Sec. 201 Short title
This title may be cited as the “FHA Reform and Modernization Act of 2013”.
Title II — FHA Reform
II FHA Reform
Sec. 202 Definitions
For purposes of this title, the following definitions shall apply:
Board— The term Board means the Board of Directors of the FHA established under section 214.
Director— The term Director means the Director of the Federal Housing Finance Agency.
FHA— The term FHA means the Federal Housing Administration established under this title.
First-time homebuyer— The term first-time homebuyer means an individual who meets any of the following criteria:
An individual, and his or her spouse, who has never had ownership in a principal residence.
A single parent (as such term is defined in section 956 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12713)) who has only owned a principal residence with a former spouse while married.
An individual who is a displaced homemaker (as such term is defined in such section 956 of the Cranston-Gonzalez National Affordable Housing Act) and has only owned a principal residence with a spouse.
An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
An individual who has only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.
Native american government— The term Native American government means the government of any Indian or Alaska native tribe, band, nation, pueblo, village or community that the Secretary of the Interior acknowledges to exist as an Indian Tribe, pursuant to the Federally Recognized Indian Tribe List Act of 1994.
Residential health care facility— The term residential health care facility includes a nursing home, a facility for long-term care, an intermediate care facility, a board and care home, an assisted living facility, a public health center, an outpatient facility, and a rehabilitation facility.
Secretary— The term Secretary means the Secretary of Housing and Urban Development.
United States— The term United States includes the States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, and Native American governments.
A Organization
Sec. 211 Establishment
In General— There is hereby established the Federal Housing Administration, which shall be a body corporate without capital stock and shall have succession until dissolved by Act of Congress.
Government Corporation— The FHA shall be established as a wholly owned Government corporation subject to chapter 91 of title 31, United States Code (commonly referred to as the Government Corporation Control Act), except as otherwise provided in this subtitle.
Federal Agency—
In general— The FHA shall be an agency of the United States, except that the FHA shall not be considered an agency for purposes of holding, managing, and disposing of assets acquired by the FHA under the provisions of this title or the National Housing Act.
Holding, management, and disposal authority— For purposes of this subsection, the term holding, managing, and disposing of assets includes the powers to—
deal with, complete, reconstruct, rent, renovate, modernize, insure, make contracts for the management of, establish suitable agencies for the management of, or exercise discretion to sell for cash or credit or lease, any acquired property;
pursue collection by way of compromise or otherwise all assigned and transferred claims; and
at any time, upon default, foreclose on any property secured by any assigned or transferred mortgage.
Self-Sufficient Entity— The FHA shall operate and conduct its business as a self-sufficient entity in accordance with section 235(c).
Corporate Offices and Residency— The FHA shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident of the District of Columbia. The FHA may establish other offices in such other places as the FHA considers appropriate in the conduct of its business.
Tax Status— The FHA, including its franchise, activities, income, and assets, shall be exempt from all taxation now or hereafter imposed by any taxing authority in the United States, except that any real property of the FHA (other than real property that the FHA uses as an office) shall be subject to taxation to the same extent according to its value as any taxing authority taxes other real property.
Protection of Name—
Prohibition— No person shall, except the body corporate established under this section, after the date of the enactment of this Act, use the words Federal Housing Administration or the initials FHA as the name or part thereof under which such person shall do business.
Enforcement— Violations of paragraph (1) may be enjoined by any court of general jurisdiction at the suit of the FHA. In any such suit, the FHA may recover any actual damages resulting from such violation, and, in addition, shall be entitled to punitive damages (regardless of the existence or nonexistence of actual damages) of not more than $100 for each day during which such violation is committed or repeated.
Sec. 212 Purposes
The FHA is established for the following purposes:
To provide mortgage insurance and other credit enhancement and related activities, for—
single family homeownership to first-time homebuyers, low- and moderate-income homebuyers, homebuyers in areas subject to counter-cyclical markets or Presidentially declared disasters;
the provision of affordable rental housing; and
the provision of residential health care facilities.
To supplement private sector activity by serving hard-to-serve markets, developing new mortgage products, and filling gaps in the provision and delivery of mortgage credit.
To deliver housing mortgage insurance and credit enhancement and provide other services in a non-discriminatory manner.
To promote liquidity and provide stability to the single family and multifamily housing finance market, by continuing to provide mortgage insurance and credit enhancement on a sound basis during times of regional and national economic downturn.
To engage in research, development, and testing of new products designed to make single family and multifamily housing and residential health care facility credit available to hard-to-serve markets.
To establish uniformity in operations and risk management and loss mitigation in housing mortgage insurance and rural housing loan programs.
Sec. 213 General powers
To further the purposes of this subtitle, in accordance with chapter 91 of title 31 of the United States Code (relating to government corporations), the FHA—
may adopt, amend, and repeal by-laws, and other written administrative guidance;
may adopt, alter, and use a corporate seal, which shall be judicially noted;
may insure, and make commitments to insure mortgages, to the extent authorized under this title, and enhance and make commitments to otherwise enhance credit, and in providing such insurance may reinsure, advance, incur liabilities, pool loans, and risk share;
may acquire, hold, use, improve, deal in, or dispose of, by any means, any interests in any real property or any personal property;
may execute contracts, and make other agreements in its own name, with any agency, public or private entity, or other person, and carry out any lawful requirement of such contracts, grants, or other agreements;
may take any actions, including the restructuring of debt, that the FHA determines are necessary to manage any portfolio (including the portfolio of the FHA) of property, assets, and obligations;
may—
create and supply, alone or in cooperation with public or private entities or persons, any product or service consistent with its corporate purposes; and
assess fees and charges for such products, information, and services in amounts, as determined by the FHA, that—
do not exceed their value in the market;
permit the FHA to recover its fully allocated long-term costs; and
permit the FHA to maintain the level of capital determined by the FHA to be necessary and sufficient to carry out the public purposes of the FHA and as required under subtitle C;
may create distinct insurance funds or other devices to segregate or permit limitations on liability for business activities or accounts;
may qualify any person or entity to engage in business with the FHA and may enforce and impose penalties for the breach of any duties, obligations, and other commitments made by such persons or entities;
shall take actions necessary to administer its business in a nondiscriminatory manner;
may use the services or obtain the goods of any Federal agency, including the Department of Housing and Urban Development, under working or cooperation agreements or contracts with such agencies and make or receive payment for the cost of such activities;
shall have the power, in its corporate name, to sue and be sued, and to complain and defend, in any court of competent jurisdiction, State or Federal, but no attachment, garnishment, injunction, or other similar process, mesne or final, shall be issued against the property of the FHA or against the FHA with respect to its property, and the FHA shall not be liable for interest prior to judgment, for punitive or exemplary damages, for penalties, or for claims based upon unjust enrichment, quasi-contract, or contracts implied-in-law, nor shall the FHA be subject to trial by jury;
notwithstanding any other provision of law—
shall be an agency of the United States Government and the officers and employees of the FHA shall be officers and employees of the United States Government for purposes of part IV of title 28, United States Code;
shall have all civil actions to which the FHA is a party deemed to arise under the laws of the United States; and
may, at any time before trial and without bond or security, remove any civil or criminal action or proceeding in a State court to which the FHA is a party to the United States district court for the District of Columbia or to the United States district court with jurisdiction over the place where the civil action or proceeding is pending, by following any procedure for removal of actions in effect at the time of such removal;
may—
accept and use voluntary and uncompensated services and accept, hold, administer, and use gifts and bequests of property, both real and personal, for the purpose of aiding or facilitating the work of the FHA, and
hold gifts and bequests of money and the proceeds from sales of other property received as gifts or bequests in a separate account, and such amounts shall be disbursed as provided by the FHA;
shall have any transaction in which it participates be exempt from the terms of any State or other law or prohibition against payment of usurious interest;
may act as a fiduciary in connection with any of its undertakings;
may foreclose any single family mortgages held by the FHA pursuant to the same procedures and authority applicable to the Secretary under the Single Family Mortgage Foreclosure Act of 1994;
may foreclose any multifamily housing mortgages held by the FHA pursuant to the same procedures and authority applicable to the Secretary under the Multifamily Mortgage Foreclosure Act of 1981;
shall have the priority of the United States with respect to the payment of debts out of bankrupt, insolvent, and decedents’ estates;
may invest in systems, technology, or other capital resources, to enhance its ability to carry out the purposes of this title; and
shall have and exercise all powers necessary or appropriate to effect any of the purposes of this title, including the power to carry out any authority delegated to the FHA by the Secretary.
Sec. 214 Board of Directors
In General— The powers of the FHA shall be vested in the Board of Directors of the FHA.
Members and Appointment— The Board of Directors shall consist of 9 individuals appointed by the President, who shall include the following individuals:
The Secretary of Housing and Urban Development.
The Secretary of Agriculture.
Not less than 5 individuals who have expertise in mortgage finance.
Not less than 2 individuals who have expertise in affordable housing serving low- and moderate-income populations.
Chairperson— The Secretary of Housing and Urban Development shall serve as the chairperson of the Board.
Terms—
In general— Each member of the Board appointed under paragraph (3) or (4) of subsection (b) shall be appointed for a term of 3 years, except as provided in paragraphs (2) and (3).
Terms of initial appointees— As designated by the President at the time of appointment, of the members first appointed to the Board pursuant to paragraphs (3) and (4) of subsection (b)—
3 shall be appointed for terms of 1 year; and
4 shall be appointed for terms of 2 years.
Vacancies— Any member appointed to fill a vacancy on the Board occurring before the expiration of the term for which the member’s predecessor was appointed shall be appointed only for the remainder of that term. A member may serve after the expiration of that member’s term until a successor has taken office. A vacancy on the Board shall be filled in the manner in which the original appointment was made.
Meetings and Quorum— The Board shall meet at any time pursuant to the call of the Chairperson or a majority of its members and as provided by the bylaws of the FHA, but not less than quarterly. A majority of the members of the Board shall constitute a quorum.
Powers— The Board shall be responsible for the general management of the FHA and shall have the same authority, privileges, and responsibilities as the board of directors of a private corporation incorporated under the District of Columbia Business Corporation Act.
Duties— In performing its duties, the Board shall—
obtain guidance from participants in the mortgage markets served by the FHA;
assess the housing and mortgage insurance needs of consumers and providers of single family and multifamily housing and communities, and the mortgage insurance needs of providers of residential health care facilities;
obtain information concerning housing finance markets in order to better assess how the FHA can complement the roles of public and private participants in such markets; and
assist the Secretary of Housing and Urban Development and the Secretary of Agriculture in coordinating the roles of Federal housing, banking, and credit agencies generally, and particularly in the delivery of housing credit enhancement to families, communities, and hard-to-serve markets.
Compensation— Members of the Board shall serve on a part-time basis and shall serve without pay.
Travel Expenses— Each member shall receive travel expenses, including per diem in lieu of subsistence, in accordance with sections 5702 and 5703 of title 5, United States Code.
Sec. 215 Officers and personnel
Appointment of Officers— The Board shall appoint a president and vice president of the FHA, and, except as provided in subsections (b) and (c), such other officers as are provided for in the bylaws of the FHA.
Chief Risk Officer— There shall be in the FHA a Chief Risk Officer, who—
shall be appointed by the Board of Directors of the FHA;
shall be selected from among individuals who possess demonstrated ability in the general management of, and knowledge of and extensive practical experience in, risk evaluation practices in large governmental or business entities;
shall be—
responsible for all matters relating to managing and mitigating risk to the mortgage insurance programs of the FHA and ensuring the performance of mortgages insured by the FHA; and
responsible for all matters relating to managing and mitigating risk to the housing loans made, insured, or guaranteed under title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) and ensuring the performance of such housing loans;
shall not be subject to the review or approval of the Board of Directors of the FHA or the Secretary of Agriculture with respect to the exercise of the responsibilities under subparagraph (A) or (B), respectively, of paragraph (3); and
shall not be required to obtain the prior approval, comment, or review of any officer or agency of the United States before submitting to the Congress, or any committee or subcommittee thereof, any reports, recommendations, testimony, or comments if such submissions include a statement indicating that the views expressed therein are those of the Chief Risk Officer of the FHA and do not necessarily represent the views of the Board of Directors of the FHA or the Secretary of Agriculture.
Chief Technology Officer— There shall be in the FHA a Chief Technology Officer, who—
shall be appointed by the Board of Directors of the FHA;
shall be selected from among individuals who possess demonstrated ability in the general management of, and knowledge of and extensive practical experience in, information technology management practices in, large governmental or business entities;
shall be—
responsible for all matters relating to information technology management relating to the mortgage insurance programs of the FHA; and
responsible for all matters relating to information technology management relating to the programs for making, insuring, and guaranteeing housing loans under title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.);
shall not be subject to the review or approval of the Board of Directors of the FHA or the Secretary of Agriculture with respect to the exercise of the responsibilities under subparagraph (A) or (B), respectively of paragraph (3); and
shall not be required to obtain the prior approval, comment, or review of any officer or agency of the United States before submitting to the Congress, or any committee or subcommittee thereof, any reports, recommendations, testimony, or comments if such submissions include a statement indicating that the views expressed therein are those of the Chief Technology Officer of the FHA and do not necessarily represent the views of the Board of Directors of the FHA or the Secretary of Agriculture.
Appointment of Employees— Subject to subtitle D, the Board shall appoint such other employees of the FHA as the Board considers necessary for the transaction of the FHA’s business.
Compensation, Duties, and Removal—
In general— The Board shall fix the compensation of all officers and employees of the FHA and define their duties. Officers and employees shall be appointed, promoted, assigned, and removed on the basis of qualifications, and any such actions taken shall be consistent with the principles of fairness, nondiscrimination, and due process.
Considerations in fixing compensation— In fixing and directing compensation for officers and employees of the FHA, the Board shall consult and maintain comparability with the compensation provided by the Government National Mortgage Association, the Federal Housing Finance Agency, the Comptroller of Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation to officers and employees of such entities.
Applicability of Certain Civil Service Laws— The officers and employees of the FHA shall be appointed without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of that title relating to classification and General Schedule pay rates.
Use of Federal Agencies— In carrying out its purposes, the FHA may use information, services, staff, and facilities of any executive agency, independent agency, or department (including the Department of Housing and Urban Development), with the consent of the agency or department, and shall reimburse the agency or department for the cost of such information, services, staff, and facilities.
Indemnification— The FHA may provide for the indemnification of any officer, employee, contractor, or agent of the FHA on such terms as the FHA determines proper, except that, to the extent that the FHA self-insures for any indemnification—
the aggregate maximum amount of indemnification outstanding at any time shall not exceed 5 percent of the amount of capital required under section 256 to be maintained by the Mutual Mortgage Insurance Fund; and
not more than $1,000,000 may be paid as an indemnity for any single event.
Amendments to Housing Act of 1949— Section 501 of the Housing Act of 1949 (42 U.S.C. 1471) is amended by adding at the end the following new subsections:
“(k) Authority of Chief Risk Officer of FHA—The Chief Risk Officer of the FHA appointed pursuant to section 215(b) of the FHA Reform and Modernization Act of 2013 shall be solely responsible for all matters relating to evaluating, managing, and mitigating risk to the programs under this title for making, insuring, and guaranteeing housing loans and ensuring the performance of such housing loans, and such authority shall not be subject to the review or approval of the Secretary.
“(l) Authority of Chief Technology Officer of FHA—The Chief Technology Officer of the FHA appointed pursuant to section 215(c) of the FHA Reform and Modernization Act of 2013 shall be solely responsible for all matters relating to information technology management relating to the programs under this title for making, insuring, and guaranteeing housing loans, and such authority shall not be subject to the review or approval of the Secretary.”
Sec. 216 Financial, underwriting, and operations systems
In general— The FHA shall develop and maintain such financial, underwriting, and operations systems as may be necessary to carry out the responsibilities of the FHA. Such systems shall be designed and developed in a manner so that such systems shall also be used for the financial, underwriting, and operations systems, respectively, of the programs under title V of the Housing Act of 1949 for making, guaranteeing, and insuring rural housing loan programs.
Use by Rural Housing Service programs—
Availability— All financial, underwriting, and operations systems of the FHA shall be available to the Secretary of Agriculture to the extent necessary to ensure compliance with section 501(m) of the Housing Act of 1949 (42 U.S.C. 1471(l)).
Use— Section 501 of the Housing Act of 1949 (42 U.S.C. 1471), as amended by the preceding provisions of this title, is further amended by adding at the end the following new subsection:
“(m) Use of FHA systems—The Secretary, the Chief Risk Officer of the FHA, and the Chief Technology Officer of the FHA shall utilize the financial, underwriting, and operations systems of the FHA in carrying out all financial, underwriting, and operations functions with respect to the programs under this title for making, insuring, or guaranteeing housing loans.”
Sec. 217 Procurement
In General— The FHA shall establish an economical and results-oriented system for the procurement, supply, and disposition by the FHA of personal property and services, which shall include performance measures and standards for determining the extent to which the FHA’s procurement of property and services satisfies the objective for which the procurement was undertaken. The system shall be consistent with the principles of impartiality and competitiveness.
Exemption from Federal Property and Administrative Service Act Requirements— Section 113(e) of title 40, United States Code, is amended—
in paragraph (19), by striking “or” at the end;
in paragraph (20), by striking the period at the end and inserting “; or” ; and
by adding at the end the following new paragraph:
“(21) The Federal Housing Administration; and”
Exemption from Procurement Protest System— Subchapter V of chapter 35 of title 31, United States Code, relating to the procurement protest system, shall not apply to the FHA.
Sec. 218 Applicability of laws
Exemption from notice and comment rulemaking— Any matter relating to credit enhancement or other business activities of the FHA authorized under this title shall be considered a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts, for purposes of section 553(a) of title 5, United States Code.
Subsidy layering— For purposes of section 102(d) of the Department of Housing and Urban Development Reform Act of 1989, mortgage insurance and other credit enhancement provided under this title shall not be considered assistance within the jurisdiction of the Department.
Government Corporation Control Act— Section 9101(3) of title 31, United States Code, is amended by adding at the end the following new subparagraph:
“(S) the Federal Housing Administration.”
Tax Exempt Status of FHA— Section 501(l) of the Internal Revenue Code of 1986 (26 U.S.C. 501(l)) is amended by adding at the end the following new paragraph:
“(5) The Federal Housing Administration established under the FHA Reform and Modernization Act of 2013.”
Sec. 219 Evaluation
In General— The Director shall conduct a study and submit a report to the President and the Congress on—
whether this title provides sufficient authority to permit the FHA to accomplish its public purposes efficiently and effectively, and in a safe and sound manner;
the impact of the limitations on business activities as to mortgage amounts and aggregate commitments, and any other statutory limitations, on the current and anticipated business activity of the FHA; and
whether the provisions of subtitle C appropriately provide that the FHA will be operated in a safe and sound manner and will fulfill the public purposes of its establishment.
Timing— The report required by this section shall be submitted on the third January 1st occurring after the conclusion of the transition period under section 281.
Sec. 220 Funding
Funding of salaries and expenses— There is authorized to be appropriated for each fiscal year to the FHA, for salaries, expenses, and technology for the management and operations of the FHA an amount not exceeding the amount of the negative subsidy credited to the negative subsidy receipt account not needed for reserves of the funds of the FHA pursuant to sections 256 and 259.
Funding of Claims—
Availability of funds— Amounts credited to the financing account of the FHA, established pursuant to title V of the Congressional Budget Act of 1974, shall be permanently and indefinitely available for payment of any claim that the FHA approves under a contract of insurance or other credit enhancement instrument pursuant to this title.
Borrowing authority—
In general— To the extent that such amounts are insufficient for such purpose, the FHA may borrow from the Treasury pursuant to title V of the Congressional Budget Act of 1974.
Notice to Congress— Upon exercising the authority referred to in subparagraph (A), the FHA shall submit to the Congress—
notice of such exercise of authority and the extent of the borrowing undertaken;
a plan for repayment to the Treasury of the amounts borrowed, specifying the time and amounts of such payments; and
if such borrowing is for the Mutual Mortgage Insurance Fund, how the FHA will comply with the capital restoration plan required under section 257(c).
Sec. 221 Effective date
This subtitle shall take effect on the date of the enactment of this Act.
B Business authority and requirements
Sec. 231 Authority to carry out FHA and other business
In General— After the expiration of the transition period under section 281—
the FHA may exercise (in addition to powers set forth in section 282) any authority and undertake any responsibilities of the Secretary of Housing and Urban Development under the National Housing Act (as amended by this title) relating to mortgage insurance, except as otherwise provided in this title and except that any authority that requires an appropriation may be conducted only to the extent that amounts are so appropriated;
any amounts in the Mutual Mortgage Insurance Fund under section 202(a) of the National Housing Act (12 U.S.C. 1708(a)), any amounts in the General Insurance Fund and Special Risk Insurance Fund under sections 519 and 238(b), respectively, of such Act (12 U.S.C. 1735c, 1715z–3(b)), and any amounts in the Cooperative Management Housing Insurance Fund under section 213(k) of such Act (12 U.S.C. 1715e(k)), shall be used by the FHA only—
for meeting any obligations of such Funds entered into before such transition date; and
for carrying out the mortgage insurance obligations of the FHA pursuant to section 282(1) of this title and paragraph (1) of this section; and
the FHA may exercise any authority of the FHA under this title.
Termination of Secretary’s FHA Authority— After the expiration of the transition period under section 281, the Secretary may not exercise any authority under the National Housing Act relating to mortgage insurance. This subsection may not be construed to limit or otherwise affect the Secretary’s authority under title I of the National Housing Act (12 U.S.C. 1702 et seq.).
Continuation of Obligations— This section and section 282(1) may not be construed to affect the validity of any right, duty, or obligation of the United States or other person arising under or pursuant to any commitment or agreement lawfully entered into with the Secretary of Housing and Urban Development under the National Housing Act.
Sec. 232 Eligible single-family mortgages
In General— Notwithstanding section 203 of the National Housing Act (12 U.S.C. 1709) or any other provision of law, the FHA may insure, and make commitments to insure, a mortgage on a 1- to 4-family residential property only if the mortgage complies with the following requirements:
Mortgage amount— The mortgage shall involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the FHA shall approve) in an amount not to exceed the following amounts:
Appraised value— 100 percent of the appraised value of the property.
Area limitation—
Maximum limit— The lesser of the following amounts:
In the case of—
a 1-family residence, 115 percent of the median 1-family house price in the area in which such residence is located, as determined by the FHA; and
in the case of a 2-, 3-, or 4-family residence, the percentage of such median price that bears the same ratio to such median price as the dollar amount limitation determined under the sixth sentence of section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-family residence, respectively, bears to the dollar amount limitation determined under such section for a 1-family residence; or
150 percent of the dollar amount limitation determined under the sixth sentence of such section 305(a)(2) for a residence of the applicable size.
Minimum limit— Notwithstanding clause (i), the principal obligation limitation in effect for any area under this subparagraph may not be less than the greater of—
375 percent of the median income for the area, as determined by the FHA; or
$200,000.
Downpayment— The mortgage shall be executed by a mortgagor who shall have paid on account of the property subject to the mortgage an amount, in cash or its equivalent, equal to or exceeding—
5 percent of the cost of acquisition of the property, as determined by the FHA; or
in the case of a mortgage under which the mortgagor is a first-time homebuyer and for which such credit enhancement as the FHA shall determine has been provided, 3.5 percent of the cost of acquisition of the property, as determined by the FHA.
Public purpose requirement— The mortgage shall meet the requirements of any one of the following subparagraphs:
First-time homebuyer— The mortgagor under the mortgage is a first-time homebuyer (as such term is defined in section 202) of the property subject to the mortgage and the property is used as the principal residence of the mortgagor.
Low- or moderate-income mortgagor— The mortgagor under the mortgage is a member of a family as follows:
In general— A family having an income that is less than 115 percent of the median income, as determined by the FHA, for the area in which the property subject to the mortgage is located, except that the FHA may establish income ceilings higher or lower than 115 percent of the median for the area to take into consideration various sizes of families.
High-cost areas— A family that—
resides in any area for which the median 1-family house price exceeds the maximum dollar amount limitation in effect for that year on the original principal obligation of a mortgage on a 1-family residence that may be purchased by the Federal Home Loan Mortgage Corporation, as determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); and
has an income that is less than 150 percent of the median income, as determined by the FHA, for the area in which the property subject to the mortgage is located, except that the FHA may establish income ceilings higher or lower than 150 percent of the median for the area to take into consideration various sizes of families.
Counter-cyclical market adjustment— The property subject to the mortgage is located in a county or counties for which a determination under this subparagraph has been made, as follows:
Determination— A mortgage may be insured pursuant to this subparagraph only upon a joint determination by the Director and the Chief Risk Officer that—
available credit for the purchase of 1- to 4-family homes located in such county or counties has contracted significantly, as measured by the credit availability measure of the Office of the Comptroller of the Currency;
housing prices in such county or counties have declined significantly, as measured by the applicable housing price index of the Federal Housing Finance Agency; or
available credit for the purchase of housing or such other economic conditions exist sufficient to evidence a significant contraction of capital in such county or counties, as measured by a metric identified by the Director and the Chief Risk Officer in a written notice made publicly available, and provided to the Congress, in advance of such determination.
Conditions of termination— Upon making a determination under clause (i), the Director and the Chief Risk Officer shall also identify measurable criteria for determining that the conditions determined under clause (i) for such county or counties have ceased to exist.
Notice to Congress— Upon making a determination under clause (i), the Director and the Chief Risk Officer shall provide written notice to the Congress of such determination and the specific measurable criteria identified pursuant to clause (ii).
Termination— The authority to insure mortgages pursuant to this subparagraph on properties located in a county or counties shall terminate upon the earlier of—
the expiration of the 18-month period beginning upon the date that notification under clause (iii) is provided to the Congress of the determination under clause (i) with respect to such county or counties; or
the occurrence of the conditions identified pursuant to clause (ii) with respect to such county or counties.
Multiple determinations— Nothing in this subparagraph may be construed to prevent multiple or consecutive periods for a county or counties during which mortgages on properties located in such county or counties may be insured pursuant to this subparagraph.
Disaster area— The Board of Directors exercises the authority to insure mortgages under this subparagraph, subject to the following requirements:
Implementation— The Board of Directors may implement authority to insure mortgages under this subparagraph only if the Board—
by a vote of the majority of its members, approves such implementation for a specific disaster area under clause (iii) and a specific disaster period under clause (iv); and
notifies the Congress and the President in writing of such approval, such disaster period, and such disaster area not less than 30 days before the commencement of the disaster period.
Eligible mortgages— The FHA may insure, or make a commitment to insure, a mortgage under authority under this subparagraph only if—
the mortgage is made for the purchase of a principal residence by a mortgagor whose home (that the mortgagor occupied as an owner or tenant) was located in a disaster area described under clause (iii) and was destroyed or damaged to such an extent that reconstruction is required, as a result of a major disaster declared by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act; and
the commitment for mortgage insurance is made during the disaster period established under clause (iv) for such disaster area.
Disaster area— A disaster area may be established for purposes of this subparagraph only for the area affected by a major disaster, as declared by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, or a portion of such area, as determined by the FHA.
Disaster period— A disaster period established for purposes of this subparagraph shall—
commence upon or after the declaration of the major disaster referred to in clause (iii); and
terminate on the date certain approved by the Board of Directors under clause (i)(I) and contained in the notice under clause (i)(II), which shall not be later than 18 months after the commencement of the period.
Conforming amendments— Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is amended—
by striking paragraph (2); and
in paragraph (9)—
by striking subparagraph (A); and
in subparagraph (B), by striking “this paragraph” and inserting “section 202(a)(2) of the FHA Reform and Modernization Act of 2013”.
Sec. 233 Risk-sharing
Development of demonstration model— Not later than the expiration of the 2-year period beginning on the date of the enactment of this Act, the FHA shall develop and implement a model and standards for entering into risk-sharing agreements with respect to mortgages insured by the FHA, under which the FHA shall insure a portion of the amount of the mortgage and persons or entities determined under the guidelines established pursuant to subsection (b) to be qualified to participate in such an agreement shall insure the remainder (or another) portion of the amount of the eligible mortgage.
Qualifications of Risk-Sharing Partners—
Establishment— The model and standards established under this section shall include guidelines for the qualification of persons or entities to participate in risk-sharing and other credit enhancement activities with the FHA.
Procedures— In establishing such guidelines, the FHA shall review the guidelines established by the Director for qualification of persons or entities to participate in risk-sharing and other credit enhancement activities with the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. The FHA shall determine whether such guidelines for such enterprises are sufficient for purposes of the FHA, including whether such guidelines meet the requirements under paragraph (3), and—
if the FHA determines that such guidelines are so sufficient, the FHA shall adopt such guidelines for purposes of this section, to the extent appropriate, with any changes necessary to account for differences between the mortgages insured under this title and the National Housing Act and the business under such provisions and the business of such enterprises; or
if the FHA determines that such guidelines are not so sufficient, the FHA shall adopt such guidelines for purposes of this section, to the extent appropriate and with changes referred to in subparagraph (A), together with additional criteria sufficient to address any such insufficiency.
Content— Such guidelines shall ensure that—
persons or entities participating in risk-sharing and other credit enhancement activities pursuant to this section have sufficient capital, credit worthiness, and liquidity, and are otherwise capable of fulfilling their obligations to the FHA;
such persons or entities and their principals or officers are not engaged in a business the goals of which would conflict with the purposes of the FHA or the National Housing Act; and
product or service delivery will be conducted in a manner that is efficient and effective, and that will comply with the requirement under section 211(d).
Risk-Sharing requirement—
Requirement— After the expiration of the 2-year period referred to in subsection (a), the FHA shall ensure that, in each fiscal year, not less than 10 percent of any new business in mortgages on 1- to 4-family residential property is insured pursuant to a risk-sharing agreement with respect to such mortgage that complies with the standards established pursuant to subsection (a).
Limitation— In any fiscal year, the FHA may not comply with paragraph (1) by entering into risk-sharing agreements with respect only to one or a limited number of types or categories of mortgages, or mortgages having only particular, or a particular range of, original principal obligation amounts, but shall enter into risk-sharing agreements for all types and amounts of mortgages insured by the FHA, to the extent required under paragraph (1).
New business— For purposes of this subsection, with respect to a fiscal year, the term new business means the aggregate dollar amount of the principal obligations of mortgages for which a commitment to insure is made pursuant to the National Housing Act or this title, as applicable, during such fiscal year.
Reports to Congress— Upon the expiration of each of the 3- and 5-year periods beginning on the date of the enactment of this Act, the FHA shall submit a report to the Congress on the findings and results of risk-sharing activities under this section. Such reports shall describe the model and standards for entering into risk-sharing agreements, analyze appropriate dollar amount limits for the original principal obligations of mortgages that should be subject to a risk-sharing requirement, identify the effects of such risk-sharing activities on the Mutual Mortgage Insurance Fund, and make recommendations regarding expanding the risk-sharing requirement under subsection (c).
Effective date— This section shall take effect on the date of the enactment of this Act. During the transition period under section 281, any reference in this section to the FHA shall be construed to refer to the Secretary to the extent the Secretary has not delegated authority under this section to the FHA pursuant to section 282(1).
Sec. 234 Limitation on mortgage insurance coverage
Limitation— Notwithstanding any other provision of this title or the National Housing Act, the FHA may not insure, or make any commitment to insure, any portion of any mortgage on a 1- to 4-family residential property in excess of the amount equal to the following percentage of the original principal obligation of the mortgage:
In the case of any such mortgage insured after the expiration of the 1-year period beginning on the date of the enactment of this Act, 90 percent of such original principal obligation, subject to paragraphs (2) through (5).
In the case of any such mortgage insured after the expiration of the 2-year period beginning on the date of the enactment of this Act, 80 percent of such original principal obligation, subject to paragraphs (3) through (5).
In the case of any such mortgage insured after the expiration of the 3-year period beginning on the date of the enactment of this Act, 70 percent of such original principal obligation, subject to paragraphs (4) and (5).
In the case of any such mortgage insured after the expiration of the 4-year period beginning on the date of the enactment of this Act, 60 percent of such original principal obligation, subject to paragraph (5).
In the case of any such mortgage insured after the expiration of the 5-year period beginning on the date of the enactment of this Act, 50 percent of such original principal obligation.
Effective date— This section shall take effect on the date of the enactment of this Act. During the transition period under section 281, any reference in this section to the FHA shall be construed to refer to the Secretary to the extent the Secretary has not delegated authority under this section to the FHA pursuant to section 282(1).
Sec. 235 Premiums
Establishment— The FHA shall establish and collect premium payments for mortgage insurance provided pursuant to this title and the amendments made by this title, and shall provide for sharing of premiums with entities entering into risk-sharing agreements with the FHA pursuant to section 233 based on the relative portion of the mortgage insured and the risk of loss borne.
Minimum premiums— In the case of mortgages on 1- to 4-family residential properties insured by the FHA, the premiums established and collected by the FHA shall include an annual premium payment in an amount not less than 0.55 percent of the remaining insured principal balance (excluding the portion of the remaining balance attributable to any premium collected at the time of insurance and without taking into account delinquent payments or prepayments) for the entire term of the mortgage.
Self-Sufficient operations— Notwithstanding section 203(c) of the National Housing Act (12 U.S.C. 1709(c)) or any other provision of law, premium rates established under this section shall be established in amounts sufficient to cover—
costs of providing mortgage insurance coverage under this title;
costs for administration, operations, management, and technology systems for the FHA for carrying out this title;
the capital ratio required for the Mutual Mortgage Insurance Fund under section 256(b) and under section 259 with respect to mortgage insurance for mortgages on multifamily properties; and
salaries and expenses for officers and personnel of the FHA.
Risk-Based premiums— The FHA may, with respect to mortgages on 1- to 4-family residential properties insured by the FHA, 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. Under such structure, the rate of premiums for such a mortgage may vary according to the credit risk associated with the mortgage and the rate of any annual premium for such a mortgage may vary during the mortgage term, except that the basis for determining the variable rate shall be established before the execution of the mortgage. The FHA may change a premium structure established under this subsection, but only to the extent that such change is not applied to any mortgage already executed.
Savings provision— Nothing in this section may be construed to affect premiums charged for mortgage insurance provided for mortgages insured before the date of the enactment of this Act.
Sec. 236 Default and foreclosure statement
Written statement— The FHA shall ensure that each mortgagor under a mortgage on a 1- to 4-family residential property insured by the FHA is provided, by the mortgagee at the time that such mortgage is originated, with a written statement containing the information required under subsection (b).
Default and foreclosure information— The information required under this subsection with respect to a mortgage is information identifying the percentage (as determined according to historical rates of default and foreclosure) of mortgages on 1- to 4-family residential properties that were insured pursuant to this title and the National Housing Act and that had mortgagors who have the same risk profile and mortgage product as the mortgagor receiving the written statement pursuant to this section (as determined in accordance with guidelines established by the FHA) that—
during the terms of such mortgages, experienced a default on payments due under such mortgages; and
were foreclosed upon during the terms of such mortgages.
Sec. 237 Occupancy and rent limitations for multifamily mortgage insurance
In general— Notwithstanding any provision of the National Housing Act or any other provision of law, the FHA may not insure any mortgage on a residential property having 5 or more dwelling units unless the property is subject to such binding terms and conditions, including such occupancy and rent restrictions, as are satisfactory to the FHA to ensure that the property includes dwelling units, to the extent determined by the FHA to be appropriate, for which occupancy is restricted during the entire term of the mortgage to only the following families:
In general— A family having an income that is less than 115 percent of the median income, as determined by the FHA, for the area in which the property subject to the mortgage is located, except that the FHA may establish income ceilings higher or lower than 115 percent of the median for the area to take into consideration various sizes of families.
High-cost areas— A family that—
resides in any area in which the median 1-family house price exceeds the maximum dollar amount limitation in effect for that year on the original principal obligation of a mortgage on a 1-family residence that may be purchased by the Federal Home Loan Mortgage Corporation, as determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); and
has an income that is less than 150 percent of the median income, as determined by the FHA, for the area in which the property subject to the mortgage is located, except that the FHA may establish income ceilings higher or lower than 150 percent of the median for the area to take into consideration various sizes of families.
Lower incomes— Subsection (a) may not be construed to prevent the FHA from establishing occupancy, income, and rent restrictions that establish limits on incomes for families occupying income-restricted units in a property that are lower than the incomes specified in subsection (a).
Area— For purposes of this section, the term area has the meaning given such term in the last sentence of section 232(a)(1)(b)(i).
Sec. 238 Effective date
This subtitle and the amendments made by this subtitle, except for sections 233 and 234, shall take effect upon the expiration of the transition period under section 281.
C Financial safety and soundness
Sec. 251 Authority of Director
Duty— The Director of the Federal Housing Finance Agency shall supervise and regulate the safety and soundness of the FHA and the programs of the Rural Housing Service of the Department of Agriculture for housing loans made, insured, or guaranteed under title V of the Housing Act of 1949, and it shall be the duty of the Director to ensure that the FHA and such Rural Housing Service programs are adequately capitalized and operating safely.
Authority— The Director may make such determinations, take such actions, and perform such functions as the Director determines necessary to meet the responsibilities of the Director under this subtitle.
Sec. 252 Budgets and business plans
Submission of business-Type budget— In each year, the FHA shall prepare and submit an annual budget as required under section 9103 of title 31, United States Code, and shall submit such budget to the Director by a date sufficient to enable the Director to produce, pursuant to section 255(c) of this title, the credit subsidy cost estimates that are required for the budget of the United States Government under section 1105(a) of title 31, United States Code.
Submission of Budget and Credit Cost Estimates to OMB— For purposes of inclusion in the budget of the United States Government, the FHA shall submit the annual budget of the FHA and the annual credit subsidy cost estimates produced pursuant to section 255(c) of this title to the Director of the Office of Management and Budget.
Reserves—
Establishment— Subject to sections 256 and 259, the FHA may establish any reserve that the FHA determines is necessary for the business operations of the FHA.
Amounts— The FHA may hold as a reserve in any financing account, as defined in section 502 of the Congressional Budget Act of 1974 (2 U.S.C. 661a), such amounts as the FHA considers necessary to comply with the capital requirements established for the FHA under sections 256 and 259 of this title and to fulfill the purposes of this title.
Sec. 253 Annual business plan; use of GAAP
Annual business plan— The FHA shall establish a business plan on an annual basis and shall make such plan available for review by the Director. Such plan shall specify the products and operational strategy of the FHA, including plans to address compliance with the safety and soundness requirements applicable to the FHA.
Use of GAAP— Any financial reporting of the FHA, including the preparation of the annual business plan required by subsection (a), the annual budget required in accordance with section 252(a), and any financial statements of the FHA, shall be conducted in accordance with generally accepted accounting principles applicable to the private sector.
Sec. 254 Examinations, reports, and cost estimates
Examinations— The Director shall conduct such examinations of the FHA and the Rural Housing Service programs referred to in section 251(a) as the Director determines necessary to evaluate the safety and soundness of the FHA and such programs. Such examinations shall be subject to and governed by subsections (c) through (h) of section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517), except that the last sentence of subsection (c) shall not apply and any reimbursements referred to in such sentence shall be made from amounts collected under section 255 of this title.
Reports— The Director may require the FHA and the Rural Housing Service to submit, within a reasonable period of time, any regular or special report, data, or other information whenever, in the judgment of the Director, such report, data, or information is necessary to carry out the Director’s responsibilities under this title.
Credit Subsidy Cost Estimates—
In general— The Director shall produce and submit to the Director of the Office of Management and Budget the annual credit subsidy cost estimates for the FHA and the Rural Housing Service programs referred to in section 251(a) required for the President’s budget. Such estimates shall be consistent with the estimates of performance generated by the risk-based capital model developed in accordance with section 257(b), and with the President’s economic forecast.
Unified estimates— The annual credit subsidy cost estimates produced under this subsection by the Director shall be reported on a unified basis, which shall be based upon the business of the FHA, and the Rural Housing Service programs referred to in section 251(a), as a whole.
Annual Report on Safety and Soundness— The Director shall submit an annual report to Congress and the Director of the Office of Management and Budget on the financial safety and soundness of the FHA and the Rural Housing Service programs referred to in section 251(a), as measured pursuant to this subtitle.
Sec. 255 Reimbursement of costs
Assessment and Collection— The Director shall assess and collect from the FHA and the Secretary of Agriculture annual assessments in such amounts determined by the Director as necessary to reimburse the Federal Housing Finance Agency for the reasonable costs and expenses of the activities undertaken by such Agency to carry out the duties of the Director under this subtitle, including the costs of examination, enforcement, and oversight expenses.
Requirements— Annual assessments imposed by the Director shall be—
imposed prior to October 1 of each year;
allocated among the FHA and the Secretary of Agriculture proportionally based on the costs and expenses of the Agency of carrying out the duties under this subtitle with respect to FHA and the Rural Housing Service program referred to in section 251(a), respectively;
collected at such time or times during each assessment year as determined necessary or appropriate by the Director; and
treated in the same manner as provided under section 1316(f) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4516(f)) with respect to amounts received by the Director from assessments under section 1316 of such Act, except that amounts from assessments under this section may be used only for expenses of the Director and the Agency relating to the functions and responsibilities under this subtitle.
Sec. 256 Mutual Mortgage Insurance Fund capital reserve
Segregation of books— To ensure accurate determinations of the capital ratio under subsection (b) of this section and such ratio under section 205(f) of the National Housing Act, as amended by subsection (d) of this section, the FHA shall establish separate accounts in the Mutual Mortgage Insurance Fund and take such other actions as may be necessary to segregate the following amounts:
Capital attributable to new business.
Capital attributable to mortgages that become insured before the expiration of the transition period under section 281.
Capital ratio for new business— The FHA shall ensure that the account for the Mutual Mortgage Insurance Fund that is established pursuant to subsection (a)(1) of this section at all times maintains a capital ratio of not less than 4.0 percent.
Definitions— For purposes of this section, the following definitions shall apply:
Capital— The term capital means the economic net worth of the account of the Fund that is established pursuant to subsection (a)(1) of this section, as determined by the FHA under the annual audit required under section 538 of the National Housing Act (12 U.S.C. 1735f–16).
Capital ratio— The term capital ratio means the ratio of capital to unamortized insurance-in-force.
Economic net worth— The term economic net worth means the current cash available to the account of the Fund that is established pursuant to subsection (a)(1) of this section, plus the net present value of all future cash inflows and outflows expected to result from outstanding new business.
Fund— The term Fund means the Mutual Mortgage Insurance Fund established under section 205 of the National Housing Act (12 U.S.C. 1711).
New business— The term new business means mortgages that are obligations of the Mutual Mortgage Insurance Fund that become insured by the FHA after the expiration of the transition period under section 281.
Unamortized insurance in force— The term unamortized insurance-in-force means the remaining obligation on outstanding new business, as estimated by the FHA.
Treatment of existing capital ratio— Paragraph (4) of section 205(f) of the National Housing Act (12 U.S.C. 1711(f)(4)) is amended—
in subparagraph (A), by striking “Mutual Mortgage Insurance Fund” and inserting “account of the Mutual Mortgage Insurance Fund that is established pursuant to subsection (a)(2) of the FHA Reform and Modernization Act of 2013”;
in subparagraph (C)—
by striking “Fund” the first place such term appears and inserting “account of the Mutual Mortgage Insurance Fund that is established pursuant to subsection (a)(2) of the FHA Reform and Modernization Act of 2013”; and
by striking “the Fund.” and inserting the following: “such account that become insured by the Secretary of Housing and Urban Development (or the FHA, pursuant to subtitle D of the FHA Reform and Modernization Act of 2013) before the expiration of the transition period under section 281 of such Act.”; and
in subparagraph (D), by inserting before the comma the following: “and become insured before the expiration of the transition period under section 281 of the FHA Reform and Modernization Act of 2013”.
Sec. 257 Capital classifications and performance measures for Mutual Mortgage Insurance Fund
Capital classification; effect on insurance authority—
Adequately capitalized— At any time that the capital ratio (as such term is defined in section 256(c)(2) of this title) is greater than 4.0 percent, the account for the Mutual Mortgage Insurance Fund established pursuant to section 256(a)(1) shall be classified as adequately capitalized for purposes of this subtitle.
Undercapitalized— At any time that the capital ratio is less than 4.0 percent—
the account for the Mutual Mortgage Insurance Fund established pursuant to section 256(a)(1) shall be classified as undercapitalized for purposes of this subtitle; and
if such capital ratio is—
equal to or greater than 2.0 percent, the FHA may not enter into any new commitment to insure any mortgage on a 1- to 4-family residential property that involves a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the FHA shall approve) in an amount exceeding 90 percent of the appraised value of the property; and
less than 2.0 percent but equal to or greater than 0.0 percent, the FHA may not enter into any new commitment to insure any mortgage on a 1- to 4-family residential property that involves a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the FHA shall approve) in an amount exceeding 80 percent of the appraised value of the property.
Significantly undercapitalized— At any time that the capital ratio is less than 0.0 percent—
the account for the Mutual Mortgage Insurance Fund established pursuant to section 256(a)(1) shall be classified as significantly undercapitalized for purposes of this subtitle; and
the Director may, pursuant to section 258(a)(1), take actions under section 258(b).
Quarterly determination of capital ratio— The Director shall determine the capital ratio and the capital classification of the account for the Mutual Mortgage Insurance Fund established pursuant to section 256(a)(1) for purposes of this subtitle not less frequently than each calendar quarter.
Stress test—
In general— The Director shall develop a risk-based capital model to determine the amount of capital that is sufficient for the FHA to maintain positive capital during a period of economic stress. The model shall incorporate the assumptions under paragraphs (2) and (3).
Credit risk— For purposes of paragraph (1), the Director shall assume that, during the period of economic stress referred to in paragraph (1), credit losses occur at a rate consistent with a nationwide economic recession of average severity based on nationwide economic recessions since 1950.
Other risks— For purposes of paragraph (1), the Director shall make assumptions about such other aspects of the period of economic stress as the Director determines are appropriate and consistent.
Capital restoration plan requirement— If the account for the Mutual Mortgage Insurance Fund established pursuant to section 256(a)(1) is classified as undercapitalized or significantly undercapitalized, the FHA shall—
submit to the Director a capital restoration plan meeting the requirements of section 258(d) for raising or restoring the capital of such account to an amount not less than the amount required for such account to be classified as adequately capitalized; and
upon approval by the Director, carry out such plan.
Sec. 258 Enforcement
Grounds— The Director may take actions under subsection (b) only if—
the account for the Mutual Mortgage Insurance Fund established pursuant to section 256(a)(1) is classified under section 257(a) as significantly undercapitalized;
the account for the Mutual Mortgage Insurance Fund established pursuant to section 256(a)(1) is classified under section 257(a) as undercapitalized and—
the FHA does not submit a capital restoration plan that is substantially in compliance with section 257(c) within the applicable period, or the Director disapproves the capital restoration plan submitted by the FHA; or
the FHA has failed to make, in good faith, reasonable efforts necessary to comply with the capital restoration plan; or
the FHA is engaging or has engaged, or the Director has reasonable cause to believe that the FHA is about to engage in—
any conduct that is likely to threaten the adequacy of the capital of the account for the Mutual Mortgage Insurance Fund established pursuant to section 256(a)(1);
any failure to comply with any written agreement entered into by the FHA with the Director; or
any failure to comply with any request by the Director for a report, data, or information under section 254(b).
Actions— The Director may, under this subsection, require the FHA—
to cease and desist from any conduct or activity that—
with respect to the account for the Mutual Mortgage Insurance Fund established pursuant to section 256(a)(1), is described in paragraph (2) or (3) of subsection (a), or that contributes to the condition described in subsection (a)(1); and
with respect to any other Fund, contributes to a failure to meet a capital reserve requirement established pursuant to section 259(a) or is likely to threaten the adequacy of the capital of such Fund; and
to take corrective or remedial action, including—
restricting the growth of, or contracting, any category of assets or liabilities;
reducing, modifying, or terminating any activity that the Director determines creates excessive risk to the FHA;
terminating agreements or contracts;
engaging or employing qualified employees (who may be subject to approval by the Director at the direction of the Director); or
submitting to the Director for review and approval a detailed and complete operating plan.
Reports— If the Director is authorized under subsection (a) of this section or section 259(b) to take action under subsection (b) of this section and determines not to take any such action, the Director shall prepare a report detailing the basis of the Director’s decision not to take such action and shall, within 30 days of the decision, submit the report to the President, the Director of the Office of Management and Budget, the Comptroller General of the United States, the Committee on Banking and Financial Services of the House of Representatives, and the Committee on Banking, Housing, and Urban Affairs of the Senate.
Capital restoration plans— A capital restoration plan submitted pursuant to section 257(c), 259(b), or 260(d)(3) shall—
set forth a feasible plan for raising or restoring the capital of the Fund for which it is prepared;
specify the level of capital to be achieved and maintained;
be submitted to the Director within 45 days from the date of notification, or if the Director determines that an extension is necessary, within such additional time as the Director so determines;
describe the actions that the FHA shall take for such Fund to become classified as adequately capitalized;
establish a schedule for completing the actions set forth in the plan; and
specify the types and levels of activities (including existing and new business activities) in which the FHA shall engage during the term of the plan.
Sec. 259 Capital reserve requirements for other funds
Requirements— The Director shall establish capital reserve requirements for—
the General Insurance Fund established under section 519 of the National Housing Act (12 U.S.C. 1735c);
the Special Risk Insurance Fund established under section 238(b) of such Act (12 U.S.C. 1715z–3(b));
the Cooperative Management Housing Insurance Fund established under section 213(k) of such Act (12 U.S.C. 1715e(k)); and
the Rural Housing Insurance Fund established under title V of the Housing Act of 1949 (42 U.S.C. 1471), or the various accounts of such Fund.
Enforcement— The Director may enforce compliance with the requirements under subsection (a) of this section with respect to a Fund by taking action under section 258(b) or by requiring submission of a capital restoration plan for such Fund meeting the requirements of section 258(d).
Sec. 260 Authority to establish temporary capital ratios in cases of nationwide countercyclical market adjustment
Authority; determination— The Director may suspend the applicability of the capital ratio under section 256(b) for the Mutual Mortgage Insurance Fund or any capital reserve requirement established pursuant to section 259 for any Fund specified under such section and establish a temporary alternative capital ratio with respect to such Fund for a specified period of time, but only upon a joint determination by the Director and the Chief Risk Officer that—
available credit throughout the United States or a significant portion of the United States for the purchase of the types of residences for which mortgages that obligations of such Fund are made has contracted significantly, as measured by the credit availability measure of the Office of the Comptroller of the Currency;
housing prices throughout the United States or a significant portion of the United States have declined significantly, as measured by the applicable housing price index of the Federal Housing Finance Agency; or
available credit for the purchase of housing or such other economic conditions exist sufficient to evidence a significant contraction of capital throughout the United States or a significant portion of the United States, as measured by a metric identified by the Director and the Chief Risk Officer in a written notice made publicly available, and provided to the Congress, in advance of such determination.
Conditions of termination— Upon making a determination under subsection (a), the Director and the Chief Risk Officer shall also identify measurable criteria for determining that the conditions determined under subsection (a) have ceased to exist.
Notice to Congress— Upon making a determination under subsection (a), the Director and the Chief Risk Officer shall provide written notice to the Congress of such determination and the specific measurable criteria identified pursuant to subsection (b).
Effect of temporary alternative capital ratio— During any period that a temporary alternative capital ratio is in effect pursuant to subsection (a) with respect to any Fund—
in the case of a temporary capital ratio for the Mutual Mortgage Insurance Fund, subsections (a) and (c) of section 257 and section 258 shall not apply;
such temporary and alternative capital classifications as the Director shall establish shall be in effect with respect to such Fund; and
the Director shall require the FHA or the Secretary of Agriculture (as appropriate) to submit and carry out a capital restoration plan for such Fund meeting the requirements under section 258(d) and may take actions under section 258(b) with respect to such Fund only in accordance with such standards relating to such temporary and alternative capital classifications for such Fund as the Director shall establish.
Termination— Any temporary alternative capital ratio established pursuant to subsection (a) shall terminate upon the earlier of—
the expiration of the 18-month period beginning upon the date that notification under subsection (c) is provided to the Congress of the determination under subsection (a); or
the occurrence of the conditions identified pursuant to subsection (b).
Multiple determinations— Nothing in this section may be construed to prevent multiple or consecutive periods during which temporary alternative capital ratios are in effect pursuant to this section.
Sec. 261 7-year borrower suspension for foreclosure
FHA—
In general— Except as provided in paragraph (2), with respect to any mortgage on a 1- to 4-family residential property that is foreclosed upon, during the 7-year period beginning upon the date of such foreclosure, the FHA may not newly insure, under any provision of this title, the National Housing Act, or any FHA program, any other mortgage under which the mortgagor is the individual who was the mortgagor under the mortgage that was foreclosed upon.
Waiver— The FHA shall provide, by regulation, for the FHA to waive the applicability of paragraph (1) with respect to a mortgagor in cases in which hardship circumstances materially contributed to the default and foreclosure of the mortgage. For purposes of this subsection, such hardship circumstances may include divorce, job or other income loss, health problems, death in the family, and such other situations as the FHA may prescribe.
Rural housing— Section 505 of the Housing Act of 1949 (42 U.S.C. 1475) is amended by adding at the end the following new subsection:
“(c) 7-Year borrower suspension for foreclosure
“(1) In general—Except as provided in paragraph (2), with respect to any mortgage on a 1- to 4-family residential property that is foreclosed upon, during the 7-year period beginning upon the date of such foreclosure, the Secretary may not newly make, insure, or guarantee, under any provision of this title, any other loan under which the borrower is individual who was the mortgagor under the mortgage that was foreclosed upon.
“(2) Waiver—The Secretary shall provide, by regulation, for waiver of the applicability of paragraph (1) with respect to a borrower in cases in which hardship circumstances materially contributed to the default and foreclosure of the mortgage. For purposes of this subsection, such hardship circumstances may include divorce, job or other income loss, health problems, death in the family, and such other situations as the Secretary may prescribe.”
Regulations— The FHA and the Secretary of Agriculture shall jointly issue regulations required under subsection (a) of this section and section 505(c) of the Housing Act of 1949, as added by subsection (b) of this section.
Sec. 262 Borrower ineligibility upon second foreclosure
FHA— If any individual is the mortgagor under any two mortgages on 1- to 4-family residential properties that have been foreclosed upon, the FHA may not newly insure, under any provision of this title, the National Housing Act, or any FHA program, any other mortgage under which such individual is the mortgagor.
Rural housing— Section 505 of the Housing Act of 1949 (42 U.S.C. 1475), as amended by the preceding provisions of this title, is further amended by adding at the end the following new subsection:
“(d) Borrower ineligibility upon second foreclosure—If any individual is the mortgagor under any two mortgages for 1- to 4-family residential properties that have been foreclosed upon, the Secretary may not newly make, insure, or guarantee, under any provision of this title, any other loan under which such individual is the borrower.”
Sec. 263 Limitation on seller concessions
FHA— The FHA may not newly insure, under any provision of this title, the National Housing Act, or any FHA program, any mortgage on a 1- to 4-family residential property with respect to which the seller of the property subject to such mortgage (or any third party or entity that is reimbursed directly or indirectly by the seller) contributes toward the acquisition of the property by the mortgagor any amount in excess of 3 percent of the total closing costs (as determined by the FHA) in connection with such acquisition.
Rural housing— Section 501 of the Housing Act of 1949 (42 U.S.C. 1471), as amended by the preceding provisions of this title, is further amended by adding at the end the following new subsection:
“(n) Limitation on seller concessions—The Secretary may not newly make, insure, or guarantee, under any provision of this title, any loan for a 1- to 4-family residential property with respect to which the seller of the property for which the loan is made (or any third party or entity that is reimbursed directly or indirectly by the seller) contributes toward the acquisition of the property by the borrower any amount in excess of 3 percent of the total closing costs (as determined by the Secretary) in connection with such acquisition.”
Sec. 264 Lender repurchase requirement
Requirement— The FHA may not newly insure, under any provision of this title, the National Housing Act, or any FHA program, any mortgage on a 1- to 4-family residential property unless the mortgagee under such mortgage enters into such binding agreements as the FHA considers necessary to ensure that, if the mortgagor is in default with respect to the mortgagor’s obligation to make payments under the mortgage for 60 or more consecutive days during the 24-month period beginning upon origination of the mortgage, the mortgagee will, upon notice by the FHA, repurchase such mortgage in an amount equal to the remaining principal obligation under the mortgage, as determined in accordance with guidelines issued by the FHA.
Effective date— This section shall take effect upon the date of the enactment of this Act.
Sec. 265 Indemnification by mortgagees
In general— If the FHA determines that at or before the time of loan closing the mortgagee knew, or should have known based on the information then reasonably available to the mortgagee, of a serious and material violation of the requirements established by the FHA with respect to a mortgage executed after the date of the enactment of this Act by such mortgagee approved by the FHA under the direct endorsement program or insured by a mortgagee pursuant to the delegation of authority under section 256 of the National Housing Act (12 U.S.C. 1715z–21) such that the mortgage loan should not have been approved and endorsed for insurance, and the FHA pays an insurance claim with respect to the mortgage within a reasonable period specified by the FHA, the FHA may require the mortgagee approved by the FHA under the direct endorsement program or the mortgagee delegated authority under such section 256 to indemnify the FHA for the loss, or any portion thereof, if the violation was a materially contributing factor to the cause of the mortgage default.
Fraud or material misrepresentation— If fraud or material misrepresentation was involved in connection with the origination or underwriting of a mortgage executed after enactment by the mortgagee and the FHA determines that at or before the time of loan closing such mortgagee knew or should have known, based on the information then reasonably available to such mortgagee, of the fraud or material misrepresentation such that the mortgage loan should not have been approved and endorsed for insurance, the FHA shall require the mortgagee approved by the FHA under the direct endorsement program or the mortgagee delegated authority under such section 256 to indemnify the FHA for the loss, or any portion thereof, if the fraud or material misrepresentation was a materially contributing factor to the cause of the mortgage default.
Appeals process— The FHA shall, by regulation, establish an appeals process for mortgagees to appeal indemnification determinations made pursuant to subsection (a) or (b).
Requirements and procedures— The FHA shall issue regulations establishing appropriate requirements and procedures governing the indemnification of the FHA by the mortgagee, including public reporting on—
the number of loans that—
were not originated or underwritten in accordance with the requirements established by the FHA;
involved fraud or material misrepresentation in connection with the origination or underwriting that was a material contributing factor to the cause of the mortgage default; and
the financial impact on the Mutual Mortgage Insurance Fund when indemnification is required.
Quality control and assurance—
Manual— The FHA shall, pursuant to its existing regulatory authority, issue and update annually a manual, handbook, or guide that collects all of the origination and underwriting requirements that a mortgagee must follow to make residential mortgage loans eligible for insurance by the FHA which shall—
provide clear and concise directions so that a mortgagee can reasonably know what is expected of it;
identify examples of specific serious and material violations that could be the basis for an indemnification demand under this section;
apply nationally and be interpreted by the FHA uniformly with respect to all mortgages endorsed for insurance; and
permit prospective changes with reasonable advance notice to mortgagees, which such changes must be incorporated into the following year’s revised version of the manual, handbook, or guide and may not provide for retroactive changes to mortgages previously endorsed for insurance.
Requirements— The FHA shall—
make prompt initial determinations of a mortgagee’s potential liability for either indemnification under this section or other administrative remedies or sanctions that may be available under the National Housing Act or other applicable laws, based on either self-reports by the mortgagee or other findings by the FHA through its examination processes of potential serious and material violations of such origination and underwriting requirements established under paragraph (1) or other fraud and material misrepresentations;
promptly notify the mortgagee of such initial determination and afford the lender the opportunity to provide additional information and analysis before a final determination is made; and
not pursue indemnification under subsections (a) and (b) with respect to those mortgages reviewed under this subsection unless an initial determination of mortgagee liability is made and communicated to the mortgagee within six months of the FHA’s receipt of information that is reasonably sufficient to enable the FHA to determine initially that a serious and material violation or fraud or material misrepresentation may have occurred.
Effective date— This section shall take effect on the date of the enactment of this Act. During the transition period under section 281, any reference in this section to the FHA shall be construed to refer to the Secretary to the extent the Secretary has not delegated authority under this section to the FHA pursuant to section 282(1).
Sec. 266 Prohibitions relating to use of power of eminent domain
FHA—
In general— Notwithstanding any other provision of law, neither the Secretary nor the FHA may newly insure, under any provision of this title, the National Housing Act, or any FHA program, any mortgage that is secured by a structure or dwelling unit that is located within a county that contains any structure or dwelling unit that secures or secured a residential mortgage loan which mortgage loan was obtained by the State during the preceding 120 months by exercise of the power of eminent domain.
Definitions— For purposes of this paragraph, the following definitions shall apply:
Residential mortgage loan— The term residential mortgage loan means a mortgage loan that is evidenced by a promissory note and secured by a mortgage, deed of trust, or other security instrument on a residential structure or a dwelling unit in a residential structure. Such term includes a first mortgage or any subordinate mortgage.
State— The term State includes the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States, and includes any agency or political subdivision of a State.
Rural housing— Section 501 of the Housing Act of 1949 (42 U.S.C. 1471), as amended by the preceding provisions of this title, is further amended by adding at the end the following new subsection:
“(o) Prohibition relating to use of power of eminent domain
“(1) In general—Notwithstanding any other provision of law, the Secretary may not newly guarantee, make, or insure under this title any mortgage that is secured by a structure or dwelling unit that is located within a county that contains any structure or dwelling unit that secures or secured a residential mortgage loan which mortgage loan was obtained by the State during the preceding 120 months by exercise of the power of eminent domain.
“(2) Definitions—For purposes of this subsection, the following definitions shall apply:
“(A) Residential mortgage loan—The term residential mortgage loan means a mortgage loan that is evidenced by a promissory note and secured by a mortgage, deed of trust, or other security instrument on a residential structure or a dwelling unit in a residential structure. Such term includes a first mortgage or any subordinate mortgage.
“(B) State—The term State has the meaning given such term in section 502(h)(12), and includes any agency or political subdivision of a State.”
Effective date— This section and the amendment made by this section shall take effect upon the date of the enactment of this Act.
Sec. 267 Residual income requirement
In general— The FHA may not newly insure, under any provision of this title, the National Housing Act, or any FHA program, any mortgage on a 1- to 4-family residential property unless the mortgagor under such mortgage meets such requirements as the FHA shall, by regulation, establish to ensure that the mortgagor has sufficient residual income.
Residual income— For purposes of this section, the term residual income means, with respect to a mortgagor, the net monthly income of the mortgagor, as provided by regulation by the FHA, after taking into consideration—
any assets of the mortgagor other than the property subject to such mortgage; and
any monthly obligations of the mortgagor with respect to mortgage payments, insurance payment, and taxes for the property subject to the mortgage, income and other taxes, maintenance, and utility expenses for the property, child care expenses, auto, consumer, and any other debt obligations, alimony and child support expenses, and such other expenses as the FHA may provide.
Effective date— This section and the amendment made by this section shall take effect upon the date of the enactment of this Act.
Sec. 268 Effective date
This subtitle and the amendments made by this subtitle (except for sections 264, 265, 266, and 267, and any amendments made by such sections) shall take effect upon the expiration of the transition period under section 281.
D Transition
Sec. 281 Transition period
In General— For purposes of this subtitle, the term transition period means the period that—
begins on the date of the enactment of this Act; and
ends upon the earlier of—
the date that the Director publishes notice in the Federal Register that the Director has determined that all of the requirements under subsection (b) have been completed; or
the expiration of the 5-year period beginning on the date of the enactment of this Act.
Requirements for Ending Transition Period— The requirements under this subsection are the following:
Approval of initial annual budget and business plan— The FHA has submitted to the Director of the Federal Housing Finance Agency an initial annual budget and business plan and the Director has approved the budget and plan.
Determination of corporate capacity— The Director of the Office of Management and Budget has determined, and notified the Director, that the staff, systems, and administrative infrastructure of the FHA are sufficient to permit the FHA to fully conduct the operation of its business.
Sec. 282 Authority during transition period
During the transition period the FHA may—
carry out any power or responsibility of the Secretary relating to mortgage insurance programs under the National Housing Act that the Secretary delegates to the FHA, using the staff, systems, and administrative infrastructure that the FHA engages or acquires during the transition period, or the personnel and other resources of the Secretary;
incur any obligation consistent with—
the carrying out of a power or responsibility delegated under paragraph (1); or
the acquisition, engagement, or development of staff, systems (including technology to enhance the ability of the FHA to engage in the business authorized by the title), and administrative structure; and
engage in any activity or undertake any responsibility (not including entering into, or making any commitment to enter into, any contract of insurance under this title) that the FHA determines to be consistent with the establishment of the FHA.
Sec. 283 Advisory Board
Establishment— The Secretary of Housing and Urban Development shall establish an advisory board to provide advice to the Board of Directors of the FHA regarding establishing and organizing the FHA and creating the business plan, premium structure, and product lines of the FHA.
Functions— In carrying out its responsibilities under subsection (a) the advisory board may—
obtain guidance from participants in the mortgage markets to be served by the FHA;
assess the housing and mortgage credit needs;
obtain information concerning single family housing finance markets to assess how the FHA can complement the roles of public and private participants in such markets; and
consult with the relevant Federal agencies generally regarding how the FHA can improve the delivery of single family housing credit enhancement to families, communities, and hard-to-serve markets.
Membership— The advisory board shall consist of—
the Assistant Secretary of Housing and Urban Development who is the Federal Housing Commissioner;
the Administrator of the Rural Housing Service of the Department of Agriculture;
not less than 5 individuals appointed by the Secretary who are representatives of the mortgage finance industry; and
not less than 2 individuals who have expertise in affordable housing serving low- and moderate-income populations.
Termination— The advisory board shall terminate upon the expiration of the transition period under section 281.
Sec. 284 Transfer of HUD authority
Transfer— Except as provided in subsections (c) and (d), effective upon the expiration of the transition period, the functions of, authority provided to, and the responsibilities of the Secretary of Housing and Urban Development and the Department of Housing and Urban Development under the following provisions of law are transferred to the FHA:
Titles II and V of the National Housing Act (12 U.S.C. 1707 et seq., 1735a et seq.).
Section 3 of Public Law 99–289 (12 U.S.C. 1721 note; relating to estimates of use of insuring authority), except that this paragraph shall not terminate or transfer any authority of the Secretary under such section relating to section 306(g) of the National Housing Act (12 U.S.C. 1721(g)).
Section 801 of the Housing Act of 1954 (12 U.S.C. 1701j–1; relating to builders warranties).
Section 424 of the Housing and Community Development Act of 1987 (12 U.S.C. 1715z–1c; relating to residential water treatment).
Section 328 of the Cranston-Gonzalez National Affordable Housing Act (12 U.S.C. 1713 note; relating to delegation of processing).
Section 106 of the Energy Policy Act of 1992 (12 U.S.C. 1701z–16; relating to energy efficient mortgages pilot program).
Section 542 of the Housing and Community Development Act of 1992 (12 U.S.C. 1715z–22; relating to multifamily mortgage credit programs).
Section 103(h) of the Multifamily Housing Property Disposition Reform Act of 1994 (12 U.S.C. 1715z–1a note; relating to alternative uses of multifamily projects to prevent default).
Repeal of Assignment Provisions— Effective upon the date of the enactment of this Act, section 204(a)(1)(B) of the National Housing Act (12 U.S.C. 1710(a)) is amended by striking the last sentence.
Applicability— The repeals under subsections (a) and (b) shall not affect any legally binding obligations entered into pursuant to the provisions repealed before the applicable effective date under such subsections. Any mortgage insurance, funds, or activities subject, before repeal, to a provision of law repealed by such subsections shall continue to be governed by the provision as it existed immediately before repeal, except that the FHA may exercise any authority under such provision otherwise transferred to the FHA by this title.
References— After the expiration of the transition period, any reference in Federal law to the Secretary of Housing and Urban Development, in connection with any function of the Secretary transferred under subsection (a) or any other provision of this subtitle, shall be deemed to be a reference to the FHA.
Sec. 285 Wind-up of HUD affairs
Abolishment of positions— Effective upon the expiration of the transition period, any offices of the Department of Housing and Urban Development responsible for functions transferred pursuant to section 284(a), to the extent of such functions, and the position of the Federal Housing Commissioner in the Department of Housing and Urban Development, are abolished.
Disposition of Affairs— During the transition period, the Secretary, solely for the purpose of winding up the affairs of the Department relating to the functions transferred under section 284—
shall manage the employees of the Department responsible for such functions and provide for the payment of the compensation and benefits of any such employee which accrue before the effective date of the transfer of such employee under section 287; and
may take any other action necessary for the purpose of winding up the affairs of the Department relating to such functions.
Status of Employees Before Transfer— The provisions of and amendments made by this title and the abolishments under subsection (a) of this section may not be construed to affect the status of any employee of the Department as an employee of an agency of the United States for purposes of any other provision of law before the effective date of the transfer of any such employee under section 287.
Use of Property and Services—
Property— The FHA may use the property of the Department of Housing and Urban Development to perform functions which have been transferred to the FHA for such time as is reasonable to facilitate the orderly transfer of functions transferred under any other provision of this title or any amendment made by this title to any other provision of law.
Agency services— Any agency, department, or other instrumentality of the United States, and any successor to any such agency, department, or instrumentality, which was providing supporting services to the Department of Housing and Urban Development before the expiration of the transition period under subsection (a) in connection with functions that are transferred under section 284 to the FHA shall—
continue to provide such services, on a reimbursable basis, until the transfer of such functions is complete; and
consult with the FHA to coordinate and facilitate a prompt and reasonable transition.
Continuation of Services— The FHA may use the services of employees and other personnel of the Department of Housing and Urban Development relating to the functions transferred under section 284, on a reimbursable basis, to perform functions which have been transferred to the FHA for such time as is reasonable to facilitate the orderly transfer of functions pursuant to any other provision of this title or any amendment made by this title to any other provision of law.
Savings Provisions—
Existing rights, duties, and obligations not affected— Subsection (a) shall not affect the validity of any right, duty, or obligation of the United States, the Secretary of Housing and Urban Development, or any other person, which—
arises under—
the National Housing Act; or
any other provision of law applicable with respect to the functions of the Department of Housing and Urban Development transferred under section 284; and
existed on the day before the date of abolishment under subsection (a).
Continuation of suits— No action or other proceeding commenced by or against the Secretary of Housing and Urban Development in connection with functions transferred to the FHA under section 284 shall abate by reason of the enactment of this title, except that the FHA shall be substituted for the Secretary as a party to any such action or proceeding.
Sec. 286 Continuation and coordination of certain actions
In general— All regulations, orders, and determinations described in subsection (b) shall remain in effect according to the terms of such regulations, orders, and determinations, and shall be enforceable by or against the FHA, until modified, terminated, set aside, or superseded in accordance with applicable law by the FHA, as the case may be, any court of competent jurisdiction, or operation of law.
Applicability— A regulation, order, or determination is described in this subsection if it—
was issued, made, prescribed, or allowed to become effective by—
the Secretary of Housing and Urban Development and relates to a function of the Secretary transferred under section 284; or
a court of competent jurisdiction, and relates to functions transferred under section 284; and
is in effect upon the expiration of the transition period.
Sec. 287 Transfer and rights of HUD employees
Transfer— Each employee of the Department of Housing and Urban Development who performs functions transferred under section 284 shall be transferred to the FHA for employment, not later than the date of the expiration of the transition period, and such transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code.
Guaranteed Positions—
In general— Each employee transferred under subsection (a) shall be guaranteed a position with the same status, tenure, grade, and pay as the position held by such employee on the day immediately preceding the transfer.
No involuntary separation or reduction— An employee transferred under subsection (a) holding a permanent position on the day immediately preceding the transfer may not be involuntarily separated or reduced in grade or compensation during the 12-month period beginning on the date of transfer, except for cause, or, in the case of a temporary employee, separated in accordance with the terms of the appointment of the employee.
Appointment Authority for Excepted and Senior Executive Service Employees—
In general— In the case of an employee occupying a position in the excepted service or the Senior Executive Service, any appointment authority established under law or by regulations of the Office of Personnel Management for filling such position shall be transferred, subject to paragraph (2).
Decline of transfer— The FHA may decline a transfer of authority under paragraph (1) to the extent that such authority relates to—
a position excepted from the competitive service because of its confidential, policymaking, policy-determining, or policy-advocating character; or
a noncareer position in the Senior Executive Service (within the meaning of section 3132(a)(7) of title 5, United States Code).
Reorganization— If the FHA determines, after the end of the 1-year period beginning on the expiration of the transition period, that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employee retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code.
Employee benefit programs—
In general— Any employee of the Department of Housing and Urban Development accepting employment with the FHA as a result of a transfer under subsection (a) may retain, for 12 months after the date on which such transfer occurs, membership in any employee benefit program of the FHA or the Department of Housing and Urban Development, as applicable, including insurance, to which such employee belongs on the date of the expiration of the transition period, if—
the employee does not elect to give up the benefit or membership in the program; and
the benefit or program is continued by the FHA.
Cost differential—
In general— The difference in the costs between the benefits which would have been provided by the Department of Housing and Urban Development and those provided by this section shall be paid by the FHA.
Health insurance— -If any employee elects to give up membership in a health insurance program or the health insurance program is not continued by the FHA, the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after the date of such election or notice, without regard to any other regularly scheduled open season.
Sec. 288 Transfer of property and facilities
Upon the expiration of the transition period, all property of the Department of Housing and Urban Development relating to the functions transferred under section 284 shall transfer to the FHA.
Sec. 289 Effective date
This subtitle shall take effect on the date of the enactment of this Act.
E Related amendments and provisions
Sec. 291 GNMA authority
Title III of the National Housing Act is amended—
in section 301(5) (12 U.S.C. 1716(5)), by inserting after “federally owned mortgage portfolios” the following: “(including any owned by the Federal Housing Administration)”;
in section 302 (12 U.S.C. 1717)—
in subsection (b)(1), by inserting “, the FHA Reform and Modernization Act of 2013,” after “National Housing Act” each place such term appears; and
in subsection (c)(2), by inserting after subparagraph (F) the following new subparagraph:
“(G) The Federal Housing Administration.”
in section 306(g) (12 U.S.C. 1721(g))—
in the clause (ii) of the first sentence of paragraph (1), by inserting “or the FHA Reform and Modernization Act of 2013” before “, or which are insured”; and
in paragraph (3)(A), by inserting “under the FHA Reform and Modernization Act of 2013 or are insured” after “Federal Housing Administration”.
Sec. 292 Repeal of certain FHA programs
Repeals— Effective upon the expiration of the 2-year period that begins upon the date of the enactment of this Act, the following sections are repealed:
Home equity conversion mortgage program— Section 255 of the National Housing Act (12 U.S.C. 1715z–20).
Mortgage insurance for hospitals— Section 242 (12 U.S.C. 1715z–7).
Conforming amendments—
The penultimate sentence of section 212(a) (12 U.S.C. 1715c(a)) is amended by inserting after “section 242” each place such term appears the following: “(as such section was in effect immediately before the effective date under section 292(a) of the FHA Reform and Modernization Act of 2013)”.
Section 223 (12 U.S.C. 1715n) is amended—
in subsection (a)(7), in the matter preceding subparagraph (A), by inserting before the first comma the following: “but not including a mortgage insured under section 242 “(as such section was in effect immediately before the effective date under section 292(a) of the FHA Reform and Modernization Act of 2013)””;
in subsection (d)(2)(A)—
in clause (i) by striking “and ” at the end; and
by inserting before the semicolon at the end the following: “and (iii) shall not be insured under section 242 (as such section was in effect immediately before the effective date under section 292(a) of the FHA Reform and Modernization Act of 2013)”; and
in subsection (f)—
in paragraph (1)—
by striking “existing hospital (or”; and
by striking “thereof)” and inserting “thereof”; and
in paragraph (4)—
in the matter preceding subparagraph (A), by striking “existing hospital (or”;
in the matter preceding subparagraph (A), by striking “thereof)” and inserting “thereof,”;
in subparagraphs (A), (B), and (C)—
by striking “existing hospital (or” each place such term appears; and
by striking “thereof)” each place such term appears and inserting “thereof”; and
in subparagraph (D), by striking “or of section 242 (for the existing hospital proposed to be refinanced)”.
Section 541(a) (12 U.S.C. 1735f–19(a)) is amended by inserting after “section 242 of this Act” the following: “, as such section was in effect immediately before the effective date under section 292(a) of the FHA Reform and Modernization Act of 2013”.
Savings Provisions—
Effect of repeals— The repeals under subsection (a) shall not affect any legally binding obligations entered before the effective date of such repeals.
Insurance authority— Notwithstanding the repeals under subsection (a), the Secretary (or the FHA, pursuant to subtitle D of this title) may insure any mortgage for which a commitment to insure under section 242 or 255 of the National Housing Act was made before the expiration of the period referred to in subsection (a). Any such mortgage insured under such section 242 or 255 shall be subject to the terms of such section as in effect immediately before the expiration of such period.
Savings provision— Any funds or activities subject, before the effective date of the repeals under subsection (a) of this section, to section 242 or 255 of the National Housing Act shall continue to be governed by such sections as in effect immediately before such effective date.
Sec. 293 Conforming amendments
Penalties for equity skimming— Paragraph (1) of section 912 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1709–2(1)) is amended by inserting “or Federal Housing Administration” after “Housing and Urban Development”.
Fraudulently misappropriated mortgage proceeds— Section 819 of the Housing and Community Development Act of 1974 (12 U.S.C. 1701l–1) is amended—
by inserting “or the Federal Housing Administration” after “Secretary of Housing and Urban Development”; and
by inserting “or such Administration, as appropriate,” before “has reason”.
Unauthorized use of multifamily housing assets and income— Section 421 of the Housing and Community Development Act of 1987 (12 U.S.C. 1715z–4a) is amended—
in subsection (a)—
in paragraph (1)—
by inserting “or the FHA, as applicable,” after “Secretary’)”;
by inserting “or by the FHA pursuant to the FHA Reform and Modernization Act of 2013” after “National Housing Act”; and
in the last sentence, by inserting “or the FHA” after “Secretary” each place such term appears;
in paragraph (2), by inserting “or the FHA Reform and Modernization Act of 2013” before the first comma; and
in subsections (b) through (e)—
by inserting “or the FHA, as applicable,” after “Secretary,” each place such term appears; and
by inserting “or the FHA, as applicable,” after “Secretary” each place such term appears (except the penultimate occurrence in subsection (c)).
Single family mortgage foreclosure— The Single Family Mortgage Foreclosure Act of 1994 (12 U.S.C. 3751 et seq.) is amended—
in section 802(b)(1) (12 U.S.C. 3751(b)(1)), by inserting “or by the FHA pursuant to the FHA Reform and Modernization Act of 2013” before the semicolon;
in section 803(10)(A) (12 U.S.C. 3752(10)(A))—
in subparagraph (A), by striking “or” at the end;
by redesignating subparagraph (B) as subparagraph (C); and
by inserting after subparagraph (A) the following new subparagraph:
“(B) is held by the FHA pursuant to the FHA Reform and Modernization Act of 2013; or”
by adding at the end the following new section:
“820. Authority of FHA
“After the expiration of the transition period under section 281 of the FHA Reform and Modernization Act of 2013, any reference in sections 804 through 819 of this Act to the Secretary shall be considered to also refer to the FHA (as established pursuant to subtitle A of such Act), but only with respect to single family mortgages described in section 803(10)(B).”
Multifamily mortgage foreclosure— The Multifamily Mortgage Foreclosure Act of 1981 (12 U.S.C. 3701 et seq.) is amended—
in section 363(2) (12 U.S.C. 3702(2)), by adding after and below subparagraph (E) the following:
by adding at the end the following new section:
“369J. Authority of FHA
“After the expiration of the transition period under section 281 of the FHA Reform and Modernization Act of 2013, any reference in sections 364 through 369I of this Act to the Secretary shall be considered to also refer to the FHA (as established pursuant to subtitle A of such Act), but only with respect to multifamily mortgages described in the last sentence of section 363(2).”
Sec. 294 Rule of construction
Notwithstanding any other evidence of the intent of the Congress, it is hereby declared to be the intent of Congress that the provisions of this title shall be construed broadly to achieve the purposes of the title, and the provisions of any other Act that must be construed with any provision of this title shall similarly be construed to achieve the purposes of this title to the extent reasonably possible. This section shall take effect on the date of the enactment of this Act.
Sec. 295 Effective date
The amendments made by this subtitle shall be made, and shall apply beginning on, the expiration of the transition period under section 281.