106 STAT. 3794 PUBLIC LAW 102-550— OCT. 28, 1992

Subtitle C— Improvement of Financing for

Improvement

12 USC 1707.

SEC. 541. SHORT TITLE.

This subtitle may be cited as the "Multifamily Housing Finance
Improvement Act".

SEC. 542. MULTIFAMILY MORTGAGE CREDIT DEMONSTRATIONS.

(a) IN GENERAL. — The Secretary of Housing and Urban Develop-
ment (hereinafter referred to as the "Secretary") shall carry out
programs through the Federal Housing Administration to dem-
onstrate the effectiveness of providing new forms of Federal credit
enhancement for multifamily loans, m carrying out demonstration
programs, the Secretary shall include an evaluation of the effective-
ness of entering into partnerships or other contractual arrange-
ments including reinsurance and risk-sharing agreements with
State or local housing finance agencies, the Federal Housing
Finance Board, the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, qualified financial
institutions, and other State or local mortgage insurance companies
or bank lending consortia.

(b) RISK-SHARING PILOT PROGRAM.—

(1) IN GENERAL. — The Secretary shall carry out a pilot
program through the Federal Housing Administration to pro-
vide for risk sharing related to mortgages on multifamily
housing.

(2) AUTHORITY FOR REINSURANCE AGREEMENTS.— The Sec-
retary may enter into reinsurance agreements (as such term.
is defined in section 544) with the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation,
qualified financial institutions, qualified housing finance agen-
cies, and the Federal Housing Finance Board. The agreements
may provide for risk-sharing and other forms of credit enhance-
ment with respect to mortgage lending on multifamily housing,
including reinsurance with respect to pools of loans on multi-
family housing properties, that the Secretary determines to
be appropriate to carry out the purposes of this subsection.
The agreements shall be in a form and have such terms and
conditions as the Secretary determines to be appropriate to
carry out the purposes of this subsection.

(3) DEVELOPMENT OF ALTERNATIVES.— The Secretary shall
develop and assess a variety of risk-sharing alternatives, includ-
ing arrangements under which the Secretary assumes an appro-
priate share of the risk related to long-term mortgage loans
on newly constructed or acquired multifamily rental housing,
mortgage refinancings, bridge financing for construction, and
other forms of multifamily housing mortgage lending that the
Secretary deems appropriate to carry out the purposes of this
subsection. Such alternatives shall be designed —

(A) to ensure that other parties bear a share of the
risk, in percentage amount and in position of exposure,
that is sufficient to create strong, market-oriented incen-
tives for other participating parties to maintain sound
underwriting and loan management practices;

(B) to develop credit mechanisms, including sound
underwriting criteria, processing methods, ana credit