[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2325 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2325

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            November 8, 2007

 Mr. Voinovich introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


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

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Maximum principal loan obligation.
Sec. 4. Extension of mortgage term.
Sec. 5. Cash investment requirement.
Sec. 6. Temporary reinstatement of downpayment requirement in event of 
                            increased defaults.
Sec. 7. Mortgage insurance premiums.
Sec. 8. Rehabilitation loans.
Sec. 9. Discretionary action.
Sec. 10. Insurance of condominiums.
Sec. 11. Mutual Mortgage Insurance Fund.
Sec. 12. Hawaiian home lands and Indian reservations.
Sec. 13. Conforming and technical amendments.
Sec. 14. Home equity conversion mortgages.
Sec. 15. Conforming loan limit in disaster areas.
Sec. 16. Participation of mortgage brokers and correspondent lenders.
Sec. 17. Sense of Congress regarding technology for financial systems.
Sec. 18. Savings provision.
Sec. 19. Implementation.

SEC. 2. FINDINGS AND PURPOSES.

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

SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION.

    Paragraph (2) of section 203(b) of the National Housing Act (12 
U.S.C. 1709(b)(2)) is amended--
            (1) by striking subparagraphs (A) and (B) and inserting the 
        following new subparagraphs:
                    ``(A) not to exceed the lesser of--
                            ``(i) in the case of a 1-family residence, 
                        the median 1-family house price in the area, as 
                        determined by the Secretary; and in the case of 
                        a 2-, 3-, or 4-family residence, the percentage 
                        of such median price that bears the same ratio 
                        to such median price as the dollar amount 
                        limitation in effect under section 305(a)(2) of 
                        the Federal Home Loan Mortgage Corporation Act 
                        (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-
                        family residence, respectively, bears to the 
                        dollar amount limitation in effect under such 
                        section for a 1-family residence; or
                            ``(ii) the dollar amount limitation 
                        determined under such section 305(a)(2) for a 
                        residence of the applicable size;
                except that the dollar amount limitation in effect for 
                any area under this subparagraph may not be less than 
                the greater of (I) the dollar amount limitation in 
                effect under this section for the area on October 21, 
                1998, or (II) 65 percent of the dollar limitation 
                determined under such section 305(a)(2) for a residence 
                of the applicable size; and
                    ``(B) not to exceed the appraised value of the 
                property, plus any initial service charges, appraisal, 
                inspection and other fees in connection with the 
                mortgage as approved by the Secretary.'';
            (2) in the matter after and below subparagraph (B), by 
        striking the second sentence (relating to a definition of 
        ``average closing cost'') and all that follows through ``title 
        38, United States Code''; and
            (3) by striking the last undesignated paragraph (relating 
        to counseling with respect to the responsibilities and 
        financial management involved in homeownership).

SEC. 4. EXTENSION OF MORTGAGE TERM.

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

SEC. 5. CASH INVESTMENT REQUIREMENT.

    Paragraph (9) of section 203(b) of the National Housing Act (12 
U.S.C. 1709(b)(9)) is amended by striking the paragraph designation and 
all that follows through ``Provided further, That for'' and inserting 
the following:
            ``(9) Be executed by a mortgagor who shall have paid on 
        account of the property, in cash or its equivalent, an amount, 
        if any, as the Secretary may determine based on factors 
        determined by the Secretary and commensurate with the 
        likelihood of default. For''.

SEC. 6. TEMPORARY REINSTATEMENT OF DOWNPAYMENT REQUIREMENT IN EVENT OF 
              INCREASED DEFAULTS.

    Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is 
amended by adding at the end the following new paragraph:
            ``(10) Effect of increased defaults.--
                    ``(A) Annual determination.--If, for any calendar 
                year described in subparagraph (B)(i), the Secretary 
                determines, pursuant such subparagraph, that--
                            ``(i) the ratio of the number of mortgage 
                        insurance claims made during such calendar year 
                        on mortgages insured under this section to the 
                        total number of mortgages having such insurance 
                        in force during such calendar year exceeds, by 
                        25 percent or more, such ratio for the 12-month 
                        period ending on the effective date of this 
                        Act, or
                            ``(ii) the ratio of the aggregate remaining 
                        principal obligation under mortgages insured 
                        under this section for which an insurance claim 
                        is made during such calendar year to the 
                        average, for such calendar year, of the 
                        aggregate outstanding principal obligation 
                        under mortgages so insured exceeds, by 25 
                        percent or more, such ratio for the 12-month 
                        period ending on such effective date,
                during the 90-day period beginning upon the submission 
                of the report for such calendar year under subparagraph 
                (B)(ii) containing such determination, the Secretary 
                may insure a mortgage under this section only pursuant 
                to the requirement under subparagraph (C), and the 
                Secretary shall, not later than 60 days after 
                submission of the report containing such determination, 
                submit a report to the Congress under subparagraph (D) 
                regarding mortgage insurance claims during such 
                calendar year.
                    ``(B) 5 years of annual determinations.--
                            ``(i) In general.--The Secretary shall, for 
                        each of the 5 calendar years commencing after 
                        the date of the enactment of this Act, compare 
                        the ratios referred to in subparagraph (A) and 
                        make a determination under such subparagraph.
                            ``(ii) Annual report on defaults.--Not 
                        later than 90 days after the conclusion of each 
                        of the calendar years described in clause (i), 
                        the Secretary shall submit a report to the 
                        Congress containing the determination of the 
                        Secretary under such clause with respect to 
                        such calendar year and setting forth the ratios 
                        referred to in such clause for such calendar 
                        year.
                    ``(C) Reinstatement of downpayment requirement.--
                The requirement under this subparagraph is that 
                paragraph (9) of this subsection shall apply as such 
                paragraph was in effect on the day before the effective 
                date of the Expanding American Homeownership Act of 
                2007.
                    ``(D) Reports regarding increased default rate.--A 
                report under this subparagraph, as required under 
                subparagraph (A), shall contain--
                            ``(i) an analysis of mortgage insurance 
                        claims, made during the calendar year for which 
                        the report is submitted, on mortgages insured 
                        under this section;
                            ``(ii) an analysis of the reasons for the 
                        increase during such calendar year in the 
                        applicable ratio or ratios under subparagraph 
                        (A), including an analysis of the extent to 
                        which such increase is attributable to the 
                        amendments made by the Expanding American 
                        Homeownership Act of 2007;
                            ``(iii) the effect of such increase on the 
                        Mutual Mortgage Insurance Fund;
                            ``(iv) recommendations regarding--
                                    ``(I) whether the Congress should, 
                                to respond to such increase, take 
                                legislative action (aa) to apply 
                                paragraph (9) of this subsection as 
                                such paragraph was in effect on the day 
                                before the effective date of Expanding 
                                American Homeownership Act of 2007, 
                                (bb) to apply paragraph (2)(A)(ii) by 
                                substituting `87 percent of the dollar 
                                amount limitation' for `the dollar 
                                amount limitation', or (cc) both; and
                                    ``(II) whether such provisions 
                                should be temporary or permanent, and, 
                                if temporary, the period during which 
                                such provisions should apply; and
                            ``(v) recommendations regarding any other 
                        administrative, regulatory, legislative, or 
                        other actions that should be taken to respond 
                        to such increase.
                    ``(E) Defaults in disaster areas not counted for 24 
                months.--In determining the number of mortgage 
                insurance claims made and the aggregate remaining 
                principal obligation under mortgages for which an 
                insurance claim is made for purposes of subparagraph 
                (A) for any calendar year, the Secretary shall not take 
                into consideration any claim made during such period on 
                a mortgage on any property that is located in an area 
                for which a major disaster was declared pursuant to the 
                Robert T. Stafford Disaster Relief and Emergency 
                Assistance Act if such claim was made during the 24-
                month period beginning upon such declaration.''.

SEC. 7. MORTGAGE INSURANCE PREMIUMS.

    Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)) is 
amended--
            (1) in paragraph (2), in the matter preceding subparagraph 
        (A), by striking ``Notwithstanding'' and inserting ``Except as 
        provided in paragraph (3) and notwithstanding''; and
            (2) by adding at the end the following new paragraph:
    ``(3) Flexible Risk-Based Premiums.--
            ``(A) In general.--For any mortgage insured by the 
        Secretary under this title that is secured by a 1- to 4-family 
        dwelling and for which the loan application is received by the 
        mortgagee on or after the date of enactment of the Expanding 
        American Homeownership Act of 2007, the Secretary may establish 
        a mortgage insurance premium structure involving a single 
        premium payment collected prior to the insurance of the 
        mortgage or annual payments (which may be collected on a 
        periodic basis), or both, subject to the limitations in 
        subparagraphs (B) and (C). The rate of premium for such a 
        mortgage may vary during the mortgage term as long as the basis 
        for determining the variable rate is established before the 
        execution of the mortgage. The Secretary may change a premium 
        structure established under this subparagraph but only to the 
        extent that such change is not applied to any mortgage already 
        executed.
            ``(B) Maximum up-front premium amounts.--For any mortgage 
        insured under a premium structure established pursuant to this 
        paragraph, the amount of any single premium payment authorized 
        by subparagraph (A), if established and collected prior to the 
        insurance of the mortgage, may not exceed the following amount:
                    ``(i) Except as provided in clauses (ii) and (iii), 
                3.0 percent of the amount of the original insured 
                principal obligation of the mortgage.
                    ``(ii) If the mortgagor has a credit score 
                equivalent to a FICO score of 560 or more and has paid 
                on account of the property, in cash or its equivalent, 
                at least 3 percent of the Secretary's estimate of the 
                cost of acquisition (excluding the mortgage insurance 
                premium paid at the time the mortgage is insured), 2.25 
                percent of the original insured principal obligation of 
                the mortgage.
                    ``(iii) If the annual premium payment is equal to 
                the maximum amount allowable under clause (i) of 
                subparagraph (C), 1.5 percent of the amount of the 
                original insured principal obligation of the mortgage.
            ``(C) Maximum annual premium amounts.--For any mortgage 
        insured under a premium structure established pursuant to this 
        paragraph, the amount of any annual premium payment collected 
        may not exceed the following amount:
                    ``(i) Except as provided in clauses (ii) and (iii), 
                2.0 percent of the remaining insured principal 
                obligation of the mortgage.
                    ``(ii) If the mortgagor is a mortgagor described in 
                clause (ii) of subparagraph (B), 0.55 percent of the 
                remaining insured principal obligation of the mortgage.
                    ``(iii) If the single premium payment collected at 
                the time of insurance is equal to maximum amount 
                allowable under clause (i) of subparagraph (B), 1.0 
                percent of the remaining insured principal obligation 
                of the mortgage.
            ``(D) Payment incentive.--Notwithstanding subparagraph (C), 
        for any mortgage insured under a premium structure established 
        pursuant to this paragraph and for which the annual premium 
        payment exceeds the amount set forth in subparagraph (C)(ii), 
        if during the 5-year period beginning upon the time of 
        insurance all mortgage insurance premiums for such mortgage 
        have been paid on a timely basis, upon the expiration of such 
        period the Secretary shall reduce the amount of the annual 
        premium payments due thereafter under such mortgage to an 
        amount equal to the amount set forth in subparagraph (C)(ii).
            ``(E) Establishment and alteration of premium structure.--A 
        premium structure shall be established or changed under 
        subparagraph (A) only by providing notice to mortgagees and to 
        the Congress, at least 30 days before the premium structure is 
        established or changed.
            ``(F) Considerations for premium structure.--When 
        establishing a premium structure under subparagraph (A) or when 
        changing such a premium structure, the Secretary shall consider 
        the following:
                    ``(i) The effect of the proposed premium structure 
                on the Secretary's ability to meet the operational 
                goals of the Mutual Mortgage Insurance Fund as provided 
                in section 202(a).
                    ``(ii) Underwriting variables.
                    ``(iii) The extent to which new pricing under the 
                proposed premium structure has potential for acceptance 
                in the private market.
                    ``(iv) The administrative capability of the 
                Secretary to administer the proposed premium structure.
                    ``(v) The effect of the proposed premium structure 
                on the Secretary's ability to maintain the availability 
                of mortgage credit and provide stability to mortgage 
                markets.''.

SEC. 8. REHABILITATION LOANS.

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

SEC. 9. DISCRETIONARY ACTION.

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

SEC. 10. INSURANCE OF CONDOMINIUMS.

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

SEC. 11. MUTUAL MORTGAGE INSURANCE FUND.

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

SEC. 12. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.

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

SEC. 13. CONFORMING AND TECHNICAL AMENDMENTS.

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

SEC. 14. HOME EQUITY CONVERSION MORTGAGES.

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

SEC. 15. CONFORMING LOAN LIMIT IN DISASTER AREAS.

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

SEC. 16. PARTICIPATION OF MORTGAGE BROKERS AND CORRESPONDENT LENDERS.

    (a) Definitions.--
            (1) In general.--Section 201 of the National Housing Act 
        (12 U.S.C. 1707) is amended--
                    (A) by striking ``As used in section 203 of this 
                title--'' and inserting ``As used in this title and for 
                purposes of participation in insurance programs under 
                this title, except as specifically provided otherwise, 
                the following definitions shall apply:'';
                    (B) by striking subsection (b) and inserting the 
                following:
            ``(2) The term `mortgagee' means any of the following 
        entities, and its successors and assigns, to the extent such 
        entity is approved by the Secretary:
                    ``(A) A lender or correspondent lender, who--
                            ``(i) makes, underwrites, and services 
                        mortgages;
                            ``(ii) submits to the Secretary such 
                        financial audits performed in accordance with 
                        the standards for financial audits of the 
                        Government Auditing Standards issued by the 
                        Comptroller of the United States;
                            ``(iii) meet the minimum net worth 
                        requirement that the Secretary shall establish; 
                        and
                            ``(iv) complies with such other 
                        requirements as the Secretary may establish.
                    ``(B) A correspondent lender who--
                            ``(i) closes a mortgage in its name but 
                        does not underwrite or service the mortgage;
                            ``(ii) posts a surety bond, in lieu of any 
                        requirement to provide audited financial 
                        statements or meet a minimum net worth 
                        requirement, in--
                                    ``(I) a form satisfactory to the 
                                Secretary; and
                                    ``(II) an amount of $75,000, as 
                                such amount is adjusted annually by the 
                                Secretary (as determined under 
                                regulations of the Secretary) by the 
                                change for such year in the Consumer 
                                Price Index for All Urban Consumers 
                                published monthly by the Bureau of 
                                Labor Statistics of the Department of 
                                Labor; and
                            ``(iii) complies with such other 
                        requirements as the Secretary may establish.
                    ``(C) A mortgage broker who--
                            ``(i) closes the mortgage in the name of 
                        the lender and does not make, underwrite, or 
                        service the mortgage;
                            ``(ii) is licensed, under the laws of the 
                        State in which the property that is subject to 
                        the mortgage is located, to act as a mortgage 
                        broker in such State;
                            ``(iii) posts a surety bond in accordance 
                        with the requirements of subparagraph (B)(ii); 
                        and
                            ``(iv) complies with such other 
                        requirements as the Secretary may establish.
            ``(3) The term `mortgagor' includes the original borrower 
        under a mortgage and the successors and assigns of the original 
        borrower.'';
                    (C) in subsection (a), by redesignating clauses (1) 
                and (2) as clauses (A) and (B) respectively; and
                    (D) by redesignating subsections (a), (c), (d), 
                (e), and (f) as paragraphs (1), (4), (5), (6), and (7), 
                respectively, and realigning such paragraphs two ems 
                from the left margin.
            (2) Mortgagee review.--Section 202(c)(7) of the National 
        Housing Act (12 U.S.C. 1708(c)(7)) is amended--
                    (A) in subparagraph (A), by inserting ``, as 
                defined in section 201,'' after ``mortgagee'';
                    (B) by striking subparagraph (B); and
                    (C) by redesignating subparagraphs (C) and (D) as 
                subparagraphs (B) and (C), respectively.
            (3) Multifamily rental housing insurance.--Section 
        207(a)(2) of the National Housing Act (12 U.S.C. 1713(a)(2)) is 
        amended by striking ``means the original lender under a 
        mortgage, and its successors and assigns, and'' and inserting 
        ``has the meaning given such term in section 201, except that 
        such term also''.
            (4) War housing insurance.--Section 601(b) of the National 
        Housing Act (12 U.S.C. 1736(b)) is amended by striking 
        ``includes the original lender under a mortgage, and his 
        successors and assigns approved by the Secretary'' and 
        inserting ``has the meaning given such term in section 201''.
            (5) Armed services housing mortgage insurance.--Section 
        801(b) of the National Housing Act (12 U.S.C. 1748(b)) is 
        amended by striking ``includes the original lender under a 
        mortgage, and his successors and assigns approved by the 
        Secretary'' and inserting ``has the meaning given such term in 
        section 201''.
            (6) Group practice facilities mortgage insurance.--Section 
        1106(8) of the National Housing Act (12 U.S.C. 1749aaa-5(8)) is 
        amended by striking ``means the original lender under a 
        mortgage, and his or its successors and assigns, and'' and 
        inserting ``has the meaning given such term in section 201, 
        except that such term also''.
    (b) Eligibility for Insurance.--
            (1) Title i.--Paragraph (1) of section 8(b) of the National 
        Housing Act (12 U.S.C. 1706c(b)(1)) is amended--
                    (A) by striking ``, and be held by,''; and
                    (B) by striking ``as responsible and able to 
                service the mortgage properly''.
            (2) Single family housing mortgage insurance.--Paragraph 
        (1) of section 203(b) of the National Housing Act (12 U.S.C. 
        1709(b)(1)) is amended--
                    (A) by striking ``, and be held by,''; and
                    (B) by striking ``as responsible and able to 
                service the mortgage properly''.
            (3) Section 221 mortgage insurance.--Paragraph (1) of 
        section 221(d) of the National Housing Act (12 U.S.C. 
        1715l(d)(1)) is amended--
                    (A) by striking ``and be held by''; and
                    (B) by striking ``as responsible and able to 
                service the mortgage properly''.
            (4) Home equity conversion mortgage insurance.--Paragraph 
        (1) of section 255(d) of the National Housing Act (12 U.S.C. 
        1715z-20(d)(1)) is amended by striking ``as responsible and 
        able to service the mortgage properly''.
            (5) War housing mortgage insurance.--Paragraph (1) of 
        section 603(b) of the National Housing Act (12 U.S.C. 
        1738(b)(1)) is amended--
                    (A) by striking ``, and be held by,''; and
                    (B) by striking ``as responsible and able to 
                service the mortgage properly''.
            (6) War housing mortgage insurance for large-scale housing 
        projects.--Paragraph (1) of section 611(b) of the National 
        Housing Act (12 U.S.C. 1746(b)(1)) is amended--
                    (A) by striking ``and be held by''; and
                    (B) by striking ``as responsible and able to 
                service the mortgage properly''.
            (7) Group practice facility mortgage insurance.--Section 
        1101(b)(2) of the National Housing Act (12 U.S.C. 
        1749aaa(b)(2)) is amended--
                    (A) by striking ``and held by''; and
                    (B) by striking ``as responsible and able to 
                service the mortgage properly''.
            (8) National defense housing insurance.--Paragraph (1) of 
        section 903(b) of the National Housing Act (12 U.S.C. 
        1750b(b)(1)) is amended--
                    (A) by striking ``, and be held by,''; and
                    (B) by striking ``as responsible and able to 
                service the mortgage properly''.

SEC. 17. SENSE OF CONGRESS REGARDING TECHNOLOGY FOR FINANCIAL SYSTEMS.

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

SEC. 18. SAVINGS PROVISION.

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

SEC. 19. IMPLEMENTATION.

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