[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5830 Reported in House (RH)]






                                                 Union Calendar No. 386
110th CONGRESS
  2d Session
                                H. R. 5830

                          [Report No. 110-619]

 To create a voluntary FHA program that provides mortgage refinancing 
     assistance to allow families to stay in their homes, protect 
         neighborhoods, and help stabilize the housing market.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 17, 2008

 Mr. Frank of Massachusetts (for himself, Ms. Waters, Mrs. Maloney of 
New York, Mr. Watt, Mr. Ackerman, Mr. Meeks of New York, Mr. Clay, Mr. 
Lynch, Mr. Al Green of Texas, Ms. Moore of Wisconsin, Mr. Lincoln Davis 
of Tennessee, Mr. Hodes, Mr. Wilson of Ohio, Mr. Perlmutter, Mr. Murphy 
 of Connecticut, Mr. Donnelly, Mr. Wexler, Mr. Shays, Ms. Ginny Brown-
Waite of Florida, Mr. Dingell, Ms. Schakowsky, Mr. Levin, Mr. Hinchey, 
Mr. Fattah, Mr. Jackson of Illinois, Mrs. Christensen, Ms. Lee, Mr. Wu, 
    Ms. McCollum of Minnesota, Mr. Van Hollen, Mr. Butterfield, Mr. 
   Courtney, Mr. Sestak, Mr. Sires, and Ms. Tsongas) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

                              May 5, 2008

 Additional sponsors: Mr. Mahoney of Florida, Mr. Carson, Mr. Crowley, 
 Mr. Hinojosa, Mr. Langevin, Mr. Capuano, Mr. Cummings, Mr. Baca, and 
                              Mr. Sherman

                              May 5, 2008

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on April 
                               17, 2008]

_______________________________________________________________________

                                 A BILL


 
 To create a voluntary FHA program that provides mortgage refinancing 
     assistance to allow families to stay in their homes, protect 
         neighborhoods, and help stabilize the housing market.

    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 ``FHA Housing 
Stabilization and Homeownership Retention Act of 2008''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.

                    TITLE I--HOMEOWNERSHIP RETENTION

Sec. 101. Purposes.
Sec. 102. Insurance of homeownership retention mortgages.
Sec. 103. Study of Auction or Bulk Refinance Program.
Sec. 104. Temporary increase in maximum loan guaranty amount for 
                            certain housing loans guaranteed by 
                            Secretary of Veterans Affairs.
Sec. 105. Study of possible accounting revisions relating to property 
                            at risk of foreclosure and the availability 
                            of credit for refinancing home mortgages at 
                            risk of foreclosure.
Sec. 106. GAO study of the effect of tightening credit markets in 
                            communities affected by the subprime 
                            mortgage foreclosure crises and predatory 
                            lending on prospective first-time 
                            homebuyers seeking mortgages.

                 TITLE II--OFFICE OF HOUSING COUNSELING

Sec. 201. Short title.
Sec. 202. Establishment of Office of Housing Counseling.
Sec. 203. Counseling procedures.
Sec. 204. Grants for housing counseling assistance.
Sec. 205. Requirements to use HUD-certified counselors under HUD 
                            programs.
Sec. 206. Study of defaults and foreclosures.
Sec. 207. Definitions for counseling-related programs.
Sec. 208. Updating and simplification of mortgage information booklet.

                  TITLE III--COMBATING MORTGAGE FRAUD

Sec. 301. Authorization of appropriations to combat mortgage fraud.

                    TITLE I--HOMEOWNERSHIP RETENTION

SEC. 101. PURPOSES.

    The purposes of this title are--
            (1) to create an FHA program, which is voluntary on the 
        part of borrowers and existing mortgage loan holders, to insure 
        refinance loans for substantial numbers of borrowers at risk of 
        foreclosure, at levels which are reasonably likely to be 
        sustainable through enhanced affordability of debt service;
            (2) to provide flexible underwriting for FHA-insured loans 
        under such a program to provide refinancing opportunities under 
        fiscally responsible terms, including higher fees commensurate 
        with higher risk levels, a seasoning requirement for higher 
        debt to income loans, and additional program controls to limit 
        and control risk;
            (3) to bar speculators and second home owners from 
        participation in such program;
            (4) to require existing mortgage loan holders to take 
        substantial loan writedowns in exchange for having the Federal 
        Government and the borrower assume the ongoing risk of the 
        refinanced loan;
            (5) to set a loan-to-value limit on such loans that 
        provides the FHA with an equity buffer against potential loan 
        losses, provides protections against the risk of future home 
        price declines, and creates incentives for borrowers to 
        maintain payments on the loan;
            (6) to protect the FHA against losses which may exceed 
        normal FHA loss levels by establishing higher fee levels, 
        including an exit fee and profit sharing during the first five 
        years of the loan, with such higher fee levels effectively 
        being funded through the required lender writedown;
            (7) to provide a fair level of incentives for junior lien 
        holders to provide the necessary releases of their lien 
        interests, in order to meet program requirements that all 
        outstanding liens must be extinguished, and thereby permit the 
        refinancing to be completed;
            (8) to enhance the administrative capacity of the FHA to 
        carry out its expanded role under the program through 
        establishment of an Oversight Board which adds expertise from 
        the Federal Reserve and the Department of the Treasury, through 
        additional funding to contract out for the provision of any 
        needed expertise in designing program requirements and 
        oversight, and through additional funding to increase FHA 
        personnel resources as needed to handle the increased loan 
        volume resulting from the program;
            (9) to sunset the program when it is no longer needed; and
            (10) to study the need for and efficacy of an auction or 
        bulk refinancing mechanism to facilitate more expeditious 
        refinancing of larger volumes of existing mortgages that are at 
        risk for foreclosure into FHA-insured mortgages.

SEC. 102. INSURANCE OF HOMEOWNERSHIP RETENTION MORTGAGES.

    (a) Mortgage Insurance Program.--Title II of the National Housing 
Act (12 U.S.C. 1707 et seq.) is amended by adding at the end the 
following new section:

``SEC. 257. INSURANCE OF HOMEOWNERSHIP RETENTION MORTGAGES.

    ``(a) Oversight Board.--
            ``(1) Establishment.--There is hereby established the 
        Refinance Program Oversight Board (in this section referred to 
        as the `Oversight Board').
            ``(2) Membership.--The Oversight Board shall consist of the 
        following members or their designees:
                    ``(A) The Secretary of the Treasury.
                    ``(B) The Secretary of Housing and Urban 
                Development.
                    ``(C) The Chairman of the Board of Governors of the 
                Federal Reserve System.
            ``(3) No additional compensation.--Members of the Oversight 
        Board shall receive no additional pay by reason of service on 
        the Oversight Board.
            ``(4) Responsibilities.--The Oversight Board shall be 
        responsible for establishing program and oversight requirements 
        for the program under this section, which shall include--
                    ``(A) detailed program requirements under 
                subsection (c);
                    ``(B) flexible underwriting criteria under 
                subsection (d);
                    ``(C) a mortgage premium structure under subsection 
                (e);
                    ``(D) a reasonable fee and rate limitation under 
                subsection (f);
                    ``(E) enhancement of FHA capacity under subsection 
                (i), including oversight of such activities and 
                personnel as may be contracted for as provided therein;
                    ``(F) monitoring of underwriting risk under 
                subsection (j); and
                    ``(G) such additional requirements as may be 
                necessary and appropriate to oversee and implement the 
                program.
            ``(5) Use of resources.--In carrying out its functions 
        under this section, the Oversight Board may utilize, with their 
        consent and to the extent practical, the personnel, services, 
        and facilities of the Department of the Treasury, the 
        Department of Housing and Urban Development, the Board of 
        Governors of the Federal Reserve System, the Federal Reserve 
        Banks, and other Federal agencies, with or without 
        reimbursement therefore.
    ``(b) Authority.--
            ``(1) In general.--The Secretary shall, subject only to the 
        absence of qualified requests for insurance under this section 
        and to the limitations under subsection (h) of this section and 
        section 531(a), make commitments to insure and insure any 
        mortgage covering a 1- to 4-family residence that is made for 
        the purpose of paying or prepaying outstanding obligations 
        under an existing mortgage or mortgages on the residence if the 
        mortgage being insured under this section meets the 
        requirements of this section, as established by the Oversight 
        Board, and of section 203, except as modified by this section.
            ``(2) Establishment and implementation of program 
        requirements.--The Oversight Board shall establish program 
        requirements and standards under this section and the Secretary 
        shall implement such requirements and standards. The Oversight 
        Board and the Secretary may establish and implement any 
        requirements or standards through interim guidance and 
        mortgagee letters.
    ``(c) Requirements.--To be eligible for insurance under this 
section, a mortgage shall comply with all of the following 
requirements:
            ``(1) Owner-occupied principal residence requirement.--The 
        residence to be covered by the mortgage insured under this 
        section shall be occupied by the mortgagor as the principal 
        residence of the mortgagor and the mortgagor shall provide a 
        certification to the originator of the mortgage that such 
        residence to be covered by the mortgage insured under this 
        section is the only residence in which the mortgagor has any 
        present ownership interest.
            ``(2) Lack of capacity to pay existing mortgage or 
        mortgages.--
                    ``(A) Borrower certification.--
                            ``(i) The mortgagor shall provide a 
                        certification to the originator of the mortgage 
                        that the mortgagor--
                                    ``(I) has not intentionally 
                                defaulted on the existing mortgage or 
                                mortgages; and
                                    ``(II) has not knowingly, or 
                                willfully and with actual knowledge 
                                furnished material information known to 
                                be false for the purpose of obtaining 
                                the existing mortgage or mortgages.
                            ``(ii) The mortgagor shall agree in writing 
                        that the mortgagor shall be liable to repay the 
                        FHA any direct financial benefit achieved from 
                        the reduction of indebtedness on the existing 
                        mortgage or mortgages on the residence 
                        refinanced under this section derived from 
                        misrepresentations made in the certifications 
                        and documentation required under this 
                        subparagraph, subject to the discretion of the 
                        Oversight Board.
                    ``(B) Current borrower debt-to-income ratio.--As of 
                March 1, 2008, the mortgagor shall have had a ratio of 
                mortgage debt to income, taking into consideration all 
                existing mortgages at such time, greater than 35 
                percent.
                    ``(C) Loss mitigation responsibilities.--This 
                section may not be construed to alter or in any way 
                affect the responsibilities of any party (including the 
                mortgage servicer) to engage in any or all loan 
                modification or other loss mitigation strategies to 
                maximize value to investors as established by any 
                applicable contract.
            ``(3) Eligibility of mortgages by date of origination.--The 
        existing senior mortgage shall have been originated on or 
        before December 31, 2007.
            ``(4) Maximum loan-to-value ratio for new loans.--The 
        mortgage being insured under this section shall involve a 
        principal obligation (including such initial service charges, 
        appraisal, inspection, and other fees as the Secretary shall 
        approve and including the mortgage insurance premium paid 
        pursuant to subsection (e)(1)) in an amount not to exceed 90 
        percent of the current appraised value of the property. Section 
        203(d) shall not apply to mortgages insured under this section.
            ``(5) Required waiver of prepayment penalties and fees.--
        All penalties for prepayment of the existing mortgage or 
        mortgages, and all fees and penalties related to default or 
        delinquency on all existing mortgages or mortgages, shall be 
        waived or forgiven.
            ``(6) Required loan reduction.--
                    ``(A) Reduction of indebtedness under existing 
                senior mortgage.--The amount of indebtedness on the 
                existing mortgage or mortgages on the residence shall 
                have been substantially reduced by such percentage as 
                the Oversight Board or Secretary may require, and such 
                reduction shall be at least sufficient to--
                            ``(i) provide for the refinancing of such 
                        existing mortgage or mortgages in an amount not 
                        greater than 90 percent of the current 
                        appraised value of the property involved;
                            ``(ii) pay the full amount of the single 
                        premium to be collected pursuant to subsection 
                        (e)(1) (which shall be an amount equal to 3.0 
                        percent of the amount of the original insured 
                        principal obligation of the mortgage insured 
                        under this section and which shall serve as an 
                        additional reserve to cover possible loan 
                        losses); and
                            ``(iii) pay the full amount of the loan 
                        origination fee and any other closing costs, 
                        not to exceed 2.0 percent of the amount of the 
                        original insured principal obligation of the 
                        mortgage insured under this section.
                    ``(B) Extinguishment of debt by refinancing.--
                            ``(i) Required agreement.--All existing 
                        holders of mortgage liens on the property 
                        involved shall agree to accept the proceeds of 
                        the insured loan as payment in full of all 
                        indebtedness under all existing mortgages, and 
                        all encumbrances related to such mortgages 
                        shall be removed. The Oversight Board may take 
                        such actions as the Oversight Board considers 
                        necessary or appropriate to facilitate 
                        coordination and agreement between the holders 
                        of the existing senior mortgage and any 
                        existing subordinate mortgages, taking into 
                        consideration the subordinate lien status of 
                        such subordinate mortgages, to comply with the 
                        requirement under this subparagraph.
                            ``(ii) Treatment of multiple mortgage 
                        liens.--In addition to clause (i), the 
                        Oversight Board shall adopt one of the 
                        following approaches for all mortgages or such 
                        classes of mortgages as the Oversight Board may 
                        determine and may, from time to time, 
                        reconsider:
                                    ``(I) Fixed price.--As a 
                                requirement for participating in this 
                                program, all existing lien holders will 
                                agree to not provide any payment to 
                                subordinate lien holders other than 
                                such payment in accordance with a 
                                formula established by the Oversight 
                                Board as set forth in clause (iii); 
                                except that the Oversight Board may 
                                establish a short period within which 
                                first and subordinate lien holders may 
                                negotiate to extinguish all subordinate 
                                liens for compensation that may be 
                                different from the amount determined 
                                under such formula set forth in clause 
                                (iii).
                                    ``(II) Shared equity.--The 
                                Oversight Board may require the 
                                mortgagor under a mortgage insured 
                                under this section to agree to share a 
                                portion of any future equity in the 
                                mortgaged property with holders of 
                                existing subordinate mortgages, in 
                                accordance with a formula for such 
                                shared equity established by the 
                                Oversight Board as set forth in clause 
                                (iii), except that payments of such 
                                shared equity may be made only after 
                                the Secretary recovers all amounts owed 
                                to the Secretary with respect to such 
                                mortgage pursuant to the program under 
                                this section (including amounts owed 
                                pursuant to paragraph (8)).
                            ``(iii) Formula.--In determining a formula 
                        for determining any payments to subordinate 
                        lien holders pursuant to subclauses (I) and 
                        (II) of clause (ii), and in any reconsideration 
                        of such formula as the Oversight Board may from 
                        time to time undertake, the Oversight Board 
                        shall take into consideration the current 
                        market value of such liens. In no case may a 
                        formula provide for the payment of more than 1 
                        percent of the current appraised value of the 
                        mortgaged property to a subordinate lien holder 
                        if the outstanding balance owed to more senior 
                        lien holders is equal to or exceeds such 
                        current appraised value.
                            ``(iv) Voluntary program.--This 
                        subparagraph may not be construed to require 
                        any holder of any existing mortgage to 
                        participate in the program under this section 
                        generally, or with respect to any particular 
                        loan.
                            ``(v) Source of payments for subordinate 
                        loans.--Any amounts paid to holders of any 
                        existing subordinate mortgages in connection 
                        with the origination and insurance of a 
                        mortgage under this section shall derive only 
                        from--
                                    ``(I) the holder of the existing 
                                senior mortgage; or
                                    ``(II) in the case only of the 
                                shared equity approach under clause 
                                (ii)(II), the mortgagor under the 
                                mortgage insured under this section
            ``(7) Required reduction of debt service.--The debt service 
        payments due under the mortgage insured under this section 
        shall be in an amount that is substantially reduced from the 
        debt service payments due under the existing mortgage or 
        mortgages, which reduction may be achieved through a reduction 
        of indebtedness, a reduction in the interest rate being paid, 
        or an extension of the term of the mortgage, or any combination 
        thereof.
            ``(8) Financial recovery to federal government through exit 
        premium.--
                    ``(A) Subordinate lien.--The mortgage shall provide 
                that the Secretary shall retain a lien on the residence 
                involved, which shall be subordinate to the mortgage 
                insured under this section but senior to all other 
                mortgages on the residence that may exist at any time, 
                and which shall secure the repayment of the amount due 
                under subparagraph (D).
                    ``(B) No interest or payment during mortgage.--The 
                amount secured by the lien retained by the Secretary 
                pursuant to subparagraph (A) shall not bear interest 
                and shall not be repayable to the Secretary except as 
                provided in subparagraph (D) of this paragraph.
                    ``(C) Net proceeds available for exit premium.--
                Upon the sale, refinancing, or other disposition of the 
                residence covered by a mortgage insured under this 
                section, any proceeds resulting from such disposition 
                that remain after deducting the remaining insured 
                principal balance of the mortgage insured under this 
                section shall be available to meet the obligation under 
                subparagraph (D).
                    ``(D) Exit premium.--Upon any refinancing of the 
                mortgage insured under this section or any sale or 
                disposition of the residence covered by the mortgage, 
                the Secretary shall, subject to the availability of 
                sufficient net proceeds described in subparagraph (C), 
                receive the greater of--
                            ``(i) 3 percent of the amount of the 
                        original insured principal obligation of the 
                        mortgage; or
                            ``(ii) a percentage of the portion of the 
                        net proceeds described in subparagraph (C), 
                        which shall be--
                                    ``(I) in the case of any 
                                refinancing, sale, or disposition 
                                occurring during the first year of the 
                                term of the mortgage, 100 percent of 
                                such net proceeds;
                                    ``(II) in the case of any 
                                refinancing, sale, or disposition 
                                occurring during the second year of the 
                                term of the mortgage, 80 percent;
                                    ``(III) in the case of any 
                                refinancing, sale, or disposition 
                                occurring during the third year of the 
                                term of the mortgage, 60 percent; and
                                    ``(IV) in the case of any 
                                refinancing, sale, or disposition 
                                occurring during the fourth year of the 
                                term of the mortgage or at any time 
                                thereafter, 50 percent;
                except that such percentage of proceeds shall be 
                reduced by all fees the Secretary has collected for the 
                mortgage prior to such refinancing, sale, or 
                disposition.
                    ``(E) Authority to prohibit new second liens.--The 
                Oversight Board shall prohibit borrowers from granting 
                a new second lien on the mortgaged property during the 
                first five years of the term of the mortgage insured 
                under this section, except as the Oversight Board 
                determines to be necessary to ensure the appropriate 
                maintenance of the mortgaged property.
            ``(9) Documentation and verification of income.--In 
        complying with the FHA underwriting requirements under the 
        program under this section, the mortgagee under the mortgage 
        shall document and verify the income of the mortgagor by 
        procuring an Internal Revenue Service transcript of the income 
        tax returns of the mortgagor for the two most recent years for 
        which the filing deadline for such years has passed and by any 
        other method, in accordance with procedures and standards that 
        the Oversight Board or the Secretary shall establish.
            ``(10) Fixed rate mortgage.--The mortgage insured under 
        this section shall bear interest at a single rate that is fixed 
        for the entire term of the mortgage.
            ``(11) Maximum loan amount.--Notwithstanding section 
        203(b)(2), the mortgage being insured under this section shall 
        involve a principal obligation in an amount that does not 
        exceed the limitation (for a property of the applicable size) 
        on the amount of the principal obligation that would be 
        allowable under the terms of section 202(a) of the Economic 
        Stimulus Act of 2008 if the mortgage were insured pursuant to 
        such section. The limitation on the amount of the principal 
        obligation allowable under such Act shall apply for the 
        purposes of this Act until the termination under subsection (n) 
        of the program under this subsection.
            ``(12) Ineligibility for fraud conviction.--The mortgagor 
        shall not have been convicted under Federal or State law for 
        mortgage fraud during the 7-year period ending upon the 
        insurance of the mortgage under this section.
            ``(13) Lender review.--The mortgagee under the mortgage 
        shall conduct an electronic database search of the mortgagor's 
        criminal history to determine if the mortgagor has had a 
        conviction described in paragraph (12). The mortgagee may 
        charge the mortgagor a reasonable fee for the actual cost of 
        the search not to exceed a maximum rate established by the 
        Oversight Board. The Oversight Board may provide clarification, 
        if needed, to help mortgagees identify any differences among 
        the States in how they report mortgage fraud convictions. The 
        Oversight Board shall establish procedures sufficient to allow 
        the mortgagor to challenge a mortgagee's determination with 
        respect to paragraph (12) (including to correct inaccuracies 
        resulting from theft of the mortgagor's identity or personally 
        identifiable information).
            ``(14) Appraisals.--Any appraisal conducted in connection 
        with a mortgage insured under this section shall--
                    ``(A) be based on the current value of the 
                property;
                    ``(B) be conducted in accordance with title XI of 
                the Financial Institutions Reform, Recovery, and 
                Enforcement Act of 1989 (12 U.S.C. 3331 et seq.);
                    ``(C) be completed by an appraiser who meets the 
                competency requirements of the Uniform Standards of 
                Professional Appraisal Practice;
                    ``(D) be wholly consistent with the appraisal 
                standards, practices, and procedures under section 
                202(e) of this Act that apply to all loans insured 
                under this Act; and
                    ``(E) comply with the requirements of subsection 
                (g) of this section (relating to appraisal 
                independence).
            ``(15) Statement of loan terms.--
                    ``(A) Requirement.--The mortgagor shall have been 
                provided by the mortgagee, not later than three days 
                after application for the mortgage, a form described in 
                subparagraph (B) appropriately and accurately completed 
                by the mortgagee.
                    ``(B) Form.--The form described in this 
                subparagraph shall be a single page, written disclosure 
                regarding the mortgage loan to be insured under this 
                section that, when completed by the mortgagee, sets 
                forth, in accordance with such requirements as the 
                Secretary shall by regulation establish a best possible 
                estimate of--
                            ``(i) the total loan amount under the 
                        mortgage;
                            ``(ii) the loan-to-value ratio for the 
                        mortgage;
                            ``(iii) the final maturity date for the 
                        mortgage;
                            ``(iv) the amount of any prepayment fee to 
                        be charged if the mortgage is paid in full 
                        before the final maturity date for the 
                        mortgage, including the percentages of any net 
                        proceeds to be received by the Secretary 
                        pursuant to paragraph (8)(D)(ii);
                            ``(v) the amount of the exit premium under 
                        the mortgage pursuant to subsection (e)(3);
                            ``(vi) the interest rate under the mortgage 
                        expressed as an annual percentage rate, and the 
                        amount of the monthly payment due under such 
                        rate;
                            ``(vii) the fully indexed rate of interest 
                        under the mortgage expressed as an annual 
                        percentage rate and the amount of the monthly 
                        payment due under such rate;
                            ``(viii) the monthly household income of 
                        the borrower upon which the mortgage is based;
                            ``(ix) the amount of the monthly payment 
                        due under the mortgage, and the amount of such 
                        initial monthly payment plus monthly amounts 
                        due for taxes and insurance on the property for 
                        which the mortgage is made, both expressed as a 
                        percentage of the monthly household income of 
                        the borrower; and
                            ``(x) the aggregate amount of settlement 
                        charges for all settlement services provided in 
                        connection with the mortgage, the amount of 
                        such charges that are included in the principal 
                        amount and the amount of such charges the 
                        borrower must pay at closing, the aggregate 
                        amount of mortgagee's fees connection with the 
                        mortgage, and the aggregate amount of other 
                        fees or required payments in connection with 
                        the mortgage.
    ``(d) Flexible Underwriting Criteria.--
            ``(1) In general.--The Oversight Board shall establish, and 
        the Secretary acting on behalf of the Oversight Board shall 
        implement, underwriting standards for mortgages insured under 
        this section that--
                    ``(A) ensure that each mortgagor under a mortgage 
                insured under this section has a reasonable expectation 
                of repaying the mortgage, taking into consideration the 
                mortgagor's income, assets, liabilities, payment 
                history, and other applicable criteria, but which shall 
                not result in a denial of insurance solely on the basis 
                of the mortgagor's current FICO or other credit scores, 
                or any delinquency or default by the mortgagor under 
                the existing mortgage or mortgages, or any case filed 
                under title 11, United States Code, by the mortgagor; 
                and
                    ``(B) subject to the provisions of subparagraph 
                (A), permit a total debt-to-income ratio of up to 43 
                percent.
            ``(2) Exception.--
                    ``(A) In general.--Subject to the underwriting 
                standards established under paragraph (1)(A) and any 
                additional requirements that the Oversight Board 
                considers appropriate, the Oversight Board shall permit 
                a total debt-to-income ratio of more than 43 percent, 
                but not more than 50 percent, if the mortgagor has 
                made, on a timely basis before the endorsement of the 
                mortgage insured under this section, not less than six 
                months of payments in an amount not less than the 
                amount of the monthly payment due under the mortgage to 
                be insured under this section. The holder of the 
                existing senior mortgage shall exercise forbearance 
                with respect to such mortgage during the period in 
                which such payments are made.
                    ``(B) Computation of debt-to-income ratio.--In 
                computing the mortgagor's total debt-to-income ratio 
                for purposes of mortgage qualification under the 
                underwriting standards established pursuant to this 
                section--
                            ``(i) if the mortgagor is a debtor in a 
                        case under chapter 13 of title 11, United 
                        States Code, payments on recurring debts other 
                        than housing expenses shall be based on the 
                        amounts being paid on such debts under the 
                        mortgagor's confirmed plan under such chapter; 
                        and
                            ``(ii) if the mortgagor is a debtor in a 
                        case under chapter 7 of title 11, United States 
                        Code, recurring debts that are to be discharged 
                        in that case shall not be considered.
            ``(3) Authority.--The Oversight Board may alter the ratios 
        under this subsection for a particular class of borrowers 
        subject to such requirements as the Board determines is 
        necessary and appropriate to fulfill the purposes of this Act.
            ``(4) Representations and warranties.--The Oversight Board 
        shall require the underwriter of the insured loan to provide 
        such representations and warranties as the Oversight Board 
        considers necessary or appropriate for the Secretary to enforce 
        compliance with all underwriting and appraisal standards of the 
        program.
    ``(e) Premiums.--For each mortgage insured under this section, the 
Oversight Board shall establish and the Secretary shall collect--
            ``(1) at the time of insurance, a single premium payment in 
        an amount equal to 3.0 percent of the amount of the original 
        insured principal obligation of the mortgage, which shall be 
        paid from the proceeds of the mortgage being insured under this 
        section, through the reduction of the amount of indebtedness on 
        the existing senior mortgage required under subsection 
        (c)(6)(A);
            ``(2) in addition to the premium under paragraph (1), 
        annual premium payments in an amount equal to 1.50 percent of 
        the remaining insured principal balance of the mortgage; and
            ``(3) an exit premium in the amount determined under 
        subsection (c)(8), but which shall not be less than 3.0 percent 
        of the original insured principal obligation of the mortgage, 
        subject only to the availability of sufficient net proceeds 
        from sale, refinancing, or other disposition of the property, 
        as determined in subsection (c)(8).
    ``(f) Origination Fees and Mortgage Rate.--The Oversight Board 
shall establish and the Secretary shall implement a reasonable 
limitation on origination fees for mortgages insured under this section 
and shall establish procedures to ensure that interest rates on such 
mortgages shall be commensurate with market rate interest rates on such 
types of loans.
    ``(g) Appraisal Independence.--
            ``(1) Prohibitions on interested parties in a real estate 
        transaction.--No mortgage lender, mortgage broker, mortgage 
        banker, real estate broker, appraisal management company, 
        employee of an appraisal management company, nor any other 
        person with an interest in a real estate transaction involving 
        an appraisal in connection with a mortgage insured under this 
        section shall improperly influence, or attempt to improperly 
        influence, through coercion, extortion, collusion, 
        compensation, instruction, inducement, intimidation, non-
        payment for services rendered, or bribery, the development, 
        reporting, result, or review of a real estate appraisal sought 
        in connection with the mortgage.
            ``(2) Exceptions.--The requirements of paragraph (1) shall 
        not be construed as prohibiting a mortgage lender, mortgage 
        broker, mortgage banker, real estate broker, appraisal 
        management company, employee of an appraisal management 
        company, or any other person with an interest in a real estate 
        transaction from asking an appraiser to provide 1 or more of 
        the following services:
                    ``(A) Consider additional, appropriate property 
                information, including the consideration of additional 
                comparable properties to make or support an appraisal.
                    ``(B) Provide further detail, substantiation, or 
                explanation for the appraiser's value conclusion.
                    ``(C) Correct errors in the appraisal report.
            ``(3) Civil monetary penalties.--The Secretary may impose a 
        civil money penalty for any knowing and material violation of 
        paragraph (1) under the same terms and conditions as are 
        authorized in section 536(a) of this Act.
    ``(h) Limitation on Aggregate Insurance Authority.--The aggregate 
original principal obligation of all mortgages insured under this 
section may not exceed $300,000,000,000.
    ``(i) Enhancement of FHA Capacity.--Under the direction of the 
Oversight Board, the Secretary shall take such actions as may be 
necessary to--
            ``(1) contract for the establishment of underwriting 
        criteria, automated underwriting systems, pricing standards, 
        and other factors relating to eligibility for mortgages insured 
        under this section;
            ``(2) contract for independent quality reviews of 
        underwriting, including appraisal reviews and fraud detection, 
        of mortgages insured under this section or pools of such 
        mortgages; and
            ``(3) increase personnel of the Department as necessary to 
        process or monitor the processing of mortgages insured under 
        this section.
    ``(j) Monitoring of Underwriting Risk.--
            ``(1) Monitoring of designated underwriters.--The Oversight 
        Board and the Secretary shall monitor independent quality 
        reviews as established pursuant to subsection (i)(2) to--
                    ``(A) determine compliance of designated 
                underwriters with underwriting standards;
                    ``(B) determine rates of delinquency, claims rates, 
                and loss rates of designated underwriters; and
                    ``(C) terminate eligibility of designated 
                underwriters that do not meet minimum performance 
                standards as the Oversight Board may establish and the 
                Secretary implements.
            ``(2) Reports by oversight board.--The Oversight Board 
        shall submit monthly reports to the Congress identifying the 
        progress of the program for mortgage insurance under this 
        section, which shall contain the following information for each 
        month:
                    ``(A) The number of new mortgages insured under 
                this section, including the location of the properties 
                subject to such mortgages by census tract.
                    ``(B) The aggregate principal obligation of new 
                mortgages insured under this section.
                    ``(C) The average amount by which the indebtedness 
                on existing mortgages is reduced in accordance with 
                subsection (c)(6).
                    ``(D) The average amount by which the debt service 
                payments on existing mortgages is reduced in accordance 
                with subsection (c)(7).
                    ``(E) The amount of premiums collected for 
                insurance of mortgages under this section.
                    ``(F) The claim and loss rates for mortgages 
                insured under this section.
                    ``(G) The race, ethnicity, gender, and income of 
                the mortgagors, aggregated by geographical areas at 
                least as specific as census tracts, except where 
                necessary to protect privacy of the borrower.
                    ``(H) Any other information that the Oversight 
                Board considers appropriate.
            ``(3) Report by inspector general.--The Inspector General 
        of the Department of Housing and Urban Development shall 
        conduct an annual audit of the program for mortgage insurance 
        under this section to determine compliance with this section 
        and program rules.
    ``(k) GNMA Commitment Authority.--
            ``(1) Guarantees.--The Secretary shall take such actions as 
        may be necessary to ensure that securities based on and backed 
        by a trust or pool composed of mortgages insured under this 
        section are available to be guaranteed by the Government 
        National Mortgage Association as to the timely payment of 
        principal and interest.
            ``(2) Guarantee authority.--To carry out the purposes of 
        section 306 of the National Housing Act (12 U.S.C. 1721), the 
        Government National Mortgage Association may enter into new 
        commitments to issue guarantees of securities based on or 
        backed by mortgages insured under this section, not exceeding 
        $300,000,000,000. The amount of authority provided under the 
        preceding sentence to enter into new commitments to issue 
        guarantees is in addition to any amount of authority to make 
        new commitments to issue guarantees that is provided to the 
        Association under any other provision of law.
    ``(l) Special Risk Insurance Fund.--The insurance of each mortgage 
under this section shall be the obligation of the Special Risk 
Insurance Fund established by section 238.
    ``(m) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Existing mortgage.--The term `existing mortgage' 
        means, with respect to a mortgage insured under this section, a 
        mortgage that is to be extinguished, and paid or prepaid, from 
        the proceeds of the mortgage insured under this section.
            ``(2) Existing senior mortgage.--The term `existing senior 
        mortgage' means, with respect to a mortgage insured under this 
        section, the existing mortgage that has superior priority.
            ``(3) Existing subordinate mortgage.--The term `existing 
        subordinate mortgage' means, with respect to a mortgage insured 
        under this section, an existing mortgage that has subordinate 
        priority to the existing senior mortgage.
    ``(n) Sunset.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        authority of the Secretary to make any new commitment to insure 
        any mortgage under this section shall terminate upon the 
        expiration of the 2-year period beginning on the date of the 
        enactment of the FHA Housing Stabilization and Homeownership 
        Retention Act of 2008.
            ``(2) Extensions.--The Oversight Board may, not more than 
        four times, extend the authority to enter into new commitments 
        to insure mortgages under this section beyond the date 
        specified in paragraph (1), except that each such extension 
        shall--
                    ``(A) be effective only if, before the program 
                terminates pursuant to paragraph (1) or any previous 
                extension pursuant to this paragraph, the Oversight 
                Board--
                            ``(i) certifies the need for such extension 
                        in writing to the Congress; and
                            ``(ii) causes notice of such extension to 
                        be published in the Federal Register no later 
                        than the beginning of the 3-month period that 
                        ends upon the scheduled termination date of the 
                        program; and
                    ``(B) be for a period of not more than 6 months.
    ``(o) Authorizations of Appropriations.--There is authorized to be 
appropriated for each of fiscal years 2008 and 2009--
            ``(1) $210,000,000 for providing counseling regarding loss 
        mitigation for mortgagors with 1- to 4-family residences, 
        including determining eligibility for the program under this 
        section, with grants to be administered through the 
        Neighborhood Reinvestment Corporation, except that--
                    ``(A) not less than 15 percent of the funds made 
                available pursuant to this paragraph shall be provided 
                to counseling organizations that target counseling 
                services regarding loss mitigation to minority and low-
                income homeowners or provide such services in 
                neighborhoods with high concentrations of minority and 
                low-income homeowners;
                    ``(B) $35,000,000 of the funds made available 
                pursuant to this paragraph shall be used by the 
                Neighborhood Reinvestment Corporation (referred to in 
                this subparagraph as the `NRC') to make grants to State 
                and local legal organizations or attorneys that have 
                demonstrated legal experience in home foreclosure or 
                eviction law to provide legal assistance related to 
                home ownership preservation, home foreclosure 
                prevention, and tenancy associated with home 
                foreclosure or to counseling intermediaries that have 
                been approved by the Department of Housing and Urban 
                Development for the purpose of making such grants or 
                contracting for such legal assistance; of the amount 
                provided under this subparagraph, at least 60 percent 
                shall be allocated for legal assistance to low-income 
                homeowners or tenants; such attorneys shall be capable 
                of assisting homeowners in owner-occupied homes or 
                tenants who live in homes with mortgages in default, in 
                danger of default, or subject to or at risk of 
                foreclosure or eviction and who have legal issues that 
                cannot be handled by counselors employed by NRC 
                intermediaries; in using the amount made available 
                under this subparagraph, the NRC shall give priority 
                consideration to State and local legal organizations 
                and attorneys that (i) provide legal assistance in the 
                100 metropolitan statistical areas (as defined by the 
                Director of the Office of Management and Budget) with 
                the highest home foreclosure rates, and (ii) have the 
                capacity to begin using the financial assistance within 
                90 days after receipt of the assistance; as a condition 
                of the receipt of a grant under this subparagraph, the 
                grantee shall submit to NRC information relating to the 
                demographic characteristics of the assisted homeowners 
                or tenants, the dollar amount and terms of the relevant 
                mortgages and the outcome of legal proceedings related 
                to the foreclosure or eviction proceedings, including 
                the resolutions thereof;
                    ``(C) some such sums shall be used for such 
                counseling for veterans recently returning from active 
                duty in the Armed Forces;
                    ``(D) the NRC shall give priority consideration for 
                funding with amounts made available pursuant to this 
                paragraph, except for funds made available under 
                subparagraphs (A) and (B), to entities that have an 
                effective plan in place for making contact, including 
                personal contact, with defaulted mortgagors, and such a 
                plan may include use of third parties (including both 
                for-profit and not-for-profit entities) to make 
                personal contact with defaulted mortgagors, or visits 
                to such mortgagors, or both;
                    ``(E) except with respect to funds reserved under 
                subparagraphs (A) and (B), the NRC shall give priority 
                consideration for funding with amounts made available 
                pursuant to this paragraph to entities that have a 
                written plan that has been implemented for providing 
                in-person counseling and for making contact, including 
                personal contact, with defaulted mortgagors, for the 
                purpose of providing counseling or providing 
                information about available counseling, both (i) prior 
                to commencement of any foreclosure proceedings, and 
                (ii) in the event effective in person or phone contact 
                has not been made with such defaulted mortgagors prior 
                thereto, then prior to the conclusion of the 
                foreclosure process; and
                    ``(F) not less than 2 percent of the funds made 
                available pursuant to this paragraph shall be used only 
                for identifying and notifying borrowers under existing 
                mortgages who are eligible under this section for 
                insurance of refinancing mortgages, and in making funds 
                reserved under this subparagraph available for such 
                purpose, the Secretary shall give preference to 
                assistance for programs that have a proven history of 
                outreach within minority communities; and
            ``(2) $150,000,000 for costs of activities under subsection 
        (i).
    ``(p) Audit and Report by Inspector General.--
            ``(1) Audit.--The Inspector General of the Department of 
        Housing and Urban Development shall conduct an audit of the 
        program for loss mitigation counseling funded with amounts made 
        available under subsection (o)(1) to determine compliance with 
        such subsection.
            ``(2) Reports to congress.--Not later than March 30, 2009, 
        and every calendar quarter thereafter, the Inspector General 
        shall submit to the appropriate committees of the Congress a 
        report summarizing the activities of the Inspector General and 
        the Neighborhood Reinvestment Corporation during the 120-day 
        period ending on the date of such report. Each report shall 
        include, for the period covered by such report, a detailed 
        statement of all obligations, expenditures, and revenues 
        associated with paragraphs (1) and (2) of subsection (o), 
        including--
                    ``(A) obligations and expenditures of appropriated 
                funds;
                    ``(B) the number of homeowners eligible in such 
                program;
                    ``(C) the number of homeowners participating in 
                such program;
                    ``(D) the status of homeowners within such program;
                    ``(E) the number of homeowners who have rejected 
                assistance from the Neighborhood Reinvestment 
                Corporation; and
                    ``(F) information on participating counseling 
                services.''.
    (b) Special Risk Insurance Fund.--Section 238 of the National 
Housing Act (12 U.S.C. 1715z-3) is amended--
            (1) in subsection (a)(1), by striking ``or 243'' each place 
        such term appears and inserting ``243, or 257''; and
            (2) in subsection (b), by striking ``and 243'' each place 
        such term appears and inserting ``243, and 257''.

SEC. 103. STUDY OF AUCTION OR BULK REFINANCE PROGRAM.

    (a) Study.--The Board of Governors of the Federal Reserve System 
(in this section referred to as the ``Board of Governors''), in 
consultation with other members of the Oversight Board established by 
section 257(a) of the National Housing Act (as added by the amendment 
made by section 102(a) of this Act), shall conduct a study of the need 
for and efficacy of an auction or bulk refinancing mechanism to 
facilitate refinancing of existing residential mortgages that are at 
risk for foreclosure into mortgages insured under the mortgage 
insurance program under title II of the National Housing Act. The study 
shall identify and examine various options for mechanisms under which 
lenders and servicers of such mortgages may make bids for forward 
commitments for such insurance in an expedited manner.
    (b) Content.--
            (1) Analysis.--The study required under subsection (a) 
        shall analyze--
                    (A) the feasibility of establishing a mechanism 
                that would facilitate the more rapid refinancing of 
                borrowers at risk of foreclosure into performing 
                mortgages insured under title II of the National 
                Housing Act;
                    (B) whether such a mechanism would provide an 
                effective and efficient mechanism to reduce 
                foreclosures on qualified existing mortgages;
                    (C) whether the use of an auction or bulk refinance 
                program is necessary to stabilize the housing market 
                and reduce the impact of turmoil in that market on the 
                economy of the United States;
                    (D) whether there are other mechanisms or authority 
                that would be useful to reduce foreclosure; and
                    (E) and any other factors that the Board of 
                Governors considers relevant.
            (2) Determinations.--To the extent that the Board of 
        Governors finds that a facility of the type described in 
        paragraph (1) is feasible and useful, the study shall--
                    (A) determine and identify any additional authority 
                or resources needed to establish and operate such a 
                mechanism;
                    (B) determine whether there is a need for 
                additional authority with respect to the loan 
                underwriting criteria included in the amendment made by 
                section 102(a) of this Act or with respect to 
                eligibility of participating borrowers, lenders, or 
                holders of liens; and
                    (C) determine whether such underwriting criteria 
                should be established on the basis of individual loans, 
                in the aggregate, or otherwise to facilitate the goal 
                of refinancing borrowers at risk of foreclosure into 
                viable loans insured under the National Housing Act.
    (c) Report.--Not later than the expiration of the 60-day period 
beginning on the date of the enactment of this Act, the Board of 
Governors shall submit a report regarding the results of the study 
conducted under this section to the Committee on Financial Services of 
the House of Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate. The report shall include a detailed 
description of the analysis required under subsection (b)(1) and of the 
determinations made pursuant to subsection (b)(2), and shall include 
any other findings and recommendations of the Board of Governors 
pursuant to the study, including identifying various options for 
mechanisms described in subsection (a).

SEC. 104. TEMPORARY INCREASE IN MAXIMUM LOAN GUARANTY AMOUNT FOR 
              CERTAIN HOUSING LOANS GUARANTEED BY SECRETARY OF VETERANS 
              AFFAIRS.

    Notwithstanding subparagraph (C) of section 3703(a)(1) of title 38, 
United States Code, for purposes of any loan described in subparagraph 
(A)(i)(IV) of such section that is originated during the period 
beginning on the date of the enactment of this Act and ending on 
December 31, 2008, the term ``maximum guaranty amount'' shall mean an 
amount equal to 25 percent of the higher of--
            (1) the limitation determined under section 305(a)(2) of 
        the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
        1454(a)(2)) for the calendar year in which the loan is 
        originated for a single-family residence; or
            (2) 125 percent of the area median price for a single-
        family residence, but in no case to exceed 175 percent of the 
        limitation determined under such section 305(a)(2) for the 
        calendar year in which the loan is originated for a single-
        family residence.

SEC. 105. STUDY OF POSSIBLE ACCOUNTING REVISIONS RELATING TO PROPERTY 
              AT RISK OF FORECLOSURE AND THE AVAILABILITY OF CREDIT FOR 
              REFINANCING HOME MORTGAGES AT RISK OF FORECLOSURE.

    (a) Study Required.--The Board of Governors of the Federal Reserve 
System shall conduct a study on mark-to-market accounting standards 
applicable to depository institutions with respect to their residential 
mortgages that are at risk of foreclosure, the effects of such 
accounting standards and capital requirements on a depository 
institution's capacity to provide refinancing to residential mortgagors 
that are at risk of foreclosure and to residential mortgagors during 
periods of market value declines and increased foreclosures, and the 
feasibility of modifications of such standards, requirements, and 
regulatory actions during periods of market fluctuation in order to 
maintain the ability of the institution to continue to carry mortgages 
on residential property at risk of foreclosure and assure the 
availability of credit to refinance at-risk residential mortgages.
    (b) Report Required.--The Board of Governors of the Federal Reserve 
System shall submit a report to the Congress before the end of the 90-
day period beginning on the date of the enactment of this Act 
containing the findings and determinations of the Board with respect to 
the study conducted under subsection (a) and such administrative and 
legislative recommendations as the Board may determine to be 
appropriate.

SEC. 106. GAO STUDY OF THE EFFECT OF TIGHTENING CREDIT MARKETS IN 
              COMMUNITIES AFFECTED BY THE SUBPRIME MORTGAGE FORECLOSURE 
              CRISES AND PREDATORY LENDING ON PROSPECTIVE FIRST-TIME 
              HOMEBUYERS SEEKING MORTGAGES.

    The Comptroller General of the United States shall conduct a study 
to analyze the effects of tightening credit markets on prospective 
first-time home buyers who reside in selected communities that have 
been most detrimentally affected by both the current subprime mortgage 
foreclosure crisis and predatory mortgage lending. Such study shall 
also analyze the adequacy of financial literacy outreach efforts by 
agencies of the Federal Government tasked with implementing financial 
literacy education in such communities and shall assess whether the 
current funding levels for such efforts are at sufficient levels to 
reduce the levels of subprime mortgage delinquencies and foreclosures 
and to increase the level of financial literacy in the selected 
communities so as to minimize the incidences of predatory mortgage 
lending. Not later than the expiration of the 6-month period beginning 
on the date of the enactment of this Act, the Comptroller General shall 
submit a report to the Congress setting forth the results of the study 
and including recommendations regarding such funding levels.

                 TITLE II--OFFICE OF HOUSING COUNSELING

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Expand and Preserve Home Ownership 
Through Counseling Act''.

SEC. 202. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.

    Section 4 of the Department of Housing and Urban Development Act 
(42 U.S.C. 3533) is amended by adding at the end the following new 
subsection:
    ``(g) Office of Housing Counseling.--
            ``(1) Establishment.--There is established, in the Office 
        of the Secretary, the Office of Housing Counseling.
            ``(2) Director.--There is established the position of 
        Director of Housing Counseling. The Director shall be the head 
        of the Office of Housing Counseling and shall be appointed by 
        the Secretary. Such position shall be a career-reserved 
        position in the Senior Executive Service.
            ``(3) Functions.--
                    ``(A) In general.--The Director shall have ultimate 
                responsibility within the Department, except for the 
                Secretary, for all activities and matters relating to 
                homeownership counseling and rental housing counseling, 
                including--
                            ``(i) research, grant administration, 
                        public outreach, and policy development 
                        relating to such counseling; and
                            ``(ii) establishment, coordination, and 
                        administration of all regulations, 
                        requirements, standards, and performance 
                        measures under programs and laws administered 
                        by the Department that relate to housing 
                        counseling, homeownership counseling (including 
                        maintenance of homes), mortgage-related 
                        counseling (including home equity conversion 
                        mortgages and credit protection options to 
                        avoid foreclosure), and rental housing 
                        counseling, including the requirements, 
                        standards, and performance measures relating to 
                        housing counseling.
                    ``(B) Specific functions.--The Director shall carry 
                out the functions assigned to the Director and the 
                Office under this section and any other provisions of 
                law. Such functions shall include establishing rules 
                necessary for--
                            ``(i) the counseling procedures under 
                        section 106(g)(1) of the Housing and Urban 
                        Development Act of 1968 (12 U.S.C. 
                        1701x(h)(1));
                            ``(ii) carrying out all other functions of 
                        the Secretary under section 106(g) of the 
                        Housing and Urban Development Act of 1968, 
                        including the establishment, operation, and 
                        publication of the availability of the toll-
                        free telephone number under paragraph (2) of 
                        such section;
                            ``(iii) carrying out section 5 of the Real 
                        Estate Settlement Procedures Act of 1974 (12 
                        U.S.C. 2604) for home buying information 
                        booklets prepared pursuant to such section;
                            ``(iv) carrying out the certification 
                        program under section 106(e) of the Housing and 
                        Urban Development Act of 1968 (12 U.S.C. 
                        1701x(e));
                            ``(v) carrying out the assistance program 
                        under section 106(a)(4) of the Housing and 
                        Urban Development Act of 1968, including 
                        criteria for selection of applications to 
                        receive assistance;
                            ``(vi) carrying out any functions regarding 
                        abusive, deceptive, or unscrupulous lending 
                        practices relating to residential mortgage 
                        loans that the Secretary considers appropriate, 
                        which shall include conducting the study under 
                        section 206 of the Expand and Preserve Home 
                        Ownership Through Counseling Act;
                            ``(vii) providing for operation of the 
                        advisory committee established under paragraph 
                        (4) of this subsection;
                            ``(viii) collaborating with community-based 
                        organizations with expertise in the field of 
                        housing counseling; and
                            ``(ix) providing for the building of 
                        capacity to provide housing counseling services 
                        in areas that lack sufficient services.
            ``(4) Advisory committee.--
                    ``(A) In general.--The Secretary shall appoint an 
                advisory committee to provide advice regarding the 
                carrying out of the functions of the Director.
                    ``(B) Members.--Such advisory committee shall 
                consist of not more than 12 individuals, and the 
                membership of the committee shall equally represent all 
                aspects of the mortgage and real estate industry, 
                including consumers.
                    ``(C) Terms.--Except as provided in subparagraph 
                (D), each member of the advisory committee shall be 
                appointed for a term of 3 years. Members may be 
                reappointed at the discretion of the Secretary.
                    ``(D) Terms of initial appointees.--As designated 
                by the Secretary at the time of appointment, of the 
                members first appointed to the advisory committee, 4 
                shall be appointed for a term of 1 year and 4 shall be 
                appointed for a term of 2 years.
                    ``(E) Prohibition of pay; travel expenses.--Members 
                of the advisory committee shall serve without pay, but 
                shall receive travel expenses, including per diem in 
                lieu of subsistence, in accordance with applicable 
                provisions under subchapter I of chapter 57 of title 5, 
                United States Code.
                    ``(F) Advisory role only.--The advisory committee 
                shall have no role in reviewing or awarding housing 
                counseling grants.
            ``(5) Scope of homeownership counseling.--In carrying out 
        the responsibilities of the Director, the Director shall ensure 
        that homeownership counseling provided by, in connection with, 
        or pursuant to any function, activity, or program of the 
        Department addresses the entire process of homeownership, 
        including the decision to purchase a home, the selection and 
        purchase of a home, issues arising during or affecting the 
        period of ownership of a home (including refinancing, default 
        and foreclosure, and other financial decisions), and the sale 
        or other disposition of a home.''.

SEC. 203. COUNSELING PROCEDURES.

    (a) In General.--Section 106 of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the 
following new subsection:
    ``(g) Procedures and Activities.--
            ``(1) Counseling procedures.--
                    ``(A) In general.--The Secretary shall establish, 
                coordinate, and monitor the administration by the 
                Department of Housing and Urban Development of the 
                counseling procedures for homeownership counseling and 
                rental housing counseling provided in connection with 
                any program of the Department, including all 
                requirements, standards, and performance measures that 
                relate to homeownership and rental housing counseling.
                    ``(B) Homeownership counseling.--For purposes of 
                this subsection and as used in the provisions referred 
                to in this subparagraph, the term `homeownership 
                counseling' means counseling related to homeownership 
                and residential mortgage loans. Such term includes 
                counseling related to homeownership and residential 
                mortgage loans that is provided pursuant to--
                            ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                            ``(ii) in the United States Housing Act of 
                        1937--
                                    ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                    ``(II) section 8(y)(1)(D) (42 
                                U.S.C. 1437f(y)(1)(D));
                                    ``(III) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                    ``(IV) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                    ``(V) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                    ``(VI) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B));
                                    ``(VII) sections 302(b)(6) and 
                                303(b)(7) (42 U.S.C. 1437aaa-1(b)(6), 
                                1437aaa-2(b)(7)); and
                                    ``(VIII) section 304(c)(4) (42 
                                U.S.C. 1437aaa-3(c)(4));
                            ``(iii) section 302(a)(4) of the American 
                        Homeownership and Economic Opportunity Act of 
                        2000 (42 U.S.C. 1437f note);
                            ``(iv) sections 233(b)(2) and 258(b) of the 
                        Cranston-Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 12773(b)(2), 12808(b));
                            ``(v) this section and section 101(e) of 
                        the Housing and Urban Development Act of 1968 
                        (12 U.S.C. 1701x, 1701w(e));
                            ``(vi) section 220(d)(2)(G) of the Low-
                        Income Housing Preservation and Resident 
                        Homeownership Act of 1990 (12 U.S.C. 
                        4110(d)(2)(G));
                            ``(vii) sections 422(b)(6), 423(b)(7), 
                        424(c)(4), 442(b)(6), and 443(b)(6) of the 
                        Cranston-Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 12872(b)(6), 12873(b)(7), 
                        12874(c)(4), 12892(b)(6), and 12893(b)(6));
                            ``(viii) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                            ``(ix) sections 202(3) and 810(b)(2)(A) of 
                        the Native American Housing and Self-
                        Determination Act of 1996 (25 U.S.C. 4132(3), 
                        4229(b)(2)(A));
                            ``(x) in the National Housing Act--
                                    ``(I) in section 203 (12 U.S.C. 
                                1709), the penultimate undesignated 
                                paragraph of paragraph (2) of 
                                subsection (b), subsection (c)(2)(A), 
                                and subsection (r)(4);
                                    ``(II) subsections (a) and (c)(3) 
                                of section 237 (12 U.S.C. 1715z-2); and
                                    ``(III) subsections (d)(2)(B) and 
                                (m)(1) of section 255 (12 U.S.C. 1715z-
                                20);
                            ``(xi) section 502(h)(4)(B) of the Housing 
                        Act of 1949 (42 U.S.C. 1472(h)(4)(B)); and
                            ``(xii) section 508 of the Housing and 
                        Urban Development Act of 1970 (12 U.S.C. 1701z-
                        7).
                    ``(C) Rental housing counseling.--For purposes of 
                this subsection, the term `rental housing counseling' 
                means counseling related to rental of residential 
                property, which may include counseling regarding future 
                homeownership opportunities and providing referrals for 
                renters and prospective renters to entities providing 
                counseling and shall include counseling related to such 
                topics that is provided pursuant to--
                            ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                            ``(ii) in the United States Housing Act of 
                        1937--
                                    ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                    ``(II) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                    ``(III) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                    ``(IV) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                    ``(V) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B)); and
                                    ``(VI) section 302(b)(6) (42 U.S.C. 
                                1437aaa-1(b)(6));
                            ``(iii) section 233(b)(2) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12773(b)(2));
                            ``(iv) section 106 of the Housing and Urban 
                        Development Act of 1968 (12 U.S.C. 1701x);
                            ``(v) section 422(b)(6) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12872(b)(6));
                            ``(vi) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                            ``(vii) sections 202(3) and 810(b)(2)(A) of 
                        the Native American Housing and Self-
                        Determination Act of 1996 (25 U.S.C. 4132(3), 
                        4229(b)(2)(A)); and
                            ``(viii) the rental assistance program 
                        under section 8 of the United States Housing 
                        Act of 1937 (42 U.S.C. 1437f).
            ``(2) Standards for materials.--The Secretary, in 
        conjunction with the advisory committee established under 
        subsection (g)(4) of the Department of Housing and Urban 
        Development Act, shall establish standards for materials and 
        forms to be used, as appropriate, by organizations providing 
        homeownership counseling services, including any recipients of 
        assistance pursuant to subsection (a)(4).
            ``(3) Mortgage software systems.--
                    ``(A) Certification.--The Secretary shall provide 
                for the certification of various computer software 
                programs for consumers to use in evaluating different 
                residential mortgage loan proposals. The Secretary 
                shall require, for such certification, that the 
                mortgage software systems take into account--
                            ``(i) the consumer's financial situation 
                        and the cost of maintaining a home, including 
                        insurance, taxes, and utilities;
                            ``(ii) the amount of time the consumer 
                        expects to remain in the home or expected time 
                        to maturity of the loan; and
                            ``(iii) such other factors as the Secretary 
                        considers appropriate to assist the consumer in 
                        evaluating whether to pay points, to lock in an 
                        interest rate, to select an adjustable or fixed 
                        rate loan, to select a conventional or 
                        government-insured or guaranteed loan and to 
                        make other choices during the loan application 
                        process.
                If the Secretary determines that available existing 
                software is inadequate to assist consumers during the 
                residential mortgage loan application process, the 
                Secretary shall arrange for the development by private 
                sector software companies of new mortgage software 
                systems that meet the Secretary's specifications.
                    ``(B) Use and initial availability.--Such certified 
                computer software programs shall be used to supplement, 
                not replace, housing counseling. The Secretary shall 
                provide that such programs are initially used only in 
                connection with the assistance of housing counselors 
                certified pursuant to subsection (e).
                    ``(C) Availability.--After a period of initial 
                availability under subparagraph (B) as the Secretary 
                considers appropriate, the Secretary shall take 
                reasonable steps to make mortgage software systems 
                certified pursuant to this paragraph widely available 
                through the Internet and at public locations, including 
                public libraries, senior-citizen centers, public 
                housing sites, offices of public housing agencies that 
                administer rental housing assistance vouchers, and 
                housing counseling centers.
            ``(4) National public service multimedia campaigns to 
        promote housing counseling.--
                    ``(A) In general.--The Director of Housing 
                Counseling shall develop, implement, and conduct 
                national public service multimedia campaigns designed 
                to make persons facing mortgage foreclosure, persons 
                considering a subprime mortgage loan to purchase a 
                home, elderly persons, persons who face language 
                barriers, low-income persons, and other potentially 
                vulnerable consumers aware that it is advisable, before 
                seeking or maintaining a residential mortgage loan, to 
                obtain homeownership counseling from an unbiased and 
                reliable sources and that such homeownership counseling 
                is available, including through programs sponsored by 
                the Secretary of Housing and Urban Development.
                    ``(B) Contact information.--Each segment of the 
                multimedia campaign under subparagraph (A) shall 
                publicize the toll-free telephone number and web site 
                of the Department of Housing and Urban Development 
                through which persons seeking housing counseling can 
                locate a housing counseling agency in their State that 
                is certified by the Secretary of Housing and Urban 
                Development and can provide advice on buying a home, 
                renting, defaults, foreclosures, credit issues, and 
                reverse mortgages.
                    ``(C) Authorization of appropriations.--There are 
                authorized to be appropriated to the Secretary, not to 
                exceed $3,000,000 for fiscal years 2008, 2009, and 
                2010, for the develop, implement, and conduct of 
                national public service multimedia campaigns under this 
                paragraph.
            ``(5) Education programs.--The Secretary shall provide 
        advice and technical assistance to States, units of general 
        local government, and nonprofit organizations regarding the 
        establishment and operation of, including assistance with the 
        development of content and materials for, educational programs 
        to inform and educate consumers, particularly those most 
        vulnerable with respect to residential mortgage loans (such as 
        elderly persons, persons facing language barriers, low-income 
        persons, and other potentially vulnerable consumers), regarding 
        home mortgages, mortgage refinancing, home equity loans, and 
        home repair loans.''.
    (b) Conforming Amendments to Grant Program for Homeownership 
Counseling Organizations.--Section 106(c)(5)(A)(ii) of the Housing and 
Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is 
amended--
            (1) in subclause (III), by striking ``and'' at the end;
            (2) in subclause (IV) by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after subclause (IV) the following new 
        subclause:
                                    ``(V) notify the housing or 
                                mortgage applicant of the availability 
                                of mortgage software systems provided 
                                pursuant to subsection (g)(3).''.

SEC. 204. GRANTS FOR HOUSING COUNSELING ASSISTANCE.

    Section 106(a) of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(a)(3)) is amended by adding at the end the following new 
paragraph:
    ``(4) Homeownership and Rental Counseling Assistance.--
            ``(A) In general.--The Secretary shall make financial 
        assistance available under this paragraph to States, units of 
        general local governments, and nonprofit organizations 
        providing homeownership or rental counseling (as such terms are 
        defined in subsection (g)(1)).
            ``(B) Qualified entities.--The Secretary shall establish 
        standards and guidelines for eligibility of organizations 
        (including governmental and nonprofit organizations) to receive 
        assistance under this paragraph.
            ``(C) Distribution.--Assistance made available under this 
        paragraph shall be distributed in a manner that encourages 
        efficient and successful counseling programs.
            ``(D) Authorization of appropriations.--There are 
        authorized to be appropriated $45,000,000 for each of fiscal 
        years 2008 through 2011 for--
                    ``(i) the operations of the Office of Housing 
                Counseling of the Department of Housing and Urban 
                Development;
                    ``(ii) the responsibilities of the Secretary under 
                paragraphs (2) through (5) of subsection (g); and
                    ``(iii) assistance pursuant to this paragraph for 
                entities providing homeownership and rental 
                counseling.''.

SEC. 205. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD 
              PROGRAMS.

    Section 106(e) of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(e)) is amended--
            (1) by striking paragraph (1) and inserting the following 
        new paragraph:
            ``(1) Requirement for assistance.--An organization may not 
        receive assistance for counseling activities under subsection 
        (a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or 
        under section 101(e), unless the organization, or the 
        individuals through which the organization provides such 
        counseling, has been certified by the Secretary under this 
        subsection as competent to provide such counseling.'';
            (2) in paragraph (2)--
                    (A) by inserting ``and for certifying 
                organizations'' before the period at the end of the 
                first sentence; and
                    (B) in the second sentence by striking ``for 
                certification'' and inserting ``, for certification of 
                an organization, that each individual through which the 
                organization provides counseling shall demonstrate, 
                and, for certification of an individual,'';
            (3) in paragraph (3), by inserting ``organizations and'' 
        before ``individuals'';
            (4) by redesignating paragraph (3) as paragraph (5); and
            (5) by inserting after paragraph (2) the following new 
        paragraphs:
            ``(3) Requirement under hud programs.--Any homeownership 
        counseling or rental housing counseling (as such terms are 
        defined in subsection (g)(1)) required under, or provided in 
        connection with, any program administered by the Department of 
        Housing and Urban Development shall be provided only by 
        organizations or counselors certified by the Secretary under 
        this subsection as competent to provide such counseling.
            ``(4) Outreach.--The Secretary shall take such actions as 
        the Secretary considers appropriate to ensure that individuals 
        and organizations providing homeownership or rental housing 
        counseling are aware of the certification requirements and 
        standards of this subsection and of the training and 
        certification programs under subsection (f).''.

SEC. 206. STUDY OF DEFAULTS AND FORECLOSURES.

    The Secretary of Housing and Urban Development shall conduct an 
extensive study of the root causes of default and foreclosure of home 
loans, using as much empirical data as are available. The study shall 
also examine the role of escrow accounts in helping prime and nonprime 
borrowers to avoid defaults and foreclosures. Not later than 12 months 
after the date of the enactment of this Act, the Secretary shall submit 
to the Congress a preliminary report regarding the study. Not later 
than 24 months after such date of enactment, the Secretary shall submit 
a final report regarding the results of the study, which shall include 
any recommended legislation relating to the study, and recommendations 
for best practices and for a process to identify populations that need 
counseling the most.

SEC. 207. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.

    Section 106 of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x), as amended by the preceding provisions of this title, is 
further amended by adding at the end the following new subsection:
    ``(h) Definitions.--For purposes of this section:
            ``(1) Nonprofit organization.--The term `nonprofit 
        organization' has the meaning given such term in section 104(5) 
        of the Cranston-Gonzalez National Affordable Housing Act (42 
        U.S.C. 12704(5)), except that subparagraph (D) of such section 
        shall not apply for purposes of this section.
            ``(2) State.--The term `State' means each of the several 
        States, the Commonwealth of Puerto Rico, the District of 
        Columbia, the Commonwealth of the Northern Mariana Islands, 
        Guam, the Virgin Islands, American Samoa, the Trust Territories 
        of the Pacific, or any other possession of the United States.
            ``(3) Unit of general local government.--The term `unit of 
        general local government' means any city, county, parish, town, 
        township, borough, village, or other general purpose political 
        subdivision of a State.''.

SEC. 208. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.

    Section 5 of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2604) is amended--
            (1) in the section heading, by striking ``special'' and 
        inserting ``home buying'';
            (2) by striking subsections (a) and (b) and inserting the 
        following new subsections:
    ``(a) Preparation and Distribution.--The Secretary shall prepare, 
at least once every 5 years, a booklet to help consumers applying for 
federally related mortgage loans to understand the nature and costs of 
real estate settlement services. The Secretary shall prepare the 
booklet in various languages and cultural styles, as the Secretary 
determines to be appropriate, so that the booklet is understandable and 
accessible to homebuyers of different ethnic and cultural backgrounds. 
The Secretary shall distribute such booklets to all lenders that make 
federally related mortgage loans. The Secretary shall also distribute 
to such lenders lists, organized by location, of homeownership 
counselors certified under section 106(e) of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701x(e)) for use in complying with 
the requirement under subsection (c) of this section.
    ``(b) Contents.--Each booklet shall be in such form and detail as 
the Secretary shall prescribe and, in addition to such other 
information as the Secretary may provide, shall include in plain and 
understandable language the following information:
            ``(1) A description and explanation of the nature and 
        purpose of the costs incident to a real estate settlement or a 
        federally related mortgage loan. The description and 
        explanation shall provide general information about the 
        mortgage process as well as specific information concerning, at 
        a minimum--
                    ``(A) balloon payments;
                    ``(B) prepayment penalties; and
                    ``(C) the trade-off between closing costs and the 
                interest rate over the life of the loan.
            ``(2) An explanation and sample of the uniform settlement 
        statement required by section 4.
            ``(3) A list and explanation of lending practices, 
        including those prohibited by the Truth in Lending Act or other 
        applicable Federal law, and of other unfair practices and 
        unreasonable or unnecessary charges to be avoided by the 
        prospective buyer with respect to a real estate settlement.
            ``(4) A list and explanation of questions a consumer 
        obtaining a federally related mortgage loan should ask 
        regarding the loan, including whether the consumer will have 
        the ability to repay the loan, whether the consumer 
        sufficiently shopped for the loan, whether the loan terms 
        include prepayment penalties or balloon payments, and whether 
        the loan will benefit the borrower.
            ``(5) An explanation of the right of rescission as to 
        certain transactions provided by sections 125 and 129 of the 
        Truth in Lending Act.
            ``(6) A brief explanation of the nature of a variable rate 
        mortgage and a reference to the booklet entitled `Consumer 
        Handbook on Adjustable Rate Mortgages', published by the Board 
        of Governors of the Federal Reserve System pursuant to section 
        226.19(b)(1) of title 12, Code of Federal Regulations, or to 
        any suitable substitute of such booklet that such Board of 
        Governors may subsequently adopt pursuant to such section.
            ``(7) A brief explanation of the nature of a home equity 
        line of credit and a reference to the pamphlet required to be 
        provided under section 127A of the Truth in Lending Act.
            ``(8) Information about homeownership counseling services 
        made available pursuant to section 106(a)(4) of the Housing and 
        Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a 
        recommendation that the consumer use such services, and 
        notification that a list of certified providers of 
        homeownership counseling in the area, and their contact 
        information, is available.
            ``(9) An explanation of the nature and purpose of escrow 
        accounts when used in connection with loans secured by 
        residential real estate and the requirements under section 10 
        of this Act regarding such accounts.
            ``(10) An explanation of the choices available to buyers of 
        residential real estate in selecting persons to provide 
        necessary services incidental to a real estate settlement.
            ``(11) An explanation of a consumer's responsibilities, 
        liabilities, and obligations in a mortgage transaction.
            ``(12) An explanation of the nature and purpose of real 
        estate appraisals, including the difference between an 
        appraisal and a home inspection.
            ``(13) Notice that the Office of Housing of the Department 
        of Housing and Urban Development has made publicly available a 
        brochure regarding loan fraud and a World Wide Web address and 
        toll-free telephone number for obtaining the brochure.
The booklet prepared pursuant to this section shall take into 
consideration differences in real estate settlement procedures that may 
exist among the several States and territories of the United States and 
among separate political subdivisions within the same State and 
territory.'';
            (3) in subsection (c), by inserting at the end the 
        following new sentence: ``Each lender shall also include with 
        the booklet a reasonably complete or updated list of 
        homeownership counselors who are certified pursuant to section 
        106(e) of the Housing and Urban Development Act of 1968 (12 
        U.S.C. 1701x(e)) and located in the area of the lender.''; and
            (4) in subsection (d), by inserting after the period at the 
        end of the first sentence the following: ``The lender shall 
        provide the HUD-issued booklet in the version that is most 
        appropriate for the person receiving it.''.

                  TITLE III--COMBATING MORTGAGE FRAUD

SEC. 301. AUTHORIZATION OF APPROPRIATIONS TO COMBAT MORTGAGE FRAUD.

    For fiscal years 2008, 2009, 2010, 2011, and 2012, there are 
authorized to be appropriated to the Attorney General a total of--
            (1) $31,250,000 to support the employment of 30 additional 
        agents of the Federal Bureau of Investigation and 2 additional 
        dedicated prosecutors at the Department of Justice to 
        coordinate prosecution of mortgage fraud efforts with the 
        offices of the United States Attorneys; and
            (2) $750,000 to support the operations of interagency task 
        forces of the Federal Bureau of Investigation in the areas with 
        the 15 highest concentrations of mortgage fraud.
                                                 Union Calendar No. 386

110th CONGRESS

  2d Session

                               H. R. 5830

                          [Report No. 110-619]

_______________________________________________________________________

                                 A BILL

 To create a voluntary FHA program that provides mortgage refinancing 
     assistance to allow families to stay in their homes, protect 
         neighborhoods, and help stabilize the housing market.

_______________________________________________________________________

                              May 5, 2008

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed