Sections Explained: (Sec. 122)

SECTION: 122 

Sections 122-128

SEC. 122. HOME EQUITY CONVERSION MORTGAGES.

(a) In General- Section 255 of the National Housing Act (12 U.S.C. 1715z-20) is amended-- (1) in subsection (b)(2), insert `real estate,' after
`mortgagor','; (2) by amending subsection (d)(1) to read as follows: `(1) have been originated by a mortgagee approved by the Secretary;';
(3) by amending subsection (d)(2)(B) to read as follows: `(B) has received adequate counseling, as provided in subsection (f), by an independent third party that is not, either directly or indirectly, associated with or compensated  by a party involved in-- `(i) originating or servicing the mortgage; `(ii) funding the loan underlying the mortgage; or `(iii) the sale of annuities, investments, long-term care insurance, or any other type of financial or insurance product;'; (4) in subsection (f)-- (A) by striking `(f) Information Services for Mortgagors- ' and inserting `(f) Counseling Services and Information for Mortgagors- '; and (B) by amending the matter preceding paragraph (1) to read as follows: `The Secretary shall provide or cause to be provided adequate counseling for the mortgagor, as described in subsection (d)(2)(B). Such counseling shall be provided by counselors that meet qualification standards and follow uniform counseling protocols. The qualification standards and counseling protocols shall be established by the Secretary within 12 months of the date of enactment of the Reverse Mortgage Proceeds Protection Act . The protocols shall require a qualified counselor to discuss with each mortgagor information which shall include--'

(5) in subsection (g), by striking `established under section 203(b)(2)' and all that follows through `located' and inserting `limitation established under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a 1-family residence'; (6) in subsection (i)(1)(C), by striking `limitations' and inserting `limitation'; (7) by striking subsection (l); (8) by redesignating subsection (m) as subsection (l); (9) by amending subsection (l), as so redesignated, to read as follows:

`(l) Funding for Counseling- The Secretary may use a portion of the mortgage insurance premiums collected under the program under this section to adequately fund the counseling and disclosure activities required under subsection (f), including counseling for those homeowners who elect not to take out a home equity conversion mortgage, provided that the use of such funds is based upon accepted actuarial principles.'; and (10) by adding at the end the following new subsection: `(m) Authority To Insure Home Purchase Mortgage- `(1) IN GENERAL- Notwithstanding any other provision of this section, the Secretary may insure, upon application by a mortgagee, a home equity conversion mortgage upon such terms and conditions as the Secretary may prescribe, when the home equity conversion mortgage will be used to purchase a 1- to 4-family dwelling unit, one unit of which the mortgagor will occupy as a primary residence, and to provide for any future payments to the mortgagor, based on available equity, as authorized under subsection (d)(9).

`(2) LIMITATION ON PRINCIPAL OBLIGATION- A home equity conversion mortgage insured pursuant to paragraph (1) shall involve a principal obligation that does not exceed the dollar amount limitation determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a 1-family residence.  `(n) Requirements on Mortgage Originators- `(1) IN GENERAL- The mortgagee and any other party that participates in the origination of a mortgage to be insured under this section shall-- `(A) not participate in, be associated with, or employ any party that participates in or is associated with any other financial or insurance activity; or `(B) demonstrate to the Secretary that the mortgagee or other party maintains, or will maintain, firewalls and other safeguards designed to ensure that-- `(i) individuals participating in the origination of the mortgage shall have no involvement with, or incentive to provide the mortgagor with, any other financial or insurance product; and

`(ii) the mortgagor shall not be required, directly or indirectly, as a condition of obtaining a mortgage under this section, to purchase any other financial or insurance product. `(2) APPROVAL OF OTHER PARTIES- All parties that participate in the origination of a mortgage to be insured under this section shall be approved by the Secretary.

`(o) Prohibition Against Requirements To Purchase Additional Products- The mortgagee or any other party shall not be required by the mortgagor or any other party to purchase an insurance, annuity, or other additional product as a requirement or condition of eligibility for a
mortgage authorized under subsection (c).

`(p) Study To Determine Consumer Protections and Underwriting Standards- The Secretary shall conduct a study to examine and determine appropriate consumer protections and underwriting standards to ensure that the purchase of products referred to in subsection (o)
is appropriate for the consumer. In conducting such study, the Secretary shall consult with consumer advocates (including recognized experts in consumer protection), industry  representatives, representatives of counseling organizations, and other interested parties.'. (b) Mortgages for Cooperatives- Subsection (b) of section 255 of the National Housing Act  (12 U.S.C. 1715z-20(b)) is amended-- (1) in paragraph (4)-- (A) by inserting `a first or subordinate mortgage or lien' before `on all stock';  (B) by inserting `unit' after `dwelling'; and (C) by inserting `a first mortgage or first lien' before `on a leasehold'; and (2) in paragraph (5), by inserting `a first or subordinate lien on' before `all stock'. 

(c) Limitation on Origination Fees- Section 255 of the National Housing Act (12 U.S.C. 1715z-20), as amended by the preceding provisions of this section, is further amended by adding at the end the following new subsection: `(r) Limitation on Origination Fees- The Secretary shall establish limits on the origination fee that may be charged to a mortgagor under a mortgage insured under this section, which limitations shall--
`(1) equal 1.5 percent of the maximum claim amount of the mortgage unless adjusted thereafter on the basis of -- `(A) the costs to the mortgagor; and `(B) the impact of such fees on the reverse mortgage market; `(2) be subject to a minimum allowable amount; `(3) provide that the origination fee may be fully financed with the mortgage; `(4) include any fees paid to correspondent mortgagees approved by the Secretary; and `(5) have the same effective date as subsection (m)(2) regarding the limitation on principal obligation.'.

(d) Study Regarding Program Costs and Credit Availability-

(1) IN GENERAL- The Comptroller General of the United States shall conduct a study regarding the costs and availability of credit under the home equity conversion mortgages for elderly homeowners program under section 255 of the National Housing Act (12 U.S.C. 1715z-20) (in this subsection referred to as the `program').  (2) PURPOSE- The purpose of the study required under paragraph (1) is to help Congress
analyze and determine the effects of limiting the amounts of the costs or fees under the program from the amounts charged under the program as of the date of the enactment of  this title.

(3) CONTENT OF REPORT- The study required under paragraph (1) should focus on-- (A) the cost to mortgagors of participating in the program; (B) the financial soundness of the program; (C) the availability of credit under the program; and (D) the costs to elderly homeowners participating in the program, including-- (i) mortgage insurance premiums charged under the program; (ii) up-front fees charged under the program; and (iii) margin rates charged under the program.

(4) TIMING OF REPORT- Not later than 12 months after the date of the enactment of this title, the Comptroller General shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of
Representatives setting forth the results and conclusions of the study required under paragraph (1).

SEC. 123. ENERGY EFFICIENT MORTGAGES PROGRAM.

Section 106(a)(2) of the Energy Policy Act of 1992 (42 U.S.C. 12712 note) is amended-- (1) by amending subparagraph (C) to read as follows:
`(C) COSTS OF IMPROVEMENTS- The cost of cost-effective energy efficiency improvements  shall not exceed the greater of -- `(i) 5 percent of the property value (not to exceed 5 percent of the limit established under section 203(b)(2)(A)) of the National Housing Act (12 U.S.C. 1709(b)(2)(A); or `(ii) 2 percent of the limit established under section 203(b)(2)(B) of such Act .'; and  (2) by adding at the end the following:

`(D) LIMITATION- In any fiscal year, the aggregate number of mortgages insured pursuant to this section may not exceed 5 percent of the aggregate number of mortgages for 1- to 4-family residences insured by the Secretary of Housing and Urban Development under title II
of the National Housing Act (12 U.S.C. 1707 et seq.) during the preceding fiscal year.'.

SEC. 124. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT SUFFICIENT CREDIT HISTORY.

(a) Establishment- Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is amended by adding at the end the following new section:

`SEC. 257. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT SUFFICIENT CREDIT HISTORY.

`(a) Establishment- The Secretary shall carry out a pilot program to establish, and make available to mortgagees, an automated process for providing alternative credit rating information for mortgagors and prospective mortgagors under mortgages on 1- to 4-family residences to be insured under this title who have insufficient credit histories for determining their creditworthiness. Such alternative credit rating information may include rent, utilities, and insurance payment histories, and such other information as the Secretary considers appropriate.

`(b) Scope- The Secretary may carry out the pilot program under this section on a limited basis or scope, and may consider limiting the program to first-time homebuyers. `(c) Limitation- In any fiscal year, the aggregate number of mortgages insured pursuant to the automated process established under this section may not exceed 5 percent of the aggregate number of mortgages for 1- to 4-family residences insured by the Secretary under this title during the preceding fiscal year. `(d) Sunset- After the expiration of the 5-year period beginning on the date of the enactment of the Building American Homeownership Act of 2008 , the Secretary may not enter into any new commitment to insure any mortgage, or newly insure any mortgage,  pursuant to the automated process established under this section.'.

(b) GAO Report- Not later than the expiration of the two-year period beginning on the date of the enactment of this subtitle, the Comptroller General of the United States shall submit to the Congress a report identifying the number of additional mortgagors served using the
automated process established pursuant to section 257 of the National Housing Act (as added by the amendment made by subsection (a) of this section) and the impact of such
process and the insurance of mortgages pursuant to such process on the safety and soundness of the insurance funds under the National Housing Act of which such mortgages are obligations.

SEC. 125. HOMEOWNERSHIP PRESERVATION.

The Secretary of Housing and Urban Development and the Commissioner of the Federal Housing Administration, in consultation with industry, the Neighborhood Reinvestment Corporation, and other entities involved in foreclosure prevention activities, shall-- (1) develop and implement a plan to improve the Federal Housing Administration's loss mitigation process; and (2) report such plan to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.

SEC. 126. USE OF FHA SAVINGS FOR IMPROVEMENTS IN FHA TECHNOLOGIES, PROCEDURES, PROCESSES, PROGRAM PERFORMANCE, STAFFING, AND SALARIES.

(a) Authorization of Appropriations- There is authorized to be appropriated for each of fiscal years 2009 through 2013, $25,000,000, from negative credit subsidy for the mortgage insurance programs under title II of the National Housing Act , to the Secretary of Housing and Urban Development for increasing funding for the purpose of improving technology, processes, program performance, eliminating fraud, and for providing appropriate staffing in connection with the mortgage insurance programs under title II of the National Housing Act .

(b) Certification- The authorization under subsection (a) shall not be effective for a fiscal year unless the Secretary of Housing and Urban Development has, by rulemaking in accordance with section 553 of title 5, United States Code (notwithstanding subsections (a)(2), (b)(B),
and (d)(3) of such section), made a determination that-- (1) premiums being, or to be, charged during such fiscal year for mortgage insurance under title II of the National Housing Act are established at the minimum amount sufficient to-- (A) comply with the requirements of section 205(f) of such Act (relating to required capital ratio for the Mutual Mortgage Insurance Fund); and (B) ensure the safety and soundness of the other mortgage insurance funds under such Act ; and (2) any negative credit subsidy for such fiscal year resulting from such mortgage insurance programs adequately ensures the efficient delivery and availability of such programs. (c) Study and Report- The Secretary of Housing and Urban Development shall conduct a study to obtain recommendations from participants in the private residential (both single
family and multifamily) mortgage lending business and the secondary market for such mortgages on how best to update and upgrade processes and technologies for the mortgage insurance programs under title II of the National Housing Act so that the procedures for
originating, insuring, and servicing of such mortgages conform with those customarily used by secondary market purchasers of residential mortgage loans. Not later than the expiration of the 12-month period beginning on the date of the enactment of this title, the Secretary shall submit a report to the Congress describing the progress made and to be made toward updating and upgrading such processes and technology, and providing appropriate staffing for such mortgage insurance programs.

SEC. 127. POST-PURCHASE HOUSING COUNSELING ELIGIBILITY IMPROVEMENTS.

Section 106(c)(4) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(c)(4)) is amended: (1) in subparagraph (C)-- (A) in clause (i), by striking `; or' and inserting a semicolon; (B) in clause (ii), by striking the period at the end and inserting a semicolon; and (C) by adding at the end the following: `(iii) a significant reduction in the income of the household due to divorce or death; or `(iv) a significant increase in basic expenses of the homeowner or an immediate family  member of the homeowner (including the spouse, child, or parent for whom the homeowner provides substantial care or financial assistance) due to-- `(I) an unexpected or significant increase in medical expenses;
`(II) a divorce; `(III) unexpected and significant damage to the property, the repair of which will not be covered by private or public insurance; or
`(IV) a large property-tax increase; or'; (2) by striking the matter that follows subparagraph (C); and (3) by adding at the end the following:
`(D) the Secretary of Housing and Urban Development determines that the annual income of the homeowner is no greater than the annual income established by the Secretary as being of low- or moderate-income.'.

SEC. 128. PRE-PURCHASE HOMEOWNERSHIP COUNSELING DEMONSTRATION.

(a) Establishment of Program- For the period beginning on the date of enactment of this title and ending on the date that is 3 years after such date of enactment, the Secretary of Housing and Urban Development shall establish and conduct a demonstration program to
test the effectiveness of alternative forms of pre-purchase homeownership counseling for eligible homebuyers.  (b) Forms of Counseling- The Secretary of Housing and Urban Development shall provide to eligible homebuyers pre-purchase homeownership counseling under this section in the form of --  (1) telephone counseling; (2) individualized in-person counseling; (3) web-based counseling; (4) counseling classes; or
(5) any other form or type of counseling that the Secretary may, in his discretion, determine appropriate.  (c) Size of Program- The Secretary shall make available the pre-purchase homeownership counseling described in subsection (b) to not more than 3,000 eligible homebuyers in any given year.  (d) Incentive to Participate- The Secretary of Housing and Urban Development may provide incentives to eligible homebuyers to participate in the demonstration program established under subsection (a).