INDEMNIFICATION AFTER DEFAULT.

SEC. 304. INDEMNIFICATION AFTER DEFAULT. (a) In General.—Section 1803 is amended by adding at the end the following new subsection: “(e)(1) Except as provided in paragraph (2) of this subsection, an individual who pays a fee under section 1829 of this title, or who is exempted under section 1829(c)(1) of this title from paying such fee, with respect to a housing loan guaranteed or insured under this chapter that is closed after December 31, 1989, shall have no liability to the Secretary with respect to the loan for any loss resulting from any default of such individual except in the case of fraud, misrepresentation, or bad faith by such individual in obtaining the loan or in connection with the loan default. “(2) The exemption from liability provided by paragraph (1) of this subsection shall not apply to— “(A) an individual from whom a fee is collected (or who is exempted from such fee) under section 1829(b) of this title; or “(B) a loan made for any purpose specified in section 1812 of this title.”. (b) Conforming Amendment.—The last sentence of section 1832(a)(1) is amended by striking out “If” and inserting in lieu thereof “Except as provided in section 1803(e) of this title, if”.