Private Mortgage Market Investment Act - Directs the Director of the Federal Housing Finance Agency (FHFA) to prescribe classifications for mortgages having various degrees of credit risk, ranging from those with little to no credit risk to those with higher credit risk, with the goals of: (1) maximizing the pricing of credit risk, (2) allowing for the trading of securities collateralized by such classifications in a forward market, and (3) maintaining well functioning liquid markets in such collateralized securities.
Requires the Director to establish standards for specified categories of underwriting criteria for each classification of mortgages depending on degree of credit risk.
Requires the Director to develop, adopt, and publish standard form securitization agreements for mortgages established under this Act, according to specified criteria.
Directs the Director to develop standards for: (1) servicer reporting obligations with respect to any mortgage serving as collateral for a qualified security; (2) servicing, including a servicer succession plan; (3) documentation used to verify the financial resources of a mortgagor, and to qualify the mortgagor for any mortgage that may become collateral for a qualified security; and (4) qualified sponsors.
Requires there to be at all times one or more trustees for each pool of mortgages that acts as collateral for a qualified security.
Imposes certain duties on each trustee for the purpose of protecting investor rights.
Subjects to mandatory arbitration all disputes between an owner of a qualified security and the qualified sponsor of such security relating to representations and warranties.
Requires the Director to require sponsors of qualified securities to: (1) disclose all pertinent information relating to residential mortgage loans that constitute such securities, and (2) allow for the trading of qualified securities under this Act in a forward market.
Amends the Securities Exchange Act of 1934 to repeal credit risk retention requirements.
Amends the Securities Act of 1933 to exempt from registration requirements any qualified security conforming to standard securitization agreements under this Act.
Subjects orders of the FHFA to judicial review in the same manner, upon the same conditions, and to the same extent, as the orders of the Securities and Exchange Commission (SEC).
Subjects to civil liability any person who makes or causes to be made any statement false or misleading with respect to any material fact, or who omits to state any required material fact, with respect to securities purchased or sold under this Act.
Makes it unlawful for any person in offering, selling, or issuing any security pursuant to this Act to represent or imply in any manner that any FHFA action or failure to act means that the FHFA has in any way passed upon the merits of, or given approval to, any trustee, indenture, or security, or any related transaction or transactions. Makes it unlawful also to represent or imply that any such FHFA action or failure to act with regard to any statement or report filed with or examined by the FHFA has the effect of an FHFA finding that the statement or report is true or inaccurate on its face or that is is not false or misleading.
Subjects violations of this Act to criminal penalties of the Trust Indenture Act of 1934.
Sets forth requirements for the disclosure of loan-level information to investors, relating agencies, and regulators.
Requires the SEC to revise its rules and regulations to require sponsors of asset-backed securities to file a preliminary prospectus containing all material terms of the transaction at least five days before investors make an investment decision.
Directs the SEC to require: (1) the dissemination of transaction, volume, and pricing information of trades in asset-backed securities; and (2) the assignment of a unique alphanumeric code to each mortgage loan involving a residential mortgage-backed security.
Grants the servicer of a securitized senior mortgage loan the right to charge the borrower an additional monthly fee if the borrower, with respect to the dwelling serving as security for the loan, enters into any credit transaction that would otherwise result in the creation of a new mortgage or other lien on the dwelling if the loan-to-value ratio of the credit transaction amount is 80% or more.
Prohibits the servicer of a residential mortgage loan (or an affiliate) from owning or holding any interest in any other residential mortgage loan secured by the same dwelling or residential real property.
Amends the Truth in Lending Act to: (1) revise the exception of qualified residential mortgage loans from the requirement that creditor make a reasonable and good faith determination based on verified and documented information that, at the time a loan is consummated, the consumer has a reasonable ability to repay it; and (2) direct specified agencies to prescribe rules defining the types of loans they insure, guarantee, or administer, as the case may be, that are qualified mortgages.
Declares that the Federal Deposit Insurance Corporation (FDIC) safe harbor rule shall apply to any pool of mortgages that meets FHFA standards and is securitized in accordance with them.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3644 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 3644
To increase standardization, transparency, and to ensure the rule of
law in the mortgage-backed security system, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 13, 2011
Mr. Garrett (for himself, Mr. Bachus, Mr. Hensarling, Mr. Schweikert,
Mr. Neugebauer, Mrs. Biggert, and Mrs. Capito) introduced the following
bill; which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To increase standardization, transparency, and to ensure the rule of
law in the mortgage-backed security system, and for 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Private Mortgage
Market Investment Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; Table of contents.
TITLE I--STANDARDIZATION AND UNIFORMITY
Sec. 101. Facilitating continued standardization and uniformity.
Sec. 102. Repeal of credit risk retention provisions.
Sec. 103. Exemption from registration of certain securities conforming
to standard securitization agreements.
Sec. 104. Judicial review.
Sec. 105. Liability for misleading statements.
Sec. 106. Unlawful representation.
Sec. 107. Penalties.
Sec. 108. Contrary stipulations void.
TITLE II--TRANSPARENCY
Sec. 201. Requirements for the disclosure of loan-level information to
investors, rating agencies, and regulators.
Sec. 202. Mandatory period for review of loan-level information prior
to investment.
Sec. 203. Dissemination of pricing information of asset-backed
securities.
Sec. 204. Alphanumeric identification of residential mortgage loans in
asset-backed securities.
TITLE III--ENSURING THE RULE OF LAW
Sec. 301. Ensure rule of law and legal certainty.
Sec. 302. Limitation on mortgages held by loan servicers.
Sec. 303. Clarification of qualified mortgage exception.
Sec. 304. FDIC safe harbor.
Sec. 305. Effective date.
TITLE I--STANDARDIZATION AND UNIFORMITY
SEC. 101. FACILITATING CONTINUED STANDARDIZATION AND UNIFORMITY.
(a) Establishment of Standard Mortgage Classifications.--
(1) Establishment.--The Director of the Federal Housing
Finance Agency (hereinafter in this Act referred to as the
``Director'') shall, for purposes of this section, prescribe
classifications for mortgages having various degrees of credit
risk, ranging from a classification of mortgages having little
to no credit risk to a classification of mortgages having
higher credit risk, with the goals of maximizing the pricing of
credit risk, allowing for the trading of securities
collateralized by the classifications of mortgages established
pursuant to this section in a forward market, and maintaining
well functioning liquid markets in securities collateralized by
each of the classifications of mortgages established pursuant
to this section.
(2) Underwriting criteria standards.--
(A) Underwriting criteria.--For each of the
classifications of mortgages established under
paragraph (1), the Director shall establish standards
for each of the following underwriting criteria:
(i) Debt-to-income ratio.--The ratio of the
amount of the total monthly debt of the
mortgagor to the amount of the monthly income
of the mortgagor.
(ii) Loan-to-value ratio.--The ratio of the
original principal obligation under the
mortgage to the original value of the residence
subject to the mortgage.
(iii) Credit history.--Information on the
credit history of the mortgagor, including the
credit score of the mortgagor.
(iv) Loan documentation.--The extent of
loan documentation and verification of the
financial resources of the mortgagor used to
qualify the mortgagor for the mortgage.
(v) Occupancy.--Whether the residence
subject to the mortgage is occupied by the
mortgagor.
(vi) Credit enhancement.--Whether any
mortgage insurance or other type of insurance
or credit enhancement was obtained at the time
of origination.
(vii) Loan payment terms.--
(I) In general.--The terms of the
mortgage that determine the magnitude
and timing of payments due from the
mortgagor, including the term to
maturity of the mortgage, the frequency
of payment, the type of amortization,
any prepayment penalties, and whether
the interest rate is fixed or may vary.
(II) Inclusion of 30-year fixed
interest rate.--Terms established under
subclause (I) shall include a 30-year
fixed interest rate mortgage.
(viii) Other.--Such other underwriting
criteria as the Director may establish
consistent with the goals of this title.
(B) Objective.--In developing the underwriting
criteria standards under subparagraph (A), the Director
shall seek to ensure that such standards are readily
identifiable to sponsors of, and investors in,
securities collateralized by mortgages so that such
sponsors and investors can clearly determine the
classification to which a mortgage belongs.
(3) Definitions.--The Director shall, for purposes of this
subsection, prescribe definitions for each of the following
terms:
(A) Mortgage.--The term ``mortgage'', which
definition shall include only mortgages on residential
properties.
(B) Default.--The term ``default'', with respect to
a mortgage.
(C) Delinquency.--The term ``delinquency'', with
respect to a mortgage.
(D) Loan documentation.--The term ``loan
documentation'', with respect to a mortgage.
(E) Additional terms.--Such other terms as the
Director may establish.
(b) Standard Form Securitization Agreements.--
(1) In general.--The Director shall develop, adopt, and
publish standard form securitization agreements for mortgages
established under subsection (a).
(2) Required content.--The standard form securitization
agreements to be developed under paragraph (1) shall only
include terms relating to--
(A) pooling and servicing;
(B) purchase and sale;
(C) representations and warranties, including
representations and warranties as to compliance or
conformity with standards established by the Director
pursuant to subsections (c), (d), (e), and (f), as
appropriate;
(D) indemnification and remedies, including
principles of a repurchase program that will ensure an
appropriate amount of risk retention under the
representations and warranties set forth under
subparagraph (C); and
(E) the qualification, responsibilities, and duties
of trustees.
(3) Public involvement.--In issuing rules and regulations
under this section, the Director shall allow appropriate notice
and comment in accordance with the chapter 5 of title 5, United
States Code (commonly referred to as the ``Administrative
Procedures Act''). The Director shall work with industry
groups, including servicers, originators, and mortgage
investors to develop the standards under this title.
(4) Qualified security.--For purposes of this title, the
term ``qualified security'' means a security that--
(A) is issued in accordance with a standard form
securitization agreement;
(B) is issued by a qualified sponsor;
(C) is collateralized by a class, or multiple
classes, of mortgages established under this title; and
(D) is not guaranteed, in whole or in part, by the
United States Government.
(c) Standards for Servicer Reporting.--The Director shall develop,
adopt, and publish standards for the reporting obligations of servicers
of any mortgage that serves as collateral for a qualified security.
(d) Standards for Servicing.--The Director shall develop, adopt,
and publish--
(1) servicing standards, including for the modification,
restructuring, or work-out of any mortgage that serves as
collateral for a qualified security; and
(2) a servicer succession plan which may include provisions
for--
(A) a specialty servicer that can replace the
existing servicer if the performance of the mortgage
pool deteriorates to specified levels; and
(B) a plan to achieve consistency in servicing
systems related to systematic note-taking, consistent
mailing addresses, and other points of contact for
borrowers to use, among other items.
(e) Standards for Documentation.--The Director shall develop, adopt
and publish standards for documentation used to verify the financial
resources of a mortgagor and to qualify the mortgagor for any mortgage
that may become collateral for any qualified security, including the
form, content, and method of documentation of any such mortgage. Such
standards shall also address any custodial or delivery obligations
related to such documents.
(f) Standards for Qualified Sponsors.--
(1) In general.--The Director shall develop, adopt, and
publish standards for a sponsor to qualify as a qualified
sponsor. Such standards shall only include--
(A) the experience and integrity of the sponsor and
its principals, including compliance history with
Federal and State laws;
(B) the adequacy of insurance and fidelity coverage
of the sponsor with respect to errors and omissions;
and
(C) a requirement that the sponsor submit audited
financial statements to the Director, who shall make
such statements publicly available through the Federal
Housing Finance Agency's website.
(2) Application process.--
(A) In general.--The Director shall establish an
application process for the qualification of sponsors,
in such form and manner and requiring such information
as the Director may require, in accordance with
standards adopted under paragraph (1).
(B) Approval.--The Director shall approve any
application made pursuant to subparagraph (A) unless
the sponsor does not meet the standards adopted under
paragraph (1).
(C) Publication.--The Director shall publish a list
of newly qualified sponsors in the Federal Register and
maintain an updated list of qualified sponsors on the
Federal Housing Finance Agency's website.
(3) Review and revocation of qualified status.--
(A) In general.--The Director may only review the
status of a qualified sponsor if the Director is
notified that a claim has been made against the sponsor
by a trustee with respect to a violation of a
contractual term in a securitization document of the
sponsor.
(B) Revocation.--
(i) In general.--Subject to subparagraph
(C), if the Director determines, in a review
pursuant to subparagraph (A), that a sponsor no
longer meets the standards for qualification,
the Director shall revoke the sponsor's
qualified status.
(ii) Construction.--The revocation of a
sponsor's qualified status under this
subparagraph shall--
(I) have no effect on the qualified
status of any security; and
(II) not relieve the sponsor of any
representations, warranties, or
repurchase obligations related to any
qualified security issued before such
revocation.
(C) Grace period.--The Director shall issue
regulations that permit a qualified sponsor who no
longer meets the standards for qualification to have a
grace period during which the sponsor can work to meet
such standards without losing the sponsor's qualified
status.
(D) Publication.--The Director shall publish a list
of sponsors who lost their qualified status in the
Federal Register and maintain an updated list of such
sponsors on the Federal Housing Finance Agency's
website.
(g) Standards for Trustees.--
(1) In general.--There shall at all times be one or more
trustee for each pool of mortgages that acts as collateral for
a qualified security.
(2) Rulemaking.--The Director shall issue regulations
regarding the qualifications of trustees under paragraph (1)
that shall, to the extent practicable, be the same as the
qualification provisions applicable to trustees under section
310(a) of the Trust Indenture Act of 1934 (15 U.S.C. 77jjj(a)).
(3) Conflicts of interest.--The Director shall issue
conflict of interest regulations that apply to a qualified
trustee. Such regulations shall, to the extent practicable, be
the same as those conflict of interest provisions applicable to
an indenture trustee under section 310(b) of the Trust
Indenture Act of 1934 (15 U.S.C. 77jjj(b)).
(4) Reporting of claims.--Any time a trustee brings a claim
against a qualified sponsor on behalf of investors with respect
to a standard form securitization agreement, the trustee shall
notify the Director of such claim.
(5) Protection of investor rights.--For the purpose of
protecting investor rights, each trustee shall--
(A) maintain a list of all investors (beneficial
owners) in a qualified security;
(B) update such list from time to time;
(C) not make such list available to investors
(beneficial owners); and
(D) act as a means to communicate information about
the qualified security to investors (beneficial owners)
and act as a means for investors (beneficial owners) to
communicate with each other.
(6) No liability for certain communications.--A trustee
shall not be liable for the content of any information provided
to the trustee by an investor (beneficial owner) that the
trustee communicates to another investor (beneficial owner).
(7) Investor (beneficial owner) notification of trustee.--A
person who becomes an investor (beneficial owner) in a
qualified security shall promptly notify the trustee of such
security of the change in ownership.
(h) Independent Third Party.--If the majority of investors in a
pool of qualified securities choose to hire an independent third party
to act on behalf of the best interests of the investors (beneficial
owners), such party shall--
(1) be granted access to the loan documents for the
mortgage loans backing such security and all servicing reports
the servicer provides to investors (beneficial owners) or the
trustee;
(2) be granted access to the list of investors (beneficial
owners) maintained by the trustee, on the condition that the
independent third party will not make the list available to the
investors (beneficial owners); and
(3) have the right, on behalf of the investors (beneficial
owners), to inform the trustee of such securities of any breach
of the securitization agreement identified by the third party.
(i) Timing; Authority To Revise Standards.--
(1) Timing.--The Director shall develop, adopt, and publish
the standards required under this title, not later than the
expiration of the 12-month period beginning upon the date of
the enactment of this title.
(2) Authority to revise.--
(A) In general.--The Director may review, revise
and, if revised, re-publish any standard form
securitization agreement or other standard required to
be developed under this section if the Director
determines review or revision to be necessary or
appropriate to satisfy the goals of this title.
(B) Application of revisions.--Any revision made
pursuant to subparagraph (A) shall only apply to
securitizations made after the date of such revision.
(j) Mandatory Arbitration.--
(1) In general.--All disputes between an owner of a
qualified security and the qualified sponsor of such security
relating to representations and warranties shall be subject to
mandatory arbitration procedures established by the Director,
in accordance with current market practices.
(2) Selection of arbitrator.--Investors (beneficial owners)
and sponsors subject to a dispute described under paragraph (1)
shall have the right to agree on an independent arbitrator. If
the parties cannot agree on an independent arbitrator, the
Director shall select an independent arbitrator for the
parties.
(3) Reporting duty of arbitrator.--
(A) Upon commencement.--The arbitrator shall
provide the Federal Housing Finance Agency with notice
upon the commencement of any arbitration under this
subsection.
(B) Upon conclusion.--Upon the conclusion of any
arbitration under this subsection, the arbitrator shall
provide the Federal Housing Finance Agency with--
(i) the decision reached by the arbitrator;
and
(ii) the basis for the arbitrator's
decision, including any evidence or testimony
received during the arbitration process.
(k) Disclosure of Information.--
(1) In general.--
(A) In general.--Not later than 6 months after the
date of the enactment of this Act, the Director shall,
by rule--
(i) require sponsors of qualified
securities to disclose all pertinent
information relating to the residential
mortgage loans that comprise such securities,
including information set forth in the
underwriting standards established under
subsection (a); and
(ii) allow for the trading of qualified
securities under this title in a forward
market.
(B) Privacy protections.--In prescribing the rules
required under this paragraph, the Director shall take
into consideration issues of consumer privacy and all
statutes, rules, and regulations related to privacy of
consumer credit information and personally identifiable
information. Such rules shall expressly prohibit the
identification of specific borrowers.
(2) Consultation.--In issuing any rules or regulations
under this subsection, the Director shall consult with the
Securities and Exchange Commission.
SEC. 102. REPEAL OF CREDIT RISK RETENTION PROVISIONS.
(a) In General.--Section 15G of the Securities Exchange Act of 1934
(15 U.S.C. 78o-11) is repealed and any regulations promulgated under
such section shall have no force or effect.
(b) Conforming Amendment.--Section 27B of the Securities Act of
1933 is amended by striking subsection (d).
(c) Prohibition.--The Office of the Comptroller of the Currency,
the Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Bureau of Consumer Financial
Protection, and the Securities and Exchange Commission shall not issue
any rule or regulation to require risk retention, any premium capture
cash reserve account, or any similar mechanism, unless directly
authorized by an Act of Congress.
SEC. 103. EXEMPTION FROM REGISTRATION OF CERTAIN SECURITIES CONFORMING
TO STANDARD SECURITIZATION AGREEMENTS.
Section 3(a) of the Securities Act of 1933 (15 U.S.C. 77c(a)) is
amended by adding at the end the following:
``(14) Any qualified security, as such term is defined
under section 101(b)(4) of the Private Mortgage Market
Investment Act.''.
SEC. 104. JUDICIAL REVIEW.
(a) In General.--Orders of the Federal Housing Finance Agency under
this title shall be subject to review in the same manner, upon the same
conditions, and to the same extent, as provided in section 9 of the
Securities Act of 1933, with respect to orders of the Securities and
Exchange Commission under such title.
(b) Jurisdiction.--Jurisdiction of offenses and violations under,
and jurisdiction and venue of suits and actions brought to enforce any
liability or duty created by, this Act, or any rules or regulations or
orders prescribed under the authority thereof, shall be as provided in
section 22(a) of the Securities Act of 1933.
SEC. 105. LIABILITY FOR MISLEADING STATEMENTS.
(a) In General.--Any person who shall make or cause to be made any
statement in any application, report, or document filed with the
Federal Housing Finance Agency pursuant to any provisions of this
title, or any rule, regulation, or order thereunder, which statement
was at the time and in the light of the circumstances under which it
was made false or misleading with respect to any material fact, or who
shall omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, shall be
liable to any person (not knowing that such statement was false or
misleading or of such omission) who, in reliance upon such statement or
omission, shall have purchased or sold a security issued under the
indenture to which such application, report, or document relates, for
damages caused by such reliance, unless the person sued shall prove
that he acted in good faith and had no knowledge that such statement
was false or misleading or of such omission. A person seeking to
enforce such liability may sue at law or in equity in any court of
competent jurisdiction. In any such suit the court may, in its
discretion, require an undertaking for the payment of the costs of such
suit and assess reasonable costs, including reasonable attorneys' fees,
against either party litigant, having due regard to the merits and good
faith of the suit or defense. No action shall be maintained to enforce
any liability created under this section unless brought within one year
after the discovery of the facts constituting the cause of action and
within three years after such cause of action accrued.
(b) Rights and Remedies Under Other Law.--The rights and remedies
provided by this title shall be in addition to any and all other rights
and remedies that may exist under the Securities Act of 1933 or the
Securities Exchange Act of 1934 or otherwise at law or in equity; but
no person permitted to maintain a suit for damages under the provisions
of this title shall recover, through satisfaction of judgment in one or
more actions, a total amount in excess of his actual damages on account
of the act complained of.
SEC. 106. UNLAWFUL REPRESENTATION.
It shall be unlawful for any person in offering, selling, or
issuing any security pursuant to this title to represent or imply in
any manner whatsoever that any action or failure to act by the Federal
Housing Finance Agency in the administration of this title means that
the Federal Housing Finance Agency has in any way passed upon the
merits of, or given approval to, any trustee, indenture, or security,
or any transaction or transactions therein, or that any such action or
failure to act with regard to any statement or report filed with or
examined by the Federal Housing Finance Agency pursuant to this title
or any rule, regulation, or order thereunder, has the effect of a
finding by the Federal Housing Finance Agency that such statement or
report is true and accurate on its face or that it is not false or
misleading.
SEC. 107. PENALTIES.
Any person who willfully violates any provision of this title or
any rule, regulation, or order thereunder, or any person who willfully,
in any application, report, or document filed or required to be filed
under the provisions of this title or any rule, regulation, or order
thereunder, makes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, shall be subject to the
penalties set forth under section 325 of the Trust Indenture Act of
1934 (15 U.S.C. 77yyy).
SEC. 108. CONTRARY STIPULATIONS VOID.
Any condition, stipulation, or provision binding any person to
waive compliance with any provision of this title or with any rule,
regulation, or order thereunder shall be void.
TITLE II--TRANSPARENCY
SEC. 201. REQUIREMENTS FOR THE DISCLOSURE OF LOAN-LEVEL INFORMATION TO
INVESTORS, RATING AGENCIES, AND REGULATORS.
(a) Rules.--Not later than 6 months after the date of the enactment
of this title, the Securities and Exchange Commission shall, by rule,
require sponsors of residential mortgage-backed securities to disclose
all pertinent information relating to the residential mortgage loans
that comprise such securities, including information regarding the
income and credit score of borrowers, the loan to value ratios, the
remaining term to maturity of the loans, and require loan-level data to
be updated on a monthly basis. Such rules shall apply to residential
mortgage-backed securities that--
(1) are registered pursuant to section 6 of the Securities
Act of 1933 (15 U.S.C. 77f); and
(2) are offered or sold in reliance on Regulation D (17 CFR
230.506) and Rule 144A (17 CFR 230.144A) of the Commission.
(b) Privacy Protections.--In prescribing the rules required under
subsection (a), the Commission shall take into consideration issues of
consumer privacy and all statutes, rules, and regulations related to
privacy of consumer credit information and personally identifiable
information. Such rules shall expressly prohibit the identification of
specific borrowers.
(c) Rules Not Applicable to Qualified Securities.--The rules
prescribed under subsection (a) shall not apply to any qualified
security, as such term is defined under section 101(b)(4).
SEC. 202. MANDATORY PERIOD FOR REVIEW OF LOAN-LEVEL INFORMATION PRIOR
TO INVESTMENT.
Not later than 6 months after the date of the enactment of this
title, the Securities and Exchange Commission shall revise its rules
and regulations to require sponsors of asset-backed securities under
section 5 of the Securities Act of 1933 (15 U.S.C. 77e) to file a
preliminary prospectus containing all material terms of the transaction
at least 5 days before investors make an investment decision.
SEC. 203. DISSEMINATION OF PRICING INFORMATION OF ASSET-BACKED
SECURITIES.
Not later than 6 months after the date of the enactment of this
title, the Securities and Exchange Commission shall, by rule, require
the dissemination of transaction, volume, and pricing information of
trades in asset-backed securities. Such rules shall require the
dissemination of such information, with exceptions as may be prescribed
by the Commission in the public interest, while taking into
consideration the effect of such dissemination on market liquidity,
through the Financial Industry Regulatory Authority's fixed income
transparency facility, referred to as Trade Reporting and Compliance
Engine (TRACE), or through a similar vehicle.
SEC. 204. ALPHANUMERIC IDENTIFICATION OF RESIDENTIAL MORTGAGE LOANS IN
ASSET-BACKED SECURITIES.
Not later than 6 months after the date of the enactment of this
title, the Securities and Exchange Commission shall, by rule, require
that each mortgage loan comprising a residential mortgage-backed
security be assigned and carry with it a unique alphanumeric code that
identifies the loan in order to facilitate ascertaining relevant
information about the loan.
TITLE III--ENSURING THE RULE OF LAW
SEC. 301. ENSURE RULE OF LAW AND LEGAL CERTAINTY.
(a) Junior Mortgage or Lien.--With respect to the dwelling of a
borrower that serves as security for a securitized senior mortgage
loan, if the borrower enters into any credit transaction that would
result in the creation of a new mortgage or other lien on such dwelling
where the loan-to-value ratio of such credit transaction amount is 80
percent or more, the servicer of the senior mortgage loan shall have
the right to charge the borrower an additional monthly fee in an amount
sufficient to offset the increased risk to repayment of such loan
because of the creation of the new mortgage or other lien.
(b) Notice of Junior Mortgage or Lien.--With respect to the
dwelling of a borrower that serves as security for a securitized senior
mortgage loan, if the borrower enters into any credit transaction that
would result in the creation of a new mortgage or other lien on such
dwelling, the creditor of such new mortgage or other lien shall notify
the servicer of the senior mortgage loan of the existence of the new
mortgage or other lien.
(c) Prevention of Forced Principal Write-Downs.--With respect to a
securitized mortgage loan, no Federal department or agency, including
the Board of Governors of the Federal Reserve System and the Bureau of
Consumer Financial Protection, may require a reduction in the principal
amount owed on such mortgage loan.
SEC. 302. LIMITATION ON MORTGAGES HELD BY LOAN SERVICERS.
(a) Limitation.--Neither the servicer of a residential mortgage
loan, nor any affiliate of such servicer, may own, or hold any interest
in, any other residential mortgage loan that is secured by a mortgage,
deed of trust, or other equivalent consensual security interest on the
same dwelling or residential real property that is subject to the
mortgage, deed of trust, or other security interest that secures the
residential mortgage loan serviced by the servicer.
(b) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Affiliate.--The term ``affiliate'' means, with respect
to a servicer, any person or entity that controls, is
controlled by, or is under common control with such servicer,
as the Director shall prescribe by regulation.
(2) Residential mortgage loan.--The term ``residential
mortgage loan'' means any consumer credit transaction that is
secured by a mortgage, deed of trust, or other equivalent
consensual security interest on a dwelling or on residential
real property that includes a dwelling, other than a consumer
credit transaction under an open end credit plan or an
extension of credit relating to a plan described in section
101(53D) of title 11, United States Code.
(3) Servicer.--The term ``servicer'' has the meaning
provided in section 129A of the Truth in Lending Act, except
that such term includes a person who makes or holds a
residential mortgage loan (including a pool of residential
mortgage loans) if such person also services the loan.
(c) Interests.--For purposes of subsection (a), ownership of, or
holding an interest in a residential mortgage loan includes ownership
of, or holding an interest in--
(1) a pool of residential mortgage loans that contains such
residential mortgage loan; or
(2) any security based on or backed by a pool of
residential mortgage loans that contains such residential
mortgage loan.
(d) Effective Date.--This section shall apply--
(1) with respect to the servicer (or affiliate of the
servicer) of a residential mortgage loan that is originated
after the date of the enactment of this Act, on such date of
enactment; and
(2) with respect to the servicer (or affiliate of the
servicer) of a residential mortgage loan that is originated on
or before the date of the enactment of this Act, upon the
expiration of the 12-month period beginning upon such date of
enactment.
SEC. 303. CLARIFICATION OF QUALIFIED MORTGAGE EXCEPTION.
Subsection (b) of section 129C of the Truth in Lending Act is
amended--
(1) in the heading of such subsection, by striking
``Presumption of Ability To Repay'' and inserting ``Exception
for Qualified Mortgages'';
(2) by amending paragraph (1) to read as follows:
``(1) In general.--Subsection (a) shall not apply to a
residential mortgage loan that is a qualified mortgage.''; and
(3) in paragraph (3), by amending subparagraph (B) to read
as follows:
``(B) Loan definition.--The following agencies
shall, in consultation with the Bureau, prescribe rules
defining the types of loans they insure, guarantee, or
administer, as the case may be, that are qualified
mortgages for purposes of paragraph (2)(A):
``(i) The Department of Housing and Urban
Development, with regard to mortgages insured
under the National Housing Act (12 U.S.C. 1707
et seq.).
``(ii) The Department of Veterans Affairs,
with regard to a loan made or guaranteed by the
Secretary of Veterans Affairs.
``(iii) The Department of Agriculture, with
regards to loans guaranteed by the Secretary of
Agriculture pursuant to section 502(h) of the
Housing Act of 1949 (42 U.S.C. 1472(h)).
``(iv) The Rural Housing Service, with
regards to loans insured by the Rural Housing
Service.''.
SEC. 304. FDIC SAFE HARBOR.
If a pool of mortgages meets the standards set forth by the Federal
Housing Finance Agency pursuant to title I and is securitized in
accordance with the standards set forth under title I, then the Federal
Deposit Insurance Corporation safe harbor rule under section 360.6 of
title 12, Code of Federal Regulations, shall apply to the pool of
mortgages.
SEC. 305. EFFECTIVE DATE.
Except as otherwise specifically provided, this title and the
amendments made by this title shall take effect on the date of the
enactment of this Act.
<all>
Hearings Held by the Subcommittee on Capital Markets and Government Sponsored Enterprises Prior to Introduction.
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.
Subcommittee Consideration and Mark-up Session Held.
Forwarded by Subcommittee to Full Committee (Amended) by the Yeas and Nays: 18 - 15 .
Referred to the Subcommittee on Financial Institutions and Consumer Credit.
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