SEC-326 -- LIMITATION ON SECONDARY RESIDENCES.


 (a) Limitation on Secondary Residences.-Section 203(g)(1) of the
National Housing Act (12 U.S.C. 1709(g)(1)) is amended by inserting
after the period at the end the following new sentence: "In making this
determination with respect to the occupancy of secondary residences, the
Secretary may not insure mortgages with respect to such residences
unless the Secretary determines that it is necessary to avoid undue
hardship to the mortgagor. In no event may a secondary residence under
this subsection include a vacation home, as determined by the
Secretary.".

 (b) Applicability.-The amendments made by subsection (a) shall apply
only with respect to-

 (1) mortgages insured-

 (A) pursuant to a conditional commitment issued after the expiration
of the 60-day period beginning on the date of the enactment of this Act;
or

 (B) in accordance with the direct endorsement program, if the approved
underwriter of the mortgages signs the appraisal report for the property
after the expiration of the 60-day period beginning on the date of the
enactment of this Act; and

 (2) the approval of substitute mortgagors, if the original mortgagor
was subject to such amendments.

 (c) Transition Provisions.-Any mortgage insurance provided under title
II of the National Housing Act before the expiration of the 60-day
period beginning on the date of the enactment of this Act, shall
continue to be governed (to the extent applicable) by the provisions of
section 203(g)(1) of the National Housing Act, as such provisions
existed before the date of the enactment of this Act.