SEC. 201. HOME EQUITY CONVERSION MORTGAGES.

(a) INSURANCE FOR MORTGAGES TO REFINANCE EXISTING HECMS-

(1) IN GENERAL- Section 255 of the National Housing Act (12 U.S.C. 1715z-20) is amended--

(A) by redesignating subsection (k) as subsection (m); and

(B) by inserting after subsection (j) the following new subsection:

`(k) INSURANCE AUTHORITY FOR REFINANCINGS-

`(1) IN GENERAL- The Secretary may, upon application by a mortgagee, insure under this subsection any mortgage given to refinance an existing home equity conversion mortgage insured under this section.

`(2) ANTI-CHURNING DISCLOSURE- The Secretary shall, by regulation, require that the mortgagee of a mortgage insured under this subsection, provide to the mortgagor, within an appropriate time period and in a manner established in such regulations, a good faith estimate of: (A) the total cost of the refinancing; and (B) the increase in the mortgagor's principal limit as measured by the estimated initial principal limit on the mortgage to be insured under this subsection less the current principal limit on the home equity conversion mortgage that is being refinanced and insured under this subsection.

`(3) WAIVER OF COUNSELING REQUIREMENT- The mortgagor under a mortgage insured under this subsection may waive the applicability, with respect to such mortgage , of the requirements under subsection (d)(2)(B) (relating to third party counseling), but only if--

`(A) the mortgagor has received the disclosure required under paragraph (2);

`(B) the increase in the principal limit described in paragraph (2) exceeds the amount of the total cost of refinancing (as described in such paragraph) by an amount to be determined by the Secretary; and

`(C) the time between the closing of the original home equity conversion mortgage that is refinanced through the mortgage insured under this subsection and the application for a refinancing mortgage insured under this subsection does not exceed 5 years.

`(4) CREDIT FOR PREMIUMS PAID- Notwithstanding section 203(c)(2)(A), the Secretary may reduce the amount of the single premium payment otherwise collected under such section at the time of the insurance of a mortgage refinanced and insured under this subsection. The amount of the single premium for mortgages refinanced under this subsection shall be determined by the Secretary based on the actuarial study required under paragraph (5).

`(5) ACTUARIAL STUDY- Not later than 180 days after the date of the enactment of the American Homeownership and Economic Opportunity Act of 2000, the Secretary shall conduct an actuarial analysis to determine the adequacy of the insurance premiums collected under the program under this subsection with respect to--

`(A) a reduction in the single premium payment collected at the time of the insurance of a mortgage refinanced and insured under this subsection;

`(B) the establishment of a single national limit on the benefits of insurance under subsection (g) (relating to limitation on insurance authority); and

`(C) the combined effect of reduced insurance premiums and a single national limitation on insurance authority.

`(6) FEES- The Secretary may establish a limit on the origination fee that may be charged to a mortgagor under a mortgage insured under this subsection, except that such limitation shall provide that the origination fee may be fully financed with the mortgage and shall include any fees paid to correspondent mortgagees approved by the Secretary.'.

(2) REGULATIONS- The Secretary shall issue any final regulations necessary to implement the amendments made by paragraph (1) of this subsection, which shall take effect not later than the expiration of the 180-day period beginning on the date of the enactment of this Act. The regulations shall be issued after notice and opportunity for public comment in accordance with the procedure under section 553 of title 5, United States Code, applicable to substantive rules (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such section).

(b) HOUSING COOPERATIVES- Section 255(b) of the National Housing Act (12 U.S.C. 1715z-20(b)) is amended--

(1) in paragraph (2), by striking `mortgage' ,'; and

(2) by adding at the end the following new paragraphs:

`(4) MORTGAGE - The term `mortgage' means a first mortgage or first lien on real estate, in fee simple, on all stock allocated to a dwelling in a residential cooperative housing corporation, or on a leasehold--

`(A) under a lease for not less than 99 years that is renewable; or

`(B) under a lease having a period of not less than 10 years to run beyond the maturity date of the mortgage .

`(5) FIRST MORTGAGE - The term `first mortgage' means such classes of first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate or all stock allocated to a dwelling unit in a residential cooperative housing corporation, under the laws of the State in which the real estate or dwelling unit is located, together with the credit instruments, if any, secured thereby.'.

(c) WAIVER OF UP-FRONT PREMIUMS FOR MORTGAGES USED TO FUND LONG-TERM CARE INSURANCE-

(1) IN GENERAL- Section 255 of the National Housing Act (12 U.S.C. 1715z-20) is amended by inserting after subsection (k) (as added by subsection (a) of this section) the following new subsection:

`(l) WAIVER OF UP-FRONT PREMIUMS FOR MORTGAGES TO FUND LONG-TERM CARE INSURANCE-

`(1) IN GENERAL- In the case of any mortgage insured under this section under which the total amount (except as provided in paragraph (2)) of all future payments described in subsection (b)(3) will be used only for costs of a qualified long-term care insurance contract that covers the mortgagor or members of the household residing in the property that is subject to the mortgage , notwithstanding section 203(c)(2), the Secretary shall not charge or collect the single premium payment otherwise required under subparagraph (A) of such section to be paid at the time of insurance.

`(2) AUTHORITY TO REFINANCE EXISTING MORTGAGE AND FINANCE CLOSING COSTS- A mortgage described in paragraph (1) may provide financing of amounts that are used to satisfy outstanding mortgage obligations (in accordance with such limitations as the Secretary shall prescribe) and any amounts used for initial service charges, appraisal, inspection, and other fees (as approved by the Secretary) in connection with such mortgage , and the amount of future payments described in subsection (b)(3) under the mortgage shall be reduced accordingly.

`(3) DEFINITION- For purposes of this subsection, the term `qualified long-term care insurance contract' has the meaning given such term in section 7702B of the Internal Revenue Code of 1986 (26 U.S.C. 7702B)), except that such contract shall also meet the requirements of--

`(A) sections 9 (relating to disclosure), 24 (relating to suitability), and 26 (relating to contingent nonforfeiture) of the long-term care insurance model regulation promulgated by the National Association of Insurance Commissioners (as adopted as of September 2000); and

`(B) section 8 (relating to contingent nonforfeiture) of the long-term care insurance model Act promulgated by the National Association of Insurance Commissioners (as adopted as of September 2000).'.

(2) APPLICABILITY- The provisions of section 255(l) of the National Housing Act (as added by paragraph (1) of this subsection) shall apply only to mortgages closed on or after April 1, 2001.

(d) STUDY OF SINGLE NATIONAL MORTGAGE LIMIT- The Secretary of Housing and Urban Development shall conduct an actuarially based study of the effects of establishing, for mortgages insured under section 255 of the National Housing Act (12 U.S.C. 1715z-20), a single maximum mortgage amount limitation in lieu of applicability of section 203(b)(2) of such Act (12 U.S.C. 1709(b)(2)). The study shall--

(1) examine the effects of establishing such limitation at different dollar amounts; and

(2) examine the effects of such various limitations on--

(A) the risks to the General Insurance Fund established under section 519 of such Act;

(B) the mortgage insurance premiums that would be required to be charged to mortgagors to ensure actuarial soundness of such Fund; and

(C) take into consideration the various approaches to providing credit to borrowers who refinance home equity conversion mortgages insured under section 255 of such Act.

Not later than 180 days after the date of the enactment of this Act, the Secretary shall complete the study under this subsection and submit a report describing the study and the results of the study to the Committee on Banking and Financial Services of the House of Representatives and to the Committee on Banking, Housing, and Urban Affairs of the Senate.

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Revised: August 31, 2001.