108 STAT. 374 PUBLIC LAW 103-233—APR. 11, 1994 Contracts. "(1) IN GENERAL. —The Secretary shall cany out a pilot program in conjunction with qualified participating entities to determine the effectiveness of Federal credit enhancement for loans for affordable multifamily housing through a system of risk-sharing agreements with such entities. "(2) PROGRAM REQUIREMENTS. — "(A) IN GENERAL.—In carrying out the pilot program under this subsection, the Secretary shall enter into risksharing agreements with qualified participating entities. "(B) MORTGAGE INSURANCE AND HEiNSURANCE.Agreements under subparagraph (A) may provide for (i) mortgage insurance through the Federal Housing Administration of loans for affordable multifamily housing originated by or through, or purchased by, qualified participating entities, and (ii) reinsurance, including reinsurance of pools of loans, on affordable multifamily housing. In entering into risksharing agreements under this subsection covering mortgages, the Secretary may give preference to mortgages that are not already in the portfolios of quaUfied participating entities. "(C) RISK APPORTIONMENT. — Agreements entered into under this subsection between the Secretary and a qualified participating entity shall specify the percentage of loss that each of the parties to the agreement will assume in the event of default of the insured or reinsured multifamily mortgage. Such agreements shall specify that the qualified participating entity and the Secretary shall share any loss in accordance with the risk-sharing agreement. "(D) REIMBURSEMENT CAPACITY.— Agreements entered into under this subsection between the Secretary and a quaUfied participating entity shall provide evidence acceptable to the Secretary of the capacity of such entity to fulfill any reimbursement obligations made pursuant to this subsection. Evidence of such capacity which may be considered by the Secretary may include— "(i) a pledge of the full faith and credit of a qualified participating entity to fulfill any obligations entered into by the entity;
- (ii) reserves pledged or otherwise restricted by
the qualified participating entity in an amount equal to an agreed upon percentage of the loss assumed by the entity under subparagraph (C); "(iii) funds pledged through a State or local guarantee fund; or "(iv) any other form of evidence mutually agreed upon by the Secretary and the qualified participating entity. "(E) UNDERWRITING STANDARDS.— The Secretary shall allow any qualified participating entity to use its own underwriting standards and loan terms and conditions for purposes of underwriting loans to be insured under this subsection, except as provided in this section, without further review by the Secretary, except that the Secretary may impose additional underwriting criteria and loan terms ana conditions for contractual agreements where the Secretary retains more than 50 percent of the risk of loss. Any financing permitted on property insured under this
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