[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4804 Introduced in House (IH)]







109th CONGRESS
  2d Session
                                H. R. 4804

  To modernize the manufactured housing loan insurance program under 
                  title I of the National Housing Act.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 16, 2006

Mr. Tiberi (for himself and Mr. Frank of Massachusetts) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
  To modernize the manufactured housing loan insurance program under 
                  title I of the National Housing Act.

    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 ``FHA Manufactured Housing Loan 
Modernization Act of 2006''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) manufactured housing plays a vital role in providing 
        housing for low- and moderate-income families in the United 
        States;
            (2) the FHA title I insurance program for manufactured home 
        loans traditionally has been a major provider of mortgage 
        insurance for home-only transactions;
            (3) the manufactured housing market is in the midst of a 
        prolonged downturn which has resulted in a severe contraction 
        of traditional sources of private lending for manufactured home 
        purchases;
            (4) during past downturns the FHA title I insurance program 
        for manufactured homes has filled the lending void by providing 
        stability until the private markets could recover;
            (5) in 1992, during the manufactured housing industry's 
        last major recession, over 30,000 manufactured home loans were 
        insured under title I;
            (6) in 2004, fewer than 2,000 manufactured housing loans 
        were insured under title I;
            (7) the dramatic reduction in the use of the title I 
        program is due primarily to certain structural problems of the 
        program, which have resulted in refusal by the Government 
        National Mortgage Association (Ginnie Mae) to accept new 
        participants into the program since 1989, contributing to 
        higher loan costs and fewer loan originators;
            (8) the loan limits for title I manufactured housing loans 
        have not been adjusted for inflation since 1992; and
            (9) these problems with the title I program have resulted 
        in an atrophied market for manufactured housing loans, leaving 
        American families who have the most difficulty achieving 
        homeownership without adequate financing options for home-only 
        manufactured home purchases.
    (b) Purposes.--The purposes of this Act are--
            (1) to provide adequate funding for FHA-insured 
        manufactured housing loans for low- and moderate-income 
        homebuyers during all economic cycles in the manufactured 
        housing industry;
            (2) to modernize the FHA title I insurance program for 
        manufactured housing loans to enhance participation by Ginnie 
        Mae and the private lending markets;
            (3) to adjust the artificially low loan limits for title I 
        manufactured home loan insurance to reflect the increase in 
        costs since such limits were last increased in 1992 and to 
        index the limits to inflation; and
            (4) to ensure that the title I manufactured housing loan 
        insurance program requires no credit subsidy from the Federal 
        Government.

SEC. 3. EXCEPTION TO LIMITATION ON FINANCIAL INSTITUTION PORTFOLIO.

    The second sentence of section 2(a) of the National Housing Act (12 
U.S.C. 1703(a)) is amended by striking ``In no case'' and inserting the 
following: ``Other than in connection with a manufactured home or a lot 
on which to place such a home (or both), in no case''.

SEC. 4. LOAN-TO-VALUE RATIO AND DOWNPAYMENT REQUIREMENT.

    Subsection (b) of section 2 of the National Housing Act (12 U.S.C. 
1703(b)) is amended by adding at the end the following new paragraph:
    ``(8) Loan-to-Value and Downpayment Limitations on Manufactured 
Housing Loans.--No insurance may be granted under this section to any 
such financial institution with respect to any obligation representing 
any such loan, advance of credit, or purchase by it in connection with 
a manufactured home or a lot on which to place a manufactured home (or 
both) unless such loan or advance of credit, or any loan or advance of 
credit represented by such an obligation--
            ``(A) involves a principal obligation not exceeding the sum 
        of--
                    ``(i) the amount of the mortgage insurance premium 
                paid by the borrower at the time that the loan, advance 
                of credit, or purchase is made; and
                    ``(ii) 95 percent of the appraised value of the 
                manufactured home or lot on which to place a 
                manufactured home (or both) for which the loan or 
                advance of credit is made; and
            ``(B) such loan or advance of credit is made to a borrower 
        who has paid in cash or its equivalent, on account of the 
        manufactured home or lot on which to place a manufactured home 
        (or both) for which the loan or advance of credit is made, at 
        least 3 percent of the Secretary's estimate of the costs of 
        acquisition, alteration, improvements, lot preparation, or 
        other eligible activity for which the loan or advance of credit 
        was made (excluding the amount of the mortgage insurance 
        premium paid by the borrower at the time that the loan or 
        advance of credit is made).''.

SEC. 5. INSURANCE BENEFITS.

    Subsection (b) of section 2 of the National Housing Act (12 U.S.C. 
1703(b)), as amended by section 4 of this Act, is further amended by 
adding at the end the following new paragraph:
    ``(9) Insurance Benefits for Manufactured Housing Loans.--Any 
contract of insurance with respect to loans, advances of credit, or 
purchases in connection with a manufactured home or a lot on which to 
place a manufactured home (or both) for a financial institution that is 
executed under this title before or after the date of the enactment of 
this Act by the Secretary shall be conclusive evidence of the 
eligibility of such financial institution for insurance, and the 
validity of any contract of insurance so executed shall be 
incontestable in the hands of the bearer from the date of the execution 
of such contract, except for fraud or misrepresentation on the part of 
such institution. With respect only to a loan, advance of credit, or 
purchase in connection with a manufactured home or a lot on which to 
place such a home (or both), the Secretary shall otherwise provide for 
the payment of insurance benefits under the provisions of this section 
for losses on such loans, advances, or purchases according to the same 
terms, conditions, procedures, and requirements applicable under 
section 204 to a mortgage insured under section 203 covering a 
manufactured home (and the site on which it is located).''.

SEC. 6. MAXIMUM LOAN LIMITS.

    (a) Dollar Amounts.--Paragraph (1) of section 2(b) of the National 
Housing Act (12 U.S.C. 1703(b)(1)) is amended--
            (1) in clause (ii) of subparagraph (A), by striking 
        ``$17,500'' and inserting ``$24,500'';
            (2) in subparagraph (C) by striking ``$48,600'' and 
        inserting ``$68,040'';
            (3) in subparagraph (D) by striking ``$64,800'' and 
        inserting ``$90,720'';
            (4) in subparagraph (E) by striking ``$16,200'' and 
        inserting ``$22,680''; and
            (5) by realigning subparagraphs (C), (D), and (E) 2 ems to 
        the left so that the left margins of such subparagraphs are 
        aligned with the margins of subparagraphs (A) and (B).
    (b) Annual Indexing.--
            (1) Method of indexing.--Section 206A of the National 
        Housing Act (12 U.S.C. 1712a) is amended--
                    (A) in subsection (a)--
                            (i) by redesignating paragraphs (1) through 
                        (7) as paragraphs (2) through (8), 
                        respectively; and
                            (ii) by inserting before paragraph (2) (as 
                        so redesignated) the following new paragraph:
            ``(1) subparagraphs (A)(ii), (C), (D), and (E) of section 
        2(b)(1) (12 U.S.C. 1703(b)(1));''.
            (2) Adjustments for 2004 through 2006.--Not later than 30 
        days after the date of the enactment of this Act, the Federal 
        Reserve Board shall calculate the adjustments for 2004, 2005, 
        and 2006 pursuant to paragraph (1) of section 206A(a) of the 
        National Housing Act (12 U.S.C. 1712a(a)(1)), as added by the 
        amendment made by paragraph (1) of this subsection, and shall 
        notify the Secretary of Housing and Urban Development pursuant 
        to subsection (b) of such section 206A. Such adjustments shall 
        take effect upon the date of such notification.
            (3) Technical and conforming changes.--Paragraph (1) of 
        section 2(b) of the National Housing Act (12 U.S.C. 1703(b)(1)) 
        is amended--
                    (A) by striking ``No'' and inserting ``Except as 
                provided in the last sentence of this paragraph and in 
                paragraph (8), no''; and
                    (B) by adding after and below subparagraph (G) the 
                following:
        ``The Secretary shall, by regulation, increase the dollar 
        amount limitations in subparagraphs (A)(ii), (C), (D), and (E) 
        (as such limitations may have been adjusted in accordance with 
        section 206A of this Act).''.

SEC. 7. INSURANCE PREMIUMS.

    Subsection (f) of section 2 of the National Housing Act (12 U.S.C. 
1703(f)) is amended--
            (1) by inserting ``(1)'' after ``(f)'';
            (2) by adding at the end the following new paragraph:
            ``(2) Manufactured home loans.--Notwithstanding paragraph 
        (1), in the case of a loan, advance of credit, or purchase in 
        connection with a manufactured home or a lot on which to place 
        such a home (or both), the premium charge for the insurance 
        granted under this section shall be paid by the borrower under 
        the loan or advance of credit, as follows:
                    ``(A) At the time of the making of the loan, 
                advance of credit, or purchase, a single premium 
                payment in an amount not to exceed 2.25 percent of the 
                amount of the original insured principal obligation.
                    ``(B) In addition to the premium under subparagraph 
                (A), annual premium payments during the term of the 
                loan, advance, or obligation purchased in an amount not 
                exceeding 1.0 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) Premium charges under this paragraph shall be 
                established in amounts that are sufficient, but do not 
                exceed the minimum amounts necessary, to maintain a 
                negative credit subsidy for the program under this 
                section for insurance of loans, advances of credit, or 
                purchases in connection with a manufactured home or a 
                lot on which to place such a home (or both), as 
                determined based upon risk to the Federal Government 
                under existing underwriting requirements.''.

SEC. 8. REVISION OF UNDERWRITING CRITERIA.

    (a) In General.--Subsection (b) of section 2 of the National 
Housing Act (12 U.S.C. 1703(b)), as amended by the preceding provisions 
of this Act, is further amended by adding at the end the following new 
paragraph:
    ``(10) Financial Soundness of Manufactured Housing Program.--The 
Secretary shall establish such underwriting criteria for loans and 
advances of credit in connection with a manufactured home or a lot on 
which to place a manufactured home (or both), including such loans and 
advances represented by obligations purchased by financial 
institutions, as may be necessary to ensure that the program under this 
title for insurance for financial institutions against losses from such 
loans, advances of credit, and purchases is financially sound.''.
    (b) Timing.--Not later than the expiration of the 6-month period 
beginning on the date of the enactment of this Act, the Secretary of 
Housing and Urban Development shall revise the existing underwriting 
criteria for the program referred to in paragraph (10) of section 2(b) 
of the National Housing Act (as added by subsection (a) of this 
section) in accordance with the requirements of such paragraph.
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