General Accounting Office Study of the Federal Housing Administration’s Mutual Mortgage Insurance Fund.—

Sec. 521. General Accounting Office Study of the Federal Housing Administration’s Mutual Mortgage Insurance Fund.—The General Accounting Office shall prepare and submit to Congress no later than April 1, 1992, a study of the actuarial soundness of the Federal Housing Administration’s single family mortgage insurance program and the solvency of the Mutual Mortgage Insurance Fund. The study, using existing studies (including the study entitled “An Actuarial Review of the Federal Housing Administration’s Mutual Mortgage Insurance Fund”) and employing the latest reliable data available, shall analyze the actuarial soundness of the Mutual Mortgage Insurance Fund and the ability of the Mutual Mortgage Insurance Fund to meet the capital ratio targets established in the Omnibus Budget Reconciliation Act of 1990 under various economic and policy scenarios. Factors considered in the analysis shall include, but shall not be limited to, the following: (1) The actuarial performance of all cohorts of loans insured by the Mutual Mortgage Insurance Fund, including all available post-1985 books of business. Specifically, the overall default rates and claims (loss) experience of these loans should be considered. (2) The effect of the Mortgagor Equity rule issued by the Department of Housing and Urban Development, which limits the amount of closing costs that can be financed with a Federal Housing Administration mortgage to 57 percent of the total amount of allowable closing costs, on the actuarial status of the Mutual Mortgage Insurance Fund, default rates of Federal Housing Administration borrowers, the relative impact on purchasers of homes at various price levels, and the ability of potential Federal Housing Administration borrowers to purchase homes. (3) The effect of underwriting changes made by the Federal Housing Administration since 1986. (4) The effect of the increase in the insurable maximum mortgage amount that was made permanent in the National 105 STAT. 781Affordable Housing Act and the effect of further increasing the maximum mortgage amount. (5) The impact of a policy to allow “streamlined refinancings” whereby the borrower would not be required to pay an annual premium. (6) The Federal Housing Administration’s accounting method for deferring and amortizing the Mutual Mortgage Insurance Fund single-family one-time premium revenue. (7) The valuation of delinquent loans for loan loss reserve accounting purposes. (8) The impact of various assumptions regarding the rate of real home price appreciation and mortgage interest rates. (9) The effect of various economic conditions, including favorable, moderate, and adverse conditions, on the ability of the Mutual Mortgage Insurance Fund to build adequate capital levels.