Housing Finance Restructuring Act of 2016

Summary: Housing Finance Restructuring Act of 2016 This bill directs the Department of the Treasury to modify the Senior Preferred Stock Purchase Agreement for each of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (enterprises) to:  reduce to zero (deem as repaid in full) the liquidation preference on the Variable Liquidation Preference Senior Preferred Stocks of each enterprise; require redemption of the Variable Liquidation Preference Senior Preferred Stock of each enterprise upon a specified date, deeming it no longer outstanding and terminating all rights of the stockholders.  Treasury shall exercise the warrants for the purchase of common stock of the enterprises under the Senior Preferred Stock Purchase Agreements. At any time an enterprise is not fully capitalized, the Federal Housing Finance Agency (FHFA) shall require that the net income (after deduction of all associated expenses) of each enterprise for the fiscal year be retained as capital reserves, and not be allocated to fund the Housing Trust Fund or the Capital Magnet Fund for affordable housing. The FHFA shall:  report a capital restoration plan for each enterprise, and  terminate the conservatorship of an enterprise when it attains an amount of capital equal to or exceeding 5% of its risk-weighted assets.  Any individual or entity adversely affected or aggrieved by action or inaction on the part of the FHFA or Treasury in violation of this bill or the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 may commence a civil action in a U.S. district court for prospective injunctive relief against the FHFA or Treasury, as appropriate.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Housing Finance Restructuring Act of 
2016''.

SEC. 2. REPAYMENT OF LIQUIDATION PREFERENCE.

    (a) Repayment and Redemption.--Not later than the expiration of the 
60-day period beginning on the date of the enactment of this Act, the 
Secretary of the Treasury shall modify the Senior Preferred Stock 
Purchase Agreement for each enterprise to provide as follows:
            (1) Deemed repayment in full.--Effective on the date of the 
        date of the enactment of this Act, the liquidation preference 
        on the Variable Liquidation Preference Senior Preferred Stocks 
        of each enterprise is reduced to zero.
            (2) Redemption of variable liquidation preference senior 
        preferred stock.--Pursuant to paragraph (1), the Variable 
        Liquidation Preference Senior Preferred Stock of each 
        enterprise shall be redeemed upon the date of the modification 
        of the Senior Preferred Stock Purchase Agreement required under 
        this subsection and, upon and after such redemption--
                    (A) shares of such Variable Liquidation Preference 
                Senior Preferred Stock of each enterprise shall no 
                longer be deemed to be outstanding and all rights of 
                the holders thereof, as such holders, shall cease;
                    (B) shares of redeemed Variable Liquidation 
                Preference Senior Preferred Stock of each enterprise 
                shall no longer have the status of authorized, issued, 
                or outstanding shares;
                    (C) the Senior Preferred Stock Purchase Agreement 
                for each enterprise shall be terminated, except that 
                sections 2.1 and 2.2 of such Agreement, as modified by 
                the Second Amendment to the Senior Preferred Stock 
                Purchase Agreement for the enterprise (dated December 
                24, 2009), shall remain in force and effect; and
                    (D) the Department of the Treasury shall retain any 
                dividend payments made by an enterprise to the 
                Department of the Treasury before the date of the 
                enactment of this Act.
    (b) No Resumption of Periodic Commitment Fee.--The Department of 
the Treasury shall not require the enterprises to pay a periodic 
commitment fee, as described in section 3.2 of the Senior Preferred 
Stock Purchase Agreements.
    (c) Exercise of Warrants for Common Stock.--Notwithstanding 
subsection (a)(2)(C) of this section, upon the enactment of this Act, 
the Department of the Treasury shall exercise the warrants for the 
purchase of common stock of the enterprises provided to the Department 
under the Senior Preferred Stock Purchase Agreements.

SEC. 3. REBUILDING OF ENTERPRISE RETAINED CAPITAL.

    (a) Applicability.--Notwithstanding any other provision of law or 
any provision of the Senior Preferred Stock Purchase Agreement for an 
enterprise, the provisions of this section shall apply to each 
enterprise, including during the term of any conservatorship of an 
enterprise pursuant to section 1367 of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617).
    (b) Use of Net Income for Capital Reserves.--At any time that an 
enterprise is not fully capitalized (as such term is defined in 
subsection (c)(3))--
            (1) section 1337 of the Federal Housing Enterprises 
        Financial Safety and Soundness Act of 1992 (42 U.S.C. 4567) 
        shall not apply to the enterprise; and
            (2) the Director shall require that, in each fiscal year, 
        the net income of each enterprise, as determined by the 
        Director, for such fiscal year shall be retained and maintained 
        by the enterprise as retained capital reserves.
    (c) Full Capitalization.--
            (1) Allocation to housing trust fund and capital magnet 
        fund.--At any time that an enterprise is fully capitalized, as 
        determined by the Director, subsection (b) shall not apply to 
        the enterprise and section 1337 of the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992 shall 
        apply to the enterprise.
            (2) Dividends.--An enterprise may not, unless the 
        enterprise is fully capitalized, declare or pay any dividend 
        (whether common or preferred) with respect to any equity 
        interests of the enterprise.
            (3) Definition.--For purposes of this subsection, the term 
        ``fully capitalized'' means, with respect to an enterprise, 
        that the enterprise maintains an amount of total capital, as 
        such term is defined in section 1303 of the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992 (12 
        U.S.C. 4502), that is equal to or exceeds 10 percent of the 
        risk-weighted assets of the enterprise.
    (d) Capital Restoration Plan.--
            (1) Requirement.--Not later than the expiration of the 45-
        day period beginning on the date of the enactment of this Act, 
        the Director shall prepare and submit to the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate 
        a capital restoration plan for each enterprise that complies 
        with section 1369C(a) of the Federal Housing Enterprises 
        Financial Safety and Soundness Act of 1992 (12 U.S.C. 4622(a)).
            (2) Annual updates.--After submission of a capital 
        restoration plan for an enterprise pursuant to paragraph (1), 
        during any period that an enterprise remains not fully 
        capitalized (as such term is defined in subsection (c)(3)), the 
        Director shall update the plan for such enterprise on an annual 
        basis and submit such updated plan to the Committees referred 
        to in paragraph (1), together with a report describing any 
        progress made toward restoring the capital of the enterprise 
        during the preceding 1-year period.
            (3) Public availability.--The Director shall make publicly 
        available each capital restoration plan prepared pursuant to 
        paragraph (1) and each updated plan prepared pursuant to 
        paragraph (2).
    (e) Termination of Conservatorships.--The Director shall terminate 
the conservatorship of an enterprise under section 1367 of the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4617) at such time that the enterprise attains, as determined by 
the Director, an amount of capital that is equal to or exceeds 5 
percent of the risk-weighted assets of the enterprise.
    (f) Regulations.--Not later than the expiration of the 180-day 
period beginning on the date of the enactment of this Act, the Director 
shall issue regulations necessary to carry out this section and the 
amendments made by this section.

SEC. 4. PRIVATE RIGHT OF ACTION.

    (a) In General.--Any individual or entity adversely affected or 
aggrieved by action or inaction on the part of the Director or the 
Secretary of the Treasury in violation of this Act or title XIII of the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 
(12 U.S.C. 4501 et seq.) may commence a civil action for prospective 
injunctive relief against the Director or the Secretary, as 
appropriate.
    (b) Equitable Relief.--In any action under this section, the court 
may award appropriate equitable relief, including temporary, 
preliminary, or permanent injunctive relief.
    (c) Costs.--In any action under this section, the court shall award 
the costs of litigation, including reasonable attorney and expert 
witness fees, to any prevailing or substantially prevailing plaintiff.
    (d) Jurisdiction.--The district courts of the United States shall 
have jurisdiction over proceedings commenced pursuant to this section 
and shall exercise the same without regard to whether the party 
aggrieved shall have exhausted any administrative or other remedies 
that may be provided for by law.

SEC. 5. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency, in the capacity of such 
        Director and in the capacity as conservator of an enterprise 
        pursuant to section 1367 of the Federal Housing Enterprises 
        Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617), as 
        the case may be.
            (2) 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).
            (3) Net income.--The term ``net income'' means, with 
        respect to an enterprise, income after deduction of all 
        associated expenses, as calculated in accordance with generally 
        accepted accounting principles.
            (4) Risk-weighted.--The term ``risk-weighted'' means, with 
        respect to the assets of an enterprise, that the amount of any 
        such assets that are single family housing mortgages meeting 
        the requirements of section 618(a)(1)(B) of the Resolution 
        Trust Corporation, Refinancing, Restructuring, and Improvement 
        Act of 1991 (12 U.S.C. 1831n note) are calculated using a risk-
        weighting of 50 percent, in the same manner required under 
        subsection (a)(1)(A) of such section 618 with respect to single 
        family housing loans.
            (5) Senior preferred stock purchase agreement.--The term 
        ``Senior Preferred Stock Purchase Agreement'' means, with 
        respect to an enterprise, the Amended and Restated Senior 
        Preferred Stock Purchase Agreements, dated September 26, 2008, 
        amended May 6, 2009, further amended December 24, 2009, and 
        further amended August 17, 2012, between the Department of the 
        Treasury and such enterprise.