Mortgage Insurance Freedom Act

Section 203(c)(2) of the National Housing Act (12 U.S.C. 1709(c)(2)) is amended—

(1) in subparagraph (B)—

(A) in clause (i), by striking For any and inserting Subject to subparagraph (D), for any; and

(B) in clause (ii), by striking For any and inserting Subject to subparagraph (D), for any;

(2) in subparagraph (C)(i), by striking In addition and inserting Subject to subparagraph (D), in addition; and

(3) by adding at the end the following:

The Secretary may not collect any annual premiums under this paragraph with respect to a mortgage at any time that the remaining insured principal balance (excluding the portion of the remaining balance attributable to the premium collected under subparagraph (A)) is 78 percent or less than the lower of—

(I) the sales price of the dwelling at the sale in connection with which the mortgage was made; or

(II) the appraised value of the dwelling at the time of the origination of the mortgage.

If the capital ratio of the Mutual Mortgage Insurance Fund falls below 2 percent—

(I) clause (i) shall not apply with respect to any mortgage with respect the Secretary was collecting premiums on the date on which the capital ratio of the Mutual Mortgage Insurance Fund fell below 2 percent; and

(II) clause (i) shall continue to apply to any mortgage with respect to which the Secretary had stopped collecting premiums under this paragraph before the date on which the capital ratio of the Mutual Mortgage Insurance Fund fell below 2 percent because the remaining insured principal balance met the requirements described in clause (i).

The Secretary shall, not later than 180 days after the enactment of this subparagraph, issue such rules to carry out this subparagraph and such rules shall include a process for mortgagors of mortgages insured under this title to use to demonstrate to the Secretary that the insured principal balance of the mortgage of such mortgagor is 78 percent or less than the lower of—

(I) the sales price of the dwelling at the sale in connection with which the mortgage was made; or

(II) the appraised value of the dwelling at the time of the origination of the mortgage.

The Secretary shall conduct outreach and educational activities to inform mortgagors of mortgages insured under this title about—

(I) the restriction on premium collection imposed by clause (i); and

(II) and the processes the mortgagor may use to demonstrate to the Secretary that the insured principal balance of the mortgage of such mortgagor is 78 percent or less than the lower of—

(bb) the sales price of the dwelling at the sale in connection with which the mortgage was made; or

(cc) the appraised value of the dwelling at the time of the origination of the mortgage.

The amendments made by subsection (a) shall apply with respect only to mortgages endorsed for insurance by the Secretary of Housing and Urban Development after the date of the enactment of this Act.