[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1376 Reported in Senate (RS)]

                                                       Calendar No. 275
113th CONGRESS
  1st Session
                                S. 1376

                          [Report No. 113-129]

    To improve the Federal Housing Administration and to ensure the 
solvency of the Mutual Mortgage Insurance Fund, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 25, 2013

Mr. Johnson of South Dakota (for himself and Mr. Crapo) introduced the 
 following bill; which was read twice and referred to the Committee on 
                  Banking, Housing, and Urban Affairs

                           December 19, 2013

        Reported by Mr. Johnson of South Dakota, with amendments
  [Omit the part struck through and insert the part printed in italic]

_______________________________________________________________________

                                 A BILL


 
    To improve the Federal Housing Administration and to ensure the 
solvency of the Mutual Mortgage Insurance Fund, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``FHA Solvency Act 
of 2013''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Mortgage insurance premiums.
Sec. 3. Prohibition on insuring mortgagors with 2 prior foreclosures.
Sec. <DELETED>3</DELETED>4. Indemnification by FHA mortgagees.
Sec. <DELETED>4</DELETED>5. Review of mortgagee performance.
Sec. 6. Transfer of mortgage servicing duties.
Sec. <DELETED>5</DELETED>7. Easing regulatory burdens; resource guide.
Sec. <DELETED>6</DELETED>8. Improving underwriting standards.
Sec. <DELETED>7</DELETED>9. Ensuring adequate capital levels in the 
                            Mutual Mortgage Insurance Fund.
Sec. 10. Stress testing of the Mutual Mortgage Insurance Fund.
Sec. 11. Congressional notification of use of certain authorities with 
                            respect to the FHA.
Sec. <DELETED>8</DELETED>12. Establishment of Deputy Assistant 
                            Secretary and Chief Risk Officer of FHA.
Sec. <DELETED>9</DELETED>13. Disclosure of events.
Sec. <DELETED>10</DELETED>14. GAO study on disclosures.
Sec. <DELETED>11</DELETED>15. Stabilizing the HECM program.
Sec. 16. Principal limit factor for HECM program.
Sec. <DELETED>12</DELETED>17. Publication of final rules relating to 
                            limiting seller contributions towards 
                            purchase related expenses.
Sec. 18. GAO study on FHA loan limits.

SEC. 2. MORTGAGE INSURANCE PREMIUMS.

    (a) In General.--Section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)) is amended--
            (1) in paragraph (2)(B)--
                    (A) in the matter preceding clause (i)--
                            (i) by striking ``may'' and inserting 
                        ``shall'';
                            (ii) by striking ``not exceeding 1.5 
                        percent'' and inserting ``not less than 0.55 
                        percent''; and
                            (iii) by inserting ``and not exceeding 2.0 
                        percent of such remaining insured principal 
                        balance'' before ``for the following 
                        periods:''; and
                    (B) in clause (ii), by striking ``1.55 percent'' 
                and inserting ``2.05 percent''; and
            (2) by adding at the end the following:
            ``(3) Evaluation of up-front and annual premiums.--
                    ``(A) Annual review.--The Secretary shall, at least 
                annually, review--
                            ``(i) the amount of the annual and up-front 
                        premiums collected under this subsection; and
                            ``(ii) the expected losses to the Mutual 
                        Mortgage Insurance Fund, as such losses are 
                        calculated in the annual independent actuarial 
                        study required under section 202(a)(4).
                    ``(B) Required adjustments.--Upon completion of the 
                review required under subparagraph (A), the Secretary 
                shall, for all mortgages that are to become an 
                obligation of the Mutual Mortgage Insurance Fund after 
                the date that such review is complete, adjust the 
                annual and up-front premiums applied to such mortgages 
                so that the premiums collected over the life of such 
                mortgages will exceed the expected losses of such 
                mortgages to the Fund plus amounts sufficient to ensure 
                the capital reserve ratio remains at the level required 
                under section 205(f).
                    ``(C) Rule of construction.--Nothing in this 
                paragraph shall permit or be construed to permit the 
                Secretary to apply different premium rates to the same 
                mortgage product during the same time period based 
                solely on the characteristics of the mortgagor.''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect upon the expiration of the 6-month period beginning on the date 
of enactment of this Act.

SEC. 3. PROHIBITION ON INSURING MORTGAGORS WITH 2 PRIOR FORECLOSURES.

    Section 203 of the National Housing Act (12 U.S.C. 1709) is amended 
by adding at the end the following:
    ``(y) Prohibition on Insuring Mortgagors With 2 Prior 
Foreclosures.--The Secretary may not insure, or enter into a commitment 
to insure, a mortgage under this section that is executed by a 
mortgagor who is the mortgagor under any two mortgages on 1- to 4-
family residential properties that have been previously foreclosed 
upon.''.

SEC. <DELETED>3</DELETED>4. INDEMNIFICATION BY FHA MORTGAGEES.

    (a) In General.--Section 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) In general.--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 
        contains a material defect such that the mortgage should not 
        have been approved or endorsed for insurance, and a loan 
        becomes delinquent within 36 months of such approval or 
        endorsement leading to a default or the Secretary pays a claim 
        within 36 months after such approval or endorsement, 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 misrepresentation.--If fraud or 
        misrepresentation was involved in connection with the 
        origination, 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<DELETED>.</DELETED>, except if the Secretary 
        determines that the fraud or misrepresentation was the result 
        of fraud or misrepresentation committed not by the mortgagee 
        but by a third party and that the mortgagee had implemented 
        adequate quality control and review procedures to deter, 
        detect, and identify such fraud or misrepresentation.
            ``(3) Requirements and procedures.--The Secretary shall 
        issue regulations establishing--
                    ``(A) appropriate requirements and procedures 
                governing the indemnification of the Secretary by the 
                mortgagee, including public reporting on--
                            ``(i) the number of loans that--
                                    ``(I) were not originated in 
                                accordance with the requirements 
                                established by the Secretary; and
                                    ``(II) involved fraud or 
                                misrepresentation in connection with 
                                the origination; and
                            ``(ii) the financial impact on the Mutual 
                        Mortgage Insurance Fund when indemnification is 
                        required; and
                    ``(B) an appeals process, or making any necessary 
                modifications or revisions to an existing appeals 
                process of the Secretary, to appeal any determination 
                of indemnification made by the Secretary pursuant to 
                paragraph (1) or (2).
            ``(4) Applicability.--This subsection shall only apply to 
        mortgages insured under this title that were originated on or 
        after the date of enactment of the FHA Solvency Act of 2013.
            ``(5) Deposit in the mutual mortgage insurance fund.--The 
        Secretary shall deposit any amounts collected pursuant to this 
        subsection in, and for the use of, the Mutual Mortgage 
        Insurance Fund.''.
    (b) Rule of Construction.--Nothing in subsection (a), or the 
amendment made by subsection (a), shall be construed to supersede, 
alter, or in any way affect the authorities granted to the Secretary of 
Housing and Urban Development under section 256 of the National Housing 
Act (12 U.S.C. 1715z-21).

SEC. <DELETED>4</DELETED>5. REVIEW OF MORTGAGEE PERFORMANCE.

    Section 533 of the National Housing Act (12 U.S.C. 1735f-11) is 
amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) Periodic Review of Mortgagee Performance.--To reduce losses 
in connection with single family mortgage insurance programs under this 
Act, at least once a year the Secretary shall review the mortgagees 
originating or underwriting insured single family mortgages.'';
            (2) by amending subsection (b) to read as follows:
    ``(b) Comparison With Other Mortgagees.--
            ``(1) In general.--In conducting the review required under 
        subsection (a), for each mortgagee the Secretary shall compare 
        that mortgagee with other mortgagees originating or 
        underwriting insured single family mortgages based on the rates 
        of defaults and claims for insured single family mortgage loans 
        originated or underwritten by that mortgagee. The Secretary may 
        also compare that mortgagee with such other mortgagees based 
        on--
                    ``(A) underwriting quality;
                    ``(B) geographic area served; or
                    ``(C) any commonly used factors the Secretary deems 
                necessary for comparing mortgage default risk, provided 
                that such comparison is of factors that the Secretary 
                would expect to reduce the default risk of mortgages 
                insured by the Secretary.
            ``(2) Implementation.--In carrying out the comparisons 
        required under paragraph (1), the Secretary shall implement 
        such comparisons by regulation, notice, or mortgagee letter.''; 
        and
            (3) in subsection (c)--
                    (A) by striking paragraph (1) and inserting the 
                following:
            ``(1) Termination authority.--
                    ``(A) In general.--Notwithstanding section 202(c), 
                the Secretary may terminate the approval of a mortgagee 
                to originate or underwrite single family mortgages if 
                the Secretary determines that the mortgage loans 
                originated or underwritten by the mortgagee present an 
                unacceptable risk to the insurance funds.
                    ``(B) Basis for determining unacceptable risk.--For 
                purposes of subparagraph (A), a mortgagee may present 
                an unacceptable risk to the insurance funds based on--
                            ``(i) a comparison of any of the factors 
                        set forth in subsection (b); or
                            ``(ii) a determination that the mortgagee 
                        engaged in fraud or misrepresentation.'';
                    (B) by redesignating paragraph (2) as paragraph 
                (3);
                    (C) by inserting after paragraph (1) the following:
            ``(2) Applicability and enforcement.--The authority granted 
        to the Secretary under paragraph (1) shall--
                    ``(A) apply for any specified area or areas, or on 
                a nationwide basis; and
                    ``(B) be made in accordance with any regulation, 
                notice, or mortgagee letter issued by the Secretary.''; 
                and
                    (D) in paragraph (3) (as so redesignated)--
                            (i) by striking ``(3 ) The Secretary shall 
                        give'' and inserting ``(3) Notice and right to 
                        informal conference.--The Secretary shall 
                        give''; and
                            (ii) in the fourth sentence, by striking 
                        ``excessive default and claim rate'' and 
                        inserting ``finding of an unacceptable risk to 
                        the insurance funds''.

SEC. 6. TRANSFER OF MORTGAGE SERVICING DUTIES.

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

``SEC. 259. TRANSFER OF MORTGAGE SERVICING DUTIES.

    ``(a) Transfer of Mortgage Servicing Duties.--
            ``(1) In general.--For any mortgage or pool of mortgages 
        insured under this title and in accordance with rules 
        promulgated by the Secretary, the Secretary may require the 
        servicer of any such mortgage or pool of mortgages to enter 
        into a subservicing arrangement with any independent specialty 
        servicer approved by the Secretary.
            ``(2) Rules.--The rules required under paragraph (1) 
        shall--
                    ``(A) set forth with clarity the performance 
                conditions of a servicer that would warrant or 
                necessitate the use of the authority granted to the 
                Secretary under this section;
                    ``(B) require that the performance condition 
                warranting or necessitating the use of such authority 
                be of such type or character so as to materially and 
                adversely affect the Secretary's ability to recover any 
                amounts owed to the Secretary;
                    ``(C) for purposes of subparagraph (B), define the 
                term `materially and adversely affect';
                    ``(D) require that any servicer whose servicing 
                duties are subject to this section be provided a 
                reasonable amount of time, provided that such time does 
                not present a risk to the Mutual Mortgage Insurance 
                Fund, to rebut, address, or correct any determination 
                of the Secretary regarding a performance condition 
                described under subparagraph (A);
                    ``(E) only permit the Secretary to carry out the 
                authority granted under this section upon expiration of 
                the time-period allowed under subparagraph (D);
                    ``(F) limit the scope of any such authority to 
                mortgages that share similar underwriting, borrower, 
                and performance characteristics;
                    ``(G) ensure that the scope of any such authority 
                is not applied broadly and without further limitation; 
                and
                    ``(H) notwithstanding subparagraphs (B) through 
                (G), provide that a servicer may be subject to more 
                extensive programmatic discipline or correction 
                measures, as determined by the Secretary, if, during 
                any 5-year period--
                            ``(i) the servicing duties that are the 
                        subject of the current use of the Secretary's 
                        authority under this section marks the third 
                        instance of the use of such authority with 
                        respect to the same servicer; and
                            ``(ii) with respect to the prior two 
                        separate and individual instances of the use of 
                        such authority, the same servicer failed to 
                        cure any identified performance conditions or 
                        implement corrective measures as determined by 
                        the Secretary pursuant to subparagraph (D).''.
    (b) Applicability.--The amendment made by this section shall only 
apply to mortgages insured under title II of the National Housing Act 
(12 U.S.C. 1707 et seq.) that were originated on or after the date of 
enactment of this Act.

SEC. <DELETED>5</DELETED>7. EASING REGULATORY BURDENS; RESOURCE GUIDE.

    (a) In General.--Not later than 360 days after the date of 
enactment of this Act, the Secretary of Housing and Urban Development 
(in this section referred to as the ``Secretary'') shall issue a 
single, uniform resource guide to inform lenders and servicers of the 
policies, processes, and procedures applicable to mortgages insured 
under title II of the National Housing Act (12 U.S.C. 1707 et seq.), 
including, but not limited to, the policies, processes, and procedures 
of the Secretary relating to any indemnification authority of the 
Secretary, including any criteria the Secretary considers to be a 
material defect for purposes of executing such authority.
    (b) Content.--The resource guide required under subsection (a) 
shall aggregate all forms, policies, and other related information set 
forth in any handbooks, mortgagee letters, guidebooks, notices, or 
bulletins issued by the Secretary.
    (c) Updating.--Beginning on the expiration of the date set forth 
under subsection (a), whenever the Secretary issues any new policy, 
process, or procedure, or revises or otherwise amends any existing 
policy, process, or procedure contained in the resource guide required 
under subsection (a), such addition, revision, or amendment shall be 
issued as an amendment to the resource guide.
    (d) Public Availability; Website Access.--The resource guide 
required under subsection (a) shall be made available to the public and 
posted on the website of the Department of the Housing and Urban 
Development.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. <DELETED>6</DELETED>8. IMPROVING UNDERWRITING STANDARDS.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Secretary of Housing and Urban Development 
shall, by mortgagee letter or rule, evaluate and revise as necessary 
the underwriting standards for mortgages eligible to be insured under 
title II of the National Housing Act (12 U.S.C. 1707 et seq.), which 
shall--
            (1) be based on empirically derived, demonstrably and 
        statistically sound models; and
            (2) include criteria, the evaluation of which has 
        historically resulted in comparatively low rates of delinquency 
        and default during adverse economic conditions.
    (b) Criteria.--The underwriting standards under subsection (a) 
shall include an evaluation of--
            (1) the current or reasonably expected income and financial 
        resources of a borrower;
            (2) the employment status of a borrower, if income used 
        under paragraph (1) is employment income;
            (3) the monthly payment of a borrower under the terms of a 
        mortgage;
            (4) the monthly payment for any other loan held by the 
        borrower;
            (5) the monthly payment for any obligations related to the 
        mortgage;
            (6) any other debt obligations of a borrower, including 
        alimony and child support;
            (7) the monthly debt-to-income ratio or residual income of 
        a borrower;
            (8) the credit history of a borrower; and
            (9) any other risk factor or criteria, as determined 
        appropriate by the Secretary.

SEC. <DELETED>7</DELETED>9. ENSURING ADEQUATE CAPITAL LEVELS IN THE 
              MUTUAL MORTGAGE INSURANCE FUND.

    Section 205 of the National Housing Act (12 U.S.C. 1711(f)) is 
amended--
            (1) in subsection (f)--
                    (A) in paragraph (2), by striking ``<DELETED>shall 
                ensure that the Fund </DELETED>maintains at least such 
                capital ratio at all times thereafter'' and inserting 
                ``maintains such ratio thereafter, subject to paragraph 
                (3)''; and
                    (B) by amending paragraph (3) to read as follows:
            ``(3) The Secretary shall ensure that the Mutual Mortgage 
        Insurance Fund attains a capital ratio of not less than 3.0 
        percent within 10 years after the date of enactment of the FHA 
        Solvency Act of 2013, and shall ensure that the Fund maintains 
        at least such capital ratio at all times thereafter.''; and
            (2) by adding at the end the following:
    ``(g) Ensuring Adequate Capital Levels in the Mutual Mortgage 
Insurance Fund.--
            ``(1) Effective date.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), this subsection shall take effect on 
                the date of enactment of the FHA Solvency Act of 2013.
                    ``(B) Exception for imposition of surcharges.--
                            ``(i) In general.--Paragraphs (4)(D), 
                        (5)(D), and (6)(D) of this subsection--
                                    ``(I) shall not have any force or 
                                effect during the 2-year period 
                                beginning on the date of enactment of 
                                the FHA Solvency Act of 2013; and
                                    ``(II) shall take effect upon the 
                                earlier of--
                                            ``(aa) the expiration of 
                                        the 2-year period set forth 
                                        under subclause (I), if in any 
                                        annual independent actuarial 
                                        study required under section 
                                        202(a)(4) the Mutual Mortgage 
                                        Insurance Fund is designated as 
                                        critically undercapitalized 
                                        pursuant to paragraph (6);
                                            ``(bb) the date the 
                                        independent actuary 
                                        commissioned to carry out the 
                                        annual independent actuarial 
                                        study required under section 
                                        202(a)(4) submits the results 
                                        of the fiscal year 2016 study 
                                        to the Secretary, if such study 
                                        finds that the Mutual Mortgage 
                                        Insurance Fund has not achieved 
                                        the capital ratio required to 
                                        be maintained under subsection 
                                        (f)(1);
                                            ``(cc) any date occurring 
                                        after the date set forth under 
                                        item (bb), but prior to any 
                                        date set forth under items (dd) 
                                        or (ee), if in any annual 
                                        independent actuarial study 
                                        required under section 
                                        202(a)(4) the independent 
                                        actuary commissioned to carry 
                                        out the study finds--

                                                    ``(AA) that in 
                                                comparison to the 
                                                independent actuarial 
                                                study submitted in the 
                                                most recent prior 
                                                fiscal year, the 
                                                capital ratio of the 
                                                Fund has decreased; and

                                                    ``(BB) the market 
                                                share for mortgages 
                                                insured under this 
                                                title has not been 
                                                concurrently reduced 
                                                thus contributing to 
                                                the decrease in the 
                                                capital ratio described 
                                                under subitem (AA);

                                            ``(dd) the date on which 
                                        the Mutual Mortgage Insurance 
                                        Fund attains a capital ratio of 
                                        3.0 percent; or
                                            ``(ee) the date that is 10 
                                        years after the date of 
                                        enactment of the FHA Solvency 
                                        Act of 2013.
                            ``(ii) Rule of construction.--For purposes 
                        of this subsection, any finding made under item 
                        (cc) of clause (i)(II) shall be deemed to mean 
                        that the Mutual Mortgage Insurance Fund is 
                        undercapitalized pursuant to paragraph (4) and 
                        that notwithstanding the provisions of 
                        paragraph (4)(D)(iv), the Secretary shall begin 
                        or continue to collect any surcharge set forth 
                        under paragraph (4)(D), until the earlier of 
                        the date on which--
                                    ``(I) the next report of the 
                                Secretary on the annual independent 
                                actuarial study required under section 
                                202(a)(4) finds that in comparison to 
                                the independent actuarial study 
                                submitted in the most recent prior 
                                fiscal year, the capital ratio of the 
                                Fund has increased;
                                    ``(II) the report of the Secretary 
                                required under paragraph (3)(A) finds 
                                that in comparison to the independent 
                                actuarial study submitted in the most 
                                recent prior fiscal year, the capital 
                                ratio of the Fund has increased; or
                                    ``(III) the Mutual Mortgage 
                                Insurance Fund has been designated as 
                                significantly undercapitalized pursuant 
                                to paragraph (5) or critically 
                                undercapitalized pursuant to paragraph 
                                (6) and the premium surcharge 
                                applicable to any such designation has 
                                taken effect.
            ``(2) Duty of chief risk officer.--Following the receipt by 
        the Deputy Assistant Secretary and Chief Risk Officer of the 
        final completed report for the fiscal year of the independent 
        actuary commissioned to carry out the annual independent 
        actuarial study required under section 202(a)(4) analyzing the 
        capital ratio of the Mutual Mortgage Insurance Fund, the Deputy 
        Assistant Secretary and Chief Risk Officer shall, as part of 
        that individual's regularly assigned duties and 
        responsibilities, have a duty to notify, within 24 hours, the 
        Secretary of any failure to maintain the capital ratio of the 
        Mutual Mortgage Insurance Fund as required under subsection 
        (f).
            ``(3) Studies and reports.--
                    ``(A) For when fund is undercapitalized or 
                significantly undercapitalized.--If the Mutual Mortgage 
                Insurance Fund is designated as undercapitalized or 
                significantly undercapitalized pursuant to paragraphs 
                (4) or (5), respectively, then not later than 180 days 
                after date on which the Secretary submits the report on 
                the annual independent actuarial study required under 
                section 202(a)(4), and annually thereafter until such 
                time as the Mutual Mortgage Insurance Fund achieves the 
                capital ratio required to be maintained under 
                subsection (f), the Secretary shall provide a report to 
                the Committee on Banking, Housing, and Urban Affairs of 
                the Senate and the Committee on Financial Services of 
                the House of Representatives updating the results of 
                the independent actuarial study required under section 
                202(a)(4) to reflect the most recently available 
                information and analyzing the financial position of the 
                Fund.
                    ``(B) For when fund is critically 
                undercapitalized.--If the Mutual Mortgage Insurance 
                Fund is designated as critically undercapitalized 
                pursuant to paragraph (6), then not later than the last 
                day of the current fiscal quarter in which the Congress 
                is informed of such events pursuant to paragraph 
                (6)(A), and every fiscal quarter thereafter until such 
                time as the Mutual Mortgage Insurance Fund achieves the 
                capital ratio required to be maintained under 
                subsection (f) or is designated as undercapitalized or 
                significantly undercapitalized pursuant to paragraphs 
                (4) or (5), respectively, the Secretary shall provide a 
                report to the Committee on Banking, Housing, and Urban 
                Affairs of the Senate and the Committee on Financial 
                Services of the House of Representatives updating the 
                results of the independent actuarial study required 
                under section 202(a)(4) to reflect the most recently 
                available information and analyzing the financial 
                position of the Fund.
                    ``(C) Failure to comply with required timelines.--
                If the Secretary fails to comply with any timeline 
                required under subparagraphs (A) or (B), the Secretary 
                shall appear before the Committee on Banking, Housing, 
                and Urban Affairs of the Senate and the Committee on 
                Financial Services of the House of Representatives 
                within 7 days of the last day of that deadline to 
                provide testimony explaining the failure to comply.
            ``(4) Corrective actions when fund is undercapitalized.--
                    ``(A) Notice to congress.--Not later than 7 days 
                after the date on which the Secretary is informed that 
                the Mutual Mortgage Insurance Fund has a capital ratio 
                of not less than 50 percent but less than 100 percent 
                of the capital ratio required to be maintained under 
                subsection (f), the Secretary shall notify the Chair 
                and Ranking Member of the Committee on Banking, 
                Housing, and Urban Affairs of the Senate and the Chair 
                and Ranking Member of the Committee on Financial 
                Services of the House of Representatives of such 
                shortfall, and the exact date on which the Secretary 
                was informed of such shortfall.
                    ``(B) Submission of capital restoration plan.--Not 
                later than 30 days after the date on which notice is 
                provided under subparagraph (A), the Secretary shall 
                submit to the Chair and Ranking Member of the Committee 
                on Banking, Housing, and Urban Affairs of the Senate 
                and the Chair and Ranking Member of the Committee on 
                Financial Services of the House of Representatives a 
                capital restoration plan, including a timeline for 
                implementation of such plan, to achieve the capital 
                ratio required to be maintained under subsection (f). 
                The plan required under this subparagraph shall be 
                revised annually until such time as the Mutual Mortgage 
                Insurance Fund achieves the capital ratio required to 
                be maintained under subsection (f).
                    ``(C) Congressional testimony.--Not later than 45 
                days after the date on which notice is provided under 
                subparagraph (A), and annually thereafter until such 
                time as the Mutual Mortgage Insurance Fund achieves the 
                capital ratio required to be maintained under 
                subsection (f), the Secretary shall provide testimony 
                to the Committee on Banking, Housing, and Urban Affairs 
                of the Senate and the Committee on Financial Services 
                of the House of Representatives on the capital status 
                of the Fund and the performance or projected 
                performance of the plan submitted under subparagraph 
                (B).
                    ``(D) Imposition of premium surcharge.--
                            ``(i) In general.--Notwithstanding any 
                        limitation on the amount of any premium payment 
                        set forth under section 203(c), in addition to 
                        the premiums collected under subparagraphs (A), 
                        (B), and (C) of paragraph (2) of section 
                        203(c), if the Mutual Mortgage Insurance Fund 
                        is designated as undercapitalized pursuant to 
                        this paragraph, the Secretary shall establish 
                        and collect annual premium payments for any 
                        newly insured mortgage for which the Secretary 
                        collects an annual premium payment under 
                        section 203(c), except for those mortgages 
                        insured pursuant to section 255, in an amount 
                        described in clause (ii).
                            ``(ii) Amount of surcharge.--With respect 
                        to a mortgage, the amount described in this 
                        clause is 10 basis points of the remaining 
                        insured principal balance (excluding the 
                        portion of the remaining balance attributable 
                        to the premium collected under paragraph (2)(A) 
                        of section 203(c) and without taking into 
                        account delinquent payments or prepayments).
                            ``(iii) Effective date.--
                                    ``(I) In general.--Subject to 
                                subclause (II), the requirement to 
                                collect the annual premium payment set 
                                forth under this subparagraph shall 
                                take effect on the date that is 180 
                                days after the date on which notice is 
                                provided to Congress under subparagraph 
                                (A).
                                    ``(II) Delay.--The effective date 
                                of the requirement to collect the 
                                annual premium payment set forth under 
                                this subparagraph may be extended for 
                                an additional 180 days, if prior to the 
                                expiration of the initial 180-day time 
                                period described under subclause (I), 
                                the report of the Secretary required 
                                under paragraph (3)(A)--
                                            ``(aa) is submitted to 
                                        Congress; and
                                            ``(bb) finds that the 
                                        Mutual Mortgage Insurance Fund 
                                        has achieved the capital ratio 
                                        required to be maintained under 
                                        subsection (f).
                                    ``(III) Reinstitution of 
                                surcharge.--Notwithstanding subclauses 
                                (I) and (II), if the next report of the 
                                Secretary on the annual independent 
                                actuarial study required under section 
                                202(a)(4) that is submitted after the 
                                report of the Secretary described in 
                                subclause (II) finds that the Mutual 
                                Mortgage Insurance Fund has not 
                                achieved the capital ratio required to 
                                be maintained under subsection (f), 
                                then the effective date of the 
                                requirement to collect the annual 
                                premium payment set forth under this 
                                subparagraph shall be the date that is 
                                30 days after the date on which such 
                                report is submitted to Congress.
                            ``(iv) Cessation of application.--The 
                        Secretary shall not be required to collect the 
                        annual premium payment set forth under this 
                        subparagraph, if, at any time after the date on 
                        which such requirement has gone into effect, 
                        either--
                                    ``(I) the report of the Secretary 
                                on the annual independent actuarial 
                                study required under section 202(a)(4) 
                                finds that the Mutual Mortgage 
                                Insurance Fund has achieved the capital 
                                ratio required to be maintained under 
                                subsection (f);
                                    ``(II) the report of the Secretary 
                                required under paragraph (3) (A) finds 
                                that the Mutual Mortgage Insurance Fund 
                                has achieved the capital ratio required 
                                to be maintained under subsection (f); 
                                or
                                    ``(III) the Mutual Mortgage 
                                Insurance Fund has been designated 
                                significantly undercapitalized pursuant 
                                to paragraph (5) or critically 
                                undercapitalized pursuant to paragraph 
                                (6) and the premium surcharge 
                                applicable to any such designation has 
                                taken effect.
            ``(5) Corrective actions when fund is significantly 
        undercapitalized.--
                    ``(A) Notice to congress.--Not later than 7 days 
                after the date on which the Secretary is informed that 
                the Mutual Mortgage Insurance Fund has a capital ratio 
                of not less than 0 percent but less than 50 percent of 
                the capital ratio required to be maintained under 
                subsection (f), the Secretary shall notify the Chair 
                and Ranking Member of the Committee on Banking, 
                Housing, and Urban Affairs of the Senate and the Chair 
                and Ranking Member of the Committee on Financial 
                Services of the House of Representatives of such 
                shortfall, and the date on which the Secretary was 
                informed of such shortfall.
                    ``(B) Submission of revised capital restoration 
                plan.--Not later than 30 days after the date on which 
                notice is provided under subparagraph (A), the 
                Secretary shall submit to the Chair and Ranking Member 
                of the Committee on Banking, Housing, and Urban Affairs 
                of the Senate and the Chair and Ranking Member of the 
                Committee on Financial Services of the House of 
                Representatives a capital restoration plan, or a 
                revised capital restoration plan, including a timeline 
                for implementation of such plan or revised plan, to 
                achieve the capital ratio required to be maintained 
                under subsection (f). The plan required under this 
                subparagraph shall be revised annually until such time 
                as the Mutual Mortgage Insurance Fund achieves the 
                capital ratio required to be maintained under 
                subsection (f).
                    ``(C) Congressional testimony.--Not later than 45 
                days after the date on which notice is provided under 
                subparagraph (A), and every 180 days thereafter until 
                such time as the Mutual Mortgage Insurance Fund 
                achieves the capital ratio required to be maintained 
                under subsection (f), the Secretary shall provide 
                testimony to the Committee on Banking, Housing, and 
                Urban Affairs of the Senate and the Committee on 
                Financial Services of the House of Representatives on 
                the capital status of the Fund and the performance or 
                projected performance of the revised capital 
                restoration plan submitted under subparagraph (B).
                    ``(D) Imposition of premium surcharge.--
                            ``(i) In general.--Notwithstanding any 
                        limitation on the amount of any premium payment 
                        set forth under section 203(c), in addition to 
                        the premiums collected under subparagraphs (A), 
                        (B), and (C) of paragraph (2) of section 
                        203(c), if the Mutual Mortgage Insurance Fund 
                        is designated as significantly undercapitalized 
                        pursuant to this paragraph, the Secretary shall 
                        establish and collect annual premium payments 
                        for any newly insured mortgage for which the 
                        Secretary collects an annual premium payment 
                        under section 203(c), except for those 
                        mortgages insured pursuant to section 255, in 
                        an amount described in clause (ii).
                            ``(ii) Amount of surcharge.--With respect 
                        to a mortgage, the amount described in this 
                        clause is 20 basis points of the remaining 
                        insured principal balance (excluding the 
                        portion of the remaining balance attributable 
                        to the premium collected under paragraph (2)(A) 
                        of section 203(c) and without taking into 
                        account delinquent payments or prepayments).
                            ``(iii) Effective date.--
                                    ``(I) In general.--Subject to 
                                subclause (II), the requirement to 
                                collect the annual premium payment set 
                                forth under this subparagraph shall 
                                take effect on the date that is 180 
                                days after the date on which notice is 
                                provided to Congress under subparagraph 
                                (A).
                                    ``(II) Delay.--The effective date 
                                of the requirement to collect the 
                                annual premium payment set forth under 
                                this subparagraph shall be extended for 
                                an additional 180 days, if prior to the 
                                expiration of the initial 180-day time 
                                period described under subclause (I), 
                                the report of the Secretary required 
                                under paragraph (3)(A)--
                                            ``(aa) is submitted to 
                                        Congress; and
                                            ``(bb) finds that the 
                                        Mutual Mortgage Insurance 
                                        Fund--

                                                    ``(AA) has achieved 
                                                the capital ratio 
                                                required to be 
                                                maintained under 
                                                subsection (f); or

                                                    ``(BB) has a 
                                                capital ratio of not 
                                                less than 50 percent 
                                                but less than 100 
                                                percent of the capital 
                                                ratio required to be 
                                                maintained under 
                                                subsection (f), at 
                                                which point the 
                                                provisions of paragraph 
                                                (4)(D) shall be 
                                                applicable, except that 
                                                the provisions of 
                                                clause (iii) of such 
                                                paragraph (4)(D) shall 
                                                not be applicable and 
                                                that the premium 
                                                surcharge applicable to 
                                                such paragraph shall 
                                                take effect within 30 
                                                days of the issuance of 
                                                such report.

                                    ``(III) Reinstitution of 
                                surcharge.--Notwithstanding subclauses 
                                (I) and (II), if the next report of the 
                                Secretary on the annual independent 
                                actuarial study required under section 
                                202(a)(4) that is submitted after the 
                                report of the Secretary described in 
                                subclause (II) finds that the Mutual 
                                Mortgage Insurance Fund has a capital 
                                ratio of not less than 0 percent but 
                                less than 50 percent of the capital 
                                ratio required to be maintained under 
                                subsection (f), then the effective date 
                                of the requirement to collect the 
                                annual premium payment set forth under 
                                this subparagraph shall be the date 
                                that is 30 days after the date on which 
                                such report is submitted to Congress.
                            ``(iv) Cessation of application.--The 
                        Secretary shall not be required to collect the 
                        annual premium payment set forth under this 
                        subparagraph, if, at any time after the date on 
                        which such requirement has gone into effect, 
                        either--
                                    ``(I) the report of the Secretary 
                                on the annual independent actuarial 
                                study required under section 202(a)(4) 
                                finds that the Mutual Mortgage 
                                Insurance Fund--
                                            ``(aa) has achieved the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f); or
                                            ``(bb) has a capital ratio 
                                        of not less than 50 percent but 
                                        less than 100 percent of the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f), at which point the 
                                        provisions of paragraph (4)(D) 
                                        shall be applicable, except 
                                        that the provisions of clause 
                                        (iii) of such paragraph (4)(D) 
                                        shall not be applicable and 
                                        that the premium surcharge 
                                        applicable to such paragraph 
                                        shall take effect within 30 
                                        days of the issuance of such 
                                        report;
                                    ``(II) the report of the Secretary 
                                required under paragraph (3)(A) finds 
                                that the Mutual Mortgage Insurance 
                                Fund--
                                            ``(aa) has achieved the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f); or
                                            ``(bb) has a capital ratio 
                                        of not less than 50 percent but 
                                        less than 100 percent of the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f), at which point the 
                                        provisions of paragraph (4)(D) 
                                        shall be applicable, except 
                                        that the provisions of clause 
                                        (iii) of such paragraph (4)(D) 
                                        shall not be applicable and 
                                        that the premium surcharge 
                                        applicable to such paragraph 
                                        shall take effect within 30 
                                        days of the issuance of such 
                                        report; or
                                    ``(III) the Mutual Mortgage 
                                Insurance Fund has been designated as 
                                critically undercapitalized pursuant to 
                                paragraph (6) and the premium surcharge 
                                applicable to any such designation has 
                                taken effect.
                    ``(E) Required examination of underwriting 
                requirements.--If the Mutual Mortgage Insurance Fund is 
                designated as significantly undercapitalized pursuant 
                to this paragraph, the Secretary shall--
                            ``(i) not later than 30 days after the date 
                        on which notice is provided under subparagraph 
                        (A), examine all of its product lines, product 
                        or insurance features, and underwriting 
                        criteria for ways to strengthen and enhance 
                        such products, features, or criteria to limit 
                        losses to the Mutual Mortgage Insurance Fund;
                            ``(ii) in carrying out the requirement 
                        under clause (i), undertake such examination 
                        actions as are necessary to reduce the 
                        financial vulnerability of the Mutual Mortgage 
                        Insurance Fund from those risk characteristics 
                        or product lines that most contribute to the 
                        default of mortgages insured under section 202, 
                        including by reviewing the underwriting and 
                        servicing standards for mortgages to be insured 
                        by the Secretary, including, but not limited 
                        to, a review of--
                                    ``(I) the amount of cash or its 
                                equivalent required to be paid on 
                                account of the property subject to a 
                                mortgage that is an obligation of the 
                                Fund;
                                    ``(II) servicer compliance with any 
                                loan servicing or loss mitigation 
                                guidelines of the Secretary; and
                                    ``(III) economic conditions present 
                                in the housing market, provided there 
                                is a demonstrated likelihood that the 
                                policies of the Secretary would impact 
                                those economic conditions; and
                            ``(iii) submit to the Committee on Banking, 
                        Housing, and Urban Affairs of the Senate and 
                        the Committee on Financial Services of the 
                        House of Representatives any analysis, 
                        findings, or recommendations used or made by 
                        the Secretary to carry out the requirements of 
                        this subparagraph.
            ``(6) Corrective actions when fund is critically 
        undercapitalized.--
                    ``(A) Notice to congress.--Not later than 7 days 
                after the date on which the Secretary is informed that 
                the Mutual Mortgage Insurance Fund has a capital ratio 
                of less than 0 percent of the capital ratio required to 
                be maintained under subsection (f), the Secretary shall 
                notify the Chair and Ranking Member of the Committee on 
                Banking, Housing, and Urban Affairs of the Senate and 
                the Chair and Ranking Member of the Committee on 
                Financial Services of the House of Representatives of 
                such shortfall, and the date on which the Secretary was 
                informed of such shortfall.
                    ``(B) Submission of further revised capital 
                restoration plan.--Not later than 30 days after the 
                date on which notice is provided under subparagraph 
                (A), the Secretary shall jointly submit with the 
                Secretary of the Treasury to the Chair and Ranking 
                Member of the Committee on Banking, Housing, and Urban 
                Affairs of the Senate and the Chair and Ranking Member 
                of the Committee on Financial Services of the House of 
                Representatives a capital restoration plan, or a 
                revised capital restoration plan, including a timeline 
                for implementation of such plan, to achieve the capital 
                ratio required to be maintained under subsection (f). 
                The plan required under this subparagraph shall be 
                revised and submitted annually with the Secretary of 
                the Treasury, until such time as the Mutual Mortgage 
                Insurance Fund achieves the capital ratio required to 
                be maintained under subsection (f).
                    ``(C) Congressional testimony.--Not later than 45 
                days after the date on which notice is provided under 
                subparagraph (A), and every 180 days thereafter until 
                such time as the Mutual Mortgage Insurance Fund 
                achieves the capital ratio required to be maintained 
                under subsection (f), the Secretary and the Secretary 
                of the Treasury shall each provide testimony to the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services of the 
                House of Representatives on the capital status of the 
                Fund and the success or failure of the further revised 
                capital restoration plan submitted under subparagraph 
                (B).
                    ``(D) Imposition of premium surcharge.--
                            ``(i) In general.--Notwithstanding any 
                        limitation on the amount of any premium payment 
                        set forth under section 203(c), in addition to 
                        the premiums collected under subparagraphs (A), 
                        (B), and (C) of paragraph (2) of section 
                        203(c), if the Mutual Mortgage Insurance Fund 
                        is designated as critically undercapitalized 
                        pursuant to this paragraph, the Secretary shall 
                        establish and collect annual premium payments 
                        for any newly insured mortgage for which the 
                        Secretary collects an annual premium payment 
                        under section 203(c), except for those 
                        mortgages insured pursuant to section 255, in 
                        an amount described in clause (ii).
                            ``(ii) Amount of surcharge.--With respect 
                        to a mortgage, the amount described in this 
                        clause is 30 basis points of the remaining 
                        insured principal balance (excluding the 
                        portion of the remaining balance attributable 
                        to the premium collected under paragraph (2)(A) 
                        of section 203(c) and without taking into 
                        account delinquent payments or prepayments).
                            ``(iii) Effective date.--
                                    ``(I) In general.--Subject to 
                                subclause (II), the requirement to 
                                collect the annual premium payment set 
                                forth under this subparagraph shall 
                                take effect on the date that is 180 
                                days after the date on which notice is 
                                provided to Congress under subparagraph 
                                (A).
                                    ``(II) Delay.--The effective date 
                                of the requirement to collect the 
                                annual premium payment set forth under 
                                this subparagraph shall be extended for 
                                an additional 180 days, if prior to the 
                                expiration of the initial 180-day time 
                                period described under subclause (I), 
                                the report of the Secretary required 
                                under paragraph (3)(B)--
                                            ``(aa) is submitted to 
                                        Congress; and
                                            ``(bb) finds that the 
                                        Mutual Mortgage Insurance 
                                        Fund--

                                                    ``(AA) has achieved 
                                                the capital ratio 
                                                required to be 
                                                maintained under 
                                                subsection (f);

                                                    ``(BB) has a 
                                                capital ratio of not 
                                                less than 50 percent 
                                                but less than 100 
                                                percent of the capital 
                                                ratio required to be 
                                                maintained under 
                                                subsection (f), at 
                                                which point the 
                                                provisions of paragraph 
                                                (4)(D) shall be 
                                                applicable, except that 
                                                the provisions of 
                                                clause (iii) of such 
                                                paragraph (4)(D) shall 
                                                not be applicable and 
                                                that the premium 
                                                surcharge applicable to 
                                                such paragraph shall 
                                                take effect within 30 
                                                days of the issuance of 
                                                such report; or

                                                    ``(CC) has a 
                                                capital ratio of not 
                                                less than 0 percent but 
                                                less than 50 percent of 
                                                the capital ratio 
                                                required to be 
                                                maintained under 
                                                subsection (f), at 
                                                which point the 
                                                provisions of paragraph 
                                                (5)(D) shall be 
                                                applicable, except that 
                                                the provisions of 
                                                clause (iii) of such 
                                                paragraph (5)(D) shall 
                                                not be applicable and 
                                                that the premium 
                                                surcharge applicable to 
                                                such paragraph shall 
                                                take effect within 30 
                                                days of the issuance of 
                                                such report.

                                    ``(III) Reinstitution of 
                                surcharge.--Notwithstanding subclauses 
                                (I) and (II), if within 1 calendar year 
                                any report of the Secretary required 
                                under paragraph (3)(B) finds that the 
                                Mutual Mortgage Insurance Fund has a 
                                capital ratio of less than 0 percent of 
                                the capital ratio required to be 
                                maintained under subsection (f), then 
                                the effective date of the requirement 
                                to collect the annual premium payment 
                                set forth under this subparagraph shall 
                                be the date that is 30 days after the 
                                date on which such report is submitted 
                                to Congress.
                            ``(iv) Cessation of application.--The 
                        Secretary shall not be required to collect the 
                        annual premium payment set forth under this 
                        subparagraph, if, at any time after the date on 
                        which such requirement has gone into effect, 
                        either--
                                    ``(I) the report of the Secretary 
                                on the annual independent actuarial 
                                study required under section 202(a)(4) 
                                finds that the Mutual Mortgage 
                                Insurance Fund--
                                            ``(aa) has achieved the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f);
                                            ``(bb) has a capital ratio 
                                        of not less than 50 percent but 
                                        less than 100 percent of the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f), at which point the 
                                        provisions of paragraph (4)(D) 
                                        shall be applicable, except 
                                        that the provisions of clause 
                                        (iii) of such paragraph (4)(D) 
                                        shall not be applicable and 
                                        that the premium surcharge 
                                        applicable to such paragraph 
                                        shall take effect within 30 
                                        days of the issuance of such 
                                        report; or
                                            ``(cc) has a capital ratio 
                                        of not less than 0 percent but 
                                        less than 50 percent of the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f), at which point the 
                                        provisions of paragraph (5)(D) 
                                        shall be applicable, except 
                                        that the provisions of clause 
                                        (iii) of such paragraph (5)(D) 
                                        shall not be applicable and 
                                        that the premium surcharge 
                                        applicable to such paragraph 
                                        shall take effect within 30 
                                        days of the issuance of such 
                                        report; or
                                    ``(II) the report of the Secretary 
                                required under paragraph (3)(B) finds 
                                that the Mutual Mortgage Insurance 
                                Fund--
                                            ``(aa) has achieved the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f);
                                            ``(bb) has a capital ratio 
                                        of not less than 50 percent but 
                                        less than 100 percent of the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f), at which point the 
                                        provisions of paragraph (4)(D) 
                                        shall be applicable, except 
                                        that the provisions of clause 
                                        (iii) of such paragraph (4)(D) 
                                        shall not be applicable and 
                                        that the premium surcharge 
                                        applicable to such paragraph 
                                        shall take effect within 30 
                                        days of the issuance of such 
                                        report; or
                                            ``(cc) has a capital ratio 
                                        of not less than 0 percent but 
                                        less than 50 percent of the 
                                        capital ratio required to be 
                                        maintained under subsection 
                                        (f), at which point the 
                                        provisions of paragraph (5)(D) 
                                        shall be applicable, except 
                                        that the provisions of clause 
                                        (iii) of such paragraph (5)(D) 
                                        shall not be applicable and 
                                        that the premium surcharge 
                                        applicable to such paragraph 
                                        shall take effect within 30 
                                        days of the issuance of such 
                                        report.
                    ``(E) Required enhancements to underwriting 
                requirements.--If the Mutual Mortgage Insurance Fund is 
                designated as critically undercapitalized pursuant to 
                this paragraph, the Secretary shall--
                            ``(i) not later than 30 days after the date 
                        on which notice is provided under subparagraph 
                        (A), take such actions as necessary to revise 
                        its product lines, product or insurances 
                        features, or underwriting criteria in order to 
                        strengthen and enhance such products, features, 
                        or criteria to limit losses to the Mutual 
                        Mortgage Insurance Fund;
                            ``(ii) in carrying out the requirement 
                        under clause (i), undertake such actions as are 
                        necessary to reduce the financial vulnerability 
                        of the Mutual Mortgage Insurance Fund from 
                        those risk characteristics or product lines 
                        that most contribute to the default of 
                        mortgages insured under section 202, such 
                        actions--
                                    ``(I) may include, but are not 
                                limited to, a revision of the--
                                            ``(aa) amount of cash or 
                                        its equivalent required to be 
                                        paid on account of the property 
                                        subject to a mortgage that is 
                                        an obligation of the Fund;
                                            ``(bb) servicer standards 
                                        for compliance with any loan 
                                        servicing or loss mitigation 
                                        guidelines of the Secretary; 
                                        and
                                            ``(cc) treatment of loan 
                                        modification requests made by 
                                        borrowers having insurance 
                                        provided under this title 
                                        seeking assistance under a 
                                        modification program of the 
                                        Secretary; and
                                    ``(II) shall take into 
                                consideration economic conditions 
                                present in the housing market, provided 
                                there is a demonstrated likelihood that 
                                the policies of the Secretary would 
                                impact those economic conditions; and
                            ``(iii) submit to the Committee on Banking, 
                        Housing, and Urban Affairs of the Senate and 
                        the Committee on Financial Services of the 
                        House of Representatives any relevant final 
                        analysis used by the Secretary to carry out the 
                        requirements of this subparagraph.
            ``(7) Mandatory reevaluation.--Upon the Mutual Mortgage 
        Insurance Fund achieving the capital ratio required to be 
        maintained under subsection (f), the Secretary--
                    ``(A) shall review any actions taken pursuant to 
                this subsection;
                    ``(B) shall examine and determine whether--
                            ``(i) the need to maintain such action is 
                        necessary; and
                            ``(ii) the repeal, revision, or amendment 
                        of any such action can be carried out without 
                        having any adverse effect on the ability of the 
                        Fund to maintain the capital ratio required 
                        under subsection (f); and
                    ``(C) may, pursuant to any determination under 
                subparagraph (B) that no such adverse effects exist, 
                repeal, revise, or amend any such action as the 
                Secretary determines appropriate.''.

SEC. 10. STRESS TESTING OF THE MUTUAL MORTGAGE INSURANCE FUND.

    Section 202(a)(4) of the National Housing Act (12 U.S.C. 
1708(a)(4)) is amended by inserting after the last sentence the 
following: ``The report shall also include an alternative stress test 
scenario of the Fund based on relevant assumptions used in the annual 
Comprehensive Capital Analysis and Review stress tests performed by the 
Board of Governors of the Federal Reserve System. The alternative 
stress test scenario of the Fund shall be developed by the Secretary, 
in consultation with the Board of Governors of the Federal Reserve 
System, and appropriately tailored for purposes of assessing the 
financial status of the Fund. A summary of the results of the 
alternative stress test scenario of the Fund, as well as any other 
stress test scenario of the Fund that may be utilized, shall be 
included in the report.''.

SEC. 11. CONGRESSIONAL NOTIFICATION OF USE OF CERTAIN AUTHORITIES WITH 
              RESPECT TO THE FHA.

    (a) Notice by Treasury.--The Secretary of the Treasury shall 
provide written notice to the Committee on Banking, Housing, and Urban 
Affairs of the Senate and the Committee on Financial Services of the 
House of Representatives within 48 hours of the exercise of any 
authority granted under section 504(f) of the Federal Credit Reform Act 
of 1990 (2 U.S.C. 661c(f)) to carry out any transaction to fund any 
account established for the benefit of the Department of Housing and 
Development, the Federal Housing Administration, or the Mutual Mortgage 
Insurance Fund established under section 202 of the National Housing 
Act (12 U.S.C. 1708).
    (b) Notice by HUD.--The Secretary of Housing and Urban Development 
shall provide written notice to the Committee on Banking, Housing, and 
Urban Affairs of the Senate and the Committee on Financial Services of 
the House of Representatives within 48 hours of the receipt of any 
amounts described under subsection (a).
    (c) Inclusion in Required Reports.--The Secretary of Housing and 
Urban Development shall include, in any report required by law to be 
submitted to Congress, including any annual, quarterly, actuarial, or 
other report required to be submitted to the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the Committee on Financial 
Services of the House of Representative, the dollar amount of any 
amounts owed by the Secretary of Housing and Urban Development to the 
Treasury as a result of the exercise of any authority granted under 
section 504(f) of the Federal Credit Reform Act of 1990 (2 U.S.C. 
661c(f)).
    (d) Public Availability.--
            (1) Treasury.--As soon as is practicable, the notice 
        required by subsection (a) shall be made available to the 
        public and posted on the website of the Department of the 
        Treasury.
            (2) HUD.--As soon as is practicable, the notice required by 
        subsection (b) shall be made available to the public and posted 
        on the website of the Department of Housing and Urban 
        Development.

SEC. <DELETED>8</DELETED>12. ESTABLISHMENT OF DEPUTY ASSISTANT 
              SECRETARY AND CHIEF RISK OFFICER OF FHA.

    (a) In General.--Subsection (b) of section 4 of the Department of 
Housing and Urban Development Act (42 U.S.C. 3533(b)) is amended--
            (1) by striking ``There shall be'' and inserting the 
        following:
            ``(1) Establishment of commissioner.--There shall be''; and
            (2) by adding at the end the following:
            ``(2) Establishment of deputy assistant secretary and chief 
        risk officer.--
                    ``(A) Appointment.--There shall be in the 
                Department, within the Federal Housing Administration, 
                a Deputy Assistant Secretary and Chief Risk Officer, 
                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 
                to protect borrowers and taxpayers.
                    ``(B) Responsibilities.--The Deputy Assistant 
                Secretary and Chief Risk Officer established under 
                subparagraph (A) shall have--
                            ``(i) comprehensive risk management and 
                        regulatory knowledge in key risks, including 
                        credit, interest rate, and operational risk;
                            ``(ii) a sound understanding of the tools 
                        and methodologies used to measure and quantify 
                        risk, including the use of statistical models; 
                        and
                            ``(iii) a broad understanding and knowledge 
                        of mortgage industry best practices for risk 
                        management.
                    ``(C) Underwriting report.--
                            ``(i) In general.--Not later than 1 year 
                        after the date of enactment of the FHA Solvency 
                        Act of 2013, and annually thereafter, the 
                        Deputy Assistant Secretary and Chief Risk 
                        Officer (or, if not yet appointed, the 
                        Commissioner of the Federal Housing 
                        Administration) shall prepare a report on the 
                        underwriting standards for mortgages insured 
                        under title II of the National Housing Act (12 
                        U.S.C. 1707 et seq.), which shall be submitted 
                        by the Secretary to--
                                    ``(I) the Committee on Banking, 
                                Housing, and Urban Affairs of the 
                                Senate; and
                                    ``(II) the Committee on Financial 
                                Services of the House of 
                                Representatives.
                            ``(ii) Contents.--The report required under 
                        clause (i) shall include--
                                    ``(I) for all mortgages insured 
                                under title II of the National Housing 
                                Act that were made not less than 6 
                                months and not more than 36 months 
                                before the date of the report, an 
                                identification of the default risk 
                                characteristics as such characteristics 
                                existed at the time of origination of 
                                the mortgage based on risk factors that 
                                are commonly used in evaluating 
                                mortgage default risk, including--
                                            ``(aa) the current or 
                                        reasonably expected income and 
                                        financial resources of a 
                                        borrower;
                                            ``(bb) the employment 
                                        status of a borrower, if income 
                                        used under item (aa) is 
                                        employment income;
                                            ``(cc) the monthly mortgage 
                                        payment of a borrower under the 
                                        terms of a mortgage;
                                            ``(dd) the monthly payment 
                                        for any other loan held by the 
                                        borrower;
                                            ``(ee) the monthly payment 
                                        for any obligations related to 
                                        the mortgage;
                                            ``(ff) any other debt 
                                        obligations of a borrower, 
                                        including alimony and child 
                                        support;
                                            ``(gg) the monthly debt-to-
                                        income ratio or residual income 
                                        of a borrower;
                                            ``(hh) the credit history 
                                        of a borrower; and
                                            ``(ii) any other risk 
                                        factor, as determined 
                                        appropriate by the Secretary;
                                    ``(II) in tabular format, the 
                                number of mortgages insured under title 
                                II of the National Housing Act that are 
                                in default and the rate of default 
                                for--
                                            ``(aa) each for the 
                                        characteristics described in 
                                        subclause (I);
                                            ``(bb) any multi-way 
                                        combination of the 
                                        characteristics in subclause 
                                        (I) as determined appropriate 
                                        by the Secretary; and
                                            ``(cc) any additional 
                                        multi-way combination of the 
                                        characteristics in subclause 
                                        (I) as may be requested by the 
                                        Chair or Ranking Member of the 
                                        Committee on Banking, Housing, 
                                        and Urban Affairs of the Senate 
                                        or the Chair or Ranking Member 
                                        of the Committee on Financial 
                                        Services of the House of 
                                        Representatives, provided that 
                                        the Deputy Assistant Secretary 
                                        and Chief Risk Officer (or, if 
                                        not yet appointed, the 
                                        Commissioner of the Federal 
                                        Housing Administration) shall 
                                        be provided an additional 30 
                                        days from the date of receipt 
                                        of such request to satisfy such 
                                        request;
                                    ``(III) an analysis of mortgages 
                                insured under title II of the National 
                                Housing Act that were made not less 
                                than 6 months and not more than 36 
                                months before the date of the report 
                                and are in the lowest quartile and 
                                decile of loan performance, which shall 
                                include--
                                            ``(aa) a description of the 
                                        characteristics described in 
                                        subclause (I) for mortgages in 
                                        the lowest quartile and decile 
                                        of loan performance; and
                                            ``(bb) a comparison of the 
                                        characteristics described in 
                                        subclause (I) between mortgages 
                                        in the lowest quartile and 
                                        decile of loan performance and 
                                        all other mortgages insured 
                                        under title II of the National 
                                        Housing Act;
                                    ``(IV) recommendations by the 
                                Deputy Assistant Secretary and Chief 
                                Risk Officer for revisions to the 
                                underwriting standards of the Secretary 
                                for mortgages eligible to be insured 
                                under title II of the National Housing 
                                Act based on the findings of the 
                                report, and a response to those 
                                recommendations from the Secretary; and
                                    ``(V) a quantitative analysis of 
                                the effects of any revisions to the 
                                underwriting standards made by the 
                                Secretary in response to the findings 
                                of a prior report, and any 
                                recommendations of the Deputy Assistant 
                                Secretary and Chief Risk Officer in 
                                response to those revisions.''.
    (b) Conforming Amendment.--Section 202(a)(4) of the National 
Housing Act (12 U.S.C. 1708(a)(4)) is amended by inserting after the 
first sentence the following: ``The independent actuary commissioned to 
carry out the annual independent actuarial study required under this 
paragraph shall submit such study to the Deputy Assistant Secretary and 
Chief Risk Officer.''.

SEC. <DELETED>9</DELETED>13. DISCLOSURE OF EVENTS.

    Section 202(a)(4) of the National Housing Act (12 U.S.C. 
1708(a)(4)) is amended--
            (1) by striking ``The Secretary shall'' and inserting the 
        following:
            ``(1) In general.--The Secretary shall''; and
            (2) by adding at the end the following:
            ``(2) Disclosure of unforeseen events.--
                    ``(A) In general.--Prior to the submission of any 
                report of the Secretary under paragraph (1), the 
                Secretary shall require that the independent actuary 
                commissioned to perform the study required under 
                paragraph (1) disclose to the Secretary any events or 
                circumstances that occur after the study is completed 
                but before the report is submitted to Congress and that 
                would have resulted in changes to the inputs or 
                assumptions the actuary used to make forecasts about 
                the financial position of the Fund, if such changes are 
                sufficiently significant that a reasonable person would 
                expect them to substantially alter the actuary's 
                forecasts of the economic value of the Fund or the 
                actuary's projections relating to the capital reserve 
                ratio of the Fund.
                    ``(B) Informing congress.--The Secretary shall 
                inform Congress of any disclosures required under 
                subparagraph (A) either by--
                            ``(i) the submission of an addendum to the 
                        report of the Secretary required under 
                        paragraph (1); or
                            ``(ii) a letter from the Secretary 
                        addressed to the Committee on Banking, Housing, 
                        and Urban Affairs of the Senate and the 
                        Committee on Financial Services of the House of 
                        Representatives.''.

SEC. <DELETED>10</DELETED>14. GAO STUDY ON DISCLOSURES.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Comptroller General of the United States 
shall conduct a one-time study of the relevant information disclosed by 
the Secretary of Housing and Urban Development in conjunction with the 
release of the annual actuarial report of the Secretary required under 
section 202(a)(4) of the National Housing Act (12 U.S.C. 1708(a)(4)).
    (b) Required Consultation.--In conducting the study required under 
subsection (a), the Comptroller General shall consult, as appropriate, 
with prominent United States academics with national recognition and 
significant depth of experience in the housing market and the 
performance of high loan-to-value lending.
    (c) Required Review.--In carrying out the study required under 
subsection (a), the Comptroller General shall review and make 
recommendations regarding--
            (1) if a reasonable amount of relevant data and analyses 
        are being disclosed by the Secretary of Housing and Urban 
        Development to the public, for research, in conjunction with 
        the release of the annual actuarial report of the Secretary 
        required under section 202(a)(4) of the National Housing Act 
        (12 U.S.C. 1708(a)(4)); and
            (2) the disclosure by the Secretary of additional relevant 
        data and analyses to the public, for research purposes.
    (d) Follow up.--Not later than 12 months after the release of the 
study required under subsection (a), the Comptroller General shall 
conduct an additional report regarding the actions of the Secretary of 
Housing and Urban Development in carrying out any recommendations of 
the Comptroller General made pursuant to subsection (c)(2).

SEC. <DELETED>11</DELETED>15. STABILIZING THE HECM PROGRAM.

    (a) In General.--Section 255 of the National Housing Act (12 U.S.C. 
1715z-20) is amended--
            (1) in subsection (d)(8)--
                    (A) by inserting ``property maintenance,'' before 
                ``insurance''; <DELETED>and
                <DELETED>    (B) by inserting ``, including matters 
                that set forth terms and provisions for establishing 
                escrow accounts, performing financial assessments, or 
                limiting the amount of any payment made available under 
                the mortgage'' before the semicolon; and</DELETED>
                    (B) by inserting ``the establishment of escrow 
                accounts or set-asides, the limiting of amounts of any 
                payment made available under the mortgage,'' after 
                ``payment of taxes'';
                    (C) by striking ``may'' and inserting ``shall''; 
                and
                    (D) by inserting ``, including matters that set 
                forth the terms and provisions for performing financial 
                assessments'' before the semicolon;
        <DELETED>    (2) in subsection (h)--</DELETED>
                <DELETED>    (A) in paragraph (1), by striking ``; 
                and'' and inserting a semicolon;</DELETED>
                <DELETED>    (B) in paragraph (2), by striking the 
                period and inserting ``; and''; and</DELETED>
                <DELETED>    (C) by adding at the end the following new 
                paragraph:</DELETED>
        <DELETED>    ``(3) by notice or mortgagee letter, establish any 
        additional or alternative requirements that the Secretary, in 
        his or her discretion, determines necessary to more effectively 
        carry out the purposes of the program authorized under this 
        section, and any such notice or mortgagee letter shall take 
        effect upon issuance and expire not later than 24 months after 
        the date of issuance of the notice or mortgagee 
        letter.''.</DELETED>
            (2) in subsection (h)(3), as added by the Reverse Mortgage 
        Stabilization Act of 2013 (Public Law 113-29), by striking 
        ``any additional or alternative requirements'' and inserting 
        ``requirements pertaining to escrow accounts or set-asides, 
        financial assessments, or limiting the amount of any payment 
        made available under the mortgage, as authorized under 
        subsection (d)(8),''; and
            (3) by adding at the end the following:
    ``(s) Escrow Accounts or Set-asides.--In carrying out the program 
authorized under this section, the Secretary shall require the 
establishment of an escrow account or set-aside in any instance where 
the Secretary determines, after a financial assessment of the mortgagor 
has been completed, that such an account or set-aside would mitigate 
the risk of loss to the mortgagee, the mortgagor, the program, or the 
Mutual Mortgage Insurance Fund.''.
    (b) Limitation on Authority.--The authority of the Secretary of 
Housing and Urban Development to issue any notice or mortgagee letter 
pursuant to section 255(h)(3) of the National Housing Act, as added by 
the Reverse Mortgage Stabilization Act of 2013 (Public Law 113-29) 
shall expire not later than 24 months after the date of enactment of 
this Act.
    (<DELETED>b</DELETED>c) Rulemaking.--
            (1) In general.--In carrying out the authority provided to 
        the Secretary of Housing and Urban Development under section 
        255(h)(3) of the National Housing Act, <DELETED>as added by 
        subsection (a)</DELETED> as added by the Reverse Mortgage 
        Stabilization Act of 2013 (Public Law 113-29), the Secretary 
        shall--
                    (A) not later than 90 days after the issuance of 
                the notice or mortgagee letter pursuant to such 
                section, issue a notice of proposed rulemaking 
                addressing the same additional or alternative 
                requirements that are the subject of the notice or 
                mortgagee letter; and
                    (B) not later than 24 months after the issuance of 
                the notice of proposed rulemaking required under 
                subparagraph (A)--
                            (i) issue a final rule addressing the same 
                        additional or alternative requirements that are 
                        the subject of the notice or mortgagee letter; 
                        or
                            (ii) withdraw the notice or mortgagee 
                        letter.
            (2) Failure to comply.--If the Secretary of Housing and 
        Urban Development fails to issue a final rule by the end of the 
        period described under paragraph (1)(B)--
                    (A) the provisions of the notice or mortgagee 
                letter at issue shall become null and void;
                    (B) the Secretary--
                            (i) shall not have authority to reissue 
                        such notice or mortgagee letter; and
                            (ii) may only address the requirements that 
                        are the subject of the notice or mortgagee 
                        letter at issue through the promulgation of a 
                        regulation pursuant to the rulemaking 
                        requirements of title 5, United States Code; 
                        and
                    (C) the Secretary and the Director of the Office of 
                Management and Budget shall appear before the Committee 
                on Banking, Housing, and Urban Affairs of the Senate 
                and the Committee on Financial Services of the House of 
                Representatives to provide testimony explaining the 
                failure to comply with the requirements of this 
                subsection.
    (d) Additional Rulemaking Relating to Fixed-rate Full Draw 
Products.--Not later than 1 year after the date of enactment of this 
Act, the Secretary of Housing and Urban Development shall issue a 
notice of proposed rulemaking that--
            (1) eliminates the use, issuance, or establishment of any 
        standard fixed-rate full draw product offered under the home 
        equity conversion mortgage program authorized by section 255 of 
        the National Housing Act (12 U.S.C. 1715z-20); and
            (2) requires any other fixed-rate full draw product offered 
        under the home equity conversion mortgage program authorized by 
        section 255 of the National Housing Act not subject to 
        elimination under paragraph (1) to be based on a financial 
        assessment of the mortgagor.
    (e) Report.--
            (1) In general.--The Secretary of Housing and Urban 
        Development, on a quarterly basis, shall report to the 
        Committee on Banking, Housing, and Urban Affairs of the Senate 
        and the Committee on Financial Services of the House of 
        Representatives on the status and financial condition of each 
        distinct product offered under the home equity conversion 
        mortgage program authorized by section 255 of the National 
        Housing Act, including the HECM Standard Adjustable, HECM Saver 
        Fixed, and HECM Saver Adjustable products.
            (2) Contents of report.--The report required under 
        paragraph (1) shall set forth, for each product the--
                    (A) default rates under the product;
                    (B) rate of foreclosure on loans insured pursuant 
                to each product; and
                    (C) severity and extent of losses incurred on loans 
                insured pursuant to each product.
            (3) Further study.--Upon review of the information 
        collected pursuant to this subsection, if the Secretary of 
        Housing and Urban Development determines that any individual 
        product has a default rate measurably higher than the default 
        rates occurring in any other product or is experiencing losses 
        measurably higher than losses incurred in any other product, 
        the Secretary shall further study the product and include in 
        the next quarterly report due under paragraph (1)--
                    (A) information identifying and enumerating the 
                causes of such higher default rates and severity of 
                losses; and
                    (B) a detailed description of the actions to be 
                taken by the Secretary to correct such inefficiencies.

SEC. 16. PRINCIPAL LIMIT FACTOR FOR HECM PROGRAM.

    Section 255(m)(2) of the National Housing Act (12 U.S.C. 1715z-
20(m)(2)) is amended--
            (1) by striking ``paragraph (1) shall'' and inserting 
        ``paragraph (1)--''
                    ``(A) shall'';
            (2) in subparagraph (A), as so designated, by striking the 
        period at the end and inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(B) in the case of a fixed rate mortgage, may not 
                involve a principal limit (as defined in section 206.3 
                of title 24, Code of Federal Regulations) with a 
                principal limit factor in excess of .61.''.

SEC. <DELETED>12</DELETED>17. PUBLICATION OF FINAL RULES RELATING TO 
              LIMITING SELLER CONTRIBUTIONS TOWARDS PURCHASE RELATED 
              EXPENSES.

    (a) Required Completion of Rule.--Not later than 90 days after the 
date of enactment of this Act, the Secretary of Housing and Urban 
Development shall--
            (1) issue and publish its final rule to implement the 
        proposed rule entitled ``Federal Housing Administration (FHA) 
        Risk Management Initiatives: Revised Seller Concessions'' (77 
        Fed. Reg. 10695 (February 23, 2012)); and
            (2) ensure that the final rule required under paragraph 
        (1)--
                    (A) limits the amount a seller or interested third 
                party, or both, may contribute towards the purchase-
                related expenses of a borrower without reducing the 
                maximum insured amount of a mortgage insured under 
                title II of the National Housing Act (12 U.S.C. 1707 et 
                seq.); and
                    (B) defines the acceptable types of expenses that a 
                seller or interested third party, or both, may 
                contribute under subparagraph (A), such as closing 
                costs, prepaid expenses, discount points, up-front 
                mortgage insurance premiums, and interest rate 
                buydowns.
    (b) Failure To Comply.--If the Secretary of Housing and Urban 
Development fails to issue a final rule by the end of the period 
described under subsection (a), the Secretary and the Director of 
Office of Management and Budget shall appear before the Committee on 
Banking, Housing, and Urban Affairs of the Senate and the Committee on 
Financial Services of the House of Representatives to provide testimony 
explaining the failure to comply with the requirements of this section.

SEC. 18. GAO STUDY ON FHA LOAN LIMITS.

    (a) In General.--The Comptroller General of the United States shall 
conduct a one-time study to determine the appropriate dollar amount 
limitation on the maximum original principal obligation of a mortgage 
that may be insured under title II of the National Housing Act (12 
U.S.C. 1701 et seq.).
    (b) Required Review.--In carrying out the study required under 
subsection (a), the Comptroller General shall review and make 
recommendations regarding the appropriate methodology for further 
adjustments to the dollar amount limitation, including adjustments for 
inflation, varying home prices across different regions of the United 
States, and the effects of economic downturns.
    (c) Report.--Not later than 1 year after the date of enactment of 
this Act, the Comptroller General shall submit a report to the 
Committee on Banking, Housing, and Urban Affairs of the Senate and the 
Committee on Financial Services of the House of Representatives on the 
results of the study conducted pursuant to subsection (a), including 
its reasons justifying its determination.
                                                       Calendar No. 275

113th CONGRESS

  1st Session

                                S. 1376

                          [Report No. 113-129]

_______________________________________________________________________

                                 A BILL

    To improve the Federal Housing Administration and to ensure the 
solvency of the Mutual Mortgage Insurance Fund, and for other purposes.

_______________________________________________________________________

                           December 19, 2013

                        Reported with amendments