Sec. 217. Capital classifications and performance measures for Mutual Mortgage Insurance Fund
462 words·~2 min read·
/bill/115/hr/6746/ih/section-217A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
At any time that the capital ratio (as such term is defined in section 216(c)(2) of this title) is greater than 4.0 percent, the account for the Mutual Mortgage Insurance Fund established pursuant to section 216(a)(1) shall be classified as adequately capitalized for purposes of this subtitle. At any time that the capital ratio is greater than 0.0 percent and is less than 4.0 percent, the account for the Mutual Mortgage Insurance Fund established pursuant to section 216(a)(1) shall be classified as undercapitalized for purposes of this subtitle.
At any time that the capital ratio is less than 0.0 percent— the account for the Mutual Mortgage Insurance Fund established pursuant to section 216(a)(1) shall be classified as significantly undercapitalized for purposes of this subtitle; and the Director may, pursuant to section 218(a)(1), take actions under section 218(b). The Director shall determine the capital ratio and the capital classification of the account for the Mutual Mortgage Insurance Fund established pursuant to section 216(a)(1) for purposes of this subtitle not less frequently than each calendar quarter.
The Director shall develop a risk-based capital model to determine the amount of capital that is sufficient for the FHA to maintain positive capital during a period of economic stress. The model shall incorporate the assumptions under paragraphs
(2)and (3). For purposes of paragraph (1), the Director shall assume that, during the period of economic stress referred to in paragraph (1), credit losses occur at a rate consistent with a nationwide economic recession of average severity based on nationwide economic recessions since 1950. For purposes of paragraph (1), the Director shall make assumptions about such other aspects of the period of economic stress as the Director determines are appropriate and consistent. Not later than the expiration of the 180-day period beginning on the date of the enactment of this Act, the Director shall submit the risk-based capital model developed pursuant to this to the Congress. The Director may not implement or otherwise employ such risk-based capital model before the expiration of the 120-day period beginning upon the submission of such model to the Congress. If the account for the Mutual Mortgage Insurance Fund established pursuant to section 216(a)(1) is classified as undercapitalized or significantly undercapitalized, the FHA shall— submit to the Director a capital restoration plan meeting the requirements of section 218(d) for raising or restoring the capital of such account to an amount not less than the amount required for such account to be classified as adequately capitalized; and upon approval by the Director, carry out such plan. If the Director disapproves a capital restoration plan submitted under this subsection, the Director shall convey in writing reasons for such disapproval and shall provide for the FHA to resubmit a revised plan for approval by the Director.