A bill to establish a Federal Board of Certification to enhance the transparency, credibility, and stability of financial markets, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Board of Certification Act 
of 2008''.

SEC. 2. PURPOSE.

    It is the purpose of this Act to establish a Federal Board of 
Certification, which shall certify that the mortgages within a security 
instrument meet the underlying standards they claim to meet with 
regards to mortgage characteristics including but not limited to: 
documentation, loan to value ratios, debt service to income ratios, and 
borrower credit standards and geographic concentration. The purpose of 
this certification process is to increase the transparency, 
predictability and reliability of securitized mortgage products.

SEC. 3. DEFINITIONS.

    As used in this Act--
            (1) the term ``Board'' means the Federal Board of 
        Certification established under this Act;
            (2) the term ``mortgage security'' means an investment 
        instrument that represents ownership of an undivided interest 
        in a group of mortgages;
            (3) the term ``insured depository institution'' has the 
        same meaning as in section 3 of the Federal Deposit Insurance 
        Act (12 U.S.C. 1803); and
            (4) the term ``Federal financial institutions regulatory 
        agency'' has the same meaning as in section 1003 of the Federal 
        Financial Institutions Examination Council Act of 1978 (12 
        U.S.C. 3302).

SEC. 4. VOLUNTARY PARTICIPATION.

    Market participants, including firms that package mortgage loans 
into mortgage securities, may elect to have their mortgage securities 
evaluated by the Board.

SEC. 5. STANDARDS.

    The Board is authorized to promulgate regulations establishing 
enumerated security standards which the Board shall use to certify 
mortgage securities. The Board shall promulgate standards which shall 
certify that the mortgages within a security instrument meet the 
underlying standards they claim to meet with regards to documentation, 
loan to value ratios, debt service to income rations and borrower 
credit standards. The standards should protect settled investor 
expectations, and increase the transparency, predictability and 
reliability of securitized mortgage products.

SEC. 6. COMPOSITION.

    (a) Establishment; Composition.--There is established the Federal 
Board of Certification, which shall consist of--
            (1) the Comptroller of the Currency;
            (2) the Secretary of Housing and Urban Development;
            (3) a Governor of the Board of Governors of the Federal 
        Reserve System designated by the Chairman of the Board;
            (4) the Undersecretary of the Treasury for Domestic 
        Finance; and
            (5) the Chairman of the Securities and Exchange Commission.
    (b) Chairperson.--The members of the Board shall select the first 
chairperson of the Board. Thereafter the position of chairperson shall 
rotate among the members of the Board.
    (c) Term of Office.--The term of each chairperson of the Board 
shall be 2 years.
    (d) Designation of Officers and Employees.--The members of the 
Board may, from time to time, designate other officers or employees of 
their respective agencies to carry out their duties on the Board.
    (e) Compensation and Expenses.--Each member of the Board shall 
serve without additional compensation, but shall be entitled to 
reasonable expenses incurred in carrying out official duties as such a 
member.

SEC. 7. EXPENSES.

    The costs and expenses of the Board, including the salaries of its 
employees, shall be paid for by excise fees collected from applicants 
for security certification from the Board, according to fee scales set 
by the Board.

SEC. 8. BOARD RESPONSIBILITIES.

    (a) Establishment of Principles and Standards.--The Board shall 
establish, by rule, uniform principles and standards and report forms 
for the regular examination of mortgage securities.
    (b) Development of Uniform Reporting System.--The Board shall 
develop uniform reporting systems for use by the Board in ascertaining 
mortgage security risk. The Board shall assess, and publicly publish, 
how it evaluates and certifies the composition of mortgage securities.
    (c) Affect on Federal Regulatory Agency Research and Development of 
New Financial Institutions Supervisory Agencies.--Nothing in this Act 
shall be construed to limit or discourage Federal regulatory agency 
research and development of new financial institutions supervisory 
methods and tools, nor to preclude the field testing of any innovation 
devised by any Federal regulatory agency.
    (d) Annual Report.--Not later than April 1 of each year, the Board 
shall prepare and submit to Congress an annual report covering its 
activities during the preceding year.
    (e) Reporting Schedule.--The Board shall determine whether it wants 
to evaluate mortgage securities at issuance, on a regular basis, or 
upon request.

SEC. 9. BOARD AUTHORITY.

    (a) Authority of Chairperson.--The chairperson of the Board is 
authorized to carry out and to delegate the authority to carry out the 
internal administration of the Board, including the appointment and 
supervision of employees and the distribution of business among 
members, employees, and administrative units.
    (b) Use of Personnel, Services, and Facilities of Federal Financial 
Institutions Regulatory Agencies, and Federal Reserve Banks.--In 
addition to any other authority conferred upon it by this Act, in 
carrying out its functions under this Act, the Board may utilize, with 
their consent and to the extent practical, the personnel, services, and 
facilities of the Federal financial institutions regulatory agencies, 
and Federal Reserve banks, with or without reimbursement therefor.
    (c) Compensation, Authority, and Duties of Officers and Employees; 
Experts and Consultants.--The Board may--
            (1) subject to the provisions of title 5, United States 
        Code, relating to the competitive service, classification, and 
        General Schedule pay rates, appoint and fix the compensation of 
        such officers and employees as are necessary to carry out the 
        provisions of this Act, and to prescribe the authority and 
        duties of such officers and employees; and
            (2) obtain the services of such experts and consultants as 
        are necessary to carry out this Act.

SEC. 10. BOARD ACCESS TO INFORMATION.

    For the purpose of carrying out this Act, the Board shall have 
access to all books, accounts, records, reports, files, memorandums, 
papers, things, and property belonging to or in use by Federal 
financial institutions regulatory agencies, including reports of 
examination of financial institutions, their holding companies, or 
mortgage lending entities from whatever source, together with work 
papers and correspondence files related to such reports, whether or not 
a part of the report, and all without any deletions.

SEC. 11. REGULATORY REVIEW.

    (a) In General.--Not less frequently than once every 10 years, the 
Board shall conduct a review of all regulations prescribed by the 
Board, in order to identify outdated or otherwise unnecessary 
regulatory requirements imposed on insured depository institutions.
    (b) Process.--In conducting the review under subsection (a), the 
Board shall--
            (1) categorize the regulations described in subsection (a) 
        by type; and
            (2) at regular intervals, provide notice and solicit public 
        comment on a particular category or categories of regulations, 
        requesting commentators to identify areas of the regulations 
        that are outdated, unnecessary, or unduly burdensome.
    (c) Complete Review.--The Board shall ensure that the notice and 
comment period described in subsection (b)(2) is conducted with respect 
to all regulations described in subsection (a), not less frequently 
than once every 10 years.
    (d) Regulatory Response.--The Board shall--
            (1) publish in the Federal Register a summary of the 
        comments received under this section, identifying significant 
        issues raised and providing comment on such issues; and
            (2) eliminate unnecessary regulations to the extent that 
        such action is appropriate.
    (e) Report to Congress.--Not later than 30 days after carrying out 
subsection (d)(1) of this section, the Board shall submit to the 
Congress a report, which shall include a summary of any significant 
issues raised by public comments received by the Board under this 
section and the relative merits of such issues.

SEC. 12. LIABILITY.

    Any publication, transmission, or webpage containing an 
advertisement for or invitation to buy a mortgage security shall 
include the following notice, in conspicuous type: ``Certification by 
the Federal Board of Certification can in no way be considered a 
guarantee of the mortgage security. Certification is merely a judgment 
by the Federal Board of Certification of the degree of risk offered by 
the security in question. The Federal Board of Certification is not 
liable for any actions taken in reliance on such judgment of risk.''.

Summary: Federal Board of Certification Act of 2008 - Establishes a Federal Board of Certification to certify that the mortgages within a security instrument meet the underlying standards they claim to meet with regards to such mortgage characteristics as: (1) documentation, (2) loan to value ratios, (3) debt service to income ratios. And (4) borrower credit standards and geographic concentration. States that the purpose of this certification process is to increase the transparency, predictability, and reliability of securitized mortgage products. Authorizes market participants, including firms that package mortgage loans into mortgage securities, to elect to have their mortgage securities evaluated by the Board. Authorizes the Board to: (1) promulgate regulations establishing enumerated security standards to use in certifying mortgage securities. (2) establish uniform principles and standards and report forms for the regular examination of such securities. And (3) develop uniform reporting systems for ascertaining mortgage security risk. Grants the Board access to all books, accounts, records, reports, files, memorandums, papers, things, and property belonging to or in use by federal financial institutions regulatory agencies. Requires any publication, transmission, or webpage containing an advertisement for or invitation to buy a mortgage security to carry a disclaimer that certification by the Federal Board of Certification can in no way be considered a guarantee of the mortgage security, but is merely a judgment of the degree of risk offered by the security in question.