[House Report 110-330] [From the U.S. Government Publishing Office] 110th Congress Report HOUSE OF REPRESENTATIVES 1st Session 110-330 ====================================================================== PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 1852) TO MODERNIZE AND UPDATE THE NATIONAL HOUSING ACT AND ENABLE THE FEDERAL HOUSING ADMINISTRATION TO USE RISK-BASED PRICING TO MORE EFFECTIVELY REACH UNDERSERVED BORROWERS, AND FOR OTHER PURPOSES _______ September 17, 2007.--Referred to the House Calendar and ordered to be printed _______ Ms. Matsui, from the Committee on Rules, submitted the following R E P O R T [To accompany H. Res. 650] The Committee on Rules, having had under consideration House Resolution 650, by a nonrecord vote, report the same to the House with the recommendation that the resolution be adopted. SUMMARY OF PROVISIONS OF THE RESOLUTION The resolution provides for consideration of H.R. 1852, the Expanding American Homeownership Act of 2007, under a structured rule. The rule provides one hour of general debate equally divided and controlled by the chairman and ranking minority member of the Committee on Financial Services. The rule waives all points of order against consideration of the bill except clauses 9 and 10 of rule XXI. The rule provides that the amendment in the nature of a substitute recommended by the Committee on Financial Services now printed in the bill, modified by the amendment printed in Part A of this report, shall be considered as adopted. The bill as amended shall be considered as an original bill for the purpose of amendment and shall be considered as read. The rule waives all points of order against provisions in the bill as amended. The rule makes in order only those further amendments printed in Part B of this report. The further amendments made in order may be offered only in the order printed in this report, may be offered only by a Member designated in this report, shall be considered as read, shall be debatable for the time specified in this report equally divided and controlled by the proponent and an opponent, shall not be subject to amendment, and shall not be subject to a demand for a division of the question in the House or in the Committee of the Whole. All points of order against the amendments except for clauses 9 and 10 of rule XXI are waived. The rule provides one motion to recommit with or without instructions. The rule provides that the Chair may postpone further consideration of the bill to a time designated by the Speaker. EXPLANATION OF WAIVERS The waiver of all points of order against consideration of the bill (except for clauses 9 and 10 of rule XXI) includes a waiver of clause 4(a) of rule XIII, requiring a three-day layover of the committee report. The committee is not aware of any points of order against provisions in the bill, as amended. The waiver of all points of order against provisions in the bill, as amended, is prophylactic in nature. COMMITTEE VOTES The results of each record vote on an amendment or motion to report, together with the names of those voting for and against, are printed below: Rules Committee record vote No. 300 Date: September 17, 2007. Measure: H.R. 1852. Motion by: Mr. Dreier. Summary of motion: To grant an open rule. Results: Defeated 3-7. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Matsui--Nay; Welch--Nay; Castor--Nay; Arcuri--Nay; Sutton--Nay; Dreier--Yea; Hastings (WA)--Yea; Sessions--Yea. Rules Committee record vote No. 301 Date: September 17, 2007. Measure: H.R. 1852. Motion by: Mr. Hastings (WA). Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Biggert (IL), #9 to strike the funding language for the affordable housing fund and insert language requiring HUD to conduct an annual study on the FHA single family housing mortgage insurance programs to determine the appropriate reserve and premium levels. If HUD determines that premiums can be reduced, it is directed to reduce them. The amendment maintains the current provision in the bill that directs any excess reserves to be used to maintain the solvency of the FHA insurance fund, encourage counseling and modernize FHA technology. Results: Defeated 3-7. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Matsui--Nay; Welch--Nay; Castor--Nay; Arcuri--Nay; Sutton--Nay; Dreier--Yea; Hastings (WA)--Yea; Sessions--Yea. Rules Committee record vote No. 302 Date: September 17, 2007. Measure: H.R. 1852. Motion by: Mr. Sessions. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Price, Tom (GA), #4 to require that any individual or household receiving money from the affordable housing fund must present verification of legal residency by a secure identification document. Results: Defeated 3-7. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Matsui--Nay; Welch--Nay; Castor--Nay; Arcuri--Nay; Sutton--Nay; Dreier--Yea; Hastings (WA)--Yea; Sessions--Yea. SUMMARY OF AMENDMENT CONSIDERED AS ADOPTED The amendment includes provisions to facilitate FHA refinancing loans to respond to recent mortgage market developments, perfecting modifications to the bill's provision establishing a surety bond requirement for mortgage broker and loan correspondent participation in FHA, modification of the loan originator fee cap for FHA reverse mortgages, a provision authorizing civil money penalties for actions which improperly influence FHA appraisals, and modifications to ensure compliance with PAYGO. SUMMARY OF AMENDMENTS MADE ORDER UNDER THE RULE 1. Tierney (MA): The amendment directs the Secretary of the Department of Housing and Urban Development to provide mortgage insurance premium refunds to eligible borrowers of FHA insured loans, which were closed prior to December 8, 2004, but which were not endorsed until December 8, 2004 or after that date, and authorizes such sums as may be necessary for such refunds. (10 minutes) 2. Frank (MA)/Miller, Gary (CA)/Cardoza (CA): The amendment raises the FHA single family loan limit, by establishing such limit in each area as the lower of (a) 125% of the local median area home price or (b) 175% of the national GSE conforming loan limit. Retains the FHA loan floor provision in the reported bill of 65% of the GSE conforming loan limit. Also gives HUD authority to raise these resulting loan limit amounts by up to $100,000 by area and/or by unit size ``if market conditions warrant.'' (10 minutes) 3. Miller, Gary (CA): The amendment will allow qualified down payment assistance providers to participate in the FHA Program if certain conditions are satisfied (i.e. no obligation for mortgagor to repay and net worth requirement). The Secretary shall consider as cash or its equivalent any amounts gifted by a family member, 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. (10 minutes) 4. Bishop, Tim (NY): The amendment would clarify requirements on reverse mortgages for seniors who own permanent foundation homes on leased land. (10 minutes) 5. Hensarling (TX): The amendment strikes the allowable use of FHA savings for an affordable housing fund. (10 minutes) 6. Tiberi (OH): The amendment requires the Secretary to ensure the mortgagor receives counseling at the time of application. Under current language the Secretary may, but is not required to, provide counseling. (10 minutes) 7. Biggert (IL): Amendment in the Nature of a Substitute. The substitute amendment would reform for the Federal Housing Administration's (FHA) single-family mortgage insurance activities and would allow FHA to base each borrower's mortgage insurance premiums on the risk that the borrower poses to the FHA Mortgage Insurance Fund, with slight variations. Under this proposal, mortgage insurance premiums will be based on the borrower's credit history, loan-to-value ratio, debt-to-income ratio, and on FHA's historical experience with similar borrowers. This amendment maintains FHA reserves within the insurance fund to preserve the future solvency of the FHA program. (20 minutes) PART A--TEXT OF AMENDMENT TO BE CONSIDERED AS ADOPTED Page 8, line 5, before the semicolon insert the following: ``that will be occupied by the mortgagor as his or her principal residence''. Page 8, strike lines 12 and 13, and insert the following: ``(iii)(I) is executed by a mortgagor who has not had any present ownership interest in a principal residence, and whose spouse has not had any such interest, during 12-month period ending upon purchase of the residence with the mortgage to which this paragraph applies, except that this subclause shall be considered a program to assist first-time homebuyers for purposes of section 956 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12713); or ``(II)(aa) is made to pay or prepay, and fully extinguish, the outstanding obligations under an existing mortgage or mortgages on the same property; and ``(bb) involves a principal obligation not exceeding the amount necessary to fully pay or prepay such outstanding obligations under the existing mortgage or mortgages, plus any charges and fees involved in such transaction and any charges and fees in connection with the payment or prepayment of such outstanding obligations.'' Page 24, after line 18, insert the following: SEC. 11. REFINANCING MORTGAGES. Section 203 of the National Housing Act (12 U.S.C. 1709) is amended by inserting after subsection (k) the following new subsection: ``(l) Refinancing Mortgages.-- ``(1) Establishment of underwriting standards.--The Secretary shall establish underwriting standards that provide for insurance under this title of mortgage loans, and take actions to facilitate the availability of mortgage loans insured under this title, for qualified borrowers that are made for the purpose of paying or prepaying outstanding obligations under existing mortgages for borrowers that-- ``(A) have existing mortgages with adverse terms or rates, or ``(B) do not have access to mortgages at reasonable rates and terms for such refinancings due to adverse market conditions. ``(2) Insurance of mortgages to borrowers in default or at risk of default.--In facilitating insurance for such mortgages, the Secretary may insure mortgages to borrowers who are, currently in default or at imminent risk of being in default, but only if such loans meet reasonable underwriting standards established by the Secretary''. Page 38, strike lines 3 and 4, and insert the following: ``(1) equal to 1.5 percent of the maximum claim amount of the mortgage, except that the Secretary may adjust the limitation under this paragraph on the basis of an analysis of (A) costs to mortgagors, and (B) the impact on the reverse mortgage market;''. Page 38, line 7, strike ``and''. Page 38, line 10, strike the first period and all that follows and insert ``; and''. Page 38, after line 10, insert the following: ``(5) apply beginning upon the date that the maximum dollar amount limitation on the benefits of insurance under this section is first increased pursuant to the amendments made by section 19(a)(2) of the Expanding American Homeownership Act of 2007.''. Page 39, lines 21 and 22, strike ``, or mortgage broker, or correspondent lender,''. Page 39, strike lines 23 and 24, and insert the following: ``(i) closes a mortgage in its name and underwrites the mortgage, services the mortgage, or both underwrites and services the mortgage;''. Page 40, strike line 7, and insert the following: ``(iv) is licensed, under the laws of the State in which the property that is subject to the mortgage is located, to act as a lender in such State; and''. Page 40, line 8, strike ``(iv)'' and insert ``(v)''. Page 40, line 14, insert a comma after ``name''. Page 40, line 15, strike ``or'' and insert ``and does not''. Page 40, after line 15, insert the following: ``(ii) is licensed, under the laws of the State in which the property that is subject to the mortgage is located, to act as a correspondent lender in such State;''. Page 40, line 16, strike ``(ii)'' and insert ``(iii)''. Page 40, line 19, strike ``in'' and insert ``that''. Page 40, line 20, insert ``is in'' before ``a form''. Page 40, line 21, strike ``and'' Page 40, line 22, strike ``an amount of $75,000'' and insert ``is in an aggregate amount, to be determined by the Secretary based on the aggregate principal amount of single-family mortgages insured under this title that are placed in a calendar year, which shall not be less than $50,000 or more than $100,000''. Page 40, lines 24 and 25, strike ``under regulations of'' and insert ``by''. Page 41, line 5, strike ``and''. Page 41, after line 5, insert the following: ``(III) guarantees payment of any liability of the correspondent lender arising from its participation in the program, up to the penal sum of the surety bond; without regard to the number of years the bond remains in effect, the number of claims or claimants, and the number of premiums paid, in no event shall the aggregate liability of the surety exceed the penal sum of the bond; and ``(IV) may be cancelled by the surety as to future liability by giving 30 days notice in writing to the Secretary, except that any such cancellation shall not alter the liability of the surety for actions of the correspondent lender prior to the effective date of the cancellation; and''. Page 41, line 6, strike ``(iii)'' and insert ``(iv)''. Page 41, line 7, before the period insert ``, except that the Secretary shall not require any minimum net worth or certified financial statements''. Page 41, strike lines 11 through 13, and insert the following: ``(i) closes the mortgage in the name of the lender, and does not underwrite and does not service the mortgage;''. Page 41, line 22, before the period insert ``, except that the Secretary shall not require any minimum net worth or certified financial statements''. Page 57, lines 10 and 11, strike ``two-year period beginning on the date of the enactment of this Act'' and insert ``four- year period beginning on the date that the Secretary of Housing and Urban Development first insures any mortgage pursuant to the automated process established under pilot program under section 258 of the National Housing Act (as added by the amendment made by subsection (a) of this section)''. Page 57, strike ``the'' in line 13 and all that follows through ``section)'' in line 16 and insert ``such automated process''. Page 61, strike lines 3 through 21, and insert the following: SEC. 28. DISCOUNT SALES OF MULTIFAMILY PROPERTIES. There is authorized to be appropriated, for discount sales of multifamily real properties under section 207(l) or 246 of the National Housing Act (12 U.S.C. 1713(l), 1715z-11), section 203 of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z-11), or section 204 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z-11a), and for discount loan sales under section 207(k) of the National Housing Act (12 U.S.C. 1713(k)), section 203 of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z- 11(k)), or section 204(a) of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z-11a(a)), $5,000,000, for fiscal year 2008. Page 62, after line 13, insert the following new section: SEC. 30. NONCOMPETITIVE SALES BY HUD TO STATES AND LOCALITIES. Subtitle A of title II of the Deficit Reduction Act of 2005 (Public Law 109-171; 120 Stat. 7) is amended by adding at the end the following new section: ``SEC. 2004. NONCOMPETITIVE SALES IN FISCAL YEAR 2011. ``Notwithstanding any other provision of law, the Secretary may not sell any multifamily real property through any discount sale during fiscal year 2011 under the provisions of law referred to in section 2002(a) or any multifamily loan through any discount loan sale during such fiscal year under the provisions referred to in section 2002(b), unless the property or loan is sold for an amount that is equal to or greater than 60 percent of the property market value or loan market value, respectively.''. Page 66, after line 25, insert the following new section: SEC. 33. CIVIL MONEY PENALTIES FOR IMPROPERLY INFLUENCING APPRAISALS. Paragraph (2) of section 536(b) of the National Housing Act (12 U.S.C. 1735f-14(b)(2)) is amended-- (1) in subparagraph (B), by striking ``or'' at the end; (2) in subparagraph (C), by striking the period at the end and inserting ``; or''; and (3) by adding at the end the following new subparagraph: ``(D) in the case of an insured mortgage under title II for a 1- to 4-family residence, compensating, instructing, inducing, coercing, or intimidating any person who conducts an appraisal of the property in connection with such mortgage, or attempting to compensate, instruct, induce, coerce, or intimidate such a person, for the purpose of causing the appraised value assigned to the property under the appraisal to be based on any other factor other than the independent judgment of such person exercised in accordance with applicable professional standards.''. PART B--TEXT OF AMENDMENTS MADE IN ORDER UNDER THE RULE 1. An Amendment To Be Offered by Representative Tierney of Massachusetts, or His Designee, Debatable for 10 minutes Page 66, after line 25, insert the following new section: SEC. 31. MORTGAGE INSURANCE PREMIUM REFUNDS. (a) Authority.--The Secretary of Housing and Urban Development shall, to the extent that amounts are made available pursuant to subsection (c), provide refunds of unearned premium charges paid, at the time of insurance, for mortgage insurance under title II of the National Housing Act (12 U.S.C. 1707 et seq.) to or on behalf of mortgagors under mortgages described in subsection (b). (b) Eligible Mortgages.--A mortgage described in this section is a mortgage on a one- to four-family dwelling that-- (1) was insured under title II of the National Housing Act (12 U.S.C. 1707 et seq.); (2) is otherwise eligible, under the last sentence of subparagraph (A) of section 203(c)(2) of such Act (12 U.S.C. 1709(c)(2)(A)), for a refund of all unearned premium charges paid on the mortgage pursuant to such subparagraph, except that the mortgage-- (A) was closed before December 8, 2004; and (B) was endorsed on or after such date. (c) Authorization of Appropriations.--There is authorized to be appropriated for each fiscal year such sums as may be necessary to provide refunds of unearned mortgage insurance premiums pursuant to this section. ---------- 2. An Amendment To Be Offered by Representative Frank of Massachusetts, or His Designee, Debatable for 10 minutes Strike line 19 on page 4 and all that follows through page 5, line 22, and insert the following: SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION. 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 in effect for 2007 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 for 2007 under such section for a 1-family residence; or ``(ii) 175 percent of the dollar amount limitation in effect for 2007 under such section 305(a)(2) 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), except that each such maximum dollar amount shall be adjusted effective January 1 of each year beginning with 2008, by adding to or subtracting from each such amount (as it may have been previously adjusted) a percentage thereof equal to the percentage increase or decrease, during the most recently completed 12- month or 4-quarter period ending before the time of determining such annual adjustment, in an housing price index developed or selected by the Secretary for purposes of adjustments under this clause; 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 in effect for 2007 under such section 305(a)(2) for a residence of the applicable size, as such limitation is adjusted by any subsequent percentage adjustments determined under clause (ii) of this subparagraph; 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''. ---------- 3. An Amendment To Be Offered by Representative Gary Miller of California, or His Designee, Debatable for 10 minutes Page 7, strike line 10 and insert the following: (2) in paragraph (9)-- (A) by striking the paragraph Page 7, line 19, strike the last period and insert ``; and''. Page 7, after line 19, insert the following: (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.''. ---------- 4. An Amendment To Be Offered by Representative Bishop of New York, or His Designee, Debatable for 10 minutes Page 35, after line 24, insert the following: (2) in subsection (b)(4), by striking subparagraph (B) and inserting the following new subparagraph: ``(B) under a lease that has a term that ends no earlier than the minimum number of years, as specified by the Secretary, beyond the actuarial life expectancy of the mortgagor or comortgagor, whichever is the later date.''. Page 35, line 25, strike ``(2)'' and insert ``(3)''. Page 36, line 7, strike ``(3)'' and insert ``(4)''. Page 36, line 9, strike ``(4)'' and insert ``(5)''. ---------- 5. An Amendment To Be Offered by Representative Hensarling of Texas, or His Designee, Debatable for 10 minutes Page 64, strike lines 6 through 13. ---------- 6. An Amendment To Be Offered by Representative Tiberi of Ohio, or His Designee, Debatable for 10 minutes Page 17, strike lines 3 through 16 and insert the following: ``(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.''. Page 18, strike lines 20 through 22 and insert the following: ``(i) Requirement.--The Secretary shall require that the mortgagor shall''. Page 19, strike lines 4 through 5 and insert the following: ``(I) prior to closing for the loan involved in the mortgage;''. ---------- 7. An Amendment To Be Offered by Representative Biggert of Illinois, or Her Designee, Debatable for 20 minutes Strike all after the enacting clause and insert the following: SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Expanding American Homeownership Act of 2007''. (b) Table of Contents.--The table of contents for this Act is as follows: Sec. 1. Short title and table of contents. Sec. 2. Findings and purposes. Sec. 3. Maximum principal loan obligation. Sec. 4. Extension of mortgage term. Sec. 5. Cash investment requirement. Sec. 6. Temporary reinstatement of downpayment requirement in event of increased defaults. Sec. 7. Mortgage insurance premiums. Sec. 8. Rehabilitation loans. Sec. 9. Discretionary action. Sec. 10. Insurance of condominiums. Sec. 11. Mutual Mortgage Insurance Fund. Sec. 12. Hawaiian home lands and Indian reservations. Sec. 13. Conforming and technical amendments. Sec. 14. Home equity conversion mortgages. Sec. 15. Conforming loan limit in disaster areas. Sec. 16. Participation of mortgage brokers and correspondent lenders. Sec. 17. Sense of Congress regarding technology for financial systems. Sec. 18. Savings provision. Sec. 19. Implementation. SEC. 2. FINDINGS AND PURPOSES. (a) Findings.--The Congress finds that-- (1) one of the primary missions of the Federal Housing Administration (FHA) single family mortgage insurance program is to reach borrowers who are underserved, or not served, by the existing conventional mortgage marketplace; (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 Act 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. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION. Paragraph (2) of section 203(b) of the National Housing Act (12 U.S.C. 1709(b)(2)) is amended-- (1) by striking subparagraphs (A) and (B) and inserting the following new subparagraphs: ``(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 the appraised value of the property, plus any initial service charges, appraisal, inspection and other fees in connection with the mortgage as approved by the Secretary.''; (2) 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 (3) by striking the last undesignated paragraph (relating to counseling with respect to the responsibilities and financial management involved in homeownership). SEC. 4. 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. 5. CASH INVESTMENT REQUIREMENT. Paragraph (9) of section 203(b) of the National Housing Act (12 U.S.C. 1709(b)(9)) is amended 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, an amount, if any, as the Secretary may determine based on factors determined by the Secretary and commensurate with the likelihood of default. For''. SEC. 6. TEMPORARY REINSTATEMENT OF DOWNPAYMENT REQUIREMENT IN EVENT OF INCREASED DEFAULTS. 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) Effect of increased defaults.-- ``(A) Annual determination.--If, for any calendar year described in subparagraph (B)(i), the Secretary determines, pursuant such subparagraph, that-- ``(i) the ratio of the number of mortgage insurance claims made during such calendar year on mortgages insured under this section to the total number of mortgages having such insurance in force during such calendar year exceeds, by 25 percent or more, such ratio for the 12-month period ending on the effective date of this Act, or ``(ii) the ratio of the aggregate remaining principal obligation under mortgages insured under this section for which an insurance claim is made during such calendar year to the average, for such calendar year, of the aggregate outstanding principal obligation under mortgages so insured exceeds, by 25 percent or more, such ratio for the 12-month period ending on such effective date, during the 90-day period beginning upon the submission of the report for such calendar year under subparagraph (B)(ii) containing such determination, the Secretary may insure a mortgage under this section only pursuant to the requirement under subparagraph (C), and the Secretary shall, not later than 60 days after submission of the report containing such determination, submit a report to the Congress under subparagraph (D) regarding mortgage insurance claims during such calendar year. ``(B) 5 years of annual determinations.-- ``(i) In general.--The Secretary shall, for each of the 5 calendar years commencing after the date of the enactment of this Act, compare the ratios referred to in subparagraph (A) and make a determination under such subparagraph. ``(ii) Annual report on defaults.-- Not later than 90 days after the conclusion of each of the calendar years described in clause (i), the Secretary shall submit a report to the Congress containing the determination of the Secretary under such clause with respect to such calendar year and setting forth the ratios referred to in such clause for such calendar year. ``(C) Reinstatement of downpayment requirement.--The requirement under this subparagraph is that paragraph (9) of this subsection shall apply as such paragraph was in effect on the day before the effective date of the Expanding American Homeownership Act of 2007. ``(D) Reports regarding increased default rate.--A report under this subparagraph, as required under subparagraph (A), shall contain-- ``(i) an analysis of mortgage insurance claims, made during the calendar year for which the report is submitted, on mortgages insured under this section; ``(ii) an analysis of the reasons for the increase during such calendar year in the applicable ratio or ratios under subparagraph (A), including an analysis of the extent to which such increase is attributable to the amendments made by the Expanding American Homeownership Act of 2007; ``(iii) the effect of such increase on the Mutual Mortgage Insurance Fund; ``(iv) recommendations regarding-- ``(I) whether the Congress should, to respond to such increase, take legislative action (aa) to apply paragraph (9) of this subsection as such paragraph was in effect on the day before the effective date of Expanding American Homeownership Act of 2007, (bb) to apply paragraph (2)(A)(ii) by substituting `87 percent of the dollar amount limitation' for `the dollar amount limitation', or (cc) both; and ``(II) whether such provisions should be temporary or permanent, and, if temporary, the period during which such provisions should apply; and ``(v) recommendations regarding any other administrative, regulatory, legislative, or other actions that should be taken to respond to such increase. ``(E) Defaults in disaster areas not counted for 24 months.--In determining the number of mortgage insurance claims made and the aggregate remaining principal obligation under mortgages for which an insurance claim is made for purposes of subparagraph (A) for any calendar year, the Secretary shall not take into consideration any claim made during such period on a mortgage on any property that is located in an area for which a major disaster was declared pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act if such claim was made during the 24-month period beginning upon such declaration.''. SEC. 7. MORTGAGE INSURANCE PREMIUMS. Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)) is amended-- (1) in paragraph (2), in the matter preceding subparagraph (A), by striking ``Notwithstanding'' and inserting ``Except as provided in paragraph (3) and notwithstanding''; and (2) by adding at the end the following new paragraph: ``(3) Flexible Risk-Based Premiums.-- ``(A) In general.--For any mortgage insured by the Secretary under this title that is secured by a 1- to 4-family dwelling and for which the loan application is received by the mortgagee on or after October 1, 2007, 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 limitations in subparagraphs (B) and (C). The rate of 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 subparagraph but only to the extent that such change is not applied to any mortgage already executed. ``(B) Maximum up-front premium amounts.--For any mortgage insured under a premium structure established pursuant to this paragraph, the amount of any single premium payment authorized by subparagraph (A), if established and collected prior to the insurance of the mortgage, may not exceed the following amount: ``(i) Except as provided in clauses (ii) and (iii), 3.0 percent of the amount of the original insured principal obligation of the mortgage. ``(ii) If the mortgagor has a credit score equivalent to a FICO score of 560 or more and has 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), 2.25 percent of the original insured principal obligation of the mortgage. ``(iii) If the annual premium payment is equal to the maximum amount allowable under clause (i) of subparagraph (C), 1.5 percent of the amount of the original insured principal obligation of the mortgage. ``(C) Maximum annual premium amounts.--For any mortgage insured under a premium structure established pursuant to this paragraph, the amount of any annual premium payment collected may not exceed the following amount: ``(i) Except as provided in clauses (ii) and (iii), 2.0 percent of the remaining insured principal obligation of the mortgage. ``(ii) If the mortgagor is a mortgagor described in clause (ii) of subparagraph (B), 0.55 percent of the remaining insured principal obligation of the mortgage. ``(iii) If the single premium payment collected at the time of insurance is equal to maximum amount allowable under clause (i) of subparagraph (B), 1.0 percent of the remaining insured principal obligation of the mortgage. ``(D) Payment incentive.--Notwithstanding subparagraph (C), for any mortgage insured under a premium structure established pursuant to this paragraph and for which the annual premium payment exceeds the amount set forth in subparagraph (C)(ii), if during the 5-year period beginning upon the time of insurance all mortgage insurance premiums for such mortgage have been paid on a timely basis, upon the expiration of such period the Secretary shall reduce the amount of the annual premium payments due thereafter under such mortgage to an amount equal to the amount set forth in subparagraph (C)(ii). ``(E) 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. ``(F) Considerations for premium structure.--When establishing a premium structure under subparagraph (A) or when changing such a premium structure, the Secretary shall consider the following: ``(i) The effect of the proposed premium structure on the Secretary's ability to meet the operational goals of the Mutual Mortgage Insurance Fund as provided in section 202(a). ``(ii) Underwriting variables. ``(iii) The extent to which new pricing under the proposed premium structure has potential for acceptance in the private market. ``(iv) The administrative capability of the Secretary to administer the proposed premium structure. ``(v) The effect of the proposed premium structure on the Secretary's ability to maintain the availability of mortgage credit and provide stability to mortgage markets.''. SEC. 8. 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. 9. 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. 10. INSURANCE OF CONDOMINIUMS. (a) In General.--Section 234 of the National Housing Act (12 U.S.C. 1715y) is amended-- (1) in subsection (c)-- (A) in the first sentence-- (i) by striking ``and'' before ``(2)''; and (ii) 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 (B) in clause (B) of the third sentence, by striking ``thirty-five years'' and inserting ``forty years''; 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) in clause (1), by striking ``or'' and inserting a comma; and (2) 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, a one-family unit in a multifamily project, including a project in which the dwelling units are attached, semi-detached, or detached, and an undivided interest in the common areas and facilities which serve the project''. SEC. 11. 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 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 upon the expiration of the 90-day period beginning on the date of the enactment of the Expanding American Homeownership Act of 2007, whichever is later. ``(6) Adjustment of premiums.--If, pursuant to the independent actuarial study of the Fund required under paragraph (5), the Secretary determines that the Fund is not meeting the operational goals established under paragraph (8) 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 section 203 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 charge borrowers under loans that are obligations of the Fund an appropriate premium for the risk that such loans pose to the Fund; ``(B) to minimize the default risk to the Fund and to homeowners; ``(C) to curtail the impact of adverse selection on the Fund; and ``(D) 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 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. 12. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS. (a) Hawaiian Home Lands.--Section 247(c) of the National Housing Act (12 U.S.C. 1715z-12) 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) 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. 13. 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. 14. 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 (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''; (2) in subsection (i)(1)(C), by striking ``limitations'' and inserting ``limitation''; and (3) by adding at the end the following new subsection: ``(n) Authority To Insure Home Purchase Mortgage.-- ``(1) In general.--Notwithstanding any other provision in 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 primary purpose of the home equity conversion mortgage is to enable an elderly mortgagor to purchase a 1- to 4-family dwelling in which the mortgagor will occupy or occupies one of the units. ``(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 residence of the applicable size.''. (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) Study Regarding Mortgage Insurance Premiums.--The Secretary of Housing and Urban Development shall conduct a study regarding mortgage insurance premiums charged under the program under section 255 of the National Housing Act (12 U.S.C. 1715z-20) for insurance of home equity conversion mortgages to analyze and determine-- (1) the effects of reducing the amounts of such premiums from the amounts charged as of the date of the enactment of this Act on-- (A) costs to mortgagors; and (B) the financial soundness of the program; and (2) the feasibility and effectiveness of exempting, from all the requirements under the program regarding payment of mortgage insurance premiums (including both up-front or annual mortgage insurance premiums under section 203(c)(2) of such Act), any mortgage insured under the program under which part or all of the amount of future payments made to the homeowner are used for costs of a long-term care insurance contract covering the mortgagor or members of the household residing in the mortgaged property. Not later than the expiration of the 12-month period beginning on the date of the enactment of this Act, the Secretary shall submit a report to the Congress setting forth the results and conclusions of the study. SEC. 15. CONFORMING LOAN LIMIT IN DISASTER AREAS. Section 203(h) of the National Housing Act (12 U.S.C. 1709) is amended-- (1) by inserting after ``property'' the following: ``plus any initial service charges, appraisal, inspection and other fees in connection with the mortgage as approved by the Secretary,''; (2) by striking the second sentence (as added by chapter 7 of the Emergency Supplemental Appropriations Act of 1994 (Public Law 103-211; 108 Stat. 12)); and (3) by adding at the end the following new sentence: ``In any case in which the single family residence to be insured under this subsection is within a jurisdiction in which the President has declared a major disaster to have occurred, the Secretary is authorized, for a temporary period not to exceed 36 months from the date of such Presidential declaration, to enter into agreements to insure a mortgage which involves a principal obligation of up to 100 percent of the dollar limitation determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a single family residence, and not in excess of 100 percent of the appraised value of the property plus any initial service charges, appraisal, inspection and other fees in connection with the mortgage as approved by the Secretary.''. SEC. 16. PARTICIPATION OF MORTGAGE BROKERS AND CORRESPONDENT LENDERS. (a) Definitions.-- (1) In general.--Section 201 of the National Housing Act (12 U.S.C. 1707) is amended-- (A) by striking ``As used in section 203 of this title--'' and inserting ``As used in this title and for purposes of participation in insurance programs under this title, except as specifically provided otherwise, the following definitions shall apply:''; (B) by striking subsection (b) and inserting the following: ``(2) The term `mortgagee' means any of the following entities, and its successors and assigns, to the extent such entity is approved by the Secretary: ``(A) A lender or correspondent lender, who-- ``(i) makes, underwrites, and services mortgages; ``(ii) submits to the Secretary such financial audits performed in accordance with the standards for financial audits of the Government Auditing Standards issued by the Comptroller of the United States; ``(iii) meet the minimum net worth requirement that the Secretary shall establish; and ``(iv) complies with such other requirements as the Secretary may establish. ``(B) A correspondent lender who-- ``(i) closes a mortgage in its name but does not underwrite or service the mortgage; ``(ii) posts a surety bond, in lieu of any requirement to provide audited financial statements or meet a minimum net worth requirement, in-- ``(I) a form satisfactory to the Secretary; and ``(II) an amount of $75,000, as such amount is adjusted annually by the Secretary (as determined under regulations of the Secretary) by the change for such year in the Consumer Price Index for All Urban Consumers published monthly by the Bureau of Labor Statistics of the Department of Labor; and ``(iii) complies with such other requirements as the Secretary may establish. ``(C) A mortgage broker who-- ``(i) closes the mortgage in the name of the lender and does not make, underwrite, or service the mortgage; ``(ii) is licensed, under the laws of the State in which the property that is subject to the mortgage is located, to act as a mortgage broker in such State; ``(iii) posts a surety bond in accordance with the requirements of subparagraph (B)(ii); and ``(iv) complies with such other requirements as the Secretary may establish. ``(3) The term `mortgagor' includes the original borrower under a mortgage and the successors and assigns of the original borrower.''; (C) in subsection (a), by redesignating clauses (1) and (2) as clauses (A) and (B) respectively; and (D) by redesignating subsections (a), (c), (d), (e), and (f) as paragraphs (1), (4), (5), (6), and (7), respectively, and realigning such paragraphs two ems from the left margin. (2) Mortgagee review.--Section 202(c)(7) of the National Housing Act (12 U.S.C. 1708(c)(7)) is amended-- (A) in subparagraph (A), by inserting ``, as defined in section 201,'' after ``mortgagee''; (B) by striking subparagraph (B); and (C) by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively. (3) Multifamily rental housing insurance.--Section 207(a)(2) of the National Housing Act (12 U.S.C. 1713(a)(2)) is amended by striking ``means the original lender under a mortgage, and its successors and assigns, and'' and inserting ``has the meaning given such term in section 201, except that such term also''. (4) War housing insurance.--Section 601(b) of the National Housing Act (12 U.S.C. 1736(b)) is amended by striking ``includes the original lender under a mortgage, and his successors and assigns approved by the Secretary'' and inserting ``has the meaning given such term in section 201''. (5) Armed services housing mortgage insurance.-- Section 801(b) of the National Housing Act (12 U.S.C. 1748(b)) is amended by striking ``includes the original lender under a mortgage, and his successors and assigns approved by the Secretary'' and inserting ``has the meaning given such term in section 201''. (6) Group practice facilities mortgage insurance.-- Section 1106(8) of the National Housing Act (12 U.S.C. 1749aaa-5(8)) is amended by striking ``means the original lender under a mortgage, and his or its successors and assigns, and'' and inserting ``has the meaning given such term in section 201, except that such term also''. (b) Eligibility for Insurance.-- (1) Title i.--Paragraph (1) of section 8(b) of the National Housing Act (12 U.S.C. 1706c(b)(1)) is amended-- (A) by striking ``, and be held by,''; and (B) by striking ``as responsible and able to service the mortgage properly''. (2) Single family housing mortgage insurance.-- Paragraph (1) of section 203(b) of the National Housing Act (12 U.S.C. 1709(b)(1)) is amended-- (A) by striking ``, and be held by,''; and (B) by striking ``as responsible and able to service the mortgage properly''. (3) Section 221 mortgage insurance.--Paragraph (1) of section 221(d) of the National Housing Act (12 U.S.C. 1715l(d)(1)) is amended-- (A) by striking `` and be held by''; and (B) by striking ``as responsible and able to service the mortgage properly''. (4) Home equity conversion mortgage insurance.-- Paragraph (1) of section 255(d) of the National Housing Act (12 U.S.C. 1715z-20(d)(1)) is amended by striking ``as responsible and able to service the mortgage properly''. (5) War housing mortgage insurance.--Paragraph (1) of section 603(b) of the National Housing Act (12 U.S.C. 1738(b)(1)) is amended-- (A) by striking ``, and be held by,''; and (B) by striking ``as responsible and able to service the mortgage properly''. (6) War housing mortgage insurance for large-scale housing projects.--Paragraph (1) of section 611(b) of the National Housing Act (12 U.S.C. 1746(b)(1)) is amended-- (A) by striking `` and be held by''; and (B) by striking ``as responsible and able to service the mortgage properly''. (7) Group practice facility mortgage insurance.-- Section 1101(b)(2) of the National Housing Act (12 U.S.C. 1749aaa(b)(2)) is amended-- (A) by striking `` and held by''; and (B) by striking ``as responsible and able to service the mortgage properly''. (8) National defense housing insurance.--Paragraph (1) of section 903(b) of the National Housing Act (12 U.S.C. 1750b(b)(1)) is amended-- (A) by striking ``, and be held by,''; and (B) by striking ``as responsible and able to service the mortgage properly''. SEC. 17. SENSE OF CONGRESS REGARDING TECHNOLOGY FOR FINANCIAL SYSTEMS. (a) Congressional Findings.--The Congress finds the following: (1) The Government Accountability Office has cited the FHA single family housing mortgage insurance program as a ``high-risk'' program, with a primary reason being non-integrated and out-dated financial management systems. (2) The ``Audit of the Federal Housing Administration's Financial Statements for Fiscal Years 2004 and 2003'', conducted by the Inspector General of the Department of Housing and Urban Development reported as a material weakness that ``HUD/FHA's automated data processing [ADP] system environment must be enhanced to more effectively support FHA's business and budget processes''. (3) Existing technology systems for the FHA program have not been updated to meet the latest standards of the Mortgage Industry Standards Maintenance Organization and have numerous deficiencies that lenders have outlined. (4) Improvements to technology used in the FHA program will-- (A) allow the FHA program to improve the management of the FHA portfolio, garner greater efficiencies in its operations, and lower costs across the program; (B) result in efficiencies and lower costs for lenders participating in the program, allowing them to better use the FHA products in extending homeownership opportunities to higher credit risk or lower-income families, in a sound manner. (5) The Mutual Mortgage Insurance Fund operates without cost to the taxpayers and generates revenues for the Federal Government. (b) Sense of Congress.--It is the sense of the Congress that-- (1) the Secretary of Housing and Urban Development should use a portion of the funds received from premiums paid for FHA single family housing mortgage insurance that are in excess of the amounts paid out in claims to substantially increase the funding for technology used in such FHA program; (2) the goal of this investment should be to bring the technology used in such FHA program to the level and sophistication of the technology used in the conventional mortgage lending market, or to exceed such level; and (3) the Secretary of Housing and Urban Development should report to the Congress not later than 180 days after the date of the enactment of this Act regarding the progress the Department is making toward such goal and if progress is not sufficient, the resources needed to make greater progress. SEC. 18. SAVINGS PROVISION. Any mortgage insured under title II of the National Housing Act before the date of enactment of this Act 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 Act. SEC. 19. 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 Act. The notice shall take effect upon issuance.