Library / Laws / 113th / s / S. 1376 / Reported in Senate
II
Calendar No. 275
113th CONGRESS
1st Session
S. 1376
[Report No. 113–129]
IN THE SENATE OF THE UNITED STATES
July 25, 2013Mr. Johnson of South
Dakota (for himself and Mr.
Crapo) introduced the following bill; which was read twice and
referred to the
Committee on Banking, Housing, and Urban
Affairs
December 19, 2013Reported by Mr. Johnson of South
Dakota, with amendmentsOmit the part struck through and insert the part
printed in italic
A BILL
To improve the Federal Housing Administration and to
ensure the solvency of the Mutual Mortgage Insurance Fund, and for other
purposes.
1.
Short
title; table of contents
(a)
Short
title
This Act may be cited
as the FHA Solvency Act of
2013.
(b)
Table of
contents
The table of
contents for this Act is as follows:
Sec. 1. Short title; table of
contents.Sec. 2. Mortgage insurance
premiums.Sec. 3. Prohibition on insuring mortgagors with
2 prior foreclosures.Sec. 34. Indemnification by FHA
mortgagees.Sec. 45. Review of mortgagee
performance.Sec. 6. Transfer of mortgage servicing
duties.Sec. 57. Easing regulatory burdens;
resource guide.Sec. 68. Improving underwriting
standards.Sec. 79. Ensuring adequate capital
levels in the Mutual Mortgage Insurance Fund.Sec. 10. Stress testing of the Mutual Mortgage
Insurance Fund.Sec. 11. Congressional notification of use of
certain authorities with respect to the FHA.Sec. 812. Establishment of Deputy
Assistant Secretary and Chief Risk Officer of FHA.Sec. 913. Disclosure of
events.Sec. 1014. GAO study on
disclosures.Sec. 1115. Stabilizing the HECM
program.Sec. 16. Principal limit factor for HECM
program.Sec. 1217. Publication of final rules
relating to limiting seller contributions towards purchase related
expenses.Sec. 18. GAO study on FHA loan
limits.
2.
Mortgage
insurance premiums
(a)
In
general
Section 203(c) of the
National Housing Act (12 U.S.C. 1709(c)) is amended—
(1) in paragraph (2)(B)—
(A) in the matter preceding clause (i)—
(i) by striking may and
inserting shall;
(ii) by striking not exceeding 1.5
percent and inserting not less than 0.55 percent;
and
(iii) by inserting and not exceeding 2.0
percent of such remaining insured principal balance before for
the following periods:; and
(B) in clause (ii), by striking 1.55
percent and inserting 2.05 percent; and
(2) by adding at the
end the following:
(3)
Evaluation of
up-front and annual premiums
(A)
Annual
review
The Secretary shall, at least annually, review—
(i) the amount of the
annual and up-front premiums collected under this subsection; and
(ii) the expected
losses to the Mutual Mortgage Insurance Fund, as such losses are calculated in
the annual independent actuarial study required under section 202(a)(4).
(B)
Required
adjustments
Upon completion of the review required under
subparagraph (A), the Secretary shall, for all mortgages that are to become an
obligation of the Mutual Mortgage Insurance Fund after the date that such
review is complete, adjust the annual and up-front premiums applied to such
mortgages so that the premiums collected over the life of such mortgages will
exceed the expected losses of such mortgages to the Fund plus amounts
sufficient to ensure the capital reserve ratio remains at the level required
under section 205(f).
(C)
Rule of
construction
Nothing in this paragraph shall permit or be
construed to permit the Secretary to apply different premium rates to the same
mortgage product during the same time period based solely on the
characteristics of the
mortgagor.
.
(b)
Effective
date
The amendments made by
subsection (a) take effect upon the expiration of the 6-month period beginning
on the date of enactment of this Act.
3.
Prohibition on insuring
mortgagors with 2 prior foreclosures
Section 203 of the National Housing Act (12
U.S.C. 1709) is amended by adding at the end the following:
(y)
Prohibition on insuring
mortgagors with 2 prior foreclosures
The Secretary may not insure, or enter into
a commitment to insure, a mortgage under this section that is executed by a
mortgagor who is the mortgagor under any two mortgages on 1- to 4-family
residential properties that have been previously foreclosed
upon.
.
34.
Indemnification
by FHA mortgagees
(a)
In
general
Section 202 of the
National Housing Act (12 U.S.C. 1708) is amended by
adding at the end the following new subsection:
(i)
Indemnification
by mortgagees
(1)
In
general
If the Secretary
determines that a mortgage executed by a mortgagee approved by the Secretary
under the direct endorsement program or insured by a mortgagee pursuant to the
delegation of authority under section 256 contains a material defect such that
the mortgage should not have been approved or endorsed for insurance, and a
loan becomes delinquent within 36 months of such approval or endorsement
leading to a default or the Secretary pays a claim within 36 months after such
approval or endorsement, the Secretary may require the mortgagee approved by
the Secretary under the direct endorsement program or the mortgagee delegated
authority under section 256 to indemnify the Secretary for the loss,
irrespective of whether the violation caused the mortgage default.
(2)
Fraud or
misrepresentation
If fraud or
misrepresentation was involved in connection with the origination, the
Secretary shall require the mortgagee approved by the Secretary under the
direct endorsement program or the mortgagee delegated authority under section
256 to indemnify the Secretary for the loss regardless of when an insurance
claim is paid., except if the Secretary determines that the
fraud or misrepresentation was the result of fraud or misrepresentation
committed not by the mortgagee but by a third party and that the mortgagee had
implemented adequate quality control and review procedures to deter, detect,
and identify such fraud or misrepresentation.
(3)
Requirements and procedures
The Secretary shall issue regulations
establishing—
(A) appropriate requirements and procedures
governing the indemnification of the Secretary by the mortgagee, including
public reporting on—
(i) the number of loans that—
(I) were not originated in accordance with the
requirements established by the Secretary; and
(II) involved fraud or misrepresentation in
connection with the origination; and
(ii) the financial impact on the Mutual Mortgage
Insurance Fund when indemnification is required; and
(B) an appeals
process, or making any necessary modifications or revisions to an existing
appeals process of the Secretary, to appeal any determination of
indemnification made by the Secretary pursuant to paragraph (1) or (2).
(4)
Applicability
This subsection shall only apply to
mortgages insured under this title that were originated on or after the date of
enactment of the FHA Solvency Act of
2013.
(5)
Deposit in the
Mutual Mortgage Insurance Fund
The Secretary shall deposit any
amounts collected pursuant to this subsection in, and for the use of, the
Mutual Mortgage Insurance
Fund.
.
(b)
Rule of
construction
Nothing in subsection (a), or the amendment made by
subsection (a), shall be construed to supersede, alter, or in any way affect
the authorities granted to the Secretary of Housing and Urban Development under
section 256 of the National Housing Act
(12 U.S.C.
1715z–21).
45.
Review of
mortgagee performance
Section
533 of the National Housing Act (12 U.S.C. 1735f–11) is amended—
(1) by amending
subsection (a) to read as follows:
(a)
Periodic review
of mortgagee performance
To reduce losses in connection with
single family mortgage insurance programs under this Act, at least once a year
the Secretary shall review the mortgagees originating or underwriting insured
single family
mortgages.
;
(2) by amending subsection (b) to read as
follows:
(b)
Comparison with
other mortgagees
(1)
In
general
In conducting the review required under subsection (a),
for each mortgagee the Secretary shall compare that mortgagee with other
mortgagees originating or underwriting insured single family mortgages based on
the rates of defaults and claims for insured single family mortgage loans
originated or underwritten by that mortgagee. The Secretary may also compare
that mortgagee with such other mortgagees based on—
(A) underwriting
quality;
(B) geographic area
served; or
(C) any commonly used
factors the Secretary deems necessary for comparing mortgage default risk,
provided that such comparison is of factors that the Secretary would expect to
reduce the default risk of mortgages insured by the Secretary.
(2)
Implementation
In
carrying out the comparisons required under paragraph (1), the Secretary shall
implement such comparisons by regulation, notice, or mortgagee
letter.
;
and
(3) in subsection
(c)—
(A) by striking
paragraph (1) and inserting the following:
(1)
Termination
authority
(A)
In
general
Notwithstanding section 202(c), the Secretary may
terminate the approval of a mortgagee to originate or underwrite single family
mortgages if the Secretary determines that the mortgage loans originated or
underwritten by the mortgagee present an unacceptable risk to the insurance
funds.
(B)
Basis for
determining unacceptable risk
For purposes of subparagraph (A), a
mortgagee may present an unacceptable risk to the insurance funds based
on—
(i) a comparison of
any of the factors set forth in subsection (b); or
(ii) a determination
that the mortgagee engaged in fraud or
misrepresentation.
;
(B) by redesignating
paragraph (2) as paragraph (3);
(C) by inserting
after paragraph (1) the following:
(2)
Applicability
and enforcement
The authority granted to the Secretary under
paragraph (1) shall—
(A) apply for any
specified area or areas, or on a nationwide basis; and
(B) be made in
accordance with any regulation, notice, or mortgagee letter issued by the
Secretary.
;
and
(D) in paragraph (3)
(as so redesignated)—
(i) by striking
(3) The
Secretary shall give and inserting (3)
Notice and right to informal
conference.—The Secretary shall give; and
(ii) in the fourth
sentence, by striking excessive default and claim rate and
inserting finding of an unacceptable risk to the insurance
funds.
6.
Transfer of mortgage
servicing duties
(a)
In
general
Title II of the
National Housing Act (12 U.S.C. 1707 et seq.) is amended by adding at the end
the following new section:
259.
Transfer of mortgage
servicing duties
(a)
Transfer of mortgage
servicing duties
(1)
In
general
For any mortgage or pool of mortgages insured under this
title and in accordance with rules promulgated by the Secretary, the Secretary
may require the servicer of any such mortgage or pool of mortgages to enter
into a subservicing arrangement with any independent specialty servicer
approved by the Secretary.
(2)
Rules
The
rules required under paragraph (1) shall—
(A) set forth with clarity
the performance conditions of a servicer that would warrant or necessitate the
use of the authority granted to the Secretary under this section;
(B) require that the
performance condition warranting or necessitating the use of such authority be
of such type or character so as to materially and adversely affect the
Secretary's ability to recover any amounts owed to the Secretary;
(C) for purposes of
subparagraph (B), define the term materially and adversely
affect;
(D) require that any servicer
whose servicing duties are subject to this section be provided a reasonable
amount of time, provided that such time does not present a risk to the Mutual
Mortgage Insurance Fund, to rebut, address, or correct any determination of the
Secretary regarding a performance condition described under subparagraph
(A);
(E) only permit the Secretary
to carry out the authority granted under this section upon expiration of the
time-period allowed under subparagraph (D);
(F) limit the scope of any
such authority to mortgages that share similar underwriting, borrower, and
performance characteristics;
(G) ensure that the scope of
any such authority is not applied broadly and without further limitation;
and
(H) notwithstanding
subparagraphs (B) through (G), provide that a servicer may be subject to more
extensive programmatic discipline or correction measures, as determined by the
Secretary, if, during any 5-year period—
(i) the servicing duties that
are the subject of the current use of the Secretary's authority under this
section marks the third instance of the use of such authority with respect to
the same servicer; and
(ii) with respect to the
prior two separate and individual instances of the use of such authority, the
same servicer failed to cure any identified performance conditions or implement
corrective measures as determined by the Secretary pursuant to subparagraph
(D).
.
(b)
Applicability
The
amendment made by this section shall only apply to mortgages insured under
title II of the National Housing Act (12 U.S.C. 1707 et seq.) that were
originated on or after the date of enactment of this Act.
57.
Easing
regulatory burdens; resource guide
(a)
In
general
Not later than 360
days after the date of enactment of this Act, the Secretary of Housing and
Urban Development (in this section referred to as the Secretary)
shall issue a single, uniform resource guide to inform lenders and servicers of
the policies, processes, and procedures applicable to mortgages insured under
title II of the National Housing Act (12 U.S.C. 1707 et seq.), including, but
not limited to, the policies, processes, and procedures of the Secretary
relating to any indemnification authority of the Secretary, including any
criteria the Secretary considers to be a material defect for purposes of
executing such authority.
(b)
Content
The
resource guide required under subsection (a) shall aggregate all forms,
policies, and other related information set forth in any handbooks, mortgagee
letters, guidebooks, notices, or bulletins issued by the Secretary.
(c)
Updating
Beginning
on the expiration of the date set forth under subsection (a), whenever the
Secretary issues any new policy, process, or procedure, or revises or otherwise
amends any existing policy, process, or procedure contained in the resource
guide required under subsection (a), such addition, revision, or amendment
shall be issued as an amendment to the resource guide.
(d)
Public
availability; website access
The resource guide required under
subsection (a) shall be made available to the public and posted on the website
of the Department of the Housing and Urban Development.
(e)
Authorization
of appropriations
There are authorized to be appropriated such
sums as are necessary to carry out this section.
68.
Improving
underwriting standards
(a)
In
general
Not later than 180 days after the date of enactment of
this Act, the Secretary of Housing and Urban Development shall, by mortgagee
letter or rule, evaluate and revise as necessary the underwriting standards for
mortgages eligible to be insured under title II of the National Housing Act (12
U.S.C. 1707 et seq.), which shall—
(1) be based on
empirically derived, demonstrably and statistically sound models; and
(2) include criteria,
the evaluation of which has historically resulted in comparatively low rates of
delinquency and default during adverse economic conditions.
(b)
Criteria
The
underwriting standards under subsection (a) shall include an evaluation
of—
(1) the current or
reasonably expected income and financial resources of a borrower;
(2) the employment
status of a borrower, if income used under paragraph (1) is employment
income;
(3) the monthly
payment of a borrower under the terms of a mortgage;
(4) the monthly
payment for any other loan held by the borrower;
(5) the monthly
payment for any obligations related to the mortgage;
(6) any other debt
obligations of a borrower, including alimony and child support;
(7) the monthly
debt-to-income ratio or residual income of a borrower;
(8) the credit
history of a borrower; and
(9) any other risk
factor or criteria, as determined appropriate by the Secretary.
79.
Ensuring
adequate capital levels in the Mutual Mortgage Insurance Fund
Section 205 of the National Housing Act (12
U.S.C. 1711(f)) is amended—
(1) in subsection (f)—
(A) in paragraph (2), by striking
shall ensure that
the Fund maintains at least such capital ratio at all times
thereafter and inserting maintains such ratio thereafter,
subject to paragraph (3); and
(B) by amending
paragraph (3) to read as follows:
(3) The Secretary
shall ensure that the Mutual Mortgage Insurance Fund attains a capital ratio of
not less than 3.0 percent within 10 years after the date of enactment of the
FHA Solvency Act of 2013, and
shall ensure that the Fund maintains at least such capital ratio at all times
thereafter.
;
and
(2) by adding at the
end the following:
(g)
Ensuring
adequate capital levels in the Mutual Mortgage Insurance Fund
(1)
Effective
date
(A)
In
general
Except as provided in subparagraph (B), this subsection
shall take effect on the date of enactment of the
FHA Solvency Act of
2013.
(B)
Exception for
imposition of surcharges
(i)
In
general
Paragraphs (4)(D), (5)(D), and (6)(D) of this
subsection—
(I) shall not have
any force or effect during the 2-year period beginning on the date of enactment
of the FHA Solvency Act of
2013; and
(II) shall take
effect upon the earlier of—
(aa) the expiration
of the 2-year period set forth under subclause (I), if in any annual
independent actuarial study required under section 202(a)(4) the Mutual
Mortgage Insurance Fund is designated as critically undercapitalized pursuant
to paragraph (6);
(bb) the date the
independent actuary commissioned to carry out the annual independent actuarial
study required under section 202(a)(4) submits the results of the fiscal year
2016 study to the Secretary, if such study finds that the Mutual Mortgage
Insurance Fund has not achieved the capital ratio required to be maintained
under subsection (f)(1);
(cc) any date
occurring after the date set forth under item (bb), but prior to any date set
forth under items (dd) or (ee), if in any annual independent actuarial study
required under section 202(a)(4) the independent actuary commissioned to carry
out the study finds— (AA) that in
comparison to the independent actuarial study submitted in the most recent
prior fiscal year, the capital ratio of the Fund has decreased; and (BB) the market share
for mortgages insured under this title has not been concurrently reduced thus
contributing to the decrease in the capital ratio described under subitem
(AA);
(dd) the date on
which the Mutual Mortgage Insurance Fund attains a capital ratio of 3.0
percent; or
(ee) the date that is
10 years after the date of enactment of the FHA Solvency Act of 2013.
(ii)
Rule of
construction
For purposes of this subsection, any finding made
under item (cc) of clause (i)(II) shall be deemed to mean that the Mutual
Mortgage Insurance Fund is undercapitalized pursuant to paragraph (4) and that
notwithstanding the provisions of paragraph (4)(D)(iv), the Secretary shall
begin or continue to collect any surcharge set forth under paragraph (4)(D),
until the earlier of the date on which—
(I) the next report
of the Secretary on the annual independent actuarial study required under
section 202(a)(4) finds that in comparison to the independent actuarial study
submitted in the most recent prior fiscal year, the capital ratio of the Fund
has increased;
(II) the report of
the Secretary required under paragraph (3)(A) finds that in comparison to the
independent actuarial study submitted in the most recent prior fiscal year, the
capital ratio of the Fund has increased; or
(III) the Mutual
Mortgage Insurance Fund has been designated
as
significantly undercapitalized pursuant to paragraph (5) or
critically undercapitalized pursuant to paragraph (6) and the premium surcharge
applicable to any such designation has taken effect.
(2)
Duty of Chief
Risk Officer
Following the receipt by the Deputy Assistant
Secretary and Chief Risk Officer of the final completed report for the fiscal
year of the independent actuary commissioned to carry out the annual
independent actuarial study required under section 202(a)(4) analyzing the
capital ratio of the Mutual Mortgage Insurance Fund, the Deputy Assistant
Secretary and Chief Risk Officer shall, as part of that individual's regularly
assigned duties and responsibilities, have a duty to notify, within 24 hours,
the Secretary of any failure to maintain the capital ratio of the Mutual
Mortgage Insurance Fund as required under subsection (f).
(3)
Studies and
reports
(A)
For when Fund
is undercapitalized or significantly undercapitalized
If the
Mutual Mortgage Insurance Fund is designated as undercapitalized or
significantly undercapitalized pursuant to paragraphs (4) or (5), respectively,
then not later than 180 days after date on which the Secretary submits the
report on the annual independent actuarial study required under section
202(a)(4), and annually thereafter until such time as the Mutual Mortgage
Insurance Fund achieves the capital ratio required to be maintained under
subsection (f), the Secretary shall provide a report to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives updating the results of the
independent actuarial study required under section 202(a)(4) to reflect the
most recently available information and analyzing the financial position of the
Fund.
(B)
For when Fund
is critically undercapitalized
If the Mutual Mortgage Insurance
Fund is designated as critically undercapitalized pursuant to paragraph (6),
then not later than the last day of the current fiscal quarter in which the
Congress is informed of such events pursuant to paragraph (6)(A), and every
fiscal quarter thereafter until such time as the Mutual Mortgage Insurance Fund
achieves the capital ratio required to be maintained under subsection (f) or is
designated as undercapitalized or significantly undercapitalized pursuant to
paragraphs (4) or (5), respectively, the Secretary shall provide a report to
the Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives updating the
results of the independent actuarial study required under section 202(a)(4) to
reflect the most recently available information and analyzing the financial
position of the Fund.
(C)
Failure to
comply with required timelines
If the Secretary fails to comply
with any timeline required under subparagraphs (A) or (B), the Secretary shall
appear before the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of Representatives
within 7 days of the last day of that deadline to provide testimony explaining
the failure to comply.
(4)
Corrective
actions when Fund is undercapitalized
(A)
Notice to
Congress
Not later than 7 days after the date on which the
Secretary is informed that the Mutual Mortgage Insurance Fund has a capital
ratio of not less than 50 percent but less than 100 percent of the capital
ratio required to be maintained under subsection (f), the Secretary shall
notify the Chair and Ranking Member of the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Chair and Ranking Member of the Committee
on Financial Services of the House of Representatives of such shortfall, and
the exact date on which the Secretary was informed of such shortfall.
(B)
Submission of
capital restoration plan
Not later than 30 days after the date on
which notice is provided under subparagraph (A), the Secretary shall submit to
the Chair and Ranking Member of the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Chair and Ranking Member of the Committee on
Financial Services of the House of Representatives a capital restoration plan,
including a timeline for implementation of such plan, to achieve the capital
ratio required to be maintained under subsection (f). The plan required under
this subparagraph shall be revised annually until such time as the Mutual
Mortgage Insurance Fund achieves the capital ratio required to be maintained
under subsection (f).
(C)
Congressional
testimony
Not later than 45 days after the date on which notice
is provided under subparagraph (A), and annually thereafter until such time as
the Mutual Mortgage Insurance Fund achieves the capital ratio required to be
maintained under subsection (f), the Secretary shall provide testimony to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives on the capital
status of the Fund and the performance or projected performance of the plan
submitted under subparagraph (B).
(D)
Imposition of
premium surcharge
(i)
In
general
Notwithstanding any limitation on the amount of any
premium payment set forth under section 203(c), in addition to the premiums
collected under subparagraphs (A), (B), and (C) of paragraph (2) of section
203(c), if the Mutual Mortgage Insurance Fund is designated as undercapitalized
pursuant to this paragraph, the Secretary shall establish and collect annual
premium payments for any newly insured mortgage for which the Secretary
collects an annual premium payment under section 203(c), except for those
mortgages insured pursuant to section 255, in an amount described in clause
(ii).
(ii)
Amount of
surcharge
With respect to a mortgage, the amount described in
this clause is 10 basis points of the remaining insured principal balance
(excluding the portion of the remaining balance attributable to the premium
collected under paragraph (2)(A) of section 203(c) and without taking into
account delinquent payments or prepayments).
(iii)
Effective
date
(I)
In
general
Subject to subclause (II), the requirement to collect the
annual premium payment set forth under this subparagraph shall take effect on
the date that is 180 days after the date on which notice is provided to
Congress under subparagraph (A).
(II)
Delay
The
effective date of the requirement to collect the annual premium payment set
forth under this subparagraph may be extended for an additional 180 days, if
prior to the expiration of the initial 180-day time period described under
subclause (I), the report of the Secretary required under paragraph
(3)(A)—
(aa) is
submitted to Congress; and
(bb) finds that the
Mutual Mortgage Insurance Fund has achieved the capital ratio required to be
maintained under subsection (f).
(III)
Reinstitution
of surcharge
Notwithstanding subclauses (I) and (II), if the next
report of the Secretary on the annual independent actuarial study required
under section 202(a)(4) that is submitted after the report of the Secretary
described in subclause (II) finds that the Mutual Mortgage Insurance Fund has
not achieved the capital ratio required to be maintained under subsection (f),
then the effective date of the requirement to collect the annual premium
payment set forth under this subparagraph shall be the date that is 30 days
after the date on which such report is submitted to Congress.
(iv)
Cessation of
application
The Secretary shall not be required to collect the
annual premium payment set forth under this subparagraph, if, at any time after
the date on which such requirement has gone into effect, either—
(I) the report of the
Secretary on the annual independent actuarial study required under section
202(a)(4) finds that the Mutual Mortgage Insurance Fund has achieved the
capital ratio required to be maintained under subsection (f);
(II) the report of
the Secretary required under paragraph (3)(A) finds that the Mutual
Mortgage Insurance Fund has achieved the capital ratio required to be
maintained under subsection (f); or
(III) the Mutual
Mortgage Insurance Fund has been designated significantly undercapitalized
pursuant to paragraph (5) or critically undercapitalized pursuant to paragraph
(6) and the premium surcharge applicable to any such designation has taken
effect.
(5)
Corrective
actions when Fund is significantly undercapitalized
(A)
Notice to
Congress
Not later than 7 days after the date on which the
Secretary is informed that the Mutual Mortgage Insurance Fund has a capital
ratio of not less than 0 percent but less than 50 percent of the capital ratio
required to be maintained under subsection (f), the Secretary shall notify the
Chair and Ranking Member of the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Chair and Ranking Member of the Committee on
Financial Services of the House of Representatives of such shortfall, and the
date on which the Secretary was informed of such shortfall.
(B)
Submission of
revised capital restoration plan
Not later than 30 days after the
date on which notice is provided under subparagraph (A), the Secretary shall
submit to the Chair and Ranking Member of the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Chair and Ranking Member of the
Committee on Financial Services of the House of Representatives a capital
restoration plan, or a revised capital restoration plan, including a timeline
for implementation of such plan or revised plan, to achieve the capital ratio
required to be maintained under subsection (f). The plan required under this
subparagraph shall be revised annually until such time as the Mutual Mortgage
Insurance Fund achieves the capital ratio required to be maintained under
subsection (f).
(C)
Congressional
testimony
Not later than 45 days after the date on which notice
is provided under subparagraph (A), and every 180 days thereafter until such
time as the Mutual Mortgage Insurance Fund achieves the capital ratio required
to be maintained under subsection (f), the Secretary shall provide testimony to
the Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives on the capital
status of the Fund and the performance or projected performance of the revised
capital restoration plan submitted under subparagraph (B).
(D)
Imposition of
premium surcharge
(i)
In
general
Notwithstanding any limitation on the amount of any
premium payment set forth under section 203(c), in addition to the premiums
collected under subparagraphs (A), (B), and (C) of paragraph (2) of section
203(c), if the Mutual Mortgage Insurance Fund is designated as significantly
undercapitalized pursuant to this paragraph, the Secretary shall establish and
collect annual premium payments for any newly insured mortgage for which the
Secretary collects an annual premium payment under section 203(c), except for
those mortgages insured pursuant to section 255, in an amount described in
clause (ii).
(ii)
Amount of
surcharge
With respect to a mortgage, the amount described in
this clause is 20 basis points of the remaining insured principal balance
(excluding the portion of the remaining balance attributable to the premium
collected under paragraph (2)(A) of section 203(c) and without taking into
account delinquent payments or prepayments).
(iii)
Effective
date
(I)
In
general
Subject to subclause (II), the requirement to collect the
annual premium payment set forth under this subparagraph shall take effect on
the date that is 180 days after the date on which notice is provided to
Congress under subparagraph (A).
(II)
Delay
The
effective date of the requirement to collect the annual premium payment set
forth under this subparagraph shall be extended for an additional 180 days, if
prior to the expiration of the initial 180-day time period described under
subclause (I), the report of the Secretary required under paragraph
(3)(A)—
(aa) is
submitted to Congress; and
(bb) finds that the
Mutual Mortgage Insurance Fund— (AA) has achieved the
capital ratio required to be maintained under subsection (f); or (BB) has a capital
ratio of not less than 50 percent but less than 100 percent of the capital
ratio required to be maintained under subsection (f), at which point the
provisions of paragraph (4)(D) shall be applicable, except that the provisions
of clause (iii) of such paragraph (4)(D) shall not be applicable and that the
premium surcharge applicable to such paragraph shall take effect within 30 days
of the issuance of such report.
(III)
Reinstitution
of surcharge
Notwithstanding subclauses (I) and (II), if the next
report of the Secretary on the annual independent actuarial study required
under section 202(a)(4) that is submitted after the report of the Secretary
described in subclause (II) finds that the Mutual Mortgage Insurance Fund has a
capital ratio of not less than 0 percent but less than 50 percent of the
capital ratio required to be maintained under subsection (f), then the
effective date of the requirement to collect the annual premium payment set
forth under this subparagraph shall be the date that is 30 days after the date
on which such report is submitted to Congress.
(iv)
Cessation of
application
The Secretary shall not be required to collect the
annual premium payment set forth under this subparagraph, if, at any time after
the date on which such requirement has gone into effect, either—
(I) the report of the
Secretary on the annual independent actuarial study required under section
202(a)(4) finds that the Mutual Mortgage Insurance Fund—
(aa) has achieved the
capital ratio required to be maintained under subsection (f); or
(bb) has a capital
ratio of not less than 50 percent but less than 100 percent of the capital
ratio required to be maintained under subsection (f), at which point the
provisions of paragraph (4)(D) shall be applicable, except that the provisions
of clause (iii) of such paragraph (4)(D) shall not be applicable and that the
premium surcharge applicable to such paragraph shall take effect within 30 days
of the issuance of such report;
(II) the report of
the Secretary required under paragraph (3)(A) finds that the Mutual Mortgage
Insurance Fund—
(aa) has achieved the
capital ratio required to be maintained under subsection (f); or
(bb) has a capital
ratio of not less than 50 percent but less than 100 percent of the capital
ratio required to be maintained under subsection (f), at which point the
provisions of paragraph (4)(D) shall be applicable, except that the provisions
of clause (iii) of such paragraph (4)(D) shall not be applicable and that the
premium surcharge applicable to such paragraph shall take effect within 30 days
of the issuance of such report; or
(III) the Mutual
Mortgage Insurance Fund has been designated
as critically undercapitalized
pursuant to paragraph (6) and the premium surcharge applicable to any such
designation has taken effect.
(E)
Required
examination of underwriting requirements
If the Mutual Mortgage
Insurance Fund is designated as significantly undercapitalized pursuant to this
paragraph, the Secretary shall—
(i) not later than 30
days after the date on which notice is provided under subparagraph (A), examine
all of its product lines, product or insurance features, and underwriting
criteria for ways to strengthen and enhance such products, features, or
criteria to limit losses to the Mutual Mortgage Insurance Fund;
(ii) in carrying out
the requirement under clause (i), undertake such examination actions as are
necessary to reduce the financial vulnerability of the Mutual Mortgage
Insurance Fund from those risk characteristics or product lines that most
contribute to the default of mortgages insured under section 202, including by
reviewing the underwriting and servicing standards for mortgages to be insured
by the Secretary, including, but not limited to, a review of—
(I) the amount of
cash or its equivalent required to be paid on account of the property subject
to a mortgage that is an obligation of the Fund;
(II) servicer
compliance with any loan servicing or loss mitigation guidelines of the
Secretary; and
(III) economic
conditions present in the housing market, provided there is a demonstrated
likelihood that the policies of the Secretary would impact those economic
conditions; and
(iii) submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives any analysis,
findings, or recommendations used or made by the Secretary to carry out the
requirements of this subparagraph.
(6)
Corrective
actions when Fund is critically undercapitalized
(A)
Notice to
Congress
Not later than 7 days after the date on which the
Secretary is informed that the Mutual Mortgage Insurance Fund has a capital
ratio of less than 0 percent of the capital ratio required to be maintained
under subsection (f), the Secretary shall notify the Chair and Ranking Member
of the Committee on Banking, Housing, and Urban Affairs of the Senate and the
Chair and Ranking Member of the Committee on Financial Services of the House of
Representatives of such shortfall, and the date on which the Secretary was
informed of such shortfall.
(B)
Submission of
further revised capital restoration plan
Not later than 30 days
after the date on which notice is provided under subparagraph (A), the
Secretary shall jointly submit with the Secretary of the Treasury to the Chair
and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Chair and Ranking Member of the Committee on Financial
Services of the House of Representatives a capital restoration plan, or a
revised capital restoration plan, including a timeline for implementation of
such plan, to achieve the capital ratio required to be maintained under
subsection (f). The plan required under this subparagraph shall be revised and
submitted annually with the Secretary of the Treasury, until such time as the
Mutual Mortgage Insurance Fund achieves the capital ratio required to be
maintained under subsection (f).
(C)
Congressional
testimony
Not later than 45 days after the date on which notice
is provided under subparagraph (A), and every 180 days thereafter until such
time as the Mutual Mortgage Insurance Fund achieves the capital ratio required
to be maintained under subsection (f), the Secretary and the Secretary of the
Treasury shall each provide testimony to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services of the
House of Representatives on the capital status of the Fund and the success or
failure of the further revised capital restoration plan submitted under
subparagraph (B).
(D)
Imposition of
premium surcharge
(i)
In
general
Notwithstanding any limitation on the amount of any
premium payment set forth under section 203(c), in addition to the premiums
collected under subparagraphs (A), (B), and (C) of paragraph (2) of section
203(c), if the Mutual Mortgage Insurance Fund is designated as critically
undercapitalized pursuant to this paragraph, the Secretary shall establish and
collect annual premium payments for any newly insured mortgage for which the
Secretary collects an annual premium payment under section 203(c), except for
those mortgages insured pursuant to section 255, in an amount described in
clause (ii).
(ii)
Amount of
surcharge
With respect to a mortgage, the amount described in
this clause is 30 basis points of the remaining insured principal balance
(excluding the portion of the remaining balance attributable to the premium
collected under paragraph (2)(A) of section 203(c) and without taking into
account delinquent payments or prepayments).
(iii)
Effective
date
(I)
In
general
Subject to subclause (II), the requirement to collect the
annual premium payment set forth under this subparagraph shall take effect on
the date that is 180 days after the date on which notice is provided to
Congress under subparagraph (A).
(II)
Delay
The
effective date of the requirement to collect the annual premium payment set
forth under this subparagraph shall be extended for an additional 180 days, if
prior to the expiration of the initial 180-day time period described under
subclause (I), the report of the Secretary required under paragraph
(3)(B)—
(aa) is
submitted to Congress; and
(bb) finds that the
Mutual Mortgage Insurance Fund— (AA) has achieved the
capital ratio required to be maintained under subsection (f); (BB) has a capital
ratio of not less than 50 percent but less than 100 percent of the capital
ratio required to be maintained under subsection (f), at which point the
provisions of paragraph (4)(D) shall be applicable, except that the provisions
of clause (iii) of such paragraph (4)(D) shall not be applicable and that the
premium surcharge applicable to such paragraph shall take effect within 30 days
of the issuance of such report; or (CC) has a capital
ratio of not less than 0 percent but less than 50 percent of the capital ratio
required to be maintained under subsection (f), at which point the provisions
of paragraph (5)(D) shall be applicable, except that the provisions of clause
(iii) of such paragraph (5)(D) shall not be applicable and that the premium
surcharge applicable to such paragraph shall take effect within 30 days of the
issuance of such report.
(III)
Reinstitution
of surcharge
Notwithstanding subclauses (I) and (II), if within 1
calendar year any report of the Secretary required under paragraph (3)(B) finds
that the Mutual Mortgage Insurance Fund has a capital ratio of less than 0
percent of the capital ratio required to be maintained under subsection (f),
then the effective date of the requirement to collect the annual premium
payment set forth under this subparagraph shall be the date that is 30 days
after the date on which such report is submitted to Congress.
(iv)
Cessation of
application
The Secretary shall not be required to collect the
annual premium payment set forth under this subparagraph, if, at any time after
the date on which such requirement has gone into effect, either—
(I) the report of the
Secretary on the annual independent actuarial study required under section
202(a)(4) finds that the Mutual Mortgage Insurance Fund—
(aa) has achieved the
capital ratio required to be maintained under subsection (f);
(bb) has a capital
ratio of not less than 50 percent but less than 100 percent of the capital
ratio required to be maintained under subsection (f), at which point the
provisions of paragraph (4)(D) shall be applicable, except that the provisions
of clause (iii) of such paragraph (4)(D) shall not be applicable and that the
premium surcharge applicable to such paragraph shall take effect within 30 days
of the issuance of such report; or
(cc) has a capital
ratio of not less than 0 percent but less than 50 percent of the capital ratio
required to be maintained under subsection (f), at which point the provisions
of paragraph (5)(D) shall be applicable, except that the provisions of clause
(iii) of such paragraph (5)(D) shall not be applicable and that the premium
surcharge applicable to such paragraph shall take effect within 30 days of the
issuance of such report; or
(II) the report of
the Secretary required under paragraph (3)(B) finds that the Mutual Mortgage
Insurance Fund—
(aa) has achieved the
capital ratio required to be maintained under subsection (f);
(bb) has a capital
ratio of not less than 50 percent but less than 100 percent of the capital
ratio required to be maintained under subsection (f), at which point the
provisions of paragraph (4)(D) shall be applicable, except that the provisions
of clause (iii) of such paragraph (4)(D) shall not be applicable and that the
premium surcharge applicable to such paragraph shall take effect within 30 days
of the issuance of such report; or
(cc) has a capital
ratio of not less than 0 percent but less than 50 percent of the capital ratio
required to be maintained under subsection (f), at which point the provisions
of paragraph (5)(D) shall be applicable, except that the provisions of clause
(iii) of such paragraph (5)(D) shall not be applicable and that the premium
surcharge applicable to such paragraph shall take effect within 30 days of the
issuance of such report.
(E)
Required
enhancements to underwriting requirements
If the Mutual Mortgage
Insurance Fund is designated as critically undercapitalized pursuant to this
paragraph, the Secretary shall—
(i) not later than 30
days after the date on which notice is provided under subparagraph (A), take
such actions as necessary to revise its product lines, product or insurances
features, or underwriting criteria in order to strengthen and enhance such
products, features, or criteria to limit losses to the Mutual Mortgage
Insurance Fund;
(ii) in carrying out
the requirement under clause (i), undertake such actions as are necessary to
reduce the financial vulnerability of the Mutual Mortgage Insurance Fund from
those risk characteristics or product lines that most contribute to the default
of mortgages insured under section 202, such actions—
(I) may include, but
are not limited to, a revision of the—
(aa) amount of cash
or its equivalent required to be paid on account of the property subject to a
mortgage that is an obligation of the Fund;
(bb) servicer
standards for compliance with any loan servicing or loss mitigation guidelines
of the Secretary; and
(cc) treatment of
loan modification requests made by borrowers having insurance provided under
this title seeking assistance under a modification program of the Secretary;
and
(II) shall take into
consideration economic conditions present in the housing market, provided there
is a demonstrated likelihood that the policies of the Secretary would impact
those economic conditions; and
(iii) submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives any relevant
final analysis used by the Secretary to carry out the requirements of this
subparagraph.
(7)
Mandatory
reevaluation
Upon the Mutual Mortgage Insurance Fund achieving
the capital ratio required to be maintained under subsection (f), the
Secretary—
(A) shall review any
actions taken pursuant to this subsection;
(B) shall examine and
determine whether—
(i) the need to
maintain such action is necessary; and
(ii) the repeal,
revision, or amendment of any such action can be carried out without having any
adverse effect on the ability of the Fund to maintain the capital ratio
required under subsection (f); and
(C) may, pursuant to
any determination under subparagraph (B) that no such adverse effects exist,
repeal, revise, or amend any such action as the Secretary determines
appropriate.
.
10.
Stress testing of the
Mutual Mortgage Insurance Fund
Section 202(a)(4) of the National Housing
Act (12 U.S.C. 1708(a)(4)) is amended by inserting after the last sentence the
following: The report shall also include an alternative stress test
scenario of the Fund based on relevant assumptions used in the annual
Comprehensive Capital Analysis and Review stress tests performed by the Board
of Governors of the Federal Reserve System. The alternative stress test
scenario of the Fund shall be developed by the Secretary, in consultation with
the Board of Governors of the Federal Reserve System, and appropriately
tailored for purposes of assessing the financial status of the Fund. A summary
of the results of the alternative stress test scenario of the Fund, as well as
any other stress test scenario of the Fund that may be utilized, shall be
included in the report..
11.
Congressional
notification of use of certain authorities with respect to the FHA
(a)
Notice by
Treasury
The Secretary of the
Treasury shall provide written notice to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services of the
House of Representatives within 48 hours of the exercise of any authority
granted under section 504(f) of the Federal Credit Reform Act of 1990 (2 U.S.C.
661c(f)) to carry out any transaction to fund any account established for the
benefit of the Department of Housing and Development, the Federal Housing
Administration, or the Mutual Mortgage Insurance Fund established under section
202 of the National Housing Act (12 U.S.C. 1708).
(b)
Notice by
HUD
The Secretary of Housing and Urban Development shall provide
written notice to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of Representatives
within 48 hours of the receipt of any amounts described under subsection
(a).
(c)
Inclusion in required
reports
The Secretary of Housing and Urban Development shall
include, in any report required by law to be submitted to Congress, including
any annual, quarterly, actuarial, or other report required to be submitted to
the Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representative, the dollar
amount of any amounts owed by the Secretary of Housing and Urban Development to
the Treasury as a result of the exercise of any authority granted under section
504(f) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661c(f)).
(d)
Public
availability
(1)
Treasury
As
soon as is practicable, the notice required by subsection (a) shall be made
available to the public and posted on the website of the Department of the
Treasury.
(2)
HUD
As
soon as is practicable, the notice required by subsection (b) shall be made
available to the public and posted on the website of the Department of Housing
and Urban Development.
812.
Establishment
of Deputy Assistant Secretary and Chief Risk Officer of FHA
(a)
In
general
Subsection (b) of
section 4 of the Department of Housing and Urban Development Act
(42 U.S.C.
3533(b)) is amended—
(1) by striking
There shall be and inserting the following:
(1)
Establishment
of Commissioner
There shall
be
; and
(2) by adding at the
end the following:
(2)
Establishment of
Deputy Assistant Secretary and Chief Risk Officer
(A)
Appointment
There shall be in the Department, within
the Federal Housing Administration, a Deputy Assistant Secretary and Chief Risk
Officer, who shall be appointed by the Secretary and shall be responsible to
the Federal Housing Commissioner for all matters relating to managing and
mitigating risk to the mortgage insurance funds of the Department and ensuring
the performance of mortgages insured by the Department to protect borrowers and
taxpayers.
(B)
Responsibilities
The Deputy Assistant Secretary and Chief
Risk Officer established under subparagraph (A) shall have—
(i) comprehensive risk management and
regulatory knowledge in key risks, including credit, interest rate, and
operational risk;
(ii) a sound understanding of the tools and
methodologies used to measure and quantify risk, including the use of
statistical models; and
(iii) a broad understanding and knowledge of
mortgage industry best practices for risk management.
(C)
Underwriting
report
(i)
In
general
Not later than 1 year after the date of enactment of the
FHA Solvency Act of 2013, and
annually thereafter, the Deputy Assistant Secretary and Chief Risk Officer (or,
if not yet appointed, the Commissioner of the Federal Housing Administration)
shall prepare a report on the underwriting standards for mortgages insured
under title II of the National Housing Act (12 U.S.C. 1707 et seq.), which
shall be submitted by the Secretary to—
(I) the Committee on
Banking, Housing, and Urban Affairs of the Senate; and
(II) the Committee on
Financial Services of the House of Representatives.
(ii)
Contents
The
report required under clause (i) shall include—
(I) for all mortgages
insured under title II of the National Housing Act that were made not less than
6 months and not more than 36 months before the date of the report, an
identification of the default risk characteristics as such characteristics
existed at the time of origination of the mortgage based on risk factors that
are commonly used in evaluating mortgage default risk, including—
(aa) the current or
reasonably expected income and financial resources of a borrower;
(bb) the employment
status of a borrower, if income used under item (aa) is employment
income;
(cc) the monthly
mortgage payment of a borrower under the terms of a mortgage;
(dd) the monthly
payment for any other loan held by the borrower;
(ee) the monthly
payment for any obligations related to the mortgage;
(ff) any other debt
obligations of a borrower, including alimony and child support;
(gg) the monthly
debt-to-income ratio or residual income of a borrower;
(hh) the credit
history of a borrower; and
(ii) any other risk
factor, as determined appropriate by the Secretary;
(II) in tabular
format, the number of mortgages insured under title II of the National Housing
Act that are in default and the rate of default for—
(aa) each for the
characteristics described in subclause (I);
(bb) any multi-way
combination of the characteristics in subclause (I) as determined appropriate
by the Secretary; and
(cc) any additional
multi-way combination of the characteristics in subclause (I) as may be
requested by the Chair or Ranking Member of the Committee on Banking, Housing,
and Urban Affairs of the Senate or the Chair or Ranking Member of the Committee
on Financial Services of the House of Representatives, provided that the Deputy
Assistant Secretary and Chief Risk Officer (or, if not yet appointed, the
Commissioner of the Federal Housing Administration) shall be provided an
additional 30 days from the date of receipt of such request to satisfy such
request;
(III) an analysis of
mortgages insured under title II of the National Housing Act that were made not
less than 6 months and not more than 36 months before the date of the report
and are in the lowest quartile and decile of loan performance, which shall
include—
(aa) a
description of the characteristics described in subclause (I) for mortgages in
the lowest quartile and decile of loan performance; and
(bb) a
comparison of the characteristics described in subclause (I) between mortgages
in the lowest quartile and decile of loan performance and all other mortgages
insured under title II of the National Housing Act;
(IV) recommendations
by the Deputy Assistant Secretary and Chief Risk Officer for revisions to the
underwriting standards of the Secretary for mortgages eligible to be insured
under title II of the National Housing Act based on the findings of the report,
and a response to those recommendations from the Secretary; and
(V) a quantitative
analysis of the effects of any revisions to the underwriting standards made by
the Secretary in response to the findings of a prior report, and any
recommendations of the Deputy Assistant Secretary and Chief Risk Officer in
response to those revisions.
.
(b)
Conforming
amendment
Section 202(a)(4) of the National Housing Act (12
U.S.C. 1708(a)(4)) is amended by inserting after the first sentence the
following: The independent actuary commissioned to carry out the annual
independent actuarial study required under this paragraph shall submit such
study to the Deputy Assistant Secretary and Chief Risk Officer..
913.
Disclosure of
events
Section 202(a)(4) of
the National Housing Act (12 U.S.C. 1708(a)(4)) is amended—
(1) by striking
The Secretary shall and inserting the following:
(1)
In
general
The Secretary
shall
;
and
(2) by adding at the
end the following:
(2)
Disclosure of
unforeseen events
(A)
In
general
Prior to the submission of any report of the Secretary
under paragraph (1), the Secretary shall require that the independent actuary
commissioned to perform the study required under paragraph (1) disclose to the
Secretary any events or circumstances that occur after the study is completed
but before the report is submitted to Congress and that would have resulted in
changes to the inputs or assumptions the actuary used to make forecasts about
the financial position of the Fund, if such changes are sufficiently
significant that a reasonable person would expect them to substantially alter
the actuary’s forecasts of the economic value of the Fund or the actuary's
projections relating to the capital reserve ratio of the Fund.
(B)
Informing
Congress
The Secretary shall inform Congress of any disclosures
required under subparagraph (A) either by—
(i) the submission of
an addendum to the report of the Secretary required under paragraph (1);
or
(ii) a letter from
the Secretary addressed to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House of
Representatives.
.
1014.
GAO study on
disclosures
(a)
In
general
Not later than 180 days after the date of enactment of
this Act, the Comptroller General of the United States shall conduct a one-time
study of the relevant information disclosed by the Secretary of Housing and
Urban Development in conjunction with the release of the annual actuarial
report of the Secretary required under section 202(a)(4) of the National
Housing Act (12 U.S.C. 1708(a)(4)).
(b)
Required
consultation
In conducting the study required under subsection
(a), the Comptroller General shall consult, as appropriate, with prominent
United States academics with national recognition and significant depth of
experience in the housing market and the performance of high loan-to-value
lending.
(c)
Required
review
In carrying out the study required under subsection (a),
the Comptroller General shall review and make recommendations regarding—
(1) if a reasonable
amount of relevant data and analyses are being disclosed by the Secretary of
Housing and Urban Development to the public, for research, in conjunction with
the release of the annual actuarial report of the Secretary required under
section 202(a)(4) of the National Housing Act (12 U.S.C. 1708(a)(4));
and
(2) the disclosure by
the Secretary of additional relevant data and analyses to the public, for
research purposes.
(d)
Follow
up
Not later than 12 months after the release of the study
required under subsection (a), the Comptroller General shall conduct an
additional report regarding the actions of the Secretary of Housing and Urban
Development in carrying out any recommendations of the Comptroller General made
pursuant to subsection (c)(2).
1115.
Stabilizing
the HECM program
(a)
In
general
Section 255 of the
National Housing Act (12 U.S.C. 1715z–20) is amended—
(1) in subsection
(d)(8)—
(A) by inserting
property maintenance, before insurance;
and
(B) by inserting
, including matters that set forth terms and provisions for establishing
escrow accounts, performing financial assessments, or limiting the amount of
any payment made available under the mortgage before the semicolon;
and
(B) by inserting the
establishment of escrow accounts or set-asides, the limiting of amounts of any
payment made available under the mortgage, after payment of
taxes;
(C) by striking
may and inserting shall; and
(D) by inserting ,
including matters that set forth the terms and provisions for performing
financial assessments before the semicolon;
(2) in subsection
(h)—
(A) in paragraph (1),
by striking ; and and inserting a semicolon;
(B) in paragraph (2),
by striking the period and inserting ; and; and
(C) by adding at the
end the following new paragraph:
(3) by notice or
mortgagee letter, establish any additional or alternative requirements that the
Secretary, in his or her discretion, determines necessary to more effectively
carry out the purposes of the program authorized under this section, and any
such notice or mortgagee letter shall take effect upon issuance and expire not
later than 24 months after the date of issuance of the notice or mortgagee
letter.
.
(2) in subsection (h)(3), as
added by the Reverse Mortgage Stabilization Act of 2013 (Public Law 113–29), by
striking any additional or alternative requirements and
inserting requirements pertaining to escrow accounts or set-asides,
financial assessments, or limiting the amount of any payment made available
under the mortgage, as authorized under subsection (d)(8),; and
(3) by adding at the end the
following:
(s)
Escrow accounts or
set-asides
In carrying out the program authorized under this
section, the Secretary shall require the establishment of an escrow account or
set-aside in any instance where the Secretary determines, after a financial
assessment of the mortgagor has been completed, that such an account or
set-aside would mitigate the risk of loss to the mortgagee, the mortgagor, the
program, or the Mutual Mortgage Insurance
Fund.
.
(b)
Limitation on
authority
The authority of the Secretary of Housing and Urban
Development to issue any notice or mortgagee letter pursuant to section
255(h)(3) of the National Housing Act, as added by the Reverse Mortgage
Stabilization Act of 2013 (Public Law 113–29) shall expire not later than 24
months after the date of enactment of this Act.
(bc)
Rulemaking
(1)
In
general
In carrying out the authority provided to the Secretary
of Housing and Urban Development under section 255(h)(3) of the National
Housing Act, as added by
subsection (a)as
added by the Reverse Mortgage Stabilization Act of 2013 (Public Law
113–29), the Secretary shall—
(A) not later than 90
days after the issuance of the notice or mortgagee letter pursuant to such
section, issue a notice of proposed rulemaking addressing the same additional
or alternative requirements that are the subject of the notice or mortgagee
letter; and
(B) not later than 24
months after the issuance of the notice of proposed rulemaking required under
subparagraph (A)—
(i) issue a final
rule addressing the same additional or alternative requirements that are the
subject of the notice or mortgagee letter; or
(ii) withdraw the
notice or mortgagee letter.
(2)
Failure to
comply
If the Secretary of Housing and Urban Development fails to
issue a final rule by the end of the period described under paragraph
(1)(B)—
(A) the provisions of
the notice or mortgagee letter at issue shall become null and void;
(B) the
Secretary—
(i) shall not have
authority to reissue such notice or mortgagee letter; and
(ii) may only address
the requirements that are the subject of the notice or mortgagee letter at
issue through the promulgation of a regulation pursuant to the rulemaking
requirements of title 5, United States Code; and
(C) the Secretary and
the Director of
the Office of Management and
Budget shall appear before the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House of
Representatives to provide testimony explaining the failure to comply with the
requirements of this subsection.
(d)
Additional rulemaking
relating to fixed-rate full draw products
Not later than 1 year
after the date of enactment of this Act, the Secretary of Housing and Urban
Development shall issue a notice of proposed rulemaking that—
(1) eliminates the use,
issuance, or establishment of any standard fixed-rate full draw product offered
under the home equity conversion mortgage program authorized by section 255 of
the National Housing Act (12 U.S.C. 1715z-20); and
(2) requires any other
fixed-rate full draw product offered under the home equity conversion mortgage
program authorized by section 255 of the National Housing Act not subject to
elimination under paragraph (1) to be based on a financial assessment of the
mortgagor.
(e)
Report
(1)
In
general
The Secretary of Housing and Urban Development, on a
quarterly basis, shall report to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the House of
Representatives on the status and financial condition of each distinct product
offered under the home equity conversion mortgage program authorized by section
255 of the National Housing Act, including the HECM Standard Adjustable, HECM
Saver Fixed, and HECM Saver Adjustable products.
(2)
Contents of
report
The report required under paragraph (1) shall set forth,
for each product the—
(A) default rates under the
product;
(B) rate of foreclosure on
loans insured pursuant to each product; and
(C) severity and extent of
losses incurred on loans insured pursuant to each product.
(3)
Further
study
Upon review of the information collected pursuant to this
subsection, if the Secretary of Housing and Urban Development determines that
any individual product has a default rate measurably higher than the default
rates occurring in any other product or is experiencing losses measurably
higher than losses incurred in any other product, the Secretary shall further
study the product and include in the next quarterly report due under paragraph
(1)—
(A) information identifying
and enumerating the causes of such higher default rates and severity of losses;
and
(B) a detailed description of
the actions to be taken by the Secretary to correct such inefficiencies.
16.
Principal limit factor
for HECM program
Section
255(m)(2) of the National Housing Act (12 U.S.C. 1715z–20(m)(2)) is
amended—
(1) by striking
paragraph (1) shall and inserting paragraph
(1)—
(A) shall
;
(2) in subparagraph (A), as
so designated, by striking the period at the end and inserting ;
and; and
(3) by adding at the end the
following:
(B) in the case of a fixed
rate mortgage, may not involve a principal limit (as defined in section 206.3
of title 24, Code of Federal Regulations) with a principal limit factor in
excess of
.61.
.
1217.
Publication of
final rules relating to limiting seller contributions towards purchase related
expenses
(a)
Required
completion of rule
Not later
than 90 days after the date of enactment of this Act, the Secretary of Housing
and Urban Development shall—
(1) issue and publish its final rule to
implement the proposed rule entitled Federal Housing Administration
(FHA) Risk Management Initiatives: Revised Seller Concessions (77 Fed.
Reg. 10695 (February 23, 2012)); and
(2) ensure that the final rule required under
paragraph (1)—
(A) limits the amount a seller or interested
third party, or both, may contribute towards the purchase-related expenses of a
borrower without reducing the maximum insured amount of a mortgage insured
under title II of the National Housing Act (12 U.S.C. 1707 et seq.); and
(B) defines the acceptable types of expenses
that a seller or interested third party, or both, may contribute under
subparagraph (A), such as closing costs, prepaid expenses, discount points,
up-front mortgage insurance premiums, and interest rate buydowns.
(b)
Failure To
comply
If the Secretary of Housing and Urban Development fails to
issue a final rule by the end of the period described under subsection (a), the
Secretary and the Director of Office of Management and Budget shall appear
before the Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives to provide
testimony explaining the failure to comply with the requirements of this
section.
18.
GAO Study on FHA loan
limits
(a)
In
general
The Comptroller General of the United States shall
conduct a one-time study to determine the appropriate dollar amount limitation
on the maximum original principal obligation of a mortgage that may be insured
under title II of the National Housing Act (12 U.S.C. 1701 et seq.).
(b)
Required
review
In carrying out the study required under subsection (a),
the Comptroller General shall review and make recommendations regarding the
appropriate methodology for further adjustments to the dollar amount
limitation, including adjustments for inflation, varying home prices across
different regions of the United States, and the effects of economic
downturns.
(c)
Report
Not
later than 1 year after the date of enactment of this Act, the Comptroller
General shall submit a report to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the House of
Representatives on the results of the study conducted pursuant to subsection
(a), including its reasons justifying its determination.
December 19, 2013Reported with amendments