[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1195 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1195

   To amend the National Housing Act to clarify the authority of the 
   Secretary of Housing and Urban Development to terminate mortgagee 
         origination approval for poorly performing mortgagees.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 18, 2001

   Mr. Sarbanes (for himself, Ms. Mikulski, Mr. Bond, Mr. Reid, Mr. 
 Schumer, Mr. Corzine, and Mr. Durbin) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
   To amend the National Housing Act to clarify the authority of the 
   Secretary of Housing and Urban Development to terminate mortgagee 
         origination approval for poorly performing mortgagees.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Credit Watch Act of 2001''.

SEC. 2. CLARIFICATION OF AUTHORITY FOR HUD TO TERMINATE MORTGAGEE 
              ORIGINATION APPROVAL FOR POORLY PERFORMING MORTGAGEES.

    Section 533 of the National Housing Act (12 U.S.C. 1735f-11) is 
amended to read as follows:

``SEC. 533. REVIEW OF MORTGAGEE PERFORMANCE AND AUTHORITY TO TERMINATE 
              MORTGAGEE ORIGINATION APPROVAL.

    ``(a) In General.--To reduce losses in connection with single 
family mortgage insurance programs under this Act, at least once a 
year, the Secretary shall--
            ``(1) review the indicators of portfolio risk for insured 
        single family mortgages originated or underwritten by each 
        mortgagee, which indicators shall be prescribed by the 
        Secretary by regulation and shall include the rates of early 
        defaults and claims; and
            ``(2) with respect to each mortgagee, compare those 
        indicators of portfolio risk for insured single family mortgage 
        loans originated or underwritten by the mortgagee with the 
        comparable indicators for other mortgagees originating or 
        underwriting insured single family mortgage loans in the same 
        area.
    ``(b) Termination of Mortgagee Origination Approval.--
            ``(1) In general.--Notwithstanding section 202(c), if, 
        based on a comparison under subsection (a)(2) of this section, 
        the Secretary determines that the mortgage loans originated or 
        underwritten by a mortgagee present an unacceptable risk to the 
        insurance funds, the Secretary may terminate the approval of 
        that mortgagee to originate or underwrite single family 
        mortgages.
            ``(2) Regulations.--A determination under paragraph (1) 
        shall be made in accordance with regulations issued by the 
        Secretary (which may include any regulation published before 
        the date of enactment of this section, as determined by the 
        Secretary).
            ``(3) Termination procedures.--
                    ``(A) Notice.--Not less than 60 days prior to the 
                effective date of a termination under this subsection, 
                the Secretary shall provide written notice of such 
                termination to the mortgagee.
                    ``(B) Meeting.--
                            ``(i) Written request.--Not later than 30 
                        days after receiving a written notice under 
                        subparagraph (A), the mortgagee may submit to 
                        the Secretary a written request for a meeting 
                        regarding the termination.
                            ``(ii) Receipt of request.--Upon receipt of 
                        a written request under this subparagraph, the 
                        Secretary shall provide the mortgagee with a 
                        meeting with the official authorized to issue 
                        termination notices on behalf of the Secretary 
                        (or a designee of that official).
                            ``(iii) Factors for default.--At the 
                        meeting provided under this subparagraph, the 
                        mortgagee may present for consideration 
                        specific factors that the mortgagee believes 
                        were beyond the control of the mortgagee that 
                        contributed to the excessive default and claim 
                        rate.
                    ``(C) Effective date.--A termination under this 
                subsection shall take effect 60 days after the date on 
                which written notice is provided to the mortgagee under 
                subparagraph (A), unless the Secretary withdraws the 
                termination notice or extends the notice period.
    ``(c) Area Defined.--In this section, the term `area' means each 
geographic area in which the mortgagee is authorized by the Secretary 
to originate insured single-family mortgages.''.
                                 <all>