[Congressional Record Volume 158, Number 120 (Monday, September 10, 2012)]
[House]
[Pages H5737-H5740]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FHA EMERGENCY FISCAL SOLVENCY ACT OF 2012
Mrs. BIGGERT. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 4264) to help ensure the fiscal solvency of the FHA mortgage
insurance programs of the Secretary of Housing and Urban Development,
and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 4264
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
Emergency Fiscal Solvency Act of 2012''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. FHA annual mortgage insurance premiums.
Sec. 3. Indemnification by FHA mortgagees.
Sec. 4. Early period delinquencies.
Sec. 5. Semiannual actuarial studies of MMIF during periods of capital
depletion.
Sec. 6. Delegation of FHA insuring authority.
Sec. 7. Authority to terminate FHA mortgagee origination and
underwriting approval.
Sec. 8. Authorization to participate in the origination of FHA-insured
loans.
Sec. 9. Reporting of mortgagee actions taken against other mortgagees.
Sec. 10. Default and origination information by loan servicer and
originating direct endorsement lender.
Sec. 11. Deputy Assistant Secretary of FHA for Risk Management and
Regulatory Affairs.
Sec. 12. Establishment of Chief Risk Officer for GNMA.
Sec. 13. Report on mortgage servicers.
Sec. 14. FHA emergency capital plan.
Sec. 15. FHA safety and soundness review.
Sec. 16. FHA disclosure standards.
Sec. 17. Report on streamlining FHA programs.
Sec. 18. Budget compliance.
SEC. 2. FHA ANNUAL MORTGAGE INSURANCE PREMIUMS.
(a) In General.--Subparagraph (B) of section 203(c)(2) of
the National Housing Act (12 U.S.C. 1709(c)(2)(B)) is
amended--
(1) in the matter preceding clause (i)--
(A) by striking ``may'' and inserting ``shall'';
(B) by striking ``not exceeding 1.5 percent'' and inserting
``not less than 0.55 percent''; and
(C) by inserting ``and not exceeding 2.0 percent of such
remaining insured principal balance'' before ``for the
following periods:''; and
(2) in clause (ii), by striking ``1.55 percent'' and
inserting ``2.05 percent''.
(b) Effective Date.--The amendments made by subsection (a)
take effect upon the expiration of the 6-month period
beginning on the date of the enactment of this Act.
SEC. 3. INDEMNIFICATION BY FHA MORTGAGEES.
Section 202 of the National Housing Act (12 U.S.C. 1708) is
amended by adding at the end the following new subsection:
``(i) Indemnification by Mortgagees.--
``(1) In general.--If the Secretary determines that the
mortgagee knew, or should have known, of a serious or
material violation of the requirements established by the
Secretary with respect to a mortgage executed by a mortgagee
approved by the Secretary under the direct endorsement
program or insured by a mortgagee pursuant to the delegation
of authority under section 256 such that the mortgage loan
should not have been approved and endorsed for insurance, and
the Secretary pays an insurance claim with respect to the
mortgage within a reasonable period specified by the
Secretary, the Secretary may require the mortgagee approved
by the Secretary under the direct endorsement program or the
mortgagee delegated authority under section 256 to indemnify
the Secretary for the loss, irrespective of whether the
violation caused the mortgage default.
``(2) Fraud or misrepresentation.--If fraud or
misrepresentation was involved in connection with the
origination or underwriting and the Secretary determines that
the mortgagee knew or should have known of the fraud or
misrepresentation, the Secretary shall require the mortgagee
approved by the Secretary under the direct endorsement
program or the mortgagee delegated authority under section
256 to indemnify the Secretary for the loss regardless of
when an insurance claim is paid.
``(3) Appeals process.--The Secretary shall, by regulation,
establish an appeals process for mortgagees to appeal
indemnification determinations made pursuant to paragraph (1)
or (2).
``(4) Requirements and procedures.--The Secretary shall
issue regulations establishing appropriate requirements and
procedures governing the indemnification of the
[[Page H5738]]
Secretary by the mortgagee, including public reporting on--
``(A) the number of loans that--
``(i) were not originated or underwritten in accordance
with the requirements established by the Secretary; and
``(ii) involved fraud or misrepresentation in connection
with the origination or underwriting; and
``(B) the financial impact on the Mutual Mortgage Insurance
Fund when indemnification is required.''.
SEC. 4. EARLY PERIOD DELINQUENCIES.
Subsection (a) of section 202 of the National Housing Act
(12 U.S.C. 1708(a)) is amended by adding at the end the
following new paragraphs:
``(8) Programmatic review of early period delinquencies.--
The Secretary shall establish and maintain a program--
``(A) to review the cause of each early period delinquency
on a mortgage that is an obligation of the Mutual Mortgage
Insurance Fund;
``(B) to require indemnification of the Secretary for a
loss associated with any such early period delinquency that
is the result of a material violation, as determined by the
Secretary, of any provision, regulation, or other guideline
established or promulgated pursuant to this title; and
``(C) to publicly report--
``(i) a summary of the results of all early period
delinquencies reviewed under subparagraph (A);
``(ii) any indemnifications required under subparagraph
(B); and
``(iii) the financial impact on the Mutual Mortgage
Insurance Fund of any such indemnifications.
``(9) Definition of early period delinquency.--For purposes
of this section, the term `early period delinquency' means,
with respect to a mortgage, that the mortgage becomes 90 or
more days delinquent within 24 months of the origination of
such mortgage.''.
SEC. 5. SEMIANNUAL ACTUARIAL STUDIES OF MMIF DURING PERIODS
OF CAPITAL DEPLETION.
(a) In General.--Paragraph (4) of section 202(a) of the
National Housing Act (12 U.S.C. 1708(a)(4)) is amended--
(1) in the first sentence, by inserting ``except as
provided in subparagraph (B),'' after ``to be conducted
annually,'';
(2) in the second sentence, by inserting ``, except as
provided in subparagraph (B),'' after ``annually'';
(3) by striking the paragraph designation and heading and
all that follows through ``The Secretary shall provide'' and
inserting the following:
``(4) Independent actuarial study.--
``(A) Annual study.--The Secretary shall provide''; and
(4) by adding at the end the following new subparagraph:
``(B) Semiannual studies during periods of capital
depletion.--During any period that the Fund fails to maintain
sufficient capital to comply with the capital ratio
requirement under section 205(f)(2)--
``(i) the independent study required by subparagraph (A)
shall be conducted semiannually and shall analyze the
financial position of the Fund as of September 30 and March
31 of each fiscal year during such period; and
``(ii) the Secretary shall submit a report meeting the
requirements of subparagraph (A) for each such semiannual
study.''.
(b) Analysis of Quarterly Actuarial Studies.--The Secretary
of Housing and Urban Development shall conduct an analysis of
the cost and feasibility of providing for an independent
actuarial study of the Mutual Mortgage Insurance Fund on a
calendar quarterly basis, which shall compare the cost and
feasibility of conducting such a study on a quarterly basis
as compared to a semi-annual basis and shall determine
whether such an actuarial study can be conducted on a
quarterly basis without substantial additional costs to the
taxpayers. Not later than the expiration of the 90-day period
beginning on the date of the enactment of this Act, the
Secretary shall submit a report to the Congress setting forth
the findings and conclusion of the analysis conducted
pursuant to this subsection.
SEC. 6. DELEGATION OF FHA INSURING AUTHORITY.
Section 256 of the National Housing Act (12 U.S.C. 1715z-
21) is amended--
(1) by striking subsection (c);
(2) in subsection (e), by striking ``, including'' and all
that follows through ``by the mortgagee''; and
(3) by redesignating subsections (d) and (e) as subsections
(c) and (d), respectively.
SEC. 7. AUTHORITY TO TERMINATE FHA MORTGAGEE ORIGINATION AND
UNDERWRITING APPROVAL.
Section 533 of the National Housing Act (12 U.S.C. 1735f-
11) is amended--
(1) in the first sentence of subsection (b), by inserting
``or areas or on a nationwide basis'' after ``area'' each
place such term appears; and
(2) in subsection (c), by striking ``(c)'' and all that
follows through ``The Secretary'' in the first sentence of
paragraph (2) and inserting the following:
``(c) Termination of Mortgagee Origination and Underwriting
Approval.--
``(1) Termination authority.--If the Secretary determines,
under the comparison provided in subsection (b), that a
mortgagee has a rate of early defaults and claims that is
excessive, the Secretary may terminate the approval of the
mortgagee to originate or underwrite single family mortgages
for any area, or areas, or on a nationwide basis,
notwithstanding section 202(c) of this Act.
``(2) Procedure.--The Secretary''.
SEC. 8. AUTHORIZATION TO PARTICIPATE IN THE ORIGINATION OF
FHA-INSURED LOANS.
(a) Single Family Mortgages.--Section 203(b) of the
National Housing Act (12 U.S.C. 1709(b)) is amended by
striking paragraph (1) and inserting the following new
paragraph:
``(1) Have been made to a mortgagee approved by the
Secretary or to a person or entity authorized by the
Secretary under section 202(d)(1) to participate in the
origination of the mortgage, and be held by a mortgagee
approved by the Secretary as responsible and able to service
the mortgage properly.''.
(b) Home Equity Conversion Mortgages.--Section 255(d) of
the National Housing Act (12 U.S.C. 1715z-20(d)) is amended
by striking paragraph (1) and inserting the following new
paragraph:
``(1) have been originated by a mortgagee approved by, or
by a person or entity authorized under section 202(d)(1) to
participate in the origination by, the Secretary;''.
SEC. 9. REPORTING OF MORTGAGEE ACTIONS TAKEN AGAINST OTHER
MORTGAGEES.
Section 202 of the National Housing Act (12 U.S.C. 1708),
as amended by the preceding provisions of this Act, is
further amended by adding at the end the following new
subsection:
``(j) Notification of Mortgagee Actions.--The Secretary
shall require each mortgagee, as a condition for approval by
the Secretary to originate or underwrite mortgages on single
family or multifamily housing that are insured by the
Secretary, if such mortgagee engages in the purchase of
mortgages insured by the Secretary and originated by other
mortgagees or in the purchase of the servicing rights to such
mortgages, and such mortgagee at any time takes action to
terminate or discontinue such purchases from another
mortgagee based on any determination or evidence of fraud or
material misrepresentation in connection with the origination
of such mortgages, to notify the Secretary of the action
taken and the reasons for such action not later than 15 days
after taking such action.''.
SEC. 10. DEFAULT AND ORIGINATION INFORMATION BY LOAN SERVICER
AND ORIGINATING DIRECT ENDORSEMENT LENDER.
(a) Collection of Information.--Paragraph (2) of section
540(b) of the National Housing Act (12 U.S.C. 1712 U.S.C.
1735f-18(b)(2)) is amended by adding at the end the following
new subparagraph:
``(C) For each entity that services insured mortgages, data
on the number of claims paid to each servicing mortgagee
during each calendar quarter occurring during the applicable
collection period.''.
(b) Applicability.--Information described in subparagraph
(C) of section 540(b)(2) of the National Housing Act, as
added by subsection (a) of this section, shall first be made
available under such section 540 for the applicable
collection period (as such term is defined in such section)
relating to the first calendar quarter ending after the
expiration of the 12-month period that begins on the date of
the enactment of this Act.
SEC. 11. DEPUTY ASSISTANT SECRETARY OF FHA FOR RISK
MANAGEMENT AND REGULATORY AFFAIRS.
(a) Establishment of Position.--Subsection (b) of section 4
of the Department of Housing and Urban Development Act (42
U.S.C. 3533(b)) is amended--
(1) by inserting ``(1)'' after ``(b)''; and
(2) by adding at the end the following new paragraph:
``(2) There shall be in the Department, within the Federal
Housing Administration, a Deputy Assistant Secretary for Risk
Management and Regulatory Affairs, who shall be appointed by
the Secretary and shall be responsible to the Federal Housing
Commissioner for all matters relating to managing and
mitigating risk to the mortgage insurance funds of the
Department and ensuring the performance of mortgages insured
by the Department.''.
(b) Termination.--Upon the appointment of the initial
Deputy Assistant Secretary for Risk Management and Regulatory
Affairs pursuant to section 4(b)(2) of the Department of
Housing and Urban Development Act, as amended by subsection
(a) of this section, the position of chief risk officer
within the Federal Housing Administration, filled by
appointment by the Federal Housing Commissioner, is
abolished.
SEC. 12. ESTABLISHMENT OF CHIEF RISK OFFICER FOR GNMA.
Section 4 of the Department of Housing and Urban
Development Act (42 U.S.C. 3533) is amended by adding after
subsection (g), as added by section 1442 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act (Public Law
111-203; 124 Stat. 2163), the following new subsection:
``(h) There shall be in the Department a Chief Risk Officer
for the Government National Mortgage Association, who shall--
``(1) be designated by the Secretary;
``(2) be responsible to the President of the Association
for all matters related to evaluating, managing, and
mitigating risk to the programs of the Association;
``(3) be in the competitive service or the senior executive
service;
``(4) be a career appointee;
``(5) be designated from among individuals who possess
demonstrated ability in general
[[Page H5739]]
management of, and knowledge of and extensive practical
experience in risk evaluation practices in large governmental
or business entities; and
``(6) shall not be required to obtain the prior approval,
comment, or review of any officer or agency of the United
States before submitting to the Congress, or any committee or
subcommittee thereof, any reports, recommendations,
testimony, or comments if such submission include a statement
indicating that the views expressed therein are those of the
Chief Risk Officer of the Association and do not necessarily
represent the views of the Secretary.''.
SEC. 13. REPORT ON MORTGAGE SERVICERS.
(a) Examination.--The Secretary of Housing and Urban
Development shall conduct an examination into mortgage
servicer compliance with the loan servicing, loss mitigation,
and insurance claim submission guidelines of the FHA mortgage
insurance programs under the National Housing Act (12 U.S.C.
1701 et seq.), and an estimate of the annual costs to the
Mutual Mortgage Insurance Fund, since 2008, resulting from
any failures by mortgage servicers to comply with such
guidelines.
(b) Report.--Not later than the expiration of the 120-day
period that begins upon the date of the enactment of this
Act, the Secretary shall submit a report to the Congress on
the results of the examination conducted pursuant to
subsection (a), including recommendations for any
administrative and legislative actions to improve mortgage
servicer compliance with the guidelines referred to in
subsection (a).
SEC. 14. FHA EMERGENCY CAPITAL PLAN.
(a) Establishment.--Not later than the expiration of the
30-day period beginning on the date of the enactment of this
Act, the Secretary of Housing and Urban Development shall
develop, submit to the Congress, and commence implementation
of an emergency capital plan for the restoration of the
fiscal solvency of the Mutual Mortgage Insurance Fund (in
this section referred to as the ``Fund'').
(b) Contents.--The emergency capital plan developed
pursuant to this section shall--
(1) provide a detailed explanation of the processes and
controls by which amounts of capital that are assets of the
Fund are monitored and tracked;
(2) establish a plan to ensure the financial safety and
soundness of the Fund that avoids the need for borrowing
amounts from the Treasury of the United States to meet
obligations of the Fund; and
(3) describe the procedure by which, if necessary, any
amounts from the Treasury needed to meet obligations of the
Fund will be obtained from the Treasury.
(c) Monthly Reports.--
(1) Reports.--Subject to paragraph (3), upon the conclusion
of each calendar month ending after the 14-day period that
begins on the date of the enactment of this Act, the
Secretary of Housing and Urban Development shall submit to
the Congress a report assessing the financial status of the
Fund at the conclusion of such month and setting forth the
information described in paragraph (2).
(2) Contents.--Each report required under paragraph (1) for
a month shall contain the following information regarding the
Fund as of the conclusion of such month:
(A) The number of mortgages that are obligations of the
Fund that are 60 or more days delinquent, the expected losses
to the Fund associated with such delinquent mortgages, and
the methodology used to make such calculation.
(B) The number of mortgages that are obligations of the
Fund that have a loan-to-value ratio at the time of
origination that is less than 80 percent and the percentage
of all mortgages that are obligations of the Fund having such
a ratio.
(C) The number of mortgages that are obligations of the
Fund that had an original principal obligation exceeding 125
percent of the median house price, for a home of the size of
the residence subject to the mortgage, for the area in which
such residence is located, and the percentage of all
mortgages that are obligations of the Fund having such an
original principal obligation.
(D) The number of mortgages that are obligations of the
Fund for which the mortgagor's income at the time of
origination of the mortgage is greater than the median income
for the area in which the residence subject to the mortgage
is located, and the percentage of all mortgages that are
obligations of the Fund for which the mortgagor has such an
income.
(E) The balances for the financing and capital reserve
accounts of the Fund.
(F) Any actions taken during such month to help ensure the
financial soundness of the Fund and compliance with section
205(f) of the National Housing Act (12 U.S.C. 1711(f);
relating to a capital ratio requirement).
(3) Termination of reporting requirement.--The requirement
to submit reports under paragraph (1) shall terminate on the
first date after the date of the enactment of this Act that
the Fund attains a capital ratio (as such term is defined in
section 205(f)(3) of the National Housing Act) of 2.0
percent.
SEC. 15. FHA SAFETY AND SOUNDNESS REVIEW.
(a) Review.--The Comptroller General of the United States
shall provide for an independent third party to--
(1) conduct a one-time review of the mortgage insurance
programs and funds of the Secretary of Housing and Urban
Development that shall determine, as of the time of such
review--
(A) the financial safety and soundness of such programs and
funds; and
(B) the extent of loan loss reserves and capital adequacy
of such programs and funds; and
(2) to submit a report under subsection (b).
Such review shall be conducted in accordance with generally
accepted accounting principles applicable to the private
sector and Federal entities.
(b) Report.--The report under this subsection shall
describe the methodology and standards used to conduct the
review under subsection (a)(1), set forth the results and
findings of the review, including the extent of loan loss
reserves and capital adequacy of the mortgage insurance
programs and funds of the Secretary of Housing and Urban
Development, and include recommendations regarding restoring
such reserves and capital to maintain such programs and funds
in a safe and sound condition.
(c) Timing.--The review required under subsection (a) shall
be completed, and the report required under subsection (b)
shall be submitted, not later than the expiration of the 60-
day period beginning on the date of the enactment of this
Act.
(d) Rule of Construction.--Nothing in this section may be
construed to alter or affect, or exempt the Secretary of
Housing and Urban Development from complying with, any laws,
regulations, or guidance relating to preparation or
submission of budgets or audits or financial or management
statements or reports.
SEC. 16. FHA DISCLOSURE STANDARDS.
Not later than the expiration of the 90-day period
beginning on the date of the enactment of this Act, the
Secretary of Housing and Urban Development shall review and
revise all standards and requirements relating to disclosure
of information regarding the mortgage insurance programs and
funds, including actuarial studies conducted under section
202(a)(4) of the National Housing Act (12 U.S.C. 1708(a)(4)),
quarterly reports under section 202(a)(5) of such Act, and
annual audited financial statements under section 538 of such
Act (12 U.S.C. 1735f-16), to ensure that, after the date of
the enactment of this Act, such disclosures--
(1) provide meaningful financial and other information that
is timely, comprehensive, and accurate;
(2) do not contain any material misstatements or
misrepresentations;
(3) make available all relevant information; and
(4) prohibit material omissions that make the contents of
the disclosure misleading.
SEC. 17. REPORT ON STREAMLINING FHA PROGRAMS.
(a) Examination.--The Secretary of Housing and Urban
Development shall conduct an examination of the mortgage
insurance and any other programs of the Federal Housing
Administration to identify--
(1) the level of use and need for such programs;
(2) any such programs that are unused or underused; and
(3) methods for streamlining, consolidating, simplifying,
increasing the efficiency of, and reducing the number of such
programs.
(b) Report.--Not later than the expiration of the 12-month
period that begins upon the date of the enactment of this
Act, the Secretary shall submit a report to the Congress on
the results of the examination conducted pursuant to
subsection (a), including recommendations for any
administrative and legislative actions to streamline,
consolidate, simplify, increase the efficiency of, and reduce
the number of such programs.
SEC. 18. BUDGET COMPLIANCE.
The Secretary of Housing and Urban Development shall
allocate $2,500,000 from the account for Administrative
Contract Expenses each fiscal year through September 30,
2017, which amounts shall be available only for the purposes
of this Act and the amendments made by this Act, including
such additional actuarial reviews as may be required by
section 5 of this Act and the amendments made by such
section.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
Illinois (Mrs. Biggert) and the gentlewoman from Wisconsin (Ms. Moore)
each will control 20 minutes.
The Chair recognizes the gentlewoman from Illinois.
General Leave
Mrs. BIGGERT. Mr. Speaker, I ask that all Members may have 5
legislative days in which to revise and extend their remarks and add
extraneous material on this bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Illinois?
There was no objection.
Mrs. BIGGERT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, H.R. 4264, the FHA Emergency Fiscal Solvency Act of
2012, will provide the tools necessary to ensure the financial
soundness of the Federal Housing Administration, or FHA. Right now, FHA
is well below its mandatory 2 percent capital reserve with only .24
percent to cover losses.
The administration's fiscal year 2013 budget recently admitted that
the FHA
[[Page H5740]]
may need a $688 million taxpayer bailout because of the depleted
capital reserve fund. Last Friday, September 7, HUD issued its FHA
quarterly report, which said that it anticipates increased
foreclosures, claim activity, and related expenditures.
The FHA has had an abysmal fiscal track record and, to top it off,
recent data furnished by the GAO confirmed that the FHA represents
about 75 percent of the insured mortgage market. FHA is a government
program that has put taxpayers at significant risk and flies in the
face of private capital returning to the housing financial market.
The FHA Emergency Fiscal Solvency Act will provide FHA with the tools
that it needs to shore up the program, lower the program's risk, and
reduce taxpayers' liabilities.
The bill would establish for the first time a minimum annual premium
of 55 basis points and allow FHA to charge up to 2.05 percent. It would
strengthen FHA's ability to recoup losses from lenders for fraudulent,
misrepresented and early delinquent loans, and it would allow FHA on a
nationwide basis to terminate bad lenders. It also codifies the
position of FHA Deputy Assistant Secretary for Risk and establishes a
chief risk officer for Ginnie Mae.
These are commonsense targeted changes that would ensure
accountability and financial stability within the FHA. On March 27, the
Financial Services Committee unanimously passed this bill, and I would
urge my colleagues to support H.R. 4264.
I reserve the balance of my time.
Ms. MOORE. Mr. Speaker, I believe that H.R. 4264 will further
strengthen and protect the MMI fund, and I would urge all Members to
adopt this resolution.
I yield back the balance of my time.
Mrs. BIGGERT. I have no further speakers, and I yield back the
balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentlewoman from Illinois (Mrs. Biggert) that the House suspend the
rules and pass the bill, H.R. 4264, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mrs. BIGGERT. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
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