Sections Explained: (Sec. 118)

SECTION: 118

 Sections 117-121

SEC. 117. INSURANCE OF CONDOMINIUMS.

(a) In General- Section 234 of the National Housing Act (12 U.S.C. 1715y) is amended-- (1) in subsection (c), in the first sentence-- (A) by striking `and' before `(2)'; and (B) by inserting before the period at the end the following: `, and (3) the project has a blanket mortgage insured by the Secretary under subsection (d)'; and (2) in subsection (g), by striking `, except that' and all that follows and inserting a period. (b) Definition of Mortgage- Section 201(a) of the National Housing Act (12 U.S.C. 1707(a)) is amended-- (1) before `a first mortgage' insert `(A)'; (2) by striking `or on a leasehold (1)' and inserting `(B) a first mortgage on a leasehold on real estate (i)'; (3) by striking `or (2)' and inserting `, or (ii)'; and (4) by inserting before the semicolon the following: `, or (C) a first mortgage given to secure the unpaid purchase price of a fee interest in, or long-term leasehold interest in, real estate consisting of a  one-family unit in a multifamily project, including a project in which the dwelling units are attached, or are manufactured housing units, semi-detached, or detached, and an undivided interest in the common areas and facilities which serve the project'. 

(c) Definition of Real Estate- Section 201 of the National Housing Act (12 U.S.C. 1707) is amended by adding at the end the following new subsection: `(g) The term `real estate' means land and all natural resources and structures permanently affixed to the land, including residential buildings and stationary manufactured housing. The Secretary may not require, for treatment of any land or other property as real estate for purposes of this title, that such land or property be treated as real estate for purposes of  State taxation.'.

SEC. 118. MUTUAL MORTGAGE INSURANCE FUND.

(a) In General- Subsection (a) of section 202 of the National Housing Act (12 U.S.C. 1708(a)) is amended to read as follows:

`(a) Mutual Mortgage Insurance Fund- `(1) ESTABLISHMENT- Subject to the provisions of the Federal Credit Reform Act of 1990, there is hereby created a Mutual Mortgage Insurance Fund (in this title referred to as the `Fund'), which shall be used by the Secretary to carry out the provisions of this title with respect to mortgages insured under section 203. The Secretary may enter into commitments to guarantee, and may guarantee, such insured mortgages. (2) LIMIT ON LOAN GUARANTEES- The authority of the Secretary to enter into commitments to guarantee such insured mortgages shall be effective for any fiscal year only to the extent that the aggregate original principal loan amount under such mortgages, any part of which is guaranteed, does not exceed the amount specified in appropriations Acts for such fiscal year.

`(3) FIDUCIARY RESPONSIBILITY- The Secretary has a responsibility to ensure that the Mutual Mortgage Insurance Fund remains financially sound. `(4) ANNUAL INDEPENDENT ACTUARIAL STUDY- The Secretary shall provide for an independent actuarial study of the Fund to be conducted annually, which shall analyze the financial position of the Fund. The Secretary shall submit a report annually to the Congress
describing the results of such study and assessing the financial status of the Fund. The report shall recommend adjustments to underwriting standards, program participation, or premiums, if necessary, to ensure that the Fund remains financially sound. The report shall also include an evaluation of the quality control procedures and accuracy of information utilized in the process of underwriting loans guaranteed by the Fund. Such evaluation shall include a review of the risk characteristics of loans based not only on borrower information and performance, but on risks associated with loans originated or funded by various entities or financial institutions.

`(5) QUARTERLY REPORTS- During each fiscal year, the Secretary shall submit a report to  the Congress for each calendar quarter, which shall specify for mortgages that are obligations of the Fund-- `(A) the cumulative volume of loan guarantee commitments that have been made during such fiscal year through the end of the quarter for which the report is submitted; `(B) the types of loans insured, categorized by risk;
`(C) any significant changes between actual and projected claim and prepayment activity; `(D) projected versus actual loss rates; and
`(E) updated projections of the annual subsidy rates to ensure that increases in risk to the Fund are identified and mitigated by adjustments to underwriting standards, program participation, or premiums, and the financial soundness of the Fund is maintained. The first quarterly report under this paragraph shall be submitted on the last day of the first quarter of fiscal year 2008 , or on the last day of the first full calendar quarter following the enactment of the Building American Homeownership Act of 2008 , whichever is later.

`(6) ADJUSTMENT OF PREMIUMS- If, pursuant to the independent actuarial study of the Fund required under paragraph (4), the Secretary determines that the Fund is not meeting the operational goals established under paragraph (7) or there is a substantial probability that the Fund will not maintain its established target subsidy rate, the Secretary may either make programmatic adjustments under this title as necessary to reduce the risk to the Fund, or make appropriate premium adjustments.

`(7) OPERATIONAL GOALS- The operational goals for the Fund are-- `(A) to minimize the default risk to the Fund and to homeowners by among other actions instituting fraud prevention quality control screening not later than 18 months after the date of enactment of the Building American Homeownership Act of 2008 ; and `(B) to meet the housing needs of the borrowers that the single family mortgage insurance
program under this title is designed to serve.'. (b) Obligations of Fund- The National Housing Act is amended as follows:

(1) HOMEOWNERSHIP VOUCHER PROGRAM MORTGAGES- In section 203(v) (12 U.S.C. 1709(v))-- (A) by striking `Notwithstanding section 202 of this title, the' and inserting `The'; and (B) by striking `General Insurance Fund' the first place such term appears and all that follows
through the end of the subsection and inserting `Mutual Mortgage Insurance Fund.'.

(2) HOME EQUITY CONVERSION MORTGAGES- Section 255(i)(2)(A) of the National Housing Act (12 U.S.C. 1715z-20(i)(2)(A)) is amended by striking `General Insurance Fund' and inserting `Mutual Mortgage Insurance Fund'. (c) Conforming Amendments- The National Housing Act is amended-- (1) in section 205 (12 U.S.C. 1711), by striking subsections (g) and (h); and (2) in section 519(e) (12 U.S.C. 1735c(e)), by striking `203(b)' and all that follows through `203(i)' and inserting `203, except as determined by the Secretary'.

SEC. 119. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.

(a) Hawaiian Home Lands- Section 247(c) of the National Housing Act (12 U.S.C. 1715z-12(c)) is amended-- (1) by striking `General Insurance Fund established in section 519' and inserting `Mutual Mortgage Insurance Fund'; and (2) in the second sentence, by striking `(1) all references' and all that follows through `and (2)'.  (b) Indian Reservations- Section 248(f) of the National Housing Act (12 U.S.C. 1715z-13(f)) is amended--
(1) by striking `General Insurance Fund' the first place it appears through `519' and inserting `Mutual Mortgage Insurance Fund'; and (2) in the second sentence, by striking `(1) all references' and all that follows through `and (2)'.

SEC. 120. CONFORMING AND TECHNICAL AMENDMENTS.

(a) Repeals- The following provisions of the National Housing Act are repealed: 

(1) Subsection (i) of section 203 (12 U.S.C. 1709(i)).

(2) Subsection (o) of section 203 (12 U.S.C. 1709(o)).

(3) Subsection (p) of section 203 (12 U.S.C. 1709(p)).

(4) Subsection (q) of section 203 (12 U.S.C. 1709(q)).

(5) Section 222 (12 U.S.C. 1715m).

(6) Section 237 (12 U.S.C. 1715z-2).

(7) Section 245 (12 U.S.C. 1715z-10).

(b) Definition of Area- Section 203(u)(2)(A) of the National Housing Act (12 U.S.C. 1709(u)(2)(A)) is amended by striking `shall' and all that follows and inserting `means a metropolitan statistical area as established by the Office of Management and Budget;'.

(c) Definition of State- Section 201(d) of the National Housing Act (12 U.S.C. 1707(d)) is amended by striking `the Trust Territory of the Pacific Islands' and inserting `the Commonwealth of the Northern Mariana Islands'.

SEC. 121. INSURANCE OF MORTGAGES.

Subsection (n)(2) of section 203 of the National Housing Act (12 U.S.C. 1709(n)(2)) is amended-- (1) in subparagraph (A), by inserting `or subordinate mortgage or' before `lien given'; and (2) in subparagraph (C), by inserting `or subordinate mortgage or' before `lien'.

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 epresentatives setting forth the results and conclusions of the study required under paragraph (1).