without lawful residency in the U.S. are
not eligible for FHA-insured Mortgages.'' In establishing DACA
on June 15, 2012, then-Secretary of Homeland Security Janet
Napolitano made clear that DACA is an exercise of
``prosecutorial discretion'' and ``confers no substantive
right, immigration status, or pathway to citizenship.'' This
means that any individual who is not a lawful resident, with or
without DACA status, is ineligible for FHA mortgage insurance,
a policy carried forward from the previous two administrations.
Additionally, by nature of their temporary legal status, DACA
recipients also fail to meet FHA's requisite future income
verification standard. DACA status provides for a two-year
deferral only, meaning a DACA recipient might be ordered to
leave the country thereafter. The FHA Handbook also requires
applicants to have three years of expected income to qualify.
DACA status and how the courts should adjudicate the
individual circumstances of DACA recipients are issues that
fall outside the scope of the Financial Services Committee's
jurisdiction. Committee Republicans believe that it is
impractical to deal with issues surrounding an individual's
immigration status in a piecemeal approach. Therefore, any
changes to the parameters or continuation of DACA should be
carried out by the committees of jurisdiction based on
comprehensive approach to the underlying problem, and not
individual efforts based on unsubstantiated reports like H.R.
3154.
David Kustoff.
Lance Gooden.
Scott Tipton.
Trey Hollingsworth.
John W. Rose.
Barry Loudermilk.
Ted Budd.
Warren Davidson.
Lee M. Zeldin.
Andy Barr.
Ann Wagner.
Blaine Luetkemeyer.
Peter T. King.
Sean P. Duffy.
Roger Williams.
Bill Steil.
Denver Riggleman.
Tom Emmer.
French Hill.
Patrick T. McHenry.
Alexander X. Mooney.
Frank D. Lucas.
Bill Huizenga.
Steve Stivers.
Bill Posey.
[all]
