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S. 2239 (107th): FHA Downpayment Simplification Act of 2002


The text of the bill below is as of Oct 15, 2002 (Reported by Senate Committee).


S 2239 RS

Calendar No. 703

107th CONGRESS

2d Session

S. 2239

To amend the National Housing Act to simplify the downpayment requirements for FHA mortgage insurance for single family homebuyers.

IN THE SENATE OF THE UNITED STATES

April 24, 2002

Mr. SARBANES (for himself, Mr. ENSIGN, Mr. SCHUMER, Mr. CORZINE, Mr. ALLARD, Mr. CARPER, Mr. BUNNING, Mrs. CLINTON, Mr. TORRICELLI, Mr. SANTORUM, Mr. BAYH, Mr. REED, Ms. STABENOW, Mr. HARKIN, Mr. JOHNSON, Mr. DODD, Mr. HUTCHINSON, Ms. COLLINS, Mr. BINGAMAN, Mr. MILLER, Mr. DORGAN, Mr. STEVENS, Mr. SMITH of Oregon, Mr. DOMENICI, and Mr. ENZI) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

October 15, 2002

Reported by Mr. SARBANES, with amendments

[Omit the part struck through and insert the part printed in italic]


A BILL

To amend the National Housing Act to simplify the downpayment requirements for FHA mortgage insurance for single family homebuyers.

    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 Downpayment Simplification Act of 2002’.

SEC. 2. DOWNPAYMENT SIMPLIFICATION.

    Section 203 of the National Housing Act (12 U.S.C. 1709) is amended--

      (1) in subsection (b)--

        (A) by striking ‘shall--’ and inserting ‘shall comply with the following:’;

        (B) in paragraph (2)--

          (i) in subparagraph (A), in the matter that precedes clause (ii), by moving the margin 2 ems to the right;

          (ii) in the undesignated matter immediately following subparagraph (B)(iii)--

            (I) by striking the second and third sentences of such matter; [Struck out->] and [<-Struck out]

            [Struck out->] (II) by striking the sixth sentence (relating to the increases for costs of solar energy systems) and all that follows through the end of the last undesignated paragraph (relating to disclosure notice); and [<-Struck out]

            (II) by striking the seventh sentence (relating to principal obligation) and all that follows through the end of the ninth sentence (relating to charges and fees); and

            (III) by striking the eleventh sentence (relating to disclosure notice) and all that follows through the end of the last undesignated paragraph (relating to disclosure notice requirements); and

          (iii) by striking subparagraph (B) and inserting the following:

        ‘(B) not to exceed an amount equal to the sum of--

          ‘(i) the amount of the mortgage insurance premium paid at the time the mortgage is insured; and

          ‘(ii) in the case of--

            ‘(I) a mortgage for a property with an appraised value equal to or less than $50,000, 98.75 percent of the appraised value of the property;

            ‘(II) a mortgage for a property with an appraised value in excess of $50,000 but not in excess of $125,000, 97.65 percent of the appraised value of the property;

            ‘(III) a mortgage for a property with an appraised value in excess of $125,000, 97.15 percent of the appraised value of the property; or

            ‘(IV) notwithstanding subclauses (II) and (III), a mortgage for a property with an appraised value in excess of $50,000 that is located in an area of the State for which the average closing cost exceeds 2.10 percent of the average, for the State, of the sale price of properties located in the State for which mortgages have been executed, 97.75 percent of the appraised value of the property.’;

        (C) by transferring and inserting the text of paragraph (10)(B) after the period at the end of the first sentence of the undesignated paragraph that immediately follows paragraph (2)(B) (relating to the definition of ‘area’); and

        (D) by striking paragraph (10); and

      (2) by inserting after subsection (e), the following:

    ‘(f) DISCLOSURE OF OTHER MORTGAGE PRODUCTS-

      ‘(1) IN GENERAL- In conjunction with any loan insured under this section, an original lender shall provide to each prospective borrower a disclosure notice that provides a 1-page analysis of mortgage products offered by that lender and for which the borrower would qualify.

      ‘(2) NOTICE- The notice required under paragraph (1) shall include--

        ‘(A) a generic analysis comparing the note rate (and associated interest payments), insurance premiums, and other costs and fees that would be due over the life of the loan for a loan insured by the Secretary under subsection (b) with the note rates, insurance premiums (if applicable), and other costs and fees that would be expected to be due if the mortgagor obtained instead other mortgage products offered by the lender and for which the borrower would qualify with a similar loan-to-value ratio in connection with a conventional mortgage (as that term is used in section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) or section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)), as applicable), assuming prevailing interest rates; and

        ‘(B) a statement regarding when the requirement of the mortgagor to pay the mortgage insurance premiums for a mortgage insured under this section would terminate, or a statement that the requirement shall terminate only if the mortgage is refinanced, paid off, or otherwise terminated.’.

SEC. 3. CONFORMING AMENDMENTS.

    Section 245 of the National Housing Act (12 U.S.C. 1715z-10) is amended--

      (1) in subsection (a), by striking ‘, or if the mortgagor’ and all that follows through ‘case of veterans’; and

      (2) in subsection (b)(3), by striking ‘, or, if the’ and all that follows through ‘for veterans,’.

SEC. 4. REPEAL OF GNMA GUARANTEE FEE INCREASE.

    Section 972 of the Higher Education Amendments of 1998 (Public Law 105-244; 112 Stat. 1837) is hereby repealed.

Calendar No. 703

107th CONGRESS

2d Session

S. 2239

A BILL

To amend the National Housing Act to simplify the downpayment requirements for FHA mortgage insurance for single family homebuyers.


October 15, 2002

Reported with amendments