Sec. 3. Indemnification by FHA mortgagees
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Section 202 of the National Housing Act ( 12 U.S.C. 1708 ) is amended by adding at the end the following new subsection: 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.
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. The Secretary shall issue regulations establishing— appropriate requirements and procedures governing the indemnification of the Secretary by the mortgagee, including public reporting on— the number of loans that— were not originated in accordance with the requirements established by the Secretary; and involved fraud or misrepresentation in connection with the origination; and the financial impact on the Mutual Mortgage Insurance Fund when indemnification is required; and 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). 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 . The Secretary shall deposit any amounts collected pursuant to this subsection in, and for the use of, the Mutual Mortgage Insurance Fund. . Nothing in subsection (a), or the amendment made by subsection (a), shall be construed to supersede, alter, or in any way affect the authorities granted to the Secretary of Housing and Urban Development under section 256 of the National Housing Act.
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Sec. 3
Indemnification by FHA mortgagees
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