[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2734 Placed on Calendar Senate (PCS)]
Calendar No. 613
110th CONGRESS
2d Session
S. 2734
To aid families and neighborhoods facing home foreclosure and address
the subprime mortgage crisis.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 7, 2008
Mr. Bond (for himself, Mr. Isakson, Mr. Alexander, Mrs. Dole, Mr.
McConnell, Mr. Allard, Mr. Chambliss, Mr. Cornyn, Mr. Craig, Mrs.
Hutchison, Mr. Inhofe, Mr. Stevens, Ms. Murkowski, and Mr. Coleman)
introduced the following bill; which was read the first time
March 10, 2008
Read the second time and placed on the calendar
_______________________________________________________________________
A BILL
To aid families and neighborhoods facing home foreclosure and address
the subprime mortgage crisis.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Security Against
Foreclosures and Education Act'' or the ``SAFE Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--PROTECTING HOMEOWNERS
Sec. 101. Subprime refinancing loans through use of qualified mortgage
bonds.
Sec. 102. Expeditious distribution of funds already provided for
mortgage foreclosure counseling.
Sec. 103. Credit for purchase of homes in or near foreclosure.
Sec. 104. Enhanced mortgage loan disclosures.
Sec. 105. Carryback of certain net operating losses allowed for 5
years; temporary suspension of 90 percent
AMT limit.
TITLE II--MORTGAGE FORECLOSURE PROTECTIONS FOR SERVICEMEMBERS
Sec. 201. Expansion of period after servicemember service of moratorium
on foreclosure sales.
Sec. 202. Counseling on mortgage foreclosures for members of the Armed
Forces returning from service abroad.
TITLE III--FHA MODERNIZATION ACT OF 2008
Sec. 301. Short title.
Subtitle A--Building American Homeownership
Sec. 311. Short title.
Sec. 312. Maximum principal loan obligation.
Sec. 313. Cash investment requirement and prohibition of seller-funded
downpayment assistance.
Sec. 314. Mortgage insurance premiums.
Sec. 315. Rehabilitation loans.
Sec. 316. Discretionary action.
Sec. 317. Insurance of condominiums.
Sec. 318. Mutual Mortgage Insurance Fund.
Sec. 319. Hawaiian home lands and Indian reservations.
Sec. 320. Conforming and technical amendments.
Sec. 321. Insurance of mortgages.
Sec. 322. Home equity conversion mortgages.
Sec. 323. Energy efficient mortgages program.
Sec. 324. Pilot program for automated process for borrowers without
sufficient credit history.
Sec. 325. Homeownership preservation.
Sec. 326. Use of FHA savings for improvements in FHA technologies,
procedures, processes, program performance,
staffing, and salaries.
Sec. 327. Post-purchase housing counseling eligibility improvements.
Sec. 328. Pre-purchase homeownership counseling demonstration.
Sec. 329. Fraud prevention.
Sec. 330. Limitation on mortgage insurance premium increases.
Sec. 331. Savings provision.
Sec. 332. Implementation.
Sec. 333. Moratorium on implementation of risk-based premiums.
Subtitle B--Manufactured Housing Loan Modernization
Sec. 341. Short title.
Sec. 342. Purposes.
Sec. 343. Exception to limitation on financial institution portfolio.
Sec. 344. Insurance benefits.
Sec. 345. Maximum loan limits.
Sec. 346. Insurance premiums.
Sec. 347. Technical corrections.
Sec. 348. Revision of underwriting criteria.
Sec. 349. Prohibition against kickbacks and unearned fees.
Sec. 350. Leasehold requirements.
TITLE I--PROTECTING HOMEOWNERS
SEC. 101. SUBPRIME REFINANCING LOANS THROUGH USE OF QUALIFIED MORTGAGE
BONDS.
(a) Use of Qualified Mortgage Bonds Proceeds for Subprime
Refinancing Loans.--Section 143(k) of the Internal Revenue Code of 1986
(relating to other definitions and special rules) is amended by adding
at the end the following:
``(12) Special rules for subprime refinancings.--
``(A) In general.--Notwithstanding the requirements
of subsection (i)(1), the proceeds of a qualified
mortgage issue may be used to refinance a mortgage on a
residence which was originally financed by the
mortgagor through a qualified subprime loan.
``(B) Special rules.--In applying this paragraph to
any case in which the proceeds of a qualified mortgage
issue are used for any refinancing described in
subparagraph (A)--
``(i) subsection (a)(2)(D)(i) shall be
applied by substituting `12-month period' for
`42-month period' each place it appears,
``(ii) subsection (d) (relating to 3-year
requirement) shall not apply, and
``(iii) subsection (e) (relating to
purchase price requirement) shall be applied by
using the market value of the residence at the
time of refinancing in lieu of the acquisition
cost.
``(C) Qualified subprime loan.--The term `qualified
subprime loan' means an adjustable rate single-family
residential mortgage loan originated after December 31,
2001, and before January 1, 2008, that the bond issuer
determines would be reasonably likely to cause
financial hardship to the borrower if not refinanced.
``(D) Termination.--This paragraph shall not apply
to any bonds issued after December 31, 2010.''.
(b) Increased Volume Cap for Certain Bonds.--
(1) In general.--Subsection (d) of section 146 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following:
``(5) Increase and set aside for housing bonds for 2008.--
``(A) Increase for 2008.--In the case of calendar
year 2008, the State ceiling for each State shall be
increased by an amount equal to $10,000,000,000
multiplied by a fraction--
``(i) the numerator of which is the
population of such State (as reported in the
most recent decennial census), and
``(ii) the denominator of which is the
total population of all States (as reported in
the most recent decennial census).
``(B) Set aside.--
``(i) In general.--Any amount of the State
ceiling for any State which is attributable to
an increase under this paragraph shall be
allocated solely for one or more qualified
purposes.
``(ii) Qualified purpose.--For purposes of
this paragraph, the term `qualified purpose'
means--
``(I) the issuance of exempt
facility bonds used solely to provide
qualified residential rental projects,
or
``(II) a qualified mortgage issue
(determined by substituting `12-month
period' for `42-month period' each
place it appears in section
143(a)(2)(D)(i)).''.
(2) Carryforward of unused limitations.--Subsection (f) of
section 146 of such Code is amended by adding at the end the
following:
``(6) Special rules for increased volume cap under
subsection (d)(5).--
``(A) In general.--No amount which is attributable
to the increase under subsection (d)(5) may be used--
``(i) for a carryforward purpose other than
a qualified purpose (as defined in subsection
(d)(5)), and
``(ii) to issue any bond after calendar
year 2010.
``(B) Ordering rules.--For purposes of subparagraph
(A), any carryforward of an issuing authority's volume
cap for calendar year 2008 shall be treated as
attributable to such increase to the extent of such
increase.''.
(c) Alternative Minimum Tax.--
(1) In general.--Clause (ii) of section 57(a)(5)(C) of the
Internal Revenue Code of 1986 is amended by striking ``shall
not include'' and all that follows and inserting ``shall not
include--
``(I) any qualified 501(c)(3) bond
(as defined in section 145), or
``(II) any qualified mortgage bond
(as defined in section 143(a)) or
qualified veteran's mortgage bond (as
defined in section 143(b)) issued after
the date of the enactment of this
subclause and before January 1,
2011.''.
(2) Conforming amendment.--The heading for section
57(a)(5)(C)(ii) of the Internal Revenue Code of 1986 is amended
by striking ``qualified 501(c)(3) bonds'' and inserting
``certain bond''.
(d) Effective Date.--The amendments made by this section shall
apply to bonds issued after the date of the enactment of this Act.
SEC. 102. EXPEDITIOUS DISTRIBUTION OF FUNDS ALREADY PROVIDED FOR
MORTGAGE FORECLOSURE COUNSELING.
Upon certification by the Neighborhood Reinvestment Corporation
under paragraph (4) under the second undesignated paragraph under the
heading ``Neighborhood Reinvestment Corporation--Payment to the
Neighborhood Reinvestment Corporation'' of Public Law 110-161 that
Housing and Urban Development or Neighborhood Reinvestment Corporation-
approved counseling intermediaries and State Housing Finance Agencies
have the need for additional portions of the $180,000,000 provided
therein for mortgage foreclosure mitigation activities in States and
areas with high rates of mortgage foreclosures, defaults, or related
activities beyond the initial awards, and the expertise to use such
funds effectively, the Neighborhood Reinvestment Corporation shall
expeditiously continue to award such funds as need and expertise is
shown.
SEC. 103. CREDIT FOR PURCHASE OF HOMES IN OR NEAR FORECLOSURE.
(a) Allowance of Credit.--Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to refundable
credits) is amended by inserting after section 25D the following new
section:
``SEC. 25E. CREDIT FOR PURCHASE OF HOMES IN OR NEAR FORECLOSURE.
``(a) Allowance of Credit.--
``(1) In general.--In the case of an individual who is a
purchaser of a qualified principal residence during the taxable
year, there shall be allowed as a credit against the tax
imposed by this chapter an amount equal to so much of the
purchase price of the residence as does not exceed $15,000.
``(2) Allocation of credit amount.--The amount of the
credit allowed under paragraph (1) shall be equally divided
among the 3 taxable years beginning with the taxable year in
which the purchase of the qualified principal residence is
made.
``(b) Limitations.--
``(1) Date of purchase.--The credit allowed under
subsection (a) shall be allowed only with respect to purchases
made--
``(A) after February 29, 2008, and
``(B) before March 1, 2009.
``(2) Limitation based on amount of tax.--In the case of a
taxable year to which section 26(a)(2) does not apply, the
credit allowed under subsection (a) for any taxable year shall
not exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) for the taxable year.
``(3) One-time only.--
``(A) In general.--If a credit is allowed under
this section in the case of any individual (and such
individual's spouse, if married) with respect to the
purchase of any qualified principal residence, no
credit shall be allowed under this section in any
taxable year with respect to the purchase of any other
qualified principal residence by such individual or a
spouse of such individual.
``(B) Joint purchase.--In the case of a purchase of
a qualified principal residence by 2 or more unmarried
individuals or by 2 married individuals filing
separately, no credit shall be allowed under this
section if a credit under this section has been allowed
to any of such individuals in any taxable year with
respect to the purchase of any other qualified
principal residence.
``(c) Qualified Principal Residence.--
``(1) In general.--For purposes of this section, the term
`qualified principal residence' means an eligible single-family
residence that is purchased to be the principal residence of
the purchaser.
``(2) Eligible single-family residence.--
``(A) In general.--For purposes of this subsection,
the term `eligible single-family residence' means a
single-family structure that is--
``(i) a new previously unoccupied residence
for which a building permit is issued and
construction begins on or before September 1,
2007, but only if such residence is purchased
by the taxpayer directly from the person to
whom such building permit was issued,
``(ii) an owner-occupied residence with
respect to which the owner's acquisition
indebtedness (as defined in section
163(h)(3)(B), determined without regard to
clause (ii) thereof) is in default on or before
March 1, 2008, or
``(iii) a residence with respect to which a
foreclosure event has taken place and which is
owned by the mortgagor or the mortgagor's
agent, but only if such residence was occupied
as a principal residence by the mortgagee for
at least 1 year prior to the foreclosure event.
``(B) Certification.--In the case of an eligible
single-family residence described in subparagraph
(A)(i), no credit shall be allowed under this section
unless the purchaser submits a certification by the
seller of such residence that such residence meets the
requirements of such subparagraph.
``(d) Denial of Double Benefit.--No credit shall be allowed under
this section for any purchase for which a credit is allowed under
section 1400C.
``(e) Recapture in the Case of Certain Dispositions.--In the event
that a taxpayer--
``(1) disposes of the qualified principal residence with
respect to which a credit is allowed under subsection (a), or
``(2) fails to occupy such residence as the taxpayer's
principal residence,
at any time within 36 months after the date on which the taxpayer
purchased such residence, then the remaining portion of the credit
allowed under subsection (a) shall be disallowed in the taxable year
during which such disposition occurred or in which the taxpayer failed
to occupy the residence as a principal residence, and in any subsequent
taxable year in which the remaining portion of the credit would, but
for this subsection, have been allowed.
``(f) Special Rules.--
``(1) Joint purchase.--
``(A) Married individuals filing separately.--In
the case of 2 married individuals filing separately,
subsection (a) shall be applied to each such individual
by substituting `$7,500' for `$15,000' in subsection
(a)(1).
``(B) Unmarried individuals.--If 2 or more
individuals who are not married purchase a qualified
principal residence, the amount of the credit allowed
under subsection (a) shall be allocated among such
individuals in such manner as the Secretary may
prescribe, except that the total amount of the credits
allowed to all such individuals shall not exceed
$15,000.
``(2) Purchase.--In defining the purchase of a qualified
principal residence, rules similar to the rules of paragraphs
(2) and (3) of section 1400C(e) (as in effect on the date of
the enactment of this section) shall apply.
``(3) Reporting requirement.--Rules similar to the rules of
section 1400C(f) (as so in effect) shall apply.
``(g) Basis Adjustment.--For purposes of this subtitle, if a credit
is allowed under this section with respect to the purchase of any
residence, the basis of such residence shall be reduced by the amount
of the credit so allowed.''.
(b) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 25D the
following new item:
``Sec. 25E. Credit for certain home purchases.''.
SEC. 104. ENHANCED MORTGAGE LOAN DISCLOSURES.
(a) Truth in Lending Act Disclosures.--Section 128(b)(2) of the
Truth in Lending Act (15 U.S.C. 1638(b)(2)) is amended--
(1) by inserting ``(A)'' before ``In the'';
(2) by striking ``a residential mortgage transaction, as
defined in section 103(w)'' and inserting ``any extension of
credit that is secured by the dwelling of a consumer'';
(3) by striking ``shall be made in accordance'' and all
that follows through ``extended, or''; and
(4) by striking ``If the'' and all that follows through the
end of the paragraph and inserting the following:
``(B) In the case of an extension of credit that is
secured by the dwelling of a consumer, in addition to
the other disclosures required by subsection (a), the
disclosures provided under this paragraph shall--
``(i) state in conspicuous type size and
format, the following: `You are not required to
complete this agreement merely because you have
received these disclosures or signed a loan
application.'; and
``(ii) be furnished to the borrower not
later than 7 business days before the date of
consummation of the transaction, and at the
time of consummation of the transaction,
subject to subparagraph (D).
``(C) In the case of an extension of credit that is
secured by the dwelling of a consumer, under which the
annual rate of interest is variable, or with respect to
which the regular payments may otherwise be variable,
in addition to the other disclosures required by
subsection (a), the disclosures provided under this
paragraph shall--
``(i) label the payment schedule as
follows: `Payment Schedule: Payments Will Vary
Based on Interest Rate Changes';
``(ii) state the maximum amount of the
regular required payments on the loan, based on
the maximum interest rate allowed, introduced
with the following language in conspicuous type
size and format: `Your payment can go as high
as $_______', the blank to be filled in with
the maximum possible payment amount;
``(iii) if the loan is an adjustable rate
mortgage that includes an initial fixed
interest rate--
``(I) state in conspicuous type
size and format the following phrase:
This loan is an adjustable rate
mortgage with an initial fixed interest
rate. Your initial fixed interest rate
is AAA with a monthly payment of BBB
until CCC. After that date, the
interest rate on your loan will `reset'
to an adjustable rate and both your
interest rate and payment could go
higher on that date and in the future.
For example, if your initial fixed rate
ended today, your new adjustable
interest rate would be DDD and your new
payment EEE. If interest rates are one
percent higher than they are today or
at some point in the future, your new
payment would be FFF. There is no
guarantee you will be able to refinance
your loan to a lower interest rate and
payment before your initial fixed
interest rate ends.;
``(II) the blank AAA in
subparagraph (I) to be filled in with
the initial fixed interest rate;
``(III) the blank BBB in
subparagraph (I) to be filled in with
the payment amount under the initial
fixed interest rate;
``(IV) the blank CCC in
subparagraph (I) to be filled in with
the loan reset date;
``(V) the blank DDD in subparagraph
(I) to be filled in with the adjustable
rate as if the initial rate expired on
the date of disclosure under
subparagraph (B);
``(VI) the blank EEE in
subparagraph (I) to be filled in with
the payment under the adjustable rate
as if the initial rate expired on the
date of disclosure under subparagraph
(B); and
``(VII) the blank FFF in
subparagraph (I) to be filled in with
the payment under the adjustable rate
as if index rate on which the
adjustable rate was one percent higher
than of the date of disclosure under
subparagraph (B); and
``(iv) if the loan contains a prepayment
penalty--
``(I) state in conspicuous type and
format the following phrase: This loan
contains a prepayment penalty. If you
desire to pay off this loan before GGG,
you will pay a penalty of HHH.;
``(II) the blank GGG in
subparagraph (I) to be filled in with
the date the prepayment penalty
expires; and
``(III) the blank HHH in
subparagraph (I) to be filled in with
the prepayment penalty amount.
``(D) In any case in which the disclosure statement
provided 7 business days before the date of
consummation of the transaction contains an annual
percentage rate of interest that is no longer accurate,
as determined under section 107(c), the creditor shall
furnish an additional, corrected statement to the
borrower, not later than 3 business days before the
date of consummation of the transaction.''.
(b) Civil Liability.--Section 130(a) of the Truth in Lending Act
(15 U.S.C. 1640(a)) is amended--
(1) in paragraph (2)(A)(iii), by striking ``not less than
$200 or greater than $2,000'' and inserting ``$5,000, such
amount to be adjusted annually based on the consumer price
index, to maintain current value''; and
(2) in the penultimate sentence of the undesignated matter
following paragraph (4)--
(A) by striking ``only for'' and inserting ``for'';
(B) by striking ``section 125 or'' and inserting
``section 122, section 125,'';
(C) by inserting ``or section 128(b),'' after
``128(a),''; and
(D) by inserting ``or section 128(b)'' before the
period.
SEC. 105. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED FOR 5
YEARS; TEMPORARY SUSPENSION OF 90 PERCENT AMT LIMIT.
(a) In General.--Subparagraph (H) of section 172(b)(1) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(H) 5-year carryback of certain losses.--
``(i) Taxable years ending during 2001 and
2002.--In the case of a net operating loss for
any taxable year ending during 2001 or 2002,
subparagraph (A)(i) shall be applied by
substituting `5' for `2' and subparagraph (F)
shall not apply.
``(ii) Taxable years ending during 2006,
2007, 2008, and 2009.--In the case of a net
operating loss for any taxable year ending
during 2006, 2007, 2008, or 2009--
``(I) subparagraph (A)(i) shall be
applied by substituting `5' for `2',
``(II) subparagraph (E)(ii) shall
be applied by substituting `4' for `2',
and
``(III) subparagraph (F) shall not
apply.''.
(b) Temporary Suspension of 90 Percent Limit on Certain NOL
Carrybacks and Carryovers.--
(1) In general.--Section 56(d) of the of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new paragraph:
``(3) Additional adjustments.--For purposes of paragraph
(1)(A), the amount described in clause (I) of paragraph
(1)(A)(ii) shall be increased by the amount of the net
operating loss deduction allowable for the taxable year under
section 172 attributable to the sum of--
``(A) carrybacks of net operating losses from
taxable years ending during 2006, 2007, 2008, and 2009,
and
``(B) carryovers of net operating losses to taxable
years ending during 2006, 2007, 2008, or 2009.''.
(2) Conforming amendment.--Subclause (I) of section
56(d)(1)(A)(i) of such Code is amended by inserting ``amount of
such'' before ``deduction described in clause (ii)(I)''.
(c) Anti-Abuse Rules.--The Secretary of Treasury or the Secretary's
designee shall prescribes such rules as are necessary to prevent the
abuse of the purposes of the amendments made by this section, including
anti-stuffing rules, anti-churning rules (including rules relating to
sale-leasebacks), and rules similar to the rules under section 1091 of
the Internal Revenue Code of 1986 relating to losses from wash sales.
(d) Effective Dates.--
(1) Subsection (a).--
(A) In general.--Except as provided in subparagraph
(B), the amendments made by subsection (a) shall apply
to net operating losses arising in taxable years ending
in 2006, 2007, 2008, or 2009.
(B) Election.--In the case of a net operating loss
for a taxable year ending during 2006 or 2007--
(i) any election made under section
172(b)(3) of the Internal Revenue Code of 1986
may (notwithstanding such section) be revoked
before November 1, 2008, and
(ii) any election made under section 172(j)
of such Code shall (notwithstanding such
section) be treated as timely made if made
before November 1, 2008.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to taxable years ending after December 31, 1995.
TITLE II--MORTGAGE FORECLOSURE PROTECTIONS FOR SERVICEMEMBERS
SEC. 201. EXPANSION OF PERIOD AFTER SERVICEMEMBER SERVICE OF MORATORIUM
ON FORECLOSURE SALES.
(a) In General.--Section 303(c) of the Servicemembers Civil Relief
Act (50 U.S.C. App. 533(c)) is amended by striking ``90 days'' and
inserting ``6 months''.
(b) Effective Date; Sunset.--
(1) Effective date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
(2) Sunset.--The amendment made by subsection (a) shall
expire on December 31, 2010. Effective January 1, 2011, the
provisions of section 303(c) of the Servicemembers Civil Relief
Act, as in effect on the day before the date of the enactment
of this Act, are hereby revived.
SEC. 202. COUNSELING ON MORTGAGE FORECLOSURES FOR MEMBERS OF THE ARMED
FORCES RETURNING FROM SERVICE ABROAD.
(a) In General.--The Secretary of Defense shall develop and
implement a program to advise members of the Armed Forces (including
members of the National Guard and Reserve) who are returning from
service on active duty abroad (including service in Operation Iraqi
Freedom and Operation Enduring Freedom) on actions to be taken by such
members to prevent or forestall mortgage foreclosures.
(b) Elements.--The program required by subsection (a) shall include
the following:
(1) Credit counseling.
(2) Home mortgage counseling.
(3) Such other counseling and information as the Secretary
considers appropriate for purposes of the program.
(c) Timing of Provision of Counseling.--Counseling and other
information under the program required by subsection (a) shall be
provided to a member of the Armed Forces covered by the program as soon
as practicable after the return of the member from service as described
in subsection (a).
TITLE III--FHA MODERNIZATION ACT OF 2008
SEC. 301. SHORT TITLE.
This title may be cited as the ``FHA Modernization Act of 2008''.
Subtitle A--Building American Homeownership
SEC. 311. SHORT TITLE.
This subtitle may be cited as the ``Building American Homeownership
Act of 2008''.
SEC. 312. 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. 313. 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. 314. 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. 315. 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. 316. 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,
and redesignating such subsection as subsection (e).
SEC. 317. 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. 318. 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 2008, 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 2008; 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. 319. 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. 320. 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. 321. 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. 322. 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).
``(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 title.
(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 title, 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. 323. 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. 324. 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 2008, 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 subtitle, 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. 325. 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. 326. 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 2009 through 2013, $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 title, 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. 327. 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)--
(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. 328. PRE-PURCHASE HOMEOWNERSHIP COUNSELING DEMONSTRATION.
(a) Establishment of Program.--For the period beginning on the date
of enactment of this title 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 title 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. 329. 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. 330. LIMITATION ON MORTGAGE INSURANCE PREMIUM INCREASES.
(a) In General.--Notwithstanding any other provision of law,
including any provision of this title and any amendment made by this
title--
(1) for the period beginning on the date of the enactment
of this title 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. 331. SAVINGS PROVISION.
Any mortgage insured under title II of the National Housing Act
before the date of enactment of this subtitle 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 subtitle.
SEC. 332. 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 subtitle. The notice shall
take effect upon issuance.
SEC. 333. MORATORIUM ON IMPLEMENTATION OF RISK-BASED PREMIUMS.
For the 12-month period beginning on the date of enactment of this
title, the Secretary of Housing and Urban Development shall not enact,
execute, or take any action to make effective the planned
implementation of risk-based premiums, which are designed for mortgage
lenders to offer borrowers an FHA-insured product that provides a range
of mortgage insurance premium pricing, based on the risk the insurance
contract represents, as such planned implementation was set forth in
the Notice published in the Federal Register on September 20, 2007
(Vol. 72, No. 182, Page 53872).
Subtitle B--Manufactured Housing Loan Modernization
SEC. 341. SHORT TITLE.
This subtitle may be cited as the ``FHA Manufactured Housing Loan
Modernization Act of 2008''.
SEC. 342. PURPOSES.
The purposes of this subtitle 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. 343. 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. 344. 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 2008 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 title.
SEC. 345. 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 title, 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
2008.''
(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).''.
SEC. 346. 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. 347. 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. 348. 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 title, 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 title, 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. 349. 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. 350. 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 title, 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.''.
Calendar No. 613
110th CONGRESS
2d Session
S. 2734
_______________________________________________________________________
A BILL
To aid families and neighborhoods facing home foreclosure and address
the subprime mortgage crisis.
_______________________________________________________________________
March 10, 2008
Read the second time and placed on the calendar