FHA SELLER-FINANCED DOWN PAYMENT

FHA Refinance Program

FHA SELLER-FINANCED DOWN PAYMENT PROGRAM.
Paragraph (9) of section 203(b) of the National Housing
Act (12 U.S.C. 1709(b)(9)) is amended--

(1) in subparagraph (C), by striking `In no case shall the
funds required by subparagraph (A)' and inserting the
following: `Except in the case of a mortgage described in
subparagraph (D), the funds required by subparagraph

(A) shall not'; and

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

(D) EXCEPTIONS TO PROHIBITED SOURCES- A mortgage
described in this subparagraph is any of the following
mortgages:

(i) A mortgage under which the mortgagor has a credit
score equivalent to a FICO score of 680 or greater.

(ii) A mortgage under which--

(I) the mortgagor has a credit score equivalent to a FICO
score of at least 620 but less than 680; and

(II) mortgage insurance premiums charged are
established--
(aa) at levels necessary, but no higher than needed, to
allow such class of loans to be insured without resulting in
a need for an appropriation for a credit subsidy, which
may exceed the maximum amount permitted under
section 203(c)(2)(B);

(bb) in the case of the single premium collected at the
time of insurance, in an amount not exceeding 3.0 percent
of the amount of the original principal obligation of the
mortgage; and

(cc) in the case of the annual premium for a mortgage
under which the mortgagor has a credit score equivalent
to a FICO score of at least 640 but less than 680, in an
amount not exceeding 1.25 percent of the remaining
insured principal balance (excluding the portion of the
remaining balance attributable to the premium collected at
the time of insurance and without taking into account
delinquent payments or prepayments).

(iii) For mortgages insured in fiscal year 2010 or
thereafter, a mortgage under which the mortgagor has a
credit score equivalent to a FICO score of 619 or less, but
only if the Secretary certifies that such loans can be
insured without resulting in a need for an appropriation
for a credit subsidy. For such mortgages, the Secretary
may charge premiums at levels authorized under items

(bb) and (cc) of clause (ii)(II) and may establish a credit or
FICO score limitation or impose such other requirements
as are necessary to meet the conditions for certification
under this clause.

(E) REQUIREMENTS FOR DOWNPAYMENT ASSISTANCE
ENTITIES- Any entity participating in a program that
provides downpayment assistance for a mortgage
described in subparagraph (D) pursuant to the exception
under subparagraph (C), which programs shall include
programs of governmental agencies and private nonprofit
organizations, shall, before the closing for the loan
involved in the mortgage in connection with which such
assistance is provided--

(i) offer to make available, to the mortgagor, counseling
regarding the responsibilities and financial management
involved in homeownership;

(ii) if such offer is accepted by the mortgagor, make such
counseling available for the mortgagor; and

(iii) in the case of any such entity that is a private
nonprofit organization, implement a conflict of interest
policy that prohibits directors, officers, employees, and
immediate family members from receiving financial benefits
from any entity that is providing the program with goods
or services other than the homeownership assistance
program entity itself or its wholly owned affiliate.

(F) CIVIL MONEY PENALTIES FOR IMPROPERLY
INFLUENCING APPRAISALS- The Secretary may impose a
civil money penalty, in the same manner and to the same
extent as for a violation under section 536, for
compensating, instructing, inducing, coercing, or
intimidating any person who conducts an appraisal of the
property to be subject to a mortgage described in
subparagraph (D) and under which any part of the funds
required by subparagraph (A) are provided to a party
described in subparagraph (C), or attempting to
compensate, instruct, induce, coerce, or intimidate such a
person, for the purpose of causing the appraised value
assigned to the property under the appraisal to be based
on any other factor other than the independent judgment
of such person exercised in accordance with applicable
professional standards.'.