Housing Finance Reform Act of 2011 - Amends the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to authorize the Director of the Federal Housing Finance Agency (FHFA) to: (1) provide for the organization, incorporation, examination, operation, and regulation of housing finance guaranty associations (which may be corporations, mutual associations, partnerships, limited liability corporations, cooperatives, or other appropriate organizational forms); and (2) issue charters for them.
Authorizes the Director, upon an organizer's application, to issue a special purpose charter if the operations of the proposed association would be limited to serving a particular mortgage market, such as multifamily housing, or a particular category of mortgage lenders, such as community banks.
Authorizes national banks, state banks, trust companies, federal or state credit unions, or other banking organizations, including bank holding companies and savings and loan holding companies, to acquire an interest in an association, and hold or dispose of it, subject to the approval by the appropriate federal banking agency.
Authorizes associations to purchase, hold, sell, and otherwise deal in conventional mortgages only for the purpose of: (1) creating a secondary market for them, including new conventional mortgage products; (2) facilitating their securitization; and (3) supporting mutlifamily housing.
Prohibits an association from originating or servicing a mortgage or performing other specified actions.
Directs the Director to establish an Office of Securitization within the FHFA to facilitate the securitization of conventional mortgages. Requires the Office to create, label, administer, and service FHFA securities issued by associations.
Requires the Comptroller General to determine the market value of the catastrophic guarantee of FHFA securities, and the Director to establish a pricing structure for guarantee fees by associations, based on the market value study, that provides for a reasonable rate of return to associations.
Exempts FHFA securities from registration under the Securities Act of 1933 and the requirements of the Securities Exchange Act of 1934.
Requires the Director to require each association to disclose publicly information about the composition of each pool of mortgages backing any FHFA security it issues.
Requires the Director to guarantee the timely payment of the principal and interest of FHFA securities (the catastrophic federal guarantee), pledged by the full faith and credit of the United States.
States that a guarantee shall apply only if: (1) the issuing association has been placed into conservatorship or recievership by the Director, and (2) the Reserve Fund (established by this Act) lacks sufficient funds to make the required principal and interest payments.
Requires the Director to: (1) establish an annual fee to be paid by associations for a guarantee issued in connection with FHFA securities issued by them, (2) impose and collect such fees through the Office of Securitization, (3) establish a Reserve Fund which shall be credited with all such fees, (4) impose a special assessment on associations to recoup all costs associated with any guarantee payments made, and (5) supervise all associations.
Directs the Director to establish: (1) risk-based and leverage capital standards for associations, (2) standards for the management and operations of associations, and (3) underwriting standards for conventional mortgages purchased by an association.
Requires the Director to prohibit any association from purchasing any conventional mortgage for which the maximum original principal obligation exceeds 150% of a figure determined according to a specified formula.
Repeals affordable housing goals.
Amends the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act to subject the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (government-sponsored enterprises or GSEs ) to state and local taxes.
Directs the Director to issue regulations that require each GSE to: (1) reduce its total mortgage assets to not more than $250 billion within five years, and (2) increase guarantee fees.
Requires the Director to place the GSEs into receivership no later than one year after five or more associations, two of which are not special purpose associations, have been chartered.
Pledges the full faith and credit of the United States to the payment of all debt obligations of the enterprises and all mortgage-backed securities issued by the GSEs until they mature or are redeemed.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1859 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 1859
To ensure the availability of reasonably priced conventional mortgages
to borrowers in all economic cycles by encouraging private sector
capital to support the secondary mortgage market, limiting the role of
the Federal government and the exposure of taxpayers, and other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 12, 2011
Mr. Campbell (for himself and Mr. Peters) introduced the following
bill; which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To ensure the availability of reasonably priced conventional mortgages
to borrowers in all economic cycles by encouraging private sector
capital to support the secondary mortgage market, limiting the role of
the Federal government and the exposure of taxpayers, and other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Housing Finance Reform Act of
2011''.
SEC. 2. STATEMENT OF PURPOSES.
The purposes of this Act are to--
(1) ensure the availability of reasonably priced
conventional residential mortgages to qualified borrowers in
all economic cycles;
(2) provide incentives for private sector capital to
support the secondary market for residential mortgages;
(3) limit the role of the Federal Government in the
secondary market for residential mortgages and the exposure of
taxpayers to the operations of the secondary markets for
residential mortgages; and
(4) provide for the orderly wind down of the Federal
National Mortgage Association and the Federal Home Loan
Mortgage Corporation.
SEC. 3. ESTABLISHMENT, OPERATION, SUPERVISION, AND REGULATION OF
HOUSING FINANCE GUARANTY ASSOCIATIONS.
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting the following
new subtitle D, and designating the existing subtitles D and E as
subtitles E and F, respectively, and renumbering the sections of those
subtitles accordingly:
``Subtitle D--Establishment, Operation, Supervision, and Regulation of
Housing Finance Guarantee Associations
``SEC. 1381. DEFINITIONS.
``For purposes of this subtitle, the following definitions shall
apply:
``(1) Association.--The term `association' means a housing
finance guarantee association chartered by the Director
pursuant to section 1382.
``(2) Association-affiliated party.--The term `association-
affiliated party' means--
``(A) any director, officer, employee, or
controlling stockholder of, or agent for, an
association;
``(B) any shareholder, affiliate, consultant, or
joint venture partner of an association, and any other
person, as determined by the Director (by regulation or
on a case-by-case basis) that participates in the
conduct of the affairs of an association;
``(C) any independent contractor for an association
(including any attorney, appraiser, or accountant),
if--
``(i) the independent contractor knowingly
or recklessly participates in--
``(I) any violation of any law or
regulation;
``(II) any breach of fiduciary
duty; or
``(III) any unsafe or unsound
practice; and
``(ii) such violation, breach, or practice
caused, or is likely to cause, more than a
minimal financial loss to, or a significant
adverse effect on, the association.
``(3) Conventional mortgage.--The term `conventional
mortgage' means a mortgage loan as defined in section
1390(e)(2).
``(4) Federal housing finance agency security.--The term
`Federal Housing Finance Agency security' means a security
issued by an association through the Office of Securitization
that conforms to the terms and conditions of section 1387.
``(5) Limited-life association.--The term `limited-life
association' means, with respect to an association in default
or in danger of default, an entity organized by the Agency
under section 1367(i) with respect to such association.
``(6) Office of securitization.--The term `Office of
Securitization' means the Office established by section 1386.
``(7) Organizer.--The term `organizer' means the person or
group of persons seeking to organize an association.
``(8) Person.--The term `person' means any natural person
or business entity.
``SEC. 1382. ESTABLISHMENT OF HOUSING FINANCE GUARANTY ASSOCIATIONS.
``(a) Director's Authority.--The Director is authorized, under such
regulations as the Director may prescribe, to provide for the
organization, incorporation, examination, operation, and regulation of
housing finance guaranty associations, and to issue charters for such
entities.
``(b) Formation of Associations; Articles of Association.--Subject
to the terms of this Act and regulations issued by the Director, an
organizer may file an application with the Director to establish an
association. The association may be chartered as a corporation, mutual
association, partnership, limited liability corporation, cooperative,
or any other organizational form that the organizer may deem
appropriate. The Director may not require the organizer to adopt any
particular organizational form.
``(c) Contents of the Application.--An application for
establishment of an association shall include--
``(1) the proposed articles of association;
``(2) a statement of the general object and purposes of the
association;
``(3) the proposed capitalization and business plan for the
association;
``(4) information on the financial resources of the
organizers;
``(5) a statement of the relevant housing finance
experience of the organizers;
``(6) identification of the proposed senior managers of the
association and the relevant experience of such individuals;
and
``(7) any other information the Director determines may be
necessary to evaluate the background, experience, and integrity
of the organizers and the proposed senior managers, or
information otherwise necessary to determine the likely success
of the proposed association.
``(d) Issuance of Charters and Chartering Criteria.--
``(1) In general.--The Director may issue a charter for an
association to commence business if the Director determines
that the proposed association would be consistent with the
purposes of this Act and the Housing Finance Reform Act of
2011, and that the association would have the managerial and
financial resources to succeed.
``(2) Chartering criteria.--In making the determination
under paragraph (1), the Director shall consider the
competence, experience, and integrity of the organizer and
proposed senior managers of the association, and the financial
resources and future prospects of the proposed association. The
Director may not issue a charter if the organizer fails to--
``(A) comply with all applicable formation
requirements;
``(B) provide all information requested by the
Director;
``(C) demonstrate the competence, experience, and
integrity necessary to operate the association in a
safe or sound manner;
``(D) demonstrate sufficient financial resources
necessary to operate the association in a safe or sound
manner; or
``(E) provide the Director with assurances that the
association will make available to the Director, on an
on-going basis, such information on the operations or
activities of the association, or any affiliate of the
association, that the Director deems necessary to
ensure the safe and sound operation of the association
and to enforce compliance with this Act.
``(3) Explanation for denial.--Within 30 days of denying
any application for the issuance of a charter under this
section, the Director shall provide the organizer with a
written explanation of the basis for the denial.
``(e) Special Purpose Associations.--
``(1) In general.--The Director may issue a special purpose
charter to the organizer of an association if the operations of
the proposed association would be limited to serving a
particular mortgage market, such as multifamily housing, or a
particular category of mortgage lenders, such as community
banks. All provisions of this Act that apply to associations
shall apply to special purpose associations, including the
criteria for obtaining a charter.
``(2) Nondiscrimination.--The operation of a special
purpose association shall not be considered discriminatory for
purposes of section 1385(a)(9).
``(f) Investments by Banking Organizations.--A national bank, State
bank, trust company, Federal or State credit union, or other banking
organization, including a bank holding company and a savings and loan
holding company, may acquire an interest in an association, and hold or
dispose of such interest, subject to the provisions of this Act, and
subject to the approval by the appropriate Federal banking agency for
such institution.
``SEC. 1383. GENERAL POWERS OF ASSOCIATIONS.
``An association may--
``(1) adopt and use a corporate seal;
``(2) adopt, amend, and repeal by-laws;
``(3) sue or be sued;
``(4) make contracts and guarantees, incur liabilities,
borrow money, issue notes, bonds, and other obligations;
``(5) purchase, receive, hold, and use real and personal
property and other assets necessary for the conduct of its
operations;
``(6) lend money;
``(7) invest, and reinvest funds, subject to the
limitations of sections 1384 and 1385;
``(8) elect or appoint directors, officers, employees, and
agents; and
``(9) issue securities, membership certificates, and other
forms of ownership interests.
``SEC. 1384. HOUSING FINANCE RELATED POWERS OF ASSOCIATIONS.
``In addition to its general powers under section 1383, an
association may--
``(1) purchase, hold, sell, and otherwise deal in
conventional mortgages only for the purpose of--
``(A) creating a secondary market for such
mortgages, including new conventional mortgage
products;
``(B) facilitating the securitization of
conventional mortgages; and
``(C) supporting multifamily housing;
``(2) issue, through the Office of Securitization, Federal
Housing Finance Agency securities;
``(3) establish a trust or similar entity that shall not be
subject to the claims made by creditors of the association in
order to provide for the sale of beneficial interests in pools
of mortgage loans or the right to receive interest and
principal from such pools;
``(4) guarantee the timely payment of principal and
interest on Federal Housing Finance Agency securities and
charge a fee for such guarantee;
``(5) ensure that Federal Housing Finance Agency securities
are properly serviced, which shall include the right to remove
a mortgage servicer in the event the association determines
that such servicer fails to perform contractual servicing
obligations or other legal requirements imposed on mortgage
servicers; and
``(6) hedge credit, interest rate and other risks
associated with the purchase and sale of conventional
mortgages.
``SEC. 1385. PROHIBITED ACTIVITIES.
``(a) In General.--An association may not--
``(1) originate a mortgage;
``(2) service a mortgage;
``(3) guarantee timely payment of principal or interest on
any mortgage-related security other than a Federal Housing
Finance Agency security;
``(4) invest in securities other than Federal Housing
Finance Agency securities, securities issued by the Federal
Government or any agency of the Federal Government, and any
other securities deemed appropriate by the Director;
``(5) speculate on credit, interest rate, and other risks;
``(6) underwrite, offer, sell, or solicit any form of
insurance;
``(7) purchase any mortgage from an institution that holds
a voting interest in the association;
``(8) purchase a conventional mortgage secured by a
property comprised of one-to-four family dwelling units if the
outstanding principal balance of the mortgage at the time of
purchase exceeds 80 percent of the value of the property
securing the mortgage, unless--
``(A) the seller retains a participation of not
less than 10 percent in the mortgage;
``(B) for such period and under such circumstances
as the Director may require, the seller agrees to
repurchase or replace the mortgage upon demand of the
association in the event that the mortgage is in
default; or
``(C) that portion of the unpaid principal balance
of the mortgage which is in excess of such 80 percent
is guaranteed or insured by a qualified insurer, as
determined by the Director.
``(9) discriminate against, or provide a preference to, any
mortgage originator on the basis of the charter or license of
such originator, the asset size of the originator, or the
existence any ownership interest in the association by the
originator; or
``(10) engage in any activity that is not authorized by
this Act.
``(b) Rule of Construction.--Subsection (a)(8) shall not be
construed to prevent an association from setting standards related to
the financial condition of originators from which it may acquire a
conventional mortgage or prevent an association from setting guarantee
fees based upon the volume of mortgages an originator sells to the
association.
``SEC. 1386. OFFICE OF SECURITIZATION.
``(a) In General.--The Director shall establish an Office of
Securitization within the Agency to facilitate the securitization of
conventional mortgages.
``(b) Functions of Office.--The Office of Securitization shall--
``(1) subject to section 1387, create and label Federal
Housing Finance Agency securities;
``(2) take such actions as may be necessary to issue the
catastrophic federal guarantee described in section 1388 with
respect to Federal Housing Finance Agency securities;
``(3) impose and collect the fee for the catastrophic
federal guarantee;
``(4) administer and service Federal Housing Finance Agency
securities, including acting as trustee for any trust
established by an association for purposes of facilitating the
securitization of conventional mortgages; and
``(5) engage in such other activities the Director
determines to be incidental to the securitization of
conventional mortgages.
``(c) Management of the Office.--The Office of Securitization shall
be managed by the Deputy Director of the Agency for Housing Finance
Guarantee Association, who shall be designated by the Director in
accordance with section 1391 and shall be subject to the direction and
control of the Director.
``(d) No Economic Interest.--In the performance of its functions,
the Office of Securitization shall not assume any economic interest in
the securities issued by an association.
``(e) Contracting Authority.--The Director may contract with the
Government National Mortgage Association to perform any or all of the
functions of the Office of Securitization specified in subsection (b).
``SEC. 1387. FEDERAL HOUSING FINANCE AGENCY SECURITIES.
``(a) In General.--The Director shall establish, by regulation, one
or more standard forms for Federal Housing Finance Agency securities
issued by associations.
``(b) Common Label; Standard Terms and Conditions.--The forms
required by subsection (a) shall--
``(1) identify the securities as Federal Housing Finance
Agency securities;
``(2) set forth the terms and conditions for the payment of
interest and principal on such securities;
``(3) state that such securities are guaranteed by the full
faith and credit of the United States, subject to the
limitations of section 1388(b);
``(4) address the servicing of Federal Housing Finance
Agency securities; and
``(5) include such other standardized terms and conditions
that the Director deems appropriate to enhance the liquidity of
the securities, and shall include a representation and warranty
certifying that a policy of a title insurance be in place to
transfer title-related risks to State licensed title insurance
companies for all conventional mortgages collateralizing a
Federal Housing Finance Agency security.
``(c) Limitation.--The forms established by the Director pursuant
to subsection (a) shall not prevent Federal Housing Finance Agency
securities to vary based upon--
``(1) the maturity of the securities;
``(2) the yield of the securities;
``(3) the type of conventional mortgages that serve as
collateral for the securities; or
``(4) such other terms and conditions that the Director
deems appropriate.
``(d) Temporary Regulation of Guarantee Fees.--
``(1) GAO study.--Not later than the expiration of the 12-
month period beginning upon the date of the enactment of the
Housing Finance Reform Act of 2011, the Comptroller General of
the United States shall conduct a study to determine the market
value of the catastrophic guarantee under section 1388 and
submit to the Director a report setting forth the findings of
such study.
``(2) Amount.--Taking into consideration the findings of
the study pursuant to paragraph (1), the Director shall
establish a pricing structure for guarantee fees by
associations that provides for a reasonable rate of return to
associations.
``(3) Quarterly adjustment.--After initially establishing
the pricing structure pursuant to paragraph (2), the Director
shall, on a calendar quarterly basis, review such prices and
adjust the pricing structure as appropriate.
``(4) Emergency adjustment.--The Director may, at any time,
adjust the prices and pricing structure under this subsection
if the Director determines that market conditions or other
factors require such adjustment.
``(5) Termination of pricing structure.--The Director shall
monitor competition between associations to determine the first
time at which both are the following conditions exist:
``(A) There is sufficient competition between the
associations.
``(B) The associations, individually and
collectively, are stable and sufficient to serve the
market.
Upon such a determination, the Director shall provide for the
termination of the applicability and adjustment of pricing
structure under this subsection upon a date certain and shall
terminate the pricing structure on such date. On and after such
date, each association shall establish guarantee fees to be
charged by the association.
``(e) Disclosure Requirement.--
``(1) In general.--Federal Housing Finance Agency
securities shall not be registered securities under the terms
of the Securities Act of 1933 (15 U.S.C. 77a et seq.) and shall
be exempt securities for purposes of the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.).
``(2) Disclosure regulation.--Notwithstanding paragraph
(1), the Director shall, by regulation, ensure transparency of
Federal Housing Finance Agency securities by requiring each
association to publicly disclose information about the
composition of each pool of mortgages backing the security,
including the average loan-to-value ratio, the average debt-to-
income ratio, the average payment history of the mortgagors,
the number and value of mortgages from each State, the
distribution of mortgage coupon rates, and whether the
mortgages were originated in broker or non-broker channels.
``SEC. 1388. CATASTROPHIC FEDERAL GUARANTEE.
``(a) Authorization.--Subject to the limitations in subsection (b),
and such other terms and conditions that the Director deems
appropriate, the Director shall guarantee the timely payment of the
principal and interest of Federal Housing Finance Agency securities,
and the full faith and credit of the United States is hereby pledged to
the payment of all amounts which may be required to be paid as a result
of such guarantee.
``(b) Limitations.--A guarantee under this section shall apply only
if--
``(1) the association that issued the securities has been
placed into conservatorship or receivership by the Director;
and
``(2) the Reserve Fund established by section 1389 lacks
sufficient funds to make the required principal and interest
payments.
``(c) Fee.--
``(1) Establishment.--The Director shall establish, on an
annual basis, a fee to be paid by associations for a guarantee
issued under this section in connection with Federal Housing
Finance Agency securities issued by such associations.
``(2) Administration.--The Director shall impose and
collect such fee through the Office of Securitization.
``(3) Amount.--The Director shall establish the fee at a
level to ensure that amounts in the Reserve Fund are sufficient
to cover potential claims on such Fund, taking into
consideration--
``(A) general economic conditions;
``(B) trends in housing prices; and
``(C) such other factors that the Director deems
appropriate.
``(d) Special Assessment To Repay Cost of Federal Guarantee.--
``(1) In general.--If the Director is required to make
payments pursuant to the catastrophic Federal guarantee
authorized under subsection (a) in excess of the amounts in the
Reserve Fund, the Director shall impose a special assessment on
associations to recoup all costs associated with the guarantee.
``(2) Criteria.--The Director, by regulation, shall
establish criteria for the imposition of a special assessment.
Such criteria shall--
``(A) apportion the assessment equally among all
associations; and
``(B) to the extent feasible and prudent, permit
associations to pay the assessment over a period of
time so that the assessment does not cause an
association to be undercapitalized or otherwise
materially impair the operations of an association.
``(e) No Federal Support for Other Securities or Obligations of
Associations.--This Act may not be construed to authorize or provide
any guarantee of any security or obligation of an association by the
United States or any agency or instrumentality of the United States,
other than Federal Housing Finance Agency securities issued by an
association.
``SEC. 1389. RESERVE FUND.
``(a) Establishment; Credits.--The Director shall establish a
Reserve Fund, which shall be credited with all fees imposed and
collected pursuant to section 1388(c).
``(b) Organization.--The Reserve Fund shall be maintained with a
Federal Reserve Bank or with a depository institution designated as a
depository or fiscal agent of the United States.
``(c) Use.--Amounts in the Reserve Fund shall be used by the
Director, through the Office of Securitization, to make principal and
interest payments to the owners of Federal Housing Finance Agency
securities issued by an association that has been placed into
conservatorship or receivership--
``(1) for payment under guarantees issued under subsection
(a) of section 1388 only under the terms provided in subsection
(b) of such section; and
``(2) to the extent such amounts are not otherwise needed,
for investment in obligations of the United States or in
obligations guaranteed as to principal and interest by the
United States.
``(d) Treasury Advance.--
``(1) In general.--If amounts in the Reserve Fund are
insufficient to satisfy the liabilities of the Fund, the
Secretary of the Treasury shall advance to the Fund such
amounts as may be necessary to meet the obligations of the
Fund, as determined by the Director and the Secretary, and the
Director shall agree to repay such advance on such terms and
conditions as required by the Secretary.
``(2) Authorization of appropriations.--There are
authorized to be appropriated to the Secretary, without fiscal
year limitation, such sums as may be necessary to carry out
this subsection.
``SEC. 1390. SUPERVISION OF ASSOCIATIONS.
``(a) General Supervisory Authority of Director.--
``(1) In general.--The Director shall have supervisory
authority over associations, and may issue such regulations,
orders, and interpretations as the Director determines
necessary to ensure that an association operates in a safe and
sound manner.
``(2) Use of existing authority.--Except as provided in
this section, an association, an association-affiliated party,
and a limited-life association shall be subject to the same
supervisory and enforcement powers of the Director to the same
extent as if an association was a regulated entity, the
association-affiliated party was an entity-affiliated party,
and the limited-life association was a limited-life entity,
including--
``(A) the enforcement powers under sections 1371
through 1379 (12 U.S.C. 4631-9);
``(B) authority to reclassify a capital
classification (as established pursuant to subsection
(h)(2) of this section) as provided in section 1364(c)
(12 U.S.C. 4614(c));
``(C) authority to restrict capital distributions
in accordance with section 1364(e) (12 U.S.C. 4614(e));
``(D) authority to take prompt corrective
supervisory actions in response to capital
classifications as provided for in sections 1365 and
1366 (12 U.S.C. 4615, 4616); and
``(E) authority to appoint the Agency as the
conservator or a receiver in accordance with section
1367 (12 U.S.C. 4617).
``(b) Examinations.--The Director shall conduct a full-scope
examination of an association not less frequently than once every 12
months, and shall have real-time access to all data and information
related to the activities and operations of an association.
``(c) Capital Standards.--
``(1) Establishment.--The Director shall establish, by
regulation, risk-based and leverage capital standards for
associations.
``(2) Criteria.--In setting the capital standards required
by paragraph (1), the Director shall take into consideration--
``(A) the risk associated with conventional
mortgages;
``(B) underwriting standards that apply to
conventional mortgages; and
``(C) such other factors as the Director deems
appropriate.
``(d) Management and Operational Standards.--The Director shall
establish, by regulation, standards for the management and operations
of associations, including standards related to--
``(1) adequacy of internal controls and information systems
taking into account the nature and scale of business
operations;
``(2) independence and adequacy of internal audit systems;
``(3) management of interest rate risk exposure;
``(4) management of market risk, including standards that
provide for systems that accurately measure, monitor, and
control market risks and, as warranted, that establish
limitations on market risk;
``(5) adequacy and maintenance of liquidity and reserves;
``(6) management of asset growth;
``(7) investments and acquisitions of assets consistent
with this Act;
``(8) overall risk management processes, including adequacy
of oversight by senior management and the board of directors
and of processes and policies to identify, measure, monitor,
and control material risks, including reputational risks, and
for adequate, well-tested business resumption plans for all
major systems with remote site facilities to protect against
disruptive events;
``(9) management of credit and counterparty risk, including
systems to identify concentrations of credit risk and
prudential limits to restrict exposure of the association to a
single counterparty or groups of related counterparties;
``(10) maintenance of adequate records, in accordance with
consistent accounting policies and practices that enable the
Director to evaluate the financial condition of the
association; and
``(11) such other operational and management standards as
the Director determines to be appropriate.
``(e) Underwriting Standards for Conventional Mortgages.--
``(1) Regulation required.--The Director shall establish,
by regulation, underwriting standards for conventional mortgage
purchased by an association. Such standards shall be the same
as the standards established by the Bureau for Consumer
Financial Protection of the Federal Reserve System for
qualified mortgages pursuant to section 129C(b) of the Truth in
Lending Act (15 U.S.C. 1639c(b); as added by section 1412 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act
(124 Stat. 2145)).
``(2) Definition.--For purposes of this subsection, the
term `conventional mortgage' means a loan that--
``(A) is secured by a mortgage, lien, or other
security interest on a--
``(i) a one-to-four family residence that
is the principal residence of the mortgagor,
``(ii) a property comprising five or more
family dwelling units;
``(iii) a manufactured home that is the
principal residence of the mortgagor; or
``(iv) the stock or membership interest or
certificate issued to a tenant-stockholder or
resident-member of a cooperative housing
corporation, as defined in section 216 of the
Internal Revenue Code of 1986, and in the
proprietary lease, occupancy agreement, or
right of tenancy in the dwelling union of the
tenant-stockholder or resident-member in such
cooperative housing corporation;
``(B) is a subordinate mortgage or lien on--
``(i) a one-to-four family residence that
is the principal residence of the mortgage; or
``(ii) a property that comprises five or
more family dwelling units:
``(C) is not insured or guaranteed under--
``(i) the National Housing Act (12 U.S.C.
1701 et seq.);
``(ii) title V of the Housing Act of 1949
(42 U.S.C. 1471 et seq.);
``(iii) chapter 37 of title 38, United
States Code; or
``(D) meets the underwriting standards set by the
Director pursuant to paragraph (1).
``(f) Limitation on Maximum Original Principal Amount.--The
Director shall prohibit any association from purchasing any
conventional mortgage for which the maximum original principal
obligation exceeds the greater of--
``(1) 150 percent of the average home price in the United
States for a residence having the same number of dwelling units
as the residence subject to the mortgage; or
``(2) 150 percent of the median price, for the area in
which the residence subject the mortgage is located for a
residence having the same number of dwelling units as the
residence subject to the mortgage.
``(g) Reporting Requirements.--
``(1) In general.--An association shall submit to the
Director such reports, containing such information and in such
form and at such times, as the Director deems necessary to
assess the condition, operations and activities of the
association.
``(2) Information regarding areas and markets served.--
``(A) Submission of information.--The Director
shall require each association to submit data annually
to the Director that the Director determines is
sufficient to indicate the geographic areas and market
segments being served by the association.
``(B) Public availability.--Upon receipt of
information submitted pursuant to subparagraph (A), the
Director shall make such information available to the
public in a form and manner determined appropriate by
the Director.
``(h) Prompt Corrective Actions.--
``(1) Establishment and criteria.--The Director, by
regulation, shall--
``(A) establish the capital classifications
specified under paragraph (2) for associations;
``(B) establish criteria for each such capital
classification based upon the amount and types of
capital held by an association; and
``(C) classify each association according to such
capital classifications.
``(2) Capital classifications.--The capital classifications
specified under this paragraph are--
``(A) adequately capitalized;
``(B) undercapitalized;
``(C) significantly undercapitalized; and
``(D) critically undercapitalized.
``(i) Conservatorship and Receivership.--
``(1) Additional grounds for appointment.--In addition to
the grounds for the appointment of conservator or receiver
under section 1367(a)(3) (12 U.S.C. 4617(a)(3)), the Director
shall appoint the Agency as the conservator or receiver of an
association if the association fails to make a timely payment
of principal or interest on a Federal Housing Finance Agency
security issued by the association.
``(2) Limited-life association.--If the Agency is appointed
as receiver for an association, the Agency, as receiver, may
organize a limited life association to assume the assets and
purchase the liabilities of the association subject to the same
provisions applicable under section 1367(i) to a limited-life
regulated entity appointed for a regulated entity, and such
limited-life association shall, by operation of law and
immediately upon its organization, succeed to the charter of
the association and operate in accordance with such charter,
this Act, and any other provision of law to which the
association is subject.
``SEC. 1391. AGENCY OPERATIONS.
``(a) Applications Processing Division.--The Director shall
establish a division within the Agency to accept and process
applications for the formation of associations, and shall employ
accountants, financial analysts, lawyers, and such other personnel as
the Director determines necessary to evaluate the qualifications of the
organizer or organizers and the financial prospects of a proposed
association.
``(b) Auditing Division.--The Director shall establish a division
within the Agency to conduct regular audits of the processes and
systems used by associations. Such audits shall include a review of
loan files and systems for tracking loan documents.
``(c) Deputy Director for Housing Finance Guarantee Associations.--
``(1) In general.--The Agency shall have a Deputy Director
for Housing Finance Guarantee Associations, who shall be
designated by the Director from among individuals with
demonstrated understanding of housing markets and housing
finance.
``(2) Functions.--The Deputy Director for Housing Finance
Guarantee Associations shall have such functions, powers, and
duties with respect to the formation, regulation, and
supervision of associations and the operations of the Office of
Securitization as the Director shall prescribe.
``(3) Limitations.--The Deputy Director for Housing Finance
Guarantee Associations may not--
``(A) have any direct or indirect financial
interest in any association or regulated entity;
``(B) hold any office, position, or employment in
any association or regulated entity; or
``(C) have served as an executive officer or
director of any association or regulated entity at any
time during the 3-year period preceding the date of the
designation of such individual by the Director.
``(d) Annual Assessment of Agency Operations.--In addition to the
general authority of the Federal Housing Finance Oversight Board
provided under section 1313A (12 U.S.C. 4513a), the Board, annually,
shall--
``(1) conduct an assessment of the operations and resources
of the Agency to determine whether the Director and the Agency
have the powers, systems, personnel, and other resources
necessary to charter, supervise, and regulate associations;
``(2) make recommendations to the Director based upon the
assessment required in paragraph (1); and
``(3) report the results of the assessment under this
subsection and any recommendations pursuant to such assessment
to the Congress.
``(e) Assessments and Other Fees.--The Director shall establish, by
regulation, such assessments and fees the Director deems necessary to
cover the Agency's direct and indirect costs for chartering,
supervising, and regulating associations under this subtitle, including
all costs associated with the establishment and operation of the Office
of Securitization.
``SEC. 1392. APPLICABLE LAW.
``(a) In General.--All authorized activities of an association
shall be governed by Federal law and subject to exclusive regulation
and supervision by the Agency. No State may prevent or restrict an
association from engaging directly or indirectly in any activity
authorized under or pursuant to this subtitle.
``(b) Limitation.--Subsection (a) may not be construed to prevent
the application of nondiscriminatory State laws that apply to all
businesses operating in a State, including criminal, tax, and zoning
laws.
``SEC. 1393. JUDICIAL REVIEW.
``(a) In General.--An association affected by an action of the
Director may seek review of such action in an appropriate Federal
court.
``(b) Private Rights of Action.--Nothing in this Act may be
construed to create a private right of action on behalf of any person
against an association, or any officer or director of an association.
``SEC. 1394. BUDGET NEUTRALITY.
``The Director shall exercise the authority provided in this
subtitle over the formation, regulation, and supervision of
associations and the operations of the Office of Securitization so as
to ensure that associations and the Office of Securitization operate in
a manner that does not increase the budget deficit, or debt, of the
Federal Government.''.
SEC. 4. TRANSITION.
(a) Transition Plan.--Not later than six months after the date of
the enactment of this Act, the Director of the Federal Housing Finance
Agency shall submit to the Congress a plan that provides for--
(1) the winding down of the enterprises; and
(2) the formation, supervision, and regulation of
associations as provided in subtitle D of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992, as
added by the amendment made by section 3 of this Act.
(b) Contents of Plan.--The plan required by subsection (a) shall
provide for--
(1) measures to ensure the continued operation of the
enterprises during the transition period, including the
retention of qualified personnel;
(2) the transfer of qualified personnel and systems from
the enterprises to associations;
(3) the implementation of the transitional actions required
by subsections (b) through (m) of this section; and
(4) such other matters as the Director deems appropriate.
(c) Repeal of Affordable Housing Goals.--
(1) Repeal.--The Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 is amended by striking
sections 1331 through 1336 (12 U.S.C. 4561-6).
(2) Conforming amendments.--Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 is amended--
(A) in section 1303(28) (12 U.S.C. 4502(28)), by
striking ``and, for the purposes'' and all that follows
through ``designated disaster areas'';
(B) in section 1324(b)(1)(A) (12 U.S.C.
4544(b)(1)(A))--
(i) by striking clauses (i), (ii), and
(iv);
(ii) in clause (iii), by inserting ``and''
after the semicolon at the end; and
(iii) by redesignating clauses (iii) and
(v) as clauses (i) and (ii), respectively;
(C) in section 1338(c)(10) (12 U.S.C. 4568(c)(10)),
by striking subparagraph (E);
(D) in section 1339(h) (12 U.S.C. 4569), by
striking paragraph (7);
(E) in section 1341 (12 U.S.C. 4581)--
(i) in subsection (a)--
(I) in paragraph (1), by inserting
``or'' after the semicolon at the end;
(II) in paragraph (2), by striking
the semicolon at the end and inserting
a period; and
(III) by striking paragraphs (3)
and (4); and
(ii) in subsection (b)(2)--
(I) in subparagraph (A), by
inserting ``or'' after the semicolon at
the end;
(II) by striking subparagraphs (B)
and (C); and
(III) by redesignating subparagraph
(D) as subparagraph (B);
(F) in section 1345(a) (12 U.S.C. 4585(a))--
(i) in paragraph (1), by inserting ``or''
after the semicolon at the end;
(ii) in paragraph (2), by striking the
semicolon at the end and inserting a period;
and
(iii) by striking paragraphs (3) and (4);
and
(G) in section 1371(a)(2) (12 U.S.C. 4631(a)(2))--
(i) by striking ``with any housing goal
established under subpart B of part 2 of
subtitle A of this title,''; and
(ii) by striking ``section 1336 or''.
(d) Requirement for Enterprises To Pay State and Local Taxes.--
(1) Fannie mae.--Effective on the date of the enactment of
this Act, paragraph (2) of section 309(c) of the Federal
National Mortgage Association Charter Act (12 U.S.C.
1723a(c)(2)) is amended--
(A) by striking ``shall be exempt from'' and
inserting ``shall be subject to''; and
(B) by striking ``except that any'' and inserting
``and any''.
(2) Freddie mac.--Effective on the date of the enactment of
this Act, section 303(e) of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1452(e)) is amended--
(A) by striking ``shall be exempt from'' and
inserting ``shall be subject to''; and
(B) by striking ``except that any'' and inserting
``and any''.
(e) Designation of Deputy Director for Housing Finance Guarantee
Associations.--Not later than six months after the date of the
enactment of this Act, the Director shall designate the Deputy Director
for Housing Finance Guarantee Associations authorized by section
1391(c) of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992, as added by the amendment made by section 3 of
this Act.
(f) Establishment of Office of Securitization and Creation of
Standardized Mortgage Security.--Not later than 12 months after the
date of the enactment of this Act, the Director shall--
(1) provide for the establishment of the Office of
Securitization, as authorized by section 1386 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992,
as added by the amendment made by section 3 of this Act;
(2) create the standardized mortgage security forms
required by section 1387 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992, as added by the
amendment made by section 3 of this Act; and
(3) require, in a manner that does not disrupt or impair
trading in existing mortgage securities issued by the
enterprises, that the enterprises use the standardized mortgage
security forms when issuing new mortgage securities.
(g) Reduction in Mortgage Asset Portfolios of Enterprises.--
(1) In general.--Not later than 12 months after the date of
enactment of this Act, the Director shall publish, in final
form, a regulation that requires each enterprise to reduce its
total mortgage assets to not more than $250,000,000,000, within
5 years of the date of the enactment of this Act.
(2) Definition.--For purposes of this paragraph, the term
``total mortgage assets'' means, with respect to an enterprise,
mortgages, mortgage loans, mortgage-related securities,
participation certificates, mortgage-backed commercial paper,
obligations of real estate investment conduits and similar
assets, in each case to the extent that such assets would
appear on the balance sheet of the enterprise in accordance
with generally accepted accounting principles in effect in the
United States as of September 7, 2008.
(h) Increase in Guarantee Fees Charged by Enterprises.--
(1) In general.--Not later than 12 months after the date of
the enactment of this Act, the Director shall, taking into
consideration the study under section 1387(d)(1) of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992,
as added by the amendment made by section 3 of this Act, issue
in final form a regulation that directs the enterprises to
increase, over a three-year period, guarantee fees to more
accurately reflect the risk assumed by the guarantee.
(2) Definition.--For purposes of this subsection, the term
``guarantee fee'' means a fee charged by an enterprise in
connection with any guarantee, issued by the enterprise, of the
timely payment of principal and interest on securities, notes,
and other obligations based on or backed by mortgages on
residential real property. Such term includes--
(A) the guarantee fee charged by the Federal
National Mortgage Association with respect to mortgage-
backed securities; and
(B) the management and guarantee fee charged by the
Federal Home Loan Mortgage Corporation with respect to
participation certificates.
(i) Conforming Loan Limits.--Effective upon the date of the
enactment of this Act, section 146 of the Continuing Appropriations
Act, 2011 (Public Law 111-242; 124 Stat. 2615) is amended by adding at
the end the following new subsection:
``(c) Extension Until End of Conservatorships.--Notwithstanding any
provision of subsection (a) or (b), such subsections shall apply with
respect to mortgages originated during the period that begins at the
conclusion of fiscal year 2011 and ends upon the termination of the
conservatorship of the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation, as applicable, pursuant to
section 4(l) of the Housing Finance Reform Act of 2011.''.
(j) Finalization of Regulations Governing Associations, Formation
the Applications and Auditing Divisions.--Not later than 12 months
after the date of the enactment of this Act, the Director shall--
(1) issue, in final form regulations governing the
chartering, operations, and supervision of associations,
including required capital and other prudential standards; and
(2) establish the applications and auditing divisions
required by section 1391 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992, as added by the
amendment made by section 3 of this Act.
(k) Notification to Congress and Acceptance of Charter
Applications.--Following the completion of the actions required under
subsection (j), the Director shall--
(1) notify the Congress that the Agency has taken all
appropriate actions to begin the process of chartering,
supervising and regulating associations, and
(2) may commence accepting, and acting upon, applications
for the chartering of associations.
(l) Mandatory Receivership.--The Director shall place the
enterprises into receivership no later than one year after five or more
associations, two of which are not special purpose associations, have
been chartered.
(m) Federal Support for Existing Obligations of Fannie Mae and
Freddie Mac.--The full faith and credit of the United States is hereby
pledged to the payment of all debt obligations of the enterprises and
all mortgage-backed securities issued by the enterprises, until such
obligations and securities mature or are redeemed.
(n) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Agency.--The term ``Agency'' means the Federal Housing
Finance Agency.
(2) Association; conventional mortgage; office of
securitization; regulated entity.--The terms ``association'',
``conventional mortgage'', ``Office of Securitization'', and
``regulated entity'' have the meanings given such terms in
section 1381 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992.
(3) Director.--The term ``Director'' means the Director of
the Agency.
(4) Enterprise.--The term ``enterprise'' has the meaning
given such term in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502).
(5) Transition period.--The term ``transition period''
means the period that begins upon the date of the enactment of
this Act and ends upon appointment of receivers for both
enterprises pursuant to subsection (m).
SEC. 5. TECHNICAL AND CONFORMING AMENDMENTS.
Federal Housing Enterprises Financial Safety and Soundness Act of
1992 is amended--
(1) in section 1303(28) (12 U.S.C. 4502(28)), by striking
``and, for the purposes'' and all that follows through
``designated disaster areas'';
(2) in section 1324(b)(1)(A) (12 U.S.C. 4544(b)(1)(A))--
(A) by striking clauses (i), (ii), and (iv);
(B) in clause (iii), by inserting ``and'' after the
semicolon at the end; and
(C) by redesignating clauses (iii) and (v) as
clauses (i) and (ii), respectively;
(3) in section 1338(c)(10) (12 U.S.C. 4568(c)(10)), by
striking subparagraph (E);
(4) in section 1339(h) (12 U.S.C. 4569), by striking
paragraph (7);
(5) in section 1341 (12 U.S.C. 4581)--
(A) in subsection (a)--
(i) in paragraph (1), by inserting ``or''
after the semicolon at the end;
(ii) in paragraph (2), by striking the
semicolon at the end and inserting a period;
and
(iii) by striking paragraphs (3) and (4);
and
(B) in subsection (b)(2)--
(i) in subparagraph (A), by inserting
``or'' after the semicolon at the end;
(ii) by striking subparagraphs (B) and (C);
and
(iii) by redesignating subparagraph (D) as
subparagraph (B);
(6) in section 1345(a) (12 U.S.C. 4585(a))--
(A) in paragraph (1), by inserting ``or'' after the
semicolon at the end;
(B) in paragraph (2), by striking the semicolon at
the end and inserting a period; and
(C) by striking paragraphs (3) and (4); and
(7) in section 1371(a)(2) (12 U.S.C. 4631(a)(2))--
(A) by striking ``with any housing goal established
under subpart B of part 2 of subtitle A of this
title,''; and
(B) by striking ``section 1336 or''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Referred to the Subcommittee on Capital Markets and Government Sponsored Enterprises.
Referred to the Subcommittee on Insurance, Housing and Community Opportunity.
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