1.Short title and table of
contents
(a)This Act may be cited
as the FHA Reform Act of
2011
.
(b)The table of contents for this Act is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Indemnification by mortgagees.
Sec. 3. Delegation of insuring authority.
Sec. 4. Authority to terminate mortgagee origination and
underwriting approval.
Sec. 5. Deputy Assistant Secretary of FHA for Risk Management
and Regulatory Affairs.
Sec. 6. Review of mortgagee performance.
Sec. 7. Coordination with State regulatory
agencies.
Sec. 8. Reporting of mortgagee actions taken against other
mortgagees.
Sec. 9. Review of downpayment requirements.
Sec. 10. Authorization to participate in the origination of
FHA-insured loans.
Sec. 11. Default and origination information by loan servicer
and originating direct endorsement lender.
Sec. 12. Third party servicer outreach.
Sec. 13. Maximum mortgage amount limits for multifamily
housing.
Sec. 14. Mortgage insurance premium refunds.
2.Indemnification
by mortgageesSection 202 of
the National Housing Act (12 U.S.C. 1708) is amended by adding at the end the
following new subsection:
(i)Indemnification
by mortgagees
(1)If the Secretary
determines that a mortgage executed by a mortgagee approved by the Secretary
under the direct endorsement program or insured by a mortgagee pursuant to the
delegation of authority under section 256 was not originated or underwritten in
accordance with the requirements established by the Secretary, and the
Secretary pays an insurance claim with respect to the mortgage within a
reasonable period specified by the Secretary, the Secretary may require the
mortgagee approved by the Secretary under the direct endorsement program or the
mortgagee delegated authority under section 256 to indemnify the Secretary for
the loss.
(2)Fraud or
misrepresentationIf fraud or misrepresentation was involved in
connection with the origination or underwriting, the Secretary may require the
mortgagee approved by the Secretary under the direct endorsement program or the
mortgagee delegated authority under section 256 to indemnify the Secretary for
the loss regardless of when an insurance claim is paid.
(3)Requirements and
proceduresThe Secretary shall issue regulations establishing
appropriate requirements and procedures governing the indemnification of the
Secretary by the
mortgagee.
.
3.Delegation of
insuring authoritySection 256
of the National Housing Act (12 U.S.C. 1715z–21) is amended—
(1)by striking
subsection (c);
(2)in subsection (e),
by striking , including
and all that follows through by
the mortgagee
; and
(3)by redesignating
subsections (d) and (e) as subsections (c) and (d), respectively.
4.Authority to
terminate mortgagee origination and underwriting approvalSection 533 of the National Housing Act (12
U.S.C. 1735f–11) is amended—
(1)in the first
sentence of subsection (b), by inserting or areas or on a nationwide
basis
after area
each place such term appears;
and
(2)in subsection (c),
by striking (c)
and all that follows through The
Secretary
in the first sentence of paragraph (2) and inserting the
following:
(c)Termination of
mortgagee origination and underwriting approval
(1)If the Secretary
determines, under the comparison provided in subsection (b), that a mortgagee
has a rate of early defaults and claims that is excessive, the Secretary may
terminate the approval of the mortgagee to originate or underwrite single
family mortgages for any area, or areas, or on a nationwide basis,
notwithstanding section 202(c) of this Act.
(2)The
Secretary
.
5.Deputy Assistant
Secretary of FHA for Risk Management and Regulatory Affairs
(a)Establishment of
positionSubsection (b) of
section 4 of the Department of Housing and Urban Development Act (42 U.S.C.
3533(b)) is amended—
(1)by inserting
(1)
after (b)
; and
(2)by adding at the
end the following new paragraph:
(2)There shall be in the Department, within
the Federal Housing Administration, a Deputy Assistant Secretary for Risk
Management and Regulatory Affairs, who shall be appointed by the Secretary and
shall be responsible to the Federal Housing Commissioner for all matters
relating to managing and mitigating risk to the mortgage insurance funds of the
Department and ensuring the performance of mortgages insured by the
Department.
.
(b)Upon the appointment and confirmation of
the initial Deputy Assistant Secretary for Risk Management and Regulatory
Affairs pursuant to section 4(b)(2) of the Department of Housing and Urban
Development Act, as amended by subsection (a) of this section, the position of
chief risk officer within the Federal Housing Administration, filled by
appointment by the Federal Housing Commissioner, is abolished.
6.Review of mortgagee
performanceSection 533 of the
National Housing Act (12 U.S.C. 1735f–11) is amended—
(1)in subsection (a),
by inserting after the period at the end the following: For purposes of
this subsection, the term early default means a default that
occurs within 24 months after a mortgage is originated or such alternative
appropriate period as the Secretary shall establish.
;
(2)in subsection (b),
by inserting after the period at the end of the first sentence the following:
The Secretary shall also identify which mortgagees have had a
significant or rapid increase, as determined by the Secretary, in the number or
percentage of early defaults and claims on such mortgages, with respect to all
mortgages originated by the mortgagee or mortgages on housing located in any
particular geographic area or areas.
(3)by adding at the
end the following new subsections:
(d)There is authorized
to be appropriated to the Secretary for each of fiscal years 2012 through 2016
the amount necessary to provide additional full-time equivalent positions for
the Department, or for entering into such contracts as are necessary, to
conduct reviews in accordance with the requirements of this section and to
carry out other responsibilities relating to ensuring the safety and soundness
of the Mutual Mortgage Insurance Fund.
(e)Not later than 90
days after the date of enactment of the FHA
Reform Act of 2011 and not less often than annually thereafter,
the Secretary shall make available to the Committee on Financial Services of
the House of Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate any information and conclusions pursuant to the reviews
required under subsection (a). Such report shall not include detailed
information on the performance of individual
mortgages.
.
7.Coordination with
State regulatory agenciesSection 202 of the National Housing Act (12
U.S.C. 1708), as amended by the preceding provisions of this Act, is further
amended by adding at the end the following new subsection:
(j)Information
sharing with State regulatory agencies
(1)Joint protocol
on information sharingThe
Secretary shall, through consultation with State regulatory agencies, pursue
protocols for information sharing, including the appropriate treatment of
confidential or otherwise restricted information, regarding either actions
described in subsection (c)(3) of this section or disciplinary or enforcement
actions by a State regulatory agency or agencies against a mortgagee (as such
term is defined in subsection (c)(7)).
(2)To
the greatest extent possible, the Secretary and appropriate State regulatory
agencies shall coordinate disciplinary and enforcement actions involving
mortgagees (as such term is defined in subsection
(c)(7)).
.
8.Reporting of
mortgagee actions taken against other mortgageesSection 202 of the National Housing Act (12
U.S.C. 1708(e)), as amended by the preceding provisions of this Act, is further
amended by adding at the end the following new subsection:
(k)Notification of
mortgagee actionsThe
Secretary shall require each mortgagee, as a condition for approval by the
Secretary to originate or underwrite mortgages on single family or multifamily
housing that are insured by the Secretary, if such mortgagee engages in the
purchase of mortgages insured by the Secretary and originated by other
mortgagees or in the purchase of the servicing rights to such mortgages, and
such mortgagee at any time takes action to terminate or discontinue such
purchases from another mortgagee based on any determination, evidence, or
report of fraud or material misrepresentation in connection with the
origination of such mortgages, the mortgagee shall, not later than 15 days
after taking such action, shall notify the Secretary of the action taken and
the reasons for such
action.
.
9.Review of downpayment
requirementsSection 205 of
the National Housing Act (12 U.S.C. 1711) is amended by adding at the end the
following new subsection:
(g)Review of
downpayment requirementsIf,
at any time when the capital ratio (as such term is defined in subsection (f))
of the Mutual Mortgage Insurance Fund does not comply with the requirement
under subsection (f)(2), the Secretary establishes a cash investment
requirement, for all mortgages or mortgagors or with respect to any group of
mortgages or mortgagors, that exceeds the minimum percentage or amount required
under section 203(b)(9), thereafter upon the capital ratio first complying with
the requirement under subsection (f)(2) the Secretary shall review such cash
investment requirement and, if the Secretary determines that such percentage or
amount may be reduced while maintaining such compliance, the Secretary may
subsequently reduce such requirement by such percentage or amount as the
Secretary considers
appropriate.
.
10.Authorization to
participate in the origination of FHA-insured loans
(a)Section 203(b) of the National Housing Act (12 U.S.C.
1709(b)) is amended by striking paragraph (1) and inserting the following new
paragraph:
(1)Have been made to
a mortgagee approved by the Secretary or to a person or entity authorized by
the Secretary under section 202(d)(1) to participate in the origination of the
mortgage, and be held by a mortgagee approved by the Secretary as responsible
and able to service the mortgage
properly.
.
(b)Home equity
conversion mortgagesSection 255(d) of the National Housing Act
(12 U.S.C. 1715z–20(d)) is amended by striking paragraph (1) and inserting the
following new paragraph:
(1)have been
originated by a mortgagee approved by, or by a person or entity authorized
under section 202(d)(1) to participate in the origination by, the
Secretary;
.
11.Default and
origination information by loan servicer and originating direct endorsement
lender
(a)Collection of
informationParagraph (2) of
section 540(b) of the National Housing Act (12 U.S.C. 1712 U.S.C.
1735f–18(b)(2)) is amended by adding at the end the following new
subparagraph:
(C)For each entity that services insured
mortgages, data on the performance of mortgages originated during each calendar
quarter occurring during the applicable collection period, disaggregated by the
direct endorsement mortgagee from whom such entity acquired such
servicing.
.
(b)Information
described in subparagraph (C) of section 540(b)(2) of the National Housing Act,
as added by subsection (a) of this section, shall first be made available under
such section 540 for the applicable collection period (as such term is defined
in such section) relating to the first calendar quarter ending after the
expiration of the 12-month period that begins on the date of the enactment of
this Act.
12.Third party
servicer outreach
(a)The Secretary of Housing and Urban
Development may, to the extent any amounts for fiscal year 2012 or 2013 are
made available in advance in appropriation Acts for reimbursements under this
section, provide reimbursement to servicers of covered mortgages (as such term
is defined in subsection (f)) for costs of obtaining the services of
independent third parties meeting the requirements under subsection (b) of this
section to make in-person contact with mortgagors under covered mortgages whose
payments under such mortgages are 60 or more days past due, solely for the
purposes of providing information to such mortgagors regarding—
(1)available
counseling by housing counseling agencies approved by the Secretary;
(2)available mortgage
loan modification, refinance, and assistance programs; and
(3)available counseling regarding financial
management and credit risk.
(b)Qualified
independent third partiesAn independent third party meets the
requirements of this subsection if the third party—
(1)is an entity,
including a housing counseling agency approved by the Secretary, that meets
standards, qualifications, and requirements (including regarding foreclosure
prevention training, quality monitoring, safeguarding of non-public
information) established by the Secretary for purposes of this section for
in-person contact about available mortgage loan modification, refinance, and
assistance programs; and
(2)does not charge
any fees or require other payments, directly or indirectly, from any mortgagor
for making in-person contact and providing information and documents under this
section.
(c)Treatment of
personal, non-Public, and confidential informationAn
independent third party whose services are obtained using amounts made
available for use under this section and the mortgage servicer obtaining such
services shall not use, disclose, or distribute any personal, non-public, or
confidential information about a mortgagor obtained during an in-person contact
with the mortgagor, except for purposes of engaging in the process of
modification or refinance of the covered mortgage.
(d)Date of contact
and disclosuresEach independent third party whose services are
obtained by a mortgage servicer using amounts made available for use under this
section shall—
(1)initiate in-person contact with a mortgagor
not later than 10 days after the date upon which payments under the covered
mortgage of the mortgagor become 60 days past due; and
(2)upon making
in-person contact with a mortgagor, provide the mortgagor with a written
document that discloses—
(A)the name of, and
contact information for, the independent third party and the mortgage
servicer;
(B)that the
independent third party has contracted with the mortgage servicer to provide
the in-person contact at no charge to the mortgagor;
(C)that the
independent third party is an agent of the mortgage servicer;
(D)that the in-person contact with the
mortgagor consists of providing information about available counseling by a
housing counseling agency approved by the Secretary and available mortgage loan
modification, refinance, and assistance programs;
(E)that the independent third party and the
mortgage servicer are prohibited from the use, disclosure, or distribution of
personal, non-public, and confidential information about the mortgagor,
obtained during the in-person contact, except for purposes of engaging in the
process of modification or refinance of the covered mortgage;
(F)any other
information that the Secretary determines should be disclosed.
(e)In providing reimbursements under this
section, the Secretary of Housing and Urban Development shall provide priority
to independent third parties serving mortgagors under covered mortgages in
areas experiencing a mortgage foreclosure rate and unemployment rate higher
than the national average for the most recent 12-month period for which
satisfactory data are available.
(f)Definition of
covered mortgageFor purposes
of this section, the term covered mortgage
means a mortgage on a
1- to 4-family residence insured under the provisions of subsection (b) or (k)
of section 203, section 234(c), or 251 of the National Housing Act (12 U.S.C.
1709, 1715y, 1715z–16).
13.Maximum mortgage
amount limits for multifamily housing
(a)
(1)The National Housing Act is amended in each
of the provisions specified in paragraph (2)—
(A)by inserting
with sound standards of construction and design
after
elevator-type structures
the first place such term appears;
and
(B)by striking
to not to exceed
and all that follows through sound
standards of construction and design
each place such terms appear and
inserting by not more than 50 percent of the amounts specified for each
unit size
.
(2)The provisions of the
National Housing Act specified in this paragraph are as follows:
(A)Subparagraph (A)
of section 207(c)(3) (12 U.S.C. 1713(c)(3)(A)).
(B)Subparagraph (A)
of section 213(b)(2) (12 U.S.C. 1715e(b)(2)(A)).
(C)Subclause (I) of section 220(d)(3)(B)(iii)
(12 U.S.C. 1715k(d)(3)(B)(iii)(I)).
(D)In section 221(d)
(12 U.S.C. 1715l(d))—
(i)subclause (I) of
paragraph (3)(ii); and
(ii)subclause (I) of paragraph (4)(ii).
(E)Subparagraph (A)
of section 231(c)(2) (12 U.S.C. 1715v(c)(2)(A)).
(F)Subparagraph (A)
of section 234(e)(3) (12 U.S.C. 1715y(e)(3)(A)).
(b)Extremely
high-Cost areasSection 214 of the National Housing Act (12
U.S.C. 1715d) is amended—
(1)in the first
sentence—
(A)by inserting , or with respect to
projects consisting of more than four dwelling units located in an extremely
high-cost area as determined by the Secretary
after or the
Virgin Islands
the first place such term appears;
(B)by inserting
, or to construct projects consisting of more than four dwelling units
on property located in an extremely high-cost area as determined by the
Secretary
after or the Virgin Islands
the second place
such term appears; and
(C)by inserting
, or with respect to projects consisting of more than four dwelling
units located in an extremely high-cost area as determined by the
Secretary
after or the Virgin Islands
the third place
such term appears;
(2)in the second sentence—
(A)by inserting
, or with respect to a project consisting of more than four dwelling
units located in an extremely high-cost area as determined by the
Secretary,
after or the Virgin Islands
the first place
such term appears; and
(B)by inserting , or in the case of a
project consisting of more than four dwelling units in an extremely high-cost
area as determined by the Secretary, in such extremely high-cost area,
after or the Virgin Islands
the second place such term appears;
and
(3)in the section
heading, by striking and the virgin islands
and
inserting the virgin
islands, and extremely high-cost areas
.
(c)The amendments made by this section shall apply to mortgages
insured under title II of the National Housing Act after September 30,
2011.
14.Mortgage insurance
premium refunds
(a)The
Secretary of Housing and Urban Development shall, to the extent that amounts
are made available pursuant to subsection (c), provide refunds of unearned
premium charges paid at the time of insurance for mortgage insurance under
title II of the National Housing Act (12 U.S.C. 1707 et seq.) to or on behalf
of mortgagors under mortgages described in subsection (b).
(b)A mortgage described in this section is a mortgage on a
one- to four-family dwelling that—
(1)was insured under
title II of the National Housing Act (12 U.S.C. 1707 et seq.);
(2)is otherwise
eligible, under the last sentence of subparagraph (A) of section 203(c)(2) of
such Act (12 U.S.C. 1709(c)(2)(A)), for a refund of all unearned premium
charges paid on the mortgage pursuant to such subparagraph, except that the
mortgage—
(A)was closed before
December 8, 2004; and
(B)was endorsed on or
after such date.
(c)Authorization of
appropriationsThere is authorized to be appropriated for each
fiscal year such sums as may be necessary to provide refunds of unearned
mortgage insurance premiums pursuant to this section.