Sec. 7. Ensuring adequate capital levels in the Mutual Mortgage Insurance Fund
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Section 205 of the National Housing Act (12 U.S.C. 1711(f)) is amended— in subsection (f)— in paragraph (2), by striking shall ensure that the Fund maintains at least such capital ratio at all times thereafter and inserting maintains such ratio thereafter, subject to paragraph
(3); and by amending paragraph
(3)to read as follows: 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. ; and by adding at the end the following: Except as provided in subparagraph (B), this subsection shall take effect on the date of enactment of the FHA Solvency Act of 2013 . Paragraphs (4)(D), (5)(D), and (6)(D) of this subsection— 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 shall take effect upon the earlier of— 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); 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); 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— 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 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); the date on which the Mutual Mortgage Insurance Fund attains a capital ratio of 3.0 percent; or the date that is 10 years after the date of enactment of the FHA Solvency Act of 2013 . 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— 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; 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 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. 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). 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. 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. 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. 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. 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). 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). 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). 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). 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). 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)— is submitted to Congress; and finds that the Mutual Mortgage Insurance Fund has achieved the capital ratio required to be maintained under subsection (f). 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. 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— 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); the report of the Secretary required under paragraph
(3)finds that the Mutual Mortgage Insurance Fund has achieved the capital ratio required to be maintained under subsection (f); or 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. 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. 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). 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). 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). 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). 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). 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)— is submitted to Congress; and finds that the Mutual Mortgage Insurance Fund— has achieved the capital ratio required to be maintained under subsection (f); or 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. 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. 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— 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); or 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; 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 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 the Mutual Mortgage Insurance Fund has been designated critically undercapitalized pursuant to paragraph
(6)and the premium surcharge applicable to any such designation has taken effect. If the Mutual Mortgage Insurance Fund is designated as significantly undercapitalized pursuant to this paragraph, the Secretary shall— 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; 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— 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; servicer compliance with any loan servicing or loss mitigation guidelines of the Secretary; and 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 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. 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. 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). 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). 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). 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). 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). 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)— is submitted to Congress; and finds that the Mutual Mortgage Insurance Fund— has achieved the capital ratio required to be maintained under subsection (f); 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 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. 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. 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— 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); 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 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 the report of the Secretary required under paragraph (3)(B) finds that the Mutual Mortgage Insurance Fund— has achieved the capital ratio required to be maintained under subsection (f); 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 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. If the Mutual Mortgage Insurance Fund is designated as critically undercapitalized pursuant to this paragraph, the Secretary shall— 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; 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— may include, but are not limited to, a revision of 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; servicer standards for compliance with any loan servicing or loss mitigation guidelines of the Secretary; and treatment of loan modification requests made by borrowers having insurance provided under this title seeking assistance under a modification program of the Secretary; and 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 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. Upon the Mutual Mortgage Insurance Fund achieving the capital ratio required to be maintained under subsection (f), the Secretary— shall review any actions taken pursuant to this subsection; shall examine and determine whether— the need to maintain such action is necessary; and 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 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. .
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Sec. 7
Ensuring adequate capital levels in the Mutual Mortgage Insurance Fund
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