EXTENSION AND IMPROVEMENT OF AUTHORITY FOR GUARANTEE OF HYBRID ADJUSTABLE RATE MORTGAGES.

SEC. 405. EXTENSION AND IMPROVEMENT OF AUTHORITY FOR GUARANTEE OF HYBRID ADJUSTABLE RATE MORTGAGES.(a) Extension of Authority.—Subsection (a) of section 3707A is amended by striking “during fiscal years 2004 and 2005” and inserting “during fiscal years 2004 through 2008”.(b) Modification of Interest Rate Adjustment Requirements.—Subsection (c) of such section is amended—(1) by redesignating paragraph (4) as paragraph (5);(2) by striking paragraph (3) and inserting the following new paragraphs:“(3) in the case of the initial contract interest rate adjustment—“(A) if the initial contract interest rate remained fixed for less than 5 years, be limited to a maximum increase or decrease of 1 percentage point; or“(B) if the initial contract interest rate remained fixed for 5 years or more, be limited to a maximum increase or decrease of such percentage point or points as the Secretary may prescribe;“(4) in the case of any single annual interest rate adjustment after the initial contract interest rate adjustment, be limited to a maximum increase or decrease of 1 percentage point; and”; and(3) in paragraph (5), as so redesignated, by striking “5 percentage points” and all that follows and inserting “such number of percentage points as the Secretary shall prescribe for purposes of this section.”.(c) No Effect on Guarantee of Loans Under Hybrid Adjustable Rate Mortgage Guarantee Demonstration 118 STAT. 3617 Project.—The amendments made by this section shall not be construed to affect the force or validity of any guarantee of a loan made by the Secretary of Veterans Affairs under the demonstration project for the guarantee of hybrid adjustable rate mortgages under section 3707A of title 38, United States Code, as in effect on the day before the date of the enactment of this Act.