Homeownership Act of 2008'.
(2) the FHA program has a long history of innovation, which
includes pioneering the 30-year self-amortizing mortgage and
a safe-to-seniors reverse mortgage product, both of which
were once thought too risky to private lenders;
(3) the FHA single family mortgage insurance program
traditionally has been a major provider of mortgage
insurance for home purchases;
(4) the FHA mortgage insurance premium structure, as well
as FHA's product offerings, should be revised to reflect FHA's
enhanced ability to determine risk at the loan level and to
allow FHA to better respond to changes in the mortgage
market;
(5) during past recessions, including the oil-patch downturns
in the mid-1980s, FHA remained a viable credit enhancer and
was therefore instrumental in preventing a more catastrophic
collapse in housing markets and a greater loss of homeowner
equity; and
(6) as housing price appreciation slows and interest rates
rise, many homeowners and prospective homebuyers will
need the less-expensive, safer financing alternative that FHA
mortgage insurance provides.
(b) Purposes- The purposes of this subtitle are--
(1) to provide flexibility to FHA to allow for the insurance of
housing loans for low- and moderate-income homebuyers
during all economic cycles in the mortgage market;
(2) to modernize the FHA single family mortgage insurance
program by making it more reflective of enhancements to
loan-level risk assessments and changes to the mortgage
market; and
(3) to adjust the loan limits for the single family mortgage
insurance program to reflect rising house prices and the
increased costs associated with new construction.
SEC. 203. MAXIMUM PRINCIPAL LOAN OBLIGATION.
(a) In General- Section 203(b)(2) of the National Housing
Act (12 U.S.C. 1709(b)(2)(A)) is amended by striking
subparagraph (A) and inserting the following new
subparagraph:
`(A) not to exceed the lesser of--
`(i) in the case of a 1-family residence, 125 percent of 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
determined 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 determined under such section for a
1-family residence; or
`(ii) 175 percent of the dollar amount limitation determined
under such section 305(a)(2)(A) for a residence of the
applicable size (without regard to any authority to increase
such limitations with respect to properties located in Alaska,
Guam, Hawaii, or the Virgin Islands and without regard to the
high-cost area limitation under such section 305(a)(2)(B));
except that the dollar amount limitation in effect under this
subparagraph for any size residence 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 October 21, 1998; or
(II) 65 percent of the dollar amount limitation determined
under such section 305(a)(2) for a residence of the
applicable size; and except that, if the Secretary determines
that market conditions warrant such an increase, the
Secretary may, for such period as the Secretary considers
appropriate, increase the maximum dollar amount limitation
determined pursuant to the preceding provisions of this
subparagraph with respect to any particular size or sizes of
residences, or with respect to residences located in any
particular area or areas, to an amount that does not exceed
the maximum dollar amount then otherwise in effect pursuant
to the preceding provisions of this subparagraph for such
size residence, or for such area (if applicable), by not more
than $100,000; and'.
(b) Treatment of Temporary Loan Limit Increase- Subsection
(a) and the amendment made by such subsection may not be
construed to in any way affect the effectiveness of section
202 of the Economic Stimulus Act of 2008 (Public Law
110-185; 122 Stat. 620).
SEC. 204. EXTENSION OF MORTGAGE TERM.
Paragraph (3) of section 203(b) of the National Housing Act
(12 U.S.C. 1709(b)(3)) is amended--
(1) by striking `thirty-five years' and inserting `forty years';
and
(2) by striking `(or thirty years if such mortgage is not
approved for insurance prior to construction)'.
SEC. 205. DOWNPAYMENT SIMPLIFICATION.
Section 203(b) of the National Housing Act (12 U.S.C.
1709(b)) is amended--
(1) in paragraph (2)--
(A) by striking subparagraph (B) and inserting the following
new subparagraph:
`(B) not to exceed an amount equal to the sum of--
`(i) the amount of the mortgage premium paid at the time
the mortgage is insured; and
`(ii) 97.75 percent of the appraised value of the property.';
(B) in the matter after and below subparagraph (B), by
striking the second sentence (relating to a definition of
`average closing cost') and all that follows through `title 38,
United States Code.'; and
(C) by striking the last undesignated paragraph (relating to
counseling with respect to the responsibilities and financial
management involved in homeownership); and
(2) in paragraph (9)--
(A) by striking the paragraph designation and all that follows
through `Provided further, That for' and inserting the
following:
`(9) Be executed by a mortgagor who shall have paid on
account of the property, in cash or its equivalent, at least 3
percent of the Secretary's estimate of the cost of acquisition
(excluding the mortgage insurance premium paid at the time
the mortgage is insured). For'; and
(B) by inserting after the period at the end the following:
`For purposes of this paragraph, the Secretary shall consider
as cash or its equivalent any amounts gifted by a family
member (as such term is defined in section 201), the
mortgagor's employer or labor union, or a qualified
homeownership assistance entity, but only if there is no
obligation on the part of the mortgagor to repay the gift: For
purposes of the preceding sentence, the term `qualified
homeownership assistance entity' means any governmental
agency or charity that has a program to provide
homeownership assistance to low- and moderate-income
families or first-time home buyers, or any private nonprofit
organization that has such a program and evidences
sufficient fiscal soundness to protect the fiscal integrity of the
Mutual Mortgage Insurance Fund by maintaining a minimum
net worth of $4,000,000 of acceptable assets.'.
SEC. 206. MORTGAGE INSURANCE PREMIUMS FOR
QUALIFIED HOMEOWNERSHIP ASSISTANCE ENTITIES AND
HIGHER-RISK BORROWERS.
Paragraph (2) of section 203(c) of the National Housing Act
(12 U.S.C. 1709(c)(2)) is amended--
(1) in subparagraph (A), in the matter preceding
subparagraph (A), by striking the first comma after `section
234(c)';
(2) in subparagraph (A), by inserting after the period at the
end of the second sentence the following: `In the case of a
mortgage for which any amounts gifted by a qualified
homeownership assistance entity (as such term is defined in
paragraph (9) of subsection (b)) that is a private nonprofit
organization are treated as cash or its equivalent for
purposes of meeting the 3 percent requirement under such
paragraph, the premium payment under this subparagraph
shall not exceed 3.0 percent of the amount of the original
insured principal obligation of the mortgage.'; and
(3) by adding at the end the following new subparagraph:
`(C) HIGHER-RISK BORROWERS- The Secretary shall
establish underwriting standards that provide for insurance
under this section of mortgages described in the matter in
this paragraph preceding subparagraph (A) for which the
mortgagor has a credit score equivalent to a FICO score of
less than 560, and may insure, and make commitments to
insure, such mortgages. Such underwriting standards shall
include establishing and collecting premium payments that
comply with the requirements of this paragraph, except that
notwithstanding subparagraph (A), the single premium
payment collected at the time of insurance may be established
in an amount that does not exceed 3.0 percent of the amount
of the original insured principal obligation of the mortgage.'.
SEC. 207. RISK-BASED MORTGAGE INSURANCE PREMIUMS.
Section 203(c) of the National Housing Act (12 U.S.C.
1709(c)), as amended by the preceding provisions of this
subtitle, is further amended by adding at the end the
following new paragraphs:
`(4) Flexible Risk-Based Premiums- In the case of a
mortgage referred to in paragraph (2)(C) or a mortgage
described in the third sentence of subparagraph (A) of
paragraph (2) (relating to mortgages for which amounts are
gifted by a nonprofit qualified homeownership assistance
entity), for which the loan application is received by the
mortgagee on or after the date of the enactment of the
Expanding American Homeownership Act of 2008:
`(A) IN GENERAL- The Secretary may establish a mortgage
insurance premium structure involving a single premium
payment collected prior to the insurance of the mortgage or
annual payments (which may be collected on a periodic
basis), or both, subject to the requirements of subparagraph
(B) and paragraph (5). Under such structure, the rate of
premiums for such a mortgage may vary according to the
credit risk associated with the mortgage and the rate of any
annual premium for such a mortgage may vary during the
mortgage term as long as the basis for determining the
variable rate is established before the execution of the
mortgage. The Secretary may change a premium structure
established under this subclause but only to the extent that
such change is not applied to any mortgage already executed.
`(B) ESTABLISHMENT AND ALTERATION OF PREMIUM
STRUCTURE- A premium structure shall be established or
changed under subparagraph (A) only by providing notice to
mortgagees and to the Congress, at least 30 days before the
premium structure is established or changed.
`(C) ANNUAL REPORT REGARDING PREMIUMS- The
Secretary shall submit a report to the Congress annually
setting forth the rate structures and rates established and
altered pursuant to this paragraph during the preceding
12-month period and describing how such rates were
determined.
`(5) Considerations for Premium Structure- When
establishing premiums for mortgages referred to in
paragraph (2)(C), establishing premiums pursuant to
paragraph (3), establishing a premium structure under
paragraph (4), and when changing such a premium
structure, the Secretary shall consider the following:
`(A) The effect of the proposed premiums or structure on
the Secretary's ability to meet the operational goals of the
Mutual Mortgage Insurance Fund as provided in section
202(a).
`(B) Underwriting variables.
`(C) The extent to which new pricing under the proposed
premiums or structure has potential for acceptance in the
private market.
`(D) The administrative capability of the Secretary to
administer the proposed premiums or structure.
`(E) The effect of the proposed premiums or structure on
the Secretary's ability to maintain the availability of mortgage
credit and provide stability to mortgage markets.
`(6) Authority to Base Premium Prices on Product Risk-
`(A) AUTHORITY- In establishing premium rates under
paragraphs (2), (3), and (4), the Secretary may provide for
variations in such rates according to the credit risk associated
with the type of mortgage product that is being insured
under this title, which may include providing that premium
rates differ between fixed-rate mortgages and
adjustable-rate mortgages insured pursuant to section 251,
between mortgages insured pursuant to section 203(b) and
mortgages for condominiums insured pursuant to section
234, and between such other products as the Secretary
considers appropriate.
Secretary to establish, for any mortgage product, any
mortgage insurance premium rate that does not comply with
the requirements and limitations under paragraphs (2)
through (5).'.
SEC. 208. PAYMENT INCENTIVES FOR HIGHER-RISK
BORROWERS.
Section 203(c) of the National Housing Act (12 U.S.C.
1709(c)), as amended by the preceding provisions of this
subtitle, is further amended by adding at the end the
following new paragraph:
`(7) Payment Incentives-
`(A) AUTHORITY- With respect to mortgages referred to in
paragraph (2)(C):
`(i) DISCRETIONARY 3-YEAR PAYMENT INCENTIVE- The
Secretary may provide, in the discretion of the Secretary, that
the payment incentive under subparagraph (B) shall apply
upon the expiration of the 3-year period beginning upon the
time of insurance of such a mortgage.
`(ii) MANDATORY 5-YEAR PAYMENT INCENTIVE- The
Secretary shall provide that the payment incentive under
subparagraph (B) applies upon the expiration of the 5-year
period beginning upon the time of insurance of such a
mortgage.
`(B) PAYMENT INCENTIVE- In the case of any mortgage to
which the payment incentive under this subparagraph
applies, if, during the period referred to in clause (i) or (ii) of
subparagraph (A), as applicable, all mortgage insurance
premiums for such mortgage have been paid on a timely
basis, upon the expiration of such period the Secretary shall--
`(i) reduce the amount of the annual premium payments
otherwise due thereafter under such mortgage to an amount
that does not exceed the amount of the annual premium
payable at the time of insurance of the mortgage on a
mortgage of the same product type having the same terms,
but for which the mortgagor has a credit score equivalent to
a FICO score of 560 or more; and
`(ii) refund to the mortgagor, upon payment in full of the
obligation of the mortgage, any amount by which the single
premium payment for such mortgage collected at the time of
insurance exceeded the amount of the single premium
payment chargeable under paragraph (2)(A) at the time of
insurance for a mortgage of the same product type having
the same terms, but for which the mortgagor has a credit
score equivalent to a FICO score of 560 or more.'.
SEC. 209. PROTECTIONS FOR HIGHER-RISK BORROWERS.
Section 203(b) of the National Housing Act (12 U.S.C.
1709(b)) is amended by adding at the end the following new
paragraph:
`(10) PROTECTIONS FOR HIGHER-RISK BORROWERS-
Except as otherwise specifically provided in this paragraph, in
the case of any mortgage referred to in paragraph (2)(C) of
subsection (c), the following requirements shall apply:
`(A) DISCLOSURES-
`(i) REQUIRED DISCLOSURES- In addition to any disclosures
that are otherwise required by law or by the Secretary for
single family mortgages, the mortgagee shall disclose to the
mortgagor the following information:
`(I) AT APPLICATION- At the time of application for the loan
involved in the mortgage, a list of counseling agencies,
approved by the Secretary, in the area of the applicant.
`(II) AT EXECUTION- At the time of entering into the
mortgage--
`(aa) the terms of the mandatory 5-year payment incentive
required under subsection (c)(7)(A)(ii); and
`(bb) a statement that the mortgagor has a right under
contract to loss mitigation.
`(III) OTHER INFORMATION- Any other additional
information that the Secretary determines is appropriate to
ensure that the mortgagor has received timely and accurate
information about the program under paragraph (2)(C) of
subsection (c).
`(ii) PENALTIES FOR FAILURE TO PROVIDE REQUIRED
DISCLOSURES- The Secretary may establish and impose
appropriate penalties for failure of a mortgagee to provide
any disclosure required under clause (i).
`(iii) NO PRIVATE RIGHT OF ACTION- This subparagraph
shall not create any private right of action on behalf of the
mortgagor.
`(B) COUNSELING-
`(i) REQUIREMENT- The Secretary shall require that the
mortgagor shall have received counseling that complies with
the requirements of this subparagraph.
`(ii) TERMS OF COUNSELING- Counseling under this
subparagraph shall be provided--
`(I) prior to closing for the loan involved in the mortgage;
`(II) by a third party (other than the mortgagee) who is
approved by the Secretary, with respect to the
responsibilities and financial management involved in
homeownership;
`(III) on an individual basis to the mortgagor by a
representative of the approved third-party counseling entity;
and
`(IV) in person, to the maximum extent possible.
`(iii) 2- AND 3-FAMILY RESIDENCES- In the case of a
mortgage involving a 2- or 3-family residence, counseling
under this subparagraph shall include (in addition to the
information required under clause (iii)) information regarding
real estate property management.
`(C) NOTICE OF FORECLOSURE PREVENTION COUNSELING
AVAILABILITY-
`(i) WRITTEN AGREEMENT- To be eligible for insurance
under this subsection, the mortgagee shall provide the
mortgagor, at the time of the execution of the mortgage, a
written agreement which shall be signed by the mortgagor
and under which the mortgagee shall provide notice
described in clause (ii) to a housing counseling entity that
has agreed to provide the notice and counseling required
under clause (iii) and is approved by the Secretary.
`(ii) NOTICE TO COUNSELING AGENCY- The notice described
in this clause, with respect to a mortgage, is notice, provided
at the earliest time practicable after the mortgagor becomes
60 days delinquent with respect to any payment due under
the mortgage, that the mortgagor is so delinquent and of
how to contact the mortgagor.
(2) the FHA program has a long history of innovation, which
includes pioneering the 30-year self-amortizing mortgage and
a safe-to-seniors reverse mortgage product, both of which
were once thought too risky to private lenders;
(3) the FHA single family mortgage insurance program
traditionally has been a major provider of mortgage
insurance for home purchases;
(4) the FHA mortgage insurance premium structure, as well
as FHA's product offerings, should be revised to reflect FHA's
enhanced ability to determine risk at the loan level and to
allow FHA to better respond to changes in the mortgage
market;
(5) during past recessions, including the oil-patch downturns
in the mid-1980s, FHA remained a viable credit enhancer and
was therefore instrumental in preventing a more catastrophic
collapse in housing markets and a greater loss of homeowner
equity; and
(6) as housing price appreciation slows and interest rates
rise, many homeowners and prospective homebuyers will
need the less-expensive, safer financing alternative that FHA
mortgage insurance provides.
(b) Purposes- The purposes of this subtitle are--
(1) to provide flexibility to FHA to allow for the insurance of
housing loans for low- and moderate-income homebuyers
during all economic cycles in the mortgage market;
(2) to modernize the FHA single family mortgage insurance
program by making it more reflective of enhancements to
loan-level risk assessments and changes to the mortgage
market; and
(3) to adjust the loan limits for the single family mortgage
insurance program to reflect rising house prices and the
increased costs associated with new construction.
SEC. 203. MAXIMUM PRINCIPAL LOAN OBLIGATION.
(a) In General- Section 203(b)(2) of the National Housing
Act (12 U.S.C. 1709(b)(2)(A)) is amended by striking
subparagraph (A) and inserting the following new
subparagraph:
`(A) not to exceed the lesser of--
`(i) in the case of a 1-family residence, 125 percent of 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
determined 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 determined under such section for a
1-family residence; or
`(ii) 175 percent of the dollar amount limitation determined
under such section 305(a)(2)(A) for a residence of the
applicable size (without regard to any authority to increase
such limitations with respect to properties located in Alaska,
Guam, Hawaii, or the Virgin Islands and without regard to the
high-cost area limitation under such section 305(a)(2)(B));
except that the dollar amount limitation in effect under this
subparagraph for any size residence 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 October 21, 1998; or
(II) 65 percent of the dollar amount limitation determined
under such section 305(a)(2) for a residence of the
applicable size; and except that, if the Secretary determines
that market conditions warrant such an increase, the
Secretary may, for such period as the Secretary considers
appropriate, increase the maximum dollar amount limitation
determined pursuant to the preceding provisions of this
subparagraph with respect to any particular size or sizes of
residences, or with respect to residences located in any
particular area or areas, to an amount that does not exceed
the maximum dollar amount then otherwise in effect pursuant
to the preceding provisions of this subparagraph for such
size residence, or for such area (if applicable), by not more
than $100,000; and'.
(b) Treatment of Temporary Loan Limit Increase- Subsection
(a) and the amendment made by such subsection may not be
construed to in any way affect the effectiveness of section
202 of the Economic Stimulus Act of 2008 (Public Law
110-185; 122 Stat. 620).
SEC. 204. EXTENSION OF MORTGAGE TERM.
Paragraph (3) of section 203(b) of the National Housing Act
(12 U.S.C. 1709(b)(3)) is amended--
(1) by striking `thirty-five years' and inserting `forty years';
and
(2) by striking `(or thirty years if such mortgage is not
approved for insurance prior to construction)'.
SEC. 205. DOWNPAYMENT SIMPLIFICATION.
Section 203(b) of the National Housing Act (12 U.S.C.
1709(b)) is amended--
(1) in paragraph (2)--
(A) by striking subparagraph (B) and inserting the following
new subparagraph:
`(B) not to exceed an amount equal to the sum of--
`(i) the amount of the mortgage premium paid at the time
the mortgage is insured; and
`(ii) 97.75 percent of the appraised value of the property.';
(B) in the matter after and below subparagraph (B), by
striking the second sentence (relating to a definition of
`average closing cost') and all that follows through `title 38,
United States Code.'; and
(C) by striking the last undesignated paragraph (relating to
counseling with respect to the responsibilities and financial
management involved in homeownership); and
(2) in paragraph (9)--
(A) by striking the paragraph designation and all that follows
through `Provided further, That for' and inserting the
following:
`(9) Be executed by a mortgagor who shall have paid on
account of the property, in cash or its equivalent, at least 3
percent of the Secretary's estimate of the cost of acquisition
(excluding the mortgage insurance premium paid at the time
the mortgage is insured). For'; and
(B) by inserting after the period at the end the following:
`For purposes of this paragraph, the Secretary shall consider
as cash or its equivalent any amounts gifted by a family
member (as such term is defined in section 201), the
mortgagor's employer or labor union, or a qualified
homeownership assistance entity, but only if there is no
obligation on the part of the mortgagor to repay the gift: For
purposes of the preceding sentence, the term `qualified
homeownership assistance entity' means any governmental
agency or charity that has a program to provide
homeownership assistance to low- and moderate-income
families or first-time home buyers, or any private nonprofit
organization that has such a program and evidences
sufficient fiscal soundness to protect the fiscal integrity of the
Mutual Mortgage Insurance Fund by maintaining a minimum
net worth of $4,000,000 of acceptable assets.'.
SEC. 206. MORTGAGE INSURANCE PREMIUMS FOR
QUALIFIED HOMEOWNERSHIP ASSISTANCE ENTITIES AND
HIGHER-RISK BORROWERS.
Paragraph (2) of section 203(c) of the National Housing Act
(12 U.S.C. 1709(c)(2)) is amended--
(1) in subparagraph (A), in the matter preceding
subparagraph (A), by striking the first comma after `section
234(c)';
(2) in subparagraph (A), by inserting after the period at the
end of the second sentence the following: `In the case of a
mortgage for which any amounts gifted by a qualified
homeownership assistance entity (as such term is defined in
paragraph (9) of subsection (b)) that is a private nonprofit
organization are treated as cash or its equivalent for
purposes of meeting the 3 percent requirement under such
paragraph, the premium payment under this subparagraph
shall not exceed 3.0 percent of the amount of the original
insured principal obligation of the mortgage.'; and
(3) by adding at the end the following new subparagraph:
`(C) HIGHER-RISK BORROWERS- The Secretary shall
establish underwriting standards that provide for insurance
under this section of mortgages described in the matter in
this paragraph preceding subparagraph (A) for which the
mortgagor has a credit score equivalent to a FICO score of
less than 560, and may insure, and make commitments to
insure, such mortgages. Such underwriting standards shall
include establishing and collecting premium payments that
comply with the requirements of this paragraph, except that
notwithstanding subparagraph (A), the single premium
payment collected at the time of insurance may be established
in an amount that does not exceed 3.0 percent of the amount
of the original insured principal obligation of the mortgage.'.
SEC. 207. RISK-BASED MORTGAGE INSURANCE PREMIUMS.
Section 203(c) of the National Housing Act (12 U.S.C.
1709(c)), as amended by the preceding provisions of this
subtitle, is further amended by adding at the end the
following new paragraphs:
`(4) Flexible Risk-Based Premiums- In the case of a
mortgage referred to in paragraph (2)(C) or a mortgage
described in the third sentence of subparagraph (A) of
paragraph (2) (relating to mortgages for which amounts are
gifted by a nonprofit qualified homeownership assistance
entity), for which the loan application is received by the
mortgagee on or after the date of the enactment of the
Expanding American Homeownership Act of 2008:
`(A) IN GENERAL- The Secretary may establish a mortgage
insurance premium structure involving a single premium
payment collected prior to the insurance of the mortgage or
annual payments (which may be collected on a periodic
basis), or both, subject to the requirements of subparagraph
(B) and paragraph (5). Under such structure, the rate of
premiums for such a mortgage may vary according to the
credit risk associated with the mortgage and the rate of any
annual premium for such a mortgage may vary during the
mortgage term as long as the basis for determining the
variable rate is established before the execution of the
mortgage. The Secretary may change a premium structure
established under this subclause but only to the extent that
such change is not applied to any mortgage already executed.
`(B) ESTABLISHMENT AND ALTERATION OF PREMIUM
STRUCTURE- A premium structure shall be established or
changed under subparagraph (A) only by providing notice to
mortgagees and to the Congress, at least 30 days before the
premium structure is established or changed.
`(C) ANNUAL REPORT REGARDING PREMIUMS- The
Secretary shall submit a report to the Congress annually
setting forth the rate structures and rates established and
altered pursuant to this paragraph during the preceding
12-month period and describing how such rates were
determined.
`(5) Considerations for Premium Structure- When
establishing premiums for mortgages referred to in
paragraph (2)(C), establishing premiums pursuant to
paragraph (3), establishing a premium structure under
paragraph (4), and when changing such a premium
structure, the Secretary shall consider the following:
`(A) The effect of the proposed premiums or structure on
the Secretary's ability to meet the operational goals of the
Mutual Mortgage Insurance Fund as provided in section
202(a).
`(B) Underwriting variables.
`(C) The extent to which new pricing under the proposed
premiums or structure has potential for acceptance in the
private market.
`(D) The administrative capability of the Secretary to
administer the proposed premiums or structure.
`(E) The effect of the proposed premiums or structure on
the Secretary's ability to maintain the availability of mortgage
credit and provide stability to mortgage markets.
`(6) Authority to Base Premium Prices on Product Risk-
`(A) AUTHORITY- In establishing premium rates under
paragraphs (2), (3), and (4), the Secretary may provide for
variations in such rates according to the credit risk associated
with the type of mortgage product that is being insured
under this title, which may include providing that premium
rates differ between fixed-rate mortgages and
adjustable-rate mortgages insured pursuant to section 251,
between mortgages insured pursuant to section 203(b) and
mortgages for condominiums insured pursuant to section
234, and between such other products as the Secretary
considers appropriate.
Secretary to establish, for any mortgage product, any
mortgage insurance premium rate that does not comply with
the requirements and limitations under paragraphs (2)
through (5).'.
SEC. 208. PAYMENT INCENTIVES FOR HIGHER-RISK
BORROWERS.
Section 203(c) of the National Housing Act (12 U.S.C.
1709(c)), as amended by the preceding provisions of this
subtitle, is further amended by adding at the end the
following new paragraph:
`(7) Payment Incentives-
`(A) AUTHORITY- With respect to mortgages referred to in
paragraph (2)(C):
`(i) DISCRETIONARY 3-YEAR PAYMENT INCENTIVE- The
Secretary may provide, in the discretion of the Secretary, that
the payment incentive under subparagraph (B) shall apply
upon the expiration of the 3-year period beginning upon the
time of insurance of such a mortgage.
`(ii) MANDATORY 5-YEAR PAYMENT INCENTIVE- The
Secretary shall provide that the payment incentive under
subparagraph (B) applies upon the expiration of the 5-year
period beginning upon the time of insurance of such a
mortgage.
`(B) PAYMENT INCENTIVE- In the case of any mortgage to
which the payment incentive under this subparagraph
applies, if, during the period referred to in clause (i) or (ii) of
subparagraph (A), as applicable, all mortgage insurance
premiums for such mortgage have been paid on a timely
basis, upon the expiration of such period the Secretary shall--
`(i) reduce the amount of the annual premium payments
otherwise due thereafter under such mortgage to an amount
that does not exceed the amount of the annual premium
payable at the time of insurance of the mortgage on a
mortgage of the same product type having the same terms,
but for which the mortgagor has a credit score equivalent to
a FICO score of 560 or more; and
`(ii) refund to the mortgagor, upon payment in full of the
obligation of the mortgage, any amount by which the single
premium payment for such mortgage collected at the time of
insurance exceeded the amount of the single premium
payment chargeable under paragraph (2)(A) at the time of
insurance for a mortgage of the same product type having
the same terms, but for which the mortgagor has a credit
score equivalent to a FICO score of 560 or more.'.
SEC. 209. PROTECTIONS FOR HIGHER-RISK BORROWERS.
Section 203(b) of the National Housing Act (12 U.S.C.
1709(b)) is amended by adding at the end the following new
paragraph:
`(10) PROTECTIONS FOR HIGHER-RISK BORROWERS-
Except as otherwise specifically provided in this paragraph, in
the case of any mortgage referred to in paragraph (2)(C) of
subsection (c), the following requirements shall apply:
`(A) DISCLOSURES-
`(i) REQUIRED DISCLOSURES- In addition to any disclosures
that are otherwise required by law or by the Secretary for
single family mortgages, the mortgagee shall disclose to the
mortgagor the following information:
`(I) AT APPLICATION- At the time of application for the loan
involved in the mortgage, a list of counseling agencies,
approved by the Secretary, in the area of the applicant.
`(II) AT EXECUTION- At the time of entering into the
mortgage--
`(aa) the terms of the mandatory 5-year payment incentive
required under subsection (c)(7)(A)(ii); and
`(bb) a statement that the mortgagor has a right under
contract to loss mitigation.
`(III) OTHER INFORMATION- Any other additional
information that the Secretary determines is appropriate to
ensure that the mortgagor has received timely and accurate
information about the program under paragraph (2)(C) of
subsection (c).
`(ii) PENALTIES FOR FAILURE TO PROVIDE REQUIRED
DISCLOSURES- The Secretary may establish and impose
appropriate penalties for failure of a mortgagee to provide
any disclosure required under clause (i).
`(iii) NO PRIVATE RIGHT OF ACTION- This subparagraph
shall not create any private right of action on behalf of the
mortgagor.
`(B) COUNSELING-
`(i) REQUIREMENT- The Secretary shall require that the
mortgagor shall have received counseling that complies with
the requirements of this subparagraph.
`(ii) TERMS OF COUNSELING- Counseling under this
subparagraph shall be provided--
`(I) prior to closing for the loan involved in the mortgage;
`(II) by a third party (other than the mortgagee) who is
approved by the Secretary, with respect to the
responsibilities and financial management involved in
homeownership;
`(III) on an individual basis to the mortgagor by a
representative of the approved third-party counseling entity;
and
`(IV) in person, to the maximum extent possible.
`(iii) 2- AND 3-FAMILY RESIDENCES- In the case of a
mortgage involving a 2- or 3-family residence, counseling
under this subparagraph shall include (in addition to the
information required under clause (iii)) information regarding
real estate property management.
`(C) NOTICE OF FORECLOSURE PREVENTION COUNSELING
AVAILABILITY-
`(i) WRITTEN AGREEMENT- To be eligible for insurance
under this subsection, the mortgagee shall provide the
mortgagor, at the time of the execution of the mortgage, a
written agreement which shall be signed by the mortgagor
and under which the mortgagee shall provide notice
described in clause (ii) to a housing counseling entity that
has agreed to provide the notice and counseling required
under clause (iii) and is approved by the Secretary.
`(ii) NOTICE TO COUNSELING AGENCY- The notice described
in this clause, with respect to a mortgage, is notice, provided
at the earliest time practicable after the mortgagor becomes
60 days delinquent with respect to any payment due under
the mortgage, that the mortgagor is so delinquent and of
how to contact the mortgagor.
| FHA Mortgage Reform 2008 |
| FHA Mortgage Reform 2008 |
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The plan combines large tax breaks for
homebuilders and a $7,000 tax credit for people
who buy foreclosed properties, as well as $4
billion in grants for communities to buy and fix
up abandoned homes.
Help families keep their homes by increasing pre-
foreclosure counseling funds, expanding
refinancing opportunities, and amending the
bankruptcy code to allow the modification of
nontraditional and subprime mortgages on
primary residences;
Help communities impacted by foreclosures by
allowing localities with high foreclosure rates to
access Community Development Block Grants
(CDBG) funds to purchase foreclosed properties
for rehabilitation, rent or re-sale;
Help struggling businesses recover by expanding
the carryback period from two years to five for
them to utilize losses incurred in 2006, 2007 and
2008 to offset prior years’ income; and
homebuilders and a $7,000 tax credit for people
who buy foreclosed properties, as well as $4
billion in grants for communities to buy and fix
up abandoned homes.
Help families keep their homes by increasing pre-
foreclosure counseling funds, expanding
refinancing opportunities, and amending the
bankruptcy code to allow the modification of
nontraditional and subprime mortgages on
primary residences;
Help communities impacted by foreclosures by
allowing localities with high foreclosure rates to
access Community Development Block Grants
(CDBG) funds to purchase foreclosed properties
for rehabilitation, rent or re-sale;
Help struggling businesses recover by expanding
the carryback period from two years to five for
them to utilize losses incurred in 2006, 2007 and
2008 to offset prior years’ income; and
FHA Express-The quick way to get an FHA loan! Click Here
Help families avoid foreclosure in the future by amending
the Truth-in-Lending Act to improve loan disclosures
during the original loan and refinancing process.
Increasing pre-foreclosure counseling funds. Title III of
S. 2636 would provide $200 million in additional funding
that would help housing counselors continue their
outreach to families at risk of foreclosure. These added
funds would help as many as 500,000 additional families
connect with their mortgage servicer or lender to explore
options that will keep them in their homes.
Providing an additional $10 billion of tax-exempt private
activity bond authority and allowing housing finance
agencies to issue bonds for refinancings. Title I of S. 2636
would allow housing finance agencies to use proceeds
from mortgage revenue bonds to refinance subprime
loans, to provide mortgages for first-time home buyers,
and for multifamily rental housing.
This increased lending activity would support economic
growth by creating new jobs, generating federal, state,
and local revenues, and inspiring home-related consumer
spending.
The Administration’s Budget for Fiscal Year 2009 included
a similar provision to allow tax-exempt qualified mortgage
bonds to be used to refinance home mortgages to provide
relief for subprime borrowers.
the Truth-in-Lending Act to improve loan disclosures
during the original loan and refinancing process.
Increasing pre-foreclosure counseling funds. Title III of
S. 2636 would provide $200 million in additional funding
that would help housing counselors continue their
outreach to families at risk of foreclosure. These added
funds would help as many as 500,000 additional families
connect with their mortgage servicer or lender to explore
options that will keep them in their homes.
Providing an additional $10 billion of tax-exempt private
activity bond authority and allowing housing finance
agencies to issue bonds for refinancings. Title I of S. 2636
would allow housing finance agencies to use proceeds
from mortgage revenue bonds to refinance subprime
loans, to provide mortgages for first-time home buyers,
and for multifamily rental housing.
This increased lending activity would support economic
growth by creating new jobs, generating federal, state,
and local revenues, and inspiring home-related consumer
spending.
The Administration’s Budget for Fiscal Year 2009 included
a similar provision to allow tax-exempt qualified mortgage
bonds to be used to refinance home mortgages to provide
relief for subprime borrowers.
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