S. 1376 — what changed

added “(i) Indemnification by mortgagees

added “(1) In general—If the Secretary determines that a mortgage executed by a mortgagee approved by the Secretary under the direct endorsement program or insured by a mortgagee pursuant to the delegation of authority under section 256 contains a material defect such that the mortgage should not have been approved or endorsed for insurance, and a loan becomes delinquent within 36 months of such approval or endorsement leading to a default or the Secretary pays a claim within 36 months after such approval or endorsement, the Secretary may require the mortgagee approved by the Secretary under the direct endorsement program or the mortgagee delegated authority under section 256 to indemnify the Secretary for the loss, irrespective of whether the violation caused the mortgage default.

added “(2) Fraud or misrepresentation—If fraud or misrepresentation was involved in connection with the origination, the Secretary shall require the mortgagee approved by the Secretary under the direct endorsement program or the mortgagee delegated authority under section 256 to indemnify the Secretary for the loss regardless of when an insurance claim is paid., except if the Secretary determines that the fraud or misrepresentation was the result of fraud or misrepresentation committed not by the mortgagee but by a third party and that the mortgagee had implemented adequate quality control and review procedures to deter, detect, and identify such fraud or misrepresentation.

added “(3) Requirements and procedures—The Secretary shall issue regulations establishing—

added “(A) appropriate requirements and procedures governing the indemnification of the Secretary by the mortgagee, including public reporting on—

added “(i) the number of loans that—

added “(I) were not originated in accordance with the requirements established by the Secretary; and

added “(II) involved fraud or misrepresentation in connection with the origination; and

added “(ii) the financial impact on the Mutual Mortgage Insurance Fund when indemnification is required; and

added “(B) an appeals process, or making any necessary modifications or revisions to an existing appeals process of the Secretary, to appeal any determination of indemnification made by the Secretary pursuant to paragraph (1) or (2).

added “(4) Applicability—This subsection shall only apply to mortgages insured under this title that were originated on or after the date of enactment of the FHA Solvency Act of 2013.

added “(5) Deposit in the Mutual Mortgage Insurance Fund—The Secretary shall deposit any amounts collected pursuant to this subsection in, and for the use of, the Mutual Mortgage Insurance Fund.”

added Section 533 of the National Housing Act (12 U.S.C. 1735f–11) is amended—

added “(a) Periodic review of mortgagee performance—To reduce losses in connection with single family mortgage insurance programs under this Act, at least once a year the Secretary shall review the mortgagees originating or underwriting insured single family mortgages.”

added “(b) Comparison with other mortgagees

added “(1) In general—In conducting the review required under subsection (a), for each mortgagee the Secretary shall compare that mortgagee with other mortgagees originating or underwriting insured single family mortgages based on the rates of defaults and claims for insured single family mortgage loans originated or underwritten by that mortgagee. The Secretary may also compare that mortgagee with such other mortgagees based on—

added “(A) underwriting quality;

added “(B) geographic area served; or

added “(C) any commonly used factors the Secretary deems necessary for comparing mortgage default risk, provided that such comparison is of factors that the Secretary would expect to reduce the default risk of mortgages insured by the Secretary.

added “(2) Implementation—In carrying out the comparisons required under paragraph (1), the Secretary shall implement such comparisons by regulation, notice, or mortgagee letter.”

added “(1) Termination authority

added “(A) In general—Notwithstanding section 202(c), the Secretary may terminate the approval of a mortgagee to originate or underwrite single family mortgages if the Secretary determines that the mortgage loans originated or underwritten by the mortgagee present an unacceptable risk to the insurance funds.

added “(B) Basis for determining unacceptable risk—For purposes of subparagraph (A), a mortgagee may present an unacceptable risk to the insurance funds based on—

added “(i) a comparison of any of the factors set forth in subsection (b); or

added “(ii) a determination that the mortgagee engaged in fraud or misrepresentation.”

added “(2) Applicability and enforcement—The authority granted to the Secretary under paragraph (1) shall—

added “(A) apply for any specified area or areas, or on a nationwide basis; and

added “(B) be made in accordance with any regulation, notice, or mortgagee letter issued by the Secretary.”

added Section 205 of the National Housing Act (12 U.S.C. 1711(f)) is amended—

added “(3) The Secretary shall ensure that the Mutual Mortgage Insurance Fund attains a capital ratio of not less than 3.0 percent within 10 years after the date of enactment of the FHA Solvency Act of 2013, and shall ensure that the Fund maintains at least such capital ratio at all times thereafter.”

added “(g) Ensuring adequate capital levels in the Mutual Mortgage Insurance Fund

added “(1) Effective date

added “(A) In general—Except as provided in subparagraph (B), this subsection shall take effect on the date of enactment of the FHA Solvency Act of 2013.

added “(B) Exception for imposition of surcharges

added “(i) In general—Paragraphs (4)(D), (5)(D), and (6)(D) of this subsection—

added “(I) shall not have any force or effect during the 2-year period beginning on the date of enactment of the FHA Solvency Act of 2013; and

added “(II) shall take effect upon the earlier of—

added “(aa) the expiration of the 2-year period set forth under subclause (I), if in any annual independent actuarial study required under section 202(a)(4) the Mutual Mortgage Insurance Fund is designated as critically undercapitalized pursuant to paragraph (6);

added “(bb) the date the independent actuary commissioned to carry out the annual independent actuarial study required under section 202(a)(4) submits the results of the fiscal year 2016 study to the Secretary, if such study finds that the Mutual Mortgage Insurance Fund has not achieved the capital ratio required to be maintained under subsection (f)(1);

added “(cc) any date occurring after the date set forth under item (bb), but prior to any date set forth under items (dd) or (ee), if in any annual independent actuarial study required under section 202(a)(4) the independent actuary commissioned to carry out the study finds—

added “(AA) that in comparison to the independent actuarial study submitted in the most recent prior fiscal year, the capital ratio of the Fund has decreased; and

added “(BB) the market share for mortgages insured under this title has not been concurrently reduced thus contributing to the decrease in the capital ratio described under subitem (AA);

added “(dd) the date on which the Mutual Mortgage Insurance Fund attains a capital ratio of 3.0 percent; or

added “(ee) the date that is 10 years after the date of enactment of the FHA Solvency Act of 2013.

added “(ii) Rule of construction—For purposes of this subsection, any finding made under item (cc) of clause (i)(II) shall be deemed to mean that the Mutual Mortgage Insurance Fund is undercapitalized pursuant to paragraph (4) and that notwithstanding the provisions of paragraph (4)(D)(iv), the Secretary shall begin or continue to collect any surcharge set forth under paragraph (4)(D), until the earlier of the date on which—

added “(I) the next report of the Secretary on the annual independent actuarial study required under section 202(a)(4) finds that in comparison to the independent actuarial study submitted in the most recent prior fiscal year, the capital ratio of the Fund has increased;

added “(II) the report of the Secretary required under paragraph (3)(A) finds that in comparison to the independent actuarial study submitted in the most recent prior fiscal year, the capital ratio of the Fund has increased; or

added “(III) the Mutual Mortgage Insurance Fund has been designated as significantly undercapitalized pursuant to paragraph (5) or critically undercapitalized pursuant to paragraph (6) and the premium surcharge applicable to any such designation has taken effect.

added “(2) Duty of Chief Risk Officer—Following the receipt by the Deputy Assistant Secretary and Chief Risk Officer of the final completed report for the fiscal year of the independent actuary commissioned to carry out the annual independent actuarial study required under section 202(a)(4) analyzing the capital ratio of the Mutual Mortgage Insurance Fund, the Deputy Assistant Secretary and Chief Risk Officer shall, as part of that individual's regularly assigned duties and responsibilities, have a duty to notify, within 24 hours, the Secretary of any failure to maintain the capital ratio of the Mutual Mortgage Insurance Fund as required under subsection (f).

added “(3) Studies and reports

added “(A) For when Fund is undercapitalized or significantly undercapitalized—If the Mutual Mortgage Insurance Fund is designated as undercapitalized or significantly undercapitalized pursuant to paragraphs (4) or (5), respectively, then not later than 180 days after date on which the Secretary submits the report on the annual independent actuarial study required under section 202(a)(4), and annually thereafter until such time as the Mutual Mortgage Insurance Fund achieves the capital ratio required to be maintained under subsection (f), the Secretary shall provide a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives updating the results of the independent actuarial study required under section 202(a)(4) to reflect the most recently available information and analyzing the financial position of the Fund.

added “(B) For when Fund is critically undercapitalized—If the Mutual Mortgage Insurance Fund is designated as critically undercapitalized pursuant to paragraph (6), then not later than the last day of the current fiscal quarter in which the Congress is informed of such events pursuant to paragraph (6)(A), and every fiscal quarter thereafter until such time as the Mutual Mortgage Insurance Fund achieves the capital ratio required to be maintained under subsection (f) or is designated as undercapitalized or significantly undercapitalized pursuant to paragraphs (4) or (5), respectively, the Secretary shall provide a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives updating the results of the independent actuarial study required under section 202(a)(4) to reflect the most recently available information and analyzing the financial position of the Fund.

added “(C) Failure to comply with required timelines—If the Secretary fails to comply with any timeline required under subparagraphs (A) or (B), the Secretary shall appear before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives within 7 days of the last day of that deadline to provide testimony explaining the failure to comply.

added “(4) Corrective actions when Fund is undercapitalized

added “(A) Notice to Congress—Not later than 7 days after the date on which the Secretary is informed that the Mutual Mortgage Insurance Fund has a capital ratio of not less than 50 percent but less than 100 percent of the capital ratio required to be maintained under subsection (f), the Secretary shall notify the Chair and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Chair and Ranking Member of the Committee on Financial Services of the House of Representatives of such shortfall, and the exact date on which the Secretary was informed of such shortfall.

added “(B) Submission of capital restoration plan—Not later than 30 days after the date on which notice is provided under subparagraph (A), the Secretary shall submit to the Chair and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Chair and Ranking Member of the Committee on Financial Services of the House of Representatives a capital restoration plan, including a timeline for implementation of such plan, to achieve the capital ratio required to be maintained under subsection (f). The plan required under this subparagraph shall be revised annually until such time as the Mutual Mortgage Insurance Fund achieves the capital ratio required to be maintained under subsection (f).

added “(C) Congressional testimony—Not later than 45 days after the date on which notice is provided under subparagraph (A), and annually thereafter until such time as the Mutual Mortgage Insurance Fund achieves the capital ratio required to be maintained under subsection (f), the Secretary shall provide testimony to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the capital status of the Fund and the performance or projected performance of the plan submitted under subparagraph (B).

added “(D) Imposition of premium surcharge

added “(i) In general—Notwithstanding any limitation on the amount of any premium payment set forth under section 203(c), in addition to the premiums collected under subparagraphs (A), (B), and (C) of paragraph (2) of section 203(c), if the Mutual Mortgage Insurance Fund is designated as undercapitalized pursuant to this paragraph, the Secretary shall establish and collect annual premium payments for any newly insured mortgage for which the Secretary collects an annual premium payment under section 203(c), except for those mortgages insured pursuant to section 255, in an amount described in clause (ii).

added “(ii) Amount of surcharge—With respect to a mortgage, the amount described in this clause is 10 basis points of the remaining insured principal balance (excluding the portion of the remaining balance attributable to the premium collected under paragraph (2)(A) of section 203(c) and without taking into account delinquent payments or prepayments).

added “(iii) Effective date

added “(I) In general—Subject to subclause (II), the requirement to collect the annual premium payment set forth under this subparagraph shall take effect on the date that is 180 days after the date on which notice is provided to Congress under subparagraph (A).

added “(II) Delay—The effective date of the requirement to collect the annual premium payment set forth under this subparagraph may be extended for an additional 180 days, if prior to the expiration of the initial 180-day time period described under subclause (I), the report of the Secretary required under paragraph (3)(A)—

added “(aa) is submitted to Congress; and

added “(bb) finds that the Mutual Mortgage Insurance Fund has achieved the capital ratio required to be maintained under subsection (f).

added “(III) Reinstitution of surcharge—Notwithstanding subclauses (I) and (II), if the next report of the Secretary on the annual independent actuarial study required under section 202(a)(4) that is submitted after the report of the Secretary described in subclause (II) finds that the Mutual Mortgage Insurance Fund has not achieved the capital ratio required to be maintained under subsection (f), then the effective date of the requirement to collect the annual premium payment set forth under this subparagraph shall be the date that is 30 days after the date on which such report is submitted to Congress.

added “(iv) Cessation of application—The Secretary shall not be required to collect the annual premium payment set forth under this subparagraph, if, at any time after the date on which such requirement has gone into effect, either—

added “(I) the report of the Secretary on the annual independent actuarial study required under section 202(a)(4) finds that the Mutual Mortgage Insurance Fund has achieved the capital ratio required to be maintained under subsection (f);

added “(II) the report of the Secretary required under paragraph (3)(A) finds that the Mutual Mortgage Insurance Fund has achieved the capital ratio required to be maintained under subsection (f); or

added “(III) the Mutual Mortgage Insurance Fund has been designated significantly undercapitalized pursuant to paragraph (5) or critically undercapitalized pursuant to paragraph (6) and the premium surcharge applicable to any such designation has taken effect.

added “(5) Corrective actions when Fund is significantly undercapitalized

added “(A) Notice to Congress—Not later than 7 days after the date on which the Secretary is informed that the Mutual Mortgage Insurance Fund has a capital ratio of not less than 0 percent but less than 50 percent of the capital ratio required to be maintained under subsection (f), the Secretary shall notify the Chair and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Chair and Ranking Member of the Committee on Financial Services of the House of Representatives of such shortfall, and the date on which the Secretary was informed of such shortfall.

added “(B) Submission of revised capital restoration plan—Not later than 30 days after the date on which notice is provided under subparagraph (A), the Secretary shall submit to the Chair and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Chair and Ranking Member of the Committee on Financial Services of the House of Representatives a capital restoration plan, or a revised capital restoration plan, including a timeline for implementation of such plan or revised plan, to achieve the capital ratio required to be maintained under subsection (f). The plan required under this subparagraph shall be revised annually until such time as the Mutual Mortgage Insurance Fund achieves the capital ratio required to be maintained under subsection (f).

added “(C) Congressional testimony—Not later than 45 days after the date on which notice is provided under subparagraph (A), and every 180 days thereafter until such time as the Mutual Mortgage Insurance Fund achieves the capital ratio required to be maintained under subsection (f), the Secretary shall provide testimony to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the capital status of the Fund and the performance or projected performance of the revised capital restoration plan submitted under subparagraph (B).

added “(D) Imposition of premium surcharge

added “(i) In general—Notwithstanding any limitation on the amount of any premium payment set forth under section 203(c), in addition to the premiums collected under subparagraphs (A), (B), and (C) of paragraph (2) of section 203(c), if the Mutual Mortgage Insurance Fund is designated as significantly undercapitalized pursuant to this paragraph, the Secretary shall establish and collect annual premium payments for any newly insured mortgage for which the Secretary collects an annual premium payment under section 203(c), except for those mortgages insured pursuant to section 255, in an amount described in clause (ii).

added “(ii) Amount of surcharge—With respect to a mortgage, the amount described in this clause is 20 basis points of the remaining insured principal balance (excluding the portion of the remaining balance attributable to the premium collected under paragraph (2)(A) of section 203(c) and without taking into account delinquent payments or prepayments).

added “(iii) Effective date

added “(I) In general—Subject to subclause (II), the requirement to collect the annual premium payment set forth under this subparagraph shall take effect on the date that is 180 days after the date on which notice is provided to Congress under subparagraph (A).

added “(II) Delay—The effective date of the requirement to collect the annual premium payment set forth under this subparagraph shall be extended for an additional 180 days, if prior to the expiration of the initial 180-day time period described under subclause (I), the report of the Secretary required under paragraph (3)(A)—

added “(aa) is submitted to Congress; and

added “(bb) finds that the Mutual Mortgage Insurance Fund—

added “(AA) has achieved the capital ratio required to be maintained under subsection (f); or

added “(BB) has a capital ratio of not less than 50 percent but less than 100 percent of the capital ratio required to be maintained under subsection (f), at which point the provisions of paragraph (4)(D) shall be applicable, except that the provisions of clause (iii) of such paragraph (4)(D) shall not be applicable and that the premium surcharge applicable to such paragraph shall take effect within 30 days of the issuance of such report.

added “(III) Reinstitution of surcharge—Notwithstanding subclauses (I) and (II), if the next report of the Secretary on the annual independent actuarial study required under section 202(a)(4) that is submitted after the report of the Secretary described in subclause (II) finds that the Mutual Mortgage Insurance Fund has a capital ratio of not less than 0 percent but less than 50 percent of the capital ratio required to be maintained under subsection (f), then the effective date of the requirement to collect the annual premium payment set forth under this subparagraph shall be the date that is 30 days after the date on which such report is submitted to Congress.

added “(iv) Cessation of application—The Secretary shall not be required to collect the annual premium payment set forth under this subparagraph, if, at any time after the date on which such requirement has gone into effect, either—

added “(I) the report of the Secretary on the annual independent actuarial study required under section 202(a)(4) finds that the Mutual Mortgage Insurance Fund—

added “(aa) has achieved the capital ratio required to be maintained under subsection (f); or

added “(bb) has a capital ratio of not less than 50 percent but less than 100 percent of the capital ratio required to be maintained under subsection (f), at which point the provisions of paragraph (4)(D) shall be applicable, except that the provisions of clause (iii) of such paragraph (4)(D) shall not be applicable and that the premium surcharge applicable to such paragraph shall take effect within 30 days of the issuance of such report;

added “(II) the report of the Secretary required under paragraph (3)(A) finds that the Mutual Mortgage Insurance Fund—

added “(aa) has achieved the capital ratio required to be maintained under subsection (f); or

added “(bb) has a capital ratio of not less than 50 percent but less than 100 percent of the capital ratio required to be maintained under subsection (f), at which point the provisions of paragraph (4)(D) shall be applicable, except that the provisions of clause (iii) of such paragraph (4)(D) shall not be applicable and that the premium surcharge applicable to such paragraph shall take effect within 30 days of the issuance of such report; or

added “(III) the Mutual Mortgage Insurance Fund has been designated as critically undercapitalized pursuant to paragraph (6) and the premium surcharge applicable to any such designation has taken effect.

added “(E) Required examination of underwriting requirements—If the Mutual Mortgage Insurance Fund is designated as significantly undercapitalized pursuant to this paragraph, the Secretary shall—

added “(i) not later than 30 days after the date on which notice is provided under subparagraph (A), examine all of its product lines, product or insurance features, and underwriting criteria for ways to strengthen and enhance such products, features, or criteria to limit losses to the Mutual Mortgage Insurance Fund;

added “(ii) in carrying out the requirement under clause (i), undertake such examination actions as are necessary to reduce the financial vulnerability of the Mutual Mortgage Insurance Fund from those risk characteristics or product lines that most contribute to the default of mortgages insured under section 202, including by reviewing the underwriting and servicing standards for mortgages to be insured by the Secretary, including, but not limited to, a review of—

added “(I) the amount of cash or its equivalent required to be paid on account of the property subject to a mortgage that is an obligation of the Fund;

added “(II) servicer compliance with any loan servicing or loss mitigation guidelines of the Secretary; and

added “(III) economic conditions present in the housing market, provided there is a demonstrated likelihood that the policies of the Secretary would impact those economic conditions; and

added “(iii) submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives any analysis, findings, or recommendations used or made by the Secretary to carry out the requirements of this subparagraph.

added “(6) Corrective actions when Fund is critically undercapitalized

added “(A) Notice to Congress—Not later than 7 days after the date on which the Secretary is informed that the Mutual Mortgage Insurance Fund has a capital ratio of less than 0 percent of the capital ratio required to be maintained under subsection (f), the Secretary shall notify the Chair and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Chair and Ranking Member of the Committee on Financial Services of the House of Representatives of such shortfall, and the date on which the Secretary was informed of such shortfall.

added “(B) Submission of further revised capital restoration plan—Not later than 30 days after the date on which notice is provided under subparagraph (A), the Secretary shall jointly submit with the Secretary of the Treasury to the Chair and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Chair and Ranking Member of the Committee on Financial Services of the House of Representatives a capital restoration plan, or a revised capital restoration plan, including a timeline for implementation of such plan, to achieve the capital ratio required to be maintained under subsection (f). The plan required under this subparagraph shall be revised and submitted annually with the Secretary of the Treasury, until such time as the Mutual Mortgage Insurance Fund achieves the capital ratio required to be maintained under subsection (f).

added “(C) Congressional testimony—Not later than 45 days after the date on which notice is provided under subparagraph (A), and every 180 days thereafter until such time as the Mutual Mortgage Insurance Fund achieves the capital ratio required to be maintained under subsection (f), the Secretary and the Secretary of the Treasury shall each provide testimony to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the capital status of the Fund and the success or failure of the further revised capital restoration plan submitted under subparagraph (B).

added “(D) Imposition of premium surcharge

added “(i) In general—Notwithstanding any limitation on the amount of any premium payment set forth under section 203(c), in addition to the premiums collected under subparagraphs (A), (B), and (C) of paragraph (2) of section 203(c), if the Mutual Mortgage Insurance Fund is designated as critically undercapitalized pursuant to this paragraph, the Secretary shall establish and collect annual premium payments for any newly insured mortgage for which the Secretary collects an annual premium payment under section 203(c), except for those mortgages insured pursuant to section 255, in an amount described in clause (ii).

added “(ii) Amount of surcharge—With respect to a mortgage, the amount described in this clause is 30 basis points of the remaining insured principal balance (excluding the portion of the remaining balance attributable to the premium collected under paragraph (2)(A) of section 203(c) and without taking into account delinquent payments or prepayments).

added “(iii) Effective date

added “(I) In general—Subject to subclause (II), the requirement to collect the annual premium payment set forth under this subparagraph shall take effect on the date that is 180 days after the date on which notice is provided to Congress under subparagraph (A).

added “(II) Delay—The effective date of the requirement to collect the annual premium payment set forth under this subparagraph shall be extended for an additional 180 days, if prior to the expiration of the initial 180-day time period described under subclause (I), the report of the Secretary required under paragraph (3)(B)—

added “(aa) is submitted to Congress; and

added “(bb) finds that the Mutual Mortgage Insurance Fund—

added “(AA) has achieved the capital ratio required to be maintained under subsection (f);

added “(BB) has a capital ratio of not less than 50 percent but less than 100 percent of the capital ratio required to be maintained under subsection (f), at which point the provisions of paragraph (4)(D) shall be applicable, except that the provisions of clause (iii) of such paragraph (4)(D) shall not be applicable and that the premium surcharge applicable to such paragraph shall take effect within 30 days of the issuance of such report; or

added “(CC) has a capital ratio of not less than 0 percent but less than 50 percent of the capital ratio required to be maintained under subsection (f), at which point the provisions of paragraph (5)(D) shall be applicable, except that the provisions of clause (iii) of such paragraph (5)(D) shall not be applicable and that the premium surcharge applicable to such paragraph shall take effect within 30 days of the issuance of such report.

added “(III) Reinstitution of surcharge—Notwithstanding subclauses (I) and (II), if within 1 calendar year any report of the Secretary required under paragraph (3)(B) finds that the Mutual Mortgage Insurance Fund has a capital ratio of less than 0 percent of the capital ratio required to be maintained under subsection (f), then the effective date of the requirement to collect the annual premium payment set forth under this subparagraph shall be the date that is 30 days after the date on which such report is submitted to Congress.

added “(iv) Cessation of application—The Secretary shall not be required to collect the annual premium payment set forth under this subparagraph, if, at any time after the date on which such requirement has gone into effect, either—

added “(I) the report of the Secretary on the annual independent actuarial study required under section 202(a)(4) finds that the Mutual Mortgage Insurance Fund—

added “(aa) has achieved the capital ratio required to be maintained under subsection (f);

added “(bb) has a capital ratio of not less than 50 percent but less than 100 percent of the capital ratio required to be maintained under subsection (f), at which point the provisions of paragraph (4)(D) shall be applicable, except that the provisions of clause (iii) of such paragraph (4)(D) shall not be applicable and that the premium surcharge applicable to such paragraph shall take effect within 30 days of the issuance of such report; or

added “(cc) has a capital ratio of not less than 0 percent but less than 50 percent of the capital ratio required to be maintained under subsection (f), at which point the provisions of paragraph (5)(D) shall be applicable, except that the provisions of clause (iii) of such paragraph (5)(D) shall not be applicable and that the premium surcharge applicable to such paragraph shall take effect within 30 days of the issuance of such report; or

added “(II) the report of the Secretary required under paragraph (3)(B) finds that the Mutual Mortgage Insurance Fund—

added “(aa) has achieved the capital ratio required to be maintained under subsection (f);

added “(bb) has a capital ratio of not less than 50 percent but less than 100 percent of the capital ratio required to be maintained under subsection (f), at which point the provisions of paragraph (4)(D) shall be applicable, except that the provisions of clause (iii) of such paragraph (4)(D) shall not be applicable and that the premium surcharge applicable to such paragraph shall take effect within 30 days of the issuance of such report; or

added “(cc) has a capital ratio of not less than 0 percent but less than 50 percent of the capital ratio required to be maintained under subsection (f), at which point the provisions of paragraph (5)(D) shall be applicable, except that the provisions of clause (iii) of such paragraph (5)(D) shall not be applicable and that the premium surcharge applicable to such paragraph shall take effect within 30 days of the issuance of such report.

added “(E) Required enhancements to underwriting requirements—If the Mutual Mortgage Insurance Fund is designated as critically undercapitalized pursuant to this paragraph, the Secretary shall—

added “(i) not later than 30 days after the date on which notice is provided under subparagraph (A), take such actions as necessary to revise its product lines, product or insurances features, or underwriting criteria in order to strengthen and enhance such products, features, or criteria to limit losses to the Mutual Mortgage Insurance Fund;

added “(ii) in carrying out the requirement under clause (i), undertake such actions as are necessary to reduce the financial vulnerability of the Mutual Mortgage Insurance Fund from those risk characteristics or product lines that most contribute to the default of mortgages insured under section 202, such actions—

added “(I) may include, but are not limited to, a revision of the—

added “(aa) amount of cash or its equivalent required to be paid on account of the property subject to a mortgage that is an obligation of the Fund;

added “(bb) servicer standards for compliance with any loan servicing or loss mitigation guidelines of the Secretary; and

added “(cc) treatment of loan modification requests made by borrowers having insurance provided under this title seeking assistance under a modification program of the Secretary; and

added “(II) shall take into consideration economic conditions present in the housing market, provided there is a demonstrated likelihood that the policies of the Secretary would impact those economic conditions; and

added “(iii) submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives any relevant final analysis used by the Secretary to carry out the requirements of this subparagraph.

added “(7) Mandatory reevaluation—Upon the Mutual Mortgage Insurance Fund achieving the capital ratio required to be maintained under subsection (f), the Secretary—

added “(A) shall review any actions taken pursuant to this subsection;

added “(B) shall examine and determine whether—

added “(i) the need to maintain such action is necessary; and

added “(ii) the repeal, revision, or amendment of any such action can be carried out without having any adverse effect on the ability of the Fund to maintain the capital ratio required under subsection (f); and

added “(C) may, pursuant to any determination under subparagraph (B) that no such adverse effects exist, repeal, revise, or amend any such action as the Secretary determines appropriate.”

added “(1) Establishment of Commissioner—There shall be”

added “(2) Establishment of Deputy Assistant Secretary and Chief Risk Officer

added “(A) Appointment—There shall be in the Department, within the Federal Housing Administration, a Deputy Assistant Secretary and Chief Risk Officer, who shall be appointed by the Secretary and shall be responsible to the Federal Housing Commissioner for all matters relating to managing and mitigating risk to the mortgage insurance funds of the Department and ensuring the performance of mortgages insured by the Department to protect borrowers and taxpayers.

added “(B) Responsibilities—The Deputy Assistant Secretary and Chief Risk Officer established under subparagraph (A) shall have—

added “(i) comprehensive risk management and regulatory knowledge in key risks, including credit, interest rate, and operational risk;

added “(ii) a sound understanding of the tools and methodologies used to measure and quantify risk, including the use of statistical models; and

added “(iii) a broad understanding and knowledge of mortgage industry best practices for risk management.

added “(C) Underwriting report

added “(i) In general—Not later than 1 year after the date of enactment of the FHA Solvency Act of 2013, and annually thereafter, the Deputy Assistant Secretary and Chief Risk Officer (or, if not yet appointed, the Commissioner of the Federal Housing Administration) shall prepare a report on the underwriting standards for mortgages insured under title II of the National Housing Act (12 U.S.C. 1707 et seq.), which shall be submitted by the Secretary to—

added “(I) the Committee on Banking, Housing, and Urban Affairs of the Senate; and

added “(II) the Committee on Financial Services of the House of Representatives.

added “(ii) Contents—The report required under clause (i) shall include—

added “(I) for all mortgages insured under title II of the National Housing Act that were made not less than 6 months and not more than 36 months before the date of the report, an identification of the default risk characteristics as such characteristics existed at the time of origination of the mortgage based on risk factors that are commonly used in evaluating mortgage default risk, including—

added “(aa) the current or reasonably expected income and financial resources of a borrower;

added “(bb) the employment status of a borrower, if income used under item (aa) is employment income;

added “(cc) the monthly mortgage payment of a borrower under the terms of a mortgage;

added “(dd) the monthly payment for any other loan held by the borrower;

added “(ee) the monthly payment for any obligations related to the mortgage;

added “(ff) any other debt obligations of a borrower, including alimony and child support;

added “(gg) the monthly debt-to-income ratio or residual income of a borrower;

added “(hh) the credit history of a borrower; and

added “(ii) any other risk factor, as determined appropriate by the Secretary;

added “(II) in tabular format, the number of mortgages insured under title II of the National Housing Act that are in default and the rate of default for—

added “(aa) each for the characteristics described in subclause (I);

added “(bb) any multi-way combination of the characteristics in subclause (I) as determined appropriate by the Secretary; and

added “(cc) any additional multi-way combination of the characteristics in subclause (I) as may be requested by the Chair or Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the Senate or the Chair or Ranking Member of the Committee on Financial Services of the House of Representatives, provided that the Deputy Assistant Secretary and Chief Risk Officer (or, if not yet appointed, the Commissioner of the Federal Housing Administration) shall be provided an additional 30 days from the date of receipt of such request to satisfy such request;

added “(III) an analysis of mortgages insured under title II of the National Housing Act that were made not less than 6 months and not more than 36 months before the date of the report and are in the lowest quartile and decile of loan performance, which shall include—

added “(aa) a description of the characteristics described in subclause (I) for mortgages in the lowest quartile and decile of loan performance; and

added “(bb) a comparison of the characteristics described in subclause (I) between mortgages in the lowest quartile and decile of loan performance and all other mortgages insured under title II of the National Housing Act;

added “(IV) recommendations by the Deputy Assistant Secretary and Chief Risk Officer for revisions to the underwriting standards of the Secretary for mortgages eligible to be insured under title II of the National Housing Act based on the findings of the report, and a response to those recommendations from the Secretary; and

added “(V) a quantitative analysis of the effects of any revisions to the underwriting standards made by the Secretary in response to the findings of a prior report, and any recommendations of the Deputy Assistant Secretary and Chief Risk Officer in response to those revisions.”

added Section 202(a)(4) of the National Housing Act (12 U.S.C. 1708(a)(4)) is amended—

added “(1) In general—The Secretary shall”

added “(2) Disclosure of unforeseen events

added “(A) In general—Prior to the submission of any report of the Secretary under paragraph (1), the Secretary shall require that the independent actuary commissioned to perform the study required under paragraph (1) disclose to the Secretary any events or circumstances that occur after the study is completed but before the report is submitted to Congress and that would have resulted in changes to the inputs or assumptions the actuary used to make forecasts about the financial position of the Fund, if such changes are sufficiently significant that a reasonable person would expect them to substantially alter the actuary’s forecasts of the economic value of the Fund or the actuary's projections relating to the capital reserve ratio of the Fund.

added “(B) Informing Congress—The Secretary shall inform Congress of any disclosures required under subparagraph (A) either by—

added “(i) the submission of an addendum to the report of the Secretary required under paragraph (1); or

added “(ii) a letter from the Secretary addressed to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.”

added “(3) by notice or mortgagee letter, establish any additional or alternative requirements that the Secretary, in his or her discretion, determines necessary to more effectively carry out the purposes of the program authorized under this section, and any such notice or mortgagee letter shall take effect upon issuance and expire not later than 24 months after the date of issuance of the notice or mortgagee letter.”

added “(s) Escrow accounts or set-asides—In carrying out the program authorized under this section, the Secretary shall require the establishment of an escrow account or set-aside in any instance where the Secretary determines, after a financial assessment of the mortgagor has been completed, that such an account or set-aside would mitigate the risk of loss to the mortgagee, the mortgagor, the program, or the Mutual Mortgage Insurance Fund.”

added Section 255(m)(2) of the National Housing Act (12 U.S.C. 1715z–20(m)(2)) is amended—

added “(A) shall”

added “(B) in the case of a fixed rate mortgage, may not involve a principal limit (as defined in section 206.3 of title 24, Code of Federal Regulations) with a principal limit factor in excess of .61.”