[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6694 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 6694

    To revise the requirements for seller-financed downpayments for 
mortgages for single-family housing insured by the Secretary of Housing 
and Urban Development under title II of the National Housing Act and to 
 authorize risk-based insurance premiums for certain mortgagors under 
                            such mortgages.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 31, 2008

 Mr. Al Green of Texas (for himself, Mr. Gary G. Miller of California, 
  Ms. Waters, and Mr. Shays) introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
    To revise the requirements for seller-financed downpayments for 
mortgages for single-family housing insured by the Secretary of Housing 
and Urban Development under title II of the National Housing Act and to 
 authorize risk-based insurance premiums for certain mortgagors under 
                            such mortgages.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``FHA Seller-Financed Downpayment 
Reform and Risk-Based Pricing Authorization Act of 2008''.

SEC. 2. FHA SELLER-FINANCED DOWNPAYMENT PROGRAM.

    Paragraph (9) of section 203(b) of the National Housing Act (12 
U.S.C. 1709(b)(9)) is amended--
            (1) in subparagraph (C), by striking ``In no case shall the 
        funds required by subparagraph (A)'' and inserting the 
        following: ``Except in the case of a mortgage described in 
        subparagraph (D), the funds required by subparagraph (A) shall 
        not'';
            (2) by adding at the end the following new subparagraph:
                    ``(D) Exceptions to prohibited sources.--A mortgage 
                described in this subparagraph is any of the following 
                mortgages:
                            ``(i) A mortgage under which the mortgagor 
                        has a credit score equivalent to a FICO score 
                        of 680 or greater.
                            ``(ii) A mortgage under which--
                                    ``(I) the mortgagor has a credit 
                                score equivalent to a FICO score of at 
                                least 620 but less than 680; and
                                    ``(II) mortgage insurance premiums 
                                charged are established--
                                            ``(aa) at levels necessary 
                                        to allow such class of loans to 
                                        be insured without resulting in 
                                        a need for an appropriation for 
                                        a credit subsidy;
                                            ``(bb) in the case of the 
                                        single premium collected at the 
                                        time of insurance, in an amount 
                                        not exceeding 3.0 percent of 
                                        the amount of the original 
                                        principal obligation of the 
                                        mortgage; and
                                            ``(cc) in the case of the 
                                        annual premium, in an amount 
                                        not exceeding 1.25 percent of 
                                        the remaining insured principal 
                                        balance (excluding the portion 
                                        of the remaining balance 
                                        attributable to the premium 
                                        collected at the time of 
                                        insurance and without taking 
                                        into account delinquent 
                                        payments or prepayments).
                            ``(iii) For mortgages insured in fiscal 
                        year 2010 or thereafter, a mortgage under which 
                        the mortgagor has a credit score equivalent to 
                        a FICO score of 619 or less, but only if the 
                        Secretary certifies that such loans can be 
                        insured without resulting in a need for an 
                        appropriation for a credit subsidy. For such 
                        mortgages, the Secretary may charge premiums at 
                        levels authorized under items (bb) and (cc) of 
                        clause (ii)(II) and may establish a credit or 
                        FICO score limitation or impose such other 
                        requirements as are necessary to meet the 
                        conditions for certification under this clause.
                    ``(E) Requirements for downpayment assistance 
                entities.--Any entity participating in a program that 
                provides downpayment assistance for a mortgage 
                described in subparagraph (D) pursuant to the exception 
                under subparagraph (C), which programs shall include 
                programs of governmental agencies and private nonprofit 
                organizations, shall, before the closing for the loan 
                involved in the mortgage in connection with which such 
                assistance is provided--
                            ``(i) offer to make available, to the 
                        mortgagor, counseling regarding the 
                        responsibilities and financial management 
                        involved in homeownership;
                            ``(ii) if such offer is accepted by the 
                        mortgagor, make such counseling available for 
                        the mortgagor; and
                            ``(iii) in the case of any such entity that 
                        is a private nonprofit organization, implement 
                        a conflict of interest policy that prohibits 
                        directors, officers, employees, and immediate 
                        family members from receiving financial 
                        benefits from any entity that is providing the 
                        program with goods or services other than the 
                        homeownership assistance program entity itself 
                        or its wholly owned affiliate.''.

SEC. 3. AUTHORIZATION FOR RISK-BASED PRICING.

    Section 2133 of the FHA Modernization Act of 2008 is amended by 
adding at the end the following new subsection:
    ``(c) Authorization for Risk-Based Pricing.--
            ``(1) Authority.--Notwithstanding subsections (a) and (b), 
        the Secretary of Housing and Urban Development may implement a 
        risk-based premium product for borrowers with lower credit or 
        FICO scores, to facilitate the availability of insurance for 
        mortgages for such borrowers, through the establishment and 
        collection of adequate premiums to cover the risks of such 
        loans.
            ``(2) Refund of premiums.--The Secretary shall provide for 
        a refund of a portion or all of the higher premiums paid at the 
        time of insurance by borrowers with lower credit or FICO scores 
        as a result of risk-based pricing pursuant to this subsection, 
        except that such refund shall be limited to only borrowers with 
        a history of at least a specified number of years of on-time 
        mortgage payments. Such refund shall be made upon payment in 
        full of the obligation of the mortgage.''.
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