	Introduction

The Federal Housing Administration (FHA) has been insuring lenders against loss on home loans since 1934. From 1934 through the end of FY2007, FHA has insured about 34.6 million home loans at a mortgage volume of about $2 trillion. Until the recent turmoil in the mortgage market, that argument appeared to have some validity. FHA reform, however, proved controversial and these efforts stalled. Several FHA reform proposals were introduced in the 110 th Congress, and provisions from some of the bills were included in H.R. 3221 , the Housing and Economic Recovery Act of 2008 (HERA), which was enacted on July 30, 2008, as P.L. 110-289 . Title I of Division B of HERA is cited as the FHA Modernization Act of 2008. The FHA Modernization Act of 2008 (the Act) contains two subtitles. Subtitle A, the Building American Homeownership Act of 2008, makes several amendments to the FHA program that insures loans on single family homes under Title II of the National Housing Act. Subtitle B, the FHA Manufactured Housing Loan Modernization Act of 2008, makes several amendments to the FHA program that insures loans on manufactured housing loan program under Title I of the National Housing. The remainder of this report discusses these two subtitles. The Act adds the provision that, in any fiscal year, the number of energy efficient mortgages may not exceed 5% of the number of FHA-insured home loans in the previous fiscal year.
The Federal Housing Administration (FHA) has been insuring lenders against loss on home loans since 1934, and has insured about 35 million homes at a mortgage volume of about $2 trillion. In past years, FHA was often the innovator in testing new mortgage products, but in recent years the private mortgage market has been offering mortgages that appealed to borrowers who otherwise may have sought FHA-insured home loans. As a result, the FHA share of the mortgage market declined. FHA reform measures were debated in previous sessions of Congress, but FHA reform proved controversial and these efforts stalled. Momentum for FHA reform grew as the downturn in the housing market worsened in 2008. Reform measures were introduced in the 110th Congress and some of the provisions were included in the Housing and Economic Recovery Act of 2008, P.L. 110-289, enacted July 30, 2008. Title I of Division B of P.L. 110-289 is cited as the FHA Modernization Act of 2008, and it contains two subtitles. Subtitle A, the Building American Homeownership Act of 2008, makes several amendments to the FHA program that insures loans on single family homes under Title II of the National Housing Act. Subtitle B, the FHA Manufactured Housing Loan Modernization Act of 2008, makes several amendments to the FHA program that insures loans on manufactured housing loan program under Title I of the National Housing. This report discusses the provisions of these subtitles. The changes enacted in these subtitles affect the delivery of FHA-insured home loans in communities throughout the United States. This report may be updated as warranted by issues related to implementing the new law.