[Congressional Record Volume 153, Number 175 (Tuesday, November 13, 2007)]
[Senate]
[Pages S14287-S14300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BARRASSO (for himself and Mr. Enzi):
  S. 2334. A bill to withhold 10 percent of the Federal funding 
apportioned for highway construction and maintenance from States that 
issue driver's licenses to individuals without verifying the legal 
status of such individuals; read the first time.
  Mr. BARRASSO. Mr. President, I would like to take a few minutes today 
to discuss the issue of giving legal government documents to people who 
are in the United States illegally.
  There is no question our immigration process is broken. People who 
attempt to enter the United States legally--to work, to join their 
families--well, they often face bureaucratic redtape and incredible 
delays. Legal entry into the United States has become more difficult as 
a result of the events of September 11, 2001. There is no question that 
should be the case.
  Unfortunately, illegal entry remains a significant problem. It is 
estimated that between 13 million and 20 million people are illegally 
in the United States. The fact that the estimates are so far apart 
should in and of itself give us all cause for concern.
  What should also give us concern is that there are efforts in the 
United States today to provide driver's licenses to those in this 
country illegally. I believe such efforts are inappropriate and are a 
serious threat to our national security.
  There is no question that legally issuing driver's licenses or other 
government documents to people who are here illegally puts our entire 
Nation at risk. I am troubled by those who argue that we will be safer 
if we provide official government papers to those who have come to our 
country illegally. I believe this is the wrong path. It is the wrong 
path for us to take, and it is contrary to the lessons we should have 
learned from the events of September 11.
  To receive a driver's license, any State used to require proof that 
someone could drive and proof of identity through a legally issued 
government document. This was often done through a notarized birth 
certificate or a passport. Over time, criminals have found ways to 
forge these documents, and they made it easier for individuals to 
illegally acquire identification, such as a driver's license.
  Some of the 9/11 hijackers had acquired identification documents 
through forged papers. It should be a wake-up call to all of us. More 
must be done to prevent this from happening in the future.
  This past year, in the Wyoming State Senate, I worked with 
Representative Pete Illoway to pass legislation making it a crime to 
use false documents to conceal a person's identity, to conceal a 
person's citizenship, or to conceal their resident alien status in 
order to obtain public resources or public services. We specifically 
identified driver's licenses in the law in Wyoming because of the 
significance that document plays in allowing individuals to freely move 
about the country. The bill was passed by the legislature and was 
signed into law. The value of legally issued driver's licenses cannot 
be underestimated in

[[Page S14288]]

maintaining our national security. In Wyoming, we get it.
  I, along with many people in America, cannot understand the arguments 
supporting the issuance of driver's licenses to illegal immigrants. To 
me, giving driver's licenses to illegal immigrants will compromise our 
national security.
  We have an immediate situation before us where illegal immigrants in 
certain parts of the country will be provided government documents that 
will allow them to freely travel all across our great Nation. It is 
inconceivable to me that this will make our Nation safer.
  The Federal Government has a responsibility to secure our borders and 
to secure the interior of the United States. Though that effort has 
come up short over the years, it does not mean we should throw up our 
hands and do nothing. I believe we must take action--aggressive 
action--to address this issue.
  Today, I am introducing a straightforward legislative proposal. It is 
S. 2334. It is a straightforward legislative proposal to deal with 
States that provide driver's licenses to those who are in our Nation 
illegally. Simply stated, my legislation would require States to verify 
lawful presence in the United States before granting a driver's 
license. States that refuse would lose a part of their Federal 
transportation funds, and those Federal transportation funds would then 
be redistributed to the States that do follow the law.
  I do not know if this is a perfect solution. I do know that issuing 
driver's licenses to illegal immigrants is wrong. Rewarding illegal 
immigrants--people who have broken into our country--with a driver's 
license is a flawed idea. It is an idea that deserves Congress's 
immediate attention. We cannot allow our country to go down this path. 
The time for action is today.
                                 ______
                                 
      By Ms. LANDRIEU:
  S. 2335. A bill to amend the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act to provide adequate case management services; 
to the Committee on Homeland Security and Governmental Affairs.
  Ms. LANDRIEU. Mr. President, almost a year ago, we passed a Homeland 
Security Appropriations bill. Included in that very large piece of 
legislation was a small provision that probably went beneath most 
people's notice.
  Section 426 of that bill allows Federal funding to provide case 
management services after a disaster. That has been a tragically absent 
component to our circumstances in Louisiana. Educated people struggle 
to find their way through the Byzantine morass that is FEMA individual 
assistance program, the Small Business Administration's loan program, 
the Road Home program and their own insurance company's requirements. 
Think of how all of this seems to working people who are encountering 
Federal bureaucracy for the first time.
  So, we need case management badly. Unfortunately, Section 426 fails 
the people of my State in two important ways. First, and this predates 
the change in Congressional leadership, it allows for case management 
services--but only for future disasters. The legislation that I am 
introducing today makes Section 426 retroactive to 2005 and will now 
cover Hurricanes Rita and Katrina, as well as succeeding disasters.
  Two years after the disaster, we only distributed half of the Road 
Home grants. It is obvious that we will need case management services 
for years to come in Louisiana. It is only common sense to direct these 
resources to the Gulf Coast today, where they are direly needed.
  However, an equally important failing of Section 426 comes from its 
implementation. In New Orleans and throughout the Gulf Coast, the 
energy for the recovery effort has truly come from America's faith 
community. You can see their good work in neighborhoods that are 
returning in my hometown. You can see them with hammers and nails in 
the Gulf Coast towns of Mississippi, and you can find them helping 
thousands of victims of Katrina and Rita to navigate the bureaucratic 
hurdles between them, and rebuilding their lives.
  As we have not had the benefit of Government supported case 
management, nonprofits and the faith-based community have stepped in to 
fill the obvious void. Unfortunately, the same community that has been 
such a lifeline to the people of the Gulf Coast has been barred from 
competing for Federal funding under Section 426.
  This is a shocking turnaround for an administration that has put so 
much emphasis on including the faith-based community in Government 
programming. I believe that the instinct to incorporate programs that 
are organic to the community, and are already working, was a good one. 
It is clear to me that case management services are prime examples of 
programs that should incorporate the faith-based community.
  So, as you can see, circumstances have compelled me to clarify 
Congressional intent. The bill I am introducing today does two things. 
First, it makes Section 426 retroactive to 2005, so that it may cover 
Hurricanes Katrina and Rita. Secondly, it strikes the phrase 
``qualified private organizations'' which has been misinterpreted to 
exclude the faith-based community. That phrase has been replaced with 
``nonprofit or faith-based organization with experience in case 
management services.'' It is unfortunate that we have arrived at the 
point where a legislative solution is needed. But nevertheless, I 
believe that this legislation resolves the problem, and will give 
comfort to the people of the Gulf Coast that Federal monies are being 
spent wisely, and given to those that have shown themselves capable and 
willing to help.
  Mr. President, I ask unanimous consent that the text of the bill and 
letters of support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2335

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Case Management Services 
     Improvement Act of 2007''.

     SEC. 2. CASE MANAGEMENT SERVICES.

       (a) In General.--Section 426 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 
     5189d) is amended by striking ``qualified private 
     organizations'' and inserting ``nonprofit or faith-based 
     organizations with experience in case management services''.
       (b) Applicability.--Section 426 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 
     5189d), as amended by this Act, shall apply to any major 
     disaster (as that term is defined in section 102 of the 
     Robert T. Stafford Disaster Relief and Emergency Assistance 
     Act (42 U.S.C. 5122)) declared on or after January 1, 2005.
                                  ____

                                                  United Methodist


                                          Committee On Relief,

                                 Washington, DC, October 25, 2007.
     Hon. Mary Landrieu,
     U.S. Senate,
     Washington, DC.
       Dear Senator Landrieu, I am writing on behalf of the United 
     Methodist Committee on Relief (UMCOR), to express my strong 
     support for the Case Management Services Improvement Act of 
     2007.
       UMCOR is the not-for-profit global humanitarian aid 
     organization of the United Methodist Church, working in more 
     than 80 countries worldwide, For domestic disasters, UMCOR 
     maintains a corps of trained disaster response specialists 
     for quick reinforcement of local efforts, and keeps a supply 
     of relief materials in warehouses to be dispatched as 
     required. These practices proved invaluable in the aftermath 
     of Hurricane Katrina when, as one of the founding members of 
     the Katrina Aid Today (KAT) coalition, UMCOR played a vital 
     role in helping nearly 200,000 individuals rebuild their 
     lives. UMCOR also served as the KAT's fiscal agent, 
     overseeing the administration of over $70 million in federal 
     funding and an addition contribution of over $70 million in 
     private dollars to Hurricane Katrina's victims.
       The broad language currently contained within the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act offers 
     federal funding to ``qualified private organizations'' to 
     provide case management services to individuals affected by 
     major disasters. Unfortunately, this language does not 
     recognize the extent to which organizations such as UMCOR 
     have efficiently and effectively provided these services in 
     the past. Through the Case Management Services Improvement 
     Act of 2007, you recognize and highlight the value of the 
     disaster-related case management services provided by 
     mission-driven, faith-based or non-profit organizations, 
     value that can not be duplicated by less-experienced, profit-
     driven private companies.
       Please let me know if the United Methodist Committee on 
     Relief, or the other members of Katrina Aid Today, can be of 
     any

[[Page S14289]]

     assistance as you proceed in getting this important 
     legislation passed. Again, we appreciate the Introduction of 
     this significant bill.
           Sincerely,

                                          F. Thomas Hazelwood,

                                      Assistant General Secretary,
     UMCOR Emergency Services U.S.
                                  ____

                                                 October 25, 2007.
     Hon. Mary Landrieu
     U.S. Senate,
     Washington, DC.
       Dear Senator Landrieu, On behalf of Lutheran Disaster 
     Response, I am writing to express my full support for the 
     Case Management Services Improvement Act of 2007. This 
     legislation is of great importance to all individuals 
     affected by major disasters, as it will allow them to receive 
     case management services from the non-profit and faith-based 
     organizations that have a long and successful history of 
     carrying out these activities,
       Lutheran Disaster Response (LDR) is a mission-driven 
     collaborative ministry of the Evangelical Lutheran Church in 
     America and The Lutheran Church-Missouri Synod. We have a 
     long history of effective case management following major 
     disasters, and in partnership with other faith-based, non-
     profit voluntary organizations such as the United Methodist 
     Committee on Relief, played a vital role in helping nearly 
     200,000 individuals rebuild their lives in the aftermath of 
     Hurricane Katrina, This collaboration of non-profit voluntary 
     agencies, known as Katrina Aid Today, established a strong 
     partnership with FEMA and effectively administered over $70 
     million in federal funding to disaster victims. Additionally, 
     we matched this federal funding with another $70 million in 
     private dollars, providing a comprehensive continuum of care 
     that addressed the needs of each survivor,
       As you know, the Robert T. Stafford Disaster Relief and 
     Emergency Assistance Act currently offers federal funding to 
     ``qualified private organizations'' to provide case 
     management services to individuals affected by major 
     disasters, This broad language does not recognize the 
     organizations that have provided these services efficiently 
     in the past, such as Lutheran Disaster Response. Through the 
     Case Management Services Improvement Act of 2007, you 
     recognize and highlight the value of disaster-related case 
     management services provided by mission-driven, faith-based 
     or non-profit organizations, rather than leaving these vital 
     responsibilities to less- experienced private companies that 
     answer to shareholders,
       Please let me know if Lutheran Disaster Response, or the 
     other members of Katrina Aid Today, can be of any assistance 
     as you proceed in getting this important legislation passed. 
     Again, we appreciate the introduction of this significant 
     bill.
           Sincerely,

                                              Heather Feltman,

                                                         Director,
     Lutheran Disaster Response.
                                  ____



                                            Katrina Aid Today,

                                 Washington, DC, October 25, 2007.
     Hon. Mary Landrieu,
     U.S. Senate,
     Washington, DC.
       Dear Senator Landrieu: I am writing to express my full 
     support for the Case Management Services Improvement Act of 
     2007 on behalf of United Methodist Committee on Relief's 
     Katrina Aid Today program. This legislation is of great 
     importance to all individuals affected by major disasters, as 
     it will allow them to receive case management services from 
     the non-profit and faith-based organizations that have a long 
     and successful history of carrying out these activities.
       Katrina Aid Today (KAT) is a consortium of 10 social 
     service and voluntary organizations, dedicated to helping 
     survivors navigate the system as they recovered from this 
     tragic disruption of their lives. Member organizations 
     include Catholic Charities USA, Lutheran Disaster Response, 
     Episcopal Relief & Development, the United Methodist 
     Committee on Relief, and the Salvation Army, among others. 
     Following Hurricane Katrina, KAT administered over $70 
     million in federal funding for disaster case management, 
     helping nearly 200,000 individuals rebuild their lives. 
     Additionally, the partner organizations within KAT matched 
     this federal funding with another $70 million in private 
     dollars, providing a comprehensive continuum of care that 
     addressed the needs of each survivor.
       Currently, the Robert T. Stafford Disaster Relief and 
     Emergency Assistance Act overlooks the valuable work of the 
     faith-based organizations that have effectively provided 
     these services in the past, by broadly allowing ``qualified 
     private organizations'' to provide case management services 
     to individuals affected by major disasters. In the Case 
     Management Services Improvement Act of 2007, you recognize 
     the value in having disaster-related case management services 
     provided by mission-driven, faith-based or non-profit 
     organizations such as KAT, rather than leaving these vital 
     responsibilities to less-experienced private companies that 
     must answer to shareholders.
       Please let us know if any of the members of Katrina Aid 
     Today can be of any assistance as you proceed in passing the 
     Case Management Services Improvement Act of 2007. Thank you 
     for your efforts and time on this matter.
           Sincerely,

                                                      Jim Cox,

                                                            UMCOR,
                                               Executive Director.
                                 ______
                                 
      By Mrs. MURRAY (for herself and Ms. Cantwell):
  S. 2336. A bill to designate the Port Angeles Federal Building in 
Port Angeles, Washington, as the ``Richard B. Anderson Federal 
Building''; to the Committee on Environment and Public Works.
  Mrs. MURRAY. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2336

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

     SECTION 1. RICHARD B. ANDERSON FEDERAL BUILDING.

       (a) Designation.--The Federal building located at 138 West 
     First Street, Port Angeles, Washington, shall be known and 
     designated as the ``Richard B. Anderson Federal Building''.
       (b) References.--Any reference in a law, map, regulation, 
     document, paper, or other record of the United States to the 
     Federal building referred to in subsection (a) shall be 
     deemed to be a reference to the ``Richard B. Anderson Federal 
     Building''.
                                 ______
                                 
      By Mr. GRASSLEY (for himself, Mrs. Lincoln, Ms. Snowe, Ms. 
        Stabenow, and Mr. Smith):
  S. 2337. A bill to amend the Internal Revenue Code of 1986 to allow 
long-term care insurance to be offered under cafeteria plans and 
flexible spending arrangements and to provide additional consumer 
protections for long-term care insurance; to the Committee on Finance.
  Mr. GRASSLEY. Mr. President, Saturday, November 10, marked the last 
day of Long-Term Care Awareness Week--this was a week where our Nation 
recognized that now more than ever, Americans need to pay attention to 
long-term care issues. My colleagues Senators Lincoln, Snowe, Stabenow, 
Smith and I couldn't think of a better way to cap off the Week than by 
introducing the Long-Term Care Affordability and Security Act of 2007.
  Our Nation is graying. Research shows that the elderly population 
will nearly double by 2030. By 2050, the population of those aged 85 
and older will have grown by more than 300 percent. Research also shows 
that the average age at which individuals need long-term care services, 
such as home health care or a private room at a nursing home, is 75. 
Currently, the average annual cost for a private room at a nursing home 
is more than $75,000. This cost is expected to be in excess of $140,000 
by 2030.
  Based on these facts, we can see that our Nation needs to prepare its 
citizens for the challenges they may face in old age. One way to 
prepare for these challenges is by encouraging more Americans to obtain 
long-term care insurance coverage. To date, only 10 percent of seniors 
have long-term care insurance policies, and only 7 percent of all 
private-sector employees are offered long-term care insurance as a 
voluntary benefit.
  Under current law, employees may pay for certain health-related 
benefits, which may include health insurance premiums, co-pays, and 
disability or life insurance, on a pre-tax basis under cafeteria plans 
and flexible spending arrangements, FSAs. Essentially, an employee may 
elect to reduce his or her annual salary to pay for these benefits, and 
the employee doesn't pay taxes on the amounts used to pay these costs. 
Employees, however, are explicitly prohibited from paying for the cost 
of long-term care insurance coverage tax-free.
  Our bill would allow employers, for the first time, to offer 
qualified long-term care insurance to employees under FSAs and 
cafeteria plans. This means employees would be permitted to pay for 
qualified long-term care insurance premiums on a tax-free basis. This 
would make it easier for employees to purchase long-term care 
insurance, which many find unaffordable. This should also encourage 
younger individuals to purchase long-term care insurance. The younger 
the person is at the time the long-care insurance contract is 
purchased, the lower the insurance premium.
  An aging Nation has no time to waste in preparing for long-term care, 
and the need to help people afford long-term care is more pressing than 
ever. I look forward to working with Senators Lincoln, Snowe, Stabenow, 
Smith and

[[Page S14290]]

all of our Senate colleagues toward enacting the Long-Term Care 
Affordability and Security Act of 2007.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2337

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Long-Term Care Affordability 
     and Security Act of 2007''.

     SEC. 2. TREATMENT OF PREMIUMS ON QUALIFIED LONG-TERM CARE 
                   INSURANCE CONTRACTS.

       (a) In General.--
       (1) Cafeteria plans.--The last sentence of section 125(f) 
     of the Internal Revenue Code of 1986 (defining qualified 
     benefits) is amended by inserting before the period at the 
     end ``; except that such term shall include the payment of 
     premiums for any qualified long-term care insurance contract 
     (as defined in section 7702B) to the extent the amount of 
     such payment does not exceed the eligible long-term care 
     premiums (as defined in section 213(d)(10)) for such 
     contract''.
       (2) Flexible spending arrangements.--Section 106 of such 
     Code (relating to contributions by an employer to accident 
     and health plans) is amended by striking subsection (c) and 
     redesignating subsection (d) as subsection (c).
       (b) Conforming Amendments.--
       (1) Section 6041 of such Code is amended by adding at the 
     end the following new subsection:
       ``(h) Flexible Spending Arrangement Defined.--For purposes 
     of this section, a flexible spending arrangement is a benefit 
     program which provides employees with coverage under which--
       ``(1) specified incurred expenses may be reimbursed 
     (subject to reimbursement maximums and other reasonable 
     conditions), and
       ``(2) the maximum amount of reimbursement which is 
     reasonably available to a participant for such coverage is 
     less than 500 percent of the value of such coverage.

     In the case of an insured plan, the maximum amount reasonably 
     available shall be determined on the basis of the underlying 
     coverage.''.
       (2) The following sections of such Code are each amended by 
     striking ``section 106(d)'' and inserting ``section 106(c)'': 
     sections 223(b)(4)(B), 223(d)(4)(C), 223(f)(3)(B), 
     3231(e)(11), 3306(b)(18), 3401(a)(22), 4973(g)(1), and 
     4973(g)(2)(B)(i).
       (3) Section 6041(f)(1) of such Code is amended by striking 
     ``(as defined in section 106(c)(2))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 3. ADDITIONAL CONSUMER PROTECTIONS FOR LONG-TERM CARE 
                   INSURANCE.

       (a) Additional Protections Applicable to Long-Term Care 
     Insurance.--Subparagraphs (A) and (B) of section 7702B(g)(2) 
     of the Internal Revenue Code of 1986 (relating to 
     requirements of model regulation and Act) are amended to read 
     as follows:
       ``(A) In general.--The requirements of this paragraph are 
     met with respect to any contract if such contract meets--
       ``(i) Model regulation.--The following requirements of the 
     model regulation:

       ``(I) Section 6A (relating to guaranteed renewal or 
     noncancellability), other than paragraph (5) thereof, and the 
     requirements of section 6B of the model Act relating to such 
     section 6A.
       ``(II) Section 6B (relating to prohibitions on limitations 
     and exclusions) other than paragraph (7) thereof.
       ``(III) Section 6C (relating to extension of benefits).
       ``(IV) Section 6D (relating to continuation or conversion 
     of coverage).
       ``(V) Section 6E (relating to discontinuance and 
     replacement of policies).
       ``(VI) Section 7 (relating to unintentional lapse).
       ``(VII) Section 8 (relating to disclosure), other than 
     sections 8F, 8G, 8H, and 8I thereof.
       ``(VIII) Section 11 (relating to prohibitions against post-
     claims underwriting).
       ``(IX) Section 12 (relating to minimum standards).
       ``(X) Section 13 (relating to requirement to offer 
     inflation protection).
       ``(XI) Section 25 (relating to prohibition against 
     preexisting conditions and probationary periods in 
     replacement policies or certificates).
       ``(XII) The provisions of section 28 relating to contingent 
     nonforfeiture benefits, if the policyholder declines the 
     offer of a nonforfeiture provision described in paragraph (4) 
     of this subsection.

       ``(ii) Model act.--The following requirements of the model 
     Act:

       ``(I) Section 6C (relating to preexisting conditions).
       ``(II) Section 6D (relating to prior hospitalization).
       ``(III) The provisions of section 8 relating to contingent 
     nonforfeiture benefits, if the policyholder declines the 
     offer of a nonforfeiture provision described in paragraph (4) 
     of this subsection.

       ``(B) Definitions.--For purposes of this paragraph--
       ``(i) Model regulation.--The term `model regulation' means 
     the long-term care insurance model regulation promulgated by 
     the National Association of Insurance Commissioners (as 
     adopted as of December 2006).
       ``(ii) Model act.--The term `model Act' means the long-term 
     care insurance model Act promulgated by the National 
     Association of Insurance Commissioners (as adopted as of 
     December 2006).
       ``(iii) Coordination.--Any provision of the model 
     regulation or model Act listed under clause (i) or (ii) of 
     subparagraph (A) shall be treated as including any other 
     provision of such regulation or Act necessary to implement 
     the provision.
       ``(iv) Determination.--For purposes of this section and 
     section 4980C, the determination of whether any requirement 
     of a model regulation or the model Act has been met shall be 
     made by the Secretary.''.
       (b) Excise Tax.--Paragraph (1) of section 4980C(c) of the 
     Internal Revenue Code of 1986 (relating to requirements of 
     model provisions) is amended to read as follows:
       ``(1) Requirements of model provisions.--
       ``(A) Model regulation.--The following requirements of the 
     model regulation must be met:
       ``(i) Section 9 (relating to required disclosure of rating 
     practices to consumer).
       ``(ii) Section 14 (relating to application forms and 
     replacement coverage).
       ``(iii) Section 15 (relating to reporting requirements).
       ``(iv) Section 22 (relating to filing requirements for 
     marketing).
       ``(v) Section 23 (relating to standards for marketing), 
     including inaccurate completion of medical histories, other 
     than paragraphs (1), (6), and (9) of section 23C.
       ``(vi) Section 24 (relating to suitability).
       ``(vii) Section 27 (relating to the right to reduce 
     coverage and lower premiums).
       ``(viii) Section 31 (relating to standard format outline of 
     coverage).
       ``(ix) Section 32 (relating to requirement to deliver 
     shopper's guide).

     The requirements referred to in clause (vi) shall not include 
     those portions of the personal worksheet described in 
     Appendix B relating to consumer protection requirements not 
     imposed by section 4980C or 7702B.
       ``(B) Model act.--The following requirements of the model 
     Act must be met:
       ``(i) Section 6F (relating to right to return).
       ``(ii) Section 6G (relating to outline of coverage).
       ``(iii) Section 6H (relating to requirements for 
     certificates under group plans).
       ``(iv) Section 6J (relating to policy summary).
       ``(v) Section 6K (relating to monthly reports on 
     accelerated death benefits).
       ``(vi) Section 7 (relating to incontestability period).
       ``(vii) Section 9 (relating to producer training 
     requirements).
       ``(C) Definitions.--For purposes of this paragraph, the 
     terms `model regulation' and `model Act' have the meanings 
     given such terms by section 7702B(g)(2)(B).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to policies issued more than 1 year after the 
     date of the enactment of this Act.
                                 ______
                                 
      By Mr. REID (for Mr. Dodd):
  S. 2338. An original bill to modernize and update the National 
Housing Act and enable the Federal Housing Administration to more 
effectively reach underserved borrowers, and for other purposes; from 
the Committee on Banking, Housing, and Urban Affairs; placed on the 
calendar.
  Mr. DODD. Mr. President, today I come to the floor to report the FHA 
Modernization Act of 2007. This is vitally important legislation, and I 
want to take a moment to express my thanks to Senator Martinez for his 
very close collaboration and support in putting this legislation 
together. This is an original bill produced by the Senate Banking 
Committee, and as such, the rules prohibit us from obtaining 
cosponsors. However, I would like to recognize Senators Reed, Schumer, 
Bayh, Menendez, Brown, Kerry, Murray, Whitehouse, Martinez, Voinovich, 
Cornyn, and Coleman for their support of this bill and for their offers 
of cosponsorship.
  The mortgage markets--particularly the subprime market--are in the 
midst of a meltdown. Historically high default and foreclosure rates 
generated, in significant part, by abusive and predatory lending 
practices, are threatening millions of American families with the loss 
of their most significant financial asset--their homes--at a cost of 
over $160 billion in home equity, according to testimony presented 
before the Banking Committee.
  While these problems are addressed, we need to make sure that credit 
is available, including for subprime borrowers, on fair terms so that 
the people of this country have an opportunity to build wealth for the 
future.
  A revitalized, strengthened, and modernized FHA can be and, under 
this legislation, will be a source of this constructive, wealth-
building credit, both

[[Page S14291]]

for new homeowners and for people who are seeking a way out of the 
abusive loans in which they are currently trapped.
  In short, by providing low-cost credit, without prepayment penalties, 
without teaser rates, and without other deceptive terms, FHA is a part 
of the solution to the predatory lending crisis we are experiencing.
  Moreover, FHA has traditionally been an important tool for creating 
new minority homeowners, and for lower-, moderate-, and middle-income 
families to become homeowners. By modernizing FHA, we will help 
millions of families achieve their American Dream. FHA is in a strong 
position to play this role: an independent audit report indicates that 
FHA has a record $22 billion in capital, and a capital ratio, 6.82 
percent, that is more than three times higher the mandated level of 2 
percent.
  The bill passed by the Committee, and which is being filed today does 
a number of important things: it raises FHA loan limits so that the 
program can reach many more people; it lowers downpayment requirements, 
while still ensuring that people will have a real stake in their new 
homes; it expands the reverse mortgage program for elderly homeowners 
by both raising the loan limit and removing the current cap on the 
number of these mortgages FHA can insure. I know Senators Reed, Crapo, 
and Allard strongly support this program; it reduces the origination 
fee that elderly homeowners can be charged for these mortgages by one-
quarter, from 2 percent to 1.5 percent making it more affordable for 
seniors to take out these loans; and, it includes a major overhaul of 
FHA's manufactured housing program, authored by our colleagues Senators 
Bayh and Allard.
  Taken together, these changes will help make FHA a more relevant and 
effective program. This legislation is supported by the Mortgage 
Bankers Association, the National Association of Home Builders, the 
National Association of Realtors, AARP, the Manufactured Housing 
Association, the Manufactured Housing Institute, and others. I urge my 
colleagues to support this bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
placed in the Record, as follows:

                                S. 2338

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

Sec. 1. Short title and table of contents.

                TITLE I--BUILDING AMERICAN HOMEOWNERSHIP

Sec. 101. Short title.
Sec. 102. Maximum principal loan obligation.
Sec. 103. Cash investment requirement and prohibition of seller-funded 
              downpayment assistance.
Sec. 104. Mortgage insurance premiums.
Sec. 105. Rehabilitation loans.
Sec. 106. Discretionary action.
Sec. 107. Insurance of condominiums.
Sec. 108. Mutual Mortgage Insurance Fund.
Sec. 109. Hawaiian home lands and Indian reservations.
Sec. 110. Conforming and technical amendments.
Sec. 111. Insurance of mortgages.
Sec. 112. Home equity conversion mortgages.
Sec. 113. Energy efficient mortgages program.
Sec. 114. Pilot program for automated process for borrowers without 
              sufficient credit history.
Sec. 115. Homeownership preservation.
Sec. 116. Use of FHA savings for improvements in FHA technologies, 
              procedures, processes, program performance, staffing, and 
              salaries.
Sec. 117. Post-purchase housing counseling eligibility improvements.
Sec. 118. Pre-purchase homeownership counseling demonstration.
Sec. 119. Fraud Prevention.
Sec. 120. Limitation on mortgage insurance premium increases.
Sec. 121. Savings provision.
Sec. 122. Implementation.

           TITLE II--MANUFACTURED HOUSING LOAN MODERNIZATION

Sec. 201. Short title.
Sec. 202. Purposes.
Sec. 203. Exception to limitation on financial institution portfolio.
Sec. 204. Insurance benefits.
Sec. 205. Maximum loan limits.
Sec. 206. Insurance premiums.
Sec. 207. Technical corrections.
Sec. 208. Revision of underwriting criteria.
Sec. 209. Prohibition against kickbacks and unearned fees.
Sec. 210. Leasehold requirements.

                TITLE I--BUILDING AMERICAN HOMEOWNERSHIP

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``Building American 
     Homeownership Act of 2007''.

     SEC. 102. MAXIMUM PRINCIPAL LOAN OBLIGATION.

       Paragraph (2) of section 203(b)(2) of the National Housing 
     Act (12 U.S.C. 1709(b)(2)) is amended--
       (1) by amending subparagraphs (A) and (B) to read as 
     follows:
       ``(A) not to exceed the lesser of--
       ``(i) in the case of a 1-family residence, the median 1-
     family house price in the area, as determined by the 
     Secretary; and in the case of a 2-, 3-, or 4-family 
     residence, the percentage of such median price that bears the 
     same ratio to such median price as the dollar amount 
     limitation in effect under section 305(a)(2) of the Federal 
     Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for 
     a 2-, 3-, or 4-family residence, respectively, bears to the 
     dollar amount limitation in effect under such section for a 
     1-family residence; or
       ``(ii) the dollar amount limitation determined under such 
     section 305(a)(2) for a residence of the applicable size;

     except that the dollar amount limitation in effect for any 
     area under this subparagraph may not be less than the greater 
     of (I) the dollar amount limitation in effect under this 
     section for the area on October 21, 1998, or (II) 65 percent 
     of the dollar limitation determined under such section 
     305(a)(2) for a residence of the applicable size; and
       ``(B) not to exceed 100 percent of the appraised value of 
     the property.''; and
       (2) in the matter following subparagraph (B), by striking 
     the second sentence (relating to a definition of ``average 
     closing cost'') and all that follows through ``section 
     3103A(d) of title 38, United States Code.''.

     SEC. 103. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF 
                   SELLER-FUNDED DOWNPAYMENT ASSISTANCE.

       Paragraph 9 of section 203(b) of the National Housing Act 
     (12 U.S.C. 1709(b)(9)) is amended to read as follows:
       ``(9) Cash investment requirement.--
       ``(A) In general.--A mortgage insured under this section 
     shall be executed by a mortgagor who shall have paid, in 
     cash, on account of the property an amount equal to not less 
     than 1.5 percent of the appraised value of the property or 
     such larger amount as the Secretary may determine.
       ``(B) Family members.--For purposes of this paragraph, the 
     Secretary shall consider as cash or its equivalent any 
     amounts borrowed from a family member (as such term is 
     defined in section 201), subject only to the requirements 
     that, in any case in which the repayment of such borrowed 
     amounts is secured by a lien against the property, that--
       ``(i) such lien shall be subordinate to the mortgage; and
       ``(ii) the sum of the principal obligation of the mortgage 
     and the obligation secured by such lien may not exceed 100 
     percent of the appraised value of the property.
       ``(C) Prohibited sources.--In no case shall the funds 
     required by subparagraph (A) consist, in whole or in part, of 
     funds provided by any of the following parties before, 
     during, or after closing of the property sale:
       ``(i) The seller or any other person or entity that 
     financially benefits from the transaction.
       ``(ii) Any third party or entity that is reimbursed, 
     directly or indirectly, by any of the parties described in 
     clause (i).''.

     SEC. 104. MORTGAGE INSURANCE PREMIUMS.

       Section 203(c)(2) of the National Housing Act (12 U.S.C. 
     1709(c)(2)) is amended--
       (1) in the matter preceding subparagraph (A), by striking 
     ``or of the General Insurance Fund'' and all that follows 
     through ``section 234(c),,''; and
       (2) in subparagraph (A)--
       (A) by striking ``2.25 percent'' and inserting ``3 
     percent''; and
       (B) by striking ``2.0 percent'' and inserting ``2.75 
     percent''.

     SEC. 105. REHABILITATION LOANS.

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

     SEC. 106. DISCRETIONARY ACTION.

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

[[Page S14292]]

     and redesignating such subsection as subsection (e).

     SEC. 107. INSURANCE OF CONDOMINIUMS.

       (a) In General.--Section 234 of the National Housing Act 
     (12 U.S.C. 1715y) is amended--
       (1) in subsection (c), in the first sentence--
       (A) by striking ``and'' before ``(2)''; and
       (B) by inserting before the period at the end the 
     following: ``, and (3) the project has a blanket mortgage 
     insured by the Secretary under subsection (d)''; and
       (2) in subsection (g), by striking ``, except that'' and 
     all that follows and inserting a period.
       (b) Definition of Mortgage.--Section 201(a) of the National 
     Housing Act (12 U.S.C. 1707(a)) is amended--
       (1) before ``a first mortgage'' insert ``(A)'';
       (2) by striking ``or on a leasehold (1)'' and inserting 
     ``(B) a first mortgage on a leasehold on real estate (i)'';
       (3) by striking ``or (2)'' and inserting ``, or (ii)''; and
       (4) by inserting before the semicolon the following: ``, or 
     (C) a first mortgage given to secure the unpaid purchase 
     price of a fee interest in, or long-term leasehold interest 
     in, real estate consisting of a one-family unit in a 
     multifamily project, including a project in which the 
     dwelling units are attached, or are manufactured housing 
     units, semi-detached, or detached, and an undivided interest 
     in the common areas and facilities which serve the project''.
       (c) Definition of Real Estate.--Section 201 of the National 
     Housing Act (12 U.S.C. 1707) is amended by adding at the end 
     the following new subsection:
       ``(g) The term `real estate' means land and all natural 
     resources and structures permanently affixed to the land, 
     including residential buildings and stationary manufactured 
     housing. The Secretary may not require, for treatment of any 
     land or other property as real estate for purposes of this 
     title, that such land or property be treated as real estate 
     for purposes of State taxation.''.

     SEC. 108. MUTUAL MORTGAGE INSURANCE FUND.

       (a) In General.--Subsection (a) of section 202 of the 
     National Housing Act (12 U.S.C. 1708(a)) is amended to read 
     as follows:
       ``(a) Mutual Mortgage Insurance Fund.--
       ``(1) Establishment.--Subject to the provisions of the 
     Federal Credit Reform Act of 1990, there is hereby created a 
     Mutual Mortgage Insurance Fund (in this title referred to as 
     the `Fund'), which shall be used by the Secretary to carry 
     out the provisions of this title with respect to mortgages 
     insured under section 203. The Secretary may enter into 
     commitments to guarantee, and may guarantee, such insured 
     mortgages.
       ``(2) Limit on loan guarantees.--The authority of the 
     Secretary to enter into commitments to guarantee such insured 
     mortgages shall be effective for any fiscal year only to the 
     extent that the aggregate original principal loan amount 
     under such mortgages, any part of which is guaranteed, does 
     not exceed the amount specified in appropriations Acts for 
     such fiscal year.
       ``(3) Fiduciary responsibility.--The Secretary has a 
     responsibility to ensure that the Mutual Mortgage Insurance 
     Fund remains financially sound.
       ``(4) Annual independent actuarial study.--The Secretary 
     shall provide for an independent actuarial study of the Fund 
     to be conducted annually, which shall analyze the financial 
     position of the Fund. The Secretary shall submit a report 
     annually to the Congress describing the results of such study 
     and assessing the financial status of the Fund. The report 
     shall recommend adjustments to underwriting standards, 
     program participation, or premiums, if necessary, to ensure 
     that the Fund remains financially sound.
       ``(5) Quarterly reports.--During each fiscal year, the 
     Secretary shall submit a report to the Congress for each 
     calendar quarter, which shall specify for mortgages that are 
     obligations of the Fund--
       ``(A) the cumulative volume of loan guarantee commitments 
     that have been made during such fiscal year through the end 
     of the quarter for which the report is submitted;
       ``(B) the types of loans insured, categorized by risk;
       ``(C) any significant changes between actual and projected 
     claim and prepayment activity;
       ``(D) projected versus actual loss rates; and
       ``(E) updated projections of the annual subsidy rates to 
     ensure that increases in risk to the Fund are identified and 
     mitigated by adjustments to underwriting standards, program 
     participation, or premiums, and the financial soundness of 
     the Fund is maintained.

     The first quarterly report under this paragraph shall be 
     submitted on the last day of the first quarter of fiscal year 
     2008, or on the last day of the first full calendar quarter 
     following the enactment of the Building American 
     Homeownership Act of 2007, whichever is later.
       ``(6) Adjustment of premiums.--If, pursuant to the 
     independent actuarial study of the Fund required under 
     paragraph (4), the Secretary determines that the Fund is not 
     meeting the operational goals established under paragraph (7) 
     or there is a substantial probability that the Fund will not 
     maintain its established target subsidy rate, the Secretary 
     may either make programmatic adjustments under this title as 
     necessary to reduce the risk to the Fund, or make appropriate 
     premium adjustments.
       ``(7) Operational goals.--The operational goals for the 
     Fund are--
       ``(A) to minimize the default risk to the Fund and to 
     homeowners by among other actions instituting fraud 
     prevention quality control screening not later than 18 months 
     after the date of enactment of the Building American 
     Homeownership Act of 2007; and
       ``(B) to meet the housing needs of the borrowers that the 
     single family mortgage insurance program under this title is 
     designed to serve.''.
       (b) Obligations of Fund.--The National Housing Act is 
     amended as follows:
       (1) Homeownership voucher program mortgages.--In section 
     203(v) (12 U.S.C. 1709(v))--
       (A) by striking ``Notwithstanding section 202 of this 
     title, the'' and inserting ``The''; and
       (B) by striking ``General Insurance Fund'' the first place 
     such term appears and all that follows through the end of the 
     subsection and inserting ``Mutual Mortgage Insurance Fund.''.
       (2) Home equity conversion mortgages.--Section 255(i)(2)(A) 
     of the National Housing Act (12 U.S.C. 1715z-20(i)(2)(A)) is 
     amended by striking ``General Insurance Fund'' and inserting 
     ``Mutual Mortgage Insurance Fund''.
       (c) Conforming Amendments.--The National Housing Act is 
     amended--
       (1) in section 205 (12 U.S.C. 1711), by striking 
     subsections (g) and (h); and
       (2) in section 519(e) (12 U.S.C. 1735c(e)), by striking 
     ``203(b)'' and all that follows through ``203(i)'' and 
     inserting ``203, except as determined by the Secretary''.

     SEC. 109. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.

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

     SEC. 110. CONFORMING AND TECHNICAL AMENDMENTS.

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

     SEC. 111. INSURANCE OF MORTGAGES.

       Subsection (n)(2) of section 203 of the National Housing 
     Act (12 U.S.C. 1709(n)(2)) is amended--
       (1) in subparagraph (A), by inserting ``or subordinate 
     mortgage or'' before ``lien given''; and
       (2) in subparagraph (C), by inserting ``or subordinate 
     mortgage or'' before ``lien''.

     SEC. 112. HOME EQUITY CONVERSION MORTGAGES.

       (a) In General.--Section 255 of the National Housing Act 
     (12 U.S.C. 1715z-20) is amended--
       (1) in subsection (b)(2), insert `` `real estate,' '' after 
     `` `mortgagor','';
       (2) in subsection (g)--
       (A) by striking the first sentence; and
       (B) by striking ``established under section 203(b)(2)'' and 
     all that follows through ``located'' and inserting 
     ``limitation established under section 305(a)(2) of the 
     Federal Home Loan Mortgage Corporation Act for a 1-family 
     residence'';
       (3) in subsection (i)(1)(C), by striking ``limitations'' 
     and inserting ``limitation''; and
       (4) by adding at the end the following new subsection:
       ``(o) Authority To Insure Home Purchase Mortgage.--
       ``(1) In general.--Notwithstanding any other provision of 
     this section, the Secretary may insure, upon application by a 
     mortgagee, a home equity conversion mortgage upon such terms 
     and conditions as the Secretary may prescribe, when the home 
     equity conversion mortgage will be used to purchase a 1- to 
     4-family dwelling unit, one unit of which that the mortgagor 
     will occupy as a primary residence, and to provide for any 
     future payments to the mortgagor, based on available equity, 
     as authorized under subsection (d)(9).

[[Page S14293]]

       ``(2) Limitation on principal obligation.--A home equity 
     conversion mortgage insured pursuant to paragraph (1) shall 
     involve a principal obligation that does not exceed the 
     dollar amount limitation determined under section 305(a)(2) 
     of the Federal Home Loan Mortgage Corporation Act for a 1-
     family residence.''.
       (b) Mortgages for Cooperatives.--Subsection (b) of section 
     255 of the National Housing Act (12 U.S.C. 1715z-20(b)) is 
     amended--
       (1) in paragraph (4)--
       (A) by inserting ``a first or subordinate mortgage or 
     lien'' before ``on all stock'';
       (B) by inserting ``unit'' after ``dwelling''; and
       (C) by inserting ``a first mortgage or first lien'' before 
     ``on a leasehold''; and
       (2) in paragraph (5), by inserting ``a first or subordinate 
     lien on'' before ``all stock''.
       (c) Limitation on Origination Fees.--Section 255 of the 
     National Housing Act (12 U.S.C. 1715z-20), as amended by the 
     preceding provisions of this section, is further amended--
       (1) by redesignating subsections (k), (l), and (m) as 
     subsections (l), (m), and (n), respectively; and
       (2) by inserting after subsection (j) the following new 
     subsection:
       ``(k) Limitation on Origination Fees.--The Secretary shall 
     establish limits on the origination fee that may be charged 
     to a mortgagor under a mortgage insured under this section, 
     which limitations shall--
       ``(1) equal 1.5 percent of the maximum claim amount of the 
     mortgage unless adjusted thereafter on the basis of--
       ``(A) the costs to the mortgagor; and
       ``(B) the impact of such fees on the reverse mortgage 
     market;
       ``(2) be subject to a minimum allowable amount;
       ``(3) provide that the origination fee may be fully 
     financed with the mortgage;
       ``(4) include any fees paid to correspondent mortgagees 
     approved by the Secretary; and
       ``(5) have the same effective date as subsection (o)(2) 
     regarding the limitation on principal obligation.''.
       (d) Study Regarding Program Costs and Credit 
     Availability.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study regarding the costs and 
     availability of credit under the home equity conversion 
     mortgages for elderly homeowners program under section 255 of 
     the National Housing Act (12 U.S.C. 1715z-20) (in this 
     subsection referred to as the ``program'').
       (2) Purpose.--The purpose of the study required under 
     paragraph (1) is to help Congress analyze and determine the 
     effects of limiting the amounts of the costs or fees under 
     the program from the amounts charged under the program as of 
     the date of the enactment of this Act.
       (3) Content of report.--The study required under paragraph 
     (1) should focus on--
       (A) the cost to mortgagors of participating in the program;
       (B) the financial soundness of the program;
       (C) the availability of credit under the program; and
       (D) the costs to elderly homeowners participating in the 
     program, including--
       (i) mortgage insurance premiums charged under the program;
       (ii) up-front fees charged under the program; and
       (iii) margin rates charged under the program.
       (4) Timing of report.--Not later than 12 months after the 
     date of the 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 setting 
     forth the results and conclusions of the study required under 
     paragraph (1).

     SEC. 113. ENERGY EFFICIENT MORTGAGES PROGRAM.

       Section 106(a)(2) of the Energy Policy Act of 1992 (42 
     U.S.C. 12712 note) is amended--
       (1) by amending subparagraph (C) to read as follows:
       ``(C) Costs of improvements.--The cost of cost-effective 
     energy efficiency improvements shall not exceed the greater 
     of--
       ``(i) 5 percent of the property value (not to exceed 5 
     percent of the limit established under section 203(b)(2)(A)) 
     of the National Housing Act (12 U.S.C. 1709(b)(2)(A); or
       ``(ii) 2 percent of the limit established under section 
     203(b)(2)(B) of such Act.''; and
       (2) by adding at the end the following:
       ``(D) Limitation.--In any fiscal year, the aggregate number 
     of mortgages insured pursuant to this section may not exceed 
     5 percent of the aggregate number of mortgages for 1- to 4-
     family residences insured by the Secretary of Housing and 
     Urban Development under title II of the National Housing Act 
     (12 U.S.C. 1707 et seq.) during the preceding fiscal year.''.

     SEC. 114. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS 
                   WITHOUT SUFFICIENT CREDIT HISTORY.

       (a) Establishment.--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. 257. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS 
                   WITHOUT SUFFICIENT CREDIT HISTORY.

       ``(a) Establishment.--The Secretary shall carry out a pilot 
     program to establish, and make available to mortgagees, an 
     automated process for providing alternative credit rating 
     information for mortgagors and prospective mortgagors under 
     mortgages on 1- to 4-family residences to be insured under 
     this title who have insufficient credit histories for 
     determining their creditworthiness. Such alternative credit 
     rating information may include rent, utilities, and insurance 
     payment histories, and such other information as the 
     Secretary considers appropriate.
       ``(b) Scope.--The Secretary may carry out the pilot program 
     under this section on a limited basis or scope, and may 
     consider limiting the program to first-time homebuyers.
       ``(c) Limitation.--In any fiscal year, the aggregate number 
     of mortgages insured pursuant to the automated process 
     established under this section may not exceed 5 percent of 
     the aggregate number of mortgages for 1- to 4-family 
     residences insured by the Secretary under this title during 
     the preceding fiscal year.
       ``(d) Sunset.--After the expiration of the 5-year period 
     beginning on the date of the enactment of the Building 
     American Homeownership Act of 2007, the Secretary may not 
     enter into any new commitment to insure any mortgage, or 
     newly insure any mortgage, pursuant to the automated process 
     established under this section.''.
       (b) GAO Report.--Not later than the expiration of the two-
     year period beginning on the date of the enactment of this 
     title, the Comptroller General of the United States shall 
     submit to the Congress a report identifying the number of 
     additional mortgagors served using the automated process 
     established pursuant to section 257 of the National Housing 
     Act (as added by the amendment made by subsection (a) of this 
     section) and the impact of such process and the insurance of 
     mortgages pursuant to such process on the safety and 
     soundness of the insurance funds under the National Housing 
     Act of which such mortgages are obligations.

     SEC. 115. HOMEOWNERSHIP PRESERVATION.

       The Secretary of Housing and Urban Development and the 
     Commissioner of the Federal Housing Administration, in 
     consultation with industry, the Neighborhood Reinvestment 
     Corporation, and other entities involved in foreclosure 
     prevention activities, shall--
       (1) develop and implement a plan to improve the Federal 
     Housing Administration's loss mitigation process; and
       (2) report such plan to the Committee on Banking, Housing, 
     and Urban Affairs of the Senate and the Committee on 
     Financial Services of the House of Representatives.

     SEC. 116. USE OF FHA SAVINGS FOR IMPROVEMENTS IN FHA 
                   TECHNOLOGIES, PROCEDURES, PROCESSES, PROGRAM 
                   PERFORMANCE, STAFFING, AND SALARIES.

       (a) Authorization of Appropriations.--There is authorized 
     to be appropriated for each of fiscal years 2008 through 
     2012, $25,000,000, from negative credit subsidy for the 
     mortgage insurance programs under title II of the National 
     Housing Act, to the Secretary of Housing and Urban 
     Development for increasing funding for the purpose of 
     improving technology, processes, program performance, 
     eliminating fraud, and for providing appropriate staffing in 
     connection with the mortgage insurance programs under title 
     II of the National Housing Act.
       (b) Certification.--The authorization under subsection (a) 
     shall not be effective for a fiscal year unless the Secretary 
     of Housing and Urban Development has, by rulemaking in 
     accordance with section 553 of title 5, United States Code 
     (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of 
     such section), made a determination that--
       (1) premiums being, or to be, charged during such fiscal 
     year for mortgage insurance under title II of the National 
     Housing Act are established at the minimum amount sufficient 
     to--
       (A) comply with the requirements of section 205(f) of such 
     Act (relating to required capital ratio for the Mutual 
     Mortgage Insurance Fund); and
       (B) ensure the safety and soundness of the other mortgage 
     insurance funds under such Act; and
       (2) any negative credit subsidy for such fiscal year 
     resulting from such mortgage insurance programs adequately 
     ensures the efficient delivery and availability of such 
     programs.
       (c) Study and Report.--The Secretary of Housing and Urban 
     Development shall conduct a study to obtain recommendations 
     from participants in the private residential (both single 
     family and multifamily) mortgage lending business and the 
     secondary market for such mortgages on how best to update and 
     upgrade processes and technologies for the mortgage insurance 
     programs under title II of the National Housing Act so that 
     the procedures for originating, insuring, and servicing of 
     such mortgages conform with those customarily used by 
     secondary market purchasers of residential mortgage loans. 
     Not later than the expiration of the 12-month period 
     beginning on the date of the enactment of this Act, the 
     Secretary shall submit a report to the Congress describing 
     the progress made and to be made toward updating and 
     upgrading such processes and technology, and providing 
     appropriate staffing for such mortgage insurance programs.

     SEC. 117. POST-PURCHASE HOUSING COUNSELING ELIGIBILITY 
                   IMPROVEMENTS.

       Section 106(c)(4) of the Housing and Urban Development Act 
     of 1968 (12 U.S.C. 1701x(c)(4)) is amended:
       (1) in subparagraph (C)--

[[Page S14294]]

       (A) in clause (i), by striking ``; or'' and inserting a 
     semicolon;
       (B) in clause (ii), by striking the period at the end and 
     inserting a semicolon; and
       (C) by adding at the end the following:
       ``(iii) a significant reduction in the income of the 
     household due to divorce or death; or
       ``(iv) a significant increase in basic expenses of the 
     homeowner or an immediate family member of the homeowner 
     (including the spouse, child, or parent for whom the 
     homeowner provides substantial care or financial assistance) 
     due to--

       ``(I) an unexpected or significant increase in medical 
     expenses;
       ``(II) a divorce;
       ``(III) unexpected and significant damage to the property, 
     the repair of which will not be covered by private or public 
     insurance; or
       ``(IV) a large property-tax increase; or'';

       (2) by striking the matter that follows subparagraph (C); 
     and
       (3) by adding at the end the following:
       ``(D) the Secretary of Housing and Urban Development 
     determines that the annual income of the homeowner is no 
     greater than the annual income established by the Secretary 
     as being of low- or moderate-income.''.

     SEC. 118. PRE-PURCHASE HOMEOWNERSHIP COUNSELING 
                   DEMONSTRATION.

       (a) Establishment of Program.--For the period beginning on 
     the date of enactment of this Act and ending on the date that 
     is 3 years after such date of enactment, the Secretary of 
     Housing and Urban Development shall establish and conduct a 
     demonstration program to test the effectiveness of 
     alternative forms of pre-purchase homeownership counseling 
     for eligible homebuyers.
       (b) Forms of Counseling.--The Secretary of Housing and 
     Urban Development shall provide to eligible homebuyers pre-
     purchase homeownership counseling under this section in the 
     form of --
       (1) telephone counseling;
       (2) individualized in-person counseling;
       (3) web-based counseling;
       (4) counseling classes; or
       (5) any other form or type of counseling that the Secretary 
     may, in his discretion, determine appropriate.
       (c) Size of Program.--The Secretary shall make available 
     the pre-purchase homeownership counseling described in 
     subsection (b) to not more than 3,000 eligible homebuyers in 
     any given year.
       (d) Incentive to Participate.--The Secretary of Housing and 
     Urban Development may provide incentives to eligible 
     homebuyers to participate in the demonstration program 
     established under subsection (a). Such incentives may include 
     the reduction of any insurance premium charges owed by the 
     eligible homebuyer to the Secretary.
       (e) Eligible Homebuyer Defined.--For purposes of this 
     section an ``eligible homebuyer'' means a first-time 
     homebuyer who has been approved for a home loan with a loan-
     to-value ratio between 97 percent and 98.5 percent.
       (f) Report to Congress.--The Secretary of Housing and Urban 
     Development shall report to the Committee on Banking, 
     Housing, and Urban Affairs of the Senate and the Committee on 
     Financial Services of the House of Representative--
       (1) on an annual basis, on the progress and results of the 
     demonstration program established under subsection (a); and
       (2) for the period beginning on the date of enactment of 
     this Act and ending on the date that is 5 years after such 
     date of enactment, on the payment history and delinquency 
     rates of eligible homebuyers who participated in the 
     demonstration program.

     SEC. 119. FRAUD PREVENTION.

       Section 1014 of title 18, United States Code, is amended in 
     the first sentence--
       (1) by inserting ``the Federal Housing Administration'' 
     before ``the Farm Credit Administration''; and
       (2) by striking ``commitment, or loan'' and inserting 
     ``commitment, loan, or insurance agreement or application for 
     insurance or a guarantee''.

     SEC. 120. LIMITATION ON MORTGAGE INSURANCE PREMIUM INCREASES.

       (a) In General.--Notwithstanding any other provision of 
     law, including any provision of this Act and any amendment 
     made by this Act--
       (1) for the period beginning on the date of the enactment 
     of this Act and ending on October 1, 2009, the premiums 
     charged for mortgage insurance under multifamily housing 
     programs under the National Housing Act may not be increased 
     above the premium amounts in effect under such program on 
     October 1, 2006, unless the Secretary of Housing and Urban 
     Development determines that, absent such increase, insurance 
     of additional mortgages under such program would, under the 
     Federal Credit Reform Act of 1990, require the appropriation 
     of new budget authority to cover the costs (as such term is 
     defined in section 502 of the Federal Credit Reform Act of 
     1990 (2 U.S.C. 661a) of such insurance; and
       (2) a premium increase pursuant to paragraph (1) may be 
     made only if not less than 30 days prior to such increase 
     taking effect, the Secretary of Housing and Urban 
     Development--
       (A) notifies the Committee on Banking, Housing, and Urban 
     Affairs of the Senate and the Committee on Financial Services 
     of the House of Representatives of such increase; and
       (B) publishes notice of such increase in the Federal 
     Register.
       (b) Waiver.--The Secretary of Housing and Urban Development 
     may waive the 30-day notice requirement under subsection 
     (a)(2), if the Secretary determines that waiting 30-days 
     before increasing premiums would cause substantial damage to 
     the solvency of multifamily housing programs under the 
     National Housing Act.

     SEC. 121. SAVINGS PROVISION.

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

     SEC. 122. IMPLEMENTATION.

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

           TITLE II--MANUFACTURED HOUSING LOAN MODERNIZATION

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``FHA Manufactured Housing 
     Loan Modernization Act of 2007''.

     SEC. 202. PURPOSES.

       The purposes of this title are--
       (1) to provide adequate funding for FHA-insured 
     manufactured housing loans for low- and moderate-income 
     homebuyers during all economic cycles in the manufactured 
     housing industry;
       (2) to modernize the FHA title I insurance program for 
     manufactured housing loans to enhance participation by Ginnie 
     Mae and the private lending markets; and
       (3) to adjust the low loan limits for title I manufactured 
     home loan insurance to reflect the increase in costs since 
     such limits were last increased in 1992 and to index the 
     limits to inflation.

     SEC. 203. EXCEPTION TO LIMITATION ON FINANCIAL INSTITUTION 
                   PORTFOLIO.

       The second sentence of section 2(a) of the National Housing 
     Act (12 U.S.C. 1703(a)) is amended--
       (1) by striking ``In no case'' and inserting ``Other than 
     in connection with a manufactured home or a lot on which to 
     place such a home (or both), in no case''; and
       (2) by striking ``: Provided, That with'' and inserting ``. 
     With''.

     SEC. 204. INSURANCE BENEFITS.

       (a) In General.--Subsection (b) of section 2 of the 
     National Housing Act (12 U.S.C. 1703(b)), is amended by 
     adding at the end the following new paragraph:
       ``(8) Insurance benefits for manufactured housing loans.--
     Any contract of insurance with respect to loans, advances of 
     credit, or purchases in connection with a manufactured home 
     or a lot on which to place a manufactured home (or both) for 
     a financial institution that is executed under this title 
     after the date of the enactment of the FHA Manufactured 
     Housing Loan Modernization Act of 2007 by the Secretary shall 
     be conclusive evidence of the eligibility of such financial 
     institution for insurance, and the validity of any contract 
     of insurance so executed shall be incontestable in the hands 
     of the bearer from the date of the execution of such 
     contract, except for fraud or misrepresentation on the part 
     of such institution.''.
       (b) Applicability.--The amendment made by subsection (a) 
     shall only apply to loans that are registered or endorsed for 
     insurance after the date of the enactment of this Act.

     SEC. 205. MAXIMUM LOAN LIMITS.

       (a) Dollar Amounts.--Paragraph (1) of section 2(b) of the 
     National Housing Act (12 U.S.C. 1703(b)(1)) is amended--
       (1) in clause (ii) of subparagraph (A), by striking 
     ``$17,500'' and inserting ``$25,090'';
       (2) in subparagraph (C) by striking ``$48,600'' and 
     inserting ``$69,678'';
       (3) in subparagraph (D) by striking ``$64,800'' and 
     inserting ``$92,904'';
       (4) in subparagraph (E) by striking ``$16,200'' and 
     inserting ``$23,226''; and
       (5) by realigning subparagraphs (C), (D), and (E) 2 ems to 
     the left so that the left margins of such subparagraphs are 
     aligned with the margins of subparagraphs (A) and (B).
       (b) Annual Indexing.--Subsection (b) of section 2 of the 
     National Housing Act (12 U.S.C. 1703(b)), as amended by the 
     preceding provisions of this Act, is further amended by 
     adding at the end the following new paragraph:
       ``(9) Annual indexing of manufactured housing loans.--The 
     Secretary shall develop a method of indexing in order to 
     annually adjust the loan limits established in subparagraphs 
     (A)(ii), (C), (D), and (E) of this subsection. Such index 
     shall be based on the manufactured housing price data 
     collected by the United States Census Bureau. The Secretary 
     shall establish such index no later than 1 year after the 
     date of the enactment of the FHA Manufactured Housing Loan 
     Modernization Act of 2007.''
       (c) Technical and Conforming Changes.--Paragraph (1) of 
     section 2(b) of the National Housing Act (12 U.S.C. 
     1703(b)(1)) is amended--
       (1) by striking ``No'' and inserting ``Except as provided 
     in the last sentence of this paragraph, no''; and
       (2) by adding after and below subparagraph (G) the 
     following:
       ``The Secretary shall, by regulation, annually increase the 
     dollar amount limitations in subparagraphs (A)(ii), (C), (D), 
     and (E) (as such limitations may have been previously 
     adjusted under this sentence) in accordance with the index 
     established pursuant to paragraph (9).''.

[[Page S14295]]

     SEC. 206. INSURANCE PREMIUMS.

       Subsection (f) of section 2 of the National Housing Act (12 
     U.S.C. 1703(f)) is amended--
       (1) by inserting ``(1) Premium charges.--'' after ``(f)''; 
     and
       (2) by adding at the end the following new paragraph:
       ``(2) Manufactured Home Loans.--Notwithstanding paragraph 
     (1), in the case of a loan, advance of credit, or purchase in 
     connection with a manufactured home or a lot on which to 
     place such a home (or both), the premium charge for the 
     insurance granted under this section shall be paid by the 
     borrower under the loan or advance of credit, as follows:
       ``(A) At the time of the making of the loan, advance of 
     credit, or purchase, a single premium payment in an amount 
     not to exceed 2.25 percent of the amount of the original 
     insured principal obligation.
       ``(B) In addition to the premium under subparagraph (A), 
     annual premium payments during the term of the loan, advance, 
     or obligation purchased in an amount not exceeding 1.0 
     percent of the remaining insured principal balance (excluding 
     the portion of the remaining balance attributable to the 
     premium collected under subparagraph (A) and without taking 
     into account delinquent payments or prepayments).
       ``(C) Premium charges under this paragraph shall be 
     established in amounts that are sufficient, but do not exceed 
     the minimum amounts necessary, to maintain a negative credit 
     subsidy for the program under this section for insurance of 
     loans, advances of credit, or purchases in connection with a 
     manufactured home or a lot on which to place such a home (or 
     both), as determined based upon risk to the Federal 
     Government under existing underwriting requirements.
       ``(D) The Secretary may increase the limitations on premium 
     payments to percentages above those set forth in 
     subparagraphs (A) and (B), but only if necessary, and not in 
     excess of the minimum increase necessary, to maintain a 
     negative credit subsidy as described in subparagraph (C).''.

     SEC. 207. TECHNICAL CORRECTIONS.

       (a) Dates.--Subsection (a) of section 2 of the National 
     Housing Act (12 U.S.C. 1703(a)) is amended--
       (1) by striking ``on and after July 1, 1939,'' each place 
     such term appears; and
       (2) by striking ``made after the effective date of the 
     Housing Act of 1954''.
       (b) Authority of Secretary.--Subsection (c) of section 2 of 
     the National Housing Act (12 U.S.C. 1703(c)) is amended to 
     read as follows:
       ``(c) Handling and Disposal of Property.--
       ``(1) Authority of secretary.--Notwithstanding any other 
     provision of law, the Secretary may--
       ``(A) deal with, complete, rent, renovate, modernize, 
     insure, or assign or sell at public or private sale, or 
     otherwise dispose of, for cash or credit in the Secretary's 
     discretion, and upon such terms and conditions and for such 
     consideration as the Secretary shall determine to be 
     reasonable, any real or personal property conveyed to or 
     otherwise acquired by the Secretary, in connection with the 
     payment of insurance heretofore or hereafter granted under 
     this title, including any evidence of debt, contract, claim, 
     personal property, or security assigned to or held by him in 
     connection with the payment of insurance heretofore or 
     hereafter granted under this section; and
       ``(B) pursue to final collection, by way of compromise or 
     otherwise, all claims assigned to or held by the Secretary 
     and all legal or equitable rights accruing to the Secretary 
     in connection with the payment of such insurance, including 
     unpaid insurance premiums owed in connection with insurance 
     made available by this title.
       ``(2) Advertisements for proposals.--Section 3709 of the 
     Revised Statutes shall not be construed to apply to any 
     contract of hazard insurance or to any purchase or contract 
     for services or supplies on account of such property if the 
     amount thereof does not exceed $25,000.
       ``(3) Delegation of authority.--The power to convey and to 
     execute in the name of the Secretary, deeds of conveyance, 
     deeds of release, assignments and satisfactions of mortgages, 
     and any other written instrument relating to real or personal 
     property or any interest therein heretofore or hereafter 
     acquired by the Secretary pursuant to the provisions of this 
     title may be exercised by an officer appointed by the 
     Secretary without the execution of any express delegation of 
     power or power of attorney. Nothing in this subsection shall 
     be construed to prevent the Secretary from delegating such 
     power by order or by power of attorney, in the Secretary's 
     discretion, to any officer or agent the Secretary may 
     appoint.''.

     SEC. 208. REVISION OF UNDERWRITING CRITERIA.

       (a) In General.--Subsection (b) of section 2 of the 
     National Housing Act (12 U.S.C. 1703(b)), as amended by the 
     preceding provisions of this Act, is further amended by 
     adding at the end the following new paragraph:
       ``(10) Financial soundness of manufactured housing 
     program.--The Secretary shall establish such underwriting 
     criteria for loans and advances of credit in connection with 
     a manufactured home or a lot on which to place a manufactured 
     home (or both), including such loans and advances represented 
     by obligations purchased by financial institutions, as may be 
     necessary to ensure that the program under this title for 
     insurance for financial institutions against losses from such 
     loans, advances of credit, and purchases is financially 
     sound.''.
       (b) Timing.--Not later than the expiration of the 6-month 
     period beginning on the date of the enactment of this Act, 
     the Secretary of Housing and Urban Development shall revise 
     the existing underwriting criteria for the program referred 
     to in paragraph (10) of section 2(b) of the National Housing 
     Act (as added by subsection (a) of this section) in 
     accordance with the requirements of such paragraph.

     SEC. 209. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES.

       Title I of the National Housing Act is amended by adding at 
     the end of section 9 the following new section:

     ``SEC. 10. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES.

       ``(a) In General.--Except as provided in subsection (b), 
     the provisions of sections 3, 8, 16, 17, 18, and 19 of the 
     Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 
     et seq.) shall apply to each sale of a manufactured home 
     financed with an FHA-insured loan or extension of credit, as 
     well as to services rendered in connection with such 
     transactions.
       ``(b) Authority of the Secretary.--The Secretary is 
     authorized to determine the manner and extent to which the 
     provisions of sections 3, 8, 16, 17, 18, and 19 of the Real 
     Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et 
     seq.) may reasonably be applied to the transactions described 
     in subsection (a), and to grant such exemptions as may be 
     necessary to achieve the purposes of this section.
       ``(c) Definitions.--For purposes of this section--
       ``(1) the term `federally related mortgage loan' as used in 
     sections 3, 8, 16, 17, 18, and 19 of the Real Estate 
     Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) 
     shall include an FHA-insured loan or extension of credit made 
     to a borrower for the purpose of purchasing a manufactured 
     home that the borrower intends to occupy as a personal 
     residence; and
       ``(2) the term `real estate settlement service' as used in 
     sections 3, 8, 16, 17, 18, and 19 of the Real Estate 
     Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) 
     shall include any service rendered in connection with a loan 
     or extension of credit insured by the Federal Housing 
     Administration for the purchase of a manufactured home.
       ``(d) Unfair and Deceptive Practices.--In connection with 
     the purchase of a manufactured home financed with a loan or 
     extension of credit insured by the Federal Housing 
     Administration under this title, the Secretary shall prohibit 
     acts or practices in connection with loans or extensions of 
     credit that the Secretary finds to be unfair, deceptive, or 
     otherwise not in the interests of the borrower.''.

     SEC. 210. LEASEHOLD REQUIREMENTS.

       Subsection (b) of section 2 of the National Housing Act (12 
     U.S.C. 1703(b)), as amended by the preceding provisions of 
     this Act, is further amended by adding at the end the 
     following new paragraph:
       ``(11) Leasehold requirements.--No insurance shall be 
     granted under this section to any such financial institution 
     with respect to any obligation representing any such loan, 
     advance of credit, or purchase by it, made for the purposes 
     of financing a manufactured home which is intended to be 
     situated in a manufactured home community pursuant to a 
     lease, unless such lease--
       ``(A) expires not less than 3 years after the origination 
     date of the obligation;
       ``(B) is renewable upon the expiration of the original 3 
     year term by successive 1 year terms; and
       ``(C) requires the lessor to provide the lessee written 
     notice of termination of the lease not less than 180 days 
     prior to the expiration of the current lease term in the 
     event the lessee is required to move due to the closing of 
     the manufactured home community, and further provides that 
     failure to provide such notice to the mortgagor in a timely 
     manner will cause the lease term, at its expiration, to 
     automatically renew for an additional 1 year term.''.
                                 ______
                                 
      By Mr. McCONNELL (for himself and Mr. Stevens):
  S. 2340. A bill making emergency supplemental appropriations for the 
Department of Defense for the fiscal year ending September 30, 2008, 
and for other purposes; read the first time.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the text 
of the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
placed in the Record, as follows:

                                S. 2340

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled, That the 
     following sums are appropriated, out of any money in the 
     Treasury not otherwise appropriated, for the fiscal year 
     ending September 30, 2008.

                                TITLE I

                           MILIARY PERSONNEL

                        Military Personnel, Army

       For an additional amount for ``Military Personnel, Army'', 
     $6,158,778,000.

                        Military Personnel, Navy

       For an additional amount for ``Military Personnel, Navy'', 
     $395,839,000.

[[Page S14296]]

                    Military Personnel, Marine Corps

       For an additional amount for ``Military Personnel, Marine 
     Corps'', $895,011,000.

                     Military Personnel, Air Force

       For an additional amount for ``Military Personnel, Air 
     Force'', $707,945,000.

                        Reverse Personnel, Army

       For an additional amount for ``Reserve Personnel, Army'', 
     $115,150,000.

                        Reserve Personnel, Navy

       For an additional amount for ``Reserve Personnel, Navy'', 
     $35,000,000.

                    Reserve Personnel, Marine Corps

       For an additional amount for ``Reserve Personnel, Marine 
     Corps'', $7,710,000.

                      Reserve Personnel, Air Force

       For an additional amount for ``Reserve Personnel, Air 
     Force'', $1,500,000.

                     National Guard Personnel, Army

       For an additional amount for ``National Guard Personnel, 
     Army'', $334,000,000.

                                TITLE II

                       OPERATION AND MAINTENANCE

                    Operation and Maintenance, Army

       For an additional amount for ``Operation and Maintenance, 
     Army'', $27,853,000,000.

                    Operation and Maintenance, Navy

                     (including transfers of funds)

       For an additional amount for ``Operation and Maintenance, 
     Navy'', $2,664,000,000: Provided, That up to $98,000,000 
     shall be transferred to the Coast Guard ``Operating 
     Expenses'' account.

                Operation and Maintenance, Marine Corps

       For an additional amount for ``Operation and Maintenance, 
     Marine Corps'', $2,649,807,000.

                  Operation and Maintenance, Air Force

       For an additional amount for ``Operation and Maintenance, 
     Air Force'', $4,778,000,000.

                Operation and Maintenance, Defense-Wide

       For an additional amount for ``Operation and Maintenance, 
     Defense-Wide'', $1,836,318,000, of which up to $300,000,000, 
     to remain available until expended, may be used for payments 
     to reimburse Pakistan, Jordan, and other key cooperating 
     nations, for logistical, military, and other support 
     provided, or to be provided, to United States military 
     operations, notwithstanding any other provision of law: 
     Provided, That such payments may be made in such amounts as 
     the Secretary of Defense, with the concurrence of the 
     Secretary of State, and in consultation with the Director of 
     the Office of Management and Budget, may determine, in his 
     discretion, based on documentation determined by the 
     Secretary of Defense to adequately account for the support 
     provided, and such determination is final and conclusive upon 
     the accounting officers of the United States, and 15 days 
     following notification to the appropriate congressional 
     committees: Provided further, That the Secretary of Defense 
     shall provide quarterly reports to the congressional defense 
     committees on the use of funds provided in this paragraph.

                Operation and Maintenance, Army Reserve

       For an additional amount for ``Operation and Maintenance, 
     Army Reserve'', $77,736,000.

                Operation and Maintenance, Navy Reserve

       For an additional amount for ``Operation and Maintenance, 
     Navy Reserve'', $41,657,000.

            Operation and Maintenance, Marine Corps Reserve

       For an additional amount for ``Operation and Maintenance, 
     Marine Corps Reserve'', $46,153,000.

             Operations and Maintenance, Air Force Reserve

       For an additional amount for ``Operation and Maintenance, 
     Air Force Reserve'', $12,133,000.

             Operation and Maintenance, Army National Guard

       For an additional amount for ``Operation and Maintenance, 
     Army National Guard'', $327,000,000.

             Operation and Maintenance, Air National Guard

       For an additional amount for ``Operation and Maintenance, 
     Air National Guard'', $51,634,000.

                           Iraq Freedom Fund

                     (including transfer of funds)

       For an additional amount for ``Iraq Freedom Fund'', 
     $3,747,327,000, to remain available for transfer until 
     September 30, 2009, only to support operations in Iraq or 
     Afghanistan: Provided, That the Secretary of Defense may 
     transfer the funds provided herein to appropriations for 
     military personnel; operation and maintenance; Overseas 
     Humanitarian, Disaster, and Civic Aid; procurement; research, 
     development, test and evaluation; and working capital funds: 
     Provided further, That funds transferred shall be merged with 
     and be available for the same purposes and for the same time 
     period as the appropriation or fund to which transferred: 
     Provided further, That this transfer authority is in addition 
     to any other transfer authority available to the Department 
     of Defense: Provided further, That upon a determination that 
     all or part of the funds transferred from this appropriation 
     are not necessary for the purposes provided herein, such 
     amounts may be transferred back to this appropriation: 
     Provided further, That the Secretary of Defense shall, not 
     fewer than 5 days prior to making transfers from this 
     appropriation, notify the congressional defense committees in 
     writing of the details of any such transfer: Provided 
     further, That the Secretary shall submit a report no later 
     than 30 days after the end of each fiscal quarter to the 
     congressional defense committees summarizing the details of 
     the transfer of funds from this appropriation.

                    Afghanistan Security Forces Fund

                     (including transfer of funds)

       For the ``Afghanistan Security Forces Fund'', 
     $1,350,000,000, to remain available until September 30, 2009: 
     Provided, That such funds shall be available to the Secretary 
     of Defense, notwithstanding any other provision of law, for 
     the purpose of allowing the Commander, Office of Security 
     Cooperation-Afghanistan, or the Secretary's designee, to 
     provide assistance, with the concurrence of the Secretary of 
     State, to the security forces of Afghanistan, including the 
     provision of equipment, supplies, services, training, 
     facility and infrastructure repair, renovation, and 
     construction, and funding: Provided further, That the 
     authority to provide assistance under this heading is in 
     addition to any other authority to provide assistance to 
     foreign nations: Provided further, That the Secretary of 
     Defense may transfer such funds to appropriations for 
     military personnel; operation and maintenance; Overseas 
     Humanitarian, Disaster, and Civic Aid; procurement; research, 
     development, test and evaluation; and defense working capital 
     funds to accomplish the purposes provided herein: Provided 
     further, That this transfer authority is in addition to any 
     other transfer authority available to the Department of 
     Defense: Provided further, That upon a determination that all 
     or part of the funds so transferred from this appropriation 
     are not necessary for the purposes provided herein, such 
     amounts may be transferred back to this appropriation: 
     Provided further, That contributions of funds for the 
     purposes provided herein from any person, foreign government, 
     or international organization may be credited to this Fund, 
     and used for such purposes: Provided further, That the 
     Secretary shall notify the congressional defense committees 
     in writing upon the receipt and upon the transfer of any 
     contribution delineating the sources and amounts of the funds 
     received and the specific use of such contributions: Provided 
     further, That the Secretary of Defense shall, not fewer than 
     five days prior to making transfers from this appropriation 
     account, notify the congressional defense committees in 
     writing of the details of any such transfer: Provided 
     further, That the Secretary shall submit a report no later 
     than 30 days after the end of each fiscal quarter to the 
     congressional defense committees summarizing the details of 
     the transfer of funds from this appropriation.

                       Iraq Security Forces Fund

                     (including transfer of funds)

       For the ``Iraq Security Forces Fund'', $1,500,000,000, to 
     remain available until September 30, 2009: Provided, That 
     such funds shall be available to the Secretary of Defense, 
     notwithstanding any other provision of law, for the purpose 
     of allowing the Commander, Multi-National Security Transition 
     Command-Iraq, or the Secretary's designee, to provide 
     assistance, with the concurrence of the Secretary of State, 
     to the security forces of Iraq, including the provision of 
     equipment, supplies, services, training, facility and 
     infrastructure repair, renovation, and construction, and 
     funding: Provided further, That the authority to provide 
     assistance under this heading is in addition to any other 
     authority to provide assistance to foreign nations: Provided 
     further, That the Secretary of Defense may transfer such 
     funds to appropriations for military personnel; operation and 
     maintenance; Overseas Humanitarian, Disaster, and Civic Aid; 
     procurement; research, development, test and evaluation; and 
     defense working capital funds to accomplish the purposes 
     provided herein: Provided further, That this transfer 
     authority is in addition to any other transfer authority 
     available to the Department of Defense: Provided further, 
     That upon a determination that all or part of the funds so 
     transferred from this appropriation are not necessary for the 
     purposes provided herein, such amounts may be transferred 
     back to this appropriation: Provided further, That 
     contributions of funds for the purposes provided herein from 
     any person, foreign government, or international organization 
     may be credited to this Fund, and used for such purposes: 
     Provided further, That the Secretary shall notify the 
     congressional defense committees in writing upon the receipt 
     and upon the transfer of any contribution delineating the 
     sources and amounts of the funds received and the specific 
     use of such contributions: Provided further, That the 
     Secretary of Defense shall, not fewer than five days prior to 
     making transfers from this appropriation account, notify the 
     congressional defense committees in writing of the details of 
     any such transfer: Provided further, That the Secretary shall 
     submit a report no later than 30 days after the end of each 
     fiscal quarter to the congressional defense committees 
     summarizing the details of the transfer of funds from this 
     appropriation.

             Joint Improvised Explosive Device Defeat Fund

                     (including transfer of funds)

       For the ``Joint Improvised Explosive Device Defeat Fund'', 
     $2,264,500,000, to remain available until September 30, 2010: 
     Provided, That such funds shall be available to the Secretary 
     of Defense, notwithstanding any other provision of law, for 
     the purpose of allowing the Director of the Joint Improvised

[[Page S14297]]

     Explosive Device Defeat Organization to investigate, develop 
     and provide equipment, supplies, services, training, 
     facilities, personnel and funds to assist United States 
     forces in the defeat of improvised explosive devices: 
     Provided further, That within 60 days of the enactment of 
     this Act, a plan for the intended management and use of the 
     Fund is provided to the congressional defense committees: 
     Provided further, That the Secretary of Defense shall submit 
     a report not later than 30 days after the end of each fiscal 
     quarter to the congressional defense committees providing 
     assessments of the evolving threats, individual service 
     requirements to counter the threats, the current strategy for 
     predeployment training of members of the Armed Forces on 
     improvised explosive devices, and details on the execution of 
     this Fund: Provided further, That the Secretary of Defense 
     may transfer funds provided herein to appropriations for 
     military personnel; operation and maintenance; procurement; 
     research, development, test and evaluation; and defense 
     working capital funds to accomplish the purpose provided 
     herein: Provided further, That this transfer authority is in 
     addition to any other transfer authority available to the 
     Department of Defense: Provided further, That upon 
     determination that all or part of the funds so transferred 
     from this appropriation are not necessary for the purpose 
     provided herein, such amounts may be transferred back to this 
     appropriation: Provided further, That the Secretary of 
     Defense shall, not fewer than 5 days prior to making 
     transfers from this appropriation, notify the congressional 
     defense committees in writing of the details of any such 
     transfer.

                               TITLE III

                              PROCUREMENT

                       Aircraft Procurement, Army

       For an additional amount for ``Aircraft Procurement, 
     Army'', $1,300,503,000, to remain available for obligation 
     until September 30, 2010.

                       Missile Procurement, Army

       For an additional amount for ``Missile Procurement, Army'', 
     $133,621,000, to remain available for obligation until 
     September 30, 2010.

        Procurement of Weapons and Tracked Combat Vehicles, Army

       For an additional amount for ``Procurement of Weapons and 
     Tracked Combat Vehicles, Army'', $4,512,566,000, to remain 
     available for obligation until September 30, 2010.

                    Procurement of Ammunition, Army

       For an additional amount for ``Procurement of Ammunition, 
     Army'', $154,000,000, to remain available for obligation 
     until September 30, 2010.

                        Other Procurement, Army

       For an additional amount for ``Other Procurement, Army'', 
     $2,300,942,000, to remain available for obligation until 
     September 30, 2010.

                       Aircraft Procurement, Navy

       For an additional amount for ``Aircraft Procurement, 
     Navy'', $45,900,000, to remain available for obligation until 
     September 30, 2010.

                       Weapons Procurement, Navy

       For an additional amount for ``Weapons Procurement, Navy'', 
     $159,141,000, to remain available for obligation until 
     September 30, 2010.

            Procurement of Ammunition, Navy and Marine Corps

       For an additional amount for ``Procurement of Ammunition, 
     Navy and Marine Corps'', $304,945,000, to remain available 
     for obligation until September 30, 2010.

                        Other Procurement, Navy

       For an additional amount for ``Other Procurement, Navy'', 
     $140,061,000, to remain available for obligation until 
     September 30, 2010.

                       Procurement, Marine Corps

       For an additional amount for ``Procurement, Marine Corps'', 
     $733,550,000, to remain available for obligation until 
     September 30, 2010.

                    Aircraft Procurement, Air Force

       For an additional amount for ``Aircraft Procurement, Air 
     Force'', $133,500,000, to remain available for obligation 
     until September 30, 2010.

                  Procurement of Ammunition, Air Force

       For an additional amount for ``Procurement of Ammunition, 
     Air Force'', $52,203,000, to remain available for obligation 
     until September 30, 2010.

                      Other Procurement, Air Force

       For an additional amount for ``Other Procurement, Air 
     Force'', $199,617,000, to remain available for obligation 
     until September 30, 2010.

                       Procurement, Defense-Wide

       For an additional amount for ``Procurement, Defense-Wide'', 
     $274,743,000, to remain available for obligation until 
     September 30, 2010.

                                TITLE IV

                     REVOLVING AND MANAGEMENT FUNDS

                     Defense Working Capital Funds

       For an additional amount of ``Defense Working Capital 
     Funds'', $1,000,000,000, to remain available for obligation 
     until September 30, 2010.

                                TITLE V

                  OTHER DEPARTMENT OF DEFENSE PROGRAMS

                         Defense Health Program

       For an additional amount for ``Defense Health Program'', 
     $575,701,000 for Operation and maintenance.

         Drug Interdiction and Counter-Drug Activities, Defense

       For an additional amount for ``Drug Interdiction and 
     Counter-Drug Activities, Defense'', $128,809,000.

                                TITLE VI

                           GENERAL PROVISIONS

       Sec. 601.  Appropriations provided in this Act are 
     available for obligation until September 30, 2008, unless 
     otherwise so provided in this Act.
       Sec. 602.  Notwithstanding any other provision of law or of 
     this Act, funds made available in this Act are in addition to 
     amounts appropriated or otherwise made available for the 
     Department of Defense for fiscal year 2008.

                          (TRANSFER OF FUNDS)

       Sec. 603.  Upon the determination of the Secretary of 
     Defense that such action is necessary in the national 
     interest, the Secretary may transfer between appropriations 
     up to $3,000,000,000 of the funds made available to the 
     Department of Defense in this Act: Provided, That the 
     Secretary shall notify the Congress promptly of each transfer 
     made pursuant to the authority in this section: Provided 
     further, That the authority provided in this section is in 
     addition to any other transfer authority available to the 
     Department of Defense.
       Sec. 604.  Funds appropriated in this Act, or made 
     available by the transfer of funds in or pursuant to this 
     Act, for intelligence activities are deemed to be 
     specifically authorized by the Congress for purposes of 
     section 504 of the National Security Act of 1947 (50 U.S.C. 
     414).
       Sec. 605.  None of the funds provided in this Act may be 
     used to finance programs or activities denied by Congress in 
     fiscal years 2007 or 2008 appropriations to the Department of 
     Defense or to initiate a procurement or research, 
     development, test and evaluation new start program without 
     prior written notification to the congressional defense 
     committees.
       Sec. 606. (a) Availability of Funds for CERP.--From funds 
     made available in this Act to the Department of Defense, not 
     to exceed $500,000,000 may be used, notwithstanding any other 
     provision of law, to fund the Commander's Emergency Response 
     Program, for the purpose of enabling military commanders in 
     Iraq to respond to urgent humanitarian relief and 
     reconstruction requirements within their areas of 
     responsibility by carrying out programs that will immediately 
     assist the Iraqi people, and to fund a similar program to 
     assist the people of Afghanistan.
       (b) Quarterly Reports.--Not later than 15 days after the 
     end of each fiscal year quarter (beginning with the first 
     quarter of fiscal year 2008), the Secretary of Defense shall 
     submit to the congressional defense committees a report 
     regarding the source of funds and the allocation and use of 
     funds during that quarter that were made available pursuant 
     to the authority provided in this section or under any other 
     provision of law for the purposes of the programs under 
     subsection (a).
       Sec. 607.  During the current fiscal year, funds available 
     to the Department of Defense for operation and maintenance 
     may be used, notwithstanding any other provision of law, to 
     provide supplies, services, transportation, including airlift 
     and sealift, and other logistical support to coalition forces 
     supporting military and stability operations in Iraq and 
     Afghanistan: Provided, That the Secretary of Defense shall 
     provide quarterly reports to the congressional defense 
     committees regarding support provided under this section.
       Sec. 608.  During fiscal year 2008, supervision and 
     administration costs associated with projects carried out 
     with funds appropriated to ``Afghanistan Security Forces 
     Fund'' or ``Iraq Security Forces Fund'' in this Act may be 
     obligated at the time a construction contract is awarded: 
     Provided, That for the purpose of this section, supervision 
     and administration costs include all in-house Government 
     costs.
       Sec. 609. (a) Reports on Progress Toward Stability in 
     Iraq.--Not later than 60 days after the date of the enactment 
     of this Act and every 90 days thereafter through the end of 
     fiscal year 2008, the Secretary of Defense shall set forth in 
     a report to Congress a comprehensive set of performance 
     indicators and measures for progress toward military and 
     political stability in Iraq.
       (b) Scope of Reports.--Each report shall include 
     performance standards and goals for security, economic, and 
     security force training objectives in Iraq together with a 
     notional timetable for achieving these goals.
       (c) Specific Elements.--In specific, each report shall 
     require, at a minimum, the following:
       (1) With respect to stability and security in Iraq, the 
     following:
       (A) Key measures of political stability, including the 
     important political milestones that must be achieved over the 
     next several years.
       (B) The primary indicators of a stable security environment 
     in Iraq, such as number of engagements per day, numbers of 
     trained Iraqi forces, and trends relating to numbers and 
     types of ethnic and religious-based hostile encounters.
       (C) An assessment of the estimated strength of the 
     insurgency in Iraq and the

[[Page S14298]]

     extent to which it is composed of non-Iraqi fighters.
       (D) A description of all militias operating in Iraq, 
     including the number, size, equipment strength, military 
     effectiveness, sources of support, legal status, and efforts 
     to disarm or reintegrate each militia.
       (E) Key indicators of economic activity that should be 
     considered the most important for determining the prospects 
     of stability in Iraq, including--
       (i) unemployment levels;
       (ii) electricity, water, and oil production rates; and
       (iii) hunger and poverty levels.
       (F) The criteria the Administration will use to determine 
     when it is safe to begin withdrawing United States forces 
     from Iraq.
       (2) With respect to the training and performance of 
     security forces in Iraq, the following:
       (A) The training provided Iraqi military and other Ministry 
     of Defense forces and the equipment used by such forces.
       (B) Key criteria for assessing the capabilities and 
     readiness of the Iraqi military and other Ministry of Defense 
     forces, goals for achieving certain capability and readiness 
     levels (as well as for recruiting, training, and equipping 
     these forces), and the milestones and notional timetable for 
     achieving these goals.
       (C) The operational readiness status of the Iraqi military 
     forces, including the type, number, size, and organizational 
     structure of Iraqi battalions that are--
       (i) capable of conducting counterinsurgency operations 
     independently;
       (ii) capable of conducting counterinsurgency operations 
     with the support of United States or coalition forces; or
       (iii) not ready to conduct counter-
     insurgency operations.
       (D) The rates of absenteeism in the Iraqi military forces 
     and the extent to which insurgents have infiltrated such 
     forces.
       (E) The training provided Iraqi police and other Ministry 
     of Interior forces and the equipment used by such forces.
       (F) Key criteria for assessing the capabilities and 
     readiness of the Iraqi police and other Ministry of Interior 
     forces, goals for achieving certain capability and readiness 
     levels (as well as for recruiting, training, and equipping), 
     and the milestones and notional timetable for achieving these 
     goals, including--
       (i) the number of police recruits that have received 
     classroom training and the duration of such instruction;
       (ii) the number of veteran police officers who have 
     received classroom instruction and the duration of such 
     instruction;
       (iii) the number of police candidates screened by the Iraqi 
     Police Screening Service, the number of candidates derived 
     from other entry procedures, and the success rates of those 
     groups of candidates;
       (iv) the number of Iraqi police forces who have received 
     field training by international police trainers and the 
     duration of such instruction; and
       (v) attrition rates and measures of absenteeism and 
     infiltration by insurgents.
       (G) The estimated total number of Iraqi battalions needed 
     for the Iraqi security forces to perform duties now being 
     undertaken by coalition forces, including defending the 
     borders of Iraq and providing adequate levels of law and 
     order throughout Iraq.
       (H) The effectiveness of the Iraqi military and police 
     officer cadres and the chain of command.
       (I) The number of United States and coalition advisors 
     needed to support the Iraqi security forces and associated 
     ministries.
       (J) An assessment, in a classified annex if necessary, of 
     United States military requirements, including planned force 
     rotations, through the end of calendar year 2008.
       Sec. 610.  Each amount appropriated or otherwise made 
     available in this Act is designated as an emergency 
     requirement and necessary to meet emergency needs pursuant to 
     subsections (a) and (b) of section 204 of S. Con. Res. 21 
     (110th Congress), the concurrent resolution on the budget for 
     fiscal year 2008.
       Sec. 611.  None of the funds appropriated or otherwise made 
     available by this Act may be obligated or expended to provide 
     award fees to any defense contractor for performance that 
     does not meet the requirements of the contract.
       Sec. 612.  No funds appropriated or otherwise made 
     available by this Act may be used by the Government of the 
     United States to enter into an agreement with the Government 
     of Iraq that would subject members of the Armed Forces of the 
     United States to the jurisdiction of Iraq criminal courts or 
     punishment under Iraq law.
       Sec. 613.  Notwithstanding any other provision of law, the 
     Secretary of the Army may reimburse a member for expenses 
     incurred by the member or family member when such expenses 
     are otherwise not reimbursable under law: Provided, That such 
     expenses must have been incurred in good faith as a direct 
     consequence of reasonable preparation for, or execution of, 
     military orders: Provided further, That reimbursement under 
     this section shall be allowed only in situations wherein 
     other authorities are insufficient to remedy a hardship 
     determined by the Secretary, and only when the Secretary 
     determines that reimbursement of the expense is in the best 
     interest of the member and the United States.
       Sec. 614.  In this Act, the term ``congressional defense 
     committees'' means--
       (1) the Committees on Armed Services and Appropriations of 
     the Senate; and
       (2) the Committees on Armed Services and Appropriations of 
     the House of Representatives.
       Sec. 615.  This Act may be cited as the ``Emergency 
     Supplemental Appropriations Act for Defense, 2008''.
                                 ______
                                 
      By Mr. REID (for Mrs. Clinton (for herself, Mr. Rockefeller, and 
        Ms. Landrieu)):
  S. 2341. A bill to provide Individual Development Accounts to support 
foster youths who are transitioning from the foster care system; to the 
Committee on Health, Education, Labor, and Pensions.
  Mrs. CLINTON. Mr. President, youth aging out of foster care 
constitute one of our Nation's most vulnerable populations. Not only do 
these young people carry wih them histories of child abuse and neglect, 
but they are also often unsupported in their transition from foster 
care to independent living. Today, I am pleased to introduce the 
Focusing Investments and Resources for a Safe Transition Act or FIRST 
Act, a piece of legislation that will offer much needed financial 
assistance to young adults as they exit the child welfare system.
  Research shows that youth aging out of foster care fare worse than 
their counterparts in the general population on a variety of social, 
educational, and health indicators. These youth report significantly 
lower levels of education and are more likely to be unemployed or 
homeless. Research also shows that, as they prepare to exit foster 
care, these young adults do not receive the independent living services 
necessary to support them through their transition. When it comes to 
guidance on educational opportunities and employment, money management 
and housing, resources for foster youth are simply inadequate.
  These young people need our help, and they need it now. According to 
the most recent Federal data, over 20,000 youth age out of the foster 
care system each year. We must intervene in order to prevent them from 
experiencing the unfavorable outcomes described in the research. The 
FIRST Act meets this task head on by addressing the financial status of 
youth exiting foster care. Specifically, the legislation supports 
states in setting up Individual Development Accounts, or IDAs, for 
those preparing to age out of the child welfare system. The accounts 
will contain a Federal deposit on behalf of foster youth matched by 
public and private community partners.
  Upon transitioning from foster care, and after completing money 
management training, the legislation permits youths to withdraw their 
savings to pay for necessities such as educational opportunities, 
vocational training, and housing--elements critical to achieving self-
sufficiency. In short, with these funds, youth aging out of the child 
welfare system will have a financial base on which they can build self-
sustaining, goal-oriented, independent lives.
  A similar program is currently being piloted in my State of New York. 
This summer, Mayor Mike Bloomberg announced that 450 New York City 
foster youths will be provided IDAs through a program called Youth 
Financial Empowerment. Similarly, the Jim Casey Youth Opportunities 
Passport program has experienced success in offering IDAs to foster 
youth in several cities.
  For years I have been encouraging Congress to take action regarding 
the needs of foster youth. In 2002 I introduced the Opportunity 
Passport Act, which, among other provisions, called for the 
establishment of IDAs for those aging out of the child welfare system. 
Since that time we have failed to make progress on this issue while 
youth continue to exit foster care without the resources they need. It 
is under these circumstances that I come forward again today to present 
the needs of this vulnerable group of young people. It is my hope that 
you will join me in putting foster youth FIRST and support this 
important legislation.
                                 ______
                                 
      By Mr. REED:
  S. 2343. A bill to amend the Real Estate Settlement Procedures Act to 
require mortgage originators to make their fees more transparent; to 
the Committee on Banking, Housing, and Urban Affairs.
  Mr. REED. Mr. President, today I introduce the Real Estate 
Transparency Act of 2007. This bill would amend the

[[Page S14299]]

Real Estate Settlement Practices Act of 1974 to improve the early loan 
disclosures given to those applying for a mortgage, ensure binding and 
transparent payment agreements between mortgage originators and 
borrowers, and require that a borrower be given a copy of their final 
settlement statement at least one business day before settlement so 
that it can be thoroughly examined before closing.
  As we are all too aware, current Good Faith Estimates do not provide 
enough useful information to help borrowers truly make informed lending 
decisions. We have heard too many stories of borrowers not 
understanding the terms of their loan or not being told about 
unexpectedly high settlement fees until they are at the closing table. 
This lack of early and appropriate disclosures regarding the terms of a 
mortgage loan and the costs of closing on that loan hinders a family's 
ability to shop for the best loan product for the purchase of a home, 
and also has allowed families to be taken advantage of by unscrupulous 
brokers and lenders.
  First and foremost, the Real Estate Transparency Act would replace 
the current Good Faith Estimate with an early written settlement 
statement of all of the costs to be charged to that person at or before 
settlement of the loan. It would require that this early settlement 
statement be in the same form as the final settlement statement, 
currently known as the HUD 1. The borrower would not be liable for any 
fees which are not disclosed on this early settlement statement, except 
for third party fees within 10 percent of the cost listed on the early 
settlement statement, or fees for bona fide and reasonable expenses not 
anticipated by the mortgage originator for an inspection, appraisal, 
survey, or flood certification. This early written settlement statement 
should allow consumers to compare the costs associated with different 
loan products from different mortgage originators and shop around for 
the best product for them early in the process.
  Second, this legislation would require for the first time that the 
HUD 1 or final settlement statement be provided to the borrower at 
least one business day before settlement. If this final settlement 
statement is not provided to the borrower, then lenders will be subject 
to statutory damages.
  Third, this bill would require mortgage originators to provide 
borrowers with a written agreement itemizing all of the fees they may 
charge the borrower, including any origination fees, underwriting fees, 
broker fees, or other fees to be charged at or before settlement of 
such loan to be paid to the lender, the broker, or affiliates of the 
lender or broker. In addition, this written agreement would have to set 
out and explain three possible methods of payment for such fees: 
payment in cash before or at settlement; adding such fees into the loan 
amount to be borrowed; and increasing the interest rate of the loan. 
The borrower also could choose to both pay in cash and incorporate some 
of the fees into the loan amount. This written agreement regarding 
mortgage origination fees would have to be provided to the borrower 
within three days of application and be signed before the borrower is 
obligated to pay any of these fees. Not only should this provide 
greater transparency regarding what fees are going to be charged by the 
mortgage originator, consumers also can decide not to sign on the 
dotted line if they do not like the costs associated with the loan.
  Finally, the bill subjects mortgage originators to statutory damages 
for violations of these disclosure provisions equal to the sum of the 
borrower's actual damages plus $5,000 for each instance such instance 
of noncompliance.
  Congress needs to take many steps to address the subprime mortgage 
crisis and to reinstate confidence among our nation's homeowners and 
those we hope will become homeowners. I believe that giving consumers 
the information they need regarding their loan costs is a vital part of 
improving this complicated and often overwhelming process. Borrowers 
need to better understand the financial ramifications of choosing a 
certain loan product from a certain mortgage originator early in this 
process, and before they actually consummate the loan. I hope my 
colleagues will join with me in supporting this legislation that I 
believe will greatly improve mortgage loan disclosures.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2343

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Real Estate Transparency Act 
     of 2007''.

     SEC. 2. GREATER TRANSPARENCY OF SETTLEMENT FEES.

       (a) In General.--Section 4 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2603) is amended--
       (1) in subsection (a), in the first sentence, by striking 
     ``The Secretary,'' and inserting ``Provision of Settlement 
     Statement.--The Secretary,'';
       (2) in subsection (b)--
       (A) in the first sentence--
       (i) by striking ``The form'' and inserting ``Advance 
     Inspection of Settlement Statement.--The form''; and
       (ii) by striking ``, except'' and all that follows through 
     ``available at such time''; and
       (B) in the second sentence--
       (i) by striking ``Upon the request of the borrower to 
     inspect the form prescribed under this section during the'' 
     and inserting ``At least 1'';
       (ii) by striking ``shall permit the'' and inserting ``shall 
     provide a completed, written copy of the settlement statement 
     to the''; and
       (iii) by striking ``to inspect those'' and all that follows 
     through ``preceding day''; and
       (3) by adding at the end the following:
       ``(c) Agreement for Originator Fees.--
       ``(1) Notice of fees.--Not later than 3 days after a person 
     applies for a federally related mortgage loan, the mortgage 
     originator of such loan shall provide to that person a 
     written agreement itemizing all of the fees that person may 
     be charged by the mortgage originator, including any 
     origination fees, underwriting fees, broker fees, and any 
     other fees to be charged at or before the settlement of such 
     loan to be paid to the mortgage originator. Bona fide 
     discount points payable by such person to reduce the interest 
     rate of such loan need not be included on any originator fees 
     agreement under this paragraph.
       ``(2) Method of payment.--
       ``(A) In general.--Each originator fee agreement under 
     paragraph (1) shall set out the following 3 methods for the 
     payment of the fees described in any such agreement:
       ``(i) Payment in cash before or at settlement.
       ``(ii) Adding such fees into the total loan amount to be 
     borrowed.
       ``(iii) Increasing the interest rate of the loan.
       ``(B) Borrower's choice of payment method.--Each applicant 
     for a federally related mortgage loan, in determining how to 
     pay any of the fees described in an originator fees agreement 
     under paragraph (1), shall choose one of the payment methods 
     described under subparagraph (A), except that the applicant 
     may choose to combine the payment methods described under 
     clauses (i) and (ii) of subparagraph (A).
       ``(C) Required explanation.--
       ``(i) Written.--Each originator fee agreement under 
     paragraph (1) shall include a written explanation of each of 
     the payment options listed in subparagraph (A), along with a 
     clear and concise illustration of the effect of each option 
     on the amount borrowed, the interest rate, the payments 
     required on the loan, and any other loan terms which might be 
     affected by such option.
       ``(ii) Oral.--Each mortgage originator of a federally 
     related mortgage loan shall explain to each applicant for 
     such a loan each of the payment options listed in 
     subparagraph (A) before accepting any payment from that 
     person.
       ``(D) Required signature.--Before any applicant for a 
     federally related mortgage loan is obligated to pay any of 
     the fees described in the originator fees agreement under 
     paragraph (1), the person shall have--
       ``(i) agreed to and signed the originator fees agreement 
     described under paragraph (1); and
       ``(ii) exercised the option for determining the method of 
     payment for such fees.
       ``(d) Early Settlement Statement.--
       ``(1) In general.--Not later than 3 days after a person 
     applies for a federally related mortgage loan, the mortgage 
     originator of such loan shall provide to that person a 
     written early settlement statement of all of the settlement 
     costs to be charged to that person at or before settlement. 
     The early settlement statement shall be in the same or a 
     similar form as the statement of settlement costs provided to 
     the person pursuant to subsection (a).
       ``(2) Required inclusions.--Each early settlement statement 
     under this subsection shall include an itemization of the 
     following:
       ``(A) All fees agreed to by the applicant of a federally 
     related mortgage loan pursuant to the originator fees 
     agreement described under subsection (c)(1).
       ``(B) All fees to be charged to that applicant by 
     independent third parties, including government agencies at 
     or before settlement of the loan, plus all escrows reserves 
     which may be required of that person.

[[Page S14300]]

       ``(e) Borrower Liability for Fees.--No borrower shall be 
     liable for any fees which are not disclosed on an early 
     settlement statement, except that the borrower is liable for 
     such fees if--
       ``(1) the total amount charged for fees imposed by 
     independent third parties is--
       ``(A) not more than 10 percent greater than that stated in 
     the early settlement statement; or
       ``(B) greater than that allowed under subparagraph (A) 
     because bona fide and reasonable expenses were incurred by 
     such third parties for unanticipated inspection, appraisal, 
     survey, or flood certification of the home which was the 
     subject of such loan;
       ``(2) the mortgage originator provides a reasonable 
     explanation of the circumstances surrounding the settlement 
     of the loan of the borrower which were different than 
     anticipated by the mortgage originator when the statement was 
     provided; and
       ``(3) the mortgage originator does not engage in a pattern 
     or practice of providing early settlement statements which 
     disclose individual fees of independent third parties in 
     different amounts than actually charged at settlement.
       ``(f) Liability for Failure to Comply.--
       ``(1) In general.--Whoever fails to comply with any 
     provision of this section shall be liable to the borrower for 
     an amount equal to the sum of--
       ``(A) any actual damages to the borrower as a result of the 
     failure; and
       ``(B) $5,000 for each such instance of noncompliance.
       ``(2) Court costs.--In addition to any amount under 
     paragraph (1), in the case of any successful action brought 
     by a borrower under this subsection, such borrower shall be 
     reimbursed for the costs of the action, together with any 
     attorneys fees incurred in connection with such action as the 
     court may determine to be reasonable under the circumstances.
       ``(g) Definition.--As used in this section, the term 
     `mortgage originator'--
       ``(1) means any person who, for direct or indirect 
     compensation or gain, or in the expectation of direct or 
     indirect compensation or gain--
       ``(A) takes a residential mortgage loan application; or
       ``(B) assists a consumer in obtaining or applying to obtain 
     a residential mortgage loan; and
       ``(2) includes any person who makes loans directly or 
     brokers loans for others.''.
       (b) Conforming Amendment.--Section 5(c) of the Real Estate 
     Settlement Procedures Act of 1974 (12 U.S.C. 2604(c)) is 
     hereby repealed.

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