1.Short title and table of
contents
(a)This Act may be cited
as the FHA Emergency Fiscal Solvency
Act of 2012
.
(b)The table of contents for this Act is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. FHA annual mortgage insurance premiums.
Sec. 3. Indemnification by FHA mortgagees.
Sec. 4. Early period delinquencies.
Sec. 5. Semiannual actuarial studies of MMIF during periods of
capital depletion.
Sec. 6. Delegation of FHA insuring authority.
Sec. 7. Authority to terminate FHA mortgagee origination and
underwriting approval.
Sec. 8. Authorization to participate in the origination of
FHA-insured loans.
Sec. 9. Reporting of mortgagee actions taken against other
mortgagees.
Sec. 10. Default and origination information by loan servicer
and originating direct endorsement lender.
Sec. 11. Deputy Assistant Secretary of FHA for Risk Management
and Regulatory Affairs.
Sec. 12. Establishment of Chief Risk Officer for
GNMA.
Sec. 13. Report on mortgage servicers.
Sec. 14. FHA emergency capital plan.
Sec. 15. FHA safety and soundness review.
Sec. 16. FHA disclosure standards.
Sec. 17. Report on streamlining FHA programs.
Sec. 18. Budget compliance.
2.FHA annual
mortgage insurance premiums
(a)Subparagraph (B) of
section 203(c)(2) of the National Housing Act (12 U.S.C. 1709(c)(2)(B)) is
amended—
(1)in the matter
preceding clause (i)—
(A)by striking may
and
inserting shall
;
(B)by striking
not exceeding 1.5 percent
and inserting not less than
0.55 percent
; and
(C)by inserting
and not exceeding 2.0 percent of such remaining insured principal
balance
before for the following periods:
; and
(2)in clause (ii), by
striking 1.55 percent
and inserting 2.05
percent
.
(b)The amendments made by
subsection (a) take effect upon the expiration of the 6-month period beginning
on the date of the enactment of this Act.
3.Indemnification
by FHA 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 the mortgagee knew, or should have known, of a serious or
material violation of the requirements established by the Secretary with
respect to 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 such that the mortgage loan should
not have been approved and endorsed for insurance, 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,
irrespective of whether the violation caused the mortgage default.
(2)Fraud or
misrepresentationIf fraud or
misrepresentation was involved in connection with the origination or
underwriting and the Secretary determines that the mortgagee knew or should
have known of the fraud or misrepresentation, the Secretary shall 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)The Secretary shall,
by regulation, establish an appeals process for mortgagees to appeal
indemnification determinations made pursuant to paragraph (1) or (2).
(4)Requirements and proceduresThe Secretary shall issue regulations
establishing appropriate requirements and procedures governing the
indemnification of the Secretary by the mortgagee, including public reporting
on—
(A)the number of loans that—
(i)were not originated or underwritten in
accordance with the requirements established by the Secretary; and
(ii)involved fraud or misrepresentation in
connection with the origination or underwriting; and
(B)the financial impact on the Mutual Mortgage
Insurance Fund when indemnification is
required.
.
4.Early period delinquenciesSubsection (a) of section 202 of the
National Housing Act (12 U.S.C. 1708(a)) is amended by
adding at the end the following new paragraphs:
(8)Programmatic review of early period
delinquenciesThe Secretary
shall establish and maintain a program—
(A)to review the cause of each early period
delinquency on a mortgage that is an obligation of the Mutual Mortgage
Insurance Fund;
(B)to require indemnification of the Secretary
for a loss associated with any such early period delinquency that is the result
of a material violation, as determined by the Secretary, of any provision,
regulation, or other guideline established or promulgated pursuant to this
title; and
(C)to publicly report—
(i)a summary of the results of all early
period delinquencies reviewed under subparagraph (A);
(ii)any
indemnifications required under subparagraph (B); and
(iii)the financial impact on the Mutual Mortgage
Insurance Fund of any such indemnifications.
(9)Definition of early period
delinquencyFor purposes of
this section, the term early period delinquency means, with
respect to a mortgage, that the mortgage becomes 90 or more days delinquent
within 24 months of the origination of such
mortgage.
.
5.Semiannual
actuarial studies of MMIF during periods of capital depletion
(a)Paragraph (4) of
section 202(a) of the National Housing Act (12 U.S.C. 1708(a)(4)) is
amended—
(1)in the first
sentence, by inserting except as provided in subparagraph (B),
after to be conducted annually,
;
(2)in the second sentence, by inserting
, except as provided in subparagraph (B),
after
annually
;
(3)by striking the
paragraph designation and heading and all that follows through The
Secretary shall provide
and inserting the following:
(4)Independent
actuarial study
(A)The Secretary shall
provide
;
and
(4)by adding at the
end the following new subparagraph:
(B)Semiannual
studies during periods of capital depletionDuring any period that the Fund fails to
maintain sufficient capital to comply with the capital ratio requirement under
section 205(f)(2)—
(i)the independent study required by
subparagraph (A) shall be conducted semiannually and shall analyze the
financial position of the Fund as of September 30 and March 31 of each fiscal
year during such period; and
(ii)the Secretary
shall submit a report meeting the requirements of subparagraph (A) for each
such semiannual
study.
.
(b)Analysis of
quarterly actuarial studiesThe Secretary of Housing and Urban
Development shall conduct an analysis of the cost and feasibility of providing
for an independent actuarial study of the Mutual Mortgage Insurance Fund on a
calendar quarterly basis, which shall compare the cost and feasibility of
conducting such a study on a quarterly basis as compared to a semi-annual basis
and shall determine whether such an actuarial study can be conducted on a
quarterly basis without substantial additional costs to the taxpayers. Not
later than the expiration of the 90-day period beginning on the date of the
enactment of this Act, the Secretary shall submit a report to the Congress
setting forth the findings and conclusion of the analysis conducted pursuant to
this subsection.
6.Delegation of FHA
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.
7.Authority to terminate
FHA 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
.
8.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;
.
9.Reporting of
mortgagee actions taken against other mortgageesSection 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)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 or evidence of
fraud or material misrepresentation in connection with the origination of such
mortgages, to notify the Secretary of the action taken and the reasons for such
action not later than 15 days after taking such
action.
.
10.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 number of claims paid to each servicing mortgagee during
each calendar quarter occurring during the applicable collection
period.
.
(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.
11.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 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.
12.Establishment of
Chief Risk Officer for GNMASection 4 of the Department of Housing and
Urban Development Act (42 U.S.C. 3533) is amended by
adding after subsection (g), as added by section 1442 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Public Law
111–203; 124 Stat. 2163), the following new subsection:
(h)There shall be in the Department a Chief
Risk Officer for the Government National Mortgage Association, who
shall—
(1)be designated by
the Secretary;
(2)be responsible to the President of the
Association for all matters related to evaluating, managing, and mitigating
risk to the programs of the Association;
(3)be in the
competitive service or the senior executive service;
(4)be a career
appointee;
(5)be designated from
among individuals who possess demonstrated ability in general management of,
and knowledge of and extensive practical experience in risk evaluation
practices in large governmental or business entities; and
(6)shall not be
required to obtain the prior approval, comment, or review of any officer or
agency of the United States before submitting to the Congress, or any committee
or subcommittee thereof, any reports, recommendations, testimony, or comments
if such submission include a statement indicating that the views expressed
therein are those of the Chief Risk Officer of the Association and do not
necessarily represent the views of the
Secretary.
.
13.Report on
mortgage servicers
(a)The Secretary of Housing and Urban
Development shall conduct an examination into mortgage servicer compliance with
the loan servicing, loss mitigation, and insurance claim submission guidelines
of the FHA mortgage insurance programs under the National Housing Act
(12 U.S.C. 1701 et
seq.), and an estimate of the annual costs to the Mutual
Mortgage Insurance Fund, since 2008, resulting from any failures by mortgage
servicers to comply with such guidelines.
(b)Not
later than the expiration of the 120-day period that begins upon the date of
the enactment of this Act, the Secretary shall submit a report to the Congress
on the results of the examination conducted pursuant to subsection (a),
including recommendations for any administrative and legislative actions to
improve mortgage servicer compliance with the guidelines referred to in
subsection (a).
14.FHA emergency
capital plan
(a)Not later than the expiration of the 30-day
period beginning on the date of the enactment of this Act, the Secretary of
Housing and Urban Development shall develop, submit to the Congress, and
commence implementation of an emergency capital plan for the restoration of the
fiscal solvency of the Mutual Mortgage Insurance Fund (in this section referred
to as the Fund).
(b)The
emergency capital plan developed pursuant to this section shall—
(1)provide a detailed
explanation of the processes and controls by which amounts of capital that are
assets of the Fund are monitored and tracked;
(2)establish a plan
to ensure the financial safety and soundness of the Fund that avoids the need
for borrowing amounts from the Treasury of the United States to meet
obligations of the Fund; and
(3)describe the procedure by which, if
necessary, any amounts from the Treasury needed to meet obligations of the Fund
will be obtained from the Treasury.
(c)
(1)Subject to paragraph (3), upon the
conclusion of each calendar month ending after the 14-day period that begins on
the date of the enactment of this Act, the Secretary of Housing and Urban
Development shall submit to the Congress a report assessing the financial
status of the Fund at the conclusion of such month and setting forth the
information described in paragraph (2).
(2)Each report required under paragraph (1)
for a month shall contain the following information regarding the Fund as of
the conclusion of such month:
(A)The number of mortgages that are
obligations of the Fund that are 60 or more days delinquent, the expected
losses to the Fund associated with such delinquent mortgages, and the
methodology used to make such calculation.
(B)The number of mortgages that are
obligations of the Fund that have a loan-to-value ratio at the time of
origination that is less than 80 percent and the percentage of all mortgages
that are obligations of the Fund having such a ratio.
(C)The number of mortgages that are
obligations of the Fund that had an original principal obligation exceeding 125
percent of the median house price, for a home of the size of the residence
subject to the mortgage, for the area in which such residence is located, and
the percentage of all mortgages that are obligations of the Fund having such an
original principal obligation.
(D)The number of mortgages that are
obligations of the Fund for which the mortgagor’s income at the time of
origination of the mortgage is greater than the median income for the area in
which the residence subject to the mortgage is located, and the percentage of
all mortgages that are obligations of the Fund for which the mortgagor has such
an income.
(E)The balances for
the financing and capital reserve accounts of the Fund.
(F)Any actions taken
during such month to help ensure the financial soundness of the Fund and
compliance with section 205(f) of the National Housing Act (12 U.S.C. 1711(f);
relating to a capital ratio requirement).
(3)Termination of
reporting requirementThe requirement to submit reports under
paragraph (1) shall terminate on the first date after the date of the enactment
of this Act that the Fund attains a capital ratio (as such term is defined in
section 205(f)(3) of the National Housing Act) of 2.0 percent.
15.FHA safety and
soundness review
(a)The Comptroller General of the United
States shall provide for an independent third party to—
(1)conduct a one-time
review of the mortgage insurance programs and funds of the Secretary of Housing
and Urban Development that shall determine, as of the time of such
review—
(A)the financial
safety and soundness of such programs and funds; and
(B)the extent of loan
loss reserves and capital adequacy of such programs and funds; and
(2)to submit a report
under subsection (b).
Such review
shall be conducted in accordance with generally accepted accounting principles
applicable to the private sector and Federal entities.(b)The report under this subsection shall
describe the methodology and standards used to conduct the review under
subsection (a)(1), set forth the results and findings of the review, including
the extent of loan loss reserves and capital adequacy of the mortgage insurance
programs and funds of the Secretary of Housing and Urban Development, and
include recommendations regarding restoring such reserves and capital to
maintain such programs and funds in a safe and sound condition.
(c)The review required under subsection (a)
shall be completed, and the report required under subsection (b) shall be
submitted, not later than the expiration of the 60-day period beginning on the
date of the enactment of this Act.
(d)Nothing in this section may be construed to alter or
affect, or exempt the Secretary of Housing and Urban Development from complying
with, any laws, regulations, or guidance relating to preparation or submission
of budgets or audits or financial or management statements or reports.
16.Not later than the
expiration of the 90-day period beginning on the date of the enactment of this
Act, the Secretary of Housing and Urban Development shall review and revise all
standards and requirements relating to disclosure of information regarding the
mortgage insurance programs and funds, including actuarial studies conducted
under section 202(a)(4) of the National Housing Act (12 U.S.C.
1708(a)(4)), quarterly reports under section 202(a)(5) of such
Act, and annual audited financial statements under section 538 of such Act
(12 U.S.C.
1735f–16), to ensure that, after the date of the enactment of
this Act, such disclosures—
(1)provide meaningful financial and other
information that is timely, comprehensive, and accurate;
(2)do not contain any
material misstatements or misrepresentations;
(3)make available all
relevant information; and
(4)prohibit material
omissions that make the contents of the disclosure misleading.
17.Report on
streamlining FHA programs
(a)The Secretary of Housing and Urban
Development shall conduct an examination of the mortgage insurance and any
other programs of the Federal Housing Administration to identify—
(1)the level of use
and need for such programs;
(2)any such programs
that are unused or underused; and
(3)methods for
streamlining, consolidating, simplifying, increasing the efficiency of, and
reducing the number of such programs.
(b)Not later than the expiration of the
12-month period that begins upon the date of the enactment of this Act, the
Secretary shall submit a report to the Congress on the results of the
examination conducted pursuant to subsection (a), including recommendations for
any administrative and legislative actions to streamline, consolidate,
simplify, increase the efficiency of, and reduce the number of such
programs.
18.The Secretary of
Housing and Urban Development shall allocate $2,500,000 from the account for
Administrative Contract Expenses each fiscal year through September
30, 2017, which amounts shall be available only for the purposes of this Act
and the amendments made by this Act, including such additional actuarial
reviews as may be required by section 5 of this Act and the amendments made by
such section.
Passed the House of
Representatives September 11, 2012.
Karen L. Haas,
Clerk