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# Legislative Bulletin..................................................\............May 17, 2007

**Contents:**

> **H.R. 1427**---Amendments to the Federal Housing Finance Reform Act

H.R. 1427, the Federal Housing Finance Reform Act (sponsored by Rep.
Barney Frank, D-MA), is scheduled to be considered on the House floor
today, May 17, 2007, subject to a modified open rule (H.Res. 404),
making in order only the following 36 amendments pre-filed in the
*Congressional Record* by close of business on Wednesday, May 16, 2007,
each debatable under the five-minute rule by title of the bill (not
section). Any Member may demand a separate vote in the House on any
amendment adopted in the Committee of the Whole. The rule allows one
motion to recommit with or without instructions.

The rule waives all points of order except those regarding PAYGO and
earmarks, deems the previous question as ordered, and allows the Chair
to postpone consideration of the legislation at any time during its
consideration.

Passage of the rule will [self-execute]{.underline} (i.e. automatically
pass) an amendment adding Section 185 back to the bill, which had been
inadvertently dropped. Section 185 would set the effective date for
Title I (the Fannie Mae/Freddie Mac/Affordable Housing Fund) at [six
months]{.underline} after the bill's enactment. Some conservatives have
expressed concerns over a delayed implementation of the bill's new
regulator.

[Note]{.underline}: The summaries are based on RSC staff's review of
*actual amendment text*. For a summary of the underlying bill, see a
separate RSC document released yesterday.

**RSC Staff Contact**: Paul Teller; <paul.teller@mail.house.gov>;
202-226-9718

**1. Neugebauer (R-TX).** Makes the required assessment of the GSEs for
the Affordable Housing Fund the [option]{.underline} of:

-   1.2 cents for each hundred dollars of the average total mortgage
    portfolio of the enterprise during the preceding year (this is the
    same as the requirement in the underlying bill);

-   the number of basis points for each dollar of the average total
    mortgage portfolio of the enterprise during the preceding year,
    which when applied to such average portfolios of both enterprises
    (Fannie and Freddie), results in an aggregate allocation by the
    enterprises for the year of \$520 million; or

-   a lesser amount, as determined by the regulator, if the regulator
    determines for such year that allocation of the lesser of the two
    amounts above poses a safety or soundness concern to the enterprise.

In other words, this amendment is seeking to provide funding options for
the Affordable Housing Fund [less]{.underline} than those in the
underlying bill.

**2. *Johnson, Eddie Bernice (D-TX)*.** Adds the following eligible
activity under the Affordable Housing Fund: "a program of financial
literacy and education to promote an understanding of consumer,
economic, and personal finance issues and concepts, including saving for
retirement, managing credit, long-term care, and estate planning and
education on predatory lending, identity theft, and financial abuse
schemes," as approved by the regulator.

**3. Boozman (R-AR).** Ensures that anyone receiving assistance through
the Affordable Housing Fund is in the country legally, as determined by
the regulator.

**4. *Bean (D-IL)*.** Changes one of the factors for the regulator to
consider when crafting standards for GSE portfolio holdings (as
consistent with the mission and sound operation of the GSEs):

-   **from** "any potential risks posed by the nature of the portfolio
    holdings"

-   **to** "any potential risks posed [to the enterprises]{.underline}
    by the nature of the portfolio holdings" (emphasis added).

**5. *Green, Al (D-TX)*.** Changes the first-year allocations of the
Affordable Housing Fund grants from 75% to Louisiana disaster relief and
25% to Mississippi disaster relief to:

-   45% for Louisiana disaster relief; and

-   18.333% for each of Mississippi, Alabama, and Texas disaster relief.

**6. Terry (R-NE).** Allows the board of directors of the appropriate
FHLB to set as two the minimum number of elective directorships
designated as representing the members located in each separate state in
a bank district. The current minimum is one.

**7. *Donnelly (D-IN)*.** Stipulates that the entities providing the
required financial counseling under the Affordable Housing Fund "shall
not discriminate against any particular form of housing."

**8. Price (R-GA)/ Capito (R-WV)/ Campbell (R-CA)/ Pearce (R-NM).**
Prevents illegal immigrants from owning or renting housing built by
funds from the Affordable Housing Fund by requiring adult occupants of
such housing to establish their legal residency through the use of
secure forms of identification (a Social Security card plus photo ID, a
driver's license or ID card compliant with the REAL ID Act, a passport,
or a Homeland Security Department ID card).

**9. Price (R-GA).** Requires that the director of a GSE study and
certify to Congress that its contributions to the Affordable Housing
Fund would not contribute to its financial instability, impair its
safety and soundness, cause its undercapitalization, prevent it from
successfully completing a capital restoration plan, or result in
increased costs to borrowers under residential mortgages before it can
make any payment to the trust fund.

**10. Sessions (R-TX).** Requires the regulator to provide information
to mortgage originators about any added mortgage costs to consumers
associated with the new Affordable Housing Fund. Originators would then
have to furnish this written information to homebuyers at or before
closing to qualify their mortgages for purchase, service, holding,
lending on the security of, or selling by, the GSEs. All of the costs
associated with the new regulatory requirement created by this amendment
would be paid for with funds from the Affordable Housing Fund. The
amendment sponsor's office writes that, "the purpose is to provide
transparency to the purchasers of conforming mortgages about any added
costs created by this new, multi-billion dollar Affordable Housing
Fund."

**11. Blunt (R-MO).** Makes any grant under the Affordable Housing Fund
(to a grantee or a recipient of a grantee), or any successor fund,
subject to disclosure on the Blunt-Coburn database created in the
Federal Funding Accountability and Transparency Act of 2006 (31 U.S.C.
6101 note). To read the RSC legislative Bulletin on this Act, see S.
2590 here:
<http://www.house.gov/hensarling/rsc/doc/LB_091306_suspensions.doc>.

**12.** **Bachus (R-AL)/ Biggert (R-IL).** Strikes the Affordable
Housing Fund and all related requirements and references.

**13. *Davis (D-CA)***. Provides that the increased confirming loan
limits for high-cost areas would be considered as the Freddie Mac
conforming loan limit limitation for the purposes of current law (38
U.S.C. 3703(a)(1)) on home loan guarantees for veterans. The maximum
amount of loan guaranty is in part a function of a formula involving the
Freddie Mac conforming loan limit limitation.

**14.** **McHenry (R-NC).** Requires the regulator to review the GAO
report (in the underlying bill) on the effects that the Affordable
Housing Fund would have on the availability and affordability of credit
for homebuyers, and the extent to which the costs are passed onto the
homebuyers, and suspend the assessment requirements on a GSE if the
regulator determines that such assessment leads to increased mortgage
costs for consumers.

**15. *Kanjorski (D-PA)*.** Sets the number of people on the Board of
Enterprise for each of the two GSEs at between seven and fifteen people
(as opposed to thirteen in the underlying bill), and retains the
presidential appointee status of the board members (as under current
law, but as stricken in the underlying legislation).

**16. Feeney (R-FL).** Provides that the Affordable Housing Fund, after
2007, could only provide housing assistance for supported rental housing
for disabled homeless veterans. Strikes the formula requirement for
grant distribution under the Affordable Housing Fund and replaces it
with a requirement for distribution based on the formula used for HUD's
Continuum of Care competition.

**17. Garrett (R-NJ).** Sets new GSE portfolio guidelines. The regulator
would have to require the GSEs to hold, in their retained portfolios,
only mortgages and mortgage-backed securities that exclusively support
affordable housing, and particularly mortgages extended to households
having incomes below the median income for the area in which the
property subject to the mortgage is located. The GSEs could purchase and
retain mortgage-related assets only to the extent that the regulator
determines such actions are necessary for the GSE to maintain a sound
secondary mortgage market in a manner that cannot be achieved otherwise
and are consistent with the public interest.

**18. Garrett (R-NJ).** Prohibits the funds of the GSEs and FHLBs from
being used for lobbying.

**19. Doolittle (R-CA).** Prohibits the GSEs from obtaining primary
residential mortgages being granted to any person who does not have a
valid Social Security number. The amendment sponsor's office writes:
"Banks and other lending institutions are currently allowed to grant
mortgages to anyone possessing a Social Security number or an Individual
Taxpayer Identification Number (ITIN). Presently, ITINs are granted to
individuals who do not qualify for a Social Security number, many of
whom are illegal immigrants. Therefore, the privilege of homeownership
is being granted to those who willingly violate our laws to the
detriment of our society. Providing mortgages to those here illegally is
not only risky financially, but it also undermines the efforts we are
taking to eliminate incentives for illegal behavior."

**20. McCaul (R-TX).** Requires that any successor fund to the
Affordable Housing Fund have the same political activity restrictions as
the original Affordable Housing Fund.

**21. *Hinojosa (D-TX)*.** Allows the regulator to waive, at the request
of a state, the financial counseling requirements under the Affordable
Housing Fund, if the travel time or distance involved in providing
counseling with respect to the state or areas within a state is
excessive on an in-person basis or the cost of such travel is
prohibitive; and if the state provides alternative forms of counseling
for the waived areas, which may include interactive telephone
counseling, on-line counseling, interactive video counseling, and
interactive home study counseling.

**22. *Kanjorski (D-PA)*.** Allows the Federal Housing Enterprise Board
to recommend individuals as "independent" directors for FHLBs who are
identified by the Board's own process or included on a list of
individuals recommended by the board of directors of the FHLB involved.
The number of individuals on any such list submitted by an FHLB's board
of directors would have to be at least double the number of independent
directorships to be filled.

**23. Garrett (R-NJ).** Note: this amendment is misidentified in the
*Congressional Record* as number 22. The amendment would require the
regulator to prohibit each GSE from treating the costs of making the
required allocations to the Affordable Housing Fund as a regular
business expense of the enterprise; and from redirecting such costs,
through increased charges or fees, or decreased premiums, or in any
other manner, to the originators of mortgages purchased or securitized
by the enterprise.

**24. Garrett (R-NJ).** Amendment in the Nature of a Substitute. This
amendment is the exact same text as the committee-reported version of
H.R. 1427. It would be used at the end of amendment debate to replace
the bill as amended by any perfecting amendments on the House floor with
the bill as reported from committee (plus the committee-omitted Section
185 on the effective date for Title I). That is, this amendment, if
passed at the end of amendment consideration, would wipe out any other
amendments previously adopted to the bill on the floor.

**25. Doolittle (R-CA).** Adds as a [purpose]{.underline} of the
Affordable Housing Fund: "to increase the investment in public
infrastructure activities in counties determined to be economically
disadvantaged by virtue of receiving payments under the Secure Rural
Schools and Community Self-Determination Act of 2000 (16 U.S.C. 500
note)." Adds as an [eligible activity]{.underline} under the Affordable
Housing Fund: "public infrastructure activities, including activities to
benefit the public safety, law enforcement, public education, and public
lands, carried out \[by government agencies\] only in counties which are
determined to be economically disadvantaged by virtue of receiving
payments under the Secure Rural Schools and Community Self-Determination
Act of 2000 (16 U.S.C. 500 note)." States with such disadvantaged
counties would have to use **ALL** of their Affordable Housing Fund
grants after 2007 for the activities described above.

**26. *Blumenauer (D-OR)*.** Directs the GSEs, in establishing
requirements with respect to quality, type, class, and other purchase
standards for mortgages on one- to four-family residences, to:

-   consider the location efficiency and energy efficiency of the
    residence;

-   treat any savings resulting from location efficiency or energy
    efficiency as an equivalent reduction in recurrent monthly expenses
    of the mortgagor; and

-   increase any limit on the amount of debt under the mortgage
    allowable for the mortgagor that is based on mortgagor income to
    account for the present value of location efficiency savings and for
    the present value of energy efficiency savings.

Location efficiency means the difference between the average monthly
transportation expenses predicted for the family of the mortgagor
residing in the residence subject to the mortgage and the average
monthly transportation expenses, for families of the same size and
income as the family of the mortgagor, residing in the lower quintile of
homes in the same metropolitan area or in the nation as a whole.

**27. Roskam (R-IL)**. Provides that, for any year that immediately
follows a fiscal year in which the federal government has an actual
on-budget (excluding Social Security) deficit and an actual off-budget
(i.e. Social Security) surplus, the amount of money required to be
allocated to the Affordable Housing Fund by the GSEs could not exceed
the amount allocated to the Fund in the preceding year. In other words,
this amendment seeks to freeze what GSEs must contribute to the
Affordable Housing Fund when the federal government is not fiscally
disciplined.

**28. Hensarling (R-TX).** Prohibits non-profits *or their affiliates*
that engaged---within the previous year---in federal election activity,
voter registration activity, or electioneering communication (as defined
under campaign finance law) or in any lobbying activity above a *de
minimis* amount (as defined by the Internal Revenue Code, including the
*de minimis* exception under current law) from receiving grants from the
Affordable Housing Fund. An affiliate is defined as an entity who either
controls or is controlled by another entity, and "control" is judged to
be present when there is: (1) overlapping board members, executives, or
staff; (2) shared resources such as office space, staff members,
supplies, marketing materials, and public forms of communication
(including the Internet); (3) common funding where one entity either
receives or contributes more than 20% of its funding from another
entity; or (4) other factors that the regulator may set forth in
regulation.

**29. Hensarling (R-TX).** Requires the new regulator to suspend GSE
contributions to the Affordable Housing Fund for the three reasons
listed in the underlying bill (contributing to their financial
instability, under-capitalization, or jeopardizing their capital
restoration plan), **as well as** if such contributions lead to an
increase in the cost of mortgage rates to homebuyers.

**30. Hensarling (R-TX).** Strikes the budgetary placeholder language
for the Affordable Housing Fund, which would allow money from the Fund
to be later transferred to an as-yet-uncreated, off-budget housing trust
fund.

**31. Baker (R-LA).** Reduces the size of the Federal Housing Enterprise
Board from five members to three members, strikes the requirement that
two of the board members be Presidentially appointed experts, strikes
the four-year term limit for board members, and strikes the requirement
that the board not have more than three members of the same political
party.

**32. Hensarling (R-TX).** Strikes the high-cost area increases for the
conforming loan limits in the underlying bill.

**33. Miller, Gary (R-CA).** Strikes the requirement that the high-cost
area conforming loan limitation increases be applied only with respect
to mortgages on which are based securities issued and sold by the GSE.

**34. Brady (R-TX).** Changes the first-year allocations of the
Affordable Housing Fund grants from 75% to Louisiana disaster relief and
25% to Mississippi disaster relief to:

-   70% for Louisiana disaster relief; and

-   20% for Mississippi disaster relief; and

-   10% for Texas disaster relief.

**35. King (R-IA).** Prohibits homeownership assistance under the
Affordable Housing Fund from going to any individual who has not
furnished ID as required under the REAL ID Act and has not furnished
documentary evidence of lawful immigration status. The amendment
explicitly states that Matricula Consular cards and other forms of ID
not allowed under the REAL ID would not qualify as acceptable ID for the
Affordable Housing Fund.

**36. King (R-IA).** Strikes the section directing the FHFA to take
affirmative steps to seek diversity in its workforce and replaces it
with the following new section: "The Agency shall return to the basis of
American values and shall limit its criteria for hiring to an evaluation
of the lawful presence of the applicant and strictly to the merits of
the applicants. In an effort to return to a color-blind society, the
Agency shall strictly adhere to the Equal Protection clause of the
Constitution of the United States and to the statutory protections in
title VII of the Civil Rights Act of 1965. The Agency shall not hire,
promote, or demote based upon the criteria in such title VII. The Agency
shall not deny any person equal protection of the laws in contravention
of the Fourteenth Amendment to the Constitution of the United States."

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