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[[Page 2791]]
FHA DOWNPAYMENT SIMPLIFICATION ACT OF 2002
[[Page 116 STAT. 2792]]
Public Law 107-326
107th Congress
An Act
To amend the National Housing Act to simplify the downpayment
requirements for FHA mortgage insurance for single family
homebuyers. <<NOTE: Dec. 4, 2002 - [S. 2239]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: FHA Downpayment
Simplification Act of 2002.>>
SECTION 1. SHORT TITLE. <<NOTE: 12 USC 1701 note.>>
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;
(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;
[[Page 116 STAT. 2793]]
``(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) <<NOTE: 12 USC 1721 and note.>> is hereby
repealed.
[[Page 116 STAT. 2794]]
SEC. 5. INDEXING OF FHA MULTIFAMILY HOUSING LOAN LIMITS.
(a) The National Housing Act (12 U.S.C. 1701 et seq.) is amended by
inserting after section 206 the following new section 206A (12 U.S.C.
1712A):
``SEC. 206A. <<NOTE: 12 USC 1712a.>> INDEXING OF FHA MULTIFAMILY
HOUSING LOAN LIMITS.
``(a) Method of Indexing.--The dollar amounts set forth in--
``(1) section 207(c)(3)(A) (12 U.S.C. 1713(c)(3)(A));
``(2) section 213(b)(2)(A) (12 U.S.C. 1715e(b)(2)(A));
``(3) section 220(d)(3)(B)(iii)(I) (12 U.S.C.
1715k(d)(3)(B)(iii)(I));
``(4) section 221(d)(3)(ii)(I) (12 U.S.C.
1715l(d)(3)(ii)(I));
``(5) section 221(d)(4)(ii)(I) (12 U.S.C.
1715l(d)(4)(ii)(I));
``(6) section 231(c)(2)(A) (12 U.S.C. 1715v(c)(2)(A)); and
``(7) section 234(e)(3)(A) (12 U.S.C. 1715y(e)(3)(A));
(collectively hereinafter referred to as the ``Dollar Amounts'') shall
be adjusted annually (commencing in 2004) on the effective date of the
Federal Reserve Board's adjustment of the $400 figure in the Home
Ownership and Equity Protection Act of 1994 (HOEPA). The adjustment of
the Dollar Amounts shall be calculated using the percentage change in
the Consumer Price Index for All Urban Consumers (CPI-U) as applied by
the Federal Reserve Board for purposes of the above-described HOEPA
adjustment.
``(b) <<NOTE: Federal Register, publication.>> Notification.--The
Federal Reserve Board on a timely basis shall notify the Secretary, or
his designee, in writing of the adjustment described in subsection (a)
and of the effective date of such adjustment in order to permit the
Secretary to undertake publication in the Federal Register of
corresponding adjustments to the Dollar Amounts. The dollar amount of
any adjustment shall be rounded to the next lower dollar.''.
(b) Technical and Conforming Changes.--(1) Section 207(c)(3) of the
National Housing Act (12 U.S.C. 1713(c)(3)) is amended--
(A) by inserting ``(A)'' after ``(3)'';
(B) by striking ``and accept that the Secretary'' through
and including ``in this paragraph'' and inserting in lieu
thereof:
``(B) the Secretary may, by regulation, increase any
of the dollar amount limitations in subparagraph (A) (as
such limitations may have been adjusted in accordance
with section 206A of this Act)''.
(2) Section 213(b)(2) of the National Housing Act (12 U.S.C.
1715e(b)(2)) is amended--
(A) by inserting ``(A)'' following ``(2)'';
(B) by striking ``: Provided further, That'' the first time
that it occurs, through and including ``contained in this
paragraph'' and inserting in lieu thereof: ``; (B)(i) the
Secretary may, by regulation, increase any of the dollar amount
limitations in subparagraph (A) (as such limitations may have
been adjusted in accordance with section 206A of this Act)'';
(C) by striking ``: Provided further, That'' the second time
it occurs and inserting in lieu thereof: ``; and (ii)'';
(D) by striking ``: And provided further, That'' and
inserting in lieu thereof: ``; and (iii)'';
(E) by striking ``with this subsection without regard to the
preceding proviso'' at the end of that subsection and inserting
in lieu thereof: ``with this subparagraph (B)(i).''.
[[Page 116 STAT. 2795]]
(3) Section 220(d)(3)(B)(iii) of the National Housing Act (12 U.S.C.
1715k(d)(3)(B)(iii)) is amended--
(A) by inserting ``(I)'' following ``(iii)'';
(B) by striking ``design; and except that'' and inserting in
lieu thereof: ``design; and (II)'';
(C) by striking ``any of the foregoing dollar amount
limitations contained in this clause'' and inserting in lieu
thereof: ``any of the dollar amount limitations in subparagraph
(B)(iii)(I) (as such limitations may have been adjusted in
accordance with section 206A of this Act)'';
(D) by striking ``: Provided, That'' through and including
``proviso'' and inserting in lieu thereof: ``with respect to
dollar amount limitations applicable to rehabilitation projects
described in subclause (II), the Secretary may, by regulation,
increase the dollar amount limitations contained in subparagraph
(B)(iii)(I) (as such limitations may have been adjusted in
accordance with section 206A of this Act)'';
(E) by striking ``: Provided further,'' and inserting in
lieu thereof: ``; (III)'';
(F) by striking ``subparagraph'' in the second proviso and
inserting in lieu thereof ``subparagraph (B)(iii)(I)'';
(G) in the last proviso, by striking ``: And provided
further, That'' and all that follows through and including
``this clause'' and inserting in lieu thereof: ``; (IV) with
respect to rehabilitation projects involving not more than five
family units, the Secretary may further increase any of the
dollar limitations which would otherwise apply to such
projects''.
(4) Section 221(d)(3)(ii) of the National Housing Act (12 U.S.C.
1715l(d)(3)(ii)) is amended--
(A) by inserting ``(I)'' following ``(ii)'';
(B) by striking ``; and except that'' and all that follows
through and including ``in this clause'' and inserting in lieu
thereof: ``; (II) the Secretary may, by regulation, increase any
of the dollar amount limitations in subclause (I) (as such
limitations may have been adjusted in accordance with section
206A of this Act)''.
(5) Section 221(d)(4)(ii) of the National Housing Act (12 U.S.C.
1715l(d)(4)(ii)) is amended--
(A) by inserting ``(I)'' following ``(ii)'';
(B) by striking ``; and except that'' and all that follows
through and including ``in this clause'' and inserting in lieu
thereof: ``; (II) the Secretary may, by regulation, increase any
of the dollar limitations in subclause (I) (as such limitations
may have been adjusted in accordance with section 206A of this
Act)''.
(6) Section 231(c)(2) of the National Housing Act (12 U.S.C.
1715v(c)(2)) is amended--
(A) by inserting ``(A)'' following ``(2)'';
(B) by striking ``; and except that'' and all that follows
through and including ``in this paragraph'' and inserting in
lieu thereof: ``; (B) the Secretary may, by regulation, increase
any of the dollar limitations in subparagraph (A) (as such
limitations may have been adjusted in accordance with section
206A of this Act)'';
(C) by striking ``: Provided, That'' and all that follows
through and including ``of this section'' and inserting in lieu
thereof: ``; (C) the Secretary may, by regulation, increase any
[[Page 116 STAT. 2796]]
of the dollar limitations in subparagraph (A) (as such
limitations may have been adjusted in accordance with section
206A of this Act)''.
(7) Section 234(e)(3) of the National Housing Act (12 U.S.C.
1715y(e)(3)) is amended--
(A) by inserting ``(A)'' following ``(3)'';
(B) by replacing ``$38,025'' with ``$42,048''; ``$42,120''
with ``$48,481''; ``$50,310'' with ``$58,469''; ``$62,010'' with
``$74,840''; ``$70,200'' with ``$83,375''; ``$43,875'' with
``$44,250''; ``$49,140'' with ``$50,724''; ``$60,255'' with
``$61,680''; ``$75,465'' with ``$79,793''; and ``$85,328'' with
``$87,588'';
(C) by striking ``; except that each'' and all that follows
through and including ``contained in this paragraph'' and
inserting in lieu thereof: ``; (B) the Secretary may, by
regulation, increase any of the dollar limitations in
subparagraph (A) (as such limitations may have been adjusted in
accordance with section 206A of this Act)''.
Approved December 4, 2002.
LEGISLATIVE HISTORY--S. 2239:
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