[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1852 Introduced in House (IH)]

110th CONGRESS
  1st Session
                                H. R. 1852

To modernize and update the National Housing Act and enable the Federal 
 Housing Administration to use risk-based pricing to more effectively 
          reach underserved borrowers, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 29, 2007

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

_______________________________________________________________________

                                 A BILL


 
To modernize and update the National Housing Act and enable the Federal 
 Housing Administration to use risk-based pricing to more effectively 
          reach underserved borrowers, and for other purposes.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Maximum principal loan obligation.
Sec. 4. Extension of mortgage term.
Sec. 5. Downpayment simplification.
Sec. 6. Mortgage insurance premiums for zero- and lower-downpayment 
                            borrowers.
Sec. 7. Mortgage insurance premiums for standard and higher-risk 
                            borrowers.
Sec. 8. Risk-based mortgage insurance premiums.
Sec. 9. Payment incentives.
Sec. 10. Borrower protections for higher risk mortgages.
Sec. 11. Annual reports on new programs and loss mitigation.
Sec. 12. Rehabilitation loans.
Sec. 13. Discretionary action.
Sec. 14. Insurance of condominiums.
Sec. 15. Mutual Mortgage Insurance Fund.
Sec. 16. Hawaiian home lands and Indian reservations.
Sec. 17. Conforming and technical amendments.
Sec. 18. Home equity conversion mortgages.
Sec. 19. Conforming loan limit in disaster areas.
Sec. 20. Sense of Congress regarding technology for financial systems.
Sec. 21. Multifamily housing mortgage limits in high cost areas.
Sec. 22. Valuation of multifamily properties in noncompetitive sales by 
                            HUD to States and localities.
Sec. 23. Use of FHA savings for affordable housing grant fund.
Sec. 24. Savings provision.
Sec. 25. Implementation.

SEC. 2. FINDINGS AND PURPOSES.

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

SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION.

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

SEC. 4. EXTENSION OF MORTGAGE TERM.

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

SEC. 5. DOWNPAYMENT SIMPLIFICATION.

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

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

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

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

    Paragraph (2) of section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)(2)) is amended--
            (1) by striking the matter that precedes subparagraph (A) 
        and inserting the following:
    ``(2) Standard-Risk Mortgages.--In the case of any mortgage that is 
secured by a 1- to 4-family dwelling, is an obligation of the Mutual 
Mortgage Insurance Fund or of the General Insurance Fund pursuant to 
subsection (v) of this section or is insured under subsection (k) of 
this section or section 234(c), for which the mortgagor has paid on 
account of the property, in cash or its equivalent, at least 3 percent 
of the Secretary's estimate of the cost of acquisition (excluding the 
mortgage insurance premium paid at the time the mortgage is insured), 
and that involves a principal obligation that complies with subclause 
(I) of subsection (b)(2)(B)(ii), the following requirements shall 
apply:''; and
            (2) by adding at the end the following new subparagraph:
            ``(C) Higher-risk borrowers.--The Secretary shall establish 
        underwriting standards, including premium payments that comply 
        with the requirements of this paragraph, that provide for 
        insurance under this section of mortgages described in the 
        matter in this paragraph preceding subparagraph (A) for which 
        the mortgagor has a credit score equivalent to a FICO score of 
        less than 560, and may insure, and make commitments to insure, 
        such mortgages.''.

SEC. 8. RISK-BASED MORTGAGE INSURANCE PREMIUMS.

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

SEC. 9. PAYMENT INCENTIVES.

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

SEC. 10. BORROWER PROTECTIONS FOR HIGHER RISK MORTGAGES.

    (a) In General.--Section 203(b) of the National Housing Act (12 
U.S.C. 1709(b)) is amended by adding at the end the following new 
paragraph:
            ``(10) Borrower protections for certain mortgages.--Except 
        as otherwise specifically provided in this paragraph, in the 
        case of any mortgage referred to in paragraph (2)(C) or (3) of 
        subsection (c), the following requirements shall apply:
                    ``(A) Disclosures.--
                            ``(i) Required disclosures.--In addition to 
                        any disclosures that are otherwise required by 
                        law or by the Secretary for single family 
                        mortgages, the mortgagee shall disclose to the 
                        mortgagor the following information:
                                    ``(I) At application.--At the time 
                                of application for the loan involved in 
                                the mortgage--
                                            ``(aa) a list of counseling 
                                        agencies approved by the 
                                        Secretary in the area of the 
                                        applicant; and
                                            ``(bb) if the mortgagor is 
                                        not provided counseling in 
                                        accordance with subparagraph 
                                        (B), the information required 
                                        under subclauses (I), (II), and 
                                        (III) of subparagraph (B)(iii) 
                                        to be provided to the 
                                        mortgagor.
                                    ``(II) At execution.--At the time 
                                of entering into the mortgage--
                                            ``(aa) the terms of the 
                                        mandatory 5-year payment 
                                        incentive required under 
                                        subsection (c)(7)(A)(ii); and
                                            ``(bb) a statement that the 
                                        mortgagor has a right under 
                                        contract to loss mitigation.
                                    ``(III) Other information.--Any 
                                other additional information that the 
                                Secretary determines is appropriate to 
                                ensure that the mortgagor has received 
                                timely and accurate information about 
                                the program under paragraph (2)(C) or 
                                (3) of subsection (c), as applicable.
                            ``(ii) Penalties for failure to provide 
                        required disclosures.--The Secretary may 
                        establish and impose appropriate penalties for 
                        failure of a mortgagee to provide any 
                        disclosure required under clause (i).
                            ``(iii) No private right of action.--This 
                        subparagraph shall not create any private right 
                        of action on behalf of the mortgagor.
                    ``(B) Counseling.--
                            ``(i) Allowable requirement.--The Secretary 
                        may, in the discretion of the Secretary, 
                        require that the mortgagor shall have received 
                        counseling that complies with the requirements 
                        of this subparagraph.
                            ``(ii) Terms of counseling.--Counseling 
                        under this subparagraph shall be provided--
                                    ``(I) prior to application for the 
                                loan involved in the mortgage;
                                    ``(II) by a third party (other than 
                                the mortgagee) who is approved by the 
                                Secretary, with respect to the 
                                responsibilities and financial 
                                management involved in homeownership;
                                    ``(III) on an individual basis to 
                                the mortgagor by a representative of 
                                the approved third-party counseling 
                                entity; and
                                    ``(IV) in person, to the maximum 
                                extent possible.
                            ``(iii) Topics.--In the case only of a 
                        mortgage referred to in subsection (c)(3), 
                        counseling under this subparagraph shall 
                        include providing to, and discussing with, the 
                        mortgagor--
                                    ``(I) information regarding 
                                homeownership options other than a 
                                mortgage that is subject to this 
                                paragraph, other zero- or low-
                                downpayment mortgage options that are 
                                or may become available to the 
                                mortgagor, the financial implications 
                                of entering into a mortgage (including 
                                a mortgage subject to this paragraph), 
                                and any other information that the 
                                Secretary may require;
                                    ``(II) a written disclosure that 
                                sets forth the amount and the 
                                percentage by which a property with a 
                                mortgage that is subject to this 
                                paragraph must appreciate for the 
                                mortgagor to recover the principal 
                                amount of the mortgage, the costs 
                                financed under the mortgage, and the 
                                estimated costs involved in selling the 
                                property, if the mortgagor were to sell 
                                the property on each of the second, 
                                fifth, and tenth anniversaries of the 
                                mortgage; and
                                    ``(III) a written disclosure, as 
                                the Secretary shall require, that 
                                specifies the effective cost to a 
                                mortgagor of borrowing the amount by 
                                which the maximum amount that could be 
                                borrowed under a mortgage that is 
                                referred to in subsection (c)(3) 
                                exceeds the maximum amount that could 
                                be borrowed under a mortgage insured 
                                under this subsection that is not a 
                                mortgage referred to in such 
                                subsection, based on average closing 
                                costs with respect to such amount, as 
                                determined by the Secretary; such cost 
                                shall be expressed as an annual 
                                interest rate over the first 5 years of 
                                a mortgage; the disclosure required 
                                under this subclause may be provided in 
                                conjunction with the notice required 
                                under subsection (f).
                            ``(iv) 2- and 3-family residences.--In the 
                        case of a mortgage involving a 2- or 3-family 
                        residence, counseling under this subparagraph 
                        shall include (in addition to the information 
                        required under clause (iii)) information 
                        regarding real estate property management.
                    ``(C) Option for notice of foreclosure prevention 
                counseling availability.--
                            ``(i) Option.--To be eligible for insurance 
                        under this subsection, the mortgagee shall 
                        provide mortgagor, at the time of the execution 
                        of the mortgage, an optional written agreement 
                        which, if signed by the mortgagor, allows, but 
                        does not require, the mortgagee to provide 
                        notice described in clause (ii) to a housing 
                        counseling entity that has agreed to provide 
                        the notice and counseling required under clause 
                        (iii) and is approved by the Secretary.
                            ``(ii) Notice to counseling agency.--The 
                        notice described in this clause, with respect 
                        to a mortgage, is notice, provided at the 
                        earliest time practicable after the mortgagor 
                        becomes 60 days delinquent with respect to any 
                        payment due under the mortgage, that the 
                        mortgagor is so delinquent and of how to 
                        contact the mortgagor. Such notice may only be 
                        provided once with respect to each delinquency 
                        period for a mortgage.
                            ``(iii) Notice to mortgagor.--Upon notice 
                        from a mortgagee that a mortgagor is 60 days 
                        delinquent with respect to payments due under 
                        the mortgage, the housing counseling entity 
                        shall at the earliest time practicable notify 
                        the mortgagor of such delinquency, that the 
                        entity makes available foreclosure prevention 
                        counseling that may assist the mortgagor in 
                        resolving the delinquency, and of how to 
                        contact the entity to arrange for such 
                        counseling.
                            ``(iv) Ability to cure.--Failure to provide 
                        the optional written agreement required under 
                        clause (i) may be corrected by sending such 
                        agreement to the mortgagor not later than the 
                        earliest time practicable after the mortgagor 
                        first becomes 60 days delinquent with respect 
                        to payments due under the mortgage. Insurance 
                        provided under this subsection may not be 
                        terminated and penalties for such failure may 
                        not be prospectively or retroactively imposed 
                        if such failure is corrected in accordance with 
                        this clause.
                            ``(v) Penalties for failure to provide 
                        agreement.--The Secretary may establish and 
                        impose appropriate penalties for failure of a 
                        mortgagee to provide the optional written 
                        agreement required under clause (i).
                            ``(vi) Limitation on liability of 
                        mortgagee.--A mortgagee shall not incur any 
                        liability or penalties for any failure of a 
                        housing counseling entity to provide notice 
                        under clause (iii).
                            ``(vii) No private right of action.--This 
                        subparagraph shall not create any private right 
                        of action on behalf of the mortgagor.
                            ``(viii) Delinquency period.--For purposes 
                        of this subparagraph, the term `delinquency 
                        period' means, with respect to a mortgage, a 
                        period that begins upon the mortgagor becoming 
                        delinquent with respect to payments due under 
                        the mortgage and ends upon the first subsequent 
                        occurrence of such payments under the mortgage 
                        becoming current or the property subject to the 
                        mortgage being foreclosed or otherwise disposed 
                        of.''.

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

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

SEC. 12. REHABILITATION LOANS.

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

SEC. 13. DISCRETIONARY ACTION.

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

SEC. 14. INSURANCE OF CONDOMINIUMS.

    (a) In General.--Section 234 of the National Housing Act (12 U.S.C. 
1715y) is amended--
            (1) in subsection (c)--
                    (A) in the first sentence--
                            (i) by striking ``and'' before ``(2)''; and
                            (ii) by inserting before the period at the 
                        end the following: ``, and (3) the project has 
                        a blanket mortgage insured by the Secretary 
                        under subsection (d)''; and
                    (B) in clause (B) of the third sentence, by 
                striking ``thirty-five years'' and inserting ``forty 
                years''; and
            (2) in subsection (g), by striking ``, except that'' and 
        all that follows and inserting a period.
    (b) Definition of Mortgage.--Section 201(a) of the National Housing 
Act (12 U.S.C. 1707(a)) is amended--
            (1) in clause (1), by striking ``or'' and inserting a 
        comma; and
            (2) by inserting before the semicolon the following: ``, or 
        (c) a first mortgage given to secure the unpaid purchase price 
        of a fee interest in, or long-term leasehold interest in, a 
        one-family unit in a multifamily project, including a project 
        in which the dwelling units are attached, semi-detached, or 
        detached, and an undivided interest in the common areas and 
        facilities which serve the project''.

SEC. 15. MUTUAL MORTGAGE INSURANCE FUND.

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

SEC. 16. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.

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

SEC. 17. CONFORMING AND TECHNICAL AMENDMENTS.

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

SEC. 18. HOME EQUITY CONVERSION MORTGAGES.

    (a) In General.--Section 255 of the National Housing Act (12 U.S.C. 
1715z-20) is amended--
            (1) in subsection (g)--
                    (A) by striking the first sentence; and
                    (B) by striking ``established under section 
                203(b)(2)'' and all that follows through ``located'' 
                and inserting ``limitation established under section 
                305(a)(2) of the Federal Home Loan Mortgage Corporation 
                Act for a 1-family residence'';
            (2) in subsection (i)(1)(C), by striking ``limitations'' 
        and inserting ``limitation''; and
            (3) by adding at the end the following new subsection:
    ``(n) Authority To Insure Home Purchase Mortgage.--
            ``(1) In general.--Notwithstanding any other provision in 
        this section, the Secretary may insure, upon application by a 
        mortgagee, a home equity conversion mortgage upon such terms 
        and conditions as the Secretary may prescribe, when the primary 
        purpose of the home equity conversion mortgage is to enable an 
        elderly mortgagor to purchase a 1- to 4-family dwelling in 
        which the mortgagor will occupy or occupies one of the units.
            ``(2) Limitation on principal obligation.--A home equity 
        conversion mortgage insured pursuant to paragraph (1) shall 
        involve a principal obligation that does not exceed the dollar 
        amount limitation determined under section 305(a)(2) of the 
        Federal Home Loan Mortgage Corporation Act for a residence of 
        the applicable size.''.
    (b) Mortgages for Cooperatives.--Subsection (b) of section 255 of 
the National Housing Act (12 U.S.C. 1715z-20(b)) is amended--
            (1) in paragraph (4)--
                    (A) by inserting ``a first or subordinate mortgage 
                or lien'' before ``on all stock'';
                    (B) by inserting ``unit'' after ``dwelling''; and
                    (C) by inserting ``a first mortgage or first lien'' 
                before ``on a leasehold''; and
            (2) in paragraph (5), by inserting ``a first or subordinate 
        lien on'' before ``all stock''.
    (c) Study Regarding Mortgage Insurance Premiums.--The Secretary of 
Housing and Urban Development shall conduct a study regarding mortgage 
insurance premiums charged under the program under section 255 of the 
National Housing Act (12 U.S.C. 1715z-20) for insurance of home equity 
conversion mortgages to analyze and determine--
            (1) the effects of reducing the amounts of such premiums 
        from the amounts charged as of the date of the enactment of 
        this Act on--
                    (A) costs to mortgagors; and
                    (B) the financial soundness of the program; and
            (2) the feasibility and effectiveness of exempting, from 
        all the requirements under the program regarding payment of 
        mortgage insurance premiums (including both up-front or annual 
        mortgage insurance premiums under section 203(c)(2) of such 
        Act), any mortgage insured under the program under which part 
        or all of the amount of future payments made to the homeowner 
        are used for costs of a long-term care insurance contract 
        covering the mortgagor or members of the household residing in 
        the mortgaged property.
Not later than the expiration of the 12-month period beginning on the 
date of the enactment of this Act, the Secretary shall submit a report 
to the Congress setting forth the results and conclusions of the study.

SEC. 19. CONFORMING LOAN LIMIT IN DISASTER AREAS.

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

SEC. 20. SENSE OF CONGRESS REGARDING TECHNOLOGY FOR FINANCIAL SYSTEMS.

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

SEC. 21. MULTIFAMILY HOUSING MORTGAGE LIMITS IN HIGH COST AREAS.

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

SEC. 22. VALUATION OF MULTIFAMILY PROPERTIES IN NONCOMPETITIVE SALES BY 
              HUD TO STATES AND LOCALITIES.

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

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

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

SEC. 23. USE OF FHA SAVINGS FOR AFFORDABLE HOUSING GRANT FUND.

    There are authorized to be appropriated for each fiscal year, to an 
affordable housing fund available for use only for grants to provide 
affordable rental housing and affordable homeownership opportunities 
for low-income families, an amount equal to the net increase for such 
fiscal year in negative credit subsidy for the mortgage insurance 
programs under title II of the National Housing Act resulting from this 
Act and the amendments made by this Act.

SEC. 24. SAVINGS PROVISION.

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

SEC. 25. IMPLEMENTATION.

    The Secretary of Housing and Urban Development shall by notice 
establish any additional requirements that may be necessary to 
immediately carry out the provisions of this Act. The notice shall take 
effect upon issuance.
                                 <all>