[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5830 Introduced in House (IH)]
110th CONGRESS
2d Session
H. R. 5830
To create a voluntary FHA program that provides mortgage refinancing
assistance to allow families to stay in their homes, protect
neighborhoods, and help stabilize the housing market.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 17, 2008
Mr. Frank of Massachusetts (for himself, Ms. Waters, Mrs. Maloney of
New York, Mr. Watt, Mr. Ackerman, Mr. Meeks of New York, Mr. Clay, Mr.
Lynch, Mr. Al Green of Texas, Ms. Moore of Wisconsin, Mr. Lincoln Davis
of Tennessee, Mr. Hodes, Mr. Wilson of Ohio, Mr. Perlmutter, Mr. Murphy
of Connecticut, Mr. Donnelly, Mr. Wexler, Mr. Shays, Ms. Ginny Brown-
Waite of Florida, Mr. Dingell, Ms. Schakowsky, Mr. Levin, Mr. Hinchey,
Mr. Fattah, Mr. Jackson of Illinois, Mrs. Christensen, Ms. Lee, Mr. Wu,
Ms. McCollum of Minnesota, Mr. Van Hollen, Mr. Butterfield, Mr.
Courtney, Mr. Sestak, Mr. Sires, and Ms. Tsongas) introduced the
following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To create a voluntary FHA program that provides mortgage refinancing
assistance to allow families to stay in their homes, protect
neighborhoods, and help stabilize the housing market.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``FHA Housing Stabilization and
Homeownership Retention Act of 2008''.
SEC. 2. PURPOSES.
The purposes of this Act are--
(1) to create an FHA program, which is voluntary on the
part of borrowers and existing mortgage loan holders, to insure
refinance loans for substantial numbers of borrowers at risk of
foreclosure, at levels which are reasonably likely to be
sustainable through enhanced affordability of debt service;
(2) to provide flexible underwriting for FHA-insured loans
under such a program to provide refinancing opportunities under
fiscally responsible terms, including higher fees commensurate
with higher risk levels, a seasoning requirement for higher
debt to income loans, and additional program controls to limit
and control risk;
(3) to bar speculators and second home owners from
participation in such program;
(4) to require existing mortgage loan holders to take
substantial loan writedowns in exchange for having the Federal
Government and the borrower assume the ongoing risk of the
refinanced loan;
(5) to set a loan-to-value limit on such loans that
provides the FHA with an equity buffer against potential loan
losses, provides protections against the risk of future home
price declines, and creates incentives for borrowers to
maintain payments on the loan;
(6) to protect the FHA against losses which may exceed
normal FHA loss levels by establishing higher fee levels,
including an exit fee and profit sharing during the first five
years of the loan, with such higher fee levels effectively
being funded through the required lender writedown;
(7) to provide a fair level of incentives for junior lien
holders to provide the necessary releases of their lien
interests, in order to meet program requirements that all
outstanding liens must be extinguished, and thereby permit the
refinancing to be completed;
(8) to enhance the administrative capacity of the FHA to
carry out its expanded role under the program through
establishment of an Oversight Board which adds expertise from
the Federal Reserve and the Department of the Treasury, through
additional funding to contract out for the provision of any
needed expertise in designing program requirements and
oversight, and through additional funding to increase FHA
personnel resources as needed to handle the increased loan
volume resulting from the program;
(9) to sunset the program when it is no longer needed; and
(10) to study the need for and efficacy of an auction or
bulk refinancing mechanism to facilitate more expeditious
refinancing of larger volumes of existing mortgages that are at
risk for foreclosure into FHA-insured mortgages.
SEC. 3. INSURANCE OF HOMEOWNERSHIP RETENTION MORTGAGES.
(a) Mortgage Insurance Program.--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. INSURANCE OF HOMEOWNERSHIP RETENTION MORTGAGES.
``(a) Oversight Board.--
``(1) Establishment.--There is hereby established the
Refinance Program Oversight Board (in this section referred to
as the `Oversight Board').
``(2) Membership.--The Oversight Board shall consist of the
following members or their designees:
``(A) The Secretary of the Treasury.
``(B) The Secretary of Housing and Urban
Development.
``(C) The Chairman of the Board of Governors of the
Federal Reserve System.
``(3) No additional compensation.--Members of the Oversight
Board shall receive no additional pay by reason of service on
the Oversight Board.
``(4) Responsibilities.--The Oversight Board shall be
responsible for establishing program and oversight requirements
for the program under this section, which shall include--
``(A) detailed program requirements under
subsection (c);
``(B) flexible underwriting criteria under
subsection (d);
``(C) a mortgage premium structure under subsection
(e);
``(D) a reasonable fee and rate limitation under
subsection (f);
``(E) enhancement of FHA capacity under subsection
(h), including oversight of such activities and
personnel as may be contracted for as provided therein;
``(F) monitoring of underwriting risk under
subsection (i); and
``(G) such additional requirements as may be
necessary and appropriate to oversee and implement the
program.
``(5) Use of resources.--In carrying out its functions
under this section, the Oversight Board may utilize, with their
consent and to the extent practical, the personnel, services,
and facilities of the Department of the Treasury, the
Department of Housing and Urban Development, the Board of
Governors of the Federal Reserve System, the Federal Reserve
Banks, and other Federal agencies, with or without
reimbursement therefore.
``(b) Authority.--
``(1) In general.--The Secretary shall, subject only to the
absence of qualified requests for insurance under this section
and to the limitations under subsection (g) of this section and
section 531(a), make commitments to insure and insure any
mortgage covering a 1- to 4-family residence that is made for
the purpose of paying or prepaying outstanding obligations
under an existing mortgage or mortgages on the residence if the
mortgage being insured under this section meets the
requirements of this section, as established by the Oversight
Board, and of section 203, except as modified by this section.
``(2) Establishment and implementation of program
requirements.--The Oversight Board shall establish program
requirements and standards under this section and the Secretary
shall implement such requirements and standards. The Oversight
Board and the Secretary may establish and implement any
requirements or standards through interim guidance and
mortgagee letters.
``(c) Requirements.--To be eligible for insurance under this
section, a mortgage shall comply with all of the following
requirements:
``(1) Owner-occupied principal residence requirement.--The
residence to be covered by the mortgage insured under this
section shall be occupied by the mortgagor as the principal
residence of the mortgagor.
``(2) Lack of capacity to pay existing mortgage or
mortgages.--
``(A) Borrower certification.--The mortgagor shall
provide a certification to the originator of the
mortgage that the mortgagor has not intentionally
defaulted on the existing mortgage or mortgages.
``(B) Current borrower debt-to-income ratio.--As of
March 1, 2008, the mortgagor shall have had a ratio of
mortgage debt to income, taking into consideration all
existing mortgages at such time, greater than 35
percent, except that the Oversight Board may decrease
such percentage for all mortgagors or identifiable
classes of mortgagors if the Oversight Board considers
such decrease necessary or appropriate to make eligible
for the program those mortgagors who cannot reasonably
afford their existing mortgage loan or loans but who
would be able to afford the new mortgage under the
program under this section.
``(C) Loss mitigation responsibilities.--This
section may not be construed to alter or in any way
affect the responsibilities of any party (including the
mortgage servicer) to engage in any or all loan
modification or other loss mitigation strategies to
maximize value to investors as established by any
applicable contract.
``(3) Eligibility of mortgages by date of origination.--The
existing senior mortgage shall have been originated on or
before December 31, 2007.
``(4) Maximum loan-to-value ratio for new loans.--The
mortgage being insured under this section shall involve a
principal obligation (including such initial service charges,
appraisal, inspection, and other fees as the Secretary shall
approve and including the mortgage insurance premium paid
pursuant to subsection (e)(1)) in an amount not to exceed 90
percent of the current appraised value of the property. Section
203(d) shall not apply to mortgages insured under this section.
``(5) Required waiver of prepayment penalties and fees.--
All penalties for prepayment of the existing mortgage or
mortgages, and all fees and penalties related to default or
delinquency on all existing mortgages or mortgages, shall be
waived or forgiven.
``(6) Required loan reduction.--
``(A) Reduction of indebtedness under existing
senior mortgage.--The amount of indebtedness on the
existing mortgage or mortgages on the residence shall
have been substantially reduced by such percentage as
the Oversight Board or Secretary may require, and such
reduction shall be at least sufficient to--
``(i) provide for the refinancing of such
existing mortgage or mortgages in an amount not
greater than 90 percent of the current
appraised value of the property involved;
``(ii) pay the full amount of the single
premium to be collected pursuant to subsection
(e)(1) (which shall be an amount equal to 3.0
percent of the amount of the original insured
principal obligation of the mortgage insured
under this section and which shall serve as an
additional reserve to cover possible loan
losses); and
``(iii) pay the full amount of the loan
origination fee and any other closing costs,
not to exceed 2.0 percent of the amount of the
original insured principal obligation of the
mortgage insured under this section.
``(B) Extinguishment of debt by refinancing.--
``(i) Required agreement.--All existing
holders of mortgage liens on the property
involved shall agree to accept the proceeds of
the insured loan as payment in full of all
indebtedness under all existing mortgages, and
all encumbrances related to such mortgages
shall be removed. The Oversight Board may take
such actions as the Oversight Board considers
necessary or appropriate to facilitate
coordination and agreement between the holders
of the existing senior mortgage and any
existing subordinate mortgages, taking into
consideration the subordinate lien status of
such subordinate mortgages, to comply with the
requirement under this subparagraph.
``(ii) Treatment of multiple mortgage
liens.--In addition to clause (i), the
Oversight Board shall adopt one of the
following approaches for all mortgages or such
classes of mortgages as the Oversight Board may
determine and may, from time to time,
reconsider:
``(I) Fixed price.--As a
requirement for participating in this
program, all existing lien holders will
agree to not provide any payment to
subordinate lien holders other than
such payment in accordance with a
formula established by the Oversight
Board as set forth in clause (iii);
except that the Oversight Board may
establish a short period within which
first and subordinate lien holders may
negotiate to extinguish all subordinate
liens for compensation that may be
different from the amount determined
under such formula set forth in clause
(iii).
``(II) Shared equity.--The
Oversight Board may require the
mortgagor under a mortgage insured
under this section to agree to share a
portion of any future equity in the
mortgaged property with holders of
existing subordinate mortgages, in
accordance with a formula for such
shared equity established by the
Oversight Board as set forth in clause
(iii), except that payments of such
shared equity may be made only after
the Secretary recovers all amounts owed
to the Secretary with respect to such
mortgage pursuant to the program under
this section (including amounts owed
pursuant to paragraph (8)).
``(iii) Formula.--In determining a formula
for determining any payments to subordinate
lien holders pursuant to subclauses (I) and
(II) of clause (ii), and in any reconsideration
of such formula as the Oversight Board may from
time to time undertake, the Oversight Board
shall take into consideration the current
market value of such liens. In no case may a
formula provide for the payment of more than 1
percent of the current appraised value of the
mortgaged property to a subordinate lien holder
if the outstanding balance owed to more senior
lien holders is equal to or exceeds such
current appraised value.
``(iv) Voluntary program.--This
subparagraph may not be construed to require
any holder of any existing mortgage to
participate in the program under this section
generally, or with respect to any particular
loan.
``(v) Source of payments for subordinate
loans.--Any amounts paid to holders of any
existing subordinate mortgages in connection
with the origination and insurance of a
mortgage under this section shall derive only
from--
``(I) the holder of the existing
senior mortgage; or
``(II) in the case only of the
shared equity approach under clause
(ii)(II), the mortgagor under the
mortgage insured under this section
``(7) Required reduction of debt service.--The debt service
payments due under the mortgage insured under this section
shall be in an amount that is substantially reduced from the
debt service payments due under the existing mortgage or
mortgages, which reduction may be achieved through a reduction
of indebtedness, a reduction in the interest rate being paid,
or an extension of the term of the mortgage, or any combination
thereof.
``(8) Financial recovery to federal government through exit
premium.--
``(A) Subordinate lien.--The mortgage shall provide
that the Secretary shall retain a lien on the residence
involved, which shall be subordinate to the mortgage
insured under this section but senior to all other
mortgages on the residence that may exist at any time,
and which shall secure the repayment of the amount due
under subparagraph (D).
``(B) No interest or payment during mortgage.--The
amount secured by the lien retained by the Secretary
pursuant to subparagraph (A) shall not bear interest
and shall not be repayable to the Secretary except as
provided in subparagraph (D) of this paragraph.
``(C) Net proceeds available for exit premium.--
Upon the sale, refinancing, or other disposition of the
residence covered by a mortgage insured under this
section, any proceeds resulting from such disposition
that remain after deducting the remaining insured
principal balance of the mortgage insured under this
section shall be available to meet the obligation under
subparagraph (D).
``(D) Exit premium.--Upon any refinancing of the
mortgage insured under this section or any sale or
disposition of the residence covered by the mortgage,
the Secretary shall, subject to the availability of
sufficient net proceeds described in subparagraph (C),
receive the greater of--
``(i) 3 percent of the amount of the
original insured principal obligation of the
mortgage; or
``(ii) a percentage of the portion of the
net proceeds described in subparagraph (C),
which shall be--
``(I) in the case of any
refinancing, sale, or disposition
occurring during the first year of the
term of the mortgage, 100 percent of
such net proceeds;
``(II) in the case of any
refinancing, sale, or disposition
occurring during the second year of the
term of the mortgage, 80 percent;
``(III) in the case of any
refinancing, sale, or disposition
occurring during the third year of the
term of the mortgage, 60 percent;
``(IV) in the case of any
refinancing, sale, or disposition
occurring during the fourth year of the
term of the mortgage, 40 percent;
``(V) in the case of any
refinancing, sale, or disposition
occurring during the fifth year of the
term of the mortgage, 20 percent; and
``(VI) in the case of any
refinancing, sale, or disposition
occurring after the end of the fifth
year, 0 percent.
``(E) Authority to prohibit new second liens.--The
Oversight Board may prohibit borrowers from granting a
new second lien on the mortgaged property during the
first five years of the term of the mortgage insured
under this section, except as the Oversight Board
determines to be necessary to ensure the appropriate
maintenance of the mortgaged property.
``(9) Documentation and verification of income.--In
complying with the FHA underwriting requirements under the
program under this section, the mortgagee under the mortgage
shall document and verify the income of the mortgagor in
accordance with procedures and standards that the Oversight
Board or the Secretary shall establish.
``(10) Fixed rate mortgage.--The mortgage insured under
this section shall bear interest at a single rate that is fixed
for the entire term of the mortgage.
``(11) Maximum loan amount.--Notwithstanding section
203(b)(2), the mortgage being insured under this section shall
involve a principal obligation in an amount that does not
exceed the limitation (for a property of the applicable size)
on the amount of the principal obligation that would be
allowable under the terms of section 202(a) of the Economic
Stimulus Act of 2008 if the mortgage were insured pursuant to
such section. The limitation on the amount of the principal
obligation allowable under such Act shall apply for the
purposes of this Act until the termination under subsection (m)
of the program under this subsection.
``(d) Flexible Underwriting Criteria.--The Oversight Board shall
establish, and the Secretary acting on behalf of the Oversight Board
shall implement, underwriting standards for mortgages insured under
this section that--
``(1) ensure that each mortgagor under a mortgage insured
under this section has a reasonable expectation of repaying the
mortgage, taking into consideration the mortgagor's income,
assets, liabilities, payment history, and other applicable
criteria, but which shall not result in a denial of insurance
solely on the basis of the mortgagor's current FICO or other
credit scores, or any delinquency or default by the mortgagor
under the existing mortgage or mortgages;
``(2) subject to the provisions of paragraph (1) and except
as provided in paragraph (3), permit a total debt-to-income
ratio of up to 43 percent;
``(3) subject to the provisions of paragraph (1), permit a
total debt-to-income ratio of more than 43 percent, but not
more than 50 percent, if the mortgagor has made, on a timely
basis before the endorsement of the mortgage insured under this
section, not less than six months of payments in an amount not
less than the amount of the monthly payment due under the
mortgage to be insured under this section; except that the
Oversight Board may increase the maximum percentage under this
paragraph for a class of borrowers, who will be subject to such
additional requirements as the Oversight Board shall establish,
to not more than 55 percent upon making a finding that such
increase is necessary to achieve the purposes of this section
and can be accomplished under reasonable underwriting
standards; and the holder of the existing senior mortgage shall
exercise forbearance with respect to such mortgage during the
period in which such payments are made; and
``(4) provide for the underwriter of the insured loan to
provide such representations and warranties as the Oversight
Board considers necessary or appropriate for the Secretary to
enforce compliance with all underwriting and appraisal
standards of the program.
``(e) Premiums.--For each mortgage insured under this section, the
Oversight Board shall establish and the Secretary shall collect--
``(1) at the time of insurance, a single premium payment in
an amount equal to 3.0 percent of the amount of the original
insured principal obligation of the mortgage, which shall be
paid from the proceeds of the mortgage being insured under this
section, through the reduction of the amount of indebtedness on
the existing senior mortgage required under subsection
(c)(6)(A);
``(2) in addition to the premium under paragraph (1),
annual premium payments in an amount equal to 1.50 percent of
the remaining insured principal balance of the mortgage; and
``(3) an exit premium in the amount determined under
subsection (c)(8), but which shall not be less than 3.0 percent
of the original insured principal obligation of the mortgage,
subject only to the availability of sufficient net proceeds
from sale, refinancing, or other disposition of the property,
as determined in subsection (c)(8).
``(f) Origination Fees and Mortgage Rate.--The Oversight Board
shall establish and the Secretary shall implement a reasonable
limitation on origination fees for mortgages insured under this section
and shall establish procedures to ensure that interest rates on such
mortgages shall be commensurate with market rate interest rates on such
types of loans.
``(g) Limitation on Aggregate Insurance Authority.--The aggregate
original principal obligation of all mortgages insured under this
section may not exceed $300,000,000,000.
``(h) Enhancement of FHA Capacity.--Under the direction of the
Oversight Board, the Secretary shall take such actions as may be
necessary to--
``(1) contract for the establishment of underwriting
criteria, automated underwriting systems, pricing standards,
and other factors relating to eligibility for mortgages insured
under this section;
``(2) contract for independent quality reviews of
underwriting, including appraisal reviews and fraud detection,
of mortgages insured under this section or pools of such
mortgages; and
``(3) increase personnel of the Department as necessary to
process or monitor the processing of mortgages insured under
this section.
``(i) Monitoring of Underwriting Risk.--
``(1) Monitoring of designated underwriters.--The Oversight
Board and the Secretary shall monitor independent quality
reviews as established pursuant to subsection (h)(2) to--
``(A) determine compliance of designated
underwriters with underwriting standards;
``(B) determine rates of delinquency, claims rates,
and loss rates of designated underwriters; and
``(C) terminate eligibility of designated
underwriters that do not meet minimum performance
standards as the Oversight Board may establish and the
Secretary implements.
``(2) Reports by oversight board.--The Oversight Board
shall submit monthly reports to the Congress identifying the
progress of the program for mortgage insurance under this
section, which shall contain the following information for each
month:
``(A) The number of new mortgages insured under
this section, including the location of the properties
subject to such mortgages by census tract.
``(B) The aggregate principal obligation of new
mortgages insured under this section.
``(C) The average amount by which the indebtedness
on existing mortgages is reduced in accordance with
subsection (c)(6).
``(D) The average amount by which the debt service
payments on existing mortgages is reduced in accordance
with subsection (c)(7).
``(E) The amount of premiums collected for
insurance of mortgages under this section.
``(F) The claim and loss rates for mortgages
insured under this section.
``(G) The race, ethnicity, gender, and income of
the mortgagors, aggregated by geographical areas at
least as specific as census tracts, except where
necessary to protect privacy of the borrower.
``(H) Any other information that the Oversight
Board considers appropriate.
``(3) Report by inspector general.--The Inspector General
of the Department of Housing and Urban Development shall
conduct an annual audit of the program for mortgage insurance
under this section to determine compliance with this section
and program rules.
``(j) GNMA Commitment Authority.--
``(1) Guarantees.--The Secretary shall take such actions as
may be necessary to ensure that securities based on and backed
by a trust or pool composed of mortgages insured under this
section are available to be guaranteed by the Government
National Mortgage Association as to the timely payment of
principal and interest.
``(2) Guarantee authority.--To carry out the purposes of
section 306 of the National Housing Act (12 U.S.C. 1721), the
Government National Mortgage Association may enter into new
commitments to issue guarantees of securities based on or
backed by mortgages insured under this section, not exceeding
$300,000,000,000. The amount of authority provided under the
preceding sentence to enter into new commitments to issue
guarantees is in addition to any amount of authority to make
new commitments to issue guarantees that is provided to the
Association under any other provision of law.
``(k) Special Risk Insurance Fund.--The insurance of each mortgage
under this section shall be the obligation of the Special Risk
Insurance Fund established by section 238.
``(l) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Existing mortgage.--The term `existing mortgage'
means, with respect to a mortgage insured under this section, a
mortgage that is to be extinguished, and paid or prepaid, from
the proceeds of the mortgage insured under this section.
``(2) Existing senior mortgage.--The term `existing senior
mortgage' means, with respect to a mortgage insured under this
section, the existing mortgage that has superior priority.
``(3) Existing subordinate mortgage.--The term `existing
subordinate mortgage' means, with respect to a mortgage insured
under this section, an existing mortgage that has subordinate
priority to the existing senior mortgage.
``(m) Sunset.--
``(1) In general.--Except as provided in paragraph (2), the
authority of the Secretary to make any new commitment to insure
any mortgage under this section shall terminate upon the
expiration of the 2-year period beginning on the date of the
enactment of the FHA Housing Stabilization and Homeownership
Retention Act of 2008.
``(2) Extensions.--The Oversight Board may, not more than
four times, extend the authority to enter into new commitments
to insure mortgages under this section beyond the date
specified in paragraph (1), except that each such extension
shall--
``(A) be effective only if, before the program
terminates pursuant to paragraph (1) or any previous
extension pursuant to this paragraph, the Oversight
Board--
``(i) certifies the need for such extension
in writing to the Congress; and
``(ii) causes notice of such extension to
be published in the Federal Register no later
than the beginning of the 3-month period that
ends upon the scheduled termination date of the
program; and
``(B) be for a period of not more than 6 months.
``(n) Authorizations of Appropriations.--There is authorized to be
appropriated for each of fiscal years 2008 and 2009--
``(1) $200,000,000 for providing counseling regarding loss
mitigation for mortgagors with 1- to 4-family residences,
including determining eligibility for the program under this
section, with grants to be administered through the
Neighborhood Reinvestment Corporation, except that--
``(A) not less than 15 percent of the funds made
available pursuant to this paragraph shall be provided
to counseling organizations that target counseling
services regarding loss mitigation to minority and low-
income homeowners or provide such services in
neighborhoods with high concentrations of minority and
low-income homeowners; and
``(B) $30,000,000 of the funds made available
pursuant to this paragraph shall be used by the
Neighborhood Reinvestment Corporation (referred to in
this subparagraph as the `NRC') to make grants to
counseling intermediaries approved by the Department of
Housing and Urban Development or the NRC to hire
attorneys to assist homeowners who have legal issues
related to home ownership preservation, home
foreclosure prevention, tenancy associated with home
foreclosure, delinquency or short sale; such attorneys
shall be capable of assisting homeowners of owner-
occupied homes with mortgages in default, in danger of
default, or subject to or at risk of foreclosure and
who have legal issues that cannot be handled by
counselors already employed by such intermediaries; of
the amount provided under this subparagraph, the NRC
shall give priority consideration to counseling
intermediaries and legal organizations that (i) provide
legal assistance in the 100 metropolitan statistical
areas (as defined by the Director of the Office of
Management and Budget) with the highest home
foreclosure rates, and (ii) have the capacity to begin
using the financial assistance within 90 days after
receipt of the assistance; and
``(2) $150,000,000 for costs of activities under subsection
(h).''.
(b) Special Risk Insurance Fund.--Section 238 of the National
Housing Act (12 U.S.C. 1715z-3) is amended--
(1) in subsection (a)(1), by striking ``or 243'' each place
such term appears and inserting ``243, or 257''; and
(2) in subsection (b), by striking ``and 243'' each place
such term appears and inserting ``243, and 257''.
SEC. 4. STUDY OF AUCTION OR BULK REFINANCE PROGRAM.
(a) Study.--The Board of Governors of the Federal Reserve System
(in this section referred to as the ``Board of Governors''), in
consultation with other members of the Oversight Board established by
section 257(a) of the National Housing Act (as added by the amendment
made by section 3(a) of this Act), shall conduct a study of the need
for and efficacy of an auction or bulk refinancing mechanism to
facilitate refinancing of existing residential mortgages that are at
risk for foreclosure into mortgages insured under the mortgage
insurance program under title II of the National Housing Act. The study
shall identify and examine various options for mechanisms under which
lenders and servicers of such mortgages may make bids for forward
commitments for such insurance in an expedited manner.
(b) Content.--
(1) Analysis.--The study required under subsection (a)
shall analyze--
(A) the feasibility of establishing a mechanism
that would facilitate the more rapid refinancing of
borrowers at risk of foreclosure into performing
mortgages insured under title II of the National
Housing Act;
(B) whether such a mechanism would provide an
effective and efficient mechanism to reduce
foreclosures on qualified existing mortgages;
(C) whether the use of an auction or bulk refinance
program is necessary to stabilize the housing market
and reduce the impact of turmoil in that market on the
economy of the United States;
(D) whether there are other mechanisms or authority
that would be useful to reduce foreclosure; and
(E) and any other factors that the Board of
Governors considers relevant.
(2) Determinations.--To the extent that the Board of
Governors finds that a facility of the type described in
paragraph (1) is feasible and useful, the study shall--
(A) determine and identify any additional authority
or resources needed to establish and operate such a
mechanism;
(B) determine whether there is a need for
additional authority with respect to the loan
underwriting criteria included in the amendment made by
section 3(a) of this Act or with respect to eligibility
of participating borrowers, lenders, or holders of
liens;
(C) determine whether such underwriting criteria
should be established on the basis of individual loans,
in the aggregate, or otherwise to facilitate the goal
of refinancing borrowers at risk of foreclosure into
viable loans insured under the National Housing Act.
(c) Report.--Not later than the expiration of the 60-day period
beginning on the date of the enactment of this Act, the Board of
Governors shall submit a report regarding the results of the study
conducted under this section to the Committee on Financial Services of
the House of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate. The report shall include a detailed
description of the analysis required under subsection (b)(1) and of the
determinations made pursuant to subsection (b)(2), and shall include
any other findings and recommendations of the Board of Governors
pursuant to the study, including identifying various options for
mechanisms described in subsection (a).
<all>