[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4390 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 4390
To amend the National Housing Act to reform and simplify the single
family home mortgage insurance program of the Department of Housing and
Urban Development, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 11, 1994
Mr. Klein (for himself and Mr. Vento) introduced the following bill;
which was referred to the Committee on Banking, Finance and Urban
Affairs
_______________________________________________________________________
A BILL
To amend the National Housing Act to reform and simplify the single
family home mortgage insurance program of the Department of Housing and
Urban Development, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``FHA Reform Act of 1994''.
SEC. 2. MAXIMUM DOLLAR AMOUNT.
Subparagraph (A) of the first sentence of section 203(b)(2) of the
National Housing Act (12 U.S.C. 1709(b)(2)(A)) is amended by striking
clause (ii) and all that follows through ``1992;'' and inserting the
following:
``(ii) 85 percent of the dollar amount
limitation determined under section 305(a)(2)
of the Federal Home Loan Mortgage Corporation
Act for a residence of the applicable size;
except that the applicable dollar amount limitation in
effect under this subparagraph (A) for any area may not
be less than the greater of--
``(I) the dollar amount limitation in
effect under this section for the area on the
date of enactment of the FHA Reform Act of
1994; or
``(II) the applicable average area purchase
price determined under section 143(e)(2) of the
Internal Revenue Code of 1986, as adjusted by
the Secretary to reflect a single amount using
purchase prices for residences that have been
previously occupied, and for residences that
have not been so occupied, which amount shall
be adjusted by the Secretary annually on the
basis of the Constant Quality Housing Price
Index;''.
SEC. 3. MAXIMUM LOAN-TO-VALUE RATIO.
Section 203(b)(2) of the National Housing Act (12 U.S.C.
1709(b)(2)) is amended--
(1) by striking ``(including such initial service charges,
appraisal, inspection, and other fees as the Secretary shall
approve)'' the first place it appears;
(2) by striking subparagraph (B) of the first sentence and
inserting the following new subparagraph:
``(B) except as otherwise provided in this
paragraph (2), not to exceed an amount equal to the sum
of--
``(i) 99 percent of $50,000 of the
appraised value of the property, as of the date
the mortgage is accepted for insurance;
``(ii) 96 percent of such value in excess
of $50,000 but not in excess of $125,000; and
``(iii) 94 percent of such value in excess
of $125,000.'';
(3) by striking the second sentence of the matter that
follows subparagraph (B) of the first sentence; and
(4) by striking penultimate undesignated paragraph.
SEC. 4. SINGLE FAMILY RISK-SHARING MORTGAGE INSURANCE PROGRAM.
(a) In General.--Title II of the National Housing Act (12 U.S.C.
1707 et seq.) is amended by adding at the end the following new
section:
``single family risk-sharing with state and local agencies
``Sec. 256. (a) Authority.--Notwithstanding any other provision of
this Act inconsistent with this section, the Secretary may insure and
make commitments to insure under this section mortgages on single
family properties under risk-sharing mortgage insurance programs
established with 1 or more States or agencies. Only mortgages executed
in connection with the acquisition of a single family property or for
the refinancing of a mortgage insured under this section shall be
eligible. Under such programs, the Secretary shall insure a portion of
the mortgage and the State or local agency shall insure the remainder.
``(b) Purposes.--The purposes of the program under this section are
(1) to increase the availability of single family mortgage financing in
areas where there is need for mortgage insurance under this Act that
cannot be met due to particularly high average median house prices in
the area, and (2) to foster arrangements with State and local agencies
to share the risk of mortgage insurance.
``(c) Applications.--
``(1) Approval.--The Secretary may approve an application
submitted by a State or local agency to establish a risk-
sharing program under this section, based on a determination
that the State or local agency demonstrates that (A) it has the
legal authority under State law and, where applicable, local
law, to participate in the risk-sharing mortgage insurance
program, (B) it has carried out, or has the potential to carry
out, a financially sound, efficient, and effective mortgage
insurance program, and (C) it has the ongoing administrative
and financial capacity necessary to carry out a program under
this section.
``(2) Cancellation of approval.--For a violation of
requirements and procedures under the risk-sharing agreement
between the State or local agency and the Secretary or for
other good cause, the Secretary may cancel approval of a State
or local agency under this section by giving notice to the
State or local agency. The cancellation shall be effective upon
receipt of the notice by the agency or at a later date
specified by the Secretary. A decision by the Secretary to
cancel approval shall be final and conclusive and shall not be
subject to judicial review.
``(d) Delegation of Authority To Insure to State and Local
Agencies.--Pursuant to a risk-sharing agreement with a State or local
agency, the Secretary shall delegate the authority to insure and make
commitments to insure the portion of mortgages to be insured by the
Secretary under this section to the State or local agency. The risk-
sharing agreement shall contain such other matters as the Secretary and
the State or local agency agree.
``(e) Underwriting Standards and Loan Terms and Conditions.--The
State or local agency shall adopt underwriting standards and loan terms
and conditions for purposes of underwriting loans to be insured under
this section without regard to requirements of this Act other than this
section, section 203(g), and section 203(r)(2), subject to review and
approval by the Secretary.
``(f) Mortgage Insurance Premiums.--
``(1) Requirement.--The State or local agency shall require
the payment of mortgage insurance premiums by mortgagors.
``(2) Shares.--The Secretary shall establish policies and
procedures for the sharing of premiums between the Secretary
and the State or local agency, based on the relative risk to,
and administrative costs of, the Secretary and the State or
local agency. The share paid to the Secretary shall not be less
than an amount necessary to cover the risk to, and
administrative costs of, the Secretary.
``(g) Limitations on Principal Mortgage Amount.--
``(1) Insured portion.--The portion of the mortgage insured
under this section by the Secretary may not exceed an amount
equal to the lesser of (A) 80 percent of the appraised value of
the property, or (B) the maximum amount the Secretary may
insure under section 203(b) of this Act for the area (but not
including any amount for a mortgage insurance premium).
``(2) Total principal amount.--The total principal amount
of a mortgage insured under this section by the Secretary and
the State or local agency (A) shall exceed the maximum amount
the Secretary may insure under subparagraph (A) of the first
sentence of section 203(b)(2) of this Act for the area, and (B)
may not exceed the conforming loan limitation determined under
section 305(a)(2) of the Federal Home Loan Mortgage Corporation
Act for a residence of the applicable size, as adjusted
annually.
``(3) Loan-to-value ratio.--The principal obligation of a
mortgage may not exceed an amount determined in accordance with
subparagraph (B) of the first sentence of section 203(b)(2) of
this Act plus the mortgage insurance premium.
``(4) Refinancing mortgages.--Notwithstanding paragraph
(2)(A) or (3), in the case of refinancing of an existing
mortgage insured under this section, the principal obligation
of a refinancing mortgage may not exceed the outstanding
principal balance of the existing mortgage plus any mortgage
insurance premium.
``(h) Insurance Claims.--
``(1) Procedure.--In the case of a default and foreclosure
of a mortgage insured under this section, the mortgagee may
file a claim with the State or local agency for insurance
benefits in accordance with requirements established by the
State or local agency and approved by the Secretary. The agency
shall pay the full amount of the claim owed to the mortgagee.
If the loss on the insured mortgage exceeds the amount of
insurance by the agency, the Secretary shall reimburse the
agency for the difference.
``(2) General insurance fund.--The insurance of a mortgage
under this section by the Secretary shall be an obligation of
the General Insurance Fund created pursuant to section 519 of
this Act.
``(i) Inapplicability of the Assignment Program.--Section 230 shall
not apply to mortgages insured under the program authorized by this
section.
``(j) Restriction on GNMA Securitization.--The Government National
Mortgage Association shall not securitize any loans insured under this
section.
``(k) Definitions.--As used in this section:
``(1) The term `local agency' means an agency of a unit of
general local government, as defined by the Secretary, that has
the authority to insure mortgages and to participate with the
Secretary in the single family risk-sharing program under this
section, or an agency or instrumentality of a local agency if
the agency or instrumentality has such authority.
``(2) The term `State agency' means an agency of a State
that has the authority to insure mortgages and to participate
with the Secretary in the single family risk-sharing program
under this section, or an agency or instrumentality of a State
agency if the agency or instrumentality has such authority.
``(3) The term `single family property' means a property
upon which there is located a dwelling designed principally for
occupancy by 1 family, and includes a condominium and a
cooperative.
``(4) The term `State' means the several States, the
Commonwealth of Puerto Rico, the District of Columbia, Guam,
the Trust Territory of the Pacific Islands, American Samoa, and
the Virgin Islands.''.
(b) Implementation.--The Secretary of Housing and Urban Development
may implement the program authorized by the amendment made under
subsection (a) by entering into risk-sharing agreements negotiated with
State agencies, notwithstanding any otherwise applicable requirement
for regulations or notice published in the Federal Register and
notwithstanding any otherwise applicable regulations of the Secretary.
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