U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

43–642 

" ! HOUSE OF REPRESENTATIVES 110TH CONGRESS

2d Session 

REPORT

2008

110–767 

PROVIDING FOR CONSIDERATION OF THE SENATE 

AMENDMENT TO THE HOUSE AMENDMENTS TO 

THE SENATE AMENDMENT TO THE BILL (H.R. 3221) 

TO PROVIDE NEEDED HOUSING REFORM AND FOR 

OTHER PURPOSES 

R E P O R T 

OF THE

COMMITTEE ON RULES 

TO ACCOMPANY

H. Res. 1363 

JULY 22, 2008.—Referred to the House Calendar and ordered to be 

printed 


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IDERATION OF THE SENATE AMENDMENT TO THE HOUSE AMENDMENTS TO THE SENATE 

E BILL (H.R. 3221) TO PROVIDE NEEDED HOUSING REFORM AND FOR OTHER PURPOSES 


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43–642 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 110–767 

PROVIDING FOR CONSIDERATION OF THE SENATE AMENDMENT TO THE 

HOUSE AMENDMENTS TO THE SENATE AMENDMENT TO THE BILL (H.R. 

3221) TO PROVIDE NEEDED HOUSING REFORM AND FOR OTHER PURPOSES 

JULY 22, 2008.—Referred to the House Calendar and ordered to be printed 

Ms. CASTOR, from the Committee on Rules, 

submitted the following 

R E P O R T 

[To accompany H. Res. 1363] 

The Committee on Rules, having had under consideration House 

Resolution 1363, by a nonrecord vote, report the same to the House 

with the recommendation that the resolution be adopted. 

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for consideration of the Senate amendment to the House amendments to the Senate amendment to H.R. 

3221, the American Housing Rescue and Foreclosure Prevention 

Act of 2008. The resolution makes in order a motion by the Chairman of the Committee on Financial Services to concur in the Senate amendment to the House amendment numbered one with the 

text of the House amendment printed in this report. The rule 

waives all points of order against the motion and provides that the 

Senate amendment and the motion shall be considered as read. 

The rule provides two hours of debate on the motion, with 80 minutes equally divided and controlled by the chairman and ranking 

minority member of the Committee on Financial Services and 40 

minutes equally divided and controlled by the chairman and ranking minority member of the Committee on Ways and Means. The 

rule provides that upon adoption of the motion specified in the first 

section of the resolution, the House shall be considered to have receded from any remaining amendments or disagreements. The rule 

provides that the Chair may postpone further consideration of the 

motion to a time designated by the Speaker. 

EXPLANATION OF WAIVERS

The waiver of all points of order against the motion includes a 

waiver of clause 10 of rule XXI regarding PAYGO. 


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COMMITTEE VOTES

The results of each record vote on an amendment or motion to 

report, together with the names of those voting for and against, are 

printed below: 

Rules Committee record vote No. 574 

Date: July 22, 2008. 

Measure: Consideration of Senate amendments to H.R. 3221. 

Motion by: Mr. Dreier. 

Summary of motion: To make in order a sight-unseen substitute 

amendment that complies with the rules of the House if offered by 

Republican Leader Boehner or his designee. 

Results: Defeated 2–8. 

Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Cardoza—Nay; Welch—Nay; Castor—Nay; Arcuri—Nay; 

Dreier—Yea; Hastings (WA)—Yea; Slaughter—Nay. 

Rules Committee record vote No. 575 

Date: July 22, 2008. 

Measure: Consideration of Senate amendments to H.R. 3221. 

Motion by: Mr. Dreier. 

Summary of motion: To make in order a substitute amendment 

offered by Rep. Garrett. 

Results: Defeated 2–8. 

Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Cardoza—Nay; Welch—Nay; Castor—Nay; Arcuri—Nay; 

Dreier—Yea; Hastings (WA)—Yea; Slaughter—Nay. 

Rules Committee record vote No. 576 

Date: July 22, 2008. 

Measure: Consideration of Senate amendments to H.R. 3221. 

Motion by: Mr. Hastings (WA). 

Summary of motion: To make in order amendment #6 offered by 

Rep. Price (GA) which would eliminate assistance for the Community Development Block Grant program. 

Results: Defeated 2–8. 

Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Cardoza—Nay; Welch—Nay; Castor—Nay; Arcuri—Nay; 

Dreier—Yea; Hastings (WA)—Yea; Slaughter—Nay. 

SUMMARY OF THE HOUSE AMENDMENT MADE IN ORDER

The amendment incorporates a number of housing-related provisions, including GSE reform, FHA refinance, loan modification, 

mortgage licensing, FHA modernization, foreclosure protection for 

veterans, emergency assistance to stabilize neighborhoods, housing 

counseling, mortgage disclosure improvement, additional veterans 

housing matters, and housing preservation. The amendment increases Treasury authority under existing lines of credit to Freddie 

Mac, Fannie Mae, and the Federal Home Loan Banks for the next 

18 months, giving Treasury standby authority to buy stock or debt 

in those companies if it determines an emergency exists and the 

purchase is necessary to provide market stability, prevent disruptions to availability of mortgages, protect the taxpayer, and restore 

orderly markets. Use of authority will be by mutual agreement beVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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tween Treasury and the individual enterprise. To use the authority, the Secretary must make an emergency determination that use 

of the authority is necessary to stabilize markets, prevent disruptions in mortgage availability, and protect the taxpayer. The authority includes additional provisions to protect the taxpayers and 

provides enhanced oversight of the enterprises while standby facility is in place, with the Federal Reserve consulting with the new 

regulator on issues concerning the safety and soundness of and 

risks posed by the GSEs. It also includes provisions contained in 

the Housing Assistance Tax Act of 2008, a revenue neutral bill to 

provide tax relief to homebuyers and homeowners. Under this 

amendment, middle-class families would be eligible to receive a tax 

benefit that is equivalent to an interest-free loan of up to $7,500 

towards the purchase of a first home and existing homeowners 

claiming the standard deduction would be allowed an additional 

standard deduction for property taxes up to $1,000 for a married 

couple filing jointly. States would receive a temporary increase in 

low-income housing tax credits and $11 billion of additional tax-exempt bond authority to provide low-interest loans to first-time 

homebuyers, to build low-income rental housing and to refinance 

certain subprime mortgages. Under the amendment, municipal 

bonds that are guaranteed by Federal home loan banks would be 

eligible for treatment as tax-exempt bonds. The amendment would 

also make necessary improvements to the low-income housing tax 

credit and other incentives for low-income rental housing. It would 

also make certain reforms to the rules governing real estate investment trusts. The amendment also contains Gulf Opportunity Zonerelated provisions and economic stimulus provisions. The cost of 

these provisions in the amendment is offset with a tax compliance 

provision included in the President’s Budget and by delaying the 

effective date of a tax benefit for multinational companies that has 

not yet taken effect. Both offsets have previously passed the House 

of Representatives. 

TEXT OF THE HOUSE AMENDMENT MADE IN ORDER

In lieu of the matter proposed to be inserted by the amendment 

of the Senate, insert the following: 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Housing and 

Economic Recovery Act of 2008’’. 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as 

follows: 

Sec. 1. Short title; table of contents. 

DIVISION A—HOUSING FINANCE REFORM 

Sec. 1001. Short title. 

Sec. 1002. Definitions. 

TITLE I—REFORM OF REGULATION OF ENTERPRISES 

Subtitle A—Improvement of Safety and Soundness Supervision 

Sec. 1101. Establishment of the Federal Housing Finance Agency. 

Sec. 1102. Duties and authorities of the Director. 

Sec. 1103. Federal Housing Finance Oversight Board. 

Sec. 1104. Authority to require reports by regulated entities. 

Sec. 1105. Examiners and accountants; authority to contract for reviews of regulated entities; ombudsman. 


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Sec. 1106. Assessments. 

Sec. 1107. Regulations and orders. 

Sec. 1108. Prudential management and operations standards. 

Sec. 1109. Review of and authority over enterprise assets and liabilities. 

Sec. 1110. Risk-based capital requirements. 

Sec. 1111. Minimum capital levels. 

Sec. 1112. Registration under the securities laws. 

Sec. 1113. Prohibition and withholding of executive compensation. 

Sec. 1114. Limit on golden parachutes. 

Sec. 1115. Reporting of fraudulent loans. 

Sec. 1116. Inclusion of minorities and women; diversity in Agency workforce. 

Sec. 1117. Temporary authority for purchase of obligations of regulated entities by 

Secretary of Treasury. 

Sec. 1118. Consultation between the Director of the Federal Housing Finance Agency and the Board of Governors of the Federal Reserve System to ensure 

financial market stability. 

Subtitle B—Improvement of Mission Supervision 

Sec. 1121. Transfer of program approval and housing goal oversight. 

Sec. 1122. Assumption by the Director of certain other HUD responsibilities. 

Sec. 1123. Review of enterprise products. 

Sec. 1124. Conforming loan limits. 

Sec. 1125. Annual housing report. 

Sec. 1126. Public use database. 

Sec. 1127. Reporting of mortgage data. 

Sec. 1128. Revision of housing goals. 

Sec. 1129. Duty to serve underserved markets. 

Sec. 1130. Monitoring and enforcing compliance with housing goals. 

Sec. 1131. Affordable housing programs. 

Sec. 1132. Financial education and counseling. 

Sec. 1133. Transfer and rights of certain HUD employees. 

Subtitle C—Prompt Corrective Action 

Sec. 1141. Critical capital levels. 

Sec. 1142. Capital classifications. 

Sec. 1143. Supervisory actions applicable to undercapitalized regulated entities. 

Sec. 1144. Supervisory actions applicable to significantly undercapitalized regulated entities. 

Sec. 1145. Authority over critically undercapitalized regulated entities. 

Subtitle D—Enforcement Actions 

Sec. 1151. Cease and desist proceedings. 

Sec. 1152. Temporary cease and desist proceedings. 

Sec. 1153. Removal and prohibition authority. 

Sec. 1154. Enforcement and jurisdiction. 

Sec. 1155. Civil money penalties. 

Sec. 1156. Criminal penalty. 

Sec. 1157. Notice after separation from service. 

Sec. 1158. Subpoena authority. 

Subtitle E—General Provisions 

Sec. 1161. Conforming and technical amendments. 

Sec. 1162. Presidentially-appointed directors of enterprises. 

Sec. 1163. Effective date. 

TITLE II—FEDERAL HOME LOAN BANKS 

Sec. 1201. Recognition of distinctions between the enterprises and the Federal 

Home Loan Banks. 

Sec. 1202. Directors. 

Sec. 1203. Definitions. 

Sec. 1204. Agency oversight of Federal Home Loan Banks. 

Sec. 1205. Housing goals. 

Sec. 1206. Community development financial institutions. 

Sec. 1207. Sharing of information among Federal Home Loan Banks. 

Sec. 1208. Exclusion from certain requirements. 

Sec. 1209. Voluntary mergers. 

Sec. 1210. Authority to reduce districts. 

Sec. 1211. Community financial institution members. 


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Sec. 1212. Public use database; reports to Congress. 

Sec. 1213. Semiannual reports. 

Sec. 1214. Liquidation or reorganization of a Federal Home Loan Bank. 

Sec. 1215. Study and report to Congress on securitization of acquired member assets. 

Sec. 1216. Technical and conforming amendments. 

Sec. 1217. Study on Federal Home Loan Bank advances. 

Sec. 1218. Federal Home Loan Bank refinancing authority for certain residential 

mortgage loans. 

TITLE III—TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF 

OFHEO AND THE FEDERAL HOUSING FINANCE BOARD 

Subtitle A—OFHEO 

Sec. 1301. Abolishment of OFHEO. 

Sec. 1302. Continuation and coordination of certain actions. 

Sec. 1303. Transfer and rights of employees of OFHEO. 

Sec. 1304. Transfer of property and facilities. 

Subtitle B—Federal Housing Finance Board 

Sec. 1311. Abolishment of the Federal Housing Finance Board. 

Sec. 1312. Continuation and coordination of certain actions. 

Sec. 1313. Transfer and rights of employees of the Federal Housing Finance Board. 

Sec. 1314. Transfer of property and facilities. 

TITLE IV—HOPE FOR HOMEOWNERS 

Sec. 1401. Short title. 

Sec. 1402. Establishment of HOPE for Homeowners Program. 

Sec. 1403. Fiduciary duty of servicers of pooled residential mortgage loans. 

Sec. 1404. Revised standards for FHA appraisers. 

TITLE V—S.A.F.E. MORTGAGE LICENSING ACT 

Sec. 1501. Short title. 

Sec. 1502. Purposes and methods for establishing a mortgage licensing system and 

registry. 

Sec. 1503. Definitions. 

Sec. 1504. License or registration required. 

Sec. 1505. State license and registration application and issuance. 

Sec. 1506. Standards for State license renewal. 

Sec. 1507. System of registration administration by Federal agencies. 

Sec. 1508. Secretary of Housing and Urban Development backup authority to establish a loan originator licensing system. 

Sec. 1509. Backup authority to establish a nationwide mortgage licensing and registry system. 

Sec. 1510. Fees. 

Sec. 1511. Background checks of loan originators. 

Sec. 1512. Confidentiality of information. 

Sec. 1513. Liability provisions. 

Sec. 1514. Enforcement under HUD backup licensing system. 

Sec. 1515. State examination authority. 

Sec. 1516. Reports and recommendations to Congress. 

Sec. 1517. Study and reports on defaults and foreclosures. 

TITLE VI—MISCELLANEOUS 

Sec. 1601. Study and reports on guarantee fees. 

Sec. 1602. Study and report on default risk evaluation. 

Sec. 1603. Conversion of HUD contracts. 

Sec. 1604. Bridge depository institutions. 

Sec. 1605. Sense of the Senate. 

DIVISION B—FORECLOSURE PREVENTION 

Sec. 2001. Short title. 

Sec. 2002. Emergency designation. 

TITLE I—FHA MODERNIZATION ACT OF 2008 

Sec. 2101. Short title. 


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Subtitle A—Building American Homeownership 

Sec. 2111. Short title. 

Sec. 2112. Maximum principal loan obligation. 

Sec. 2113. Cash investment requirement and prohibition of seller-funded down payment assistance. 

Sec. 2114. Mortgage insurance premiums. 

Sec. 2115. Rehabilitation loans. 

Sec. 2116. Discretionary action. 

Sec. 2117. Insurance of condominiums. 

Sec. 2118. Mutual Mortgage Insurance Fund. 

Sec. 2119. Hawaiian home lands and Indian reservations. 

Sec. 2120. Conforming and technical amendments. 

Sec. 2121. Insurance of mortgages. 

Sec. 2122. Home equity conversion mortgages. 

Sec. 2123. Energy efficient mortgages program. 

Sec. 2124. Pilot program for automated process for borrowers without sufficient 

credit history. 

Sec. 2125. Homeownership preservation. 

Sec. 2126. Use of FHA savings for improvements in FHA technologies, procedures, 

processes, program performance, staffing, and salaries. 

Sec. 2127. Post-purchase housing counseling eligibility improvements. 

Sec. 2128. Pre-purchase homeownership counseling demonstration. 

Sec. 2129. Fraud prevention. 

Sec. 2130. Limitation on mortgage insurance premium increases. 

Sec. 2131. Savings provision. 

Sec. 2132. Implementation. 

Sec. 2133. Moratorium on implementation of risk-based premiums. 

Subtitle B—Manufactured Housing Loan Modernization 

Sec. 2141. Short title. 

Sec. 2142. Purposes. 

Sec. 2143. Exception to limitation on financial institution portfolio. 

Sec. 2144. Insurance benefits. 

Sec. 2145. Maximum loan limits. 

Sec. 2146. Insurance premiums. 

Sec. 2147. Technical corrections. 

Sec. 2148. Revision of underwriting criteria. 

Sec. 2149. Prohibition against kickbacks and unearned fees. 

Sec. 2150. Leasehold requirements. 

TITLE II—MORTGAGE FORECLOSURE PROTECTIONS FOR 

SERVICEMEMBERS 

Sec. 2201. Temporary increase in maximum loan guaranty amount for certain 

housing loans guaranteed by the Secretary of Veterans Affairs. 

Sec. 2202. Counseling on mortgage foreclosures for members of the Armed Forces 

returning from service abroad. 

Sec. 2203. Enhancement of protections for servicemembers relating to mortgages 

and mortgage foreclosures. 

TITLE III—EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF 

ABANDONED AND FORECLOSED HOMES 

Sec. 2301. Emergency assistance for the redevelopment of abandoned and foreclosed homes. 

Sec. 2302. Nationwide distribution of resources. 

Sec. 2303. Limitation on use of funds with respect to eminent domain. 

Sec. 2304. Limitation on distribution of funds. 

Sec. 2305. Counseling intermediaries. 

TITLE IV—HOUSING COUNSELING RESOURCES 

Sec. 2401. Housing counseling resources. 

Sec. 2402. Credit counseling. 

TITLE V—MORTGAGE DISCLOSURE IMPROVEMENT ACT 

Sec. 2501. Short title. 

Sec. 2502. Enhanced mortgage loan disclosures. 

Sec. 2503. Community Development Investment Authority for depository institutions. 


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TITLE VI—VETERANS HOUSING MATTERS 

Sec. 2601. Home improvements and structural alterations for totally disabled members of the Armed Forces before discharge or release from the Armed 

Forces. 

Sec. 2602. Eligibility for specially adapted housing benefits and assistance for 

members of the Armed Forces with service-connected disabilities and 

individuals residing outside the United States. 

Sec. 2603. Specially adapted housing assistance for individuals with severe burn injuries. 

Sec. 2604. Extension of assistance for individuals residing temporarily in housing 

owned by a family member. 

Sec. 2605. Increase in specially adapted housing benefits for disabled veterans. 

Sec. 2606. Report on specially adapted housing for disabled individuals. 

Sec. 2607. Report on specially adapted housing assistance for individuals who reside in housing owned by a family member on permanent basis. 

Sec. 2608. Definition of annual income for purposes of section 8 and other public 

housing programs. 

Sec. 2609. Payment of transportation of baggage and household effects for members 

of the Armed Forces who relocate due to foreclosure of leased housing. 

TITLE VII—SMALL PUBLIC HOUSING AUTHORITIES PAPERWORK 

REDUCTION ACT 

Sec. 2701. Short title. 

Sec. 2702. Public housing agency plans for certain qualified public housing agencies. 

TITLE VIII—HOUSING PRESERVATION 

Subtitle A—Preservation Under Federal Housing Programs 

Sec. 2801. Clarification of disposition of certain properties. 

Sec. 2802. Eligibility of certain projects for enhanced voucher assistance. 

Sec. 2803. Transfer of certain rental assistance contracts. 

Sec. 2804. Public housing disaster relief. 

Sec. 2805. Preservation of certain affordable housing. 

Subtitle B—Coordination of Federal Housing Programs and Tax Incentives for 

Housing 

Sec. 2831. Short title. 

Sec. 2832. Approvals by Department of Housing and Urban Development. 

Sec. 2833. Project approvals by rural housing service. 

Sec. 2834. Use of FHA loans with housing tax credits. 

Sec. 2835. Other HUD programs. 

TITLE IX—MISCELLANEOUS 

Sec. 2901. Homeless assistance. 

Sec. 2902. Increasing access and understanding of energy efficient mortgages. 

DIVISION C—TAX-RELATED PROVISIONS 

Sec. 3000. Short title; etc. 

TITLE I—HOUSING TAX INCENTIVES 

Subtitle A—Multi-Family Housing 

PART I—LOW-INCOME HOUSING TAX CREDIT

Sec. 3001. Temporary increase in volume cap for low-income housing tax credit. 

Sec. 3002. Determination of credit rate. 

Sec. 3003. Modifications to definition of eligible basis. 

Sec. 3004. Other simplification and reform of low-income housing tax incentives. 

Sec. 3005. Treatment of military basic pay. 

PART II—MODIFICATIONS TO TAX-EXEMPT HOUSING BOND RULES

Sec. 3007. Recycling of tax-exempt debt for financing residential rental projects. 

Sec. 3008. Coordination of certain rules applicable to low-income housing credit and 

qualified residential rental project exempt facility bonds. 


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PART III—REFORMS RELATED TO THE LOW-INCOME HOUSING CREDIT AND TAXEXEMPT HOUSING BONDS

Sec. 3009. Hold harmless for reductions in area median gross income. 

Sec. 3010. Exception to annual current income determination requirement where 

determination not relevant. 

Subtitle B—Single Family Housing 

Sec. 3011. First-time homebuyer credit. 

Sec. 3012. Additional standard deduction for real property taxes for nonitemizers. 

Subtitle C—General Provisions 

Sec. 3021. Temporary liberalization of tax-exempt housing bond rules. 

Sec. 3022. Repeal of alternative minimum tax limitations on tax-exempt housing 

bonds, low-income housing tax credit, and rehabilitation credit. 

Sec. 3023. Bonds guaranteed by Federal home loan banks eligible for treatment as 

tax-exempt bonds. 

Sec. 3024. Modification of rules pertaining to FIRPTA nonforeign affidavits. 

Sec. 3025. Modification of definition of tax-exempt use property for purposes of the 

rehabilitation credit. 

Sec. 3026. Extension of special rule for mortgage revenue bonds for residences located in disaster areas. 

Sec. 3027. Transfer of funds appropriated to carry out 2008 recovery rebates for individuals. 

TITLE II—REFORMS RELATED TO REAL ESTATE INVESTMENT TRUSTS 

Subtitle A—Foreign Currency and Other Qualified Activities 

Sec. 3031. Revisions to REIT income tests. 

Sec. 3032. Revisions to REIT asset tests. 

Sec. 3033. Conforming foreign currency revisions. 

Subtitle B—Taxable REIT Subsidiaries 

Sec. 3041. Conforming taxable REIT subsidiary asset test. 

Subtitle C—Dealer Sales 

Sec. 3051. Holding period under safe harbor. 

Sec. 3052. Determining value of sales under safe harbor. 

Subtitle D—Health Care REITs 

Sec. 3061. Conformity for health care facilities. 

Subtitle E—Effective Dates 

Sec. 3071. Effective dates. 

TITLE III—REVENUE PROVISIONS 

Subtitle A—General Provisions 

Sec. 3081. Election to accelerate the AMT and research credits in lieu of bonus depreciation. 

Sec. 3082. Certain GO Zone incentives. 

Sec. 3083. Increase in statutory limit on the public debt. 

Subtitle B—Revenue Offsets 

Sec. 3091. Returns relating to payments made in settlement of payment card and 

third party network transactions. 

Sec. 3092. Gain from sale of principal residence allocated to nonqualified use not 

excluded from income. 

Sec. 3093. Delay in application of worldwide allocation of interest. 

Sec. 3094. Time for payment of corporate estimated taxes. 


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DIVISION A—HOUSING FINANCE 

REFORM 

SEC. 1001. SHORT TITLE. 

This division may be cited as the ‘‘Federal Housing Finance Regulatory Reform Act of 2008’’. 

SEC. 1002. DEFINITIONS. 

(a) FEDERAL SAFETY AND SOUNDNESS ACT DEFINITIONS.—Section 

1303 of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992 (12 U.S.C. 4502) is amended—

(1) in each of paragraphs (8), (9), (10), and (19), by striking 

‘‘Secretary’’ each place that term appears and inserting ‘‘Director’’; 

(2) by redesignating paragraphs (16) through (19) as paragraphs (21) through (24), respectively; 

(3) by striking paragraphs (13) through (15) and inserting 

the following: 

‘‘(19) OFFICE OF FINANCE.—The term ‘Office of Finance’

means the Office of Finance of the Federal Home Loan Bank 

System (or any successor thereto). 

‘‘(20) REGULATED ENTITY.—The term ‘regulated entity’

means—

‘‘(A) the Federal National Mortgage Association and any 

affiliate thereof; 

‘‘(B) the Federal Home Loan Mortgage Corporation and 

any affiliate thereof; and 

‘‘(C) any Federal Home Loan Bank.’’; 

(4) by redesignating paragraphs (11) and (12) as paragraphs 

(17) and (18), respectively; 

(5) by redesignating paragraph (7) as paragraph (12); 

(6) by redesignating paragraphs (8) through (10) as paragraphs (14) through (16), respectively; 

(7) in paragraph (5)—

(A) by striking ‘‘(5)’’ and inserting ‘‘(9)’’; and 

(B) by striking ‘‘Office of Federal Housing Enterprise 

Oversight of the Department of Housing and Urban Development’’ and inserting ‘‘Federal Housing Finance Agency’’; 

(8) by redesignating paragraph (6) as paragraph (10); 

(9) by redesignating paragraphs (2) through (4) as paragraphs (5) through (7), respectively; 

(10) by inserting after paragraph (7), as redesignated, the 

following: 

‘‘(8) DEFAULT; IN DANGER OF DEFAULT.—

‘‘(A) DEFAULT.—The term ‘default’ means, with respect 

to a regulated entity, any adjudication or other official determination by any court of competent jurisdiction, or the 

Agency, pursuant to which a conservator, receiver, limitedlife regulated entity, or legal custodian is appointed for a 

regulated entity. 

‘‘(B) IN DANGER OF DEFAULT.—The term ‘in danger of default’ means a regulated entity with respect to which, in 

the opinion of the Agency—


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‘‘(i) the regulated entity is not likely to be able to 

pay the obligations of the regulated entity in the normal course of business; or ‘‘(ii) the regulated entity— ‘‘(I) has incurred or is likely to incur losses that 

will deplete all or substantially all of its capital; 

and ‘‘(II) there is no reasonable prospect that the 

capital of the regulated entity will be replenished.’’; 

(11) by inserting after paragraph (1) the following: 

‘‘(2) AGENCY.—The term ‘Agency’ means the Federal Housing 

Finance Agency established under section 1311. 

‘‘(3) AUTHORIZING STATUTES.—The term ‘authorizing statutes’

means—

‘‘(A) the Federal National Mortgage Association Charter 

Act; 

‘‘(B) the Federal Home Loan Mortgage Corporation Act; 

and 

‘‘(C) the Federal Home Loan Bank Act. 

‘‘(4) BOARD.—The term ‘Board’ means the Federal Housing 

Finance Oversight Board established under section 1313A.’’; 

(12) by inserting after paragraph (10), as redesignated by 

this section, the following: ‘‘(11) ENTITY-AFFILIATED PARTY.—The term ‘entity-affiliated 

party’ means— ‘‘(A) any director, officer, employee, or controlling stockholder of, or agent for, a regulated entity; ‘‘(B) any shareholder, affiliate, consultant, or joint venture partner of a regulated entity, and any other person, 

as determined by the Director (by regulation or on a caseby-case basis) that participates in the conduct of the affairs of a regulated entity, provided that a member of a 

Federal Home Loan Bank shall not be deemed to have participated in the affairs of that Bank solely by virtue of 

being a shareholder of, and obtaining advances from, that 

Bank; 

‘‘(C) any independent contractor for a regulated entity 

(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 regulated entity; 

‘‘(D) any not-for-profit corporation that receives its principal funding, on an ongoing basis, from any regulated entity; and 

‘‘(E) the Office of Finance.’’; 

(13) by inserting after paragraph (12), as redesignated by 

this section, the following: 

‘‘(13) LIMITED-LIFE REGULATED ENTITY.—The term ‘limitedlife regulated entity’ means an entity established by the AgenVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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cy under section 1367(i) with respect to a Federal Home Loan 

Bank in default or in danger of default or with respect to an 

enterprise in default or in danger of default.’’; and 

(14) by adding at the end the following: 

‘‘(25) VIOLATION.—The term ‘violation’ includes any action 

(alone or in combination with another or others) for or toward 

causing, bringing about, participating in, counseling, or aiding 

or abetting a violation.’’. 

(b) REFERENCES IN THIS ACT.—As used in this Act, unless otherwise specified—

(1) the term ‘‘Agency’’ means the Federal Housing Finance 

Agency; 

(2) the term ‘‘Director’’ means the Director of the Agency; 

and 

(3) the terms ‘‘enterprise’’, ‘‘regulated entity’’, and ‘‘authorizing statutes’’ have the same meanings as in section 1303 of 

the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by this Act. 

TITLE I—REFORM OF REGULATION OF 

ENTERPRISES 

Subtitle A—Improvement of Safety and 

Soundness Supervision 

SEC. 1101. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE 

AGENCY. 

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by striking 

sections 1311 and 1312 and inserting the following: 

‘‘SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE 

AGENCY. 

‘‘(a) ESTABLISHMENT.—There is established the Federal Housing 

Finance Agency, which shall be an independent agency of the Federal Government. 

‘‘(b) GENERAL SUPERVISORY AND REGULATORY AUTHORITY.—

‘‘(1) IN GENERAL.—Each regulated entity shall, to the extent 

provided in this title, be subject to the supervision and regulation of the Agency. 

‘‘(2) AUTHORITY OVER FANNIE MAE, FREDDIE MAC, THE FEDERAL HOME LOAN BANKS, AND THE OFFICE OF FINANCE.—The Director shall have general regulatory authority over each regulated entity and the Office of Finance, and shall exercise such 

general regulatory authority, including such duties and authorities set forth under section 1313, to ensure that the purposes of this Act, the authorizing statutes, and any other applicable law are carried out. 

‘‘(c) SAVINGS PROVISION.—The authority of the Director to take 

actions under subtitles B and C shall not in any way limit the general supervisory and regulatory authority granted to the Director 

under subsection (b). 


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‘‘SEC. 1312. DIRECTOR. 

‘‘(a) ESTABLISHMENT OF POSITION.—There is established the position of the Director of the Agency, who shall be the head of the 

Agency. 

‘‘(b) APPOINTMENT; TERM.—

‘‘(1) APPOINTMENT.—The Director shall be appointed by the 

President, by and with the advice and consent of the Senate, 

from among individuals who are citizens of the United States, 

have a demonstrated understanding of financial management 

or oversight, and have a demonstrated understanding of capital markets, including the mortgage securities markets and 

housing finance. 

‘‘(2) TERM.—The Director shall be appointed for a term of 5 

years, unless removed before the end of such term for cause by 

the President. 

‘‘(3) VACANCY.—A vacancy in the position of Director that occurs before the expiration of the term for which a Director was 

appointed shall be filled in the manner established under paragraph (1), and the Director appointed to fill such vacancy shall 

be appointed only for the remainder of such term. 

‘‘(4) SERVICE AFTER END OF TERM.—An individual may serve 

as the Director after the expiration of the term for which appointed until a successor has been appointed. 

‘‘(5) TRANSITIONAL PROVISION.—Notwithstanding paragraphs 

(1) and (2), during the period beginning on the effective date 

of the Federal Housing Finance Regulatory Reform Act of 

2008, and ending on the date on which the Director is appointed and confirmed, the person serving as the Director of 

the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development on that effective 

date shall act for all purposes as, and with the full powers of, 

the Director. 

‘‘(c) DEPUTY DIRECTOR OF THE DIVISION OF ENTERPRISE REGULATION.—

‘‘(1) IN GENERAL.—The Agency shall have a Deputy Director 

of the Division of Enterprise Regulation, who shall be designated by the Director from among individuals who are citizens of the United States, have a demonstrated understanding 

of financial management or oversight, and have a demonstrated understanding of mortgage securities markets and 

housing finance. 

‘‘(2) FUNCTIONS.—The Deputy Director of the Division of Enterprise Regulation shall have such functions, powers, and duties with respect to the oversight of the enterprises as the Director shall prescribe. 

‘‘(d) DEPUTY DIRECTOR OF THE DIVISION OF FEDERAL HOME

LOAN BANK REGULATION.—

‘‘(1) IN GENERAL.—The Agency shall have a Deputy Director 

of the Division of Federal Home Loan Bank Regulation, who 

shall be designated by the Director from among individuals 

who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a 

demonstrated understanding of the Federal Home Loan Bank 

System and housing finance. 


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‘‘(2) FUNCTIONS.—The Deputy Director of the Division of Federal Home Loan Bank Regulation shall have such functions, 

powers, and duties with respect to the oversight of the Federal 

Home Loan Banks as the Director shall prescribe. 

‘‘(e) DEPUTY DIRECTOR FOR HOUSING MISSION AND GOALS.—

‘‘(1) IN GENERAL.—The Agency shall have a Deputy Director 

for Housing Mission and Goals, who shall be designated by the 

Director from among individuals who are citizens of the United 

States, and have a demonstrated understanding of the housing 

markets and housing finance. 

‘‘(2) FUNCTIONS.—The Deputy Director for Housing Mission 

and Goals shall have such functions, powers, and duties with 

respect to the oversight of the housing mission and goals of the 

enterprises, and with respect to oversight of the housing finance and community and economic development mission of 

the Federal Home Loan Banks, as the Director shall prescribe. 

‘‘(3) CONSIDERATIONS.—In exercising such functions, powers, 

and duties, the Deputy Director for Housing Mission and Goals 

shall consider the differences between the enterprises and the 

Federal Home Loan Banks, including those described in section 

1313(d). 

‘‘(f) ACTING DIRECTOR.—In the event of the death, resignation, 

sickness, or absence of the Director, the President shall designate 

either the Deputy Director of the Division of Enterprise Regulation, 

the Deputy Director of the Division of Federal Home Loan Bank 

Regulation, or the Deputy Director for Housing Mission and Goals, 

to serve as acting Director until the return of the Director, or the 

appointment of a successor pursuant to subsection (b). 

‘‘(g) LIMITATIONS.—The Director and each of the Deputy Directors 

may not—

‘‘(1) have any direct or indirect financial interest in any regulated entity or entity-affiliated party; 

‘‘(2) hold any office, position, or employment in any regulated 

entity or entity-affiliated party; or 

‘‘(3) have served as an executive officer or director of any regulated entity or entity-affiliated party at any time during the 

3-year period preceding the date of appointment or designation 

of such individual as Director or Deputy Director, as applicable.’’. 

SEC. 1102. DUTIES AND AUTHORITIES OF THE DIRECTOR. 

(a) IN GENERAL.—Section 1313 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513) 

is amended to read as follows: 

‘‘SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR. 

‘‘(a) DUTIES.—

‘‘(1) PRINCIPAL DUTIES.—The principal duties of the Director 

shall be—

‘‘(A) to oversee the prudential operations of each regulated entity; and 

‘‘(B) to ensure that—

‘‘(i) each regulated entity operates in a safe and 

sound manner, including maintenance of adequate 

capital and internal controls; 


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14 

‘‘(ii) the operations and activities of each regulated 

entity foster liquid, efficient, competitive, and resilient 

national housing finance markets (including activities 

relating to mortgages on housing for low- and moderate-income families involving a reasonable economic 

return that may be less than the return earned on 

other activities); ‘‘(iii) each regulated entity complies with this title 

and the rules, regulations, guidelines, and orders 

issued under this title and the authorizing statutes; ‘‘(iv) each regulated entity carries out its statutory 

mission only through activities that are authorized 

under and consistent with this title and the authorizing statutes; and ‘‘(v) the activities of each regulated entity and the 

manner in which such regulated entity is operated are 

consistent with the public interest. ‘‘(2) SCOPE OF AUTHORITY.—The authority of the Director 

shall include the authority— ‘‘(A) to review and, if warranted based on the principal 

duties described in paragraph (1), reject any acquisition or 

transfer of a controlling interest in a regulated entity; and ‘‘(B) to exercise such incidental powers as may be necessary or appropriate to fulfill the duties and responsibilities of the Director in the supervision and regulation of 

each regulated entity. ‘‘(b) DELEGATION OF AUTHORITY.—The Director may delegate to 

officers and employees of the Agency any of the functions, powers, 

or duties of the Director, as the Director considers appropriate. ‘‘(c) LITIGATION AUTHORITY.— ‘‘(1) IN GENERAL.—In enforcing any provision of this title, 

any regulation or order prescribed under this title, or any other 

provision of law, rule, regulation, or order, or in any other action, suit, or proceeding to which the Director is a party or in 

which the Director is interested, and in the administration of 

conservatorships and receiverships, the Director may act in the 

Director’s own name and through the Director’s own attorneys. ‘‘(2) SUBJECT TO SUIT.—Except as otherwise provided by law, 

the Director shall be subject to suit (other than suits on claims 

for money damages) by a regulated entity with respect to any 

matter under this title or any other applicable provision of law, 

rule, order, or regulation under this title, in the United States 

district court for the judicial district in which the regulated entity has its principal place of business, or in the United States 

District Court for the District of Columbia, and the Director 

may be served with process in the manner prescribed by the 

Federal Rules of Civil Procedure.’’. 

(b) INDEPENDENCE IN CONGRESSIONAL TESTIMONY AND RECOMMENDATIONS.—Section 111 of Public Law 93–495 (12 U.S.C. 250) 

is amended by striking ‘‘the Federal Housing Finance Board’’ and 

inserting ‘‘the Director of the Federal Housing Finance Agency’’. 

SEC. 1103. FEDERAL HOUSING FINANCE OVERSIGHT BOARD. 

(a) IN GENERAL.—The Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is 

amended by inserting after section 1313 the following: 


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15 

‘‘SEC. 1313A. FEDERAL HOUSING FINANCE OVERSIGHT BOARD. 

‘‘(a) IN GENERAL.—There is established the Federal Housing Finance Oversight Board, which shall advise the Director with respect to overall strategies and policies in carrying out the duties of 

the Director under this title. 

‘‘(b) LIMITATIONS.—The Board may not exercise any executive authority, and the Director may not delegate to the Board any of the 

functions, powers, or duties of the Director. 

‘‘(c) COMPOSITION.—The Board shall be comprised of 4 members, 

of whom—

‘‘(1) 1 member shall be the Secretary of the Treasury; 

‘‘(2) 1 member shall be the Secretary of Housing and Urban 

Development; ‘‘(3) 1 member shall be the Chairman of the Securities and 

Exchange Commission; and ‘‘(4) 1 member shall be the Director, who shall serve as the 

Chairperson of the Board. ‘‘(d) MEETINGS.—

‘‘(1) IN GENERAL.—The Board shall meet upon notice by the 

Director, but in no event shall the Board meet less frequently 

than once every 3 months. 

‘‘(2) SPECIAL MEETINGS.—Either the Secretary of the Treasury, the Secretary of Housing and Urban Development, or the 

Chairman of the Securities and Exchange Commission may, 

upon giving written notice to the Director, require a special 

meeting of the Board. 

‘‘(e) TESTIMONY.—On an annual basis, the Board shall testify before Congress regarding—

‘‘(1) the safety and soundness of the regulated entities; 

‘‘(2) any material deficiencies in the conduct of the operations 

of the regulated entities; 

‘‘(3) the overall operational status of the regulated entities; 

‘‘(4) an evaluation of the performance of the regulated entities in carrying out their respective missions; 

‘‘(5) operations, resources, and performance of the Agency; 

and 

‘‘(6) such other matters relating to the Agency and its fulfillment of its mission, as the Board determines appropriate.’’. 

(b) ANNUAL REPORT OF THE DIRECTOR.—Section 1319B(a) of the 

Federal Housing Enterprises Financial Safety and Soundness Act 

of 1992 (12 U.S.C. 4521(a)) is amended—

(1) by striking ‘‘enterprise’’ each place that term appears and 

inserting ‘‘regulated entity’’; 

(2) by striking ‘‘enterprises’’ each place that term appears 

and inserting ‘‘regulated entities’’; 

(3) in paragraph (3), by striking ‘‘; and’’ and inserting a semicolon; 

(4) in paragraph (4), by striking ‘‘1994.’’ and inserting ‘‘1994; 

and’’; and 

(5) by adding at the end the following: 

‘‘(5) the assessment of the Board or any of its members with 

respect to—

‘‘(A) the safety and soundness of the regulated entities; 

‘‘(B) any material deficiencies in the conduct of the operations of the regulated entities; 


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‘‘(C) the overall operational status of the regulated entities; and 

‘‘(D) an evaluation of the performance of the regulated 

entities in carrying out their respective missions; 

‘‘(6) operations, resources, and performance of the Agency; 

and 

‘‘(7) such other matters relating to the Agency and the fulfillment of its mission.’’. 

SEC. 1104. AUTHORITY TO REQUIRE REPORTS BY REGULATED ENTITIES. 

(a) IN GENERAL.—Section 1314 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4514) 

is amended—

(1) in the section heading, by striking ‘‘ENTERPRISES’’

and inserting ‘‘REGULATED ENTITIES’’; 

(2) by striking ‘‘an enterprise’’ each place that term appears 

and inserting ‘‘a regulated entity’’; 

(3) by striking ‘‘the enterprise’’ and inserting ‘‘the regulated 

entity’’; 

(4) in subsection (a)—

(A) by striking the subsection heading and all that follows through ‘‘and operations’’ in paragraph (1) and inserting the following: 

‘‘(a) REGULAR AND SPECIAL REPORTS.—

‘‘(1) REGULAR REPORTS.—The Director may require, by general or specific orders, a regulated entity to submit regular reports, including financial statements determined on a fair 

value basis, on the condition (including financial condition), 

management, activities, or operations of the regulated entity, 

as the Director considers appropriate’’; and 

(B) in paragraph (2)—

(i) by inserting ‘‘, by general or specific orders,’’ after 

‘‘may also require’’; and 

(ii) by striking ‘‘whenever’’ and inserting ‘‘on any of 

the topics specified in paragraph (1) or any other relevant topics, if’’; and 

(5) by adding at the end the following: 

‘‘(c) PENALTIES FOR FAILURE TO MAKE REPORTS.—

‘‘(1) VIOLATIONS.—It shall be a violation of this section for 

any regulated entity—

‘‘(A) to fail to make, transmit, or publish any report or 

obtain any information required by the Director under this 

section, section 309(k) of the Federal National Mortgage 

Association Charter Act, section 307(c) of the Federal 

Home Loan Mortgage Corporation Act, or section 20 of the 

Federal Home Loan Bank Act, within the period of time 

specified in such provision of law or otherwise by the Director; or 

‘‘(B) to submit or publish any false or misleading report 

or information under this section. 

‘‘(2) PENALTIES.—

‘‘(A) FIRST TIER.—

‘‘(i) IN GENERAL.—A violation described in paragraph 

(1) shall be subject to a penalty of not more than 


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$2,000 for each day during which such violation continues, in any case in which—

‘‘(I) the subject regulated entity maintains procedures reasonably adapted to avoid any inadvertent error and the violation was unintentional 

and a result of such an error; or 

‘‘(II) the violation was an inadvertent transmittal or publication of any report which was 

minimally late. 

‘‘(ii) BURDEN OF PROOF.—For purposes of this subparagraph, the regulated entity shall have the burden 

of proving that the error was inadvertent or that a report was inadvertently transmitted or published late. 

‘‘(B) SECOND TIER.—A violation described in paragraph 

(1) shall be subject to a penalty of not more than $20,000 

for each day during which such violation continues or such 

false or misleading information is not corrected, in any 

case that is not addressed in subparagraph (A) or (C). 

‘‘(C) THIRD TIER.—A violation described in paragraph (1) 

shall be subject to a penalty of not more than $1,000,000 

per day for each day during which such violation continues 

or such false or misleading information is not corrected, in 

any case in which the subject regulated entity committed 

such violation knowingly or with reckless disregard for the 

accuracy of any such information or report. 

‘‘(3) ASSESSMENTS.—Any penalty imposed under this subsection shall be in lieu of a penalty under section 1376, but 

shall be assessed and collected by the Director in the manner 

provided in section 1376 for penalties imposed under that section, and any such assessment (including the determination of 

the amount of the penalty) shall be otherwise subject to the 

provisions of section 1376. 

‘‘(4) HEARING.—A regulated entity against which a penalty is 

assessed under this section shall be afforded an agency hearing 

if the regulated entity submits a request for a hearing not later 

than 20 days after the date of the issuance of the notice of assessment. Section 1374 shall apply to any such proceedings.’’. 

(b) CONFORMING AMENDMENT.—The Federal Housing Enterprises 

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et 

seq.) is amended by striking sections 1327 and 1328. 

SEC. 1105. EXAMINERS AND ACCOUNTANTS; AUTHORITY TO CONTRACT FOR REVIEWS OF REGULATED ENTITIES; OMBUDSMAN. 

(a) IN GENERAL.—Section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4517) 

is amended—

(1) in subsection (a), by striking ‘‘enterprise’’ each place that 

term appears and inserting ‘‘regulated entity’’; 

(2) in subsection (b)—

(A) by inserting ‘‘of a regulated entity’’ after ‘‘under this 

section’’; and 

(B) by striking ‘‘to determine the condition of an enterprise for the purpose of ensuring its financial safety and 

soundness’’ and inserting ‘‘or appropriate’’; 


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(3) in subsection (c), in the second sentence, by inserting before the period ‘‘to conduct examinations under this section’’; 

(4) by redesignating subsections (d) through (f) as subsections (e) through (g), respectively; and 

(5) by inserting after subsection (c) the following: ‘‘(d) INSPECTOR GENERAL.—There shall be within the Agency an 

Inspector General, who shall be appointed in accordance with section 3(a) of the Inspector General Act of 1978.’’. (b) DIRECT HIRE AUTHORITY TO HIRE ACCOUNTANTS, ECONO- MISTS, AND EXAMINERS.—Section 1317 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 

4517) is amended by adding at the end the following: ‘‘(h) APPOINTMENT OF ACCOUNTANTS, ECONOMISTS, AND EXAM- INERS.—

‘‘(1) APPLICABILITY.—This section shall apply with respect to 

any position of examiner, accountant, economist, and specialist 

in financial markets and in technology at the Agency, with respect to supervision and regulation of the regulated entities, 

that is in the competitive service. ‘‘(2) APPOINTMENT AUTHORITY.—The Director may appoint 

candidates to any position described in paragraph (1)— ‘‘(A) in accordance with the statutes, rules, and regulations governing appointments in the excepted service; and ‘‘(B) notwithstanding any statutes, rules, and regulations 

governing appointments in the competitive service.’’. (c) AMENDMENTS TO INSPECTOR GENERAL ACT.—Section 11 of the 

Inspector General Act of 1978 (5 U.S.C. App.) is amended— (1) in paragraph (1), by inserting ‘‘; the Director of the Federal Housing Finance Agency’’ after ‘‘Social Security Administration’’; and 

(2) in paragraph (2), by inserting ‘‘, the Federal Housing Finance Agency’’ after ‘‘Social Security Administration’’. (d) AUTHORITY TO CONTRACT FOR REVIEWS OF REGULATED ENTI- TIES.—Section 1319 of the Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 U.S.C. 4519) is amended— (1) in the section heading, by striking ‘‘ENTERPRISES BY 

RATING ORGANIZATION’’ and inserting ‘‘REGULATED 

ENTITIES’’; and 

(2) by striking ‘‘enterprises’’ and inserting ‘‘regulated entities’’. (e) OFFICE OF THE OMBUDSMAN.—Section 1317 of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992 

(12 U.S.C. 4517) is amended by adding at the end the following: 

‘‘(i) OMBUDSMAN.—The Director shall establish, by regulation, an 

Office of the Ombudsman within the Agency, which shall be responsible for considering complaints and appeals, from any regulated entity and any person that has a business relationship with 

a regulated entity, regarding any matter relating to the regulation 

and supervision of such regulated entity by the Agency. The regulation issued by the Director under this subsection shall specify the 

authority and duties of the Office of the Ombudsman.’’. 

SEC. 1106. ASSESSMENTS. 

Section 1316 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4516) is amended—

(1) by striking subsection (a) and inserting the following: 


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‘‘(a) ANNUAL ASSESSMENTS.—The Director shall establish and collect from the regulated entities annual assessments in an amount 

not exceeding the amount sufficient to provide for reasonable costs 

(including administrative costs) and expenses of the Agency, including— ‘‘(1) the expenses of any examinations under section 1317 of 

this Act and under section 20 of the Federal Home Loan Bank 

Act; ‘‘(2) the expenses of obtaining any reviews and credit assessments under section 1319; ‘‘(3) such amounts in excess of actual expenses for any given 

year as deemed necessary by the Director to maintain a working capital fund in accordance with subsection (e); and ‘‘(4) the windup of the affairs of the Office of Federal Housing Enterprise Oversight and the Federal Housing Finance 

Board under title III of the Federal Housing Finance Regulatory Reform Act of 2008.’’; 

(2) in subsection (b)— (A) by realigning the margins of paragraph (2) two ems 

from the left, so as to align the left margin of such paragraph with the left margins of paragraph (1); 

(B) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively; and 

(C) by inserting after paragraph (1) the following: ‘‘(2) SEPARATE TREATMENT OF FEDERAL HOME LOAN BANK AND

ENTERPRISE ASSESSMENTS.—Assessments collected from the enterprises shall not exceed the amounts sufficient to provide for 

the costs and expenses described in subsection (a) relating to 

the enterprises. Assessments collected from the Federal Home 

Loan Banks shall not exceed the amounts sufficient to provide 

for the costs and expenses described in subsection (a) relating 

to the Federal Home Loan Banks.’’; 

(3) by striking subsection (c) and inserting the following: ‘‘(c) INCREASED COSTS OF REGULATION.—

‘‘(1) INCREASE FOR INADEQUATE CAPITALIZATION.—The semiannual payments made pursuant to subsection (b) by any regulated entity that is not classified (for purposes of subtitle B) as 

adequately capitalized may be increased, as necessary, in the 

discretion of the Director to pay additional estimated costs of 

regulation of the regulated entity. ‘‘(2) ADJUSTMENT FOR ENFORCEMENT ACTIVITIES.—The Director may adjust the amounts of any semiannual payments for 

an assessment under subsection (a) that are to be paid pursuant to subsection (b) by a regulated entity, as necessary in the 

discretion of the Director, to ensure that the costs of enforcement activities under this Act for a regulated entity are borne 

only by such regulated entity. 

‘‘(3) ADDITIONAL ASSESSMENT FOR DEFICIENCIES.—If at any 

time, as a result of increased costs of regulation of a regulated 

entity that is not classified (for purposes of subtitle B) as adequately capitalized or as the result of supervisory or enforcement activities under this Act for a regulated entity, the 

amount available from any semiannual payment made by such 

regulated entity pursuant to subsection (b) is insufficient to 

cover the costs of the Agency with respect to such entity, the 


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Director may make and collect from such regulated entity an 

immediate assessment to cover the amount of such deficiency 

for the semiannual period. If, at the end of any semiannual period during which such an assessment is made, any amount remains from such assessment, such remaining amount shall be 

deducted from the assessment for such regulated entity for the 

following semiannual period.’’; 

(4) in subsection (d), by striking ‘‘If’’ and inserting ‘‘Except 

with respect to amounts collected pursuant to subsection (a)(3), 

if’’; and 

(5) by striking subsections (e) through (g) and inserting the 

following: ‘‘(e) WORKING CAPITAL FUND.—At the end of each year for which 

an assessment under this section is made, the Director shall remit 

to each regulated entity any amount of assessment collected from 

such regulated entity that is attributable to subsection (a)(3) and 

is in excess of the amount the Director deems necessary to maintain a working capital fund. 

‘‘(f) TREATMENT OF ASSESSMENTS.—

‘‘(1) DEPOSIT.—Amounts received by the Director from assessments under this section may be deposited by the Director 

in the manner provided in section 5234 of the Revised Statutes 

of the United States (12 U.S.C. 192) for monies deposited by 

the Comptroller of the Currency. 

‘‘(2) NOT GOVERNMENT FUNDS.—The amounts received by the 

Director from any assessment under this section shall not be 

construed to be Government or public funds or appropriated 

money. ‘‘(3) NO APPORTIONMENT OF FUNDS.—Notwithstanding any 

other provision of law, the amounts received by the Director 

from any assessment under this section shall not be subject to 

apportionment for the purpose of chapter 15 of title 31, United 

States Code, or under any other authority. ‘‘(4) USE OF FUNDS.—The Director may use any amounts received by the Director from assessments under this section for 

compensation of the Director and other employees of the Agency and for all other expenses of the Director and the Agency. 

‘‘(5) AVAILABILITY OF OVERSIGHT FUND AMOUNTS.—Notwithstanding any other provision of law, any amounts remaining in 

the Federal Housing Enterprises Oversight Fund established 

under this section (as in effect before the effective date of the 

Federal Housing Finance Regulatory Reform Act of 2008, and 

any amounts remaining from assessments on the Federal 

Home Loan Banks pursuant to section 18(b) of the Federal 

Home Loan Bank Act (12 U.S.C. 1438(b)), shall, upon such effective date, be treated for purposes of this subsection as 

amounts received from assessments under this section. ‘‘(6) TREASURY INVESTMENTS.—

‘‘(A) AUTHORITY.—The Director may request the Secretary of the Treasury to invest such portions of amounts 

received by the Director from assessments paid under this 

section that, in the Director’s discretion, are not required 

to meet the current working needs of the Agency. ‘‘(B) GOVERNMENT OBLIGATIONS.—Pursuant to a request 

under subparagraph (A), the Secretary of the Treasury 


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shall invest such amounts in Government obligations guaranteed as to principal and interest by the United States 

with maturities suitable to the needs of the Agency and 

bearing interest at a rate determined by the Secretary of 

the Treasury taking into consideration current market 

yields on outstanding marketable obligations of the United 

States of comparable maturity. ‘‘(g) BUDGET AND FINANCIAL MANAGEMENT.— ‘‘(1) FINANCIAL OPERATING PLANS AND FORECASTS.—The Director shall provide to the Director of the Office of Management and Budget copies of the Director’s financial operating 

plans and forecasts, as prepared by the Director in the ordinary course of the Agency’s operations, and copies of the quarterly reports of the Agency’s financial condition and results of 

operations, as prepared by the Director in the ordinary course 

of the Agency’s operations. ‘‘(2) FINANCIAL STATEMENTS.—The Agency shall prepare annually a statement of—

‘‘(A) assets and liabilities and surplus or deficit; 

‘‘(B) income and expenses; and 

‘‘(C) sources and application of funds. 

‘‘(3) FINANCIAL MANAGEMENT SYSTEMS.—The Agency shall 

implement and maintain financial management systems that— ‘‘(A) comply substantially with Federal financial management systems requirements and applicable Federal accounting standards; and ‘‘(B) use a general ledger system that accounts for activity at the transaction level. ‘‘(4) ASSERTION OF INTERNAL CONTROLS.—The Director shall 

provide to the Comptroller General of the United States an assertion as to the effectiveness of the internal controls that 

apply to financial reporting by the Agency, using the standards 

established in section 3512(c) of title 31, United States Code. ‘‘(5) RULE OF CONSTRUCTION.—This subsection may not be 

construed as implying any obligation on the part of the Director to consult with or obtain the consent or approval of the Director of the Office of Management and Budget with respect to 

any report, plan, forecast, or other information referred to in 

paragraph (1) or any jurisdiction or oversight over the affairs 

or operations of the Agency. 

‘‘(h) AUDIT OF AGENCY.—

‘‘(1) IN GENERAL.—The Comptroller General shall annually 

audit the financial transactions of the Agency in accordance 

with the United States generally accepted government auditing 

standards as may be prescribed by the Comptroller General of 

the United States. The audit shall be conducted at the place 

or places where accounts of the Agency are normally kept. The 

representatives of the Government Accountability Office shall 

have access to the personnel and to all books, accounts, documents, papers, records (including electronic records), reports, 

files, and all other papers, automated data, things, or property 

belonging to or under the control of or used or employed by the 

Agency pertaining to its financial transactions and necessary 

to facilitate the audit, and such representatives shall be afforded full facilities for verifying transactions with the balVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00023 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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ances or securities held by depositories, fiscal agents, and 

custodians. All such books, accounts, documents, records, reports, files, papers, and property of the Agency shall remain in 

possession and custody of the Agency. The Comptroller General 

may obtain and duplicate any such books, accounts, documents, records, working papers, automated data and files, or 

other information relevant to such audit without cost to the 

Comptroller General and the Comptroller General’s right of access to such information shall be enforceable pursuant to section 716(c) of title 31, United States Code. 

‘‘(2) REPORT.—The Comptroller General shall submit to the 

Congress a report of each annual audit conducted under this 

subsection. The report to the Congress shall set forth the scope 

of the audit and shall include the statement of assets and liabilities and surplus or deficit, the statement of income and expenses, the statement of sources and application of funds, and 

such comments and information as may be deemed necessary 

to inform Congress of the financial operations and condition of 

the Agency, together with such recommendations with respect 

thereto as the Comptroller General may deem advisable. A 

copy of each report shall be furnished to the President and to 

the Agency at the time submitted to the Congress. 

‘‘(3) ASSISTANCE AND COSTS.—For the purpose of conducting 

an audit under this subsection, the Comptroller General may, 

in the discretion of the Comptroller General, employ by contract, without regard to section 3709 of the Revised Statutes of 

the United States (41 U.S.C. 5), professional services of firms 

and organizations of certified public accountants for temporary 

periods or for special purposes. Upon the request of the Comptroller General, the Director of the Agency shall transfer to the 

Government Accountability Office from funds available, the 

amount requested by the Comptroller General to cover the full 

costs of any audit and report conducted by the Comptroller 

General. The Comptroller General shall credit funds transferred to the account established for salaries and expenses of 

the Government Accountability Office, and such amount shall 

be available upon receipt and without fiscal year limitation to 

cover the full costs of the audit and report.’’. 

SEC. 1107. REGULATIONS AND ORDERS. 

Section 1319G of the Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 U.S.C. 4526) is amended—

(1) by striking subsection (a) and inserting the following: 

‘‘(a) AUTHORITY.—The Director shall issue any regulations, guidelines, or orders necessary to carry out the duties of the Director 

under this title or the authorizing statutes, and to ensure that the 

purposes of this title and the authorizing statutes are accomplished.’’; and 

(2) by striking subsection (c). 

SEC. 1108. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS. 

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting 

after section 1313A, as added by this Act, the following new section: 


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‘‘SEC. 1313B. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS. 

‘‘(a) STANDARDS.—The Director shall establish standards, by regulation or guideline, for each regulated entity relating 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 and investment portfolio growth; 

‘‘(7) investments and acquisitions of assets by a regulated entity, to ensure that they are consistent with the purposes of 

this title and the authorizing statutes; 

‘‘(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 regulated entity 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 regulated entity; and 

‘‘(11) such other operational and management standards as 

the Director determines to be appropriate. 

‘‘(b) FAILURE TO MEET STANDARDS.—

‘‘(1) PLAN REQUIREMENT.—

‘‘(A) IN GENERAL.—If the Director determines that a regulated entity fails to meet any standard established under 

subsection (a)—

‘‘(i) if such standard is established by regulation, the 

Director shall require the regulated entity to submit 

an acceptable plan to the Director within the time allowed under subparagraph (C); and 

‘‘(ii) if such standard is established by guideline, the 

Director may require the regulated entity to submit a 

plan described in clause (i). 

‘‘(B) CONTENTS.—Any plan required under subparagraph 

(A) shall specify the actions that the regulated entity will 

take to correct the deficiency. If the regulated entity is 

undercapitalized, the plan may be a part of the capital restoration plan for the regulated entity under section 1369C. 

‘‘(C) DEADLINES FOR SUBMISSION AND REVIEW.—The Director shall by regulation establish deadlines that—


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‘‘(i) provide the regulated entities with reasonable 

time to submit plans required under subparagraph 

(A), and generally require a regulated entity to submit 

a plan not later than 30 days after the Director determines that the entity fails to meet any standard established under subsection (a); and 

‘‘(ii) require the Director to act on plans expeditiously, and generally not later than 30 days after the 

plan is submitted. 

‘‘(2) REQUIRED ORDER UPON FAILURE TO SUBMIT OR IMPLEMENT PLAN.—If a regulated entity fails to submit an acceptable 

plan within the time allowed under paragraph (1)(C), or fails 

in any material respect to implement a plan accepted by the 

Director, the following shall apply: 

‘‘(A) REQUIRED CORRECTION OF DEFICIENCY.—The Director shall, by order, require the regulated entity to correct 

the deficiency. 

‘‘(B) OTHER AUTHORITY.—The Director may, by order, 

take one or more of the following actions until the deficiency is corrected: 

‘‘(i) Prohibit the regulated entity from permitting its 

average total assets (as such term is defined in section 

1316(b)) during any calendar quarter to exceed its average total assets during the preceding calendar quarter, or restrict the rate at which the average total assets of the entity may increase from one calendar 

quarter to another. 

‘‘(ii) Require the regulated entity—

‘‘(I) in the case of an enterprise, to increase its 

ratio of core capital to assets. 

‘‘(II) in the case of a Federal Home Loan Bank, 

to increase its ratio of total capital (as such term 

is defined in section 6(a)(5) of the Federal Home 

Loan Bank Act (12 U.S.C. 1426(a)(5)) to assets. 

‘‘(iii) Require the regulated entity to take any other 

action that the Director determines will better carry 

out the purposes of this section than any of the actions 

described in this subparagraph. 

‘‘(3) MANDATORY RESTRICTIONS.—In complying with paragraph (2), the Director shall take one or more of the actions described in clauses (i) through (iii) of paragraph (2)(B) if—

‘‘(A) the Director determines that the regulated entity 

fails to meet any standard prescribed under subsection (a); 

‘‘(B) the regulated entity has not corrected the deficiency; and 

‘‘(C) during the 18-month period before the date on 

which the regulated entity first failed to meet the standard, the entity underwent extraordinary growth, as defined 

by the Director. 

‘‘(c) OTHER ENFORCEMENT AUTHORITY NOT AFFECTED.—The authority of the Director under this section is in addition to any other 

authority of the Director.’’. 


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SEC. 1109. REVIEW OF AND AUTHORITY OVER ENTERPRISE ASSETS 

AND LIABILITIES. 

(a) IN GENERAL.—Subtitle B of the Federal Housing Enterprises 

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611 et 

seq.) is amended—

(1) by striking the subtitle designation and heading and inserting the following: 

‘‘Subtitle B—Required Capital Levels for 

Regulated Entities, Special Enforcement 

Powers, and Reviews of Assets and Liabilities’’; 

and 

(2) by adding at the end the following new section: 

‘‘SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND LIABILITIES. 

‘‘(a) IN GENERAL.—The Director shall, by regulation, establish 

criteria governing the portfolio holdings of the enterprises, to ensure that the holdings are backed by sufficient capital and consistent with the mission and the safe and sound operations of the 

enterprises. In establishing such criteria, the Director shall consider the ability of the enterprises to provide a liquid secondary 

market through securitization activities, the portfolio holdings in 

relation to the overall mortgage market, and adherence to the 

standards specified in section 1313B. 

‘‘(b) TEMPORARY ADJUSTMENTS.—The Director may, by order, 

make temporary adjustments to the established standards for an 

enterprise or both enterprises, such as during times of economic 

distress or market disruption. 

‘‘(c) AUTHORITY TO REQUIRE DISPOSITION OR ACQUISITION.—The 

Director shall monitor the portfolio of each enterprise. Pursuant to 

subsection (a) and notwithstanding the capital classifications of the 

enterprises, the Director may, by order, require an enterprise, 

under such terms and conditions as the Director determines to be 

appropriate, to dispose of or acquire any asset, if the Director determines that such action is consistent with the purposes of this 

Act or any of the authorizing statutes.’’. 

(b) REGULATIONS.—Not later than the expiration of the 180-day 

period beginning on the effective date of this Act, the Director shall 

issue regulations pursuant to section 1369E(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (as 

added by subsection (a) of this section) establishing the portfolio 

holdings standards under such section. 

SEC. 1110. RISK-BASED CAPITAL REQUIREMENTS. 

(a) IN GENERAL.—Section 1361 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611) 

is amended to read as follows: 

‘‘SEC. 1361. RISK-BASED CAPITAL LEVELS FOR REGULATED ENTITIES. 

‘‘(a) IN GENERAL.—

‘‘(1) ENTERPRISES.—The Director shall, by regulation, establish risk-based capital requirements for the enterprises to ensure that the enterprises operate in a safe and sound manner, 


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maintaining sufficient capital and reserves to support the risks 

that arise in the operations and management of the enterprises. 

‘‘(2) FEDERAL HOME LOAN BANKS.—The Director shall establish risk-based capital standards under section 6 of the Federal 

Home Loan Bank Act for the Federal Home Loan Banks. 

‘‘(b) NO LIMITATION.—Nothing in this section shall limit the authority of the Director to require other reports or undertakings, or 

take other action, in furtherance of the responsibilities of the Director under this Act.’’. 

(b) FEDERAL HOME LOAN BANKS RISK-BASED CAPITAL.—Section 

6(a)(3) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(3)) 

is amended—

(1) by striking subparagraph (A) and inserting the following: 

‘‘(A) RISK-BASED CAPITAL STANDARDS.—The Director 

shall, by regulation, establish risk-based capital standards 

for the Federal Home Loan Banks to ensure that the Federal Home Loan Banks operate in a safe and sound manner, with sufficient permanent capital and reserves to support the risks that arise in the operations and management of the Federal Home Loans Banks.’’; and 

(2) in subparagraph (B), by striking ‘‘(A)(ii)’’ and inserting 

‘‘(A)’’. 

SEC. 1111. MINIMUM CAPITAL LEVELS. 

Section 1362 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4612) is amended—

(1) in subsection (a), by striking ‘‘IN GENERAL’’ and inserting 

‘‘ENTERPRISES’’; and 

(2) by striking subsection (b) and inserting the following: 

‘‘(b) FEDERAL HOME LOAN BANKS.—For purposes of this subtitle, 

the minimum capital level for each Federal Home Loan Bank shall 

be the minimum capital required to be maintained to comply with 

the leverage requirement for the bank established under section 

6(a)(2) of the Federal Home Loan Bank Act (12 U.S.C. 1426(a)(2)). 

‘‘(c) ESTABLISHMENT OF REVISED MINIMUM CAPITAL LEVELS.—

Notwithstanding subsections (a) and (b) and notwithstanding the 

capital classifications of the regulated entities, the Director may, by 

regulations issued under section 1319G, establish a minimum capital level for the enterprises, for the Federal Home Loan Banks, or 

for both the enterprises and the banks, that is higher than the 

level specified in subsection (a) for the enterprises or the level specified in subsection (b) for the Federal Home Loan Banks, to the extent needed to ensure that the regulated entities operate in a safe 

and sound manner. 

‘‘(d) AUTHORITY TO REQUIRE TEMPORARY INCREASE.—

‘‘(1) IN GENERAL.—Notwithstanding subsections (a) and (b) 

and any minimum capital level established pursuant to subsection (c), the Director may, by order, increase the minimum 

capital level for a regulated entity on a temporary basis, when 

the Director determines that such an increase is necessary and 

consistent with the prudential regulation and the safe and 

sound operations of a regulated entity. 

‘‘(2) RESCISSION.—The Director shall rescind any temporary 

minimum capital level established under paragraph (1) when 


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the Director determines that the circumstances or facts no 

longer justify the temporary minimum capital level. ‘‘(3) REGULATIONS REQUIRED.—The Director shall issue regulations establishing— ‘‘(A) standards for the imposition of a temporary increase 

in minimum capital under paragraph (1); ‘‘(B) the standards and procedures that the Director will 

use to make the determination referred to in paragraph 

(2); and ‘‘(C) a reasonable time frame for periodic review of any 

temporary increase in minimum capital for the purpose of 

making the determination referred to in paragraph (2). ‘‘(e) AUTHORITY TO ESTABLISH ADDITIONAL CAPITAL AND RESERVE

REQUIREMENTS FOR PARTICULAR PURPOSES.—The Director may, at 

any time by order or regulation, establish such capital or reserve 

requirements with respect to any product or activity of a regulated 

entity, as the Director considers appropriate to ensure that the regulated entity operates in a safe and sound manner, with sufficient 

capital and reserves to support the risks that arise in the operations and management of the regulated entity. ‘‘(f) PERIODIC REVIEW.—The Director shall periodically review the 

amount of core capital maintained by the enterprises, the amount 

of capital retained by the Federal Home Loan Banks, and the minimum capital levels established for such regulated entities pursuant to this section.’’. 

SEC. 1112. REGISTRATION UNDER THE SECURITIES LAWS. 

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 

amended by adding at the end the following: 

‘‘SEC. 38. FEDERAL NATIONAL MORTGAGE ASSOCIATION, FEDERAL 

HOME LOAN MORTGAGE CORPORATION, FEDERAL HOME 

LOAN BANKS. 

‘‘(a) FEDERAL NATIONAL MORTGAGE ASSOCIATION AND FEDERAL

HOME LOAN MORTGAGE CORPORATION.—No class of equity securities of the Federal National Mortgage Association or the Federal 

Home Loan Mortgage Corporation shall be treated as an exempted 

security for purposes of section 12, 13, 14, or 16. ‘‘(b) FEDERAL HOME LOAN BANKS.— ‘‘(1) REGISTRATION.—Each Federal Home Loan Bank shall 

register a class of its common stock under section 12(g), not 

later than 120 days after the date of enactment of the Federal 

Housing Finance Regulatory Reform Act of 2008, and shall 

thereafter maintain such registration and be treated for purposes of this title as an ‘issuer’, the securities of which are required to be registered under section 12, regardless of the 

number of members holding such stock at any given time. 

‘‘(2) STANDARDS RELATING TO AUDIT COMMITTEES.—Each Federal Home Loan Bank shall comply with the rules issued by 

the Commission under section 10A(m). 

‘‘(c) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

‘‘(1) FEDERAL HOME LOAN BANK; MEMBER.—The terms ‘Federal Home Loan Bank’ and ‘member’, have the same meanings 

as in section 2 of the Federal Home Loan Bank Act. 

‘‘(2) FEDERAL NATIONAL MORTGAGE ASSOCIATION.—The term 

‘Federal National Mortgage Association’ means the corporation 


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created by the Federal National Mortgage Association Charter 

Act. ‘‘(3) FEDERAL HOME LOAN MORTGAGE CORPORATION.—The 

term ‘Federal Home Loan Mortgage Corporation’ means the 

corporation created by the Federal Home Loan Mortgage Corporation Act.’’. 

SEC. 1113. PROHIBITION AND WITHHOLDING OF EXECUTIVE COMPENSATION. 

(a) IN GENERAL.—Section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518) 

is amended— (1) in the section heading, by striking ‘‘OF EXCESSIVE’’ and inserting ‘‘AND WITHHOLDING OF EXECUTIVE’’; 

(2) in subsection (a)— (A) by striking ‘‘enterprise’’ and inserting ‘‘regulated entity’’; and 

(B) by striking ‘‘enterprises’’ and inserting ‘‘regulated entities’’; 

(3) by redesignating subsection (b) as subsection (d); and 

(4) by inserting after subsection (a) the following: ‘‘(b) FACTORS.—In making any determination under subsection 

(a), the Director may take into consideration any factors the Director considers relevant, including any wrongdoing on the part of the 

executive officer, and such wrongdoing shall include any fraudulent 

act or omission, breach of trust or fiduciary duty, violation of law, 

rule, regulation, order, or written agreement, and insider abuse 

with respect to the regulated entity. The approval of an agreement 

or contract pursuant to section 309(d)(3)(B) of the Federal National 

Mortgage Association Charter Act (12 U.S.C. 1723a(d)(3)(B)) or section 303(h)(2) of the Federal Home Loan Mortgage Corporation Act 

(12 U.S.C. 1452(h)(2)) shall not preclude the Director from making 

any subsequent determination under subsection (a). ‘‘(c) WITHHOLDING OF COMPENSATION.—In carrying out subsection (a), the Director may require a regulated entity to withhold 

any payment, transfer, or disbursement of compensation to an executive officer, or to place such compensation in an escrow account, 

during the review of the reasonableness and comparability of compensation.’’. 

(b) CONFORMING AMENDMENTS.—

(1) FANNIE MAE.—Section 309(d) of the Federal National 

Mortgage Association Charter Act (12 U.S.C. 1723a(d)) is 

amended by adding at the end the following new paragraph: 

‘‘(4) Notwithstanding any other provision of this section, the corporation shall not transfer, disburse, or pay compensation to any 

executive officer, or enter into an agreement with such executive officer, without the approval of the Director, for matters being reviewed under section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).’’. 

(2) FREDDIE MAC.—Section 303(h) of the Federal Home Loan 

Mortgage Corporation Act (12 U.S.C. 1452(h)) is amended by 

adding at the end the following new paragraph: 

‘‘(4) Notwithstanding any other provision of this section, the Corporation shall not transfer, disburse, or pay compensation to any 

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viewed under section 1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518).’’. (3) FEDERAL HOME LOAN BANKS.—Section 7 of the Federal 

Home Loan Bank Act (12 U.S.C. 1427) is amended by adding 

at the end the following new subsection: ‘‘(l) WITHHOLDING OF COMPENSATION.—Notwithstanding any 

other provision of this section, a Federal Home Loan Bank shall 

not transfer, disburse, or pay compensation to any executive officer, 

or enter into an agreement with such executive officer, without the 

approval of the Director, for matters being reviewed under section 

1318 of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992 (12 U.S.C. 4518).’’. 

SEC. 1114. LIMIT ON GOLDEN PARACHUTES. 

Section 1318 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4518) is amended by adding 

at the end the following: ‘‘(e) AUTHORITY TO REGULATE OR PROHIBIT CERTAIN FORMS OF

BENEFITS TO AFFILIATED PARTIES.— ‘‘(1) GOLDEN PARACHUTES AND INDEMNIFICATION PAYMENTS.— The Director may prohibit or limit, by regulation or order, any 

golden parachute payment or indemnification payment. ‘‘(2) FACTORS TO BE TAKEN INTO ACCOUNT.—The Director 

shall prescribe, by regulation, the factors to be considered by 

the Director in taking any action pursuant to paragraph (1), 

which may include such factors as— ‘‘(A) whether there is a reasonable basis to believe that 

the affiliated party has committed any fraudulent act or 

omission, breach of trust or fiduciary duty, or insider 

abuse with regard to the regulated entity that has had a 

material effect on the financial condition of the regulated 

entity; ‘‘(B) whether there is a reasonable basis to believe that 

the affiliated party is substantially responsible for the insolvency of the regulated entity, the appointment of a conservator or receiver for the regulated entity, or the troubled condition of the regulated entity (as defined in regulations prescribed by the Director); ‘‘(C) whether there is a reasonable basis to believe that 

the affiliated party has materially violated any applicable 

provision of Federal or State law or regulation that has 

had a material effect on the financial condition of the regulated entity; ‘‘(D) whether the affiliated party was in a position of 

managerial or fiduciary responsibility; and ‘‘(E) the length of time that the party was affiliated with 

the regulated entity, and the degree to which— ‘‘(i) the payment reasonably reflects compensation 

earned over the period of employment; and ‘‘(ii) the compensation involved represents a reasonable payment for services rendered. ‘‘(3) CERTAIN PAYMENTS PROHIBITED.—No regulated entity 

may prepay the salary or any liability or legal expense of any 

affiliated party if such payment is made—

‘‘(A) in contemplation of the insolvency of such regulated 

entity, or after the commission of an act of insolvency; and 


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‘‘(B) with a view to, or having the result of—

‘‘(i) preventing the proper application of the assets of 

the regulated entity to creditors; or 

‘‘(ii) preferring one creditor over another. 

‘‘(4) GOLDEN PARACHUTE PAYMENT DEFINED.—

‘‘(A) IN GENERAL.—For purposes of this subsection, the 

term ‘golden parachute payment’ means any payment (or 

any agreement to make any payment) in the nature of 

compensation by any regulated entity for the benefit of any 

affiliated party pursuant to an obligation of such regulated 

entity that—

‘‘(i) is contingent on the termination of such party’s 

affiliation with the regulated entity; and 

‘‘(ii) is received on or after the date on which—

‘‘(I) the regulated entity became insolvent; 

‘‘(II) any conservator or receiver is appointed for 

such regulated entity; or 

‘‘(III) the Director determines that the regulated 

entity is in a troubled condition (as defined in the 

regulations of the Director). 

‘‘(B) CERTAIN PAYMENTS IN CONTEMPLATION OF AN

EVENT.—Any payment which would be a golden parachute 

payment but for the fact that such payment was made before the date referred to in subparagraph (A)(ii) shall be 

treated as a golden parachute payment if the payment was 

made in contemplation of the occurrence of an event described in any subclause of such subparagraph. 

‘‘(C) CERTAIN PAYMENTS NOT INCLUDED.—For purposes of 

this subsection, the term ‘golden parachute payment’ shall 

not include—

‘‘(i) any payment made pursuant to a retirement 

plan which is qualified (or is intended to be qualified) 

under section 401 of the Internal Revenue Code of 

1986, or other nondiscriminatory benefit plan; 

‘‘(ii) any payment made pursuant to a bona fide deferred compensation plan or arrangement which the 

Director determines, by regulation or order, to be permissible; or 

‘‘(iii) any payment made by reason of the death or 

disability of an affiliated party. 

‘‘(5) OTHER DEFINITIONS.—For purposes of this subsection, 

the following definitions shall apply: 

‘‘(A) INDEMNIFICATION PAYMENT.—Subject to paragraph 

(6), the term ‘indemnification payment’ means any payment (or any agreement to make any payment) by any regulated entity for the benefit of any person who is or was 

an affiliated party, to pay or reimburse such person for 

any liability or legal expense with regard to any administrative proceeding or civil action instituted by the Agency 

which results in a final order under which such person—

‘‘(i) is assessed a civil money penalty; 

‘‘(ii) is removed or prohibited from participating in 

conduct of the affairs of the regulated entity; or 


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‘‘(iii) is required to take any affirmative action to 

correct certain conditions resulting from violations or 

practices, by order of the Director. 

‘‘(B) LIABILITY OR LEGAL EXPENSE.—The term ‘liability or 

legal expense’ means—

‘‘(i) any legal or other professional expense incurred 

in connection with any claim, proceeding, or action; 

‘‘(ii) the amount of, and any cost incurred in connection with, any settlement of any claim, proceeding, or 

action; and 

‘‘(iii) the amount of, and any cost incurred in connection with, any judgment or penalty imposed with respect to any claim, proceeding, or action. 

‘‘(C) PAYMENT.—The term ‘payment’ includes—

‘‘(i) any direct or indirect transfer of any funds or 

any asset; and 

‘‘(ii) any segregation of any funds or assets for the 

purpose of making, or pursuant to an agreement to 

make, any payment after the date on which such 

funds or assets are segregated, without regard to 

whether the obligation to make such payment is contingent on—

‘‘(I) the determination, after such date, of the liability for the payment of such amount; or 

‘‘(II) the liquidation, after such date, of the 

amount of such payment. 

‘‘(6) CERTAIN COMMERCIAL INSURANCE COVERAGE NOT TREATED AS COVERED BENEFIT PAYMENT.—No provision of this subsection shall be construed as prohibiting any regulated entity 

from purchasing any commercial insurance policy or fidelity 

bond, except that, subject to any requirement described in 

paragraph (5)(A)(iii), such insurance policy or bond shall not 

cover any legal or liability expense of the regulated entity 

which is described in paragraph (5)(A).’’. 

SEC. 1115. REPORTING OF FRAUDULENT LOANS. 

Part 1 of subtitle C of the Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 U.S.C. 4631 et seq.), as 

amended by this Act, is amended by adding at the end the following: 

‘‘SEC. 1379E. REPORTING OF FRAUDULENT LOANS. 

‘‘(a) REQUIREMENT TO REPORT.—The Director shall require a regulated entity to submit to the Director a timely report upon discovery by the regulated entity that it has purchased or sold a 

fraudulent loan or financial instrument, or suspects a possible 

fraud relating to the purchase or sale of any loan or financial instrument. The Director shall require each regulated entity to establish and maintain procedures designed to discover any such transactions. 

‘‘(b) PROTECTION FROM LIABILITY FOR REPORTS.—Any regulated 

entity that, in good faith, makes a report pursuant to subsection 

(a), and any entity-affiliated party, that, in good faith, makes or requires another to make any such report, shall not be liable to any 

person under any provision of law or regulation, any constitution, 

law, or regulation of any State or political subdivision of any State, 


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or under any contract or other legally enforceable agreement (including any arbitration agreement) for such report or for any failure to provide notice of such report to the person who is the subject 

of such report or any other persons identified in the report.’’. 

SEC. 1116. INCLUSION OF MINORITIES AND WOMEN; DIVERSITY IN 

AGENCY WORKFORCE. 

Section 1319A of the Housing and Community Development Act 

of 1992 (12 U.S.C. 4520) is amended— (1) in the section heading, by striking ‘‘EQUAL OPPORTUNITY IN SOLICITATION OF CONTRACTS’’ and inserting ‘‘MINORITY AND WOMEN INCLUSION; DIVERSITY 

REQUIREMENTS’’; 

(2) in subsection (a), by striking ‘‘(a) IN GENERAL.—Each enterprise’’ and inserting ‘‘(e) OUTREACH.—Each regulated entity’’; and 

(3) by striking subsection (b); 

(4) by inserting before subsection (e), as so redesignated by 

paragraph (2) of this section, the following new subsections: ‘‘(a) OFFICE OF MINORITY AND WOMEN INCLUSION.—Each regulated entity shall establish an Office of Minority and Women Inclusion, or designate an office of the entity, that shall be responsible 

for carrying out this section and all matters of the entity relating 

to diversity in management, employment, and business activities in 

accordance with such standards and requirements as the Director 

shall establish. ‘‘(b) INCLUSION IN ALL LEVELS OF BUSINESS ACTIVITIES.—Each 

regulated entity shall develop and implement standards and procedures to ensure, to the maximum extent possible, the inclusion and 

utilization of minorities (as such term is defined in section 1204(c) 

of the Financial Institutions Reform, Recovery, and Enforcement 

Act of 1989 (12 U.S.C. 1811 note)) and women, and minority- and 

women-owned businesses (as such terms are defined in section 

21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C. 

1441a(r)(4)) (including financial institutions, investment banking 

firms, mortgage banking firms, asset management firms, brokerdealers, financial services firms, underwriters, accountants, brokers, investment consultants, and providers of legal services) in all 

business and activities of the regulated entity at all levels, including in procurement, insurance, and all types of contracts (including 

contracts for the issuance or guarantee of any debt, equity, or mortgage-related securities, the management of its mortgage and securities portfolios, the making of its equity investments, the purchase, sale and servicing of single- and multi-family mortgage 

loans, and the implementation of its affordable housing program 

and initiatives). The processes established by each regulated entity 

for review and evaluation for contract proposals and to hire service 

providers shall include a component that gives consideration to the 

diversity of the applicant. 

‘‘(c) APPLICABILITY.—This section shall apply to all contracts of a 

regulated entity for services of any kind, including services that require the services of investment banking, asset management entities, broker-dealers, financial services entities, underwriters, accountants, investment consultants, and providers of legal services. ‘‘(d) INCLUSION IN ANNUAL REPORTS.—Each regulated entity shall 

include, in the annual report submitted by the entity to the DirecVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00034 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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tor pursuant to section 309(k) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(k)), section 307(c) of the 

Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(c)), 

and section 20 of the Federal Home Loan Bank Act (12 U.S.C. 

1440), as applicable, detailed information describing the actions 

taken by the entity pursuant to this section, which shall include a 

statement of the total amounts paid by the entity to third party 

contractors since the last such report and the percentage of such 

amounts paid to businesses described in subsection (b) of this section.’’; and 

(5) by adding at the end the following new subsection: 

‘‘(f) DIVERSITY IN AGENCY WORKFORCE.—The Agency shall take 

affirmative steps to seek diversity in its workforce at all levels of 

the agency consistent with the demographic diversity of the United 

States, which shall include—

‘‘(1) heavily recruiting at historically Black colleges and universities, Hispanic-serving institutions, women’s colleges, and 

colleges that typically serve majority minority populations; 

‘‘(2) sponsoring and recruiting at job fairs in urban communities, and placing employment advertisements in newspapers 

and magazines oriented toward women and people of color; 

‘‘(3) partnering with organizations that are focused on developing opportunities for minorities and women to place talented 

young minorities and women in industry internships, summer 

employment, and full-time positions; and 

‘‘(4) where feasible, partnering with inner-city high schools, 

girls’ high schools, and high schools with majority minority 

populations to establish or enhance financial literacy programs 

and provide mentoring.’’. 

SEC. 1117. TEMPORARY AUTHORITY FOR PURCHASE OF OBLIGATIONS 

OF REGULATED ENTITIES BY SECRETARY OF TREASURY. 

(a) FANNIE MAE.—Section 304 of the Federal National Mortgage 

Association Charter Act (12 U.S.C. 1719) is amended by adding at 

the end the following new subsection: 

‘‘(g) TEMPORARY AUTHORITY OF TREASURY TO PURCHASE OBLIGATIONS AND SECURITIES; CONDITIONS.—

‘‘(1) AUTHORITY TO PURCHASE.—

‘‘(A) GENERAL AUTHORITY.—In addition to the authority 

under subsection (c) of this section, the Secretary of the 

Treasury is authorized to purchase any obligations and 

other securities issued by the corporation under any section of this Act, on such terms and conditions as the Secretary may determine and in such amounts as the Secretary may determine. Nothing in this subsection requires 

the corporation to issue obligations or securities to the Secretary without mutual agreement between the Secretary 

and the corporation. Nothing in this subsection permits or 

authorizes the Secretary, without the agreement of the 

corporation, to engage in open market purchases of the 

common securities of the corporation. 

‘‘(B) EMERGENCY DETERMINATION REQUIRED.—In connection with any use of this authority, the Secretary must determine that such actions are necessary to—

‘‘(i) provide stability to the financial markets; 


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34 

‘‘(ii) prevent disruptions in the availability of mortgage finance; and ‘‘(iii) protect the taxpayer. ‘‘(C) CONSIDERATIONS.—To protect the taxpayers, the 

Secretary of the Treasury shall take into consideration the 

following in connection with exercising the authority contained in this paragraph: ‘‘(i) The need for preferences or priorities regarding 

payments to the Government. ‘‘(ii) Limits on maturity or disposition of obligations 

or securities to be purchased. ‘‘(iii) The corporation’s plan for the orderly resumption of private market funding or capital market access. ‘‘(iv) The probability of the corporation fulfilling the 

terms of any such obligation or other security, including repayment. ‘‘(v) The need to maintain the corporation’s status as 

a private shareholder-owned company. ‘‘(vi) Restrictions on the use of corporation resources, 

including limitations on the payment of dividends and 

executive compensation and any such other terms and 

conditions as appropriate for those purposes. ‘‘(D) REPORTS TO CONGRESS.—Upon exercise of this authority, the Secretary shall report to the Committees on 

the Budget, Financial Services, and Ways and Means of 

the House of Representatives and the Committees on the 

Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate as to the necessity for the purchase and 

the determinations made by the Secretary under subparagraph (B) and with respect to the considerations required 

under subparagraph (C), and the size, terms, and probability of repayment or fulfillment of other terms of such 

purchase. 

‘‘(2) RIGHTS; SALE OF OBLIGATIONS AND SECURITIES.— ‘‘(A) EXERCISE OF RIGHTS.—The Secretary of the Treasury may, at any time, exercise any rights received in connection with such purchases. ‘‘(B) SALE OF OBLIGATION AND SECURITIES.—The Secretary of the Treasury may, at any time, subject to the 

terms of the security or otherwise upon terms and conditions and at prices determined by the Secretary, sell any 

obligation or security acquired by the Secretary under this 

subsection. ‘‘(C) APPLICATION OF SUNSET TO PURCHASED OBLIGATIONS

OR SECURITIES.—The authority of the Secretary of the 

Treasury to hold, exercise any rights received in connection with, or sell, any obligations or securities purchased 

is not subject to the provisions of paragraph (4). 

‘‘(3) FUNDING.—For the purpose of the authorities granted in 

this subsection, the Secretary of the Treasury may use the proceeds of the sale of any securities issued under chapter 31 of 

Title 31, and the purposes for which securities may be issued 

under chapter 31 of Title 31 are extended to include such purchases and the exercise of any rights in connection with such 


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35 

purchases. Any funds expended for the purchase of, or modifications to, obligations and securities, or the exercise of any 

rights received in connection with such purchases under this 

subsection shall be deemed appropriated at the time of such 

purchase, modification, or exercise. 

‘‘(4) TERMINATION OF AUTHORITY.—The authority under this 

subsection (g), with the exception of paragraphs (2) and (3) of 

this subsection, shall expire December 31, 2009. 

‘‘(5) AUTHORITY OF THE DIRECTOR WITH RESPECT TO EXECUTIVE COMPENSATION.—The Director shall have the power to approve, disapprove, or modify the executive compensation of the 

corporation, as defined under Regulation S-K, 17 C.F.R. 229.’’. 

(b) FREDDIE MAC.—Section 306 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455) is amended by adding at the 

end the following new subsection: 

‘‘(l) TEMPORARY AUTHORITY OF TREASURY TO PURCHASE OBLIGATIONS AND SECURITIES; CONDITIONS.—

‘‘(1) AUTHORITY TO PURCHASE.—

‘‘(A) GENERAL AUTHORITY.—In addition to the authority 

under subsection (c) of this section, the Secretary of the 

Treasury is authorized to purchase any obligations and 

other securities issued by the Corporation under any section of this Act, on such terms and conditions as the Secretary may determine and in such amounts as the Secretary may determine. Nothing in this subsection requires 

the Corporation to issue obligations or securities to the 

Secretary without mutual agreement between the Secretary and the Corporation. Nothing in this subsection permits or authorizes the Secretary, without the agreement of 

the Corporation, to engage in open market purchases of 

the common securities of the Corporation. 

‘‘(B) EMERGENCY DETERMINATION REQUIRED.—In connection with any use of this authority, the Secretary must determine that such actions are necessary to—

‘‘(i) provide stability to the financial markets; 

‘‘(ii) prevent disruptions in the availability of mortgage finance; and 

‘‘(iii) protect the taxpayer. 

‘‘(C) CONSIDERATIONS.—To protect the taxpayers, the 

Secretary of the Treasury shall take into consideration the 

following in connection with exercising the authority contained in this paragraph: 

‘‘(i) The need for preferences or priorities regarding 

payments to the Government. 

‘‘(ii) Limits on maturity or disposition of obligations 

or securities to be purchased. 

‘‘(iii) The Corporation’s plan for the orderly resumption of private market funding or capital market access. 

‘‘(iv) The probability of the Corporation fulfilling the 

terms of any such obligation or other security, including repayment. 

‘‘(v) The need to maintain the Corporation’s status 

as a private shareholder-owned company. 


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‘‘(vi) Restrictions on the use of Corporation resources, including limitations on the payment of dividends and executive compensation and any such other 

terms and conditions as appropriate for those purposes. ‘‘(D) REPORTS TO CONGRESS.—Upon exercise of this authority, the Secretary shall report to the Committees on 

the Budget, Financial Services, and Ways and Means of 

the House of Representatives and the Committees on the 

Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate as to the necessity for the purchase and 

the determinations made by the Secretary under subparagraph (B) and with respect to the considerations required 

under subparagraph (C), and the size, terms, and probability of repayment or fulfillment of other terms of such 

purchase. ‘‘(2) RIGHTS; SALE OF OBLIGATIONS AND SECURITIES.—

‘‘(A) EXERCISE OF RIGHTS.—The Secretary of the Treasury may, at any time, exercise any rights received in connection with such purchases. ‘‘(B) SALE OF OBLIGATION AND SECURITIES.—The Secretary of the Treasury may, at any time, subject to the 

terms of the security or otherwise upon terms and conditions and at prices determined by the Secretary, sell any 

obligation or security acquired by the Secretary under this 

subsection. ‘‘(C) APPLICATION OF SUNSET TO PURCHASED OBLIGATIONS

OR SECURITIES.—The authority of the Secretary of the 

Treasury to hold, exercise any rights received in connection with, or sell, any obligations or securities purchased 

is not subject to the provisions of paragraph (4). ‘‘(3) FUNDING.—For the purpose of the authorities granted in 

this subsection, the Secretary of the Treasury may use the proceeds of the sale of any securities issued under chapter 31 of 

Title 31, and the purposes for which securities may be issued 

under chapter 31 of Title 31 are extended to include such purchases and the exercise of any rights in connection with such 

purchases. Any funds expended for the purchase of, or modifications to, obligations and securities, or the exercise of any 

rights received in connection with such purchases under this 

subsection shall be deemed appropriated at the time of such 

purchase, modification, or exercise. ‘‘(4) TERMINATION OF AUTHORITY.—The authority under this 

subsection (l), with the exception of paragraphs (2) and (3) of 

this subsection, shall expire December 31, 2009. 

‘‘(5) AUTHORITY OF THE DIRECTOR WITH RESPECT TO EXECUTIVE COMPENSATION.—The Director shall have the power to approve, disapprove, or modify the executive compensation of the 

Corporation, as defined under Regulation S-K, 17 C.F.R. 229.’’. (c) FEDERAL HOME LOAN BANKS.—Section 11 of the Federal 

Home Loan Bank Act (12 U.S.C. 1431) is amended by adding at the 

end the following new subsection: ‘‘(l) TEMPORARY AUTHORITY OF TREASURY TO PURCHASE OBLIGATIONS; CONDITIONS.—

‘‘(1) AUTHORITY TO PURCHASE.—


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‘‘(A) GENERAL AUTHORITY.—In addition to the authority 

under subsection (i) of this section, the Secretary of the 

Treasury is authorized to purchase any obligations issued 

by any Federal Home Loan Bank under any section of this 

Act, on such terms and conditions as the Secretary may 

determine and in such amounts as the Secretary may determine. Nothing in this subsection requires a Federal 

Home Loan Bank to issue obligations or securities to the 

Secretary without mutual agreement between the Secretary and the Federal Home Loan Bank. Nothing in this 

subsection permits or authorizes the Secretary, without 

the agreement of the Federal Home Loan Bank, to engage 

in open market purchases of the common securities of any 

Federal Home Loan Bank. ‘‘(B) EMERGENCY DETERMINATION REQUIRED.—In connection with any use of this authority, the Secretary must determine that such actions are necessary to—

‘‘(i) provide stability to the financial markets; 

‘‘(ii) prevent disruptions in the availability of mortgage finance; and 

‘‘(iii) protect the taxpayer. 

‘‘(C) CONSIDERATIONS.—To protect the taxpayers, the 

Secretary of the Treasury shall take into consideration the 

following in connection with exercising the authority contained in this paragraph: ‘‘(i) The need for preferences or priorities regarding 

payments to the Government. ‘‘(ii) Limits on maturity or disposition of obligations 

or securities to be purchased. ‘‘(iii) The Federal Home Loan Bank’s plan for the orderly resumption of private market funding or capital 

market access. ‘‘(iv) The probability of the Federal Home Loan 

Bank fulfilling the terms of any such obligation or 

other security, including repayment. 

‘‘(v) The need to maintain the Federal Home Loan 

Bank’s status as a private shareholder-owned company. 

‘‘(vi) Restrictions on the use of Federal Home Loan 

Bank resources, including limitations on the payment 

of dividends and executive compensation and any such 

other terms and conditions as appropriate for those 

purposes. 

‘‘(D) REPORTS TO CONGRESS.—Upon exercise of this authority, the Secretary shall report to the Committees on 

the Budget, Financial Services, and Ways and Means of 

the House of Representatives and the Committees on the 

Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate as to the necessity for the purchase and 

the determinations made by the Secretary under subparagraph (B) and with respect to the considerations required 

under subparagraph (C), and the size, terms, and probability of repayment or fulfillment of other terms of such 

purchase. ‘‘(2) RIGHTS; SALE OF OBLIGATIONS AND SECURITIES.—


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38 

‘‘(A) EXERCISE OF RIGHTS.—The Secretary of the Treasury may, at any time, exercise any rights received in connection with such purchases. 

‘‘(B) SALE OF OBLIGATIONS.—The Secretary of the Treasury may, at any time, subject to the terms of the security 

or otherwise upon terms and conditions and at prices determined by the Secretary, sell any obligation acquired by 

the Secretary under this subsection. 

‘‘(C) APPLICATION OF SUNSET TO PURCHASED OBLIGATIONS.—The authority of the Secretary of the Treasury to 

hold, exercise any rights received in connection with, or 

sell, any obligations purchased is not subject to the provisions of paragraph (4). 

‘‘(3) FUNDING.—For the purpose of the authorities granted in 

this subsection, the Secretary of the Treasury may use the proceeds of the sale of any securities issued under chapter 31 of 

Title 31, and the purposes for which securities may be issued 

under chapter 31 of Title 31 are extended to include such purchases and the exercise of any rights in connection with such 

purchases. Any funds expended for the purchase of, or modifications to, obligations and securities, or the exercise of any 

rights received in connection with such purchases under this 

subsection shall be deemed appropriated at the time of such 

purchase, modification, or exercise. 

‘‘(4) TERMINATION OF AUTHORITY.—The authority under this 

subsection (l), with the exception of paragraphs (2) and (3) of 

this subsection, shall expire December 31, 2009. 

‘‘(5) AUTHORITY OF THE DIRECTOR WITH RESPECT TO EXECUTIVE COMPENSATION.—The Director shall have the power to approve, disapprove, or modify the executive compensation of the 

Federal Home Loan Bank, as defined under Regulation S-K, 17 

C.F.R. 229.’’. 

SEC. 1118. CONSULTATION BETWEEN THE DIRECTOR OF THE FEDERAL HOUSING FINANCE AGENCY AND THE BOARD OF 

GOVERNORS OF THE FEDERAL RESERVE SYSTEM TO ENSURE FINANCIAL MARKET STABILITY . 

Subsection (a) of section 1313 of the Federal Housing Enterprises 

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513), as 

amended by the preceding provisions of this Act, is further amended by adding at the end the following new paragraph: 

‘‘(3) COORDINATION WITH THE CHAIRMAN OF THE BOARD OF

GOVERNORS OF THE FEDERAL RESERVE SYSTEM.— ‘‘(A) CONSULTATION.— The Director shall consult with, 

and consider the views of, the Chairman of the Board of 

Governors of the Federal Reserve System, with respect to 

the risks posed by the regulated entities to the financial 

system, prior to issuing any proposed or final regulations, 

orders, and guidelines with respect to the exercise of the 

additional authority provided in this Act regarding prudential management and operations standards, safe and 

sound operations of, and capital requirements and portfolio 

standards applicable to the regulated entities (as such 

term is defined in section 1303). The Director also shall 

consult with the Chairman regarding any decision to place 

a regulated entity into conservatorship or receivership. 


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39 

‘‘(B) INFORMATION SHARING.—To facilitate the consultative process, the Director shall share information with 

the Board of Governors of the Federal Reserve System on 

a regular, periodic basis as determined by the Director and 

the Board regarding the capital, asset and liabilities, financial condition, and risk management practices of the 

regulated entities as well as any information related to financial market stability. ‘‘(C) TERMINATION OF CONSULTATION REQUIREMENT.— The requirement of the Director to consult with the Board 

of Governors of the Federal Reserve System under this 

paragraph shall expire at the conclusion of December 31, 

2009.’’. 

Subtitle B—Improvement of Mission 

Supervision 

SEC. 1121. TRANSFER OF PROGRAM APPROVAL AND HOUSING GOAL 

OVERSIGHT. 

Part 2 of subtitle A of the Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is 

amended— (1) by striking the heading for the part and inserting the following: 

‘‘PART 2—ADDITIONAL AUTHORITIES OF THE 

DIRECTOR’’; 

and 

(2) by striking sections 1321 and 1322. 

SEC. 1122. ASSUMPTION BY THE DIRECTOR OF CERTAIN OTHER HUD 

RESPONSIBILITIES. 

(a) IN GENERAL.—Part 2 of subtitle A of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 

4541 et seq.) is amended—

(1) by striking ‘‘Secretary’’ each place that term appears and 

inserting ‘‘Director’’ in each of sections 1323, 1326, 1327, 1328, 

and 1336; and 

(2) by striking sections 1338 and 1349 (12 U.S.C. 4562 note 

and 4589). 

(b) RETENTION OF FAIR HOUSING RESPONSIBILITIES.—Section 

1325 of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992 (12 U.S.C. 4545) is amended in the matter 

preceding paragraph (1), by inserting ‘‘of Housing and Urban Development’’ after ‘‘The Secretary’’. 

SEC. 1123. REVIEW OF ENTERPRISE PRODUCTS. 

Part 2 of subtitle A of the Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is 

amended by inserting before section 1323 the following: 

‘‘SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS. 

‘‘(a) IN GENERAL.—The Director shall require each enterprise to 

obtain the approval of the Director for any product of the enterprise before initially offering the product. 


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‘‘(b) STANDARD FOR APPROVAL.—In considering any request for 

approval of a product pursuant to subsection (a), the Director shall 

make a determination that— ‘‘(1) in the case of a product of the Federal National Mortgage Association, the product is authorized under paragraph 

(2), (3), (4), or (5) of section 302(b) or section 304 of the Federal 

National Mortgage Association Charter Act (12 U.S.C. 1717(b), 

1719); ‘‘(2) in the case of a product of the Federal Home Loan Mortgage Corporation, the product is authorized under paragraph 

(1), (4), or (5) of section 305(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)); ‘‘(3) the product is in the public interest; and 

‘‘(4) the product is consistent with the safety and soundness 

of the enterprise or the mortgage finance system. ‘‘(c) PROCEDURE FOR APPROVAL.—

‘‘(1) SUBMISSION OF REQUEST.—An enterprise shall submit to 

the Director a written request for approval of a product that 

describes the product in such form as prescribed by order or 

regulation of the Director. 

‘‘(2) REQUEST FOR PUBLIC COMMENT.—Immediately upon receipt of a request for approval of a product, as required under 

paragraph (1), the Director shall publish notice of such request 

and of the period for public comment pursuant to paragraph 

(3) regarding the product, and a description of the product proposed by the request. The Director shall give interested parties 

the opportunity to respond in writing to the proposed product. ‘‘(3) PUBLIC COMMENT PERIOD.—During the 30-day period beginning on the date of publication pursuant to paragraph (2) 

of a request for approval of a product, the Director shall receive public comments regarding the proposed product. ‘‘(4) OFFERING OF PRODUCT.—

‘‘(A) IN GENERAL.—Not later than 30 days after the close 

of the public comment period described in paragraph (3), 

the Director shall approve or deny the product, specifying 

the grounds for such decision in writing. ‘‘(B) FAILURE TO ACT.—If the Director fails to act within 

the 30-day period described in subparagraph (A), then the 

enterprise may offer the product. ‘‘(C) TEMPORARY APPROVAL.—The Director may, subject 

to the rules of the Director, provide for temporary approval 

of the offering of a product without a public comment period, if the Director finds that the existence of exigent circumstances makes such delay contrary to the public interest. 

‘‘(d) CONDITIONAL APPROVAL.—If the Director approves the offering of any product by an enterprise, the Director may establish 

terms, conditions, or limitations with respect to such product with 

which the enterprise must comply in order to offer such product. ‘‘(e) EXCLUSIONS.— ‘‘(1) IN GENERAL.—The requirements of subsections (a) 

through (d) do not apply with respect to— ‘‘(A) the automated loan underwriting system of an enterprise in existence as of the date of enactment of the 

Federal Housing Finance Regulatory Reform Act of 2008, 


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41 

including any upgrade to the technology, operating system, 

or software to operate the underwriting system; ‘‘(B) any modification to the mortgage terms and conditions or mortgage underwriting criteria relating to the 

mortgages that are purchased or guaranteed by an enterprise, provided that such modifications do not alter the underlying transaction so as to include services or financing, 

other than residential mortgage financing; or ‘‘(C) any other activity that is substantially similar, as 

determined by rule of the Director to— ‘‘(i) the activities described in subparagraphs (A) and 

(B); and ‘‘(ii) other activities that have been approved by the 

Director in accordance with this section. ‘‘(2) EXPEDITED REVIEW.— ‘‘(A) ENTERPRISE NOTICE.—For any new activity that an 

enterprise considers not to be a product, the enterprise 

shall provide written notice to the Director of such activity, 

and may not commence such activity until the date of receipt of a notice under subparagraph (B) or the expiration 

of the period described in subparagraph (C). The Director 

shall establish, by regulation, the form and content of such 

written notice. ‘‘(B) DIRECTOR DETERMINATION.—Not later than 15 days 

after the date of receipt of a notice under subparagraph 

(A), the Director shall determine whether such activity is 

a product subject to approval under this section. The Director shall, immediately upon so determining, notify the 

enterprise. ‘‘(C) FAILURE TO ACT.—If the Director fails to determine 

whether such activity is a product within the 15-day period described in subparagraph (B), the enterprise may 

commence the new activity in accordance with subparagraph (A). ‘‘(f) NO LIMITATION.—Nothing in this section may be construed to 

restrict—

‘‘(1) the safety and soundness authority of the Director over 

all new and existing products or activities; or ‘‘(2) the authority of the Director to review all new and existing products or activities to determine that such products or 

activities are consistent with the statutory mission of an enterprise.’’. 

SEC. 1124. CONFORMING LOAN LIMITS. 

(a) FANNIE MAE.—

(1) GENERAL LIMIT.—Section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) 

is amended by striking the 7th and 8th sentences and inserting 

the following new sentences: ‘‘Such limitations shall not exceed 

$417,000 for a mortgage secured by a single-family residence, 

$533,850 for a mortgage secured by a 2-family residence, 

$645,300 for a mortgage secured by a 3-family residence, and 

$801,950 for a mortgage secured by a 4-family residence, except that such maximum limitations shall be adjusted effective 

January 1 of each year beginning after the effective date of the 

Federal Housing Finance Regulatory Reform Act of 2008, subVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00043 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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ject to the limitations in this paragraph. Each adjustment shall 

be made by adding to each such amount (as it may have been 

previously adjusted) a percentage thereof equal to the percentage increase, during the most recent 12-month or 4-quarter period ending before the time of determining such annual adjustment, in the housing price index maintained by the Director of 

the Federal Housing Finance Agency (pursuant to section 1322 

of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992 (12 U.S.C. 4541)). If the change in such 

house price index during the most recent 12-month or 4-quarter period ending before the time of determining such annual 

adjustment is a decrease, then no adjustment shall be made for 

the next year, and the next adjustment shall take into account 

prior declines in the house price index, so that any adjustment 

shall reflect the net change in the house price index since the 

last adjustment. Declines in the house price index shall be accumulated and then reduce increases until subsequent increases exceed prior declines.’’. (2) HIGH-COST AREA LIMIT.—Section 302(b)(2) of the Federal 

National Mortgage Association Charter Act (12 U.S.C. 

1717(b)(2)) is amended by adding after the period at the end 

the following: ‘‘Such foregoing limitations shall also be increased, with respect to properties of a particular size located 

in any area for which 115 percent of the median house price 

for such size residence exceeds the foregoing limitation for such 

size residence, to the lesser of 150 percent of such limitation 

for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence.’’. 

(3) EFFECTIVE DATE.—The amendments made by paragraphs 

(1) and (2) of this subsection shall take effect upon the expiration of the date described in section 201(a) of the Economic 

Stimulus Act of 2008 (Public Law 110–185). 

(b) FREDDIE MAC.—

(1) GENERAL LIMIT.—Section 305(a)(2) of the Federal Home 

Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) is 

amended by striking the 6th and 7th sentences and inserting 

the following new sentences: ‘‘Such limitations shall not exceed 

$417,000 for a mortgage secured by a single-family residence, 

$533,850 for a mortgage secured by a 2-family residence, 

$645,300 for a mortgage secured by a 3-family residence, and 

$801,950 for a mortgage secured by a 4-family residence, except that such maximum limitations shall be adjusted effective 

January 1 of each year beginning after the effective date of the 

Federal Housing Finance Regulatory Reform Act of 2008, subject to the limitations in this paragraph. Each adjustment shall 

be made by adding to each such amount (as it may have been 

previously adjusted) a percentage thereof equal to the percentage increase, during the most recent 12-month or 4-quarter period ending before the time of determining such annual adjustment, in the housing price index maintained by the Director of 

the Federal Housing Finance Agency (pursuant to section 1322 

of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992 (12 U.S.C. 4541)). If the change in such 

house price index during the most recent 12-month or 4-quarVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00044 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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43 

ter period ending before the time of determining such annual 

adjustment is a decrease, then no adjustment shall be made for 

the next year, and the next adjustment shall take into account 

prior declines in the house price index, so that any adjustment 

shall reflect the net change in the house price index since the 

last adjustment. Declines in the house price index shall be accumulated and then reduce increases until subsequent increases exceed prior declines.’’. 

(2) HIGH-COST AREA LIMIT.—Section 305(a)(2) of the Federal 

Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) is 

amended by adding after the period at the end the following: 

‘‘Such foregoing limitations shall also be increased, with respect to properties of a particular size located in any area for 

which 115 percent of the median house price for such size residence exceeds the foregoing limitation for such size residence, 

to the lesser of 150 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median 

house price in such area for such size residence.’’. 

(3) EFFECTIVE DATE.—The amendments made by paragraphs 

(1) and (2) of this subsection shall take effect upon the expiration of the date described in section 201(a) of the Economic 

Stimulus Act of 2008 (Public Law 110–185). 

(c) SENSE OF CONGRESS.—It is the sense of the Congress that the 

securitization of mortgages by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation plays an 

important role in providing liquidity to the United States housing 

markets. Therefore, the Congress encourages the Federal National 

Mortgage Association and the Federal Home Loan Mortgage Corporation to securitize mortgages acquired under the increased conforming loan limits established under this Act. 

(d) HOUSING PRICE INDEX.—Part 2 of subtitle A of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992 

(12 U.S.C. 4541 et seq.) is amended by inserting after section 1321 

(as added by section 1123 of this Act) the following new section: 

‘‘SEC. 1322. HOUSING PRICE INDEX. 

‘‘The Director shall establish and maintain a method of assessing 

the national average 1-family house price for use for adjusting the 

conforming loan limitations of the enterprises. In establishing such 

method, the Director shall take into consideration the monthly survey of all major lenders conducted by the Federal Housing Finance 

Agency to determine the national average 1-family house price, the 

House Price Index maintained by the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development before the effective date of the Federal Housing Finance 

Regulatory Reform Act of 2008, any appropriate house price indexes of the Bureau of the Census of the Department of Commerce, 

and any other indexes or measures that the Director considers appropriate.’’. 

SEC. 1125. ANNUAL HOUSING REPORT. 

(a) REPEAL.—Section 1324 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4544) is hereby repealed. 


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(b) ANNUAL HOUSING REPORT.—The Federal Housing Enterprises 

Financial Safety and Soundness Act of 1992 is amended by inserting after section 1323 the following: 

‘‘SEC. 1324. ANNUAL HOUSING REPORT. 

‘‘(a) IN GENERAL.—After reviewing and analyzing the reports 

submitted under section 309(n) of the Federal National Mortgage 

Association Charter Act and section 307(f) of the Federal Home 

Loan Mortgage Corporation Act, the Director shall submit a report, 

not later than October 30 of each year, to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee 

on Financial Services of the House of Representatives, on the activities of each enterprise. ‘‘(b) CONTENTS.—The report required under subsection (a) shall— ‘‘(1) discuss— ‘‘(A) the extent to and manner in which— ‘‘(i) each enterprise is achieving the annual housing 

goals established under subpart B; ‘‘(ii) each enterprise is complying with its duty to 

serve underserved markets, as established under section 1335; ‘‘(iii) each enterprise is complying with section 1337; 

‘‘(iv) each enterprise received credit towards achieving each of its goals resulting from a transaction or activity pursuant to section 1331(b)(2); and ‘‘(v) each enterprise is achieving the purposes of the 

enterprise established by law; and ‘‘(B) the actions that each enterprise could undertake to 

promote and expand the purposes of the enterprise; ‘‘(2) aggregate and analyze relevant data on income to assess 

the compliance of each enterprise with the housing goals established under subpart B; ‘‘(3) aggregate and analyze data on income, race, and gender 

by census tract and other relevant classifications, and compare 

such data with larger demographic, housing, and economic 

trends; ‘‘(4) identify the extent to which each enterprise is involved 

in mortgage purchases and secondary market activities involving subprime and nontraditional loans; ‘‘(5) compare the characteristics of subprime and nontraditional loans both purchased and securitized by each enterprise 

to other loans purchased and securitized by each enterprise; 

and ‘‘(6) compare the characteristics of high-cost loans purchased 

and securitized, where such securities are not held on portfolio 

to loans purchased and securitized, where such securities are 

either retained on portfolio or repurchased by the enterprise, 

including such characteristics as—

‘‘(A) the purchase price of the property that secures the 

mortgage; 

‘‘(B) the loan-to-value ratio of the mortgage, which shall 

reflect any secondary liens on the relevant property; 

‘‘(C) the terms of the mortgage; 

‘‘(D) the creditworthiness of the borrower; and 

‘‘(E) any other relevant data, as determined by the Director. 


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‘‘(c) DATA COLLECTION AND REPORTING.— ‘‘(1) IN GENERAL.—To assist the Director in analyzing the 

matters described in subsection (b), the Director shall conduct, 

on a monthly basis, a survey of mortgage markets in accordance with this subsection. ‘‘(2) DATA POINTS.—Each monthly survey conducted by the 

Director under paragraph (1) shall collect data on— ‘‘(A) the characteristics of individual mortgages that are 

eligible for purchase by the enterprises and the characteristics of individual mortgages that are not eligible for purchase by the enterprises including, in both cases, information concerning— ‘‘(i) the price of the house that secures the mortgage; 

‘‘(ii) the loan-to-value ratio of the mortgage, which 

shall reflect any secondary liens on the relevant property; ‘‘(iii) the terms of the mortgage; 

‘‘(iv) the creditworthiness of the borrower or borrowers; and ‘‘(v) whether the mortgage, in the case of a conforming mortgage, was purchased by an enterprise; ‘‘(B) the characteristics of individual subprime and nontraditional mortgages that are eligible for purchase by the 

enterprises and the characteristics of borrowers under 

such mortgages, including the creditworthiness of such 

borrowers and determination whether such borrowers 

would qualify for prime lending; and ‘‘(C) such other matters as the Director determines to be 

appropriate. ‘‘(3) PUBLIC AVAILABILITY.—The Director shall make any data 

collected by the Director in connection with the conduct of a 

monthly survey available to the public in a timely manner, 

provided that the Director may modify the data released to the 

public to ensure that the data— ‘‘(A) is not released in an identifiable form; and 

‘‘(B) is not otherwise obtainable from other publicly 

available data sets. ‘‘(4) DEFINITION.—For purposes of this subsection, the term ‘identifiable form’ means any representation of information 

that permits the identity of a borrower to which the information relates to be reasonably inferred by either direct or indirect means.’’. 

SEC. 1126. PUBLIC USE DATABASE. 

Section 1323 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (42 U.S.C. 4543) is amended—

(1) in subsection (a)—

(A) by striking ‘‘(a) IN GENERAL.—The Secretary’’ and inserting the following: 

‘‘(a) AVAILABILITY.—

‘‘(1) IN GENERAL.—The Director’’; and 

(B) by adding at the end the following new paragraph: 

‘‘(2) CENSUS TRACT LEVEL REPORTING.—Such data shall include the data elements required to be reported under the 

Home Mortgage Disclosure Act of 1975, at the census tract 

level.’’; 


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(2) in subsection (b)(2), by inserting before the period at the 

end the following: ‘‘or with subsection (a)(2)’’; and 

(3) by adding at the end the following new subsection: ‘‘(d) TIMING.—Data submitted under this section by an enterprise 

in connection with a provision referred to in subsection (a) shall be 

made publicly available in accordance with this section not later 

than September 30 of the year following the year to which the data 

relates.’’. 

SEC. 1127. REPORTING OF MORTGAGE DATA. 

Section 1326 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4546) is amended— (1) in subsection (a), by striking ‘‘The Director’’ and inserting ‘‘Subject to subsection (d), the Director’’; and 

(2) by adding at the end the following: ‘‘(d) MORTGAGE INFORMATION.—Subject to privacy considerations, 

as described in section 304(j) of the Home Mortgage Disclosure Act 

of 1975 (12 U.S.C. 2803(j)), the Director shall, by regulation or 

order, provide that certain information relating to single family 

mortgage data of the enterprises shall be disclosed to the public, 

in order to make available to the public— ‘‘(1) the same data from the enterprises that is required of 

insured depository institutions under the Home Mortgage Disclosure Act of 1975; and 

‘‘(2) information collected by the Director under section 

1324(b)(6).’’. 

SEC. 1128. REVISION OF HOUSING GOALS. 

(a) REPEAL.—Sections 1331 through 1334 of the Federal Housing 

Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 

4561 through 4564) are hereby repealed. 

(b) HOUSING GOALS.—The Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 is amended by inserting before 

section 1335 the following: 

‘‘SEC. 1331. ESTABLISHMENT OF HOUSING GOALS. 

‘‘(a) IN GENERAL.—The Director shall, by regulation, establish effective for 2010 and each year thereafter, annual housing goals, 

with respect to the mortgage purchases by the enterprises, as follows: 

‘‘(1) SINGLE-FAMILY HOUSING GOALS.—Four single-family 

housing goals under section 1332. 

‘‘(2) MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL.—One 

multifamily special affordable housing goal under section 1333. 

‘‘(b) TIMING.—The Director shall, by regulation, establish an annual deadline by which the Director shall establish the annual 

housing goals under this subpart for each year, taking into consideration the need for the enterprises to reasonably and sufficiently 

plan their operations and activities in advance, including operations and activities necessary to meet such annual goals. 

‘‘(c) TRANSITION.—The annual housing goals effective for 2008 

pursuant to this subpart, as in effect before the enactment of the 

Federal Housing Finance Regulatory Reform Act of 2008, shall remain in effect for 2009, except that not later than the expiration 

of the 270-day period beginning on the date of the enactment of 

such Act, the Director shall review such goals applicable for 2009 

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tions current at such time and, after seeking public comment for 

a period not to exceed 30 days, may make appropriate adjustments 

consistent with such market conditions. ‘‘(d) ELIMINATING INTEREST RATE DISPARITIES.— ‘‘(1) IN GENERAL.—Upon request by the Director, an enterprise shall provide to the Director, in a form determined by the 

Director, data the Director may review to determine whether 

there exist disparities in interest rates charged on mortgages 

to borrowers who are minorities as compared with comparable 

mortgages to borrowers of similar creditworthiness who are not 

minorities. ‘‘(2) REMEDIAL ACTIONS UPON PRELIMINARY FINDING.—Upon a 

preliminary finding by the Director that a pattern of disparities in interest rates with respect to any lender or lenders exists pursuant to the data provided by an enterprise in paragraph (1), the Director shalll ‘‘(A) refer the preliminary finding to the appropriate regulatory or enforcement agency for further review; and ‘‘(B) require the enterprise to submit additional data 

with respect to any lender or lenders, as appropriate and 

to the extent practicable, to the Director who shall submit 

any such additional data to the regulatory or enforcement 

agency for appropriate action. ‘‘(3) ANNUAL REPORT TO CONGRESS.—The Director shall 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 report describing the actions 

taken, and being taken, by the Director to carry out this subsection. No such report shall identify any lender or lenders 

who have not been found to have engaged in discriminatory 

lending practices pursuant to a final adjudication on the 

record, and after opportunity for an administrative hearing, in 

accordance with subchapter II of chapter 5 of title 5, United 

States Code. ‘‘(4) PROTECTION OF IDENTITY OF INDIVIDUALS.—In carrying 

out this subsection, the Director shall ensure that no propertyrelated or financial information that would enable a borrower 

to be identified shall be made public. 

‘‘SEC. 1332. SINGLE-FAMILY HOUSING GOALS. 

‘‘(a) IN GENERAL.—The Director shall, by regulation, establish 

annual goals for the purchase by each enterprise of the following 

types of mortgages for the following categories of families: 

‘‘(1) PURCHASE-MONEY MORTGAGES.—A goal for purchase of 

conventional, conforming, single-family, purchase money mortgages financing owner-occupied housing for each of the following categories of families: 

‘‘(A) Low-income families. 

‘‘(B) Families that reside in low-income areas. 

‘‘(C) Very low-income families. 

‘‘(2) REFINANCING MORTGAGES.—A goal for purchase of conventional, conforming mortgages on owner-occupied, singlefamily housing for low-income families that are given to pay off 

or prepay an existing loan secured by the same property. 

‘‘(b) GOALS AS A PERCENTAGE OF TOTAL MORTGAGE PURCHASES.—

The goals established under paragraphs (1) and (2) of subsection 


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(a) shall be established as a percentage of the total number of conventional, conforming, single-family, owner-occupied, purchase 

money mortgages purchased by the enterprise, or as percentage of 

the total number of conventional, single-family, owner-occupied refinance mortgages purchased by the enterprise, as applicable, that 

are mortgages for the types of families specified in paragraphs (1) 

and (2) of subsection (a). ‘‘(c) SINGLE-FAMILY, OWNER-OCCUPIED RENTAL HOUSING

UNITS.—The Director shall require each enterprise to report the 

number of rental housing units affordable to low-income families 

each year which are contained in mortgages purchased by the enterprise financing 2- to 4-unit single-family, owner-occupied properties and may, by regulation, establish additional requirements relating to such units. ‘‘(d) DETERMINATION OF COMPLIANCE.—

‘‘(1) IN GENERAL.—The Director shall determine, for each 

year that the housing goals under this section are in effect pursuant to section 1331(a), whether each enterprise has complied 

with each such goal established under subsection (a) of this 

section and any additional requirements which may be established under subsection (c) of this section. 

‘‘(2) PURCHASE-MONEY MORTGAGE GOALS.—An enterprise 

shall be considered to be in compliance with a housing goal 

under subparagraph (A), (B), or (C) of subsection (a)(1) for a 

year only if, for the type of family described in such subparagraph, the percentage of the number of conventional, conforming, single-family, owner-occupied, purchase money mortgages purchased by the enterprise in such year that serve such 

families, meets or exceeds the target for the year for such type 

of family that is established under subsection (e). ‘‘(3) REFINANCE GOAL.—An enterprise shall be considered to 

be in compliance with the refinance goal under subsection 

(a)(2) for a year only if the percentage of the number of conventional, conforming, single-family, owner-occupied refinance 

mortgages purchased by the enterprise in such year that serve 

low-income families meets or exceeds the target for the year 

that is established under subsection (e). 

‘‘(e) ANNUAL TARGETS.— ‘‘(1) IN GENERAL.—The Director shall, by regulation, establish annual targets for each goal and subgoal under this section, provided that the Director shall not set prospective targets longer than three years. In establishing such targets, the 

Director shall not consider segments of the market determined 

to be unacceptable or contrary to good lending practices, inconsistent with safety and soundness, or unauthorized for purchase by the enterprises. ‘‘(2) GOALS TARGETS.—

‘‘(A) CALCULATION.—The Director shall calculate, for 

each of the types of families described in subsection (a), 

the percentage, for each of the three years that most recently precede such year and for which information under 

the Home Mortgage Disclosure Act of 1975 is publicly 

available—

‘‘(i) of the number of conventional, conforming, single-family, owner-occupied purchase money mortgages 


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originated in such year that serve such type of family, 

or ‘‘(ii) the number of conventional, conforming, singlefamily, owner-occupied refinance mortgages originated 

in such year that serve low-income families, 

as applicable, as determined by the Director using the information obtained and determined pursuant to paragraphs (4) and (5). ‘‘(B) ESTABLISHMENT OF GOAL TARGETS.—The Director 

shall, by regulation, establish targets for each of the goal 

categories, taking into consideration the calculations under 

subparagraph (A) and the following factors: ‘‘(i) National housing needs. 

‘‘(ii) Economic, housing, and demographic conditions, 

including expected market developments. ‘‘(iii) The performance and effort of the enterprises 

toward achieving the housing goals under this section 

in previous years. ‘‘(iv) The ability of the enterprise to lead the industry in making mortgage credit available. ‘‘(v) Such other reliable mortgage data as may be 

available. ‘‘(vi) The size of the purchase money conventional 

mortgage market, or refinance conventional mortgage 

market, as applicable, serving each of the types of 

families described in subsection (a), relative to the size 

of the overall purchase money mortgage market or the 

overall refinance mortgage market, respectively. ‘‘(vii) The need to maintain the sound financial condition of the enterprises. ‘‘(3) AUTHORITY TO ADJUST TARGETS.—The Director may, by 

regulation, adjust the percentage targets previously established 

by regulation pursuant to paragraph (2)(B) for any year, to reflect subsequent available data and market developments. 

‘‘(4) HMDA INFORMATION.—The Director shall annually obtain information submitted in compliance with the Home Mortgage Disclosure Act of 1975 regarding conventional, conforming, single-family, owner-occupied, purchase money and 

refinance mortgages originated and purchased for the previous 

year. ‘‘(5) CONFORMING MORTGAGES.—In determining whether a 

mortgage is a conforming mortgage for purposes of this paragraph, the Director shall consider the original principal balance of the mortgage loan to be the principal balance as reported in the information referred to in paragraph (4), as 

rounded to the nearest thousand dollars. 

‘‘(f) NOTICE OF DETERMINATION AND ENTERPRISE COMMENT.—

‘‘(1) NOTICE.—Within 30 days of making a determination 

under subsection (d) regarding compliance of an enterprise for 

a year with a housing goal established under this section and 

before any public disclosure thereof, the Director shall provide 

notice of the determination to the enterprise, which shall include an analysis and comparison, by the Director, of the performance of the enterprise for the year and the targets for the 

year under subsection (e). 


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‘‘(2) COMMENT PERIOD.—The Director shall provide each enterprise an opportunity to comment on the determination during the 30-day period beginning upon receipt by the enterprise 

of the notice. ‘‘(g) USE OF BORROWER INCOME.—In monitoring the performance 

of each enterprise pursuant to the housing goals under this section 

and evaluating such performance (for purposes of section 1336), the 

Director shall consider a mortgagor’s income to be such income at 

the time of origination of the mortgage. ‘‘(h) CONSIDERATION OF PROPERTIES WITH RENTAL UNITS.—Mortgages financing two- to four-unit owner-occupied properties shall 

count toward the achievement of the single-family housing goals 

under this section, if such properties otherwise meet the requirements under this section, notwithstanding the use of one or more 

units for rental purposes. ‘‘(i) GOALS CREDIT.—The Director shall determine whether an enterprise shall receive full, partial, or no credit for a transaction toward achievement of any of the housing goals established pursuant 

to section 1332 and 1333. In making any such determination, the 

Director shall consider whether a transaction or activity of an enterprise is substantially equivalent to a mortgage purchase and either (1) creates a new market, or (2) adds liquidity to an existing 

market. No credit toward the achievement of the housing goals and 

subgoals established under this section may be given to the purchase of mortgages, including any transaction or activity of an enterprise determined to be substantially equivalent to a mortgage 

purchase, that is determined to be unacceptable or contrary to good 

lending practices, inconsistent with safety and soundness, or unauthorized for purchase by the enterprises, pursuant to regulations 

issued by the Director. 

‘‘SEC. 1333. MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL. 

‘‘(a) ESTABLISHMENT OF GOAL.— ‘‘(1) IN GENERAL.—The Director shall, by regulation, establish a single annual goal, by either unit or dollar volume, of 

purchases by each enterprise of mortgages on multifamily 

housing that finance dwelling units affordable to low-income 

families. ‘‘(2) ADDITIONAL REQUIREMENTS FOR UNITS AFFORDABLE TO

VERY LOW-INCOME FAMILIES.—When establishing the goal 

under this section, the Director shall establish additional requirements for the purchase by each enterprise of mortgages 

on multifamily housing that finance dwelling units affordable 

to very low-income families. 

‘‘(3) REPORTING ON SMALLER PROPERTIES.—The Director shall 

require each enterprise to report on the purchase by each enterprise of multifamily housing of a smaller or limited size that 

is affordable to low-income families, which may be based on 

multifamily projects of 5 to 50 units (as such numbers may be 

adjusted by the Director) or on mortgages of up to $5,000,000 

(as such amount may be adjusted by the Director), and may, 

by regulation, establish such aditional requirements related to 

such units. 

‘‘(4) FACTORS.—In establishing the goal and additional requirements under this section, the Director shall not consider 

segments of the market determined to be inconsistent with 


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safety and soundness or unauthorized for purchase by the enterprises, and shall take into consideration— ‘‘(A) national multifamily mortgage credit needs and the 

ability of the enterprise to provide additional liquidity and 

stability for the multifamily mortgage market; ‘‘(B) the performance and effort of the enterprise in making mortgage credit available for multifamily housing in 

previous years; ‘‘(C) the size of the multifamily mortgage market for 

housing affordable to low-income and very low-income families, including the size of the multifamily markets for 

housing of a smaller or limited size; ‘‘(D) the ability of the enterprise to lead the market in 

making multifamily mortgage credit available, especially 

for multifamily housing described in paragraphs (1) and 

(2); ‘‘(E) the availability of public subsidies; and 

‘‘(F) the need to maintain the sound financial condition 

of the enterprise. ‘‘(b) UNITS FINANCED BY HOUSING FINANCE AGENCY BONDS.—The 

Director shall give full credit toward the achievement of the multifamily special affordable housing goal under this section (for purposes of section 1336) to dwelling units in multifamily housing that 

otherwise qualifies under such goal and that is financed by tax-exempt or taxable bonds issued by a State or local housing finance 

agency, if such bonds, in whole or in part— ‘‘(1) are secured by a guarantee of the enterprise; or 

‘‘(2) are purchased by the enterprise, except that the Director 

may give less than full credit for purchases of investment 

grade bonds, to the extent that such purchases do not provide 

a new market or add liquidity to an existing market. ‘‘(c) MEASUREMENT OF PERFORMANCE.—The Director shall monitor the performance of each enterprise in meeting the goals established under this section and shall evaluate such performance (for 

purposes of section 1336) based on whether the rent levels are affordable. A rent level shall be considered to be affordable for purposes of this subsection for low-income families if it does not exceed 

30 percent of the maximum income level of such income category, 

with appropriate adjustments for unit size as measured by the 

number of bedrooms. ‘‘(d) DETERMINATION OF COMPLIANCE.—The Director shall determine, for each year that the housing goal under this section is in 

effect pursuant to section 1331(a), whether each enterprise has 

complied with such goal and the additional requirements under 

subsection (a)(2). 

‘‘SEC. 1334. DISCRETIONARY ADJUSTMENT OF HOUSING GOALS. 

‘‘(a) AUTHORITY.—An enterprise may petition the Director in 

writing at any time during a year to reduce the level of any goal 

or subgoal for such year established pursuant to this subpart. 

‘‘(b) STANDARD FOR REDUCTION.—The Director may reduce the 

level for a goal or subgoal pursuant to such a petition only if—

‘‘(1) market and economic conditions or the financial condition of the enterprise require such action; or 

‘‘(2) efforts to meet the goal or subgoal would result in the 

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ments, or other consequences contrary to the intent of this subpart, or section 301(3) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1716(3)) or section 301(b)(3) of 

the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 

1451 note), as applicable. ‘‘(c) DETERMINATION.—The Director shall, promptly upon receipt 

of a petition regarding a reduction, seek public comment on the reduction for a period of 30 days. The Director shall make a determination regarding any proposed reduction within 30 days after 

the expiration of such public comment period. The Director may extend such determination period for a single additional 15-day period, but only if the Director requests additional information from 

the enterprise.’’. (c) CONFORMING AMENDMENTS.—The Housing and Community 

Development Act of 1992 is amended—l 

(1) in section 1335(a) (12 U.S.C. 4565(a)), in the matter preceding paragraph (1), by striking ‘‘low- and moderate-income 

housing goal’’ and all that follows through ‘‘section 1334’’ and 

inserting ‘‘housing goals established under this subpart’’; and 

(2) in section 1336(a)(1) (12 U.S.C. 4566(a)(1)), by striking 

‘‘sections 1332, 1333, and 1334,’’ and inserting ‘‘this subpart’’. 

(d) DEFINITIONS.—Section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502) 

is amended— (1) by striking paragraph (24), as so designated by section 

1002 of this Act, and inserting the following: ‘‘(24) VERY LOW-INCOME.— ‘‘(A) IN GENERAL.—The term ‘very low-income’ means— ‘‘(i) in the case of owner-occupied units, families having incomes not greater than 50 percent of the area 

median income; and ‘‘(ii) in the case of rental units, families having incomes not greater than 50 percent of the area median 

income, with adjustments for smaller and larger families, as determined by the Director. 

‘‘(B) RULE OF CONSTRUCTION.—For purposes of section 

1338 and 1339, the term ‘very low-income’ means— ‘‘(i) in the case of owner-occupied units, income in 

excess of 30 percent but not greater than 50 percent 

of the area median income; and ‘‘(ii) in the case of rental units, income in excess of 

30 percent but not greater than 50 percent of the area 

median income, with adjustments for smaller and 

larger families, as determined by the Director.’’; and 

(2) by adding at the end the following: 

‘‘(26) CONFORMING MORTGAGE.—The term ‘conforming mortgage’ means, with respect to an enterprise, a conventional 

mortgage having an original principal obligation that does not 

exceed the dollar amount limitation in effect at the time of 

such origination and applicable to such mortgage, under, as applicable—

‘‘(A) section 302(b)(2) of the Federal National Mortgage 

Association Charter Act; or ‘‘(B) section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act. 


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‘‘(27) EXTREMELY LOW-INCOME.—The term ‘extremely low-income’ means—

‘‘(A) in the case of owner-occupied units, income not in 

excess of 30 percent of the area median income; and 

‘‘(B) in the case of rental units, income not in excess of 

30 percent of the area median income, with adjustments 

for smaller and larger families, as determined by the Director. 

‘‘(28) LOW-INCOME AREA.—The term ‘low-income area’ means 

a census tract or block numbering area in which the median 

income does not exceed 80 percent of the median income for 

the area in which such census tract or block numbering area 

is located, and, for the purposes of section 1332(a)(1)(B), shall 

include families having incomes not greater than 100 percent 

of the area median income who reside in minority census tracts 

and shall include families having incomes not greater than 100 

percent of the area median income who reside in designated 

disaster areas. 

‘‘(29) MINORITY CENSUS TRACT.—The term ‘minority census 

tract’ means a census tract that has a minority population of 

at least 30 percent and a median family income of less than 

100 percent of the area family median income. 

‘‘(30) SHORTAGE OF STANDARD RENTAL UNITS BOTH AFFORDABLE AND AVAILABLE TO EXTREMELY LOW-INCOME RENTER

HOUSEHOLDS.—

‘‘(A) IN GENERAL.—The term ‘shortage of standard rental 

units both affordable and available to extremely low-income renter households’ means the gap between—

‘‘(i) the number of units with complete plumbing and 

kitchen facilities with a rent that is 30 percent or less 

of 30 percent of the adjusted area median income as 

determined by the Director that are occupied by extremely low-income renter households or are vacant 

for rent; and 

‘‘(ii) the number of extremely low-income renter 

households. 

‘‘(B) RULE OF CONSTRUCTION.—If the number of units described in subparagraph (A)(i) exceeds the number of extremely low-income households as described in subparagraph (A)(ii), there is no shortage. 

‘‘(31) SHORTAGE OF STANDARD RENTAL UNITS BOTH AFFORDABLE AND AVAILABLE TO VERY LOW-INCOME RENTER HOUSEHOLDS.—

‘‘(A) IN GENERAL.—The term ‘shortage of standard rental 

units both affordable and available to very low-income 

renter households’ means the gap between—

‘‘(i) the number of units with complete plumbing and 

kitchen facilities with a rent that is 30 percent or less 

of 50 percent of the adjusted area median income as 

determined by the Director that are occupied by either 

extremely low- or very low-income renter households 

or are vacant for rent; and 

‘‘(ii) the number of extremely low- and very low-income renter households. 


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‘‘(B) RULE OF CONSTRUCTION.—If the number of units described in subparagraph (A)(i) exceeds the number of extremely low- and very low-income households as described 

in subparagraph (A)(ii), there is no shortage.’’. 

SEC. 1129. DUTY TO SERVE UNDERSERVED MARKETS. 

(a) ESTABLISHMENT AND EVALUATION OF PERFORMANCE.—Section 

1335 of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992 (12 U.S.C. 4565) is amended—

(1) in the section heading, by inserting ‘‘duty to serve underserved markets and’’ before ‘‘other’’; 

(2) by striking subsection (b); 

(3) in subsection (a)—

(A) in the matter preceding paragraph (1), by inserting 

‘‘and to carry out the duty under subsection (a) of this section’’ before ‘‘, each enterprise shall’’; 

(B) in paragraph (3), by inserting ‘‘and’’ after the semicolon at the end; 

(C) in paragraph (4), by striking ‘‘; and’’ and inserting a 

period; 

(D) by striking paragraph (5); and 

(E) by redesignating such subsection as subsection (b); 

(4) by inserting before subsection (b) (as so redesignated by 

paragraph (3)(E) of this subsection) the following new subsection: 

‘‘(a) DUTY TO SERVE UNDERSERVED MARKETS.—

‘‘(1) DUTY.—To increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing for underserved markets, each enterprise shall provide leadership to the market in developing 

loan products and flexible underwriting guidelines to facilitate 

a secondary market for mortgages for very low-, low-, and moderate-income families with respect to the following underserved 

markets: 

‘‘(A) MANUFACTURED HOUSING.—The enterprise shall develop loan products and flexible underwriting guidelines to 

facilitate a secondary market for mortgages on manufactured homes for very low-, low-, and moderate-income families. 

‘‘(B) AFFORDABLE HOUSING PRESERVATION.—The enterprise shall develop loan products and flexible underwriting 

guidelines to facilitate a secondary market to preserve 

housing affordable to very low-, low-, and moderate-income 

families, including housing projects subsidized underl 

‘‘(i) the project-based and tenant-based rental assistance programs under section 8 of the United States 

Housing Act of 1937; 

‘‘(ii) the program under section 236 of the National 

Housing Act; 

‘‘(iii) the below-market interest rate mortgage program under section 221(d)(4) of the National Housing 

Act; 

‘‘(iv) the supportive housing for the elderly program 

under section 202 of the Housing Act of 1959; 


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‘‘(v) the supportive housing program for persons 

with disabilities under section 811 of the CranstonGonzalez National Affordable Housing Act; ‘‘(vi) the programs under title IV of the McKinneyVento Homeless Assistance Act (42 U.S.C. 11361 et 

seq.), but only permanent supportive housing projects 

subsidized under such programs; ‘‘(vii) the rural rental housing program under section 

515 of the Housing Act of 1949; ‘‘(viii) the low-income housing tax credit under section 42 of the Internal Revenue Code of 1986; and ‘‘(ix) comparable state and local affordable housing 

programs. ‘‘(C) RURAL MARKETS.—The enterprise shall develop loan 

products and flexible underwriting guidelines to facilitate 

a secondary market for mortgages on housing for very low- 

, and low-, and moderate-income families in rural areas.’’; 

and 

(5) by adding at the end the following new subsections: 

‘‘(c) ADDITIONAL CATEGORIES.—The Director may submit recommendations to the Committee on Financial Services of the 

House of Representatives and the Committee on Banking, Housing, 

and Urban Affairs of the Senate for the establishment of additional 

categories under subsection (a), provided that the Director makes 

a preliminary determination that any such category is important to 

the mission of the enterprises, that the category is an underserved 

market, and that the establishment of such category is warranted. 

‘‘(d) EVALUATION AND REPORTING OF COMPLIANCE.— ‘‘(1) IN GENERAL.—The Director shall, by regulation, establish effective for 2010 and thereafter a manner for evaluating 

whether, and the extent to which, the enterprises have complied with the duty under subsection (a) to serve underserved 

markets and for rating the extent of such compliance. Using 

such method, the Director shall, for 2010 and each year thereafter, evaluate such compliance and rate the performance of 

each enterprise as to extent of compliance. The Director shall 

include such evaluation and rating for each enterprise for a 

year in the report for that year submitted pursuant to section 

1319B(a). ‘‘(2) SEPARATE EVALUATIONS.—In determining whether an enterprise has complied with the duty referred to in paragraph 

(1), the Director shall separately evaluate whether the enterprise has complied with such duty with respect to each of the 

underserved markets identified in subsection (a), taking into 

considerationl 

‘‘(A) the development of loan products, more flexible underwriting guidelines, and other innovative approaches to 

providing financing to each of such underserved markets; 

‘‘(B) the extent of outreach to qualified loan sellers and 

other market participants in each of such underserved 

markets; ‘‘(C) the volume of loans purchased in each of such underserved markets relative to the market opportunities 

available to the enterprise, except that the Director shall 

not establish specific quantitative targets nor evaluate the 


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56 

enterprises based solely on the volume of loans purchased; 

and ‘‘(D) the amount of investments and grants in projects 

which assist in meeting the needs of such underserved 

markets. ‘‘(3) MANUFACTURED HOUSING MARKET.—In determining 

whether an enterprise has complied with the duty under subparagraph (A) of subsection (a)(1), the Director may consider 

loans secured by both real and personal property. ‘‘(4) PROHIBITION OF CONSIDERATION OF AFFORDABLE HOUSING

FUND GRANTS FOR MEETING DUTY TO SERVE.— In determining 

whether an enterprise has complied with the duty referred to 

in paragraph (1), the Director may not consider any affordable 

housing fund grant amounts used under section 1337 for eligible activities under subsection (g) of such section.’’. (b) ENFORCEMENT.—Subsection (a) of section 1336 of the Housing 

and Community Development Act of 1992 (12 U.S.C. 4566(a)) is 

amended— (1) in paragraph (1), by inserting ‘‘and with the duty under 

section 1335(a) of each enterprise with respect to underserved 

markets,’’ before ‘‘as provided in this section’’; and 

(2) by adding at the end of such subsection, as amended by 

the preceding provisions of this title, the following new paragraph: 

‘‘(4) ENFORCEMENT OF DUTY TO PROVIDE MORTGAGE CREDIT

TO UNDERSERVED MARKETS.—The duty under section 1335(a) of 

each enterprise to serve underserved markets (as determined 

in accordance with section 1335(c)) shall be enforceable under 

this section to the same extent and under the same provisions 

that the housing goals established under this subpart are enforceable. Such duty shall be enforceable only under this section, except that such duty shall not be subject to subsection 

(c)(7) of this section and shall not be enforceable under any 

other provision of this title (including subpart C of this part) 

or under any provision of the Federal National Mortgage Association Charter Act or the Federal Home Loan Mortgage Corporation Act.’’. (c) ADDITIONAL CREDIT FOR CERTAIN MORTGAGES.—Section 

1336(a) of the Housing and Community Development Act of 1992 

(12 U.S.C. 4566(a)) is amendedl (1) in paragraph (2), by inserting ‘‘, except as provided in 

paragraph (5),’’ after ‘‘which’’; and 

(2) by adding at the end the following new paragraph: 

‘‘(5) ADDITIONAL CREDIT.—The Director may assign additional credit toward achievement, under this section, of the 

housing goals for mortgage purchase activities of the enterprises that comply with the requirements of such goals and 

support housing that includes a licensed childcare center. The 

availability of additional credit under this paragraph shall not 

be used to increase any housing goal, subgoal, or target established under this subpart.’’. 

SEC. 1130. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING GOALS. 

(a) IN GENERAL.—Section 1336 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4566) 


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is amended by striking subsections (b) and (c) and inserting the following: ‘‘(b) NOTICE AND PRELIMINARY DETERMINATION OF FAILURE TO

MEET GOALS.— ‘‘(1) NOTICE.—If the Director preliminarily determines that 

an enterprise has failed, or that there is a substantial probability that an enterprise will fail, to meet any housing goal 

under this subpart, the Director shall provide written notice to 

the enterprise of such a preliminary determination, the reasons for such determination, and the information on which the 

Director based the determination. ‘‘(2) RESPONSE PERIOD.—

‘‘(A) IN GENERAL.—During the 30-day period beginning 

on the date on which an enterprise is provided notice 

under paragraph (1), the enterprise may submit to the Director any written information that the enterprise considers appropriate for consideration by the Director in finally determining whether such failure has occurred or 

whether the achievement of such goal was or is feasible. 

‘‘(B) EXTENDED PERIOD.—The Director may extend the 

period under subparagraph (A) for good cause for not more 

than 30 additional days. 

‘‘(C) SHORTENED PERIOD.—The Director may shorten the 

period under subparagraph (A) for good cause. ‘‘(D) FAILURE TO RESPOND.—The failure of an enterprise 

to provide information during the 30-day period under this 

paragraph (as extended or shortened) shall waive any 

right of the enterprise to comment on the proposed determination or action of the Director. ‘‘(3) CONSIDERATION OF INFORMATION AND FINAL DETERMINA- TION.—

‘‘(A) IN GENERAL.—After the expiration of the response 

period under paragraph (2), or upon receipt of information 

provided during such period by the enterprise, whichever 

occurs earlier, the Director shall issue a final determination on—

‘‘(i) whether the enterprise has failed, or there is a 

substantial probability that the enterprise will fail, to 

meet the housing goal; and ‘‘(ii) whether (taking into consideration market and 

economic conditions and the financial condition of the 

enterprise) the achievement of the housing goal was or 

is feasible. ‘‘(B) CONSIDERATIONS.—In making a final determination 

under subparagraph (A), the Director shall take into consideration any relevant information submitted by the enterprise during the response period. 

‘‘(C) NOTICE.—The Director shall provide written notice, 

including a response to any information submitted during 

the response period, to the enterprise, the Committee on 

Banking, Housing, and Urban Affairs of the Senate, and 

the Committee on Financial Services of the House of Representatives, of—

‘‘(i) each final determination under this paragraph 

that an enterprise has failed, or that there is a subVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00059 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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stantial probability that the enterprise will fail, to 

meet a housing goal; 

‘‘(ii) each final determination that the achievement 

of a housing goal was or is feasible; and 

‘‘(iii) the reasons for each such final determination. 

‘‘(c) CEASE AND DESIST, CIVIL MONEY PENALTIES, AND REMEDIES

INCLUDING HOUSING PLANS.—

‘‘(1) REQUIREMENT.—If the Director finds, pursuant to subsection (b), that there is a substantial probability that an enterprise will fail, or has actually failed, to meet any housing 

goal under this subpart, and that the achievement of the housing goal was or is feasible, the Director may require that the 

enterprise submit a housing plan under this subsection. If the 

Director makes such a finding and the enterprise refuses to 

submit such a plan, submits an unacceptable plan, or fails to 

comply with the plan, the Director may issue a cease and desist order in accordance with section 1341 and impose civil 

money penalties in accordance with section 1345. 

‘‘(2) HOUSING PLAN.—If the Director requires a housing plan 

under this subsection, such a plan shall be—

‘‘(A) a feasible plan describing the specific actions the enterprise will take—

‘‘(i) to achieve the goal for the next calendar year; 

and 

‘‘(ii) if the Director determines that there is a substantial probability that the enterprise will fail to 

meet a goal in the current year, to make such improvements and changes in its operations as are reasonable in the remainder of such year; and 

‘‘(B) sufficiently specific to enable the Director to monitor 

compliance periodically. 

‘‘(3) DEADLINE FOR SUBMISSION.—The Director shall establish 

a deadline for an enterprise to submit a housing plan to the 

Director, which may not be more than 45 days after the enterprise is provided notice. The Director may extend the deadline 

to the extent that the Director determines necessary. Any extension of the deadline shall be in writing and for a time certain. 

‘‘(4) APPROVAL.—The Director shall review each submission 

by an enterprise, including a housing plan submitted under 

this subsection, and, not later than 30 days after submission, 

approve or disapprove the plan or other action. The Director 

may extend the period for approval or disapproval for a single 

additional 30-day period if the Director determines it necessary. The Director shall approve any plan that the Director 

determines is likely to succeed, and conforms with the Federal 

National Mortgage Association Charter Act or the Federal 

Home Loan Mortgage Corporation Act (as applicable), this 

title, and any other applicable provision of law. 

‘‘(5) NOTICE OF APPROVAL AND DISAPPROVAL.—The Director 

shall provide written notice to any enterprise submitting a 

housing plan of the approval or disapproval of the plan (which 

shall include the reasons for any disapproval of the plan) and 

of any extension of the period for approval or disapproval. 


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59 

‘‘(6) RESUBMISSION.—If the initial housing plan submitted by 

an enterprise under this section is disapproved, the enterprise 

shall submit an amended plan acceptable to the Director not 

later than 15 days after such disapproval, or such longer period that the Director determines is in the public interest. 

‘‘(7) CEASE AND DESIST ORDERS; CIVIL MONEY PENALTIES.—

Solely with respect to the housing goals established under sections 1332(a) and 1333(a)(1), if the Director requires an enterprise to submit a housing plan under this subsection and the 

enterprise refuses to submit such a plan, submits an unacceptable plan, or fails to comply with the plan, the Director may 

issue a cease and desist order in accordance with section 1341, 

impose civil money penalties in accordance with section 1345, 

exercise other appropriate enforcement authority or seek other 

appropriate actions.’’. 

(b) CONFORMING AMENDMENT.—The heading for subpart C of 

part 2 of subtitle A of the Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 is amended to read as follows: 

‘‘Subpart C—Enforcement’’. 

(c) CEASE AND DESIST PROCEEDINGS .—

(1) REPEAL.—Section 1341 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 

4581) is hereby repealed. 

(2) CEASE AND DESIST PROCEEDINGS.—The Federal Housing 

Enterprises Financial Safety and Soundness Act of 1992 is 

amended by inserting before section 1342 the following: 

‘‘SEC. 1341. CEASE AND DESIST PROCEEDINGS. 

‘‘(a) GROUNDS FOR ISSUANCE.—The Director may issue and serve 

a notice of charges under this section upon an enterprise if the Director determines that—

‘‘(1) the enterprise has failed to submit a report under section 1327, following a notice of such failure, an opportunity for 

comment by the enterprise, and a final determination by the 

Director; 

‘‘(2) the enterprise has failed to submit the information required under subsection (m) or (n) of section 309 of the Federal 

National Mortgage Association Charter Act, or subsection (e) or 

(f) of section 307 of the Federal Home Loan Mortgage Corporation Act; 

‘‘(3) solely with respect to the housing goals established 

under sections 1332(a) and 1333(a)(1), the enterprise has failed 

to submit a housing plan that complies with section 1336(c) 

within the applicable period; or 

‘‘(4) solely with respect to the housing goals established 

under sections 1332(a) and 1333(a)(1), the enterprise has failed 

to comply with a housing plan under section 1336(c). 

‘‘(b) PROCEDURE.—

‘‘(1) NOTICE OF CHARGES.—Each notice of charges issued 

under this section shall contain a statement of the facts constituting the alleged conduct and shall fix a time and place at 

which a hearing will be held to determine on the record whether an order to cease and desist from such conduct should issue. 


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‘‘(2) ISSUANCE OF ORDER.—If the Director finds on the record 

made at a hearing described in paragraph (1) that any conduct 

specified in the notice of charges has been established (or the 

enterprise consents pursuant to section 1342(a)(4)), the Director may issue and serve upon the enterprise an order requiring 

the enterprise to— ‘‘(A) submit a report under section 1327; 

‘‘(B) solely with respect to the housing goals established 

under sections 1332(a) and 1333(a)(1), submit a housing 

plan in compliance with section 1336(c); ‘‘(C) solely with respect to the housing goals established 

under sections 1332(a) and 1333(a)(1), comply with the 

housing plan in compliance with section 1336(c); or ‘‘(D) provide the information required under subsection 

(m) or (n) of section 309 of the Federal National Mortgage 

Association Charter Act, or subsection (e) or (f) of section 

307 of the Federal Home Loan Mortgage Corporation Act. ‘‘(c) EFFECTIVE DATE.—An order under this section shall become 

effective upon the expiration of the 30-day period beginning on the 

date of service of the order upon the enterprise (except in the case 

of an order issued upon consent, which shall become effective at 

the time specified therein), and shall remain effective and enforceable as provided in the order, except to the extent that the order 

is stayed, modified, terminated, or set aside by action of the Director or otherwise, as provided in this subpart.’’. (d) CIVIL MONEY PENALTIES.— (1) REPEAL.—Section 1345 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 

4585) is hereby repealed. 

(2) CIVIL MONEY PENALTIES.—The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 is amended 

by inserting after section 1344 the following: 

‘‘SEC. 1345. CIVIL MONEY PENALTIES. 

‘‘(a) AUTHORITY.—The Director may impose a civil money penalty, in accordance with the provisions of this section, on any enterprise that has failed to— ‘‘(1) submit a report under section 1327, following a notice of 

such failure, an opportunity for comment by the enterprise, 

and a final determination by the Director; ‘‘(2) submit the information required under subsection (m) or 

(n) of section 309 of the Federal National Mortgage Association 

Charter Act or subsection (e) or (f) of section 307 of the Federal 

Home Loan Mortgage Corporation Act; 

‘‘(3) solely with respect to the housing goals established 

under sections 1332(a) and 1333(a)(1), submit a housing plan 

or perform its responsibilities under a remedial order issued 

pursuant to section 1336(c) within the required period; or 

‘‘(4) solely with respect to the housing goals established 

under sections 1332(a) and 1333(a)(1), comply with a housing 

plan for the enterprise under section 1336(c). 

‘‘(b) AMOUNT OF PENALTY.—The amount of a penalty under this 

section, as determined by the Director, may not exceed—

‘‘(1) for any failure described in paragraph (1), (5), or (6) of 

subsection (a), $100,000 for each day that the failure occurs; 

and 


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61 

‘‘(2) for any failure described in paragraph (2), (3), or (4) of subsection (a), $50,000 for each day that the failure occurs. ‘‘(c) PROCEDURES.— ‘‘(1) ESTABLISHMENT.—The Director shall establish standards 

and procedures governing the imposition of civil money penalties under this section. Such standards and procedures— ‘‘(A) shall provide for the Director to notify the enterprise in writing of the determination of the Director to impose the penalty, which shall be made on the record; ‘‘(B) shall provide for the imposition of a penalty only 

after the enterprise has been given an opportunity for a 

hearing on the record pursuant to section 1342; and ‘‘(C) may provide for review by the Director of any determination or order, or interlocutory ruling, arising from a 

hearing. ‘‘(2) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under this section, the Director shall give consideration to factors including—

‘‘(A) the gravity of the offense; 

‘‘(B) any history of prior offenses; 

‘‘(C) ability to pay the penalty; 

‘‘(D) injury to the public; 

‘‘(E) benefits received; 

‘‘(F) deterrence of future violations; 

‘‘(G) the length of time that the enterprise should reasonably take to achieve the goal; and 

‘‘(H) such other factors as the Director may determine, 

by regulation, to be appropriate. 

‘‘(d) ACTION TO COLLECT PENALTY.—If an enterprise fails to comply with an order by the Director imposing a civil money penalty 

under this section, after the order is no longer subject to review, 

as provided in sections 1342 and 1343, the Director may bring an 

action in the United States District Court for the District of Columbia to obtain a monetary judgment against the enterprise, and such 

other relief as may be available. The monetary judgment may, in 

the court’s discretion, include the attorneys’ fees and other expenses incurred by the United States in connection with the action. 

In an action under this subsection, the validity and appropriateness of the order imposing the penalty shall not be subject to review. ‘‘(e) SETTLEMENT BY DIRECTOR.—The Director may compromise, 

modify, or remit any civil money penalty which may be, or has 

been, imposed under this section. 

‘‘(f) DEPOSIT OF PENALTIES.—The Director shall use any civil 

money penalties collected under this section to help fund the Housing Trust Fund established under section 1338.’’. 

(e) DIRECTOR AUTHORITY.—

(1) AUTHORITY TO BRING A CIVIL ACTION.—Section 1344(a) of 

the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4584) is amended by striking ‘‘The 

Secretary may request the Attorney General of the United 

States to bring a civil action’’ and inserting ‘‘The Director may 

bring a civil action’’. 

(2) SUBPOENA ENFORCEMENT.—Section 1348(c) of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 


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62 

1992 (12 U.S.C. 4588(c)) is amended by inserting ‘‘may bring 

an action or’’ before ‘‘may request’’. 

(3) CONFORMING AMENDMENTS.—Subpart C of part 2 of subtitle A of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4581 et seq.) is amended 

by striking ‘‘Secretary’’ each place that term appears and inserting ‘‘Director’’ in each of—

(A) section 1342 (12 U.S.C. 4582); 

(B) section 1343 (12 U.S.C. 4583); 

(C) section 1346 (12 U.S.C. 4586); 

(D) section 1347 (12 U.S.C. 4587); and 

(E) section 1348 (12 U.S.C. 4588). 

SEC. 1131. AFFORDABLE HOUSING PROGRAMS. 

(a) REPEAL.—Section 1337 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4567) is hereby repealed. 

(b) ANNUAL HOUSING REPORT.—The Federal Housing Enterprises 

Financial Safety and Soundness Act of 1992 (12 U.S.C. 1301 et 

seq.) is amended by inserting after section 1336 the following: 

‘‘SEC. 1337. AFFORDABLE HOUSING ALLOCATIONS. 

‘‘(a) SET ASIDE AND ALLOCATION OF AMOUNTS BY ENTERPRISES.—

Subject to subsection (b), in each fiscal year—

‘‘(1) the Federal Home Loan Mortgage Corporation shall—

‘‘(A) set aside an amount equal to 4.2 basis points for 

each dollar of the unpaid principal balance of its total new 

business purchases; and 

‘‘(B) allocate or otherwise transfer—

‘‘(i) 65 percent of such amounts to the Secretary of 

Housing and Urban Development to fund the Housing 

Trust Fund established under section 1338; and 

‘‘(ii) 35 percent of such amounts to fund the Capital 

Magnet Fund established pursuant to section 1339; 

and 

‘‘(2) the Federal National Mortgage Association shall—

‘‘(A) set aside an amount equal to 4.2 basis points for 

each dollar of unpaid principal balance of its total new 

business purchases; and 

‘‘(B) allocate or otherwise transfer—

‘‘(i) 65 percent of such amounts to the Secretary of 

Housing and Urban Development to fund the Housing 

Trust Fund established under section 1338; and 

‘‘(ii) 35 percent of such amounts to fund the Capital 

Magnet Fund established pursuant to section 1339. 

‘‘(b) SUSPENSION OF CONTRIBUTIONS.—The Director shall temporarily suspend allocations under subsection (a) by an enterprise 

upon a finding by the Director that such allocations—

‘‘(1) are contributing, or would contribute, to the financial instability of the enterprise; 

‘‘(2) are causing, or would cause, the enterprise to be classified as undercapitalized; or 

‘‘(3) are preventing, or would prevent, the enterprise from 

successfully completing a capital restoration plan under section 

1369C. 


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‘‘(c) PROHIBITION OF PASS-THROUGH OF COST OF ALLOCATIONS.—

The Director shall, by regulation, prohibit each enterprise from redirecting the costs of any allocation required under this section, 

through increased charges or fees, or decreased premiums, or in 

any other manner, to the originators of mortgages purchased or 

securitized by the enterprise. 

‘‘(d) ENFORCEMENT OF REQUIREMENTS ON ENTERPRISE.—Compliance by the enterprises with the requirements under this section 

shall be enforceable under subpart C. Any reference in such subpart to this part or to an order, rule, or regulation under this part 

specifically includes this section and any order, rule, or regulation 

under this section. 

‘‘(e) REQUIRED AMOUNT FOR HOPE RESERVE FUND.—Of the aggregate amount allocated under subsection (a), 25 percent shall be 

deposited into a fund established in the Treasury of the United 

States by the Secretary of the Treasury for such purpose. 

‘‘(f) LIMITATION.—No funds under this title may be used in conjunction with property taken by eminent domain, unless eminent 

domain is employed only for a public use, except that, for purposes 

of this section, public use shall not be construed to include economic development that primarily benefits any private entity. 

‘‘SEC. 1338. HOUSING TRUST FUND. 

‘‘(a) ESTABLISHMENT AND PURPOSE.—

‘‘(1) IN GENERAL.—The Secretary of Housing and Urban Development (in this section referred to as the ‘Secretary’) shall 

establish and manage a Housing Trust Fund, which shall be 

funded with amounts allocated by the enterprises under section 1337 and any amounts as are or may be appropriated, 

transferred, or credited to such Housing Trust Fund under any 

other provisions of law. The purpose of the Housing Trust 

Fund under this section is to provide grants to States (as such 

term is defined in section 1303) for use—

‘‘(A) to increase and preserve the supply of rental housing for extremely low- and very low-income families, including homeless families; and 

‘‘(B) to increase homeownership for extremely low- and 

very low-income families. 

‘‘(2) FEDERAL ASSISTANCE.—For purposes of the application of 

Federal civil rights laws, all assistance provided from the 

Housing Trust Fund shall be considered Federal financial assistance. 

‘‘(b) ALLOCATIONS FOR HOPE BOND PAYMENTS.—

‘‘(1) IN GENERAL.—Notwithstanding subsection (c), to help 

address the mortgage crisis, of the amounts allocated pursuant 

to clauses (i) and (ii) of section 1337(a)(1)(B) and clauses (i) 

and (ii) of section 1337(a)(2)(B) in excess of amounts described 

in section 1337(e)—

‘‘(A) 100 percent of such excess shall be used to reimburse the Treasury for payments made pursuant to section 

257(w)(1)(C) of the National Housing Act in calendar year 

2009; 

‘‘(B) 50 percent of such excess shall be used to reimburse 

the Treasury for such payments in calendar year 2010; 

and 


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64 

‘‘(C) 25 percent of such excess shall be used to reimburse 

the Treasury for such payments in calendar year 2011. ‘‘(2) EXCESS FUNDS.—At the termination of the HOPE for 

Homeowners Program established under section 257 of the National Housing Act, if amounts used to reimburse the Treasury 

under paragraph (1) exceed the total net cost to the Government of the HOPE for Homeowners Program, such amounts 

shall be used for their original purpose, as described in paragraphs (1)(B) and (2)(B) of section 1337(a). ‘‘(3) TREASURY FUND.—The amounts referred to in subparagraphs (A) through (C) of paragraph (1) shall be deposited into 

a fund established in the Treasury of the United States by the 

Secretary of the Treasury for such purpose. ‘‘(c) ALLOCATION FOR HOUSING TRUST FUND IN FISCAL YEAR 2010 

AND SUBSEQUENT YEARS.—

‘‘(1) IN GENERAL.—Except as provided in subsection (b), the 

Secretary shall distribute the amounts allocated for the Housing Trust Fund under this section to provide affordable housing as described in this subsection. 

‘‘(2) PERMISSIBLE DESIGNEES.—A State receiving grant 

amounts under this subsection may designate a State housing 

finance agency, housing and community development entity, 

tribally designated housing entity (as such term is defined in 

section 4 of the Native American Housing Assistance and SelfDetermination Act of 1997 (25 U.S.C. 4103)), or any other 

qualified instrumentality of the State to receive such grant 

amounts. 

‘‘(3) DISTRIBUTION TO STATES BY NEEDS-BASED FORMULA.— ‘‘(A) IN GENERAL.—The Secretary shall, by regulation, establish a formula within 12 months of the date of enactment of the Federal Housing Finance Regulatory Reform 

Act of 2008, to distribute amounts made available under 

this subsection to each State to provide affordable housing 

to extremely low- and very low-income households. ‘‘(B) BASIS FOR FORMULA.—The formula required under 

subparagraph (A) shall include the following: ‘‘(i) The ratio of the shortage of standard rental 

units both affordable and available to extremely lowincome renter households in the State to the aggregate 

shortage of standard rental units both affordable and 

available to extremely low-income renter households 

in all the States. ‘‘(ii) The ratio of the shortage of standard rental 

units both affordable and available to very low-income 

renter households in the State to the aggregate shortage of standard rental units both affordable and available to very low-income renter households in all the 

States. ‘‘(iii) The ratio of extremely low-income renter 

households in the State living with either (I) incomplete kitchen or plumbing facilities, (II) more than 1 

person per room, or (III) paying more than 50 percent 

of income for housing costs, to the aggregate number 

of extremely low-income renter households living with 

either (IV) incomplete kitchen or plumbing facilities, 


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(V) more than 1 person per room, or (VI) paying more 

than 50 percent of income for housing costs in all the 

States. ‘‘(iv) The ratio of very low-income renter households 

in the State paying more than 50 percent of income on 

rent relative to the aggregate number of very low-income renter households paying more than 50 percent 

of income on rent in all the States. ‘‘(v) The resulting sum calculated from the factors 

described in clauses (i) through (iv) shall be multiplied 

by the relative cost of construction in the State. For 

purposes of this subclause, the term ‘cost of construction’—‘‘(I) means the cost of construction or building 

rehabilitation in the State relative to the national 

cost of construction or building rehabilitation; and ‘‘(II) shall be calculated such that values higher 

than 1.0 indicate that the State’s construction 

costs are higher than the national average, a 

value of 1.0 indicates that the State’s construction 

costs are exactly the same as the national average, and values lower than 1.0 indicate that the 

State’s cost of construction are lower than the national average. ‘‘(C) PRIORITY.—The formula required under subparagraph (A) shall give priority emphasis and consideration to 

the factor described in subparagraph (B)(i). ‘‘(4) ALLOCATION OF GRANT AMOUNTS.— ‘‘(A) NOTICE.—Not later than 60 days after the date that 

the Secretary determines the formula amounts described 

in paragraph (3), the Secretary shall caused to be published in the Federal Register a notice that such amounts 

shall be so available. ‘‘(B) GRANT AMOUNT.—In each fiscal year other than fiscal year 2009, the Secretary shall make a grant to each 

State in an amount that is equal to the formula amount 

determined under paragraph (3) for that State. 

‘‘(C) MINIMUM STATE ALLOCATIONS.—If the formula 

amount determined under paragraph (3) for a fiscal year 

would allocate less than $3,000,000 to any of the 50 States 

of the United States or the District of Columbia, the allocation for such State of the United States or the District 

of Columbia shall be $3,000,000, and the increase shall be 

deducted pro rata from the allocations made to all other of 

the States (as such term is defined in section 1303). ‘‘(5) ALLOCATION PLANS REQUIRED.—

‘‘(A) IN GENERAL.—For each year that a State or State 

designated entity receives a grant under this subsection, 

the State or State designated entity shall establish an allocation plan. Such plan shall— ‘‘(i) set forth a plan for the distribution of grant 

amounts received by the State or State designated entity for such year; ‘‘(ii) be based on priority housing needs, as determined by the State or State designated entity in acVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00067 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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cordance with the regulations established under subsection (g)(2)(D); 

‘‘(iii) comply with paragraph (6); and 

‘‘(iv) include performance goals that comply with the 

requirements established by the Secretary pursuant to 

subsection (g)(2). 

‘‘(B) ESTABLISHMENT.—In establishing an allocation plan 

under this paragraph, a State or State designated entity 

shall—

‘‘(i) notify the public of the establishment of the 

plan; 

‘‘(ii) provide an opportunity for public comments regarding the plan; 

‘‘(iii) consider any public comments received regarding the plan; and 

‘‘(iv) make the completed plan available to the public. 

‘‘(C) CONTENTS.—An allocation plan of a State or State 

designated entity under this paragraph shall set forth the 

requirements for eligible recipients under paragraph (8) to 

apply for such grant amounts, including a requirement 

that each such application include—

‘‘(i) a description of the eligible activities to be conducted using such assistance; and 

‘‘(ii) a certification by the eligible recipient applying 

for such assistance that any housing units assisted 

with such assistance will comply with the requirements under this section. 

‘‘(6) SELECTION OF ACTIVITIES FUNDED USING HOUSING TRUST

FUND GRANT AMOUNTS.—Grant amounts received by a State or 

State designated entity under this subsection may be used, or 

committed for use, only for activities that—

‘‘(A) are eligible under paragraph (7) for such use; 

‘‘(B) comply with the applicable allocation plan of the 

State or State designated entity under paragraph (5); and 

‘‘(C) are selected for funding by the State or State designated entity in accordance with the process and criteria 

for such selection established pursuant to subsection 

(g)(2)(D). 

‘‘(7) ELIGIBLE ACTIVITIES.—Grant amounts allocated to a 

State or State designated entity under this subsection shall be 

eligible for use, or for commitment for use, only for assistance 

for—

‘‘(A) the production, preservation, and rehabilitation of 

rental housing, including housing under the programs 

identified in section 1335(a)(2)(B) and for operating costs, 

except that not less than 75 percent of such grant amounts 

shall be used for the benefit only of extremely low-income 

families or families with incomes at or below the poverty 

line (as such term is defined in section 673 of the Omnibus 

Budget Reconciliation Act of 1981 (42 U.S.C. 9902), including any revision required by such section) applicable to a 

family of the size involved, and not more than 25 percent 

for the benefit only of very low-income families; and 


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67 

‘‘(B) the production, preservation, and rehabilitation of 

housing for homeownership, including such forms as down 

payment assistance, closing cost assistance, and assistance 

for interest rate buy-downs, that—

‘‘(i) is available for purchase only for use as a principal residence by families that qualify both as—

‘‘(I) extremely low- and very low-income families 

at the times described in subparagraphs (A) 

through (C) of section 215(b)(2) of the CranstonGonzalez National Affordable Housing Act (42 

U.S.C. 12745(b)(2)); and 

‘‘(II) first-time homebuyers, as such term is defined in section 104 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12704), 

except that any reference in such section to assistance under title II of such Act shall for purposes 

of this subsection be considered to refer to assistance from affordable housing fund grant amounts; 

‘‘(ii) has an initial purchase price that meets the requirements of section 215(b)(1) of the Cranston-Gonzalez National Affordable Housing Act; 

‘‘(iii) is subject to the same resale restrictions established under section 215(b)(3) of the Cranston-Gonzalez National Affordable Housing Act and applicable 

to the participating jurisdiction that is the State in 

which such housing is located; and 

‘‘(iv) is made available for purchase only by, or in 

the case of assistance under this subsection, is made 

available only to homebuyers who have, before purchase completed a program of independent financial 

education and counseling from an eligible organization 

that meets the requirements of section 132 of the Federal Housing Finance Regulatory Reform Act of 2008. 

‘‘(8) TENANT PROTECTIONS AND PUBLIC PARTICIPATION.—All 

amounts from the Trust Fund shall be allocated in accordance 

with, and any eligible activities carried out in whole or in part 

with grant amounts under this subtitle (including housing provided with such grant amounts) shall comply with and be operated in compliance with—

‘‘(A) laws relating to tenant protections and tenant 

rights to participate in decision making regarding their 

residences; 

‘‘(B) laws requiring public participation, including laws 

relating to Consolidated Plans, Qualified Allocation Plans, 

and Public Housing Agency Plans; and 

‘‘(C) fair housing laws and laws regarding accessibility in 

federally assisted housing, including section 504 of the Rehabilitation Act of 1973. 

‘‘(9) ELIGIBLE RECIPIENTS.—Grant amounts allocated to a 

State or State designated entity under this subsection may be 

provided only to a recipient that is an organization, agency, or 

other entity (including a for-profit entity or a nonprofit entity) 

that—


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68 

‘‘(A) has demonstrated experience and capacity to conduct an eligible activity under paragraph (7), as evidenced 

by its ability to—

‘‘(i) own, construct or rehabilitate, manage, and operate an affordable multifamily rental housing development; 

‘‘(ii) design, construct or rehabilitate, and market affordable housing for homeownership; or 

‘‘(iii) provide forms of assistance, such as down payments, closing costs, or interest rate buy-downs for 

purchasers; 

‘‘(B) demonstrates the ability and financial capacity to 

undertake, comply, and manage the eligible activity; 

‘‘(C) demonstrates its familiarity with the requirements 

of any other Federal, State, or local housing program that 

will be used in conjunction with such grant amounts to ensure compliance with all applicable requirements and regulations of such programs; and 

‘‘(D) makes such assurances to the State or State designated entity as the Secretary shall, by regulation, require to ensure that the recipient will comply with the requirements of this subsection during the entire period that 

begins upon selection of the recipient to receive such grant 

amounts and ending upon the conclusion of all activities 

under paragraph (8) that are engaged in by the recipient 

and funded with such grant amounts. 

‘‘(10) LIMITATIONS ON USE.—

‘‘(A) REQUIRED AMOUNT FOR HOMEOWNERSHIP ACTIVITIES.—Of the aggregate amount allocated to a State or 

State designated entity under this subsection not more 

than 10 percent shall be used for activities under subparagraph (B) of paragraph (7). 

‘‘(B) DEADLINE FOR COMMITMENT OR USE.—Grant 

amounts allocated to a State or State designated entity 

under this subsection shall be used or committed for use 

within 2 years of the date that such grant amounts are 

made available to the State or State designated entity. The 

Secretary shall recapture any such amounts not so used or 

committed for use and reallocate such amounts under this 

subsection in the first year after such recapture. 

‘‘(C) USE OF RETURNS.—The Secretary shall, by regulation, provide that any return on a loan or other investment 

of any grant amount used by a State or State designated 

entity to provide a loan under this subsection shall be 

treated, for purposes of availability to and use by the State 

or State designated entity, as a grant amount authorized 

under this subsection. 

‘‘(D) PROHIBITED USES.—The Secretary shall, by regulation—

‘‘(i) set forth prohibited uses of grant amounts allocated under this subsection, which shall include use 

for—

‘‘(I) political activities; 

‘‘(II) advocacy; 


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‘‘(III) lobbying, whether directly or through 

other parties; 

‘‘(IV) counseling services; 

‘‘(V) travel expenses; and 

‘‘(VI) preparing or providing advice on tax returns; 

and for the purposes of this subparagraph, the prohibited use of funds for political activities includes influencing the selection, nomination, election, or appointment of one or more candidates to any Federal, State 

or local office as codified in section 501 of the Internal 

Revenue Code of 1986 (26 U.S.C. 501); 

‘‘(ii) provide that, except as provided in clause (iii), 

grant amounts of a State or State designated entity 

may not be used for administrative, outreach, or other 

costs of—

‘‘(I) the State or State designated entity; or 

‘‘(II) any other recipient of such grant amounts; 

and 

‘‘(iii) limit the amount of any grant amounts for a 

year that may be used by the State or State designated entity for administrative costs of carrying out 

the program required under this subsection, including 

home ownership counseling, to a percentage of such 

grant amounts of the State or State designated entity 

for such year, which may not exceed 10 percent. 

‘‘(E) PROHIBITION OF CONSIDERATION OF USE FOR MEETING HOUSING GOALS OR DUTY TO SERVE.—In determining 

compliance with the housing goals under this subpart and 

the duty to serve underserved markets under section 1335, 

the Director may not consider any grant amounts used 

under this section for eligible activities under paragraph 

(7). The Director shall give credit toward the achievement 

of such housing goals and such duty to serve underserved 

markets to purchases by the enterprises of mortgages for 

housing that receives funding from such grant amounts, 

but only to the extent that such purchases by the enterprises are funded other than with such grant amounts. 

‘‘(d) REDUCTION FOR FAILURE TO OBTAIN RETURN OF MISUSED

FUNDS.—If in any year a State or State designated entity fails to 

obtain reimbursement or return of the full amount required under 

subsection (e)(1)(B) to be reimbursed or returned to the State or 

State designated entity during such year—

‘‘(1) except as provided in paragraph (2)—

‘‘(A) the amount of the grant for the State or State designated entity for the succeeding year, as determined pursuant to this section, shall be reduced by the amount by 

which such amounts required to be reimbursed or returned 

exceed the amount actually reimbursed or returned; and 

‘‘(B) the amount of the grant for the succeeding year for 

each other State or State designated entity whose grant is 

not reduced pursuant to subparagraph (A) shall be increased by the amount determined by applying the formula established pursuant to this section to the total 


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amount of all reductions for all State or State designated 

entities for such year pursuant to subparagraph (A); or 

‘‘(2) in any case in which such failure to obtain reimbursement or return occurs during a year immediately preceding a 

year in which grants under this section will not be made, the 

State or State designated entity shall pay to the Secretary for 

reallocation among the other grantees an amount equal to the 

amount of the reduction for the entity that would otherwise 

apply under paragraph (1)(A). 

‘‘(e) ACCOUNTABILITY OF RECIPIENTS AND GRANTEES.—

‘‘(1) RECIPIENTS.—

‘‘(A) TRACKING OF FUNDS.—The Secretary shall—

‘‘(i) require each State or State designated entity to 

develop and maintain a system to ensure that each recipient of assistance under this section uses such 

amounts in accordance with this section, the regulations issued under this section, and any requirements 

or conditions under which such amounts were provided; and 

‘‘(ii) establish minimum requirements for agreements, between the State or State designated entity 

and recipients, regarding assistance under this section, which shall include—

‘‘(I) appropriate periodic financial and project reporting, record retention, and audit requirements 

for the duration of the assistance to the recipient 

to ensure compliance with the limitations and requirements of this section and the regulations 

under this section; and 

‘‘(II) any other requirements that the Secretary 

determines are necessary to ensure appropriate 

administration and compliance. 

‘‘(B) MISUSE OF FUNDS.—

‘‘(i) REIMBURSEMENT REQUIREMENT.—If any recipient 

of assistance under this section is determined, in accordance with clause (ii), to have used any such 

amounts in a manner that is materially in violation of 

this section, the regulations issued under this section, 

or any requirements or conditions under which such 

amounts were provided, the State or State designated 

entity shall require that, within 12 months after the 

determination of such misuse, the recipient shall reimburse the State or State designated entity for such 

misused amounts and return to the State or State designated entity any such amounts that remain unused 

or uncommitted for use. The remedies under this 

clause are in addition to any other remedies that may 

be available under law. 

‘‘(ii) DETERMINATION.—A determination is made in 

accordance with this clause if the determination is 

made by the Secretary or made by the State or State 

designated entity, provided that—

‘‘(I) the State or State designated entity provides notification of the determination to the SecVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00072 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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71 

retary for review, in the discretion of the Secretary, of the determination; and ‘‘(II) the Secretary does not subsequently reverse the determination. ‘‘(2) GRANTEES.— ‘‘(A) REPORT.— ‘‘(i) IN GENERAL.—The Secretary shall require each 

State or State designated entity receiving grant 

amounts in any given year under this section to submit a report, for such year, to the Secretary that— ‘‘(I) describes the activities funded under this 

section during such year with such grant 

amounts; and ‘‘(II) the manner in which the State or State 

designated entity complied during such year with 

any allocation plan established pursuant to subsection (c). ‘‘(ii) PUBLIC AVAILABILITY.—The Secretary shall 

make such reports pursuant to this subparagraph publicly available. ‘‘(B) MISUSE OF FUNDS.—If the Secretary determines, 

after reasonable notice and opportunity for hearing, that a 

State or State designated entity has failed to comply substantially with any provision of this section, and until the 

Secretary is satisfied that there is no longer any such failure to comply, the Secretary shall— ‘‘(i) reduce the amount of assistance under this section to the State or State designated entity by an 

amount equal to the amount of grant amounts which 

were not used in accordance with this section; ‘‘(ii) require the State or State designated entity to 

repay the Secretary any amount of the grant which 

was not used in accordance with this section; ‘‘(iii) limit the availability of assistance under this 

section to the State or State designated entity to activities or recipients not affected by such failure to 

comply; or 

‘‘(iv) terminate any assistance under this section to 

the State or State designated entity. 

‘‘(f) DEFINITIONS.—For purposes of this section, the following definitions shall apply: 

‘‘(1) EXTREMELY LOW-INCOME RENTER HOUSEHOLD.—The term 

‘extremely low-income renter household’ means a household 

whose income is not in excess of 30 percent of the area median 

income, with adjustments for smaller and larger families, as 

determined by the Secretary. 

‘‘(2) RECIPIENT.—The term ‘recipient’ means an individual or 

entity that receives assistance from a State or State designated 

entity from amounts made available to the State or State designated entity under this section. ‘‘(3) SHORTAGE OF STANDARD RENTAL UNITS BOTH AFFORD- ABLE AND AVAILABLE TO EXTREMELY LOW-INCOME RENTER

HOUSEHOLDS.—

‘‘(A) IN GENERAL.—The term ‘shortage of standard rental 

units both affordable and available to extremely low-inVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00073 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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come renter households’ means for any State or other geographical area the gap between— ‘‘(i) the number of units with complete plumbing and 

kitchen facilities with a rent that is 30 percent or less 

of 30 percent of the adjusted area median income as 

determined by the Secretary that are occupied by extremely low-income renter households or are vacant 

for rent; and ‘‘(ii) the number of extremely low-income renter 

households. ‘‘(B) RULE OF CONSTRUCTION.—If the number of units described in subparagraph (A)(i) exceeds the number of extremely low-income households as described in subparagraph (A)(ii), there is no shortage. ‘‘(4) SHORTAGE OF STANDARD RENTAL UNITS BOTH AFFORDABLE AND AVAILABLE TO VERY LOW-INCOME RENTER HOUSEHOLDS.—

‘‘(A) IN GENERAL.—The term ‘shortage of standard rental 

units both affordable and available to very low-income 

renter households’ means for any State or other geographical area the gap between— ‘‘(i) the number of units with complete plumbing and 

kitchen facilities with a rent that is 30 percent or less 

of 50 percent of the adjusted area median income as 

determined by the Secretary that are occupied by very 

low-income renter households or are vacant for rent; 

and ‘‘(ii) the number of very low-income renter households. ‘‘(B) RULE OF CONSTRUCTION.—If the number of units described in subparagraph (A)(i) exceeds the number of very 

low-income households as described in subparagraph 

(A)(ii), there is no shortage. ‘‘(5) VERY LOW-INCOME FAMILY.—The term ‘very low-income 

family’ has the meaning given such term in section 1303, except that such term includes any family that resides in a rural 

area that has an income that does not exceed the poverty line 

(as such term is defined in section 673(2) of the Omnibus 

Budget Reconciliation Act of 1981 (42 U.S.C. 9902(2)), including any revision required by such section) applicable to a family of the size involved. 

‘‘(6) VERY LOW-INCOME RENTER HOUSEHOLDS.—The term 

‘very low-income renter households’ means a household whose 

income is in excess of 30 percent but not greater than 50 percent of the area median income, with adjustments for smaller 

and larger families, as determined by the Secretary. 

‘‘(g) REGULATIONS.—

‘‘(1) IN GENERAL.—The Secretary shall issue regulations to 

carry out this section. 

‘‘(2) REQUIRED CONTENTS.—The regulations issued under this 

subsection shall include— ‘‘(A) a requirement that the Secretary ensure that the 

use of grant amounts under this section by States or State 

designated entities is audited not less than annually to ensure compliance with this section; 


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73 

‘‘(B) authority for the Secretary to audit, provide for an 

audit, or otherwise verify a State or State designated entity’s activities to ensure compliance with this section; 

‘‘(C) a requirement that, for the purposes of subparagraphs (A) and (B), any financial statement submitted by 

a grantee or recipient to the Secretary shall be reviewed 

by an independent certified public accountant in accordance with Statements on Standards for Accounting and 

Review Services, issued by the American Institute of Certified Public Accountants; ‘‘(D) requirements for a process for application to, and 

selection by, each State or State designated entity for activities meeting the State or State designated entity’s priority housing needs to be funded with grant amounts 

under this section, which shall provide for priority in funding to be based upon— ‘‘(i) geographic diversity; 

‘‘(ii) ability to obligate amounts and undertake activities so funded in a timely manner; ‘‘(iii) in the case of rental housing projects under 

subsection (c)(7)(A), the extent to which rents for units 

in the project funded are affordable, especially for extremely low-income families; ‘‘(iv) in the case of rental housing projects under 

subsection (c)(7)(A), the extent of the duration for 

which such rents will remain affordable; ‘‘(v) the extent to which the application makes use 

of other funding sources; and ‘‘(vi) the merits of an applicant’s proposed eligible 

activity; ‘‘(E) requirements to ensure that grant amounts provided to a State or State designated entity under this section that are used for rental housing under subsection 

(c)(7)(A) are used only for the benefit of extremely low- and 

very low-income families; and 

‘‘(F) requirements and standards for establishment, by a 

State or State designated entity, for use of grant amounts 

in 2009 and subsequent years of performance goals, benchmarks, and timetables for the production, preservation, 

and rehabilitation of affordable rental and homeownership 

housing with such grant amounts. 

‘‘(h) AFFORDABLE HOUSING TRUST FUND.—If, after the date of enactment of the Federal Housing Finance Regulatory Reform Act of 

2008, in any year, there is enacted any provision of Federal law establishing an affordable housing trust fund other than under this 

title for use only for grants to provide affordable rental housing 

and affordable homeownership opportunities, and the subsequent 

year is a year referred to in subsection (c), the Secretary shall in 

such subsequent year and any remaining years referred to in subsection (c) transfer to such affordable housing trust fund the aggregate amount allocated pursuant to subsection (c) in such year. Notwithstanding any other provision of law, assistance provided using 

amounts transferred to such affordable housing trust fund pursuant to this subsection may not be used for any of the activities 

specified in clauses (i) through (vi) of subsection (c)(9)(D). 


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74 

‘‘(i) FUNDING ACCOUNTABILITY AND TRANSPARENCY.—Any grant 

under this section to a grantee by a State or State designated entity, any assistance provided to a recipient by a State or State designated entity, and any grant, award, or other assistance from an 

affordable housing trust fund referred to in subsection (h) shall be 

considered a Federal award for purposes of the Federal Funding 

Accountability and Transparency Act of 2006 (31 U.S.C. 6101 note). 

Upon the request of the Director of the Office of Management and 

Budget, the Secretary shall obtain and provide such information regarding any such grants, assistance, and awards as the Director of 

the Office of Management and Budget considers necessary to comply with the requirements of such Act, as applicable, pursuant to 

the preceding sentence. 

‘‘SEC. 1339. CAPITAL MAGNET FUND. 

‘‘(a) ESTABLISHMENT.—There is established in the Treasury of the 

United States a trust fund to be known as the Capital Magnet 

Fund, which shall be a special account within the Community Development Financial Institutions Fund. ‘‘(b) DEPOSITS TO TRUST FUND.—The Capital Magnet Fund shall 

consist of— ‘‘(1) any amounts transferred to the Fund pursuant to section 

1337; and ‘‘(2) any amounts as are or may be appropriated, transferred, 

or credited to such Fund under any other provisions of law. ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts in the Capital 

Magnet Fund shall be available to the Secretary of the Treasury 

to carry out a competitive grant program to attract private capital 

for and increase investment in— ‘‘(1) the development, preservation, rehabilitation, or purchase of affordable housing for primarily extremely low-, very 

low-, and low-income families; and ‘‘(2) economic development activities or community service 

facilities, such as day care centers, workforce development centers, and health care clinics, which in conjunction with affordable housing activities implement a concerted strategy to stabilize or revitalize a low-income area or underserved rural 

area. ‘‘(d) FEDERAL ASSISTANCE.—For purposes of the application of 

Federal civil rights laws, all assistance provided using amounts in 

the Capital Magnet Fund shall be considered Federal financial assistance. 

‘‘(e) ELIGIBLE GRANTEES.—A grant under this section may be 

made, pursuant to such requirements as the Secretary of the 

Treasury shall establish for experience and success in attracting 

private financing and carrying out the types of activities proposed 

under the application of the grantee, only to—

‘‘(1) a Treasury certified community development financial 

institution; or 

‘‘(2) a nonprofit organization having as 1 of its principal purposes the development or management of affordable housing. 

‘‘(f) ELIGIBLE USES.—Grant amounts awarded from the Capital 

Magnet Fund pursuant to this section may be used for the purposes described in paragraphs (1) and (2) of subsection (c), including for the following uses: 

‘‘(1) To provide loan loss reserves. 


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‘‘(2) To capitalize a revolving loan fund. 

‘‘(3) To capitalize an affordable housing fund. 

‘‘(4) To capitalize a fund to support activities described in 

subsection (c)(2). ‘‘(5) For risk-sharing loans. ‘‘(g) APPLICATIONS.— ‘‘(1) IN GENERAL.—The Secretary of the Treasury shall provide, in a competitive application process established by regulation, for eligible grantees under subsection (e) to submit applications for Capital Magnet Fund grants to the Secretary at 

such time and in such manner as the Secretary shall determine. ‘‘(2) CONTENT OF APPLICATION.—The application required 

under paragraph (1) shall include a detailed description of—

‘‘(A) the types of affordable housing, economic, and community revitalization projects that support or sustain residents of an affordable housing project funded by a grant 

under this section for which such grant amounts would be 

used, including the proposed use of eligible grants as authorized under this section; 

‘‘(B) the types, sources, and amounts of other funding for 

such projects; and 

‘‘(C) the expected time frame of any grant used for such 

project. 

‘‘(h) GRANT LIMITATION.— ‘‘(1) IN GENERAL.—Any 1 eligible grantee and its subsidiaries 

and affiliates may not be awarded more than 15 percent of the 

aggregate funds available for grants during any year from the 

Capital Magnet Fund. ‘‘(2) GEOGRAPHIC DIVERSITY.—

‘‘(A) GOAL.—The Secretary of the Treasury shall seek to 

fund activities in geographically diverse areas of economic 

distress, including metropolitan and underserved rural 

areas in every State. 

‘‘(B) DIVERSITY DEFINED.—For purposes of this paragraph, geographic diversity includes those areas that meet 

objective criteria of economic distress developed by the Secretary of the Treasury, which may include— ‘‘(i) the percentage of low-income families or the extent of poverty; ‘‘(ii) the rate of unemployment or underemployment; 

‘‘(iii) extent of blight and disinvestment; 

‘‘(iv) projects that target extremely low-, very low-, 

and low-income families in or outside a designated 

economic distress area; or ‘‘(v) any other criteria designated by the Secretary of 

the Treasury. ‘‘(3) LEVERAGE OF FUNDS.—Each grant from the Capital Magnet Fund awarded under this section shall be reasonably expected to result in eligible housing, or economic and community development projects that support or sustain an affordable 

housing project funded by a grant under this section whose aggregate costs total at least 10 times the grant amount. 

‘‘(4) COMMITMENT FOR USE DEADLINE.—Amounts made available for grants under this section shall be committed for use 


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within 2 years of the date of such allocation. The Secretary of 

the Treasury shall recapture into the Capital Magnet Fund 

any amounts not so used or committed for use and allocate 

such amounts in the first year after such recapture. 

‘‘(5) PROHIBITED USES.—The Secretary shall, by regulation, 

set forth prohibited uses of grant amounts awarded under this 

section, which shall include use for—

‘‘(A) political activities; 

‘‘(B) advocacy; 

‘‘(C) lobbying, whether directly or through other parties; 

‘‘(D) counseling services; 

‘‘(E) travel expenses; and 

‘‘(F) preparing or providing advice on tax returns; 

and for the purposes of this paragraph, the prohibited use of 

funds for political activities includes influencing the selection, 

nomination, election, or appointment of one or more candidates 

to any Federal, State or local office as codified in section §501 

of the Internal Revenue Code of 1986 (26 U.S.C. 501). 

‘‘(6) ADDITIONAL LOBBYING RESTRICTIONS.—No assistance or 

amounts made available under this section may be expended 

by an eligible grantee to pay any person to influence or attempt to influence any agency, elected official, officer or employee of a State or local government in connection with the 

making, award, extension, continuation, renewal, amendment, 

or modification of any State or local government contract, 

grant, loan, or cooperative agreement as such terms are defined in section 1352 of title 31, United States Code. 

‘‘(7) PROHIBITION OF CONSIDERATION OF USE FOR MEETING

HOUSING GOALS OR DUTY TO SERVE.—In determining the compliance of the enterprises with the housing goals under this 

section and the duty to serve underserved markets under section 1335, the Director of the Federal Housing Finance Agency 

may not consider any Capital Magnet Fund amounts used 

under this section for eligible activities under subsection (f). 

The Director of the Federal Housing Finance Agency shall give 

credit toward the achievement of such housing goals and such 

duty to serve underserved markets to purchases by the enterprises of mortgages for housing that receives funding from 

Capital Magnet Fund grant amounts, but only to the extent 

that such purchases by the enterprises are funded other than 

with such grant amounts. 

‘‘(8) ACCOUNTABILITY OF RECIPIENTS AND GRANTEES.—

‘‘(A) TRACKING OF FUNDS.—The Secretary of the Treasury shall—

‘‘(i) require each grantee to develop and maintain a 

system to ensure that each recipient of assistance from 

the Capital Magnet Fund uses such amounts in accordance with this section, the regulations issued 

under this section, and any requirements or conditions 

under which such amounts were provided; and 

‘‘(ii) establish minimum requirements for agreements, between the grantee and the Capital Magnet 

Fund, regarding assistance from the Capital Magnet 

Fund, which shall include—


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77 

‘‘(I) appropriate periodic financial and project reporting, record retention, and audit requirements 

for the duration of the grant to the recipient to ensure compliance with the limitations and requirements of this section and the regulations under 

this section; and 

‘‘(II) any other requirements that the Secretary 

determines are necessary to ensure appropriate 

grant administration and compliance. 

‘‘(B) MISUSE OF FUNDS.—If the Secretary of the Treasury 

determines, after reasonable notice and opportunity for 

hearing, that a grantee has failed to comply substantially 

with any provision of this section and until the Secretary 

is satisfied that there is no longer any such failure to comply, the Secretary shall—

‘‘(i) reduce the amount of assistance under this section to the grantee by an amount equal to the amount 

of Capital Magnet Fund grant amounts which were 

not used in accordance with this section; 

‘‘(ii) require the grantee to repay the Secretary any 

amount of the Capital Magnet Fund grant amounts 

which were not used in accordance with this section; 

‘‘(iii) limit the availability of assistance under this 

section to the grantee to activities or recipients not affected by such failure to comply; or 

‘‘(iv) terminate any assistance under this section to 

the grantee. 

‘‘(i) PERIODIC REPORTS.—

‘‘(1) IN GENERAL.—The Secretary of the Treasury shall submit a report, on a periodic basis, to the Committee on Banking, 

Housing, and Urban Affairs of the Senate and the Committee 

on Financial Services of the House of Representatives describing the activities to be funded under this section. 

‘‘(2) REPORTS AVAILABLE TO PUBLIC.—The Secretary of the 

Treasury shall make the reports required under paragraph (1) 

publicly available. 

‘‘(j) REGULATIONS.—

‘‘(1) IN GENERAL.—The Secretary of the Treasury shall issue 

regulations to carry out this section. 

‘‘(2) REQUIRED CONTENTS.—The regulations issued under this 

subsection shall include—

‘‘(A) authority for the Secretary to audit, provide for an 

audit, or otherwise verify an enterprise’s activities, to ensure compliance with this section; 

‘‘(B) a requirement that the Secretary ensure that the allocation of each enterprise is audited not less than annually to ensure compliance with this section; 

‘‘(C) a requirement that, for the purposes of subparagraphs (A) and (B), any financial statement submitted by 

a grantee to the Secretary shall be reviewed by an independent certified public accountant in accordance with 

Statements on Standards for Accounting and Review Services, issued by the American Institute of Certified Public 

Accountants; and 


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78 

‘‘(D) requirements for a process for application to, and 

selection by, the Secretary for activities to be funded with 

amounts from the Capital Magnet Fund, which shall provide that— ‘‘(i) funds be fairly distributed to urban, suburban, 

and rural areas; and ‘‘(ii) selection shall be based upon specific criteria, 

including a prioritization of funding based upon— ‘‘(I) the ability to use such funds to generate additional investments; ‘‘(II) affordable housing need (taking into account the distinct needs of different regions of the 

country); and ‘‘(III) ability to obligate amounts and undertake 

activities so funded in a timely manner.’’. 

SEC. 1132. FINANCIAL EDUCATION AND COUNSELING. 

(a) GOALS.—Financial education and counseling under this section shall have the goal of— (1) increasing the financial knowledge and decision making 

capabilities of prospective homebuyers; 

(2) assisting prospective homebuyers to develop monthly 

budgets, build personal savings, finance or plan for major purchases, reduce their debt, improve their financial stability, and 

set and reach their financial goals; 

(3) helping prospective homebuyers to improve their credit 

scores by understanding the relationship between their credit 

histories and their credit scores; and 

(4) educating prospective homebuyers about the options 

available to build savings for short- and long-term goals. 

(b) GRANTS.— (1) IN GENERAL.—The Secretary of the Treasury (in this section referred to as the ‘‘Secretary’’) shall make grants to eligible organizations to enable such organizations to provide a 

range of financial education and counseling services to prospective homebuyers. 

(2) SELECTION.—The Secretary shall select eligible organizations to receive assistance under this section based on their experience and ability to provide financial education and counseling services that result in documented positive behavioral 

changes. 

(c) ELIGIBLE ORGANIZATIONS.—

(1) IN GENERAL.—For purposes of this section, the term ‘‘eligible organization’’ means an organization that is—

(A) certified in accordance with section 106(e)(1) of the 

Housing and Urban Development Act of 1968 (12 U.S.C. 

1701x(e)); or 

(B) certified by the Office of Financial Education of the 

Department of the Treasury for purposes of this section, in 

accordance with paragraph (2). 

(2) OFE CERTIFICATION.—To be certified by the Office of Financial Education for purposes of this section, an eligible organization shall be—

(A) a housing counseling agency certified by the Secretary of Housing and Urban Development under section 

106(e) of the Housing and Urban Development Act of 1968; 


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79 

(B) a State, local, or tribal government agency; 

(C) a community development financial institution (as 

defined in section 103(5) of the Community Development 

Banking and Financial Institutions Act of 1994 (12 U.S.C. 

4702(5)) or a credit union; or 

(D) any collaborative effort of entities described in any 

of subparagraphs (A) through (C). 

(d) AUTHORITY FOR PILOT PROJECTS.— (1) IN GENERAL.—The Secretary of the Treasury shall authorize not more than 5 pilot project grants to eligible organizations under subsection (c) in order to— (A) carry out the services under this section; and 

(B) provide such other services that will improve the financial stability and economic condition of low- and moderate-income and low-wealth individuals. 

(2) GOAL.—The goal of the pilot project grants under this 

subsection is to— (A) identify successful methods resulting in positive behavioral change for financial empowerment; and 

(B) establish program models for organizations to carry 

out effective counseling services. 

(e) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated to the Secretary such sums as are necessary to 

carry out this section and for the provision of additional financial 

educational services. 

(f) STUDY AND REPORT ON EFFECTIVENESS AND IMPACT.— (1) IN GENERAL.—The Comptroller General of the United 

States shall conduct a study on the effectiveness and impact of 

the grant program established under this section. Not later 

than 3 years after the date of enactment of this Act, the Comptroller General shall submit a report on the results of such 

study to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of 

the House of Representatives. 

(2) CONTENT OF STUDY.—The study required under paragraph (1) shall include an evaluation of the following: 

(A) The effectiveness of the grant program established 

under this section in improving the financial situation of 

homeowners and prospective homebuyers served by the 

grant program. 

(B) The extent to which financial education and counseling services have resulted in positive behavioral 

changes. 

(C) The effectiveness and quality of the eligible organizations providing financial education and counseling services 

under the grant program. 

(g) REGULATIONS.—The Secretary is authorized to promulgate 

such regulations as may be necessary to implement and administer 

the grant program authorized by this section. 

SEC. 1133. TRANSFER AND RIGHTS OF CERTAIN HUD EMPLOYEES. 

(a) TRANSFER.—Each employee of the Department of Housing 

and Urban Development whose position responsibilities primarily 

involve the establishment and enforcement of the housing goals 

under subpart B of part 2 of subtitle A of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 


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4561 et seq.) shall be transferred to the Federal Housing Finance 

Agency for employment, not later than the effective date of the 

Federal Housing Finance Regulatory Reform Act of 2008, and such 

transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code. 

(b) GUARANTEED POSITIONS.— (1) IN GENERAL.—Each employee transferred under subsection (a) shall be guaranteed a position with the same status, 

tenure, grade, and pay as that held on the day immediately 

preceding the transfer. 

(2) NO INVOLUNTARY SEPARATION OR REDUCTION.—An employee transferred under subsection (a) holding a permanent 

position on the day immediately preceding the transfer may 

not be involuntarily separated or reduced in grade or compensation during the 12-month period beginning on the date of 

transfer, except for cause, or, in the case of a temporary employee, separated in accordance with the terms of the appointment of the employee. 

(c) APPOINTMENT AUTHORITY FOR EXCEPTED AND SENIOR EXECUTIVE SERVICE EMPLOYEES.—

(1) IN GENERAL.—In the case of an employee occupying a position in the excepted service or the Senior Executive Service, 

any appointment authority established under law or by regulations of the Office of Personnel Management for filling such position shall be transferred, subject to paragraph (2). 

(2) DECLINE OF TRANSFER.—The Director may decline a 

transfer of authority under paragraph (1) to the extent that 

such authority relates to— (A) a position excepted from the competitive service because of its confidential, policymaking, policy-determining, 

or policy-advocating character; or 

(B) a noncareer position in the Senior Executive Service 

(within the meaning of section 3132(a)(7) of title 5, United 

States Code). 

(d) REORGANIZATION.—If the Director determines, after the end of 

the 1-year period beginning on the effective date of the Federal 

Housing Finance Regulatory Reform Act of 2008, that a reorganization of the combined workforce is required, that reorganization 

shall be deemed a major reorganization for purposes of affording 

affected employee retirement under section 8336(d)(2) or 

8414(b)(1)(B) of title 5, United States Code. 

(e) EMPLOYEE BENEFIT PROGRAMS.—

(1) IN GENERAL.—Any employee described under subsection 

(a) accepting employment with the Agency as a result of a 

transfer under subsection (a) may retain, for 12 months after 

the date on which such transfer occurs, membership in any 

employee benefit program of the Agency or the Department of 

Housing and Urban Development, as applicable, including insurance, to which such employee belongs on such effective 

date, if—

(A) the employee does not elect to give up the benefit or 

membership in the program; and 

(B) the benefit or program is continued by the Director 

of the Federal Housing Finance Agency. 

(2) COST DIFFERENTIAL.—


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(A) IN GENERAL.—The difference in the costs between 

the benefits which would have been provided by the Department of Housing and Urban Development and those 

provided by this section shall be paid by the Director. 

(B) HEALTH INSURANCE.—If any employee elects to give 

up membership in a health insurance program or the 

health insurance program is not continued by the Director, 

the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after 

the date of such election or notice, without regard to any 

other regularly scheduled open season. 

Subtitle C—Prompt Corrective Action 

SEC. 1141. CRITICAL CAPITAL LEVELS. 

(a) IN GENERAL.—Section 1363 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4613) 

is amended—

(1) by striking ‘‘For’’ and inserting ‘‘(a) ENTERPRISES.—FOR’’; 

and 

(2) by adding at the end the following new subsection: 

‘‘(b) FEDERAL HOME LOAN BANKS.—

‘‘(1) IN GENERAL.—For purposes of this subtitle, the critical 

capital level for each Federal Home Loan Bank shall be such 

amount of capital as the Director shall, by regulation, require. 

‘‘(2) CONSIDERATION OF OTHER CRITICAL CAPITAL LEVELS.—In 

establishing the critical capital level under paragraph (1) for 

the Federal Home Loan Banks, the Director shall take due 

consideration of the critical capital level established under subsection (a) for the enterprises, with such modifications as the 

Director determines to be appropriate to reflect the difference 

in operations between the banks and the enterprises.’’. 

(b) REGULATIONS.—Not later than the expiration of the 180-day 

period beginning on the date of enactment of this Act, the Director 

of the Federal Housing Finance Agency shall issue regulations pursuant to section 1363(b) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (as added by this section) 

establishing the critical capital level under such section. 

SEC. 1142. CAPITAL CLASSIFICATIONS. 

(a) IN GENERAL.—Section 1364 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4614) 

is amended— (1) in the heading for subsection (a) by striking ‘‘In General’’ and inserting ‘‘Enterprises’’; 

(2) in subsection (c)—

(A) by striking ‘‘subsection (b)’’ and inserting ‘‘subsection 

(c)’’; 

(B) by striking ‘‘enterprises’’ and inserting ‘‘regulated entities’’; and 

(C) by striking the last sentence; 

(3) by redesignating subsections (c) (as so amended by paragraph (2) of this subsection) and (d) as subsections (d) and (f), 

respectively; 

(4) by striking subsection (b) and inserting the following: 


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‘‘(b) FEDERAL HOME LOAN BANKS.— ‘‘(1) ESTABLISHMENT AND CRITERIA.—For purposes of this 

subtitle, the Director shall, by regulation— ‘‘(A) establish the capital classifications specified under 

paragraph (2) for the Federal Home Loan Banks; ‘‘(B) establish criteria for each such capital classification 

based on the amount and types of capital held by a bank 

and the risk-based, minimum, and critical capital levels for 

the banks and taking due consideration of the capital classifications established under subsection (a) for the enterprises, with such modifications as the Director determines 

to be appropriate to reflect the difference in operations between the banks and the enterprises; and ‘‘(C) shall classify the Federal Home Loan Banks according to such capital classifications. ‘‘(2) CLASSIFICATIONS.—The capital classifications specified 

under this paragraph are—

‘‘(A) adequately capitalized; 

‘‘(B) undercapitalized; 

‘‘(C) significantly undercapitalized; and 

‘‘(D) critically undercapitalized. 

‘‘(c) DISCRETIONARY CLASSIFICATION.— ‘‘(1) GROUNDS FOR RECLASSIFICATION.—The Director may reclassify a regulated entity under paragraph (2) if— ‘‘(A) at any time, the Director determines in writing that 

the regulated entity is engaging in conduct that could result in a rapid depletion of core or total capital or the 

value of collateral pledged as security has decreased significantly or that the value of the property subject to mortgages held by the regulated entity (or securitized in the 

case of an enterprise) has decreased significantly; ‘‘(B) after notice and an opportunity for hearing, the Director determines that the regulated entity is in an unsafe 

or unsound condition; or 

‘‘(C) pursuant to section 1371(b), the Director deems the 

regulated entity to be engaging in an unsafe or unsound 

practice. 

‘‘(2) RECLASSIFICATION.—In addition to any other action authorized under this title, including the reclassification of a regulated entity for any reason not specified in this subsection, if 

the Director takes any action described in paragraph (1), the 

Director may classify a regulated entity— ‘‘(A) as undercapitalized, if the regulated entity is otherwise classified as adequately capitalized; ‘‘(B) as significantly undercapitalized, if the regulated 

entity is otherwise classified as undercapitalized; and ‘‘(C) as critically undercapitalized, if the regulated entity 

is otherwise classified as significantly undercapitalized.’’; 

and 

(5) by inserting after subsection (d) (as so redesignated by 

paragraph (3) of this subsection), the following new subsection: 

‘‘(e) RESTRICTION ON CAPITAL DISTRIBUTIONS.— ‘‘(1) IN GENERAL.—A regulated entity shall make no capital 

distribution if, after making the distribution, the regulated entity would be undercapitalized. 


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‘‘(2) EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or 

applicable, to repurchase, redeem, retire, or otherwise acquire 

shares or ownership interests if the repurchase, redemption, 

retirement, or other acquisition—

‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at 

least an equivalent amount; and 

‘‘(B) will reduce the financial obligations of the regulated 

entity or otherwise improve the financial condition of the 

entity.’’. 

(b) REGULATIONS.—Not later than the expiration of the 180-day 

period beginning on the date of enactment of this Act, the Director 

of the Federal Housing Finance Agency shall issue regulations to 

carry out section 1364(b) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (as added by this section), relating to capital classifications for the Federal Home Loan 

Banks. 

SEC. 1143. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED REGULATED ENTITIES. 

Section 1365 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4615) is amended—

(1) by striking ‘‘the enterprise’’ each place that term appears 

and inserting ‘‘the regulated entity’’; 

(2) by striking ‘‘An enterprise’’ each place that term appears 

and inserting ‘‘A regulated entity’’; 

(3) by striking ‘‘an enterprise’’ each place that term appears 

and inserting ‘‘a regulated entity’’; 

(4) in subsection (a)—

(A) by redesignating paragraphs (1) and (2) as paragraphs (2) and (3), respectively; 

(B) by inserting before paragraph (2), as redesignated, 

the following: 

‘‘(1) REQUIRED MONITORING.—The Director shall—

‘‘(A) closely monitor the condition of any undercapitalized regulated entity; 

‘‘(B) closely monitor compliance with the capital restoration plan, restrictions, and requirements imposed on an 

undercapitalized regulated entity under this section; and 

‘‘(C) periodically review the plan, restrictions, and requirements applicable to an undercapitalized regulated entity to determine whether the plan, restrictions, and requirements are achieving the purpose of this section.’’; and 

(C) by adding at the end the following: 

‘‘(4) RESTRICTION OF ASSET GROWTH.—An undercapitalized 

regulated entity shall not permit its average total assets during any calendar quarter to exceed its average total assets during the preceding calendar quarter, unless—

‘‘(A) the Director has accepted the capital restoration 

plan of the regulated entity; 

‘‘(B) any increase in total assets is consistent with the 

capital restoration plan; and 

‘‘(C) the ratio of tangible equity to assets of the regulated 

entity increases during the calendar quarter at a rate sufVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00085 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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ficient to enable the regulated entity to become adequately 

capitalized within a reasonable time. ‘‘(5) PRIOR APPROVAL OF ACQUISITIONS AND NEW ACTIVITIES.— An undercapitalized regulated entity shall not, directly or indirectly, acquire any interest in any entity or engage in any new 

activity, unless— ‘‘(A) the Director has accepted the capital restoration 

plan of the regulated entity, the regulated entity is implementing the plan, and the Director determines that the 

proposed action is consistent with and will further the 

achievement of the plan; or ‘‘(B) the Director determines that the proposed action 

will further the purpose of this subtitle.’’; 

(5) in subsection (b)— (A) in the subsection heading, by striking ‘‘DISCRE- TIONARY’’; 

(B) in the matter preceding paragraph (1), by striking ‘‘may’’ and inserting ‘‘shall’’; and 

(C) in paragraph (2)— (i) by striking ‘‘make, in good faith, reasonable efforts necessary to’’; and 

(ii) by striking the period at the end and inserting 

‘‘in any material respect.’’; and 

(6) by striking subsection (c) and inserting the following: 

‘‘(c) OTHER DISCRETIONARY SAFEGUARDS.—The Director may 

take, with respect to an undercapitalized regulated entity, any of 

the actions authorized to be taken under section 1366 with respect 

to a significantly undercapitalized regulated entity, if the Director 

determines that such actions are necessary to carry out the purpose of this subtitle.’’. 

SEC. 1144. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY 

UNDERCAPITALIZED REGULATED ENTITIES. 

Section 1366 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4616) is amended—

(1) in subsection (a)(2), by striking ‘‘undercapitalized enterprise’’ and inserting ‘‘undercapitalized’’; 

(2) by striking ‘‘the enterprise’’ each place that term appears 

and inserting ‘‘the regulated entity’’; 

(3) by striking ‘‘An enterprise’’ each place that term appears 

and inserting ‘‘A regulated entity’’; 

(4) by striking ‘‘an enterprise’’ each place that term appears 

and inserting ‘‘a regulated entity’’; 

(5) in subsection (b)—

(A) in the subsection heading, by striking ‘‘DISCRETIONARY SUPERVISORY’’ and inserting ‘‘SPECIFIC’’; 

(B) in the matter preceding paragraph (1), by striking 

‘‘may, at any time, take any’’ and inserting ‘‘shall carry out 

this section by taking, at any time, 1 or more’’; 

(C) by striking paragraph (6); 

(D) by redesignating paragraph (5) as paragraph (6); 

(E) by inserting after paragraph (4) the following: 

‘‘(5) IMPROVEMENT OF MANAGEMENT.—Take 1 or more of the 

following actions: 

‘‘(A) NEW ELECTION OF BOARD.—Order a new election for 

the board of directors of the regulated entity. 


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‘‘(B) DISMISSAL OF DIRECTORS OR EXECUTIVE OFFICERS.—

Require the regulated entity to dismiss from office any director or executive officer who had held office for more 

than 180 days immediately before the date on which the 

regulated entity became undercapitalized. Dismissal under 

this subparagraph shall not be construed to be a removal 

pursuant to the enforcement powers of the Director under 

section 1377. 

‘‘(C) EMPLOY QUALIFIED EXECUTIVE OFFICERS.—Require 

the regulated entity to employ qualified executive officers 

(who, if the Director so specifies, shall be subject to approval by the Director).’’; and 

(F) by adding at the end the following: 

‘‘(7) OTHER ACTION.—Require the regulated entity to take 

any other action that the Director determines will better carry 

out the purpose of this section than any of the other actions 

specified in this subsection.’’; and 

(6) by striking subsection (c) and inserting the following: 

‘‘(c) RESTRICTION ON COMPENSATION OF EXECUTIVE OFFICERS.—A 

regulated entity that is classified as significantly undercapitalized 

in accordance with section 1364 may not, without prior written approval by the Director—

‘‘(1) pay any bonus to any executive officer; or 

‘‘(2) provide compensation to any executive officer at a rate 

exceeding the average rate of compensation of that officer (excluding bonuses, stock options, and profit sharing) during the 

12 calendar months preceding the calendar month in which the 

regulated entity became significantly undercapitalized.’’. 

SEC. 1145. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED REGULATED ENTITIES. 

(a) IN GENERAL.—Section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617) 

is amended to read as follows: 

‘‘SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED REGULATED ENTITIES. 

‘‘(a) APPOINTMENT OF THE AGENCY AS CONSERVATOR OR RECEIVER.—

‘‘(1) IN GENERAL.—Notwithstanding any other provision of 

Federal or State law, the Director may appoint the Agency as 

conservator or receiver for a regulated entity in the manner 

provided under paragraph (2) or (4). All references to the conservator or receiver under this section are references to the 

Agency acting as conservator or receiver. 

‘‘(2) DISCRETIONARY APPOINTMENT.—The Agency may, at the 

discretion of the Director, be appointed conservator or receiver 

for the purpose of reorganizing, rehabilitating, or winding up 

the affairs of a regulated entity. 

‘‘(3) GROUNDS FOR DISCRETIONARY APPOINTMENT OF CONSERVATOR OR RECEIVER.—The grounds for appointing conservator 

or receiver for any regulated entity under paragraph (2) are as 

follows: 

‘‘(A) ASSETS INSUFFICIENT FOR OBLIGATIONS.—The assets 

of the regulated entity are less than the obligations of the 

regulated entity to its creditors and others. 


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‘‘(B) SUBSTANTIAL DISSIPATION.—Substantial dissipation 

of assets or earnings due to— ‘‘(i) any violation of any provision of Federal or State 

law; or ‘‘(ii) any unsafe or unsound practice. ‘‘(C) UNSAFE OR UNSOUND CONDITION.—An unsafe or unsound condition to transact business. ‘‘(D) CEASE AND DESIST ORDERS.—Any willful violation of 

a cease and desist order that has become final. ‘‘(E) CONCEALMENT.—Any concealment of the books, papers, records, or assets of the regulated entity, or any refusal to submit the books, papers, records, or affairs of the 

regulated entity, for inspection to any examiner or to any 

lawful agent of the Director. ‘‘(F) INABILITY TO MEET OBLIGATIONS.—The regulated entity is likely to be unable to pay its obligations or meet the 

demands of its creditors in the normal course of business. 

‘‘(G) LOSSES.—The regulated entity has incurred or is 

likely to incur losses that will deplete all or substantially 

all of its capital, and there is no reasonable prospect for 

the regulated entity to become adequately capitalized (as 

defined in section 1364(a)(1)). ‘‘(H) VIOLATIONS OF LAW.—Any violation of any law or 

regulation, or any unsafe or unsound practice or condition 

that is likely to— ‘‘(i) cause insolvency or substantial dissipation of assets or earnings; or ‘‘(ii) weaken the condition of the regulated entity. ‘‘(I) CONSENT.—The regulated entity, by resolution of its 

board of directors or its shareholders or members, consents 

to the appointment. 

‘‘(J) UNDERCAPITALIZATION.—The regulated entity is 

undercapitalized or significantly undercapitalized (as defined in section 1364(a)(3)), and— ‘‘(i) has no reasonable prospect of becoming adequately capitalized; ‘‘(ii) fails to become adequately capitalized, as required by— ‘‘(I) section 1365(a)(1) with respect to a regulated entity; or ‘‘(II) section 1366(a)(1) with respect to a significantly undercapitalized regulated entity; ‘‘(iii) fails to submit a capital restoration plan acceptable to the Agency within the time prescribed 

under section 1369C; or ‘‘(iv) materially fails to implement a capital restoration plan submitted and accepted under section 1369C. ‘‘(K) CRITICAL UNDERCAPITALIZATION.—The regulated entity is critically undercapitalized, as defined in section 

1364(a)(4). 

‘‘(L) MONEY LAUNDERING.—The Attorney General notifies the Director in writing that the regulated entity has 

been found guilty of a criminal offense under section 1956 

or 1957 of title 18, United States Code, or section 5322 or 

5324 of title 31, United States Code. 


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‘‘(4) MANDATORY RECEIVERSHIP.— ‘‘(A) IN GENERAL.—The Director shall appoint the Agency 

as receiver for a regulated entity if the Director determines, in writing, that— ‘‘(i) the assets of the regulated entity are, and during 

the preceding 60 calendar days have been, less than 

the obligations of the regulated entity to its creditors 

and others; or ‘‘(ii) the regulated entity is not, and during the preceding 60 calendar days has not been, generally paying the debts of the regulated entity (other than debts 

that are the subject of a bona fide dispute) as such 

debts become due. ‘‘(B) PERIODIC DETERMINATION REQUIRED FOR CRITICALLY

UNDERCAPITALIZED REGULATED ENTITY.—If a regulated entity is critically undercapitalized, the Director shall make 

a determination, in writing, as to whether the regulated 

entity meets the criteria specified in clause (i) or (ii) of 

subparagraph (A)—

‘‘(i) not later than 30 calendar days after the regulated entity initially becomes critically undercapitalized; and 

‘‘(ii) at least once during each succeeding 30-calendar day period. 

‘‘(C) DETERMINATION NOT REQUIRED IF RECEIVERSHIP AL- READY IN PLACE.—Subparagraph (B) does not apply with 

respect to a regulated entity in any period during which 

the Agency serves as receiver for the regulated entity. ‘‘(D) RECEIVERSHIP TERMINATES CONSERVATORSHIP.—The 

appointment of the Agency as receiver of a regulated entity under this section shall immediately terminate any conservatorship established for the regulated entity under 

this title. ‘‘(5) JUDICIAL REVIEW.—

‘‘(A) IN GENERAL.—If the Agency is appointed conservator or receiver under this section, the regulated entity 

may, within 30 days of such appointment, bring an action 

in the United States district court for the judicial district 

in which the home office of such regulated entity is located, or in the United States District Court for the District of Columbia, for an order requiring the Agency to remove itself as conservator or receiver. ‘‘(B) REVIEW.—Upon the filing of an action under subparagraph (A), the court shall, upon the merits, dismiss 

such action or direct the Agency to remove itself as such 

conservator or receiver. 

‘‘(6) DIRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINT- MENT OF CONSERVATOR OR RECEIVER.—The members of the 

board of directors of a regulated entity shall not be liable to 

the shareholders or creditors of the regulated entity for acquiescing in or consenting in good faith to the appointment of the 

Agency as conservator or receiver for that regulated entity. 

‘‘(7) AGENCY NOT SUBJECT TO ANY OTHER FEDERAL AGENCY.—

When acting as conservator or receiver, the Agency shall not 

be subject to the direction or supervision of any other agency 


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of the United States or any State in the exercise of the rights, 

powers, and privileges of the Agency. ‘‘(b) POWERS AND DUTIES OF THE AGENCY AS CONSERVATOR OR

RECEIVER.— ‘‘(1) RULEMAKING AUTHORITY OF THE AGENCY.—The Agency 

may prescribe such regulations as the Agency determines to be 

appropriate regarding the conduct of conservatorships or receiverships. ‘‘(2) GENERAL POWERS.— ‘‘(A) SUCCESSOR TO REGULATED ENTITY.—The Agency 

shall, as conservator or receiver, and by operation of law, 

immediately succeed to— ‘‘(i) all rights, titles, powers, and privileges of the 

regulated entity, and of any stockholder, officer, or director of such regulated entity with respect to the regulated entity and the assets of the regulated entity; 

and ‘‘(ii) title to the books, records, and assets of any 

other legal custodian of such regulated entity. ‘‘(B) OPERATE THE REGULATED ENTITY.—The Agency 

may, as conservator or receiver—

‘‘(i) take over the assets of and operate the regulated 

entity with all the powers of the shareholders, the directors, and the officers of the regulated entity and 

conduct all business of the regulated entity; 

‘‘(ii) collect all obligations and money due the regulated entity; 

‘‘(iii) perform all functions of the regulated entity in 

the name of the regulated entity which are consistent 

with the appointment as conservator or receiver; 

‘‘(iv) preserve and conserve the assets and property 

of the regulated entity; and 

‘‘(v) provide by contract for assistance in fulfilling 

any function, activity, action, or duty of the Agency as 

conservator or receiver. ‘‘(C) FUNCTIONS OF OFFICERS, DIRECTORS, AND SHARE- HOLDERS OF A REGULATED ENTITY.—The Agency may, by 

regulation or order, provide for the exercise of any function 

by any stockholder, director, or officer of any regulated entity for which the Agency has been named conservator or 

receiver. ‘‘(D) POWERS AS CONSERVATOR.—The Agency may, as 

conservator, take such action as may be—

‘‘(i) necessary to put the regulated entity in a sound 

and solvent condition; and 

‘‘(ii) appropriate to carry on the business of the regulated entity and preserve and conserve the assets and 

property of the regulated entity. 

‘‘(E) ADDITIONAL POWERS AS RECEIVER.—In any case in 

which the Agency is acting as receiver, the Agency shall 

place the regulated entity in liquidation and proceed to realize upon the assets of the regulated entity in such manner as the Agency deems appropriate, including through 

the sale of assets, the transfer of assets to a limited-life 

regulated entity established under subsection (i), or the exVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00090 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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ercise of any other rights or privileges granted to the 

Agency under this paragraph. ‘‘(F) ORGANIZATION OF NEW ENTERPRISE.—The Agency 

may, as receiver for an enterprise, organize a successor enterprise that will operate pursuant to subsection (i). ‘‘(G) TRANSFER OR SALE OF ASSETS AND LIABILITIES.—The 

Agency may, as conservator or receiver, transfer or sell 

any asset or liability of the regulated entity in default, and 

may do so without any approval, assignment, or consent 

with respect to such transfer or sale. ‘‘(H) PAYMENT OF VALID OBLIGATIONS.—The Agency, as 

conservator or receiver, shall, to the extent of proceeds realized from the performance of contracts or sale of the assets of a regulated entity, pay all valid obligations of the 

regulated entity that are due and payable at the time of 

the appointment of the Agency as conservator or receiver, 

in accordance with the prescriptions and limitations of this 

section. ‘‘(I) SUBPOENA AUTHORITY.—

‘‘(i) IN GENERAL.—

‘‘(I) AGENCY AUTHORITY.—The Agency may, as 

conservator or receiver, and for purposes of carrying out any power, authority, or duty with respect to a regulated entity (including determining 

any claim against the regulated entity and determining and realizing upon any asset of any person 

in the course of collecting money due the regulated entity), exercise any power established 

under section 1348. ‘‘(II) APPLICABILITY OF LAW.—The provisions of 

section 1348 shall apply with respect to the exercise of any power under this subparagraph, in the 

same manner as such provisions apply under that 

section. ‘‘(ii) SUBPOENA.—A subpoena or subpoena duces 

tecum may be issued under clause (i) only by, or with 

the written approval of, the Director, or the designee 

of the Director. ‘‘(iii) RULE OF CONSTRUCTION.—This subsection shall 

not be construed to limit any rights that the Agency, 

in any capacity, might otherwise have under section 

1317 or 1379B. ‘‘(J) INCIDENTAL POWERS.—The Agency may, as conservator or receiver—

‘‘(i) exercise all powers and authorities specifically 

granted to conservators or receivers, respectively, 

under this section, and such incidental powers as shall 

be necessary to carry out such powers; and 

‘‘(ii) take any action authorized by this section, 

which the Agency determines is in the best interests 

of the regulated entity or the Agency. ‘‘(K) OTHER PROVISIONS.— ‘‘(i) SHAREHOLDERS AND CREDITORS OF FAILED REGULATED ENTITY.—Notwithstanding any other provision 

of law, the appointment of the Agency as receiver for 


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90 

a regulated entity pursuant to paragraph (2) or (4) of 

subsection (a) and its succession, by operation of law, 

to the rights, titles, powers, and privileges described in 

subsection (b)(2)(A) shall terminate all rights and 

claims that the stockholders and creditors of the regulated entity may have against the assets or charter of 

the regulated entity or the Agency arising as a result 

of their status as stockholders or creditors, except for 

their right to payment, resolution, or other satisfaction 

of their claims, as permitted under subsections (b)(9), 

(c), and (e). 

‘‘(ii) ASSETS OF REGULATED ENTITY.—Notwithstanding any other provision of law, for purposes of 

this section, the charter of a regulated entity shall not 

be considered an asset of the regulated entity. 

‘‘(3) AUTHORITY OF RECEIVER TO DETERMINE CLAIMS.—

‘‘(A) IN GENERAL.—The Agency may, as receiver, determine claims in accordance with the requirements of this 

subsection and any regulations prescribed under paragraph (4). 

‘‘(B) NOTICE REQUIREMENTS.—The receiver, in any case 

involving the liquidation or winding up of the affairs of a 

closed regulated entity, shall—

‘‘(i) promptly publish a notice to the creditors of the 

regulated entity to present their claims, together with 

proof, to the receiver by a date specified in the notice 

which shall be not less than 90 days after the date of 

publication of such notice; and 

‘‘(ii) republish such notice approximately 1 month 

and 2 months, respectively, after the date of publication under clause (i). 

‘‘(C) MAILING REQUIRED.—The receiver shall mail a notice similar to the notice published under subparagraph 

(B)(i) at the time of such publication to any creditor shown 

on the books of the regulated entity—

‘‘(i) at the last address of the creditor appearing in 

such books; or 

‘‘(ii) upon discovery of the name and address of a 

claimant not appearing on the books of the regulated 

entity, within 30 days after the discovery of such name 

and address. 

‘‘(4) RULEMAKING AUTHORITY RELATING TO DETERMINATION OF

CLAIMS.—Subject to subsection (c), the Director may prescribe 

regulations regarding the allowance or disallowance of claims 

by the receiver and providing for administrative determination 

of claims and review of such determination. 

‘‘(5) PROCEDURES FOR DETERMINATION OF CLAIMS.—

‘‘(A) DETERMINATION PERIOD.—

‘‘(i) IN GENERAL.—Before the end of the 180-day period beginning on the date on which any claim against 

a regulated entity is filed with the Agency as receiver, 

the Agency shall determine whether to allow or disallow the claim and shall notify the claimant of any 

determination with respect to such claim. 


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‘‘(ii) EXTENSION OF TIME.—The period described in 

clause (i) may be extended by a written agreement between the claimant and the Agency. ‘‘(iii) MAILING OF NOTICE SUFFICIENT.—The requirements of clause (i) shall be deemed to be satisfied if 

the notice of any determination with respect to any 

claim is mailed to the last address of the claimant 

which appears— ‘‘(I) on the books of the regulated entity; 

‘‘(II) in the claim filed by the claimant; or 

‘‘(III) in documents submitted in proof of the 

claim. ‘‘(iv) CONTENTS OF NOTICE OF DISALLOWANCE.—If 

any claim filed under clause (i) is disallowed, the notice to the claimant shall contain—

‘‘(I) a statement of each reason for the disallowance; and 

‘‘(II) the procedures available for obtaining 

agency review of the determination to disallow the 

claim or judicial determination of the claim. 

‘‘(B) ALLOWANCE OF PROVEN CLAIM.—The receiver shall 

allow any claim received on or before the date specified in 

the notice published under paragraph (3)(B)(i) by the receiver from any claimant which is proved to the satisfaction of the receiver. ‘‘(C) DISALLOWANCE OF CLAIMS FILED AFTER FILING PE- RIOD.—Claims filed after the date specified in the notice 

published under paragraph (3)(B)(i), or the date specified 

under paragraph (3)(C), shall be disallowed and such disallowance shall be final. ‘‘(D) AUTHORITY TO DISALLOW CLAIMS.— ‘‘(i) IN GENERAL.—The receiver may disallow any 

portion of any claim by a creditor or claim of security, 

preference, or priority which is not proved to the satisfaction of the receiver. ‘‘(ii) PAYMENTS TO LESS THAN FULLY SECURED CREDI- TORS.—In the case of a claim of a creditor against a 

regulated entity which is secured by any property or 

other asset of such regulated entity, the receiver— ‘‘(I) may treat the portion of such claim which 

exceeds an amount equal to the fair market value 

of such property or other asset as an unsecured 

claim against the regulated entity; and ‘‘(II) may not make any payment with respect to 

such unsecured portion of the claim, other than in 

connection with the disposition of all claims of unsecured creditors of the regulated entity. ‘‘(iii) EXCEPTIONS.—No provision of this paragraph 

shall apply with respect to—

‘‘(I) any extension of credit from any Federal Reserve Bank, Federal Home Loan Bank, or the 

United States Treasury; or 

‘‘(II) any security interest in the assets of the 

regulated entity securing any such extension of 

credit. 


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‘‘(E) NO JUDICIAL REVIEW OF DETERMINATION PURSUANT

TO SUBPARAGRAPH (D).—No court may review the determination of the Agency under subparagraph (D) to disallow a claim. 

‘‘(F) LEGAL EFFECT OF FILING.—

‘‘(i) STATUTE OF LIMITATION TOLLED.—For purposes 

of any applicable statute of limitations, the filing of a 

claim with the receiver shall constitute a commencement of an action. 

‘‘(ii) NO PREJUDICE TO OTHER ACTIONS.—Subject to 

paragraph (10), the filing of a claim with the receiver 

shall not prejudice any right of the claimant to continue any action which was filed before the date of the 

appointment of the receiver, subject to the determination of claims by the receiver. 

‘‘(6) PROVISION FOR JUDICIAL DETERMINATION OF CLAIMS.—

‘‘(A) IN GENERAL.—The claimant may file suit on a claim 

(or continue an action commenced before the appointment 

of the receiver) in the district or territorial court of the 

United States for the district within which the principal 

place of business of the regulated entity is located or the 

United States District Court for the District of Columbia 

(and such court shall have jurisdiction to hear such claim), 

before the end of the 60-day period beginning on the earlier of—

‘‘(i) the end of the period described in paragraph 

(5)(A)(i) with respect to any claim against a regulated 

entity for which the Agency is receiver; or 

‘‘(ii) the date of any notice of disallowance of such 

claim pursuant to paragraph (5)(A)(i). 

‘‘(B) STATUTE OF LIMITATIONS.—A claim shall be deemed 

to be disallowed (other than any portion of such claim 

which was allowed by the receiver), and such disallowance 

shall be final, and the claimant shall have no further 

rights or remedies with respect to such claim, if the claimant fails, before the end of the 60-day period described 

under subparagraph (A), to file suit on such claim (or continue an action commenced before the appointment of the 

receiver). 

‘‘(7) REVIEW OF CLAIMS.—

‘‘(A) OTHER REVIEW PROCEDURES.—

‘‘(i) IN GENERAL.—The Agency shall establish such 

alternative dispute resolution processes as may be appropriate for the resolution of claims filed under paragraph (5)(A)(i). 

‘‘(ii) CRITERIA.—In establishing alternative dispute 

resolution processes, the Agency shall strive for procedures which are expeditious, fair, independent, and 

low cost. 

‘‘(iii) VOLUNTARY BINDING OR NONBINDING PROCEDURES.—The Agency may establish both binding and 

nonbinding processes under this subparagraph, which 

may be conducted by any government or private party. 

All parties, including the claimant and the Agency, 


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must agree to the use of the process in a particular 

case. ‘‘(B) CONSIDERATION OF INCENTIVES.—The Agency shall 

seek to develop incentives for claimants to participate in 

the alternative dispute resolution process. ‘‘(8) EXPEDITED DETERMINATION OF CLAIMS.— ‘‘(A) ESTABLISHMENT REQUIRED.—The Agency shall establish a procedure for expedited relief outside of the routine claims process established under paragraph (5) for 

claimants who— ‘‘(i) allege the existence of legally valid and enforceable or perfected security interests in assets of any 

regulated entity for which the Agency has been appointed receiver; and ‘‘(ii) allege that irreparable injury will occur if the 

routine claims procedure is followed. ‘‘(B) DETERMINATION PERIOD.—Before the end of the 90- 

day period beginning on the date on which any claim is 

filed in accordance with the procedures established under 

subparagraph (A), the Director shall—

‘‘(i) determine—

‘‘(I) whether to allow or disallow such claim; or 

‘‘(II) whether such claim should be determined 

pursuant to the procedures established under 

paragraph (5); and 

‘‘(ii) notify the claimant of the determination, and if 

the claim is disallowed, provide a statement of each 

reason for the disallowance and the procedure for obtaining agency review or judicial determination. 

‘‘(C) PERIOD FOR FILING OR RENEWING SUIT.—Any claimant who files a request for expedited relief shall be permitted to file a suit, or to continue a suit filed before the 

date of appointment of the receiver, seeking a determination of the rights of the claimant with respect to such security interest after the earlier of— ‘‘(i) the end of the 90-day period beginning on the 

date of the filing of a request for expedited relief; or ‘‘(ii) the date on which the Agency denies the claim. ‘‘(D) STATUTE OF LIMITATIONS.—If an action described 

under subparagraph (C) is not filed, or the motion to 

renew a previously filed suit is not made, before the end 

of the 30-day period beginning on the date on which such 

action or motion may be filed under subparagraph (B), the 

claim shall be deemed to be disallowed as of the end of 

such period (other than any portion of such claim which 

was allowed by the receiver), such disallowance shall be 

final, and the claimant shall have no further rights or remedies with respect to such claim. ‘‘(E) LEGAL EFFECT OF FILING.— ‘‘(i) STATUTE OF LIMITATION TOLLED.—For purposes 

of any applicable statute of limitations, the filing of a 

claim with the receiver shall constitute a commencement of an action. ‘‘(ii) NO PREJUDICE TO OTHER ACTIONS.—Subject to 

paragraph (10), the filing of a claim with the receiver 


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shall not prejudice any right of the claimant to continue any action that was filed before the appointment 

of the receiver, subject to the determination of claims 

by the receiver. ‘‘(9) PAYMENT OF CLAIMS.— ‘‘(A) IN GENERAL.—The receiver may, in the discretion of 

the receiver, and to the extent that funds are available 

from the assets of the regulated entity, pay creditor claims, 

in such manner and amounts as are authorized under this 

section, which are— ‘‘(i) allowed by the receiver; 

‘‘(ii) approved by the Agency pursuant to a final determination pursuant to paragraph (7) or (8); or ‘‘(iii) determined by the final judgment of any court 

of competent jurisdiction. ‘‘(B) AGREEMENTS AGAINST THE INTEREST OF THE AGENCY.—No agreement that tends to diminish or defeat the interest of the Agency in any asset acquired by the Agency 

as receiver under this section shall be valid against the 

Agency unless such agreement is in writing and executed 

by an authorized officer or representative of the regulated 

entity. 

‘‘(C) PAYMENT OF DIVIDENDS ON CLAIMS.—The receiver 

may, in the sole discretion of the receiver, pay from the assets of the regulated entity dividends on proved claims at 

any time, and no liability shall attach to the Agency by 

reason of any such payment, for failure to pay dividends 

to a claimant whose claim is not proved at the time of any 

such payment. ‘‘(D) RULEMAKING AUTHORITY OF THE DIRECTOR.—The Director may prescribe such rules, including definitions of 

terms, as the Director deems appropriate to establish a 

single uniform interest rate for, or to make payments of 

post-insolvency interest to creditors holding proven claims 

against the receivership estates of the regulated entity, following satisfaction by the receiver of the principal amount 

of all creditor claims. ‘‘(10) SUSPENSION OF LEGAL ACTIONS.— ‘‘(A) IN GENERAL.—After the appointment of a conservator or receiver for a regulated entity, the conservator or 

receiver may, in any judicial action or proceeding to which 

such regulated entity is or becomes a party, request a stay 

for a period not to exceed— ‘‘(i) 45 days, in the case of any conservator; and 

‘‘(ii) 90 days, in the case of any receiver. ‘‘(B) GRANT OF STAY BY ALL COURTS REQUIRED.—Upon receipt of a request by the conservator or receiver under subparagraph (A) for a stay of any judicial action or proceeding in any court with jurisdiction of such action or proceeding, the court shall grant such stay as to all parties. ‘‘(11) ADDITIONAL RIGHTS AND DUTIES.— ‘‘(A) PRIOR FINAL ADJUDICATION.—The Agency shall 

abide by any final unappealable judgment of any court of 

competent jurisdiction which was rendered before the appointment of the Agency as conservator or receiver. 


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‘‘(B) RIGHTS AND REMEDIES OF CONSERVATOR OR RE- CEIVER.—In the event of any appealable judgment, the 

Agency as conservator or receiver— ‘‘(i) shall have all of the rights and remedies available to the regulated entity (before the appointment of 

such conservator or receiver) and the Agency, including removal to Federal court and all appellate rights; 

and ‘‘(ii) shall not be required to post any bond in order 

to pursue such remedies. ‘‘(C) NO ATTACHMENT OR EXECUTION.—No attachment or 

execution may issue by any court upon assets in the possession of the receiver, or upon the charter, of a regulated 

entity for which the Agency has been appointed receiver. ‘‘(D) LIMITATION ON JUDICIAL REVIEW.—Except as otherwise provided in this subsection, no court shall have jurisdiction over—

‘‘(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, 

the assets or charter of any regulated entity for which 

the Agency has been appointed receiver; or 

‘‘(ii) any claim relating to any act or omission of 

such regulated entity or the Agency as receiver. 

‘‘(E) DISPOSITION OF ASSETS.—In exercising any right, 

power, privilege, or authority as conservator or receiver in 

connection with any sale or disposition of assets of a regulated entity for which the Agency has been appointed conservator or receiver, the Agency shall conduct its operations in a manner which— ‘‘(i) maximizes the net present value return from the 

sale or disposition of such assets; ‘‘(ii) minimizes the amount of any loss realized in 

the resolution of cases; and ‘‘(iii) ensures adequate competition and fair and consistent treatment of offerors. 

‘‘(12) STATUTE OF LIMITATIONS FOR ACTIONS BROUGHT BY

CONSERVATOR OR RECEIVER.— ‘‘(A) IN GENERAL.—Notwithstanding any provision of any 

contract, the applicable statute of limitations with regard 

to any action brought by the Agency as conservator or receiver shall be— ‘‘(i) in the case of any contract claim, the longer of— ‘‘(I) the 6-year period beginning on the date on 

which the claim accrues; or ‘‘(II) the period applicable under State law; and ‘‘(ii) in the case of any tort claim, the longer of— ‘‘(I) the 3-year period beginning on the date on 

which the claim accrues; or ‘‘(II) the period applicable under State law. ‘‘(B) DETERMINATION OF THE DATE ON WHICH A CLAIM AC- CRUES.—For purposes of subparagraph (A), the date on 

which the statute of limitations begins to run on any claim 

described in such subparagraph shall be the later of— ‘‘(i) the date of the appointment of the Agency as 

conservator or receiver; or 


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‘‘(ii) the date on which the cause of action accrues. ‘‘(13) REVIVAL OF EXPIRED STATE CAUSES OF ACTION.— ‘‘(A) IN GENERAL.—In the case of any tort claim described under clause (ii) for which the statute of limitations applicable under State law with respect to such claim 

has expired not more than 5 years before the appointment 

of the Agency as conservator or receiver, the Agency may 

bring an action as conservator or receiver on such claim 

without regard to the expiration of the statute of limitations applicable under State law. ‘‘(B) CLAIMS DESCRIBED.—A tort claim referred to under 

clause (i) is a claim arising from fraud, intentional misconduct resulting in unjust enrichment, or intentional misconduct resulting in substantial loss to the regulated entity. ‘‘(14) ACCOUNTING AND RECORDKEEPING REQUIREMENTS.—

‘‘(A) IN GENERAL.—The Agency as conservator or receiver 

shall, consistent with the accounting and reporting practices and procedures established by the Agency, maintain 

a full accounting of each conservatorship and receivership 

or other disposition of a regulated entity in default. 

‘‘(B) ANNUAL ACCOUNTING OR REPORT.—With respect to 

each conservatorship or receivership, the Agency shall 

make an annual accounting or report available to the 

Board, the Comptroller General of the United States, the 

Committee on Banking, Housing, and Urban Affairs of the 

Senate, and the Committee on Financial Services of the 

House of Representatives. ‘‘(C) AVAILABILITY OF REPORTS.—Any report prepared 

under subparagraph (B) shall be made available by the 

Agency upon request to any shareholder of a regulated entity or any member of the public. 

‘‘(D) RECORDKEEPING REQUIREMENT.—After the end of 

the 6-year period beginning on the date on which the conservatorship or receivership is terminated by the Director, 

the Agency may destroy any records of such regulated entity which the Agency, in the discretion of the Agency, determines to be unnecessary, unless directed not to do so by 

a court of competent jurisdiction or governmental agency, 

or prohibited by law. ‘‘(15) FRAUDULENT TRANSFERS.—

‘‘(A) IN GENERAL.—The Agency, as conservator or receiver, may avoid a transfer of any interest of an entityaffiliated party, or any person determined by the conservator or receiver to be a debtor of the regulated entity, in 

property, or any obligation incurred by such party or person, that was made within 5 years of the date on which 

the Agency was appointed conservator or receiver, if such 

party or person voluntarily or involuntarily made such 

transfer or incurred such liability with the intent to 

hinder, delay, or defraud the regulated entity, the Agency, 

the conservator, or receiver. ‘‘(B) RIGHT OF RECOVERY.—To the extent a transfer is 

avoided under subparagraph (A), the conservator or receiver may recover, for the benefit of the regulated entity, 


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the property transferred, or, if a court so orders, the value 

of such property (at the time of such transfer) from—

‘‘(i) the initial transferee of such transfer or the entity-affiliated party or person for whose benefit such 

transfer was made; or 

‘‘(ii) any immediate or mediate transferee of any 

such initial transferee. 

‘‘(C) RIGHTS OF TRANSFEREE OR OBLIGEE.—The conservator or receiver may not recover under subparagraph (B) 

from—

‘‘(i) any transferee that takes for value, including 

satisfaction or securing of a present or antecedent 

debt, in good faith; or 

‘‘(ii) any immediate or mediate good faith transferee 

of such transferee. 

‘‘(D) RIGHTS UNDER THIS PARAGRAPH.—The rights under 

this paragraph of the conservator or receiver described 

under subparagraph (A) shall be superior to any rights of 

a trustee or any other party (other than any party which 

is a Federal agency) under title 11, United States Code. 

‘‘(16) ATTACHMENT OF ASSETS AND OTHER INJUNCTIVE RELIEF.—Subject to paragraph (17), any court of competent jurisdiction may, at the request of the conservator or receiver, issue 

an order in accordance with rule 65 of the Federal Rules of 

Civil Procedure, including an order placing the assets of any 

person designated by the conservator or receiver under the 

control of the court, and appointing a trustee to hold such assets. 

‘‘(17) STANDARDS OF PROOF.—Rule 65 of the Federal Rules of 

Civil Procedure shall apply with respect to any proceeding 

under paragraph (16) without regard to the requirement of 

such rule that the applicant show that the injury, loss, or damage is irreparable and immediate. 

‘‘(18) TREATMENT OF CLAIMS ARISING FROM BREACH OF CONTRACTS EXECUTED BY THE CONSERVATOR OR RECEIVER.—

‘‘(A) IN GENERAL.—Notwithstanding any other provision 

of this subsection, any final and unappealable judgment 

for monetary damages entered against the conservator or 

receiver for the breach of an agreement executed or approved in writing by the conservator or receiver after the 

date of its appointment, shall be paid as an administrative 

expense of the conservator or receiver. 

‘‘(B) NO LIMITATION OF POWER.—Nothing in this paragraph shall be construed to limit the power of the conservator or receiver to exercise any rights under contract or 

law, including to terminate, breach, cancel, or otherwise 

discontinue such agreement. 

‘‘(19) GENERAL EXCEPTIONS.—

‘‘(A) LIMITATIONS.—The rights of the conservator or receiver appointed under this section shall be subject to the 

limitations on the powers of a receiver under sections 402 

through 407 of the Federal Deposit Insurance Corporation 

Improvement Act of 1991 (12 U.S.C. 4402 through 4407). 

‘‘(B) MORTGAGES HELD IN TRUST.—


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‘‘(i) IN GENERAL.—Any mortgage, pool of mortgages, 

or interest in a pool of mortgages held in trust, custodial, or agency capacity by a regulated entity for the 

benefit of any person other than the regulated entity 

shall not be available to satisfy the claims of creditors 

generally, except that nothing in this clause shall be 

construed to expand or otherwise affect the authority 

of any regulated entity. 

‘‘(ii) HOLDING OF MORTGAGES.—Any mortgage, pool 

of mortgages, or interest in a pool of mortgages described in clause (i) shall be held by the conservator 

or receiver appointed under this section for the beneficial owners of such mortgage, pool of mortgages, or 

interest in accordance with the terms of the agreement 

creating such trust, custodial, or other agency arrangement. 

‘‘(iii) LIABILITY OF CONSERVATOR OR RECEIVER.—The 

liability of the conservator or receiver appointed under 

this section for damages shall, in the case of any contingent or unliquidated claim relating to the mortgages held in trust, be estimated in accordance with 

the regulations of the Director. 

‘‘(c) PRIORITY OF EXPENSES AND UNSECURED CLAIMS.—

‘‘(1) IN GENERAL.—Unsecured claims against a regulated entity, or the receiver therefor, that are proven to the satisfaction 

of the receiver shall have priority in the following order: 

‘‘(A) Administrative expenses of the receiver. 

‘‘(B) Any other general or senior liability of the regulated 

entity (which is not a liability described under subparagraph (C) or (D). 

‘‘(C) Any obligation subordinated to general creditors 

(which is not an obligation described under subparagraph 

(D)). 

‘‘(D) Any obligation to shareholders or members arising 

as a result of their status as shareholder or members. 

‘‘(2) CREDITORS SIMILARLY SITUATED.—All creditors that are 

similarly situated under paragraph (1) shall be treated in a 

similar manner, except that the receiver may take any action 

(including making payments) that does not comply with this 

subsection, if—

‘‘(A) the Director determines that such action is necessary to maximize the value of the assets of the regulated 

entity, to maximize the present value return from the sale 

or other disposition of the assets of the regulated entity, or 

to minimize the amount of any loss realized upon the sale 

or other disposition of the assets of the regulated entity; 

and 

‘‘(B) all creditors that are similarly situated under paragraph (1) receive not less than the amount provided in 

subsection (e)(2). 

‘‘(3) DEFINITION.—As used in this subsection, the term ‘administrative expenses of the receiver’ includes—

‘‘(A) the actual, necessary costs and expenses incurred by 

the receiver in preserving the assets of a failed regulated 


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entity or liquidating or otherwise resolving the affairs of a 

failed regulated entity; and 

‘‘(B) any obligations that the receiver determines are 

necessary and appropriate to facilitate the smooth and orderly liquidation or other resolution of the regulated entity. 

‘‘(d) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE

APPOINTMENT OF CONSERVATOR OR RECEIVER.—

‘‘(1) AUTHORITY TO REPUDIATE CONTRACTS.—In addition to 

any other rights a conservator or receiver may have, the conservator or receiver for any regulated entity may disaffirm or 

repudiate any contract or lease—

‘‘(A) to which such regulated entity is a party; 

‘‘(B) the performance of which the conservator or receiver, in its sole discretion, determines to be burdensome; 

and 

‘‘(C) the disaffirmance or repudiation of which the conservator or receiver determines, in its sole discretion, will 

promote the orderly administration of the affairs of the 

regulated entity. 

‘‘(2) TIMING OF REPUDIATION.—The conservator or receiver 

shall determine whether or not to exercise the rights of repudiation under this subsection within a reasonable period following such appointment. 

‘‘(3) CLAIMS FOR DAMAGES FOR REPUDIATION.—

‘‘(A) IN GENERAL.—Except as otherwise provided under 

subparagraph (C) and paragraphs (4), (5), and (6), the liability of the conservator or receiver for the disaffirmance 

or repudiation of any contract pursuant to paragraph (1) 

shall be—

‘‘(i) limited to actual direct compensatory damages; 

and 

‘‘(ii) determined as of—

‘‘(I) the date of the appointment of the conservator or receiver; or 

‘‘(II) in the case of any contract or agreement referred to in paragraph (8), the date of the 

disaffirmance or repudiation of such contract or 

agreement. 

‘‘(B) NO LIABILITY FOR OTHER DAMAGES.—For purposes of 

subparagraph (A), the term ‘actual direct compensatory 

damages’ shall not include—

‘‘(i) punitive or exemplary damages; 

‘‘(ii) damages for lost profits or opportunity; or 

‘‘(iii) damages for pain and suffering. 

‘‘(C) MEASURE OF DAMAGES FOR REPUDIATION OF FINANCIAL CONTRACTS.—In the case of any qualified financial 

contract or agreement to which paragraph (8) applies, compensatory damages shall be—

‘‘(i) deemed to include normal and reasonable costs 

of cover or other reasonable measures of damages utilized in the industries for such contract and agreement 

claims; and 


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‘‘(ii) paid in accordance with this subsection and subsection (e), except as otherwise specifically provided in 

this section. 

‘‘(4) LEASES UNDER WHICH THE REGULATED ENTITY IS THE

LESSEE.—

‘‘(A) IN GENERAL.—If the conservator or receiver disaffirms or repudiates a lease under which the regulated 

entity was the lessee, the conservator or receiver shall not 

be liable for any damages (other than damages determined 

under subparagraph (B)) for the disaffirmance or repudiation of such lease. 

‘‘(B) PAYMENTS OF RENT.—Notwithstanding subparagraph (A), the lessor under a lease to which that subparagraph applies shall—

‘‘(i) be entitled to the contractual rent accruing before the later of the date on which—

‘‘(I) the notice of disaffirmance or repudiation is 

mailed; or 

‘‘(II) the disaffirmance or repudiation becomes 

effective, unless the lessor is in default or breach 

of the terms of the lease; 

‘‘(ii) have no claim for damages under any acceleration clause or other penalty provision in the lease; and 

‘‘(iii) have a claim for any unpaid rent, subject to all 

appropriate offsets and defenses, due as of the date of 

the appointment, which shall be paid in accordance 

with this subsection and subsection (e). 

‘‘(5) LEASES UNDER WHICH THE REGULATED ENTITY IS THE

LESSOR.—

‘‘(A) IN GENERAL.—If the conservator or receiver repudiates an unexpired written lease of real property of the regulated entity under which the regulated entity is the lessor 

and the lessee is not, as of the date of such repudiation, 

in default, the lessee under such lease may either—

‘‘(i) treat the lease as terminated by such repudiation; or 

‘‘(ii) remain in possession of the leasehold interest 

for the balance of the term of the lease, unless the lessee defaults under the terms of the lease after the 

date of such repudiation. 

‘‘(B) PROVISIONS APPLICABLE TO LESSEE REMAINING IN

POSSESSION.—If any lessee under a lease described under 

subparagraph (A) remains in possession of a leasehold interest under clause (ii) of subparagraph (A)—

‘‘(i) the lessee—

‘‘(I) shall continue to pay the contractual rent 

pursuant to the terms of the lease after the date 

of the repudiation of such lease; and 

‘‘(II) may offset against any rent payment which 

accrues after the date of the repudiation of the 

lease, and any damages which accrue after such 

date due to the nonperformance of any obligation 

of the regulated entity under the lease after such 

date; and 


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‘‘(ii) the conservator or receiver shall not be liable to 

the lessee for any damages arising after such date as 

a result of the repudiation, other than the amount of 

any offset allowed under clause (i)(II). ‘‘(6) CONTRACTS FOR THE SALE OF REAL PROPERTY.— ‘‘(A) IN GENERAL.—If the conservator or receiver repudiates any contract for the sale of real property and the purchaser of such real property under such contract is in possession, and is not, as of the date of such repudiation, in 

default, such purchaser may either— ‘‘(i) treat the contract as terminated by such repudiation; or ‘‘(ii) remain in possession of such real property. ‘‘(B) PROVISIONS APPLICABLE TO PURCHASER REMAINING

IN POSSESSION.—If any purchaser of real property under 

any contract described under subparagraph (A) remains in 

possession of such property under clause (ii) of subparagraph (A)—

‘‘(i) the purchaser—

‘‘(I) shall continue to make all payments due 

under the contract after the date of the repudiation of the contract; and 

‘‘(II) may offset against any such payments any 

damages which accrue after such date due to the 

nonperformance (after such date) of any obligation 

of the regulated entity under the contract; and 

‘‘(ii) the conservator or receiver shall—

‘‘(I) not be liable to the purchaser for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II); 

‘‘(II) deliver title to the purchaser in accordance 

with the provisions of the contract; and ‘‘(III) have no obligation under the contract 

other than the performance required under subclause (II). ‘‘(C) ASSIGNMENT AND SALE ALLOWED.— ‘‘(i) IN GENERAL.—No provision of this paragraph 

shall be construed as limiting the right of the conservator or receiver to assign the contract described 

under subparagraph (A), and sell the property subject 

to the contract and the provisions of this paragraph. ‘‘(ii) NO LIABILITY AFTER ASSIGNMENT AND SALE.—If 

an assignment and sale described under clause (i) is 

consummated, the conservator or receiver shall have 

no further liability under the contract described under 

subparagraph (A), or with respect to the real property 

which was the subject of such contract. 

‘‘(7) SERVICE CONTRACTS.— ‘‘(A) SERVICES PERFORMED BEFORE APPOINTMENT.—In the 

case of any contract for services between any person and 

any regulated entity for which the Agency has been appointed conservator or receiver, any claim of such person 

for services performed before the appointment of the conservator or receiver shall be—


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‘‘(i) a claim to be paid in accordance with subsections 

(b) and (e); and ‘‘(ii) deemed to have arisen as of the date on which 

the conservator or receiver was appointed. ‘‘(B) SERVICES PERFORMED AFTER APPOINTMENT AND

PRIOR TO REPUDIATION.—If, in the case of any contract for 

services described under subparagraph (A), the conservator 

or receiver accepts performance by the other person before 

the conservator or receiver makes any determination to exercise the right of repudiation of such contract under this 

section—

‘‘(i) the other party shall be paid under the terms of 

the contract for the services performed; and ‘‘(ii) the amount of such payment shall be treated as 

an administrative expense of the conservatorship or 

receivership. ‘‘(C) ACCEPTANCE OF PERFORMANCE NO BAR TO SUBSE- QUENT REPUDIATION.—The acceptance by the conservator 

or receiver of services referred to under subparagraph (B) 

in connection with a contract described in such subparagraph shall not affect the right of the conservator or receiver to repudiate such contract under this section at any 

time after such performance. ‘‘(8) CERTAIN QUALIFIED FINANCIAL CONTRACTS.— ‘‘(A) RIGHTS OF PARTIES TO CONTRACTS.—Subject to paragraphs (9) and (10), and notwithstanding any other provision of this title (other than subsection (b)(9)(B) of this section), any other Federal law, or the law of any State, no 

person shall be stayed or prohibited from exercising— ‘‘(i) any right of that person to cause the termination, liquidation, or acceleration of any qualified financial contract with a regulated entity that arises 

upon the appointment of the Agency as receiver for 

such regulated entity at any time after such appointment; 

‘‘(ii) any right under any security agreement or arrangement or other credit enhancement relating to one 

or more qualified financial contracts; or 

‘‘(iii) any right to offset or net out any termination 

value, payment amount, or other transfer obligation 

arising under or in connection with 1 or more contracts and agreements described in clause (i), including any master agreement for such contracts or agreements. 

‘‘(B) APPLICABILITY OF OTHER PROVISIONS.—Subsection 

(b)(10) shall apply in the case of any judicial action or proceeding brought against any receiver referred to under 

subparagraph (A), or the regulated entity for which such 

receiver was appointed, by any party to a contract or 

agreement described under subparagraph (A)(i) with such 

regulated entity. ‘‘(C) CERTAIN TRANSFERS NOT AVOIDABLE.— ‘‘(i) IN GENERAL.—Notwithstanding paragraph (11), 

or any other provision of Federal or State law relating 

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fers, the Agency, whether acting as such or as conservator or receiver of a regulated entity, may not avoid 

any transfer of money or other property in connection 

with any qualified financial contract with a regulated 

entity. 

‘‘(ii) EXCEPTION FOR CERTAIN TRANSFERS.—Clause (i) 

shall not apply to any transfer of money or other property in connection with any qualified financial contract 

with a regulated entity if the Agency determines that 

the transferee had actual intent to hinder, delay, or 

defraud such regulated entity, the creditors of such 

regulated entity, or any conservator or receiver appointed for such regulated entity. 

‘‘(D) CERTAIN CONTRACTS AND AGREEMENTS DEFINED.—In 

this subsection the following definitions shall apply: 

‘‘(i) QUALIFIED FINANCIAL CONTRACT.—The term 

‘qualified financial contract’ means any securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, and any similar 

agreement that the Agency determines by regulation, 

resolution, or order to be a qualified financial contract 

for purposes of this paragraph. 

‘‘(ii) SECURITIES CONTRACT.—The term ‘securities 

contract’—

‘‘(I) means a contract for the purchase, sale, or 

loan of a security, a certificate of deposit, a mortgage loan, or any interest in a mortgage loan, a 

group or index of securities, certificates of deposit, 

or mortgage loans or interests therein (including 

any interest therein or based on the value thereof) 

or any option on any of the foregoing, including 

any option to purchase or sell any such security, 

certificate of deposit, mortgage loan, interest, 

group or index, or option, and including any repurchase or reverse repurchase transaction on any 

such security, certificate of deposit, mortgage loan, 

interest, group or index, or option; 

‘‘(II) does not include any purchase, sale, or repurchase obligation under a participation in a 

commercial mortgage loan, unless the Agency determines by regulation, resolution, or order to include any such agreement within the meaning of 

such term; 

‘‘(III) means any option entered into on a national securities exchange relating to foreign currencies; 

‘‘(IV) means the guarantee by or to any securities clearing agency of any settlement of cash, securities, certificates of deposit, mortgage loans or 

interests therein, group or index of securities, certificates of deposit, or mortgage loans or interests 

therein (including any interest therein or based on 

the value thereof) or option on any of the foregoing, including any option to purchase or sell any 


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such security, certificate of deposit, mortgage loan, 

interest, group or index, or option; ‘‘(V) means any margin loan; 

‘‘(VI) means any other agreement or transaction 

that is similar to any agreement or transaction referred to in this clause; ‘‘(VII) means any combination of the agreements 

or transactions referred to in this clause; ‘‘(VIII) means any option to enter into any 

agreement or transaction referred to in this 

clause; ‘‘(IX) means a master agreement that provides 

for an agreement or transaction referred to in subclause (I), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master 

agreement, without regard to whether the master 

agreement provides for an agreement or transaction that is not a securities contract under this 

clause, except that the master agreement shall be 

considered to be a securities contract under this 

clause only with respect to each agreement or 

transaction under the master agreement that is 

referred to in subclause (I), (III), (IV), (V), (VI), 

(VII), or (VIII); and ‘‘(X) means any security agreement or arrangement or other credit enhancement related to any 

agreement or transaction referred to in this 

clause, including any guarantee or reimbursement 

obligation in connection with any agreement or 

transaction referred to in this clause. ‘‘(iii) COMMODITY CONTRACT.—The term ‘commodity 

contract’ means— ‘‘(I) with respect to a futures commission merchant, a contract for the purchase or sale of a 

commodity for future delivery on, or subject to the 

rules of, a contract market or board of trade; 

‘‘(II) with respect to a foreign futures commission merchant, a foreign future; 

‘‘(III) with respect to a leverage transaction merchant, a leverage transaction; 

‘‘(IV) with respect to a clearing organization, a 

contract for the purchase or sale of a commodity 

for future delivery on, or subject to the rules of, a 

contract market or board of trade that is cleared 

by such clearing organization, or commodity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by 

such clearing organization; 

‘‘(V) with respect to a commodity options dealer, 

a commodity option; 

‘‘(VI) any other agreement or transaction that is 

similar to any agreement or transaction referred 

to in this clause; 

‘‘(VII) any combination of the agreements or 

transactions referred to in this clause; 


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‘‘(VIII) any option to enter into any agreement 

or transaction referred to in this clause; ‘‘(IX) a master agreement that provides for an 

agreement or transaction referred to in subclause 

(I), (II), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master 

agreement, without regard to whether the master 

agreement provides for an agreement or transaction that is not a commodity contract under this 

clause, except that the master agreement shall be 

considered to be a commodity contract under this 

clause only with respect to each agreement or 

transaction under the master agreement that is 

referred to in subclause (I), (II), (III), (IV), (V), 

(VI), (VII), or (VIII); or ‘‘(X) any security agreement or arrangement or 

other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause. ‘‘(iv) FORWARD CONTRACT.—The term ‘forward contract’ means— ‘‘(I) a contract (other than a commodity contract) 

for the purchase, sale, or transfer of a commodity 

or any similar good, article, service, right, or interest which is presently or in the future becomes the 

subject of dealing in the forward contract trade, or 

product or byproduct thereof, with a maturity date 

more than 2 days after the date on which the contract is entered into, including a repurchase transaction, reverse repurchase transaction, consignment, lease, swap, hedge transaction, deposit, 

loan, option, allocated transaction, unallocated 

transaction, or any other similar agreement; 

‘‘(II) any combination of agreements or transactions referred to in subclauses (I) and (III); 

‘‘(III) any option to enter into any agreement or 

transaction referred to in subclause (I) or (II); 

‘‘(IV) a master agreement that provides for an 

agreement or transaction referred to in subclauses 

(I), (II), or (III), together with all supplements to 

any such master agreement, without regard to 

whether the master agreement provides for an 

agreement or transaction that is not a forward 

contract under this clause, except that the master 

agreement shall be considered to be a forward 

contract under this clause only with respect to 

each agreement or transaction under the master 

agreement that is referred to in subclause (I), (II), 

or (III); or 

‘‘(V) any security agreement or arrangement or 

other credit enhancement related to any agreement or transaction referred to in subclause (I), 

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bursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. ‘‘(v) REPURCHASE AGREEMENT.—The term ‘repurchase agreement’ (including a reverse repurchase 

agreement)— ‘‘(I) means an agreement, including related 

terms, which provides for the transfer of one or 

more certificates of deposit, mortgage-related securities (as such term is defined in section 3 of the 

Securities Exchange Act of 1934), mortgage loans, 

interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified 

foreign government securities (defined for purposes of this clause as a security that is a direct 

obligation of, or that is fully guaranteed by, the 

central government of a member of the Organization for Economic Cooperation and Development, 

as determined by regulation or order adopted by 

the appropriate Federal banking authority), or securities that are direct obligations of, or that are 

fully guaranteed by, the United States or any 

agency of the United States against the transfer of 

funds by the transferee of such certificates of deposit, eligible bankers’ acceptances, securities, 

mortgage loans, or interests with a simultaneous 

agreement by such transferee to transfer to the 

transferor thereof certificates of deposit, eligible 

bankers’ acceptances, securities, mortgage loans, 

or interests as described above, at a date certain 

not later than 1 year after such transfers or on demand, against the transfer of funds, or any other 

similar agreement; ‘‘(II) does not include any repurchase obligation 

under a participation in a commercial mortgage 

loan, unless the Agency determines by regulation, 

resolution, or order to include any such participation within the meaning of such term; 

‘‘(III) means any combination of agreements or 

transactions referred to in subclauses (I) and (IV); 

‘‘(IV) means any option to enter into any agreement or transaction referred to in subclause (I) or 

(III); 

‘‘(V) means a master agreement that provides 

for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement provides 

for an agreement or transaction that is not a repurchase agreement under this clause, except that 

the master agreement shall be considered to be a 

repurchase agreement under this subclause only 

with respect to each agreement or transaction 

under the master agreement that is referred to in 

subclause (I), (III), or (IV); and 


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‘‘(VI) means any security agreement or arrangement or other credit enhancement related to any 

agreement or transaction referred to in subclause 

(I), (III), (IV), or (V), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. ‘‘(vi) SWAP AGREEMENT.—The term ‘swap agreement’ means—

‘‘(I) any agreement, including the terms and 

conditions incorporated by reference in any such 

agreement, which is an interest rate swap, option, 

future, or forward agreement, including a rate 

floor, rate cap, rate collar, cross-currency rate 

swap, and basis swap; a spot, same day-tomorrow, 

tomorrow-next, forward, or other foreign exchange 

or precious metals agreement; a currency swap, 

option, future, or forward agreement; an equity 

index or equity swap, option, future, or forward 

agreement; a debt index or debt swap, option, future, or forward agreement; a total return, credit 

spread or credit swap, option, future, or forward 

agreement; a commodity index or commodity 

swap, option, future, or forward agreement; or a 

weather swap, weather derivative, or weather option; ‘‘(II) any agreement or transaction that is similar to any other agreement or transaction referred 

to in this clause and that is of a type that has 

been, is presently, or in the future becomes, the 

subject of recurrent dealings in the swap markets 

(including terms and conditions incorporated by 

reference in such agreement) and that is a forward, swap, future, or option on one or more 

rates, currencies, commodities, equity securities or 

other equity instruments, debt securities or other 

debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, 

or contingency associated with a financial, commercial, or economic consequence, or economic or 

financial indices or measures of economic or financial risk or value; 

‘‘(III) any combination of agreements or transactions referred to in this clause; 

‘‘(IV) any option to enter into any agreement or 

transaction referred to in this clause; 

‘‘(V) a master agreement that provides for an 

agreement or transaction referred to in subclause 

(I), (II), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement contains 

an agreement or transaction that is not a swap 

agreement under this clause, except that the master agreement shall be considered to be a swap 

agreement under this clause only with respect to 


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each agreement or transaction under the master 

agreement that is referred to in subclause (I), (II), 

(III), or (IV); and ‘‘(VI) any security agreement or arrangement or 

other credit enhancement related to any agreements or transactions referred to in subclause (I), 

(II), (III), (IV), or (V), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. ‘‘(vii) TREATMENT OF MASTER AGREEMENT AS ONE

AGREEMENT.—Any master agreement for any contract 

or agreement described in any preceding clause of this 

subparagraph (or any master agreement for such master agreement or agreements), together with all supplements to such master agreement, shall be treated 

as a single agreement and a single qualified financial 

contract. If a master agreement contains provisions relating to agreements or transactions that are not 

themselves qualified financial contracts, the master 

agreement shall be deemed to be a qualified financial 

contract only with respect to those transactions that 

are themselves qualified financial contracts. 

‘‘(viii) TRANSFER.—The term ‘transfer’ means every 

mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with 

property or with an interest in property, including retention of title as a security interest and foreclosure of 

the equity of redemption of the regulated entity. ‘‘(E) CERTAIN PROTECTIONS IN EVENT OF APPOINTMENT OF

CONSERVATOR.—Notwithstanding any other provision of 

this section, any other Federal law, or the law of any State 

(other than paragraph (10) of this subsection and subsection (b)(9)(B)), no person shall be stayed or prohibited 

from exercising—

‘‘(i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a regulated entity in a conservatorship based upon a default under such financial contract which is enforceable under applicable 

noninsolvency law; 

‘‘(ii) any right under any security agreement or arrangement or other credit enhancement relating to 1 

or more such qualified financial contracts; or 

‘‘(iii) any right to offset or net out any termination 

values, payment amounts, or other transfer obligations 

arising under or in connection with such qualified financial contracts. 

‘‘(F) CLARIFICATION.—No provision of law shall be construed as limiting the right or power of the Agency, or authorizing any court or agency to limit or delay in any manner, the right or power of the Agency to transfer any qualified financial contract in accordance with paragraphs (9) 

and (10), or to disaffirm or repudiate any such contract in 

accordance with subsection (d)(1). 


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‘‘(G) WALKAWAY CLAUSES NOT EFFECTIVE.—

‘‘(i) IN GENERAL.—Notwithstanding the provisions of 

subparagraphs (A) and (E), and sections 403 and 404 

of the Federal Deposit Insurance Corporation Improvement Act of 1991, no walkaway clause shall be enforceable in a qualified financial contract of a regulated entity in default. 

‘‘(ii) WALKAWAY CLAUSE DEFINED.—For purposes of 

this subparagraph, the term ‘walkaway clause’ means 

a provision in a qualified financial contract that, after 

calculation of a value of a party’s position or an 

amount due to or from 1 of the parties in accordance 

with its terms upon termination, liquidation, or acceleration of the qualified financial contract, either does 

not create a payment obligation of a party or extinguishes a payment obligation of a party in whole or in 

part solely because of the status of such party as a 

nondefaulting party. 

‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CONTRACTS.—In making any transfer of assets or liabilities of a regulated entity in 

default which includes any qualified financial contract, the conservator or receiver for such regulated entity shall either—

‘‘(A) transfer to 1 person—

‘‘(i) all qualified financial contracts between any person (or any affiliate of such person) and the regulated 

entity in default; 

‘‘(ii) all claims of such person (or any affiliate of such 

person) against such regulated entity under any such 

contract (other than any claim which, under the terms 

of any such contract, is subordinated to the claims of 

general unsecured creditors of such regulated entity); 

‘‘(iii) all claims of such regulated entity against such 

person (or any affiliate of such person) under any such 

contract; and 

‘‘(iv) all property securing, or any other credit enhancement for any contract described in clause (i), or 

any claim described in clause (ii) or (iii) under any 

such contract; or 

‘‘(B) transfer none of the financial contracts, claims, or 

property referred to under subparagraph (A) (with respect 

to such person and any affiliate of such person). 

‘‘(10) NOTIFICATION OF TRANSFER.—

‘‘(A) IN GENERAL.—The conservator or receiver shall notify any person that is a party to a contract or transfer by 

5:00 p.m. (Eastern Standard Time) on the business day following the date of the appointment of the receiver in the 

case of a receivership, or the business day following such 

transfer in the case of a conservatorship, if—

‘‘(i) the conservator or receiver for a regulated entity 

in default makes any transfer of the assets and liabilities of such regulated entity; and 

‘‘(ii) such transfer includes any qualified financial 

contract. 

‘‘(B) CERTAIN RIGHTS NOT ENFORCEABLE.—


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‘‘(i) RECEIVERSHIP.—A person who is a party to a 

qualified financial contract with a regulated entity 

may not exercise any right that such person has to 

terminate, liquidate, or net such contract under paragraph (8)(A) of this subsection or under section 403 or 

404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, solely by reason of or incidental to the appointment of a receiver for the regulated entity (or the insolvency or financial condition of 

the regulated entity for which the receiver has been 

appointed)— ‘‘(I) until 5:00 p.m. (Eastern Standard Time) on 

the business day following the date of the appointment of the receiver; or ‘‘(II) after the person has received notice that 

the contract has been transferred pursuant to 

paragraph (9)(A). ‘‘(ii) CONSERVATORSHIP.—A person who is a party to 

a qualified financial contract with a regulated entity 

may not exercise any right that such person has to 

terminate, liquidate, or net such contract under paragraph (8)(E) of this subsection or under section 403 or 

404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, solely by reason of or incidental to the appointment of a conservator for the regulated entity (or the insolvency or financial condition 

of the regulated entity for which the conservator has 

been appointed). ‘‘(iii) NOTICE.—For purposes of this paragraph, the 

conservator or receiver of a regulated entity shall be 

deemed to have notified a person who is a party to a 

qualified financial contract with such regulated entity, 

if the conservator or receiver has taken steps reasonably calculated to provide notice to such person by the 

time specified in subparagraph (A). ‘‘(C) BUSINESS DAY DEFINED.—For purposes of this paragraph, the term ‘business day’ means any day other than 

any Saturday, Sunday, or any day on which either the 

New York Stock Exchange or the Federal Reserve Bank of 

New York is closed. ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS.—In exercising the rights of disaffirmance or 

repudiation of a conservator or receiver with respect to any 

qualified financial contract to which a regulated entity is a 

party, the conservator or receiver for such institution shall either—

‘‘(A) disaffirm or repudiate all qualified financial contracts between—

‘‘(i) any person or any affiliate of such person; and 

‘‘(ii) the regulated entity in default; or ‘‘(B) disaffirm or repudiate none of the qualified financial 

contracts referred to in subparagraph (A) (with respect to 

such person or any affiliate of such person). ‘‘(12) CERTAIN SECURITY INTERESTS NOT AVOIDABLE.—No provision of this subsection shall be construed as permitting the 


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avoidance of any legally enforceable or perfected security interest in any of the assets of any regulated entity, except where 

such an interest is taken in contemplation of the insolvency of 

the regulated entity, or with the intent to hinder, delay, or defraud the regulated entity or the creditors of such regulated 

entity. 

‘‘(13) AUTHORITY TO ENFORCE CONTRACTS.—

‘‘(A) IN GENERAL.—Notwithstanding any provision of a 

contract providing for termination, default, acceleration, or 

exercise of rights upon, or solely by reason of, insolvency 

or the appointment of, or the exercise of rights or powers 

by, a conservator or receiver, the conservator or receiver 

may enforce any contract, other than a contract for liability insurance for a director or officer, or a contract or a 

regulated entity bond, entered into by the regulated entity. 

‘‘(B) CERTAIN RIGHTS NOT AFFECTED.—No provision of 

this paragraph may be construed as impairing or affecting 

any right of the conservator or receiver to enforce or recover under a liability insurance contract for an officer or 

director, or regulated entity bond under other applicable 

law. 

‘‘(C) CONSENT REQUIREMENT.—

‘‘(i) IN GENERAL.—Except as otherwise provided 

under this section, no person may exercise any right 

or power to terminate, accelerate, or declare a default 

under any contract to which a regulated entity is a 

party, or to obtain possession of or exercise control 

over any property of the regulated entity, or affect any 

contractual rights of the regulated entity, without the 

consent of the conservator or receiver, as appropriate, 

for a period of—

‘‘(I) 45 days after the date of appointment of a 

conservator; or 

‘‘(II) 90 days after the date of appointment of a 

receiver. 

‘‘(ii) EXCEPTIONS.—This subparagraph shall not—

‘‘(I) apply to a contract for liability insurance for 

an officer or director; 

‘‘(II) apply to the rights of parties to certain 

qualified financial contracts under subsection 

(d)(8); and 

‘‘(III) be construed as permitting the conservator 

or receiver to fail to comply with otherwise enforceable provisions of such contracts. 

‘‘(14) SAVINGS CLAUSE.—The meanings of terms used in this 

subsection are applicable for purposes of this subsection only, 

and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank 

Products Act of 2000, the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 

1934), and the Commodity Exchange Act. 


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‘‘(15) EXCEPTION FOR FEDERAL RESERVE AND FEDERAL HOME

LOAN BANKS.—No provision of this subsection shall apply with 

respect to— ‘‘(A) any extension of credit from any Federal Home 

Loan Bank or Federal Reserve Bank to any regulated entity; or ‘‘(B) any security interest in the assets of the regulated 

entity securing any such extension of credit. ‘‘(e) VALUATION OF CLAIMS IN DEFAULT.— ‘‘(1) IN GENERAL.—Notwithstanding any other provision of 

Federal law or the law of any State, and regardless of the 

method which the Agency determines to utilize with respect to 

a regulated entity in default or in danger of default, including 

transactions authorized under subsection (i), this subsection 

shall govern the rights of the creditors of such regulated entity. ‘‘(2) MAXIMUM LIABILITY.—The maximum liability of the 

Agency, acting as receiver or in any other capacity, to any person having a claim against the receiver or the regulated entity 

for which such receiver is appointed shall be not more than the 

amount that such claimant would have received if the Agency 

had liquidated the assets and liabilities of the regulated entity 

without exercising the authority of the Agency under subsection (i). 

‘‘(f) LIMITATION ON COURT ACTION.—Except as provided in this 

section or at the request of the Director, no court may take any action to restrain or affect the exercise of powers or functions of the 

Agency as a conservator or a receiver. ‘‘(g) LIABILITY OF DIRECTORS AND OFFICERS.— ‘‘(1) IN GENERAL.—A director or officer of a regulated entity 

may be held personally liable for monetary damages in any 

civil action described in paragraph (2) brought by, on behalf of, 

or at the request or direction of the Agency, and prosecuted 

wholly or partially for the benefit of the Agency— ‘‘(A) acting as conservator or receiver of such regulated 

entity; or ‘‘(B) acting based upon a suit, claim, or cause of action 

purchased from, assigned by, or otherwise conveyed by 

such receiver or conservator. ‘‘(2) ACTIONS ADDRESSED.—Paragraph (1) applies in any civil 

action for gross negligence, including any similar conduct or 

conduct that demonstrates a greater disregard of a duty of care 

than gross negligence, including intentional tortious conduct, 

as such terms are defined and determined under applicable 

State law. ‘‘(3) NO LIMITATION.—Nothing in this subsection shall impair 

or affect any right of the Agency under other applicable law. 

‘‘(h) DAMAGES.—In any proceeding related to any claim against 

a director, officer, employee, agent, attorney, accountant, appraiser, 

or any other party employed by or providing services to a regulated 

entity, recoverable damages determined to result from the improvident or otherwise improper use or investment of any assets of the 

regulated entity shall include principal losses and appropriate interest. ‘‘(i) LIMITED-LIFE REGULATED ENTITIES.—

‘‘(1) ORGANIZATION.—


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‘‘(A) PURPOSE.—The Agency, as receiver appointed pursuant to subsection (a)— ‘‘(i) may, in the case of a Federal Home Loan Bank, 

organize a limited-life regulated entity with those 

powers and attributes of the Federal Home Loan Bank 

in default or in danger of default as the Director determines necessary, subject to the provisions of this subsection, and the Director shall grant a temporary charter to that limited-life regulated entity, and that limited-life regulated entity may operate subject to that 

charter; and ‘‘(ii) shall, in the case of an enterprise, organize a 

limited-life regulated entity with respect to that enterprise in accordance with this subsection. ‘‘(B) AUTHORITIES.—Upon the creation of a limited-life 

regulated entity under subparagraph (A), the limited-life 

regulated entity may—

‘‘(i) assume such liabilities of the regulated entity 

that is in default or in danger of default as the Agency 

may, in its discretion, determine to be appropriate, except that the liabilities assumed shall not exceed the 

amount of assets purchased or transferred from the 

regulated entity to the limited-life regulated entity; 

‘‘(ii) purchase such assets of the regulated entity 

that is in default, or in danger of default as the Agency may, in its discretion, determine to be appropriate; 

and 

‘‘(iii) perform any other temporary function which 

the Agency may, in its discretion, prescribe in accordance with this section. 

‘‘(2) CHARTER AND ESTABLISHMENT.— ‘‘(A) TRANSFER OF CHARTER.—

‘‘(i) FANNIE MAE.—If the Agency is appointed as receiver for the Federal National Mortgage Association, 

the limited-life regulated entity established under this 

subsection with respect to such enterprise shall, by operation of law and immediately upon its organization— ‘‘(I) succeed to the charter of the Federal National Mortgage Association, as set forth in the 

Federal National Mortgage Association Charter 

Act; and ‘‘(II) thereafter operate in accordance with, and 

subject to, such charter, this Act, and any other 

provision of law to which the Federal National 

Mortgage Association is subject, except as otherwise provided in this subsection. ‘‘(ii) FREDDIE MAC.—If the Agency is appointed as receiver for the Federal Home Loan Mortgage Corporation, the limited-life regulated entity established 

under this subsection with respect to such enterprise 

shall, by operation of law and immediately upon its organization—

‘‘(I) succeed to the charter of the Federal Home 

Loan Mortgage Corporation, as set forth in the 


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Federal Home Loan Mortgage Corporation Charter Act; and ‘‘(II) thereafter operate in accordance with, and 

subject to, such charter, this Act, and any other 

provision of law to which the Federal Home Loan 

Mortgage Corporation is subject, except as otherwise provided in this subsection. ‘‘(B) INTERESTS IN AND ASSETS AND OBLIGATIONS OF REG- ULATED ENTITY IN DEFAULT.—Notwithstanding subparagraph (A) or any other provision of law— ‘‘(i) a limited-life regulated entity shall assume, acquire, or succeed to the assets or liabilities of a regulated entity only to the extent that such assets or liabilities are transferred by the Agency to the limitedlife regulated entity in accordance with, and subject to 

the restrictions set forth in, paragraph (1)(B); ‘‘(ii) a limited-life regulated entity shall not assume, 

acquire, or succeed to any obligation that a regulated 

entity for which a receiver has been appointed may 

have to any shareholder of the regulated entity that 

arises as a result of the status of that person as a 

shareholder of the regulated entity; and ‘‘(iii) no shareholder or creditor of a regulated entity 

shall have any right or claim against the charter of 

the regulated entity once the Agency has been appointed receiver for the regulated entity and a limitedlife regulated entity succeeds to the charter pursuant 

to subparagraph (A). ‘‘(C) LIMITED-LIFE REGULATED ENTITY TREATED AS BEING

IN DEFAULT FOR CERTAIN PURPOSES.—A limited-life regulated entity shall be treated as a regulated entity in default at such times and for such purposes as the Agency 

may, in its discretion, determine. ‘‘(D) MANAGEMENT.—Upon its establishment, a limitedlife regulated entity shall be under the management of a 

board of directors consisting of not fewer than 5 nor more 

than 10 members appointed by the Agency. 

‘‘(E) BYLAWS.—The board of directors of a limited-life 

regulated entity shall adopt such bylaws as may be approved by the Agency. ‘‘(3) CAPITAL STOCK.—

‘‘(A) NO AGENCY REQUIREMENT.—The Agency is not 

required to pay capital stock into a limited-life regulated entity or to issue any capital stock on behalf of 

a limited-life regulated entity established under this 

subsection. 

‘‘(B) AUTHORITY.—If the Director determines that 

such action is advisable, the Agency may cause capital 

stock or other securities of a limited-life regulated entity established with respect to an enterprise to be 

issued and offered for sale, in such amounts and on 

such terms and conditions as the Director may determine, in the discretion of the Director. ‘‘(4) INVESTMENTS.—Funds of a limited-life regulated entity 

shall be kept on hand in cash, invested in obligations of the 


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United States or obligations guaranteed as to principal and interest by the United States, or deposited with the Agency, or 

any Federal reserve bank. ‘‘(5) EXEMPT TAX STATUS.—Notwithstanding any other provision of Federal or State law, a limited-life regulated entity, its 

franchise, property, and income shall be exempt from all taxation now or hereafter imposed by the United States, by any 

territory, dependency, or possession thereof, or by any State, 

county, municipality, or local taxing authority. ‘‘(6) WINDING UP.— ‘‘(A) IN GENERAL.—Subject to subparagraphs (B) and (C), 

not later than 2 years after the date of its organization, 

the Agency shall wind up the affairs of a limited-life regulated entity. ‘‘(B) EXTENSION.—The Director may, in the discretion of 

the Director, extend the status of a limited-life regulated 

entity for 3 additional 1-year periods. 

‘‘(C) TERMINATION OF STATUS AS LIMITED-LIFE REGULATED ENTITY.—

‘‘(i) IN GENERAL.—Upon the sale by the Agency of 80 

percent or more of the capital stock of a limited-life 

regulated entity, as defined in clause (iv), to 1 or more 

persons (other than the Agency)—

‘‘(I) the status of the limited-life regulated entity 

as such shall terminate; and 

‘‘(II) the entity shall cease to be a limited-life 

regulated entity for purposes of this subsection. 

‘‘(ii) DIVESTITURE OF REMAINING STOCK, IF ANY.— ‘‘(I) IN GENERAL.—Not later than 1 year after 

the date on which the status of a limited-life regulated entity is terminated pursuant to clause (i), 

the Agency shall sell to 1 or more persons (other 

than the Agency) any remaining capital stock of 

the former limited-life regulated entity. ‘‘(II) EXTENSION AUTHORIZED.—The Director 

may extend the period referred to in subclause (I) 

for not longer than an additional 2 years, if the 

Director determines that such action would be in 

the public interest. ‘‘(iii) SAVINGS CLAUSE.—Notwithstanding any provision of law, other than clause (ii), the Agency shall not 

be required to sell the capital stock of an enterprise or 

a limited-life regulated entity established with respect 

to an enterprise. 

‘‘(iv) APPLICABILITY.—This subparagraph applies 

only with respect to a limited-life regulated entity that 

is established with respect to an enterprise. 

‘‘(7) TRANSFER OF ASSETS AND LIABILITIES.—

‘‘(A) IN GENERAL.— ‘‘(i) TRANSFER OF ASSETS AND LIABILITIES.—The 

Agency, as receiver, may transfer any assets and liabilities of a regulated entity in default, or in danger 

of default, to the limited-life regulated entity in accordance with and subject to the restrictions of paragraph (1). 


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‘‘(ii) SUBSEQUENT TRANSFERS.—At any time after the 

establishment of a limited-life regulated entity, the 

Agency, as receiver, may transfer any assets and liabilities of the regulated entity in default, or in danger 

of default, as the Agency may, in its discretion, determine to be appropriate in accordance with and subject 

to the restrictions of paragraph (1). 

‘‘(iii) EFFECTIVE WITHOUT APPROVAL.—The transfer 

of any assets or liabilities of a regulated entity in default or in danger of default to a limited-life regulated 

entity shall be effective without any further approval 

under Federal or State law, assignment, or consent 

with respect thereto. 

‘‘(iv) EQUITABLE TREATMENT OF SIMILARLY SITUATED

CREDITORS.—The Agency shall treat all creditors of a 

regulated entity in default or in danger of default that 

are similarly situated under subsection (c)(1) in a 

similar manner in exercising the authority of the 

Agency under this subsection to transfer any assets or 

liabilities of the regulated entity to the limited-life regulated entity established with respect to such regulated entity, except that the Agency may take actions 

(including making payments) that do not comply with 

this clause, if—

‘‘(I) the Director determines that such actions 

are necessary to maximize the value of the assets 

of the regulated entity, to maximize the present 

value return from the sale or other disposition of 

the assets of the regulated entity, or to minimize 

the amount of any loss realized upon the sale or 

other disposition of the assets of the regulated entity; and 

‘‘(II) all creditors that are similarly situated 

under subsection (c)(1) receive not less than the 

amount provided in subsection (e)(2). 

‘‘(v) LIMITATION ON TRANSFER OF LIABILITIES.—Notwithstanding any other provision of law, the aggregate 

amount of liabilities of a regulated entity that are 

transferred to, or assumed by, a limited-life regulated 

entity may not exceed the aggregate amount of assets 

of the regulated entity that are transferred to, or purchased by, the limited-life regulated entity. 

‘‘(8) REGULATIONS.—The Agency may promulgate such regulations as the Agency determines to be necessary or appropriate to implement this subsection. 

‘‘(9) POWERS OF LIMITED-LIFE REGULATED ENTITIES.—

‘‘(A) IN GENERAL.—Each limited-life regulated entity created under this subsection shall have all corporate powers 

of, and be subject to the same provisions of law as, the regulated entity in default or in danger of default to which it 

relates, except that—

‘‘(i) the Agency may—

‘‘(I) remove the directors of a limited-life regulated entity; 


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‘‘(II) fix the compensation of members of the 

board of directors and senior management, as determined by the Agency in its discretion, of a limited-life regulated entity; and 

‘‘(III) indemnify the representatives for purposes 

of paragraph (1)(B), and the directors, officers, 

employees, and agents of a limited-life regulated 

entity on such terms as the Agency determines to 

be appropriate; and 

‘‘(ii) the board of directors of a limited-life regulated 

entity—

‘‘(I) shall elect a chairperson who may also serve 

in the position of chief executive officer, except 

that such person shall not serve either as chairperson or as chief executive officer without the 

prior approval of the Agency; and 

‘‘(II) may appoint a chief executive officer who is 

not also the chairperson, except that such person 

shall not serve as chief executive officer without 

the prior approval of the Agency. 

‘‘(B) STAY OF JUDICIAL ACTION.—Any judicial action to 

which a limited-life regulated entity becomes a party by 

virtue of its acquisition of any assets or assumption of any 

liabilities of a regulated entity in default shall be stayed 

from further proceedings for a period of not longer than 45 

days, at the request of the limited-life regulated entity. 

Such period may be modified upon the consent of all parties. 

‘‘(10) NO FEDERAL STATUS.—

‘‘(A) AGENCY STATUS.—A limited-life regulated entity is 

not an agency, establishment, or instrumentality of the 

United States. 

‘‘(B) EMPLOYEE STATUS.—Representatives for purposes of 

paragraph (1)(B), interim directors, directors, officers, employees, or agents of a limited-life regulated entity are not, 

solely by virtue of service in any such capacity, officers or 

employees of the United States. Any employee of the Agency or of any Federal instrumentality who serves at the request of the Agency as a representative for purposes of 

paragraph (1)(B), interim director, director, officer, employee, or agent of a limited-life regulated entity shall 

not—

‘‘(i) solely by virtue of service in any such capacity 

lose any existing status as an officer or employee of 

the United States for purposes of title 5, United States 

Code, or any other provision of law; or 

‘‘(ii) receive any salary or benefits for service in any 

such capacity with respect to a limited-life regulated 

entity in addition to such salary or benefits as are obtained through employment with the Agency or such 

Federal instrumentality. 

‘‘(11) AUTHORITY TO OBTAIN CREDIT.—

‘‘(A) IN GENERAL.—A limited-life regulated entity may 

obtain unsecured credit and issue unsecured debt. 


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‘‘(B) INABILITY TO OBTAIN CREDIT.—If a limited-life regulated entity is unable to obtain unsecured credit or issue 

unsecured debt, the Director may authorize the obtaining 

of credit or the issuance of debt by the limited-life regulated entity—

‘‘(i) with priority over any or all of the obligations of 

the limited-life regulated entity; 

‘‘(ii) secured by a lien on property of the limited-life 

regulated entity that is not otherwise subject to a lien; 

or 

‘‘(iii) secured by a junior lien on property of the limited-life regulated entity that is subject to a lien. 

‘‘(C) LIMITATIONS.—

‘‘(i) IN GENERAL.—The Director, after notice and a 

hearing, may authorize the obtaining of credit or the 

issuance of debt by a limited-life regulated entity that 

is secured by a senior or equal lien on property of the 

limited-life regulated entity that is subject to a lien 

(other than mortgages that collateralize the mortgagebacked securities issued or guaranteed by an enterprise) only if—

‘‘(I) the limited-life regulated entity is unable to 

otherwise obtain such credit or issue such debt; 

and 

‘‘(II) there is adequate protection of the interest 

of the holder of the lien on the property with respect to which such senior or equal lien is proposed to be granted. 

‘‘(D) BURDEN OF PROOF.—In any hearing under this subsection, the Director has the burden of proof on the issue 

of adequate protection. 

‘‘(12) EFFECT ON DEBTS AND LIENS.—The reversal or modification on appeal of an authorization under this subsection to 

obtain credit or issue debt, or of a grant under this section of 

a priority or a lien, does not affect the validity of any debt so 

issued, or any priority or lien so granted, to an entity that extended such credit in good faith, whether or not such entity 

knew of the pendency of the appeal, unless such authorization 

and the issuance of such debt, or the granting of such priority 

or lien, were stayed pending appeal. 

‘‘(j) OTHER AGENCY EXEMPTIONS.—

‘‘(1) APPLICABILITY.—The provisions of this subsection shall 

apply with respect to the Agency in any case in which the 

Agency is acting as a conservator or a receiver. 

‘‘(2) TAXATION.—The Agency, including its franchise, its capital, reserves, and surplus, and its income, shall be exempt 

from all taxation imposed by any State, county, municipality, 

or local taxing authority, except that any real property of the 

Agency shall be subject to State, territorial, county, municipal, 

or local taxation to the same extent according to its value as 

other real property is taxed, except that, notwithstanding the 

failure of any person to challenge an assessment under State 

law of the value of such property, and the tax thereon, shall 

be determined as of the period for which such tax is imposed. 


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‘‘(3) PROPERTY PROTECTION.—No property of the Agency shall 

be subject to levy, attachment, garnishment, foreclosure, or 

sale without the consent of the Agency, nor shall any involuntary lien attach to the property of the Agency. 

‘‘(4) PENALTIES AND FINES.—The Agency shall not be liable 

for any amounts in the nature of penalties or fines, including 

those arising from the failure of any person to pay any real 

property, personal property, probate, or recording tax or any 

recording or filing fees when due. 

‘‘(k) PROHIBITION OF CHARTER REVOCATION.—In no case may the 

receiver appointed pursuant to this section revoke, annul, or terminate the charter of an enterprise.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENTS.—The Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992 

(12 U.S.C. 4501 et seq.) is amended—

(1) in section 1368 (12 U.S.C. 4618)—

(A) by striking ‘‘an enterprise’’ each place that term appears and inserting ‘‘a regulated entity’’; and 

(B) by striking ‘‘the enterprise’’ each place that term appears and inserting ‘‘the regulated entity’’; 

(2) in section 1369C (12 U.S.C. 4622), by striking ‘‘enterprise’’ each place that term appears and inserting ‘‘regulated 

entity’’; 

(3) in section 1369D (12 U.S.C. 4623)—

(A) by striking ‘‘an enterprise’’ each place that term appears and inserting ‘‘a regulated entity’’; and 

(B) in subsection (a)(1), by striking ‘‘An enterprise’’ and 

inserting ‘‘A regulated entity’’; and 

(4) by striking sections 1369, 1369A, and 1369B (12 U.S.C. 

4619, 4620, and 4621). 

Subtitle D—Enforcement Actions 

SEC. 1151. CEASE AND DESIST PROCEEDINGS. 

Section 1371 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4631) is amended—

(1) by striking subsections (a) and (b) and inserting the following: 

‘‘(a) ISSUANCE FOR UNSAFE OR UNSOUND PRACTICES AND VIOLATIONS.—

‘‘(1) AUTHORITY OF DIRECTOR.—If, in the opinion of the Director, a regulated entity or any entity-affiliated party is engaging 

or has engaged, or the Director has reasonable cause to believe 

that the regulated entity or any entity-affiliated party is about 

to engage, in an unsafe or unsound practice in conducting the 

business of the regulated entity or the Office of Finance, or is 

violating or has violated, or the Director has reasonable cause 

to believe is about to violate, a law, rule, regulation, or order, 

or any condition imposed in writing by the Director in connection with the granting of any application or other request by 

the regulated entity or the Office of Finance or any written 

agreement entered into with the Director, the Director may 

issue and serve upon the regulated entity or entity-affiliated 

party a notice of charges in respect thereof. 


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‘‘(2) LIMITATION.—The Director may not, pursuant to this 

section, enforce compliance with any housing goal established 

under subpart B of part 2 of subtitle A of this title, with section 1336 or 1337 of this title, with subsection (m) or (n) of section 309 of the Federal National Mortgage Association Charter 

Act (12 U.S.C. 1723a(m), (n)), with subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act 

(12 U.S.C. 1456(e), (f)), or with paragraph (5) of section 10(j) 

of the Federal Home Loan Bank Act (12 U.S.C. 1430(j)). 

‘‘(b) ISSUANCE FOR UNSATISFACTORY RATING.—If a regulated entity receives, in its most recent report of examination, a less-thansatisfactory rating for asset quality, management, earnings, or liquidity, the Director may (if the deficiency is not corrected) deem 

the regulated entity to be engaging in an unsafe or unsound practice for purposes of subsection (a).’’; 

(2) in subsection (c)—

(A) in paragraph (1), by inserting before the period at 

the end the following: ‘‘, unless the party served with a notice of charges shall appear at the hearing personally or by 

a duly authorized representative, the party shall be 

deemed to have consented to the issuance of the cease and 

desist order’’; and 

(B) in paragraph (2)—

(i) by striking ‘‘or director’’ and inserting ‘‘director, 

or entity-affiliated party’’; and 

(ii) by inserting ‘‘or entity-affiliated party’’ before 

‘‘consents’’; 

(3) in each of subsections (c), (d), and (e)—

(A) by striking ‘‘the enterprise’’ each place that term appears and inserting ‘‘the regulated entity’’; 

(B) by striking ‘‘an enterprise’’ each place that term appears and inserting ‘‘a regulated entity’’; and 

(C) by striking ‘‘conduct’’ each place that term appears 

and inserting ‘‘practice’’; 

(4) in subsection (d)—

(A) in the matter preceding paragraph (1)—

(i) by striking ‘‘or director’’ and inserting ‘‘director, 

or entity-affiliated party’’; and 

(ii) by inserting ‘‘to require a regulated entity or entity-affiliated party’’ after ‘‘includes the authority’’; 

(B) in paragraph (1)—

(i) by striking ‘‘to require an executive officer or a director to’’; and 

(ii) by striking ‘‘loss’’ and all that follows through 

‘‘person’’ and inserting ‘‘loss, if’’; 

(iii) in subparagraph (A), by inserting ‘‘such entity 

or party or finance facility’’ before ‘‘was’’; and 

(iv) by striking subparagraph (B) and inserting the 

following: 

‘‘(B) the violation or practice involved a reckless disregard for the law or any applicable regulations or prior 

order of the Director;’’; and 

(C) in paragraph (4), by inserting ‘‘loan or’’ before 

‘‘asset’’; 


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(5) in subsection (e), by inserting ‘‘or entity-affiliated 

party’’—

(A) before ‘‘or any executive’’; and 

(B) before the period at the end; and 

(6) in subsection (f)—

(A) by striking ‘‘enterprise’’ and inserting ‘‘regulated entity, finance facility,’’; and 

(B) by striking ‘‘or director’’ and inserting ‘‘director, or 

entity-affiliated party’’. 

SEC. 1152. TEMPORARY CEASE AND DESIST PROCEEDINGS. 

Section 1372 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4632) is amended—

(1) by striking subsection (a) and inserting the following: 

‘‘(a) GROUNDS FOR ISSUANCE.—

‘‘(1) IN GENERAL.—If the Director determines that the actions 

specified in the notice of charges served upon a regulated entity or any entity-affiliated party pursuant to section 1371(a), or 

the continuation thereof, is likely to cause insolvency or significant dissipation of assets or earnings of that entity, or is likely 

to weaken the condition of that entity prior to the completion 

of the proceedings conducted pursuant to sections 1371 and 

1373, the Director may—

‘‘(A) issue a temporary order requiring that regulated entity or entity-affiliated party to cease and desist from any 

such violation or practice; and 

‘‘(B) require that regulated entity or entity-affiliated 

party to take affirmative action to prevent or remedy such 

insolvency, dissipation, condition, or prejudice pending 

completion of such proceedings. 

‘‘(2) ADDITIONAL REQUIREMENTS.—An order issued under 

paragraph (1) may include any requirement authorized under 

subsection 1371(d).’’; 

(2) in subsection (b)—

(A) by striking ‘‘or director’’ and inserting ‘‘director, or 

entity-affiliated party’’; and 

(B) by striking ‘‘enterprise’’ each place that term appears 

and inserting ‘‘regulated entity’’; 

(3) in subsection (c), by striking ‘‘enterprise’’ each place that 

term appears and inserting ‘‘regulated entity’’; 

(4) in subsection (d)—

(A) by striking ‘‘or director’’ each place that term appears and inserting ‘‘director, or entity-affiliated party’’; 

and 

(B) by striking ‘‘An enterprise’’ and inserting ‘‘A regulated entity’’; and 

(5) in subsection (e)—

(A) by striking ‘‘request the Attorney General of the 

United States to’’; and 

(B) by striking ‘‘or may, under the direction and control 

of the Attorney General, bring such action’’. 

SEC. 1153. REMOVAL AND PROHIBITION AUTHORITY. 

(a) IN GENERAL.—Part 1 of subtitle C of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 

4631 et seq.) is amended—


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(1) by redesignating sections 1377 through 1379B (12 U.S.C. 

4637–4641) as sections 1379 through 1379D, respectively; and 

(2) by inserting after section 1376 (12 U.S.C. 4636) the following: 

‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY. 

‘‘(a) AUTHORITY TO ISSUE ORDER.—

‘‘(1) IN GENERAL.—The Director may serve upon a party described in paragraph (2), or any officer, director, or management of the Office of Finance a written notice of the intention 

of the Director to suspend or remove such party from office, or 

prohibit any further participation by such party, in any manner, in the conduct of the affairs of the regulated entity. 

‘‘(2) APPLICABILITY.—A party described in this paragraph is 

an entity-affiliated party or any officer, director, or management of the Office of Finance, if the Director determines that—

‘‘(A) that party, officer, or director has, directly or indirectly—

‘‘(i) violated—

‘‘(I) any law or regulation; 

‘‘(II) any cease and desist order which has become final; 

‘‘(III) any condition imposed in writing by the 

Director in connection with the grant of any application or other request by such regulated entity; 

or 

‘‘(IV) any written agreement between such regulated entity and the Director; 

‘‘(ii) engaged or participated in any unsafe or unsound practice in connection with any regulated entity 

or business institution; or 

‘‘(iii) committed or engaged in any act, omission, or 

practice which constitutes a breach of such party’s fiduciary duty; 

‘‘(B) by reason of the violation, practice, or breach described in subparagraph (A)—

‘‘(i) such regulated entity or business institution has 

suffered or will probably suffer financial loss or other 

damage; or 

‘‘(ii) such party has received financial gain or other 

benefit; and 

‘‘(C) the violation, practice, or breach described in subparagraph (A)—

‘‘(i) involves personal dishonesty on the part of such 

party; or 

‘‘(ii) demonstrates willful or continuing disregard by 

such party for the safety or soundness of such regulated entity or business institution. 

‘‘(b) SUSPENSION ORDER.—

‘‘(1) SUSPENSION OR PROHIBITION AUTHORITY.—If the Director 

serves written notice under subsection (a) upon a party subject 

to that subsection (a), the Director may, by order, suspend or 

remove such party from office, or prohibit such party from further participation in any manner in the conduct of the affairs 

of the regulated entity, if the Director—


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‘‘(A) determines that such action is necessary for the protection of the regulated entity; and 

‘‘(B) serves such party with written notice of the order. 

‘‘(2) EFFECTIVE PERIOD.—Any order issued under this subsection—

‘‘(A) shall become effective upon service; and 

‘‘(B) unless a court issues a stay of such order under subsection (g), shall remain in effect and enforceable until—

‘‘(i) the date on which the Director dismisses the 

charges contained in the notice served under subsection (a) with respect to such party; or 

‘‘(ii) the effective date of an order issued under subsection (b). 

‘‘(3) COPY OF ORDER.—If the Director issues an order under 

subsection (b) to any party, the Director shall serve a copy of 

such order on any regulated entity with which such party is affiliated at the time such order is issued. 

‘‘(c) NOTICE, HEARING, AND ORDER.—

‘‘(1) NOTICE.—A notice under subsection (a) of the intention 

of the Director to issue an order under this section shall contain a statement of the facts constituting grounds for such action, and shall fix a time and place at which a hearing will be 

held on such action. 

‘‘(2) TIMING OF HEARING.—A hearing shall be fixed for a date 

not earlier than 30 days, nor later than 60 days, after the date 

of service of notice under subsection (a), unless an earlier or 

a later date is set by the Director at the request of—

‘‘(A) the party receiving such notice, and good cause is 

shown; or 

‘‘(B) the Attorney General of the United States. 

‘‘(3) CONSENT.—Unless the party that is the subject of a notice delivered under subsection (a) appears at the hearing in 

person or by a duly authorized representative, such party shall 

be deemed to have consented to the issuance of an order under 

this section. 

‘‘(4) ISSUANCE OF ORDER OF SUSPENSION.—The Director may 

issue an order under this section, as the Director may deem 

appropriate, if—

‘‘(A) a party is deemed to have consented to the issuance 

of an order under paragraph (3); or 

‘‘(B) upon the record made at the hearing, the Director 

finds that any of the grounds specified in the notice have 

been established. 

‘‘(5) EFFECTIVENESS OF ORDER.—Any order issued under 

paragraph (4) shall become effective at the expiration of 30 

days after the date of service upon the relevant regulated entity and party (except in the case of an order issued upon consent under paragraph (3), which shall become effective at the 

time specified therein). Such order shall remain effective and 

enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the Director or a reviewing 

court. 

‘‘(d) PROHIBITION OF CERTAIN SPECIFIC ACTIVITIES.—Any person 

subject to an order issued under this section shall not—


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‘‘(1) participate in any manner in the conduct of the affairs 

of any regulated entity or the Office of Finance; ‘‘(2) solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect 

to any voting rights in any regulated entity; ‘‘(3) violate any voting agreement previously approved by the 

Director; or ‘‘(4) vote for a director, or serve or act as an entity-affiliated 

party of a regulated entity or as an officer or director of the 

Office of Finance. ‘‘(e) INDUSTRY-WIDE PROHIBITION.— ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), any 

person who, pursuant to an order issued under this section, 

has been removed or suspended from office in a regulated entity or the Office of Finance, or prohibited from participating in 

the conduct of the affairs of a regulated entity or the Office of 

Finance, may not, while such order is in effect, continue or 

commence to hold any office in, or participate in any manner 

in the conduct of the affairs of, any regulated entity or the Office of Finance. 

‘‘(2) EXCEPTION IF DIRECTOR PROVIDES WRITTEN CONSENT.—If, 

on or after the date on which an order is issued under this section which removes or suspends from office any party, or prohibits such party from participating in the conduct of the affairs of a regulated entity or the Office of Finance, such party 

receives the written consent of the Director, the order shall, to 

the extent of such consent, cease to apply to such party with 

respect to the regulated entity or such Office of Finance described in the written consent. Any such consent shall be publicly disclosed. ‘‘(3) VIOLATION OF PARAGRAPH (1) TREATED AS VIOLATION OF

ORDER.—Any violation of paragraph (1) by any person who is 

subject to an order issued under subsection (h) shall be treated 

as a violation of the order. ‘‘(f) APPLICABILITY.—This section shall only apply to a person who 

is an individual, unless the Director specifically finds that it should 

apply to a corporation, firm, or other business entity. ‘‘(g) STAY OF SUSPENSION AND PROHIBITION OF ENTITY-AFFILI- ATED PARTY.—Not later than 10 days after the date on which any 

entity-affiliated party has been suspended from office or prohibited 

from participation in the conduct of the affairs of a regulated entity 

under this section, such party may apply to the United States District Court for the District of Columbia, or the United States district court for the judicial district in which the headquarters of the 

regulated entity is located, for a stay of such suspension or prohibition pending the completion of the administrative proceedings pursuant to subsection (c). The court shall have jurisdiction to stay 

such suspension or prohibition. ‘‘(h) SUSPENSION OR REMOVAL OF ENTITY-AFFILIATED PARTY

CHARGED WITH FELONY.— ‘‘(1) SUSPENSION OR PROHIBITION.— ‘‘(A) IN GENERAL.—Whenever any entity-affiliated party 

is charged in any information, indictment, or complaint, 

with the commission of or participation in a crime involving dishonesty or breach of trust which is punishable by 


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imprisonment for a term exceeding 1 year under Federal 

or State law, the Director may, if continued service or participation by such party may pose a threat to the regulated 

entity or impair public confidence in the regulated entity, 

by written notice served upon such party, suspend such 

party from office or prohibit such party from further participation in any manner in the conduct of the affairs of 

any regulated entity. 

‘‘(B) PROVISIONS APPLICABLE TO NOTICE.—

‘‘(i) COPY.—A copy of any notice under subparagraph 

(A) shall be served upon the relevant regulated entity. 

‘‘(ii) EFFECTIVE PERIOD.—A suspension or prohibition 

under subparagraph (A) shall remain in effect until 

the information, indictment, or complaint referred to 

in subparagraph (A) is finally disposed of, or until terminated by the Director. 

‘‘(2) REMOVAL OR PROHIBITION.—

‘‘(A) IN GENERAL.—If a judgment of conviction or an 

agreement to enter a pretrial diversion or other similar 

program is entered against an entity-affiliated party in 

connection with a crime described in paragraph (1)(A), at 

such time as such judgment is not subject to further appellate review, the Director may, if continued service or participation by such party may pose a threat to the regulated 

entity or impair public confidence in the regulated entity, 

issue and serve upon such party an order removing such 

party from office or prohibiting such party from further 

participation in any manner in the conduct of the affairs 

of the regulated entity without the prior written consent of 

the Director. 

‘‘(B) PROVISIONS APPLICABLE TO ORDER.—

‘‘(i) COPY.—A copy of any order under subparagraph 

(A) shall be served upon the relevant regulated entity, 

at which time the entity-affiliated party who is subject 

to the order (if a director or an officer) shall cease to 

be a director or officer of such regulated entity. 

‘‘(ii) EFFECT OF ACQUITTAL.—A finding of not guilty 

or other disposition of the charge shall not preclude 

the Director from instituting proceedings after such 

finding or disposition to remove a party from office or 

to prohibit further participation in the affairs of a regulated entity pursuant to subsection (a) or (b). 

‘‘(iii) EFFECTIVE PERIOD.—Unless terminated by the 

Director, any notice of suspension or order of removal 

issued under this subsection shall remain effective and 

outstanding until the completion of any hearing or appeal authorized under paragraph (4). 

‘‘(3) AUTHORITY OF REMAINING BOARD MEMBERS.—

‘‘(A) IN GENERAL.—If at any time, because of the suspension of 1 or more directors pursuant to this section, there 

shall be on the board of directors of a regulated entity less 

than a quorum of directors not so suspended, all powers 

and functions vested in or exercisable by such board shall 

vest in and be exercisable by the director or directors on 


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the board not so suspended, until such time as there shall 

be a quorum of the board of directors. ‘‘(B) APPOINTMENT OF TEMPORARY DIRECTORS.—If all of 

the directors of a regulated entity are suspended pursuant 

to this section, the Director shall appoint persons to serve 

temporarily as directors pending the termination of such 

suspensions, or until such time as those who have been 

suspended cease to be directors of the regulated entity and 

their respective successors take office. ‘‘(4) HEARING REGARDING CONTINUED PARTICIPATION.— ‘‘(A) IN GENERAL.—Not later than 30 days after the date 

of service of any notice of suspension or order of removal 

issued pursuant to paragraph (1) or (2), the entity-affiliated party may request in writing an opportunity to appear before the Director to show that the continued service 

or participation in the conduct of the affairs of the regulated entity by such party does not, or is not likely to, pose 

a threat to the interests of the regulated entity, or threaten to impair public confidence in the regulated entity. ‘‘(B) TIMING AND FORM OF HEARING.—Upon receipt of a 

request for a hearing under subparagraph (A), the Director 

shall fix a time (not later than 30 days after the date of 

receipt of such request, unless extended at the request of 

such party) and place at which the entity-affiliated party 

may appear, personally or through counsel, before the Director or 1 or more designated employees of the Director 

to submit written materials (or, at the discretion of the Director, oral testimony) and oral argument. 

‘‘(C) DETERMINATION.—Not later than 60 days after the 

date of a hearing under subparagraph (B), the Director 

shall notify the entity-affiliated party whether the suspension or prohibition from participation in any manner in the 

conduct of the affairs of the regulated entity will be continued, terminated, or otherwise modified, or whether the 

order removing such party from office or prohibiting such 

party from further participation in any manner in the conduct of the affairs of the regulated entity will be rescinded 

or otherwise modified. Such notification shall contain a 

statement of the basis for any adverse decision of the Director. ‘‘(5) RULES.—The Director is authorized to prescribe such 

rules as may be necessary to carry out this subsection.’’. 

(b) CONFORMING AMENDMENTS.—

(1) SAFETY AND SOUNDNESS ACT.—Subtitle C of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 

1992 (12 U.S.C. 4501 et seq.) is amended—

(A) in section 1317(f), by striking ‘‘section 1379B’’ and inserting ‘‘section 1379D’’; 

(B) in section 1373(a)— (i) in paragraph (1), by striking ‘‘or 1376(c)’’ and inserting ‘‘, 1376(c), or 1377’’; 

(ii) in paragraph (2), by inserting ‘‘or 1377’’ after’’ 1371’’; and 

(iii) in paragraph (4), by inserting ‘‘or removal or 

prohibition’’ after ‘‘cease and desist’’; and 


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(C) in section 1374(a)—

(i) by striking ‘‘or 1376’’ and inserting ‘‘1313B, 1376, 

or 1377’’; and 

(ii) by striking ‘‘such section’’ and inserting ‘‘this 

title’’. 

(2) FANNIE MAE CHARTER ACT.—Section 308(b) of the Federal 

National Mortgage Association Charter Act (12 U.S.C. 1723(b)) 

is amended in the second sentence, by striking ‘‘The’’ and inserting ‘‘Except to the extent that action under section 1377 of 

the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 temporarily results in a lesser number, the’’. 

(3) FREDDIE MAC CHARTER ACT.—Section 303(a)(2)(A) of the 

Federal Home Loan Mortgage Corporation Act (12 U.S.C. 

1452(a)(2)(A)) is amended, in the second sentence, by striking 

‘‘The’’ and inserting ‘‘Except to the extent action under section 

1377 of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992 temporarily results in a lesser number, 

the’’. 

SEC. 1154. ENFORCEMENT AND JURISDICTION. 

Section 1375 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4635) is amended—

(1) by striking subsection (a) and inserting the following new 

subsection: 

‘‘(a) ENFORCEMENT.—The Director may, in the discretion of the 

Director, apply to the United States District Court for the District 

of Columbia, or the United States district court within the jurisdiction of which the headquarters of the regulated entity is located, 

for the enforcement of any effective and outstanding notice or order 

issued under this subtitle or subtitle B, or request that the Attorney General of the United States bring such an action. Such court 

shall have jurisdiction and power to order and require compliance 

with such notice or order.’’; and 

(2) in subsection (b), by striking ‘‘or 1376’’ and inserting 

‘‘1313B, 1376, or 1377’’. 

SEC. 1155. CIVIL MONEY PENALTIES. 

Section 1376 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4636) is amended—

(1) by striking subsection (a) and inserting the following: 

‘‘(a) IN GENERAL.—The Director may impose a civil money penalty in accordance with this section on any regulated entity or any 

entity-affiliated party. The Director shall not impose a civil penalty 

in accordance with this section on any regulated entity or any entity-affiliated party for any violation that is addressed under section 

1345(a).’’; 

(2) by striking subsection (b) and inserting the following: 

‘‘(b) AMOUNT OF PENALTY.—

‘‘(1) FIRST TIER.—A regulated entity or entity-affiliated party 

shall forfeit and pay a civil penalty of not more than $10,000 

for each day during which a violation continues, if such regulated entity or party—

‘‘(A) violates any provision of this title, the authorizing 

statutes, or any order, condition, rule, or regulation under 

this title or any authorizing statute; 


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‘‘(B) violates any final or temporary order or notice 

issued pursuant to this title; 

‘‘(C) violates any condition imposed in writing by the Director in connection with the grant of any application or 

other request by such regulated entity; or 

‘‘(D) violates any written agreement between the regulated entity and the Director. 

‘‘(2) SECOND TIER.—Notwithstanding paragraph (1), a regulated entity or entity-affiliated party shall forfeit and pay a 

civil penalty of not more than $50,000 for each day during 

which a violation, practice, or breach continues, if—

‘‘(A) the regulated entity or entity-affiliated party, respectively—

‘‘(i) commits any violation described in any subparagraph of paragraph (1); 

‘‘(ii) recklessly engages in an unsafe or unsound 

practice in conducting the affairs of the regulated entity; or 

‘‘(iii) breaches any fiduciary duty; and 

‘‘(B) the violation, practice, or breach—

‘‘(i) is part of a pattern of misconduct; 

‘‘(ii) causes or is likely to cause more than a minimal 

loss to the regulated entity; or 

‘‘(iii) results in pecuniary gain or other benefit to 

such party. 

‘‘(3) THIRD TIER.—Notwithstanding paragraphs (1) and (2), 

any regulated entity or entity-affiliated party shall forfeit and 

pay a civil penalty in an amount not to exceed the applicable 

maximum amount determined under paragraph (4) for each 

day during which such violation, practice, or breach continues, 

if such regulated entity or entity-affiliated party—

‘‘(A) knowingly—

‘‘(i) commits any violation described in any subparagraph of paragraph (1); 

‘‘(ii) engages in any unsafe or unsound practice in 

conducting the affairs of the regulated entity; or 

‘‘(iii) breaches any fiduciary duty; and 

‘‘(B) knowingly or recklessly causes a substantial loss to 

the regulated entity or a substantial pecuniary gain or 

other benefit to such party by reason of such violation, 

practice, or breach. 

‘‘(4) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION

DESCRIBED IN PARAGRAPH (3).—The maximum daily amount of 

any civil penalty which may be assessed pursuant to paragraph (3) for any violation, practice, or breach described in 

paragraph (3) is—

‘‘(A) in the case of any entity-affiliated party, an amount 

not to exceed $2,000,000; and 

‘‘(B) in the case of any regulated entity, $2,000,000.’’; 

(3) in subsection (c)—

(A) by striking ‘‘enterprise’’ each place that term appears 

and inserting ‘‘regulated entity’’; 

(B) by inserting ‘‘or entity-affiliated party’’ before ‘‘in 

writing’’; and 


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(C) by inserting ‘‘or entity-affiliated party’’ before ‘‘has 

been given’’; 

(4) in subsection (d)— (A) by striking ‘‘or director’’ each place such term appears and inserting ‘‘director, or entity-affiliated party’’; 

(B) by striking ‘‘an enterprise’’ and inserting ‘‘a regulated entity’’; 

(C) by striking ‘‘the enterprise’’ and inserting ‘‘the regulated entity’’; 

(D) by striking ‘‘request the Attorney General of the 

United States to’’; 

(E) by inserting ‘‘, or the United States district court 

within the jurisdiction of which the headquarters of the 

regulated entity is located,’’ after ‘‘District of Columbia’’; 

(F) by striking ‘‘, or may, under the direction and control 

of the Attorney General of the United States, bring such 

an action’’; and 

(G) by striking ‘‘and section 1374’’; and 

(5) in subsection (g), by striking ‘‘An enterprise’’ and inserting ‘‘A regulated entity’’. 

SEC. 1156. CRIMINAL PENALTY. 

(a) IN GENERAL.—Subtitle C of the Federal Housing Enterprises 

Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631 et 

seq.) is amended by inserting after section 1377, as added by this 

Act, the following: 

‘‘SEC. 1378. CRIMINAL PENALTY. 

‘‘Whoever, being subject to an order in effect under section 1377, 

without the prior written approval of the Director, knowingly participates, directly or indirectly, in any manner (including by engaging in an activity specifically prohibited in such an order) in the 

conduct of the affairs of any regulated entity shall, notwithstanding 

section 3571 of title 18, be fined not more than $1,000,000, imprisoned for not more than 5 years, or both.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENTS.—The Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992 

(12 U.S.C. 4501 et seq.) is amended—

(1) in section 1379 (as so designated by this Act)—

(A) by striking ‘‘an enterprise’’ and inserting ‘‘a regulated entity’’; and 

(B) by striking ‘‘the enterprise’’ and inserting ‘‘the regulated entity’’; 

(2) in section 1379A (as so designated by this Act), by striking ‘‘an enterprise’’ and inserting ‘‘a regulated entity’’; 

(3) in section 1379B(c) (as so designated by this Act), by 

striking ‘‘enterprise’’ and inserting ‘‘regulated entity’’; and 

(4) in section 1379D (as so designated by this Act), by striking ‘‘enterprise’’ and inserting ‘‘regulated entity’’. 

SEC. 1157. NOTICE AFTER SEPARATION FROM SERVICE. 

Section 1379 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4637), as so designated by 

this Act, is amended—

(1) by striking ‘‘2-year’’ and inserting ‘‘6-year’’; 

(2) by striking ‘‘a director or executive officer of an enterprise’’ and inserting ‘‘an entity-affiliated party’’; 


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(3) by striking ‘‘director or officer’’ each place that term appears and inserting ‘‘entity-affiliated party’’; and 

(4) by striking ‘‘enterprise.’’ and inserting ‘‘regulated entity.’’. 

SEC. 1158. SUBPOENA AUTHORITY. 

(a) IN GENERAL.—Section 1379B of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4641) 

is amended—

(1) in subsection (a)—

(A) in the matter preceding paragraph (1)—

(i) by striking ‘‘administrative’’; 

(ii) by inserting ‘‘, examination, or investigation’’

after ‘‘proceeding’’; 

(iii) by striking ‘‘subtitle’’ and inserting ‘‘title’’; and 

(iv) by inserting ‘‘or any designated representative 

thereof, including any person designated to conduct 

any hearing under this subtitle’’ after ‘‘Director’’; and 

(B) in paragraph (4), by striking ‘‘issued by the Director’’; 

(2) in subsection (b), by inserting ‘‘or in any territory or other 

place subject to the jurisdiction of the United States’’ after 

‘‘State’’; 

(3) by striking subsection (c) and inserting the following: 

‘‘(c) ENFORCEMENT.—

‘‘(1) IN GENERAL.—The Director, or any party to proceedings 

under this subtitle, may apply to the United States District 

Court for the District of Columbia, or the United States district 

court for the judicial district of the United States in any territory in which such proceeding is being conducted, or where the 

witness resides or carries on business, for enforcement of any 

subpoena or subpoena duces tecum issued pursuant to this section. 

‘‘(2) POWER OF COURT.—The courts described under paragraph (1) shall have the jurisdiction and power to order and require compliance with any subpoena issued under paragraph 

(1).’’; 

(4) in subsection (d), by inserting ‘‘enterprise-affiliated party’’

before ‘‘may allow’’; and 

(5) by adding at the end the following: 

‘‘(e) PENALTIES.—A person shall be guilty of a misdemeanor, and 

upon conviction, shall be subject to a fine of not more than $1,000 

or to imprisonment for a term of not more than 1 year, or both, if 

that person willfully fails or refuses, in disobedience of a subpoena 

issued under subsection (c), to—

‘‘(1) attend court; 

‘‘(2) testify in court; 

‘‘(3) answer any lawful inquiry; or 

‘‘(4) produce books, papers, correspondence, contracts, agreements, or such other records as requested in the subpoena.’’. 


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Subtitle E—General Provisions 

SEC. 1161. CONFORMING AND TECHNICAL AMENDMENTS. 

(a) AMENDMENTS TO 1992 ACT.—The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 

et seq.), as amended by this Act, is amended—

(1) in section 1315 (12 U.S.C. 4515)—

(A) in subsection (a)—

(i) by striking ‘‘(a) OFFICE PERSONNEL.—The’’ and 

inserting ‘‘(a) IN GENERAL.—Subject to title III of the 

Federal Housing Finance Regulatory Reform Act of 

2008, the’’; and 

(ii) by striking ‘‘the Office’’ each place that term appears and inserting ‘‘the Agency’’; 

(B) in subsection (c), by striking ‘‘the Office’’ and inserting ‘‘the Agency’’; 

(C) in subsection (e), by striking ‘‘the Office’’ and inserting ‘‘the Agency’’; 

(D) by striking subsection (d) and redesignating subsection (e) as subsection (d); and 

(E) by striking subsection (f); 

(2) in section 1319A (12 U.S.C. 4520)—

(A) by striking ‘‘(a) IN GENERAL.—’’; and 

(B) by striking subsection (b); 

(3) in section 1364(c) (12 U.S.C. 4614(c)), by striking the last 

sentence; 

(4) by striking section 1383 (12 U.S.C. 1451 note); 

(5) in each of sections 1319D, 1319E, and 1319F (12 U.S.C. 

4523, 4524, 4525) by striking ‘‘the Office’’ each place that term 

appears and inserting ‘‘the Agency’’; and 

(6) in each of sections 1319B and 1369(a)(3) (12 U.S.C. 4521, 

4619(a)(3)), by striking ‘‘Committee on Banking, Finance and 

Urban Affairs’’ each place such term appears and inserting ‘‘Committee on Financial Services’’. (b) AMENDMENTS TO FANNIE MAE CHARTER ACT.—The Federal 

National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.) 

is amended—

(1) in each of sections 303(c)(2) (12 U.S.C. 1718(c)(2)), 

309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)), and 309(k)(1) (12 

U.S.C. 1723a(k)(1)), by striking ‘‘Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development’’ each place that term appears, 

and inserting ‘‘Director of the Federal Housing Finance Agency’’; and 

(2) in section 309—

(A) in subsection (m) (12 U.S.C. 1723a(m))—

(i) in paragraph (1), by striking ‘‘to the Secretary, in 

a form determined by the Secretary’’ and inserting ‘‘to 

the Director of the Federal Housing Finance Agency, 

in a form determined by the Director’’; and 

(ii) in paragraph (2), by striking ‘‘to the Secretary, 

in a form determined by the Secretary’’ and inserting 

‘‘to the Director of the Federal Housing Finance Agency, in a form determined by the Director’’; 


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(B) in subsection (n) (12 U.S.C. 1723a(n))— (i) in paragraph (1), by striking ‘‘and the Secretary’’ and inserting ‘‘and the Director of the Federal Housing 

Finance Agency’’; and 

(ii) in paragraph (2), by striking ‘‘Secretary’’ each 

place that term appears and inserting ‘‘Director of the 

Federal Housing Finance Agency’’; and 

(C) in paragraph (3)(B), by striking ‘‘Secretary’’ and inserting ‘‘Director of the Federal Housing Finance Agency’’. (c) AMENDMENTS TO FREDDIE MAC CHARTER ACT.—The Federal 

Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.) is 

amended— (1) in each of sections 303(b)(2) (12 U.S.C. 1452(b)(2)), 

303(h)(2) (12 U.S.C. 1452(h)(2)), and section 307(c)(1) (12 

U.S.C. 1456(c)(1)), by striking ‘‘Director of the Office of Federal 

Housing Enterprise Oversight of the Department of Housing 

and Urban Development’’ each place that term appears, and inserting ‘‘Director of the Federal Housing Finance Agency’’; 

(2) in section 306 (12 U.S.C. 1455)— (A) in subsection (c)(2), by inserting ‘‘the’’ after ‘‘Secretary of’’; 

(B) in subsection (i)— (i) by striking ‘‘section 1316(c)’’ and inserting ‘‘section 306(c)’’; and 

(ii) by striking ‘‘section 106’’ and inserting ‘‘section 

1316’’; and 

(C) in subsection (j)(2), by striking ‘‘of substantially’’ and 

inserting ‘‘or substantially’’; and 

(3) in section 307 (12 U.S.C. 1456)— (A) in subsection (e)— (i) in paragraph (1), by striking ‘‘to the Secretary, in 

a form determined by the Secretary’’ and inserting ‘‘to 

the Director of the Federal Housing Finance Agency, 

in a form determined by the Director’’; and 

(ii) in paragraph (2), by striking ‘‘to the Secretary, 

in a form determined by the Secretary’’ and inserting 

‘‘to the Director of the Federal Housing Finance Agency, in a form determined by the Director’’; and 

(B) in subsection (f)—

(i) in paragraph (1), by striking ‘‘and the Secretary’’

and inserting ‘‘and the Director of the Federal Housing 

Finance Agency’’; 

(ii) in paragraph (2), by striking ‘‘the Secretary’’

each place that term appears and inserting ‘‘the Director of the Federal Housing Finance Agency’’; and 

(iii) in paragraph (3)(B), by striking ‘‘Secretary’’ and 

inserting ‘‘Director of the Federal Housing Finance 

Agency’’. 

(d) AMENDMENT TO TITLE 18, UNITED STATES CODE.—Section 

1905 of title 18, United States Code, is amended by striking ‘‘Office 

of Federal Housing Enterprise Oversight’’ and inserting ‘‘Federal 

Housing Finance Agency’’. (e) AMENDMENTS TO FLOOD DISASTER PROTECTION ACT OF

1973.—Section 102(f)(3)(A) of the Flood Disaster Protection Act of 

1973 (42 U.S.C. 4012a(f)(3)(A)) is amended by striking ‘‘Director of 


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the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development’’ and inserting ‘‘Director 

of the Federal Housing Finance Agency’’. 

(f) AMENDMENT TO DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ACT.—Section 5 of the Department of Housing and Urban 

Development Act (42 U.S.C. 3534) is amended by striking subsection (d). 

(g) AMENDMENTS TO TITLE 5, UNITED STATES CODE.—Title 5, 

United States Code, is amended—

(1) in section 5313, by striking the item relating to the Director of the Office of Federal Housing Enterprise Oversight, Department of Housing and Urban Development and inserting 

the following new item: 

‘‘Director of the Federal Housing Finance Agency.’’; and 

(2) in section 3132(a)(1)—

(A) in subparagraph (B), by striking ‘‘,, and’’ and inserting ‘‘, and’’; 

(B) in subparagraph (D)—

(i) by striking ‘‘the Federal Housing Finance Board’’; 

(ii) by striking ‘‘the Office of Federal Housing Enterprise Oversight of the Department of Housing and 

Urban Development’’ and inserting ‘‘the Federal Housing Finance Agency’’; and 

(iii) by striking ‘‘or or’’ at the end; 

(C) in subparagraph (E), as added by section 

8(d)(1)(B)(iii) of Public Law 107–123, by adding ‘‘or’’ at the 

end; and 

(D) by redesignating subparagraph (E), as added by section 10702(c)(1)(C) of Public Law 107–171, as subparagraph (F). 

(h) AMENDMENT TO SARBANES-OXLEY ACT.—Section 

105(b)(5)(B)(ii)(II) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

7215(b)(5)(B)(ii)(II)) is amended by inserting ‘‘and the Director of 

the Federal Housing Finance Agency,’’ after ‘‘Commission,’’. 

(i) AMENDMENT TO FEDERAL DEPOSIT INSURANCE ACT.—Section 

11(t)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 

1821(t)(2)(A)) is amended by adding at the end the following: 

‘‘(vii) Federal Housing Finance Agency.’’. 

SEC. 1162. PRESIDENTIALLY-APPOINTED DIRECTORS OF ENTERPRISES. 

(a) FANNIE MAE.—

(1) IN GENERAL.—Section 308(b) of the Federal National 

Mortgage Association Charter Act (12 U.S.C. 1723(b)) is 

amended—

(A) in the first sentence, by striking ‘‘eighteen persons, 

five of whom shall be appointed annually by the President 

of the United States, and the remainder of whom’’ and inserting ‘‘13 persons, or such other number that the Director determines appropriate, who’’; 

(B) in the second sentence, by striking ‘‘appointed by the 

President’’; 

(C) in the third sentence—

(i) by striking ‘‘appointed or’’; and 


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(ii) by striking ‘‘, except that any such appointed 

member may be removed from office by the President 

for good cause’’; 

(D) in the fourth sentence, by striking ‘‘elective’’; and 

(E) by striking the fifth sentence. 

(2) TRANSITIONAL PROVISION.—The amendments made by 

paragraph (1) shall not apply to any appointed position of the 

board of directors of the Federal National Mortgage Association until the expiration of the annual term for such position 

during which the effective date under section 1163 occurs. 

(b) FREDDIE MAC.—

(1) IN GENERAL.—Section 303(a)(2) of the Federal Home Loan 

Mortgage Corporation Act (12 U.S.C. 1452(a)(2)) is amended—

(A) in subparagraph (A)—

(i) in the first sentence, by striking ‘‘18 persons, 5 of 

whom shall be appointed annually by the President of 

the United States and the remainder of whom’’ and inserting ‘‘13 persons, or such other number as the Director determines appropriate, who’’; and 

(ii) in the second sentence, by striking ‘‘appointed by 

the President of the United States’’; 

(B) in subparagraph (B)—

(i) by striking ‘‘such or’’; and 

(ii) by striking ‘‘, except that any appointed member 

may be removed from office by the President for good 

cause’’; and 

(C) in subparagraph (C)—

(i) by striking the first sentence; and 

(ii) by striking ‘‘elective’’. 

(2) TRANSITIONAL PROVISION.—The amendments made by 

paragraph (1) shall not apply to any appointed position of the 

board of directors of the Federal Home Loan Mortgage Corporation until the expiration of the annual term for such position during which the effective date under section 1163 occurs. 

SEC. 1163. EFFECTIVE DATE. 

Except as otherwise specifically provided in this title, this title 

and the amendments made by this title shall take effect on, and 

shall apply beginning on, the date of enactment of this Act. 

TITLE II—FEDERAL HOME LOAN BANKS 

SEC. 1201. RECOGNITION OF DISTINCTIONS BETWEEN THE ENTERPRISES AND THE FEDERAL HOME LOAN BANKS. 

Section 1313 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992 (12 U.S.C. 4513) is amended by adding 

at the end the following: 

‘‘(f) RECOGNITION OF DISTINCTIONS BETWEEN THE ENTERPRISES

AND THE FEDERAL HOME LOAN BANKS.—Prior to promulgating any 

regulation or taking any other formal or informal agency action of 

general applicability and future effect relating to the Federal Home 

Loan Banks (other than any regulation, advisory document, or examination guidance of the Federal Housing Finance Board that the 

Director reissues after the authority of the Director over the Federal Home Loan Banks takes effect), including the issuance of an 


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advisory document or examination guidance, the Director shall consider the differences between the Federal Home Loan Banks and 

the enterprises with respect to— ‘‘(1) the Banks’— ‘‘(A) cooperative ownership structure; 

‘‘(B) the mission of providing liquidity to members; 

‘‘(C) affordable housing and community development 

mission; ‘‘(D) capital structure; and 

‘‘(E) joint and several liability; and ‘‘(2) any other differences that the Director considers appropriate.’’. 

SEC. 1202. DIRECTORS. 

Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) 

is amended— (1) by striking subsection (a) and inserting the following: ‘‘(a) NUMBER; ELECTION; QUALIFICATIONS; CONFLICTS OF INTER- EST.—‘‘(1) IN GENERAL.—Subject to paragraphs (2) through (4), the 

management of each Federal Home Loan Bank shall be vested 

in a board of 13 directors, or such other number as the Director determines appropriate. ‘‘(2) BOARD MAKEUP.—The board of directors of each Bank 

shall be comprised of— ‘‘(A) member directors, who shall comprise at least the 

majority of the members of the board of directors; and ‘‘(B) independent directors, who shall comprise not fewer 

than 2⁄5 of the members of the board of directors. 

‘‘(3) SELECTION CRITERIA.— ‘‘(A) IN GENERAL.—Each member of the board of directors shall be— 

‘‘(i) elected by plurality vote of the members, in accordance with procedures established under this section; and 

‘‘(ii) a citizen of the United States. 

‘‘(B) INDEPENDENT DIRECTOR CRITERIA.— ‘‘(i) IN GENERAL.—Each independent director that is 

not a public interest director under clause (ii) shall 

have demonstrated knowledge of, or experience in, financial management, auditing and accounting, risk 

management practices, derivatives, project development, or organizational management, or such other 

knowledge or expertise as the Director may provide by 

regulation. 

‘‘(ii) PUBLIC INTEREST.—Not fewer than 2 of the 

independent directors shall have more than 4 years of 

experience in representing consumer or community interests on banking services, credit needs, housing, or 

financial consumer protections. 

‘‘(iii) CONFLICTS OF INTEREST.—No independent director may, during the term of service on the board of 

directors, serve as an officer of any Federal Home 

Loan Bank or as a director, officer, or employee of any 

member of a Bank, or of any person that receives advances from a Bank. 


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‘‘(4) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: ‘‘(A) INDEPENDENT DIRECTOR.—The terms ‘independent 

director’ and ‘independent directorship’ mean a member of 

the board of directors of a Federal Home Loan Bank who 

is a bona fide resident of the district in which the Federal 

Home Loan Bank is located, or the directorship held by 

such a person, respectively. ‘‘(B) MEMBER DIRECTOR.—The terms ‘member director’ and ‘member directorship’ mean a member of the board of 

directors of a Federal Home Loan Bank who is an officer 

or director of a member institution that is located in the 

district in which the Federal Home Loan Bank is located, 

or the directorship held by such a person, respectively.’’; 

(2) by striking ‘‘elective’’ each place that term appears, other 

than in subsections (d), (e), and (f), and inserting ‘‘member’’; 

(3) in subsection (b)— (A) by striking the subsection heading and all that follows through ‘‘Each elective directorship’’ and inserting the 

following: ‘‘(b) DIRECTORSHIPS.— ‘‘(1) MEMBER DIRECTORSHIPS.—Each member directorship’’; 

and 

(B) by adding at the end the following: ‘‘(2) INDEPENDENT DIRECTORSHIPS.— ‘‘(A) ELECTIONS.—Each independent director— ‘‘(i) shall be elected by the members entitled to vote, 

from among eligible persons nominated, after consultation with the Advisory Council of the Bank, by 

the board of directors of the Bank; and ‘‘(ii) shall be elected by a plurality of the votes of the 

members of the Bank at large, with each member having the number of votes for each such directorship as 

it has under paragraph (1) in an election to fill member directorships. 

‘‘(B) CRITERIA.—Nominees shall meet all applicable requirements prescribed in this section. ‘‘(C) NOMINATION AND ELECTION PROCEDURES.—Procedures for nomination and election of independent directors 

shall be prescribed by the bylaws of each Federal Home 

Loan Bank, in a manner consistent with the rules and regulations of the Agency.’’; 

(4) in subsection (c)— (A) by striking ‘‘elective’’ each place that term appears 

and inserting ‘‘member’’, except— (i) in the second sentence, the second place that 

term appears; and 

(ii) each place that term appears in the fifth sentence; and 

(B) in the second sentence—

(i) by inserting ‘‘(A) except as provided in clause (B) 

of this sentence,’’ before ‘‘if at any time’’; and 

(ii) by inserting before the period at the end the following: ‘‘, and (B) clause (A) of this sentence shall not 

apply to the directorships of any Federal Home Loan 


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137 

Bank resulting from the merger of any 2 or more such 

Banks’’; 

(5) in subsection (d)— (A) in the first sentence— (i) by striking ‘‘, whether elected or appointed,’’; and 

(ii) by striking ‘‘3 years’’ and inserting ‘‘4 years’’; 

(B) in the second sentence— (i) by striking ‘‘Federal Home Loan Bank System 

Modernization Act of 1999’’ and inserting ‘‘Federal 

Housing Finance Regulatory Reform Act of 2008’’; 

(ii) by striking ‘‘1⁄3’’ and inserting ‘‘1⁄4’’; and 

(iii) by striking ‘‘or appointed’’; and 

(C) in the third sentence— (i) by striking ‘‘an elective’’ each place that term appears and inserting ‘‘a’’; and 

(ii) by striking ‘‘in any elective directorship or elective directorships’’; 

(6) in subsection (f)— (A) by striking paragraph (2); 

(B) by striking ‘‘appointed or’’ each place that term appears; and 

(C) in paragraph (3)— (i) by striking ‘‘(3) ELECTED BANK DIRECTORS.—’’ and 

inserting ‘‘(2) ELECTION PROCESS.—’’; and 

(ii) by striking ‘‘elective’’ each place that term appears; 

(7) in subsection (i)— (A) in paragraph (1), by striking ‘‘Subject to paragraph 

(2), each’’ and inserting ‘‘Each’’; and 

(B) by striking paragraph (2) and inserting the following: ‘‘(2) ANNUAL REPORT.—The Director shall include, in the annual report submitted to the Congress pursuant to section 

1319B of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992, information regarding the compensation and expenses paid by the Federal Home Loan Banks 

to the directors on the boards of directors of the Banks.’’; and 

(8) by adding at the end the following: ‘‘(l) TRANSITION RULE.—Any member of the board of directors of 

a Bank elected or appointed in accordance with this section prior 

to the date of enactment of this subsection may continue to serve 

as a member of that board of directors for the remainder of the existing term of service.’’. 

SEC. 1203. DEFINITIONS. 

Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) 

is amended—

(1) by striking paragraphs (1), (10), and (11); 

(2) by redesignating paragraphs (2) through (9) as paragraphs (1) through (8), respectively; 

(3) by redesignating paragraphs (12) and (13) as paragraphs 

(9) and (10), respectively; and 

(4) by adding at the end the following: 

‘‘(11) DIRECTOR.—The term ‘Director’ means the Director of 

the Federal Housing Finance Agency. 

‘‘(12) AGENCY.—The term ‘Agency’ means the Federal Housing Finance Agency, established under section 1311 of the FedVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00139 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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eral Housing Enterprises Financial Safety and Soundness Act 

of 1992.’’. 

SEC. 1204. AGENCY OVERSIGHT OF FEDERAL HOME LOAN BANKS. 

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.), other 

than in provisions of that Act added or amended otherwise by this 

Act, is amended— (1) by striking sections 2A and 2B (12 U.S.C. 1422a, 1422b); 

(2) in section 18 (12 U.S.C. 1438), by striking subsection (b); 

(3) in section 11 (12 U.S.C. 1431)— (A) in subsection (b)— (i) in the first sentence— (I) by striking ‘‘The Board’’ and inserting ‘‘The 

Office of Finance, as agent for the Banks,’’; and 

(II) by striking ‘‘the Board’’ and inserting ‘‘such 

Office’’; and 

(ii) in the second and fourth sentences, by striking ‘‘the Board’’ each place such term appears and inserting ‘‘the Office of Finance’’; 

(B) in subsection (c)— (i) by striking ‘‘the Board’’ the first place such term 

appears and inserting ‘‘the Office of Finance, as agent 

for the Banks,’’; and 

(ii) by striking ‘‘the Board’’ the second place such 

term appears and inserting ‘‘such Office’’; and 

(C) in subsection (f)— (i) by striking the 2 commas after ‘‘permit’’ and inserting ‘‘or’’; and 

(ii) by striking the comma after ‘‘require’’; 

(4) in section 6 (12 U.S.C. 1426)— (A) in subsection (b)(1), in the matter preceding subparagraph (A), by striking ‘‘Finance Board approval’’ and inserting ‘‘approval by the Director’’; and 

(B) in each of subsections (c)(4)(B) and (d)(2), by striking ‘‘Finance Board regulations’’ each place that term appears 

and inserting ‘‘regulations of the Director’’; 

(5) in section 10(b) (12 U.S.C. 1430(b))— (A) in the subsection heading, by striking ‘‘FORMAL

BOARD RESOLUTION’’ and inserting ‘‘APPROVAL OF DIREC- TOR’’; and 

(B) by striking ‘‘by formal resolution’’; 

(6) in section 21(b)(5) (12 U.S.C. 1441(b)(5)), by striking 

‘‘Chairperson of the Federal Housing Finance Board’’ and inserting ‘‘Director’’; 

(7) in section 15 (12 U.S.C. 1435), by inserting ‘‘or the Director’’ after ‘‘the Board’’; 

(8) by striking ‘‘the Board’’ each place that term appears and 

inserting ‘‘the Director’’; 

(9) by striking ‘‘The Board’’ each place that term appears and 

inserting ‘‘The Director’’; 

(10) by striking ‘‘the Finance Board’’ each place that term appears and inserting ‘‘the Director’’; 

(11) by striking ‘‘The Finance Board’’ each place that term 

appears and inserting ‘‘The Director’’; and 

(12) by striking ‘‘Federal Housing Finance Board’’ each place 

that term appears and inserting ‘‘Director’’. 


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SEC. 1205. HOUSING GOALS. 

The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is 

amended by inserting after section 10b the following new section: 

‘‘SEC. 10C. HOUSING GOALS. 

‘‘(a) IN GENERAL.—The Director shall establish housing goals 

with respect to the purchase of mortgages, if any, by the Federal 

Home Loan Banks. Such goals shall be consistent with the goals 

established under sections 1331 through 1334 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. 

‘‘(b) CONSIDERATIONS.—In establishing the goals required by subsection (a), the Director shall consider the unique mission and ownership structure of the Federal Home Loan Banks. 

‘‘(c) TRANSITION PERIOD.—To facilitate an orderly transition, the 

Director shall establish interim target goals for purposes of this 

section for each of the 2 calendar years following the date of enactment of this section. 

‘‘(d) MONITORING AND ENFORCEMENT OF GOALS.—The requirements of section 1336 of the Federal Housing Enterprises Safety 

and Soundness Act of 1992, shall apply to this section, in the same 

manner and to the same extent as that section applies to the Federal housing enterprises. 

‘‘(e) ANNUAL REPORT.—The Director shall annually report to Congress on the performance of the Banks in meeting the goals established under this section.’’. 

SEC. 1206. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS. 

Section 4(a)(1) of the Federal Home Loan Bank Act (12 U.S.C. 

1424(a)(1)) is amended—

(1) by inserting after ‘‘savings bank,’’ the following: ‘‘community development financial institution,’’; and 

(2) in subparagraph (B), by inserting after ‘‘United States,’’

the following: ‘‘or, in the case of a community development financial institution, is certified as a community development financial institution under the Community Development Banking and Financial Institutions Act of 1994.’’. 

SEC. 1207. SHARING OF INFORMATION AMONG FEDERAL HOME LOAN 

BANKS. 

The Federal Home Loan Bank Act is amended by inserting after 

section 20 (12 U.S.C. 1440) the following new section: 

‘‘SEC. 20A. SHARING OF INFORMATION AMONG FEDERAL HOME LOAN 

BANKS. 

‘‘(a) INFORMATION ON FINANCIAL CONDITION.—In order to enable 

each Federal Home Loan Bank to evaluate the financial condition 

of one or more of the other Federal Home Loan Banks individually 

and the Federal Home Loan Bank System (including any risks associated with the issuance or repayment of consolidated Federal 

Home Loan Bank bonds and debentures or other borrowings and 

the joint and several liabilities of the Banks incurred due to such 

borrowings), as well as to comply with any of its obligations under 

the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), the Director shall make available to the Banks such reports, records, or 

other information as may be available, relating to the condition of 

any Federal Home Loan Bank. 

‘‘(b) SHARING OF INFORMATION.—


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‘‘(1) IN GENERAL.—The Director shall promulgate regulations 

to facilitate the sharing of information made available under 

subsection (a) directly among the Federal Home Loan Banks. 

‘‘(2) LIMITATION.—Notwithstanding paragraph (1), a Federal 

Home Loan Bank responding to a request from another Bank 

or from the Director for information pursuant to this section 

may request that the Director determine that such information 

is proprietary and that the public interest requires that such 

information not be shared. 

‘‘(c) LIMITATION.—Nothing in this section shall affect the obligations of any Federal Home Loan Bank under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or the regulations issued 

by the Securities and Exchange Commission thereunder. 

‘‘(d) NO WAIVER OF PRIVILEGE.—The Director shall not be 

deemed to have waived any privilege applicable to any information 

concerning a Federal Home Loan Bank by transferring, or permitting the transfer of, that information to any other Federal Home 

Loan Bank for the purposes set out in subsection (a).’’. 

SEC. 1208. EXCLUSION FROM CERTAIN REQUIREMENTS. 

(a) IN GENERAL.—The Federal Home Loan Banks shall be exempt from compliance with—

(1) sections 13(e), 14(a), and 14(c) of the Securities Exchange 

Act of 1934, and related Commission regulations; 

(2) section 15 of the Securities Exchange Act of 1934, and related Commission regulations, with respect to transactions in 

the capital stock of a Federal Home Loan Bank; 

(3) section 17A of the Securities Exchange Act of 1934, and 

related Commission regulations, with respect to the transfer of 

the securities of a Federal Home Loan Bank; and 

(4) the Trust Indenture Act of 1939. 

(b) MEMBER EXEMPTION.—The members of the Federal Home 

Loan Bank System shall be exempt from compliance with sections 

13(d), 13(f), 13(g), 14(d), and 16 of the Securities Exchange Act of 

1934, and related Commission regulations, with respect to ownership of or transactions in the capital stock of the Federal Home 

Loan Banks by such members. 

(c) EXEMPTED AND GOVERNMENT SECURITIES.—

(1) CAPITAL STOCK.—The capital stock issued by each of the 

Federal Home Loan Banks under section 6 of the Federal 

Home Loan Bank Act are—

(A) exempted securities, within the meaning of section 

3(a)(2) of the Securities Act of 1933; and 

(B) exempted securities, within the meaning of section 

3(a)(12)(A) of the Securities Exchange Act of 1934, except 

to the extent provided in section 38 of that Act. 

(2) OTHER OBLIGATIONS.—The debentures, bonds, and other 

obligations issued under section 11 of the Federal Home Loan 

Bank Act (12 U.S.C. 1431) are—

(A) exempted securities, within the meaning of section 

3(a)(2) of the Securities Act of 1933; 

(B) government securities, within the meaning of section 

3(a)(42) of the Securities Exchange Act of 1934; and 

(C) government securities, within the meaning of section 

2(a)(16) of the Investment Company Act of 1940. 


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(3) BROKERS AND DEALERS.—A person (other than a Federal 

Home Loan Bank effecting transactions for members of the 

Federal Home Loan Bank System) that effects transactions in 

the capital stock or other obligations of a Federal Home Loan 

Bank, for the account of others or for that person’s own account, as applicable, is a broker or dealer, as those terms are 

defined in paragraphs (4) and (5), respectively, of section 3(a) 

of the Securities Exchange Act of 1934, but is excluded from 

the definition of— (A) the term ‘‘government securities broker’’ under section 3(a)(43) of the Securities Exchange Act of 1934; and 

(B) the term ‘‘government securities dealer’’ under section 3(a)(44) of the Securities Exchange Act of 1934. 

(d) EXEMPTION FROM REPORTING REQUIREMENTS.—The Federal 

Home Loan Banks shall be exempt from periodic reporting requirements under the securities laws pertaining to the disclosure of— (1) related party transactions that occur in the ordinary 

course of the business of the Banks with members; and 

(2) the unregistered sales of equity securities. 

(e) TENDER OFFERS.—Commission rules relating to tender offers 

shall not apply in connection with transactions in the capital stock 

of the Federal Home Loan Banks. 

(f) REGULATIONS.— (1) IN GENERAL.—The Commission shall promulgate such 

rules and regulations as may be necessary or appropriate in 

the public interest or in furtherance of this section and the exemptions provided in this section. 

(2) CONSIDERATIONS.—In issuing regulations under this section, the Commission shall consider the distinctive characteristics of the Federal Home Loan Banks when evaluating— (A) the accounting treatment with respect to the payment to the Resolution Funding Corporation; 

(B) the role of the combined financial statements of the 

Federal Home Loan Banks; 

(C) the accounting classification of redeemable capital 

stock; and 

(D) the accounting treatment related to the joint and 

several nature of the obligations of the Banks. 

(g) DEFINITIONS.—As used in this section— (1) the terms ‘‘Bank’’, ‘‘Federal Home Loan Bank’’, ‘‘member’’, and ‘‘Federal Home Loan Bank System’’ have the same meanings as in section 2 of the Federal Home Loan Bank Act (12 

U.S.C. 1422); 

(2) the term ‘‘Commission’’ means the Securities and Exchange Commission; and 

(3) the term ‘‘securities laws’’ has the same meaning as in 

section 3(a)(47) of the Securities Exchange Act of 1934 (15 

U.S.C. 78c(a)(47)). 

SEC. 1209. VOLUNTARY MERGERS. 

Section 26 of the Federal Home Loan Bank Act (12 U.S.C. 1446) 

is amended—

(1) by striking ‘‘Whenever’’ and inserting ‘‘(a) IN GENERAL.—

Whenever’’; and 

(2) by adding at the end the following: 

‘‘(b) VOLUNTARY MERGERS AUTHORIZED.—


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‘‘(1) IN GENERAL.—Any Federal Home Loan Bank may, with 

the approval of the Director and of the boards of directors of 

the Banks involved, merge with another Bank. ‘‘(2) REGULATIONS REQUIRED.—The Director shall promulgate 

regulations establishing the conditions and procedures for the 

consideration and approval of any voluntary merger described 

in paragraph (1), including the procedures for Bank member 

approval.’’. 

SEC. 1210. AUTHORITY TO REDUCE DISTRICTS. 

Section 3 of the Federal Home Loan Bank Act (12 U.S.C. 1423) 

is amended— (1) by striking ‘‘As soon’’ and inserting ‘‘(a) IN GENERAL.—As 

soon’’; and 

(2) by adding at the end the following: ‘‘(b) AUTHORITY TO REDUCE DISTRICTS.—Notwithstanding subsection (a), the number of districts may be reduced to a number 

less than 8— ‘‘(1) pursuant to a voluntary merger between Banks, as approved pursuant to section 26(b); or ‘‘(2) pursuant to a decision by the Director to liquidate a 

Bank pursuant to section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.’’. 

SEC. 1211. COMMUNITY FINANCIAL INSTITUTION MEMBERS. 

(a) TOTAL ASSET REQUIREMENT.—Paragraph (10) of section 2 of 

the Federal Home Loan Bank Act (12 U.S.C. 1422(10)), as so redesignated by section 201(3) of this Act, is amended by striking 

‘‘$500,000,000’’ each place such term appears and inserting 

‘‘$1,000,000,000’’. 

(b) USE OF ADVANCES FOR COMMUNITY DEVELOPMENT ACTIVITIES.—Section 10(a) of the Federal Home Loan Bank Act (12 U.S.C. 

1430(a)) is amended—

(1) in paragraph (2)(B)—

(A) by striking ‘‘and’’; and 

(B) by inserting ‘‘, and community development activities’’ before the period at the end; 

(2) in paragraph (3)(E), by inserting ‘‘or community development activities’’ after ‘‘agriculture,’’; and 

(3) in paragraph (6)—

(A) by striking ‘‘and’’; and 

(B) by inserting ‘‘, and ‘community development activities’ ’’ before ‘‘shall’’. 

SEC. 1212. PUBLIC USE DATABASE; REPORTS TO CONGRESS. 

Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) 

is amended—

(1) in subsection (j)(12)—

(A) by striking subparagraph (C) and inserting the following: 

‘‘(C) REPORTS.—The Director shall annually report to the 

Committee on Banking, Housing, and Urban Affairs of the 

Senate and the Committee on Financial Services of the 

House of Representatives on the collateral pledged to the 

Banks, including an analysis of collateral by type and by 

Bank district.’’; and 

(B) by adding at the end the following: 


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143 

‘‘(D) SUBMISSION TO CONGRESS.—The Director shall submit the reports under subparagraphs (A) and (C) to the 

Committee on Banking, Housing, and Urban Affairs of the 

Senate and the Committee on Financial Services of the 

House of Representatives, not later than 180 days after 

the date of enactment of the Federal Housing Finance Regulatory Reform Act of 2008.’’; and 

(2) by adding at the end the following: 

‘‘(k) PUBLIC USE DATABASE.—

‘‘(1) DATA.—Each Federal Home Loan Bank shall provide to 

the Director, in a form determined by the Director, census 

tract level data relating to mortgages purchased, if any, including—

‘‘(A) data consistent with that reported under section 

1323 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992; 

‘‘(B) data elements required to be reported under the 

Home Mortgage Disclosure Act of 1975; and 

‘‘(C) any other data elements that the Director considers 

appropriate. 

‘‘(2) PUBLIC USE DATABASE.—

‘‘(A) IN GENERAL.—The Director shall make available to 

the public, in a form that is useful to the public (including 

forms accessible electronically), and to the extent practicable, the data provided to the Director under paragraph 

(1). 

‘‘(B) PROPRIETARY INFORMATION.—Not withstanding subparagraph (A), the Director may not provide public access 

to, or disclose to the public, any information required to be 

submitted under this subsection that the Director determines is proprietary or that would provide personally identifiable information and that is not otherwise publicly accessible through other forms, unless the Director determines that it is in the public interest to provide such information.’’. 

SEC. 1213. SEMIANNUAL REPORTS. 

Section 21B of the Federal Home Loan Bank Act is amended in 

subsection (f)(2)(C), by adding at the end the following: 

‘‘(v) SEMIANNUAL REPORTS.—The Director shall report semiannually to the Committee on Banking, 

Housing, and Urban Affairs of the Senate and the 

Committee on Financial Services of the House of Representatives on the projected date for the completion of 

contributions required by this section.’’. 

SEC. 1214. LIQUIDATION OR REORGANIZATION OF A FEDERAL HOME 

LOAN BANK. 

Section 26 of the Federal Home Loan Bank Act (12 U.S.C. 1446) 

is amended by adding at the end the following: ‘‘At least 30 days 

prior to liquidating or reorganizing any Bank under this section, 

the Director shall notify the Bank of its determination and the 

facts and circumstances upon which such determination is based. 

The Bank may contest that determination in a hearing before the 

Director, in which all issues shall be determined on the record pursuant to section 554 of title 5, United States Code.’’. 


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SEC. 1215. STUDY AND REPORT TO CONGRESS ON SECURITIZATION OF 

ACQUIRED MEMBER ASSETS. 

(a) STUDY.—The Director shall conduct a study on securitization 

of home mortgage loans purchased or to be purchased from member financial institutions under the Acquired Member Assets programs. In conducting the study, the Director shall establish a process for the formal submission of comments. 

(b) ELEMENTS.—The study shall encompass—

(1) the benefits and risks associated with securitization of 

Acquired Member Assets; 

(2) the potential impact of securitization upon liquidity in 

the mortgage and broader credit markets; 

(3) the ability of the Federal Home Loan Bank or Banks in 

question to manage the risks associated with such a program; 

(4) the impact of such a program on the existing activities of 

the Banks, including their mortgage portfolios and advances; 

and 

(5) the joint and several liability of the Banks and the cooperative structure of the Federal Home Loan Bank System. 

(c) CONSULTATIONS.—In conducting the study under this section, 

the Director shall consult with the Federal Home Loan Banks, the 

Banks’ fiscal agent, representatives of the mortgage lending industry, practitioners in the structured finance field, and other experts 

as needed. 

(d) REPORT.—Not later than 1 year after the date of enactment 

of this Act, the Director shall submit a report to Congress on the 

results of the study conducted under subsection (a), including policy recommendations based on the analysis of the Director of the 

feasibility of mortgage-backed securities issuance by a Federal 

Home Loan Bank or Banks and the risks and benefits associated 

with such program or programs. 

(e) DEFINITIONS.—As used in this section, the terms ‘‘member’’, 

‘‘Bank’’, and ‘‘Federal Home Loan Bank’’ have the same meanings 

as in section 2 of the Federal Home Loan Bank Act (12 U.S.C. 

1422). 

SEC. 1216. TECHNICAL AND CONFORMING AMENDMENTS. 

(a) RIGHT TO FINANCIAL PRIVACY ACT OF 1978.—Section 1113(o) 

of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3413(o)) 

is amended—

(1) by striking ‘‘Federal Housing Finance Board’’ and inserting ‘‘Federal Housing Finance Agency’’; and 

(2) by striking ‘‘Federal Housing Finance Board’s’’ and inserting ‘‘Federal Housing Finance Agency’s’’. 

(b) RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY IMPROVEMENT ACT OF 1994.—Section 117(e) of the Riegle Community 

Development and Regulatory Improvement Act of 1994 (12 U.S.C. 

4716(e)) is amended by striking ‘‘Federal Housing Finance Board’’

and inserting ‘‘Federal Housing Finance Agency’’. 

(c) TITLE 18, UNITED STATES CODE.—Title 18, United States 

Code, is amended by striking ‘‘Federal Housing Finance Board’’

each place such term appears in each of sections 212, 657, 1006, 

and 1014, and inserting ‘‘Federal Housing Finance Agency’’. 

(d) MAHRA ACT OF 1997.—Section 517(b)(4) of the Multifamily 

Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 


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145 

1437f note) is amended by striking ‘‘Federal Housing Finance 

Board’’ and inserting ‘‘Federal Housing Finance Agency’’. 

(e) TITLE 44, UNITED STATES CODE.—Section 3502(5) of title 44, 

United States Code, is amended by striking ‘‘Federal Housing Finance Board’’ and inserting ‘‘Federal Housing Finance Agency’’. 

(f) ACCESS TO LOCAL TV ACT OF 2000.—Section 1004(d)(2)(D)(iii) 

of the Launching Our Communities’ Access to Local Television Act 

of 2000 (47 U.S.C. 1103(d)(2)(D)(iii)) is amended by striking ‘‘Office 

of Federal Housing Enterprise Oversight, the Federal Housing Finance Board’’ and inserting ‘‘Federal Housing Finance Agency’’. 

(g) FIRREA.—Section 1216 of the Financial Institutions Reform, 

Recovery, and Enhancement Act of 1989 (12 U.S.C. 1833e) is 

amended—

(1) in subsection (a), by striking paragraph (3) and inserting 

the following: 

‘‘(3) the Federal Housing Finance Agency;’’; 

(2) in subsection (b), by striking ‘‘Federal National Mortgage 

Association’’ and inserting ‘‘Federal Home Loan Banks, the 

Federal National Mortgage Association,’’; and 

(3) in subsection (c), by striking ‘‘Finance Board’’ and inserting ‘‘Finance Agency’’. 

SEC. 1217. STUDY ON FEDERAL HOME LOAN BANK ADVANCES. 

(a) IN GENERAL.—Not later than 1 year after the date of enactment of this Act, the Director shall conduct a study and submit a 

report to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of the 

House or Representatives on the extent to which loans and securities used as collateral to support Federal Home Loan Bank advances are consistent with the interagency guidance on nontraditional mortgage products. 

(b) REQUIRED CONTENT.—The study required under subsection 

(a) shall—

(1) consider and recommend any additional regulations, guidance, advisory bulletins, or other administrative actions necessary to ensure that the Federal Home Loan Banks are not 

supporting loans with predatory characteristics; and 

(2) include an opportunity for the public to comment on any 

recommendations made under paragraph (1). 

SEC. 1218. FEDERAL HOME LOAN BANK REFINANCING AUTHORITY 

FOR CERTAIN RESIDENTIAL MORTGAGE LOANS. 

Section 10(j)(2) of the Federal Home Loan Bank Act (12 U.S.C. 

1430(j)(2)) is amended—

(1) in subparagraph (A), by striking ‘‘or’’ at the end; 

(2) in subparagraph (B), by striking the period at the end 

and inserting ‘‘; or’’; and 

(3) by adding at the end the following: 

‘‘(C) during the 2-year period beginning on the date of 

enactment of this subparagraph, use such percentage as 

the Director may by regulation establish of any subsidized 

advances set aside to finance homeownership under subparagraph (A) to refinance loans that are secured by a first 

mortgage on a primary residence of any family having an 

income at or below 80 percent of the median income for 

the area.’’. 


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146 

TITLE III—TRANSFER OF FUNCTIONS, 

PERSONNEL, AND PROPERTY OF 

OFHEO AND THE FEDERAL HOUSING 

FINANCE BOARD 

Subtitle A—OFHEO 

SEC. 1301. ABOLISHMENT OF OFHEO. 

(a) IN GENERAL.—Effective at the end of the 1-year period beginning on the date of enactment of this Act, the Office of Federal 

Housing Enterprise Oversight of the Department of Housing and 

Urban Development and the positions of the Director and Deputy 

Director of such Office are abolished. 

(b) DISPOSITION OF AFFAIRS.—During the 1-year period beginning 

on the date of enactment of this Act, the Director of the Office of 

Federal Housing Enterprise Oversight, solely for the purpose of 

winding up the affairs of the Office of Federal Housing Enterprise 

Oversight— (1) shall manage the employees of such Office and provide 

for the payment of the compensation and benefits of any such 

employee which accrue before the effective date of the transfer 

of such employee under section 1303; and 

(2) may take any other action necessary for the purpose of 

winding up the affairs of the Office. 

(c) STATUS OF EMPLOYEES BEFORE TRANSFER.—The amendments 

made by title I and the abolishment of the Office of Federal Housing Enterprise Oversight under subsection (a) of this section may 

not be construed to affect the status of any employee of such Office 

as an employee of an agency of the United States for purposes of 

any other provision of law before the effective date of the transfer 

of any such employee under section 1303. 

(d) USE OF PROPERTY AND SERVICES.— (1) PROPERTY.—The Director may use the property of the Office of Federal Housing Enterprise Oversight to perform functions which have been transferred to the Director for such time 

as is reasonable to facilitate the orderly transfer of functions 

transferred under any other provision of this Act or any 

amendment made by this Act to any other provision of law. 

(2) AGENCY SERVICES.—Any agency, department, or other instrumentality of the United States, and any successor to any 

such agency, department, or instrumentality, which was providing supporting services to the Office of Federal Housing Enterprise Oversight before the expiration of the period under 

subsection (a) in connection with functions that are transferred 

to the Director shall—

(A) continue to provide such services, on a reimbursable 

basis, until the transfer of such functions is complete; and 

(B) consult with any such agency to coordinate and facilitate a prompt and reasonable transition. 

(e) CONTINUATION OF SERVICES.—The Director may use the services of employees and other personnel of the Office of Federal 

Housing Enterprise Oversight, on a reimbursable basis, to perform 

functions which have been transferred to the Director for such time 


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as is reasonable to facilitate the orderly transfer of functions pursuant to any other provision of this Act or any amendment made by 

this Act to any other provision of law. 

(f) SAVINGS PROVISIONS.— (1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AF- FECTED.—Subsection (a) shall not affect the validity of any 

right, duty, or obligation of the United States, the Director of 

the Office of Federal Housing Enterprise Oversight, or any 

other person, which— (A) arises under— (i) the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992; 

(ii) the Federal National Mortgage Association Charter Act; 

(iii) the Federal Home Loan Mortgage Corporation 

Act; or 

(iv) any other provision of law applicable with respect to such Office; and 

(B) existed on the day before the date of abolishment 

under subsection (a). 

(2) CONTINUATION OF SUITS.—No action or other proceeding 

commenced by or against the Director of the Office of Federal 

Housing Enterprise Oversight in connection with functions 

that are transferred to the Director of the Federal Housing Finance Agency shall abate by reason of the enactment of this 

Act, except that the Director of the Federal Housing Finance 

Agency shall be substituted for the Director of the Office of 

Federal Housing Enterprise Oversight as a party to any such 

action or proceeding. 

SEC. 1302. CONTINUATION AND COORDINATION OF CERTAIN ACTIONS. 

(a) IN GENERAL.—All regulations, orders, and determinations described in subsection (b) shall remain in effect according to the 

terms of such regulations, orders, and determinations, and shall be 

enforceable by or against the Director or the Secretary of Housing 

and Urban Development, as the case may be, until modified, terminated, set aside, or superseded in accordance with applicable law 

by the Director or the Secretary, as the case may be, any court of 

competent jurisdiction, or operation of law. 

(b) APPLICABILITY.—A regulation, order, or determination is described in this subsection if it— (1) was issued, made, prescribed, or allowed to become effective by—

(A) the Office of Federal Housing Enterprise Oversight; 

(B) the Secretary of Housing and Urban Development, 

and relates to the authority of the Secretary under—

(i) the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992; 

(ii) the Federal National Mortgage Association Charter Act, with respect to the Federal National Mortgage 

Association; or 

(iii) the Federal Home Loan Mortgage Corporation 

Act, with respect to the Federal Home Loan Mortgage 

Corporation; or 

(C) a court of competent jurisdiction, and relates to functions transferred by this Act; and 


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(2) is in effect on the effective date of the abolishment under 

section 1301(a). 

SEC. 1303. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO. 

(a) TRANSFER.—Each employee of the Office of Federal Housing 

Enterprise Oversight shall be transferred to the Agency for employment, not later than the effective date of the abolishment under 

section 1301(a), and such transfer shall be deemed a transfer of 

function for purposes of section 3503 of title 5, United States Code. 

(b) GUARANTEED POSITIONS.—

(1) IN GENERAL.—Each employee transferred under subsection (a) shall be guaranteed a position with the same status, 

tenure, grade, and pay as that held on the day immediately 

preceding the transfer. 

(2) NO INVOLUNTARY SEPARATION OR REDUCTION.—An employee transferred under subsection (a) holding a permanent 

position on the day immediately preceding the transfer may 

not be involuntarily separated or reduced in grade or compensation during the 12-month period beginning on the date of 

transfer, except for cause, or, in the case of a temporary employee, separated in accordance with the terms of the appointment of the employee. 

(c) APPOINTMENT AUTHORITY FOR EXCEPTED AND SENIOR EXECUTIVE SERVICE EMPLOYEES.—

(1) IN GENERAL.—In the case of an employee occupying a position in the excepted service or the Senior Executive Service, 

any appointment authority established under law or by regulations of the Office of Personnel Management for filling such position shall be transferred, subject to paragraph (2). 

(2) DECLINE OF TRANSFER.—The Director may decline a 

transfer of authority under paragraph (1) to the extent that 

such authority relates to—

(A) a position excepted from the competitive service because of its confidential, policymaking, policy-determining, 

or policy-advocating character; or 

(B) a noncareer position in the Senior Executive Service 

(within the meaning of section 3132(a)(7) of title 5, United 

States Code). 

(d) REORGANIZATION.—If the Director determines, after the end of 

the 1-year period beginning on the effective date of the abolishment 

under section 1301(a), that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employee retirement 

under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States 

Code. 

(e) EMPLOYEE BENEFIT PROGRAMS.—

(1) IN GENERAL.—Any employee of the Office of Federal 

Housing Enterprise Oversight accepting employment with the 

Agency as a result of a transfer under subsection (a) may retain, for 12 months after the date on which such transfer occurs, membership in any employee benefit program of the 

Agency or the Office of Federal Housing Enterprise Oversight 

of the Department of Housing and Urban Development, as applicable, including insurance, to which such employee belongs 

on the date of the abolishment under section 1301(a), if—


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(A) the employee does not elect to give up the benefit or 

membership in the program; and 

(B) the benefit or program is continued by the Director 

of the Federal Housing Finance Agency. 

(2) COST DIFFERENTIAL.— (A) IN GENERAL.—The difference in the costs between 

the benefits which would have been provided by the Office 

of Federal Housing Enterprise Oversight and those provided by this section shall be paid by the Director. 

(B) HEALTH INSURANCE.—If any employee elects to give 

up membership in a health insurance program or the 

health insurance program is not continued by the Director, 

the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after 

the date of such election or notice, without regard to any 

other regularly scheduled open season. 

SEC. 1304. TRANSFER OF PROPERTY AND FACILITIES. 

Upon the effective date of its abolishment under section 1301(a), 

all property of the Office of Federal Housing Enterprise Oversight 

shall transfer to the Agency. 

Subtitle B—Federal Housing Finance 

Board 

SEC. 1311. ABOLISHMENT OF THE FEDERAL HOUSING FINANCE 

BOARD. 

(a) IN GENERAL.—Effective at the end of the 1-year period beginning on the date of enactment of this Act, the Federal Housing Finance Board (in this subtitle referred to as the ‘‘Board’’) is abolished. 

(b) DISPOSITION OF AFFAIRS.—During the 1-year period beginning 

on the date of enactment of this Act, the Board, solely for the purpose of winding up the affairs of the Board—

(1) shall manage the employees of the Board and provide for 

the payment of the compensation and benefits of any such employee which accrue before the effective date of the transfer of 

such employee under section 1313; and 

(2) may take any other action necessary for the purpose of 

winding up the affairs of the Board. 

(c) STATUS OF EMPLOYEES BEFORE TRANSFER.—The amendments 

made by titles I and II and the abolishment of the Board under 

subsection (a) may not be construed to affect the status of any employee of the Board as an employee of an agency of the United 

States for purposes of any other provision of law before the effective date of the transfer of any such employee under section 1313. 

(d) USE OF PROPERTY AND SERVICES.—

(1) PROPERTY.—The Director may use the property of the 

Board to perform functions which have been transferred to the 

Director, for such time as is reasonable to facilitate the orderly 

transfer of functions transferred under any other provision of 

this Act or any amendment made by this Act to any other provision of law. 

(2) AGENCY SERVICES.—Any agency, department, or other instrumentality of the United States, and any successor to any 


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such agency, department, or instrumentality, which was providing supporting services to the Board before the expiration of 

the 1-year period under subsection (a) in connection with functions that are transferred to the Director shall—

(A) continue to provide such services, on a reimbursable 

basis, until the transfer of such functions is complete; and 

(B) consult with any such agency to coordinate and facilitate a prompt and reasonable transition. 

(e) CONTINUATION OF SERVICES.—The Director may use the services of employees and other personnel of the Board, on a reimbursable basis, to perform functions which have been transferred to the 

Director for such time as is reasonable to facilitate the orderly 

transfer of functions pursuant to any other provision of this Act or 

any amendment made by this Act to any other provision of law. 

(f) SAVINGS PROVISIONS.—

(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED.—Subsection (a) shall not affect the validity of any 

right, duty, or obligation of the United States, a member of the 

Board, or any other person, which—

(A) arises under the Federal Home Loan Bank Act, or 

any other provision of law applicable with respect to the 

Board; and 

(B) existed on the day before the effective date of the 

abolishment under subsection (a). 

(2) CONTINUATION OF SUITS.—No action or other proceeding 

commenced by or against the Board in connection with functions that are transferred under this Act to the Director shall 

abate by reason of the enactment of this Act, except that the 

Director shall be substituted for the Board or any member 

thereof as a party to any such action or proceeding. 

SEC. 1312. CONTINUATION AND COORDINATION OF CERTAIN ACTIONS. 

(a) IN GENERAL.—All regulations, orders, determinations, and 

resolutions described under subsection (b) shall remain in effect according to the terms of such regulations, orders, determinations, 

and resolutions, and shall be enforceable by or against the Director 

until modified, terminated, set aside, or superseded in accordance 

with applicable law by the Director, any court of competent jurisdiction, or operation of law. 

(b) APPLICABILITY.—A regulation, order, determination, or resolution is described under this subsection if it—

(1) was issued, made, prescribed, or allowed to become effective by—

(A) the Board; or 

(B) a court of competent jurisdiction, and relates to functions transferred by this Act; and 

(2) is in effect on the effective date of the abolishment under 

section 1311(a). 

SEC. 1313. TRANSFER AND RIGHTS OF EMPLOYEES OF THE FEDERAL 

HOUSING FINANCE BOARD. 

(a) TRANSFER.—Each employee of the Board shall be transferred 

to the Agency for employment, not later than the effective date of 

the abolishment under section 1311(a), and such transfer shall be 

deemed a transfer of function for purposes of section 3503 of title 

5, United States Code. 


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(b) GUARANTEED POSITIONS.—

(1) IN GENERAL.—Each employee transferred under subsection (a) shall be guaranteed a position with the same status, 

tenure, grade, and pay as that held on the day immediately 

preceding the transfer. 

(2) NO INVOLUNTARY SEPARATION OR REDUCTION.—An employee holding a permanent position on the day immediately 

preceding the transfer may not be involuntarily separated or 

reduced in grade or compensation during the 12-month period 

beginning on the date of transfer, except for cause, or, if the 

employee is a temporary employee, separated in accordance 

with the terms of the appointment of the employee. 

(c) APPOINTMENT AUTHORITY FOR EXCEPTED EMPLOYEES.—

(1) IN GENERAL.—In the case of an employee occupying a position in the excepted service, any appointment authority established under law or by regulations of the Office of Personnel 

Management for filling such position shall be transferred, subject to paragraph (2). 

(2) DECLINE OF TRANSFER.—The Director may decline a 

transfer of authority under paragraph (1), to the extent that 

such authority relates to a position excepted from the competitive service because of its confidential, policymaking, policy-determining, or policy-advocating character. 

(d) REORGANIZATION.—If the Director determines, after the end of 

the 1-year period beginning on the effective date of the abolishment 

under section 1311(a), that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employee retirement 

under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States 

Code. 

(e) EMPLOYEE BENEFIT PROGRAMS.—

(1) IN GENERAL.—Any employee of the Board accepting employment with the Agency as a result of a transfer under subsection (a) may retain, for 12 months after the date on which 

such transfer occurs, membership in any employee benefit program of the Agency or the Board, as applicable, including insurance, to which such employee belongs on the effective date 

of the abolishment under section 1311(a) if—

(A) the employee does not elect to give up the benefit or 

membership in the program; and 

(B) the benefit or program is continued by the Director. 

(2) COST DIFFERENTIAL.—

(A) IN GENERAL.—The difference in the costs between 

the benefits which would have been provided by the Board 

and those provided by this section shall be paid by the Director. 

(B) HEALTH INSURANCE.—If any employee elects to give 

up membership in a health insurance program or the 

health insurance program is not continued by the Director, 

the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after 

the date of such election or notice, without regard to any 

other regularly scheduled open season. 


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SEC. 1314. TRANSFER OF PROPERTY AND FACILITIES. 

Upon the effective date of the abolishment under section 1311(a), 

all property of the Board shall transfer to the Agency. 

TITLE IV—HOPE FOR HOMEOWNERS 

SEC. 1401. SHORT TITLE. 

This title may be cited as the ‘‘HOPE for Homeowners Act of 

2008’’. 

SEC. 1402. ESTABLISHMENT OF HOPE FOR HOMEOWNERS PROGRAM. 

(a) ESTABLISHMENT.—Title II of the National Housing Act (12 

U.S.C. 1707 et seq.) is amended by adding at the end the following: 

‘‘SEC. 257. HOPE FOR HOMEOWNERS PROGRAM. 

‘‘(a) ESTABLISHMENT.—There is established in the Federal Housing Administration a HOPE for Homeowners Program. ‘‘(b) PURPOSE.—The purpose of the HOPE for Homeowners Program is—

‘‘(1) to create an FHA program, participation in which is voluntary on the part of homeowners and existing loan holders to 

insure refinanced loans for distressed borrowers to support 

long-term, sustainable homeownership; ‘‘(2) to allow homeowners to avoid foreclosure by reducing the 

principle balance outstanding, and interest rate charged, on 

their mortgages; ‘‘(3) to help stabilize and provide confidence in mortgage 

markets by bringing transparency to the value of assets based 

on mortgage assets; ‘‘(4) to target mortgage assistance under this section to 

homeowners for their principal residence; ‘‘(5) to enhance the administrative capacity of the FHA to 

carry out its expanded role under the HOPE for Homeowners 

Program; ‘‘(6) to ensure the HOPE for Homeowners Program remains 

in effect only for as long as is necessary to provide stability to 

the housing market; and ‘‘(7) to provide servicers of delinquent mortgages with additional methods and approaches to avoid foreclosure. ‘‘(c) ESTABLISHMENT AND IMPLEMENTATION OF PROGRAM REQUIRE- MENTS.—

‘‘(1) DUTIES OF THE BOARD.—In order to carry out the purposes of the HOPE for Homeowners Program, the Board 

shall—

‘‘(A) establish requirements and standards for the program; and 

‘‘(B) prescribe such regulations and provide such guidance as may be necessary or appropriate to implement 

such requirements and standards. 

‘‘(2) DUTIES OF THE SECRETARY.—In carrying out any of the 

program requirements or standards established under paragraph (1), the Secretary may issue such interim guidance and 

mortgagee letters as the Secretary determines necessary or appropriate. 

‘‘(d) INSURANCE OF MORTGAGES.—The Secretary is authorized 

upon application of a mortgagee to make commitments to insure or 


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to insure any eligible mortgage that has been refinanced in a manner meeting the requirements under subsection (e). ‘‘(e) REQUIREMENTS OF INSURED MORTGAGES.—To be eligible for 

insurance under this section, a refinanced eligible mortgage shall 

comply with all of the following requirements: ‘‘(1) LACK OF CAPACITY TO PAY EXISTING MORTGAGE.— ‘‘(A) BORROWER CERTIFICATION.— ‘‘(i) IN GENERAL.—The mortgagor shall provide certification to the Secretary that the mortgagor has not 

intentionally defaulted on the mortgage or any other 

debt, and has not knowingly, or willfully and with actual knowledge, furnished material information known 

to be false for the purpose of obtaining any eligible 

mortgage. ‘‘(ii) PENALTIES.—

‘‘(I) FALSE STATEMENT.—Any certification filed 

pursuant to clause (i) shall contain an acknowledgment that any willful false statement made in 

such certification is punishable under section 

1001, of title 18, United States Code, by fine or 

imprisonment of not more than 5 years, or both. 

‘‘(II) LIABILITY FOR REPAYMENT.—The mortgagor 

shall agree in writing that the mortgagor shall be 

liable to repay to the Federal Housing Administration any direct financial benefit achieved from the 

reduction of indebtedness on the existing mortgage or mortgages on the residence refinanced 

under this section derived from misrepresentations made in the certifications and documentation required under this subparagraph, subject to 

the discretion of the Secretary. ‘‘(B) CURRENT BORROWER DEBT-TO-INCOME RATIO.—As of 

March 1, 2008, the mortgagor shall have had a ratio of 

mortgage debt to income, taking into consideration all existing mortgages of that mortgagor at such time, greater 

than 31 percent (or such higher amount as the Board determines appropriate). ‘‘(2) DETERMINATION OF PRINCIPAL OBLIGATION AMOUNT.— The principal obligation amount of the refinanced eligible 

mortgage to be insured shall— ‘‘(A) be determined by the reasonable ability of the mortgagor to make his or her mortgage payments, as such ability is determined by the Secretary pursuant to section 

203(b)(4) or by any other underwriting standards established by the Board; and ‘‘(B) not exceed 90 percent of the appraised value of the 

property to which such mortgage relates. ‘‘(3) REQUIRED WAIVER OF PREPAYMENT PENALTIES AND

FEES.—All penalties for prepayment or refinancing of the eligible mortgage, and all fees and penalties related to default or 

delinquency on the eligible mortgage, shall be waived or forgiven. ‘‘(4) EXTINGUISHMENT OF SUBORDINATE LIENS.—

‘‘(A) REQUIRED AGREEMENT.—All holders of outstanding 

mortgage liens on the property to which the eligible mortVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00155 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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gage relates shall agree to accept the proceeds of the insured loan as payment in full of all indebtedness under the 

eligible mortgage, and all encumbrances related to such eligible mortgage shall be removed. The Secretary may take 

such actions, subject to standards established by the Board 

under subparagraph (B), as may be necessary and appropriate to facilitate coordination and agreement between 

the holders of the existing senior mortgage and any existing subordinate mortgages, taking into consideration the 

subordinate lien status of such subordinate mortgages. ‘‘(B) SHARED APPRECIATION.— ‘‘(i) IN GENERAL.—The Board shall establish standards and policies that will allow for the payment to 

the holder of any existing subordinate mortgage of a 

portion of any future appreciation in the property secured by such eligible mortgage that is owed to the 

Secretary pursuant to subsection (k). 

‘‘(ii) FACTORS.—In establishing the standards and 

policies required under clause (i), the Board shall take 

into consideration— ‘‘(I) the status of any subordinate mortgage; 

‘‘(II) the outstanding principal balance of and 

accrued interest on the existing senior mortgage 

and any outstanding subordinate mortgages; ‘‘(III) the extent to which the current appraised 

value of the property securing a subordinate mortgage is less than the outstanding principal balance and accrued interest on any other liens that 

are senior to such subordinate mortgage; and ‘‘(IV) such other factors as the Board determines 

to be appropriate. ‘‘(C) VOLUNTARY PROGRAM.—This paragraph may not be 

construed to require any holder of any existing mortgage 

to participate in the program under this section generally, 

or with respect to any particular loan. ‘‘(5) TERM OF MORTGAGE.—The refinanced eligible mortgage 

to be insured shall— ‘‘(A) bear interest at a single rate that is fixed for the entire term of the mortgage; and ‘‘(B) have a maturity of not less than 30 years from the 

date of the beginning of amortization of such refinanced eligible mortgage. ‘‘(6) MAXIMUM LOAN AMOUNT.—The principal obligation 

amount of the eligible mortgage to be insured shall not exceed 

132 percent of the dollar amount limitation in effect for 2007 

under section 305(a)(2) of the Federal Home Loan Mortgage 

Corporation Act (12 U.S.C. 1454(a)(2)) for a property of the applicable size. 

‘‘(7) PROHIBITION ON SECOND LIENS.—A mortgagor may not 

grant a new second lien on the mortgaged property during the 

first 5 years of the term of the mortgage insured under this 

section, except as the Board determines to be necessary to ensure the maintenance of property standards; and provided that 

such new outstanding liens (A) do not reduce the value of the 

Government’s equity in the borrower’s home; and (B) when 


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combined with the mortgagor’s existing mortgage indebtedness, 

do not exceed 95 percent of the home’s appraised value at the 

time of the new second lien. 

‘‘(8) APPRAISALS.—Any appraisal conducted in connection 

with a mortgage insured under this section shall—

‘‘(A) be based on the current value of the property; 

‘‘(B) be conducted in accordance with title XI of the Financial Institutions Reform, Recovery, and Enforcement 

Act of 1989 (12 U.S.C. 3331 et seq.); 

‘‘(C) be completed by an appraiser who meets the competency requirements of the Uniform Standards of Professional Appraisal Practice; 

‘‘(D) be wholly consistent with the appraisal standards, 

practices, and procedures under section 202(e) of this Act 

that apply to all loans insured under this Act; and 

‘‘(E) comply with the requirements of subsection (g) of 

this section (relating to appraisal independence). 

‘‘(9) DOCUMENTATION AND VERIFICATION OF INCOME.—In complying with the FHA underwriting requirements under the 

HOPE for Homeowners Program under this section, the mortgagee shall document and verify the income of the mortgagor 

or non-filing status by procuring (A) an income tax return transcript of the income tax returns of the mortgagor, or(B) a copy 

of the income tax returns from the Internal Revenue Service, 

for the two most recent years for which the filing deadline for 

such years has passed and by any other method, in accordance 

with procedures and standards that the Board shall establish. 

‘‘(10) MORTGAGE FRAUD.—The mortgagor shall not have been 

convicted under Federal or State law for fraud during the 10- 

year period ending upon the insurance of the mortgage under 

this section. 

‘‘(11) PRIMARY RESIDENCE.—The mortgagor shall provide documentation satisfactory in the determination of the Secretary 

to prove that the residence covered by the mortgage to be insured under this section is occupied by the mortgagor as the 

primary residence of the mortgagor, and that such residence is 

the only residence in which the mortgagor has any present 

ownership interest. 

‘‘(f) STUDY OF AUCTION OR BULK REFINANCE PROGRAM.—

‘‘(1) STUDY.—The Board shall conduct a study of the need for 

and efficacy of an auction or bulk refinancing mechanism to facilitate refinancing of existing residential mortgages that are 

at risk for foreclosure into mortgages insured under this section. The study shall identify and examine various options for 

mechanisms under which lenders and servicers of such mortgages may make bids for forward commitments for such insurance in an expedited manner. 

‘‘(2) CONTENT.—

‘‘(A) ANALYSIS.—The study required under paragraph (1) 

shall analyze—

‘‘(i) the feasibility of establishing a mechanism that 

would facilitate the more rapid refinancing of borrowers at risk of foreclosure into performing mortgages insured under this section; 


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‘‘(ii) whether such a mechanism would provide an effective and efficient mechanism to reduce foreclosures 

on qualified existing mortgages; 

‘‘(iii) whether the use of an auction or bulk refinance 

program is necessary to stabilize the housing market 

and reduce the impact of turmoil in that market on 

the economy of the United States; 

‘‘(iv) whether there are other mechanisms or authority that would be useful to reduce foreclosure; and 

‘‘(v) and any other factors that the Board considers 

relevant. 

‘‘(B) DETERMINATIONS.—To the extent that the Board 

finds that a facility of the type described in subparagraph 

(A) is feasible and useful, the study shall—

‘‘(i) determine and identify any additional authority 

or resources needed to establish and operate such a 

mechanism; 

‘‘(ii) determine whether there is a need for additional authority with respect to the loan underwriting 

criteria established in this section or with respect to 

eligibility of participating borrowers, lenders, or holders of liens; 

‘‘(iii) determine whether such underwriting criteria 

should be established on the basis of individual loans, 

in the aggregate, or otherwise to facilitate the goal of 

refinancing borrowers at risk of foreclosure into viable 

loans insured under this section. 

‘‘(3) REPORT.—Not later than the expiration of the 60-day period beginning on the date of the enactment of this section, the 

Board shall submit a report regarding the results of the study 

conducted under this subsection to the Committee on Financial 

Services of the House of Representatives and the Committee on 

Banking, Housing, and Urban Affairs of the Senate. The report 

shall include a detailed description of the analysis required 

under paragraph (2)(A) and of the determinations made pursuant to paragraph (2)(B), and shall include any other findings 

and recommendations of the Board pursuant to the study, including identifying various options for mechanisms described 

in paragraph (1). 

‘‘(g) APPRAISAL INDEPENDENCE.—

‘‘(1) PROHIBITIONS ON INTERESTED PARTIES IN A REAL ESTATE

TRANSACTION.—No mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, nor any 

other person with an interest in a real estate transaction involving an appraisal in connection with a mortgage insured 

under this section shall improperly influence, or attempt to improperly influence, through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, nonpayment 

for services rendered, or bribery, the development, reporting, 

result, or review of a real estate appraisal sought in connection 

with the mortgage. 

‘‘(2) CIVIL MONETARY PENALTIES.—The Secretary may impose 

a civil money penalty for any knowing and material violation 


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of paragraph (1) under the same terms and conditions as are 

authorized in section 536(a) of this Act. ‘‘(h) STANDARDS TO PROTECT AGAINST ADVERSE SELECTION.— ‘‘(1) IN GENERAL.—The Board shall, by rule or order, establish standards and policies to require the underwriter of the insured loan to provide such representations and warranties as 

the Board considers necessary or appropriate to enforce compliance with all underwriting and appraisal standards of the 

HOPE for Homeowners Program. ‘‘(2) EXCLUSION FOR VIOLATIONS.—The Board shall prohibit 

the Secretary from paying insurance benefits to a mortgagee 

who violates the representations and warranties, as established under paragraph (1), or in any case in which a mortgagor fails to make the first payment on a refinanced eligible 

mortgage. ‘‘(3) OTHER AUTHORITY.—The Board may establish such other 

standards or policies as necessary to protect against adverse 

selection, including requiring loans identified by the Secretary 

as higher risk loans to demonstrate payment performance for 

a reasonable period of time prior to being insured under the 

program. 

‘‘(i) PREMIUMS.—For each refinanced eligible mortgage insured 

under this section, the Secretary shall establish and collect— ‘‘(1) at the time of insurance, a single premium payment in 

an amount equal to 3 percent of the amount of the original insured principal obligation of the refinanced eligible mortgage, 

which shall be paid from the proceeds of the mortgage being 

insured under this section, through the reduction of the 

amount of indebtedness that existed on the eligible mortgage 

prior to refinancing; and ‘‘(2) in addition to the premium required under paragraph 

(1), an annual premium in an amount equal to 1.5 percent of 

the amount of the remaining insured principal balance of the 

mortgage. 

‘‘(j) ORIGINATION FEES AND INTEREST RATE.—The Board shall establish—

‘‘(1) a reasonable limitation on origination fees for refinanced 

eligible mortgages insured under this section; and ‘‘(2) procedures to ensure that interest rates on such mortgages shall be commensurate with market rate interest rates 

on such types of loans. ‘‘(k) EQUITY AND APPRECIATION.—

‘‘(1) FIVE-YEAR PHASE-IN FOR EQUITY AS A RESULT OF SALE OR

REFINANCING.—For each eligible mortgage insured under this 

section, the Secretary and the mortgagor of such mortgage 

shall, upon any sale or disposition of the property to which 

such mortgage relates, or upon the subsequent refinancing of 

such mortgage, be entitled to the following with respect to any 

equity created as a direct result of such sale or refinancing: ‘‘(A) If such sale or refinancing occurs during the period 

that begins on the date that such mortgage is insured and 

ends 1 year after such date of insurance, the Secretary 

shall be entitled to 100 percent of such equity. ‘‘(B) If such sale or refinancing occurs during the period 

that begins 1 year after such date of insurance and ends 


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2 years after such date of insurance, the Secretary shall be 

entitled to 90 percent of such equity and the mortgagor 

shall be entitled to 10 percent of such equity. 

‘‘(C) If such sale or refinancing occurs during the period 

that begins 2 years after such date of insurance and ends 

3 years after such date of insurance, the Secretary shall be 

entitled to 80 percent of such equity and the mortgagor 

shall be entitled to 20 percent of such equity. 

‘‘(D) If such sale or refinancing occurs during the period 

that begins 3 years after such date of insurance and ends 

4 years after such date of insurance, the Secretary shall be 

entitled to 70 percent of such equity and the mortgagor 

shall be entitled to 30 percent of such equity. 

‘‘(E) If such sale or refinancing occurs during the period 

that begins 4 years after such date of insurance and ends 

5 years after such date of insurance, the Secretary shall be 

entitled to 60 percent of such equity and the mortgagor 

shall be entitled to 40 percent of such equity. 

‘‘(F) If such sale or refinancing occurs during any period 

that begins 5 years after such date of insurance, the Secretary shall be entitled to 50 percent of such equity and 

the mortgagor shall be entitled to 50 percent of such equity. 

‘‘(2) APPRECIATION IN VALUE.—For each eligible mortgage insured under this section, the Secretary and the mortgagor of 

such mortgage shall, upon any sale or disposition of the property to which such mortgage relates, each be entitled to 50 percent of any appreciation in value of the appraised value of such 

property that has occurred since the date that such mortgage 

was insured under this section. 

‘‘(l) ESTABLISHMENT OF HOPE FUND.—

‘‘(1) IN GENERAL.—There is established in the Federal Housing Administration a revolving fund to be known as the Home 

Ownership Preservation Entity Fund, which shall be used by 

the Board for carrying out the mortgage insurance obligations 

under this section. 

‘‘(2) MANAGEMENT OF FUND.—The HOPE Fund shall be administered and managed by the Secretary, who shall establish 

reasonable and prudent criteria for the management and operation of any amounts in the HOPE Fund. 

‘‘(m) LIMITATION ON AGGREGATE INSURANCE AUTHORITY.—The 

aggregate original principal obligation of all mortgages insured 

under this section may not exceed $300,000,000,000. 

‘‘(n) REPORTS BY THE BOARD.—The Board shall submit monthly 

reports to the Congress identifying the progress of the HOPE for 

Homeowners Program, which shall contain the following information for each month: 

‘‘(1) The number of new mortgages insured under this section, including the location of the properties subject to such 

mortgages by census tract. 

‘‘(2) The aggregate principal obligation of new mortgages insured under this section. 

‘‘(3) The average amount by which the principle balance outstanding on mortgages insured this section was reduced. 


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‘‘(4) The amount of premiums collected for insurance of mortgages under this section. ‘‘(5) The claim and loss rates for mortgages insured under 

this section. ‘‘(6) Any other information that the Board considers appropriate. ‘‘(o) REQUIRED OUTREACH EFFORTS.—The Secretary shall carry 

out outreach efforts to ensure that homeowners, lenders, and the 

general public are aware of the opportunities for assistance available under this section. ‘‘(p) ENHANCEMENT OF FHA CAPACITY.—Under the direction of 

the Board, the Secretary shall take such actions as may be necessary to— ‘‘(1) contract for the establishment of underwriting criteria, 

automated underwriting systems, pricing standards, and other 

factors relating to eligibility for mortgages insured under this 

section; ‘‘(2) contract for independent quality reviews of underwriting, including appraisal reviews and fraud detection, of 

mortgages insured under this section or pools of such mortgages; and ‘‘(3) increase personnel of the Department as necessary to 

process or monitor the processing of mortgages insured under 

this section. ‘‘(q) GNMA COMMITMENT AUTHORITY.— ‘‘(1) GUARANTEES.—The Secretary shall take such actions as 

may be necessary to ensure that securities based on and 

backed by a trust or pool composed of mortgages insured under 

this section are available to be guaranteed by the Government 

National Mortgage Association as to the timely payment of 

principal and interest. ‘‘(2) GUARANTEE AUTHORITY.—To carry out the purposes of 

section 306 of the National Housing Act (12 U.S.C. 1721), the 

Government National Mortgage Association may enter into 

new commitments to issue guarantees of securities based on or 

backed by mortgages insured under this section, not exceeding 

$300,000,000,000. The amount of authority provided under the 

preceding sentence to enter into new commitments to issue 

guarantees is in addition to any amount of authority to make 

new commitments to issue guarantees that is provided to the 

Association under any other provision of law. ‘‘(r) SUNSET.—The Secretary may not enter into any new commitment to insure any refinanced eligible mortgage, or newly insure 

any refinanced eligible mortgage pursuant to this section before October 1, 2008 or after September 30, 2011. 

‘‘(s) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

‘‘(1) APPROVED FINANCIAL INSTITUTION OR MORTGAGEE.—The 

term ‘approved financial institution or mortgagee’ means a financial institution or mortgagee approved by the Secretary 

under section 203 as responsible and able to service mortgages 

responsibly. 

‘‘(2) BOARD.—The term ‘Board’ means the Board of Directors 

of the HOPE for Homeowners Program. The Board shall be 

composed of the Secretary, the Secretary of the Treasury, the 


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Chairperson of the Board of Governors of the Federal Reserve 

System, and the Chairperson of the Board of Directors of the 

Federal Deposit Insurance Corporation, or their designees. ‘‘(3) ELIGIBLE MORTGAGE.—The term ‘eligible mortgage’ means a mortgage— ‘‘(A) the mortgagor of which— ‘‘(i) occupies such property as his or her principal 

residence; and ‘‘(ii) cannot, subject to subsection (e)(1)(B) and such 

other standards established by the Board, afford his or 

her mortgage payments; and ‘‘(B) originated on or before January 1, 2008. ‘‘(4) EXISTING SENIOR MORTGAGE.—The term ‘existing senior 

mortgage’ means, with respect to a mortgage insured under 

this section, the existing mortgage that has superior priority. 

‘‘(5) EXISTING SUBORDINATE MORTGAGE.—The term ‘existing 

subordinate mortgage’ means, with respect to a mortgage insured under this section, an existing mortgage that has subordinate priority to the existing senior mortgage. 

‘‘(6) HOPE FOR HOMEOWNERS PROGRAM.—The term ‘HOPE 

for Homeowners Program’ means the program established 

under this section. 

‘‘(7) SECRETARY.—The term ‘Secretary’ means the Secretary 

of Housing and Urban Development, except where specifically 

provided otherwise. ‘‘(t) REQUIREMENTS RELATED TO THE BOARD.— ‘‘(1) COMPENSATION, ACTUAL, NECESSARY, AND TRANSPOR- TATION EXPENSES.— ‘‘(A) FEDERAL EMPLOYEES.—A member of the Board who 

is an officer or employee of the Federal Government shall 

serve without additional pay (or benefits in the nature of 

compensation) for service as a member of the Board. 

‘‘(B) TRAVEL EXPENSES.—Members of the Board shall be 

entitled to receive travel expenses, including per diem in 

lieu of subsistence, equivalent to those set forth in subchapter I of chapter 57 of title 5, United States Code. ‘‘(2) BYLAWS.—The Board may prescribe, amend, and repeal 

such bylaws as may be necessary for carrying out the functions 

of the Board. ‘‘(3) QUORUM.—A majority of the Board shall constitute a 

quorum. 

‘‘(4) STAFF; EXPERTS AND CONSULTANTS.—

‘‘(A) DETAIL OF GOVERNMENT EMPLOYEES.—Upon request 

of the Board, any Federal Government employee may be 

detailed to the Board without reimbursement, and such detail shall be without interruption or loss of civil service 

status or privilege. 

‘‘(B) EXPERTS AND CONSULTANTS.—The Board shall procure the services of experts and consultants as the Board 

considers appropriate. 

‘‘(u) RULE OF CONSTRUCTION RELATED TO VOLUNTARY NATURE OF

THE PROGRAM.—This section shall not be construed to require that 

any approved financial institution or mortgagee participate in any 

activity authorized under this section, including any activity related to the refinancing of an eligible mortgage. 


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‘‘(v) RULE OF CONSTRUCTION RELATED TO INSURANCE OF MORT- GAGES.—Except as otherwise provided for in this section or by action of the Board, the provisions and requirements of section 203(b) 

shall apply with respect to the insurance of any eligible mortgage 

under this section. ‘‘(w) HOPE BONDS.— ‘‘(1) ISSUANCE AND REPAYMENT OF BONDS.—Notwithstanding 

section 504(b) of the Federal Credit Reform Act of 1990 (2 

U.S.C. 661d(b)), the Secretary of the Treasury shall— ‘‘(A) subject to such terms and conditions as the Secretary of the Treasury deems necessary, issue Federal 

credit instruments, to be known as ‘HOPE Bonds’, that are 

callable at the discretion of the Secretary of the Treasury 

and do not, in the aggregate, exceed the amount specified 

in subsection (m); ‘‘(B) provide the subsidy amounts necessary for loan 

guarantees under the HOPE for Homeowners Program, 

not to exceed the amount specified in subsection (m), in accordance with the provisions of the Federal Credit Reform 

Act of 1990 (2 U.S.C. 661 et seq.), except as provided in 

this paragraph; and ‘‘(C) use the proceeds from HOPE Bonds only to pay for 

the net costs to the Federal Government of the HOPE for 

Homeowners Program, including administrative costs. ‘‘(2) REIMBURSEMENTS TO TREASURY.—Funds received pursuant to section 1338(b) of the Federal Housing Enterprises Regulatory Reform Act of 1992 shall be used to reimburse the Secretary of the Treasury for amounts borrowed under paragraph 

(1). ‘‘(3) USE OF RESERVE FUND.—If the net cost to the Federal 

Government for the HOPE for Homeowners Program exceeds 

the amount of funds received under paragraph (2), remaining 

debts of the HOPE for Homeowners Program shall be paid 

from amounts deposited into the fund established by the Secretary under section 1337(e) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, remaining 

amounts in such fund to be used to reduce the National debt. ‘‘(4) REDUCTION OF NATIONAL DEBT.—Amounts collected 

under the HOPE for Homeowners Program in accordance with 

subsections (i) and (k) in excess of the net cost to the Federal 

Government for such Program shall be used to reduce the National debt.’’. 

SEC. 1403. FIDUCIARY DUTY OF SERVICERS OF POOLED RESIDENTIAL 

MORTGAGE LOANS. 

The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended 

by inserting after section 129 the following new section: 

‘‘SEC. 129A. FIDUCIARY DUTY OF SERVICERS OF POOLED RESIDENTIAL MORTGAGES. 

‘‘(a) IN GENERAL.—Except as may be established in any investment contract between a servicer of pooled residential mortgages 

and an investor, a servicer of pooled residential mortgages—

‘‘(1) owes any duty to maximize the net present value of the 

pooled mortgages in an investment to all investors and parties 

having a direct or indirect interest in such investment, not to 

any individual party or group of parties; and 


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‘‘(2) shall be deemed to act in the best interests of all such 

investors and parties if the servicer agrees to or implements a 

modification or workout plan, including any modification or refinancing undertaken pursuant to the HOPE for Homeowners 

Act of 2008, for a residential mortgage or a class of residential 

mortgages that constitute a part or all of the pooled mortgages 

in such investment, provided that any mortgage so modified 

meets the following criteria: 

‘‘(A) Default on the payment of such mortgage has occurred or is reasonably foreseeable. 

‘‘(B) The property securing such mortgage is occupied by 

the mortgagor of such mortgage. 

‘‘(C) The anticipated recovery on the principal outstanding obligation of the mortgage under the modification 

or workout plan exceeds, on a net present value basis, the 

anticipated recovery on the principal outstanding obligation of the mortgage through foreclosure. 

‘‘(b) DEFINITION.—As used in this section, the term ‘servicer’

means the person responsible for servicing of a loan (including the 

person who makes or holds a loan if such person also services the 

loan).’’. 

SEC. 1404. REVISED STANDARDS FOR FHA APPRAISERS. 

Section 202(e) of the National Housing Act (12 U.S.C. 1708(e)) is 

amended by adding at the end the following: 

‘‘(5) ADDITIONAL APPRAISER STANDARDS.—Beginning on the 

date of enactment of the Federal Housing Finance Regulatory 

Reform Act of 2008, any appraiser chosen or approved to conduct appraisals for mortgages under this title shall—

‘‘(A) be certified—

‘‘(i) by the State in which the property to be appraised is located; or 

‘‘(ii) by a nationally recognized professional appraisal organization; and 

‘‘(B) have demonstrated verifiable education in the appraisal requirements established by the Federal Housing 

Administration under this subsection.’’. 

TITLE V—S.A.F.E. MORTGAGE 

LICENSING ACT 

SEC. 1501. SHORT TITLE. 

This title may be cited as the ‘‘Secure and Fair Enforcement for 

Mortgage Licensing Act of 2008’’ or ‘‘S.A.F.E. Mortgage Licensing 

Act of 2008’’. 

SEC. 1502. PURPOSES AND METHODS FOR ESTABLISHING A MORTGAGE LICENSING SYSTEM AND REGISTRY. 

In order to increase uniformity, reduce regulatory burden, enhance consumer protection, and reduce fraud, the States, through 

the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, are hereby encouraged 

to establish a Nationwide Mortgage Licensing System and Registry 

for the residential mortgage industry that accomplishes all of the 

following objectives: 


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(1) Provides uniform license applications and reporting requirements for State-licensed loan originators. 

(2) Provides a comprehensive licensing and supervisory database. 

(3) Aggregates and improves the flow of information to and 

between regulators. 

(4) Provides increased accountability and tracking of loan 

originators. 

(5) Streamlines the licensing process and reduces the regulatory burden. 

(6) Enhances consumer protections and supports anti-fraud 

measures. 

(7) Provides consumers with easily accessible information, offered at no charge, utilizing electronic media, including the 

Internet, regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan 

originators. 

(8) Establishes a means by which residential mortgage loan 

originators would, to the greatest extent possible, be required 

to act in the best interests of the consumer. 

(9) Facilitates responsible behavior in the subprime mortgage market place and provides comprehensive training and 

examination requirements related to subprime mortgage lending. 

(10) Facilitates the collection and disbursement of consumer 

complaints on behalf of State and Federal mortgage regulators. 

SEC. 1503. DEFINITIONS. 

For purposes of this title, the following definitions shall apply: 

(1) FEDERAL BANKING AGENCIES.—The term ‘‘Federal banking agencies’’ means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of 

the Office of Thrift Supervision, the National Credit Union Administration, and the Federal Deposit Insurance Corporation. 

(2) DEPOSITORY INSTITUTION.—The term ‘‘depository institution’’ has the same meaning as in section 3 of the Federal Deposit Insurance Act, and includes any credit union. 

(3) LOAN ORIGINATOR.—

(A) IN GENERAL.—The term ‘‘loan originator’’—

(i) means an individual who—

(I) takes a residential mortgage loan application; and 

(II) offers or negotiates terms of a residential 

mortgage loan for compensation or gain; 

(ii) does not include any individual who is not otherwise described in clause (i) and who performs purely 

administrative or clerical tasks on behalf of a person 

who is described in any such clause; 

(iii) does not include a person or entity that only 

performs real estate brokerage activities and is licensed or registered in accordance with applicable 

State law, unless the person or entity is compensated 

by a lender, a mortgage broker, or other loan originator or by any agent of such lender, mortgage broker, 

or other loan originator; and 


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(iv) does not include a person or entity solely involved in extensions of credit relating to timeshare 

plans, as that term is defined in section 101(53D) of 

title 11, United States Code. 

(B) OTHER DEFINITIONS RELATING TO LOAN ORIGINATOR.—For purposes of this subsection, an individual ‘‘assists a consumer in obtaining or applying to obtain a residential mortgage loan’’ by, among other things, advising on 

loan terms (including rates, fees, other costs), preparing 

loan packages, or collecting information on behalf of the 

consumer with regard to a residential mortgage loan. 

(C) ADMINISTRATIVE OR CLERICAL TASKS.—The term ‘‘administrative or clerical tasks’’ means the receipt, collection, 

and distribution of information common for the processing 

or underwriting of a loan in the mortgage industry and 

communication with a consumer to obtain information necessary for the processing or underwriting of a residential 

mortgage loan. 

(D) REAL ESTATE BROKERAGE ACTIVITY DEFINED.—The 

term ‘‘real estate brokerage activity’’ means any activity 

that involves offering or providing real estate brokerage 

services to the public, including—

(i) acting as a real estate agent or real estate broker 

for a buyer, seller, lessor, or lessee of real property; 

(ii) bringing together parties interested in the sale, 

purchase, lease, rental, or exchange of real property; 

(iii) negotiating, on behalf of any party, any portion 

of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with providing financing with respect to any such 

transaction); 

(iv) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker 

under any applicable law; and 

(v) offering to engage in any activity, or act in any 

capacity, described in clause (i), (ii), (iii), or (iv). 

(4) LOAN PROCESSOR OR UNDERWRITER.—

(A) IN GENERAL.—The term ‘‘loan processor or underwriter’’ means an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of—

(i) a State-licensed loan originator; or 

(ii) a registered loan originator. 

(B) CLERICAL OR SUPPORT DUTIES.—For purposes of subparagraph (A), the term ‘‘clerical or support duties’’ may 

include—

(i) the receipt, collection, distribution, and analysis 

of information common for the processing or underwriting of a residential mortgage loan; and 

(ii) communicating with a consumer to obtain the information necessary for the processing or underwriting 

of a loan, to the extent that such communication does 

not include offering or negotiating loan rates or terms, 


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or counseling consumers about residential mortgage 

loan rates or terms. 

(5) NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY.—The term ‘‘Nationwide Mortgage Licensing System and 

Registry’’ means a mortgage licensing system developed and 

maintained by the Conference of State Bank Supervisors and 

the American Association of Residential Mortgage Regulators 

for the State licensing and registration of State-licensed loan 

originators and the registration of registered loan originators 

or any system established by the Secretary under section 1509. 

(6) NONTRADITIONAL MORTGAGE PRODUCT.—The term ‘‘nontraditional mortgage product’’ means any mortgage product 

other than a 30-year fixed rate mortgage. 

(7) REGISTERED LOAN ORIGINATOR.—The term ‘‘registered 

loan originator’’ means any individual who—

(A) meets the definition of loan originator and is an employee of—

(i) a depository institution; 

(ii) a subsidiary that is—

(I) owned and controlled by a depository institution; and 

(II) regulated by a Federal banking agency; or 

(iii) an institution regulated by the Farm Credit Administration; and 

(B) is registered with, and maintains a unique identifier 

through, the Nationwide Mortgage Licensing System and 

Registry. 

(8) RESIDENTIAL MORTGAGE LOAN.—The term ‘‘residential 

mortgage loan’’ means any loan primarily for personal, family, 

or household use that is secured by a mortgage, deed of trust, 

or other equivalent consensual security interest on a dwelling 

(as defined in section 103(v) of the Truth in Lending Act) or 

residential real estate upon which is constructed or intended to 

be constructed a dwelling (as so defined). 

(9) SECRETARY.—The term ‘‘Secretary’’ means the Secretary 

of Housing and Urban Development. 

(10) STATE.—The term ‘‘State’’ means any State of the 

United States, the District of Columbia, any territory of the 

United States, Puerto Rico, Guam, American Samoa, the Trust 

Territory of the Pacific Islands, the Virgin Islands, and the 

Northern Mariana Islands. 

(11) STATE-LICENSED LOAN ORIGINATOR.—The term ‘‘State-licensed loan originator’’ means any individual who—

(A) is a loan originator; 

(B) is not an employee of—

(i) a depository institution; 

(ii) a subsidiary that is—

(I) owned and controlled by a depository institution; and 

(II) regulated by a Federal banking agency; or 

(iii) an institution regulated by the Farm Credit Administration; and 

(C) is licensed by a State or by the Secretary under section 1508 and registered as a loan originator with, and 


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maintains a unique identifier through, the Nationwide 

Mortgage Licensing System and Registry. 

(12) UNIQUE IDENTIFIER.—

(A) IN GENERAL.—The term ‘‘unique identifier’’ means a 

number or other identifier that—

(i) permanently identifies a loan originator; 

(ii) is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry and 

the Federal banking agencies to facilitate electronic 

tracking of loan originators and uniform identification 

of, and public access to, the employment history of and 

the publicly adjudicated disciplinary and enforcement 

actions against loan originators; and 

(iii) shall not be used for purposes other than those 

set forth under this title. 

(B) RESPONSIBILITY OF STATES.—To the greatest extent 

possible and to accomplish the purpose of this title, States 

shall use unique identifiers in lieu of social security numbers. 

SEC. 1504. LICENSE OR REGISTRATION REQUIRED. 

(a) IN GENERAL.—Subject to the existence of a licensing or registration regime, as the case may be, an individual may not engage 

in the business of a loan originator without first—

(1) obtaining, and maintaining annually—

(A) a registration as a registered loan originator; or 

(B) a license and registration as a State-licensed loan 

originator; and 

(2) obtaining a unique identifier. 

(b) LOAN PROCESSORS AND UNDERWRITERS.—

(1) SUPERVISED LOAN PROCESSORS AND UNDERWRITERS.—A 

loan processor or underwriter who does not represent to the 

public, through advertising or other means of communicating 

or providing information (including the use of business cards, 

stationery, brochures, signs, rate lists, or other promotional 

items), that such individual can or will perform any of the activities of a loan originator shall not be required to be a Statelicensed loan originator. 

(2) INDEPENDENT CONTRACTORS.—An independent contractor 

may not engage in residential mortgage loan origination activities as a loan processor or underwriter unless such independent contractor is a State-licensed loan originator. 

SEC. 1505. STATE LICENSE AND REGISTRATION APPLICATION AND 

ISSUANCE. 

(a) BACKGROUND CHECKS.—In connection with an application to 

any State for licensing and registration as a State-licensed loan 

originator, the applicant shall, at a minimum, furnish to the Nationwide Mortgage Licensing System and Registry information concerning the applicant’s identity, including— (1) fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized 

to receive such information for a State and national criminal 

history background check; and 

(2) personal history and experience, including authorization 

for the System to obtain—


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(A) an independent credit report obtained from a consumer reporting agency described in section 603(p) of the 

Fair Credit Reporting Act; and 

(B) information related to any administrative, civil or 

criminal findings by any governmental jurisdiction. 

(b) ISSUANCE OF LICENSE.—The minimum standards for licensing 

and registration as a State-licensed loan originator shall include 

the following: 

(1) The applicant has never had a loan originator license revoked in any governmental jurisdiction. 

(2) The applicant has not been convicted of, or pled guilty or 

nolo contendere to, a felony in a domestic, foreign, or military 

court—

(A) during the 7-year period preceding the date of the 

application for licensing and registration; or 

(B) at any time preceding such date of application, if 

such felony involved an act of fraud, dishonesty, or a 

breach of trust, or money laundering. 

(3) The applicant has demonstrated financial responsibility, 

character, and general fitness such as to command the confidence of the community and to warrant a determination that 

the loan originator will operate honestly, fairly, and efficiently 

within the purposes of this title. 

(4) The applicant has completed the pre-licensing education 

requirement described in subsection (c). 

(5) The applicant has passed a written test that meets the 

test requirement described in subsection (d). 

(6) The applicant has met either a net worth or surety bond 

requirement, or paid into a State fund, as required by the 

State pursuant to section 1508(d)(6). 

(c) PRE-LICENSING EDUCATION OF LOAN ORIGINATORS.— (1) MINIMUM EDUCATIONAL REQUIREMENTS.—In order to meet 

the pre-licensing education requirement referred to in subsection (b)(4), a person shall complete at least 20 hours of education approved in accordance with paragraph (2), which shall 

include at least— (A) 3 hours of Federal law and regulations; 

(B) 3 hours of ethics, which shall include instruction on 

fraud, consumer protection, and fair lending issues; and 

(C) 2 hours of training related to lending standards for 

the nontraditional mortgage product marketplace. 

(2) APPROVED EDUCATIONAL COURSES.—For purposes of paragraph (1), pre-licensing education courses shall be reviewed, 

and approved by the Nationwide Mortgage Licensing System 

and Registry. 

(3) LIMITATION AND STANDARDS.—

(A) LIMITATION.—To maintain the independence of the 

approval process, the Nationwide Mortgage Licensing System and Registry shall not directly or indirectly offer prelicensure educational courses for loan originators. 

(B) STANDARDS.—In approving courses under this section, the Nationwide Mortgage Licensing System and Registry shall apply reasonable standards in the review and 

approval of courses. 

(d) TESTING OF LOAN ORIGINATORS.—


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(1) IN GENERAL.—In order to meet the written test requirement referred to in subsection (b)(5), an individual shall pass, 

in accordance with the standards established under this subsection, a qualified written test developed by the Nationwide 

Mortgage Licensing System and Registry and administered by 

an approved test provider. 

(2) QUALIFIED TEST.—A written test shall not be treated as 

a qualified written test for purposes of paragraph (1) unless 

the test adequately measures the applicant’s knowledge and 

comprehension in appropriate subject areas, including—

(A) ethics; 

(B) Federal law and regulation pertaining to mortgage 

origination; 

(C) State law and regulation pertaining to mortgage 

origination; 

(D) Federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional 

mortgage marketplace, and fair lending issues. 

(3) MINIMUM COMPETENCE.—

(A) PASSING SCORE.—An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than 75 percent 

correct answers to questions. 

(B) INITIAL RETESTS.—An individual may retake a test 3 

consecutive times with each consecutive taking occurring 

at least 30 days after the preceding test. 

(C) SUBSEQUENT RETESTS.—After failing 3 consecutive 

tests, an individual shall wait at least 6 months before 

taking the test again. 

(D) RETEST AFTER LAPSE OF LICENSE.—A State-licensed 

loan originator who fails to maintain a valid license for a 

period of 5 years or longer shall retake the test, not taking 

into account any time during which such individual is a 

registered loan originator. 

(e) MORTGAGE CALL REPORTS.—Each mortgage licensee shall 

submit to the Nationwide Mortgage Licensing System and Registry 

reports of condition, which shall be in such form and shall contain 

such information as the Nationwide Mortgage Licensing System 

and Registry may require. 

SEC. 1506. STANDARDS FOR STATE LICENSE RENEWAL. 

(a) IN GENERAL.—The minimum standards for license renewal 

for State-licensed loan originators shall include the following: 

(1) The loan originator continues to meet the minimum 

standards for license issuance. 

(2) The loan originator has satisfied the annual continuing 

education requirements described in subsection (b). 

(b) CONTINUING EDUCATION FOR STATE-LICENSED LOAN ORIGINATORS.—

(1) IN GENERAL.—In order to meet the annual continuing 

education requirements referred to in subsection (a)(2), a 

State-licensed loan originator shall complete at least 8 hours of 

education approved in accordance with paragraph (2), which 

shall include at least—

(A) 3 hours of Federal law and regulations; 


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(B) 2 hours of ethics, which shall include instruction on 

fraud, consumer protection, and fair lending issues; and 

(C) 2 hours of training related to lending standards for 

the nontraditional mortgage product marketplace. 

(2) APPROVED EDUCATIONAL COURSES.—For purposes of paragraph (1), continuing education courses shall be reviewed, and 

approved by the Nationwide Mortgage Licensing System and 

Registry. 

(3) CALCULATION OF CONTINUING EDUCATION CREDITS.—A 

State-licensed loan originator—

(A) may only receive credit for a continuing education 

course in the year in which the course is taken; and 

(B) may not take the same approved course in the same 

or successive years to meet the annual requirements for 

continuing education. 

(4) INSTRUCTOR CREDIT.—A State-licensed loan originator 

who is approved as an instructor of an approved continuing 

education course may receive credit for the originator’s own annual continuing education requirement at the rate of 2 hours 

credit for every 1 hour taught. 

(5) LIMITATION AND STANDARDS.—

(A) LIMITATION.—To maintain the independence of the 

approval process, the Nationwide Mortgage Licensing System and Registry shall not directly or indirectly offer any 

continuing education courses for loan originators. 

(B) STANDARDS.—In approving courses under this section, the Nationwide Mortgage Licensing System and Registry shall apply reasonable standards in the review and 

approval of courses. 

SEC. 1507. SYSTEM OF REGISTRATION ADMINISTRATION BY FEDERAL 

AGENCIES. 

(a) DEVELOPMENT.—

(1) IN GENERAL.—The Federal banking agencies shall jointly, 

through the Federal Financial Institutions Examination Council, and together with the Farm Credit Administration, develop 

and maintain a system for registering employees of a depository institution, employees of a subsidiary that is owned and 

controlled by a depository institution and regulated by a Federal banking agency, or employees of an institution regulated 

by the Farm Credit Administration, as registered loan originators with the Nationwide Mortgage Licensing System and Registry. The system shall be implemented before the end of the 

1-year period beginning on the date of enactment of this title. 

(2) REGISTRATION REQUIREMENTS.—In connection with the 

registration of any loan originator under this subsection, the 

appropriate Federal banking agency and the Farm Credit Administration shall, at a minimum, furnish or cause to be furnished to the Nationwide Mortgage Licensing System and Registry information concerning the employees’s identity, including—

(A) fingerprints for submission to the Federal Bureau of 

Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check; and 


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(B) personal history and experience, including authorization for the Nationwide Mortgage Licensing System and 

Registry to obtain information related to any administrative, civil or criminal findings by any governmental jurisdiction. 

(b) COORDINATION.— (1) UNIQUE IDENTIFIER.—The Federal banking agencies, 

through the Financial Institutions Examination Council, and 

the Farm Credit Administration shall coordinate with the Nationwide Mortgage Licensing System and Registry to establish 

protocols for assigning a unique identifier to each registered 

loan originator that will facilitate electronic tracking and uniform identification of, and public access to, the employment 

history of and publicly adjudicated disciplinary and enforcement actions against loan originators. 

(2) NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY

DEVELOPMENT.—To facilitate the transfer of information required by subsection (a)(2), the Nationwide Mortgage Licensing 

System and Registry shall coordinate with the Federal banking 

agencies, through the Financial Institutions Examination 

Council, and the Farm Credit Administration concerning the 

development and operation, by such System and Registry, of 

the registration functionality and data requirements for loan 

originators. 

(c) CONSIDERATION OF FACTORS AND PROCEDURES.—In establishing the registration procedures under subsection (a) and the 

protocols for assigning a unique identifier to a registered loan originator, the Federal banking agencies shall make such de minimis 

exceptions as may be appropriate to paragraphs (1)(A) and (2) of 

section 1504(a), shall make reasonable efforts to utilize existing information to minimize the burden of registering loan originators, 

and shall consider methods for automating the process to the greatest extent practicable consistent with the purposes of this title. 

SEC. 1508. SECRETARY OF HOUSING AND URBAN DEVELOPMENT 

BACKUP AUTHORITY TO ESTABLISH A LOAN ORIGINATOR 

LICENSING SYSTEM. 

(a) BACKUP LICENSING SYSTEM.—If, by the end of the 1-year period, or the 2-year period in the case of a State whose legislature 

meets only biennially, beginning on the date of the enactment of 

this title or at any time thereafter, the Secretary determines that 

a State does not have in place by law or regulation a system for 

licensing and registering loan originators that meets the requirements of sections 1505 and 1506 and subsection (d) of this section, 

or does not participate in the Nationwide Mortgage Licensing System and Registry, the Secretary shall provide for the establishment 

and maintenance of a system for the licensing and registration by 

the Secretary of loan originators operating in such State as Statelicensed loan originators. 

(b) LICENSING AND REGISTRATION REQUIREMENTS.—The system 

established by the Secretary under subsection (a) for any State 

shall meet the requirements of sections 1505 and 1506 for Statelicensed loan originators. 

(c) UNIQUE IDENTIFIER.—The Secretary shall coordinate with the 

Nationwide Mortgage Licensing System and Registry to establish 

protocols for assigning a unique identifier to each loan originator 


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licensed by the Secretary as a State-licensed loan originator that 

will facilitate electronic tracking and uniform identification of, and 

public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against loan originators. 

(d) STATE LICENSING LAW REQUIREMENTS.—For purposes of this 

section, the law in effect in a State meets the requirements of this 

subsection if the Secretary determines the law satisfies the following minimum requirements: 

(1) A State loan originator supervisory authority is maintained to provide effective supervision and enforcement of such 

law, including the suspension, termination, or nonrenewal of a 

license for a violation of State or Federal law. 

(2) The State loan originator supervisory authority ensures 

that all State-licensed loan originators operating in the State 

are registered with Nationwide Mortgage Licensing System 

and Registry. 

(3) The State loan originator supervisory authority is required to regularly report violations of such law, as well as enforcement actions and other relevant information, to the Nationwide Mortgage Licensing System and Registry. 

(4) The State loan originator supervisory authority has a 

process in place for challenging information contained in the 

Nationwide Mortgage Licensing System and Registry. 

(5) The State loan originator supervisory authority has established a mechanism to assess civil money penalties for individuals acting as mortgage originators in their State without 

a valid license or registration. 

(6) The State loan originator supervisory authority has established minimum net worth or surety bonding requirements 

that reflect the dollar amount of loans originated by a residential mortgage loan originator, or has established a recovery 

fund paid into by the loan originators. 

(e) TEMPORARY EXTENSION OF PERIOD.—The Secretary may extend, by not more than 24 months, the 1-year or 2-year period, as 

the case may be, referred to in subsection (a) for the licensing of 

loan originators in any State under a State licensing law that 

meets the requirements of sections 1505 and 1506 and subsection 

(d) if the Secretary determines that such State is making a good 

faith effort to establish a State licensing law that meets such requirements, license mortgage originators under such law, and register such originators with the Nationwide Mortgage Licensing System and Registry. 

SEC. 1509. BACKUP AUTHORITY TO ESTABLISH A NATIONWIDE MORTGAGE LICENSING AND REGISTRY SYSTEM. 

If at any time the Secretary determines that the Nationwide 

Mortgage Licensing System and Registry is failing to meet the requirements and purposes of this title for a comprehensive licensing, 

supervisory, and tracking system for loan originators, the Secretary 

shall establish and maintain such a system to carry out the purposes of this title and the effective registration and regulation of 

loan originators. 


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SEC. 1510. FEES. 

The Federal banking agencies, the Farm Credit Administration, 

the Secretary, and the Nationwide Mortgage Licensing System and 

Registry may charge reasonable fees to cover the costs of maintaining and providing access to information from the Nationwide Mortgage Licensing System and Registry, to the extent that such fees 

are not charged to consumers for access to such system and registry. 

SEC. 1511. BACKGROUND CHECKS OF LOAN ORIGINATORS. 

(a) ACCESS TO RECORDS.—Notwithstanding any other provision of 

law, in providing identification and processing functions, the Attorney General shall provide access to all criminal history information 

to the appropriate State officials responsible for regulating Statelicensed loan originators to the extent criminal history background 

checks are required under the laws of the State for the licensing 

of such loan originators. 

(b) AGENT.—For the purposes of this section and in order to reduce the points of contact which the Federal Bureau of Investigation may have to maintain for purposes of subsection (a), the Conference of State Bank Supervisors or a wholly owned subsidiary 

may be used as a channeling agent of the States for requesting and 

distributing information between the Department of Justice and 

the appropriate State agencies. 

SEC. 1512. CONFIDENTIALITY OF INFORMATION. 

(a) SYSTEM CONFIDENTIALITY.—Except as otherwise provided in 

this section, any requirement under Federal or State law regarding 

the privacy or confidentiality of any information or material provided to the Nationwide Mortgage Licensing System and Registry 

or a system established by the Secretary under section 1509, and 

any privilege arising under Federal or State law (including the 

rules of any Federal or State court) with respect to such information or material, shall continue to apply to such information or material after the information or material has been disclosed to the 

system. Such information and material may be shared with all 

State and Federal regulatory officials with mortgage industry oversight authority without the loss of privilege or the loss of confidentiality protections provided by Federal and State laws. 

(b) NONAPPLICABILITY OF CERTAIN REQUIREMENTS.—Information 

or material that is subject to a privilege or confidentiality under 

subsection (a) shall not be subject to—

(1) disclosure under any Federal or State law governing the 

disclosure to the public of information held by an officer or an 

agency of the Federal Government or the respective State; or 

(2) subpoena or discovery, or admission into evidence, in any 

private civil action or administrative process, unless with respect to any privilege held by the Nationwide Mortgage Licensing System and Registry or the Secretary with respect to such 

information or material, the person to whom such information 

or material pertains waives, in whole or in part, in the discretion of such person, that privilege. 

(c) COORDINATION WITH OTHER LAW.—Any State law, including 

any State open record law, relating to the disclosure of confidential 

supervisory information or any information or material described 

in subsection (a) that is inconsistent with subsection (a) shall be 


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superseded by the requirements of such provision to the extent 

State law provides less confidentiality or a weaker privilege. 

(d) PUBLIC ACCESS TO INFORMATION.—This section shall not 

apply with respect to the information or material relating to the 

employment history of, and publicly adjudicated disciplinary and 

enforcement actions against, loan originators that is included in 

Nationwide Mortgage Licensing System and Registry for access by 

the public. 

SEC. 1513. LIABILITY PROVISIONS. 

The Secretary, any State official or agency, any Federal banking 

agency, or any organization serving as the administrator of the Nationwide Mortgage Licensing System and Registry or a system established by the Secretary under section 1509, or any officer or employee of any such entity, shall not be subject to any civil action 

or proceeding for monetary damages by reason of the good faith action or omission of any officer or employee of any such entity, while 

acting within the scope of office or employment, relating to the collection, furnishing, or dissemination of information concerning persons who are loan originators or are applying for licensing or registration as loan originators. 

SEC. 1514. ENFORCEMENT UNDER HUD BACKUP LICENSING SYSTEM. 

(a) SUMMONS AUTHORITY.—The Secretary may—

(1) examine any books, papers, records, or other data of any 

loan originator operating in any State which is subject to a licensing system established by the Secretary under section 

1508; and 

(2) summon any loan originator referred to in paragraph (1) 

or any person having possession, custody, or care of the reports 

and records relating to such loan originator, to appear before 

the Secretary or any delegate of the Secretary at a time and 

place named in the summons and to produce such books, papers, records, or other data, and to give testimony, under oath, 

as may be relevant or material to an investigation of such loan 

originator for compliance with the requirements of this title. 

(b) EXAMINATION AUTHORITY.—

(1) IN GENERAL.—If the Secretary establishes a licensing system under section 1508 for any State, the Secretary shall appoint examiners for the purposes of administering such section. 

(2) POWER TO EXAMINE.—Any examiner appointed under 

paragraph (1) shall have power, on behalf of the Secretary, to 

make any examination of any loan originator operating in any 

State which is subject to a licensing system established by the 

Secretary under section 1508 whenever the Secretary determines an examination of any loan originator is necessary to determine the compliance by the originator with this title. 

(3) REPORT OF EXAMINATION.—Each examiner appointed 

under paragraph (1) shall make a full and detailed report of 

examination of any loan originator examined to the Secretary. 

(4) ADMINISTRATION OF OATHS AND AFFIRMATIONS; EVI- DENCE.—In connection with examinations of loan originators 

operating in any State which is subject to a licensing system 

established by the Secretary under section 1508, or with other 

types of investigations to determine compliance with applicable 

law and regulations, the Secretary and examiners appointed by 


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the Secretary may administer oaths and affirmations and examine and take and preserve testimony under oath as to any 

matter in respect to the affairs of any such loan originator. 

(5) ASSESSMENTS.—The cost of conducting any examination 

of any loan originator operating in any State which is subject 

to a licensing system established by the Secretary under section 1508 shall be assessed by the Secretary against the loan 

originator to meet the Secretary’s expenses in carrying out 

such examination. 

(c) CEASE AND DESIST PROCEEDING.— (1) AUTHORITY OF SECRETARY.—If the Secretary finds, after 

notice and opportunity for hearing, that any person is violating, has violated, or is about to violate any provision of this 

title, or any regulation thereunder, with respect to a State 

which is subject to a licensing system established by the Secretary under section 1508, the Secretary may publish such 

findings and enter an order requiring such person, and any 

other person that is, was, or would be a cause of the violation, 

due to an act or omission the person knew or should have 

known would contribute to such violation, to cease and desist 

from committing or causing such violation and any future violation of the same provision, rule, or regulation. Such order 

may, in addition to requiring a person to cease and desist from 

committing or causing a violation, require such person to comply, or to take steps to effect compliance, with such provision 

or regulation, upon such terms and conditions and within such 

time as the Secretary may specify in such order. Any such 

order may, as the Secretary deems appropriate, require future 

compliance or steps to effect future compliance, either permanently or for such period of time as the Secretary may specify, 

with such provision or regulation with respect to any loan 

originator. 

(2) HEARING.—The notice instituting proceedings pursuant to 

paragraph (1) shall fix a hearing date not earlier than 30 days 

nor later than 60 days after service of the notice unless an earlier or a later date is set by the Secretary with the consent of 

any respondent so served. 

(3) TEMPORARY ORDER.—Whenever the Secretary determines 

that the alleged violation or threatened violation specified in 

the notice instituting proceedings pursuant to paragraph (1), or 

the continuation thereof, is likely to result in significant dissipation or conversion of assets, significant harm to consumers, 

or substantial harm to the public interest prior to the completion of the proceedings, the Secretary may enter a temporary 

order requiring the respondent to cease and desist from the 

violation or threatened violation and to take such action to prevent the violation or threatened violation and to prevent dissipation or conversion of assets, significant harm to consumers, 

or substantial harm to the public interest as the Secretary 

deems appropriate pending completion of such proceedings. 

Such an order shall be entered only after notice and opportunity for a hearing, unless the Secretary determines that notice and hearing prior to entry would be impracticable or contrary to the public interest. A temporary order shall become effective upon service upon the respondent and, unless set aside, 


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limited, or suspended by the Secretary or a court of competent 

jurisdiction, shall remain effective and enforceable pending the 

completion of the proceedings. 

(4) REVIEW OF TEMPORARY ORDERS.— (A) REVIEW BY SECRETARY.—At any time after the respondent has been served with a temporary cease and desist order pursuant to paragraph (3), the respondent may 

apply to the Secretary to have the order set aside, limited, 

or suspended. If the respondent has been served with a 

temporary cease and desist order entered without a prior 

hearing before the Secretary, the respondent may, within 

10 days after the date on which the order was served, request a hearing on such application and the Secretary 

shall hold a hearing and render a decision on such application at the earliest possible time. 

(B) JUDICIAL REVIEW.—Within—

(i) 10 days after the date the respondent was served 

with a temporary cease and desist order entered with 

a prior hearing before the Secretary; or 

(ii) 10 days after the Secretary renders a decision on 

an application and hearing under paragraph (1), with 

respect to any temporary cease and desist order entered without a prior hearing before the Secretary, 

the respondent may apply to the United States district 

court for the district in which the respondent resides or 

has its principal place of business, or for the District of Columbia, for an order setting aside, limiting, or suspending 

the effectiveness or enforcement of the order, and the court 

shall have jurisdiction to enter such an order. A respondent served with a temporary cease and desist order entered without a prior hearing before the Secretary may not 

apply to the court except after hearing and decision by the 

Secretary on the respondent’s application under subparagraph (A). 

(C) NO AUTOMATIC STAY OF TEMPORARY ORDER.—The 

commencement of proceedings under subparagraph (B) 

shall not, unless specifically ordered by the court, operate 

as a stay of the Secretary’s order. 

(5) AUTHORITY OF THE SECRETARY TO PROHIBIT PERSONS

FROM SERVING AS LOAN ORIGINATORS.—In any cease and desist 

proceeding under paragraph (1), the Secretary may issue an 

order to prohibit, conditionally or unconditionally, and permanently or for such period of time as the Secretary shall determine, any person who has violated this title or regulations 

thereunder, from acting as a loan originator if the conduct of 

that person demonstrates unfitness to serve as a loan originator. 

(d) AUTHORITY OF THE SECRETARY TO ASSESS MONEY PENALTIES.—

(1) IN GENERAL.—The Secretary may impose a civil penalty 

on a loan originator operating in any State which is subject to 

a licensing system established by the Secretary under section 

1508, if the Secretary finds, on the record after notice and opportunity for hearing, that such loan originator has violated or 

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lation prescribed by the Secretary under this title or order 

issued under subsection (c). 

(2) MAXIMUM AMOUNT OF PENALTY.—The maximum amount 

of penalty for each act or omission described in paragraph (1) 

shall be $25,000. 

SEC. 1515. STATE EXAMINATION AUTHORITY. 

In addition to any authority allowed under State law a State licensing agency shall have the authority to conduct investigations 

and examinations as follows: 

(1) For the purposes of investigating violations or complaints 

arising under this title, or for the purposes of examination, the 

State licensing agency may review, investigate, or examine any 

loan originator licensed or required to be licensed under this 

title, as often as necessary in order to carry out the purposes 

of this title. 

(2) Each such loan originator shall make available upon request to the State licensing agency the books and records relating to the operations of such originator. The State licensing 

agency may have access to such books and records and interview the officers, principals, loan originators, employees, independent contractors, agents, and customers of the licensee concerning their business. 

(3) The authority of this section shall remain in effect, 

whether such a loan originator acts or claims to act under any 

licensing or registration law of such State, or claims to act 

without such authority. 

(4) No person subject to investigation or examination under 

this section may knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, 

or other information. 

SEC. 1516. REPORTS AND RECOMMENDATIONS TO CONGRESS. 

(a) ANNUAL REPORTS.—Not later than 1 year after the date of enactment of this title, and annually thereafter, the Secretary shall 

submit a report to Congress on the effectiveness of the provisions 

of this title, including legislative recommendations, if any, for 

strengthening consumer protections, enhancing examination standards, streamlining communication between all stakeholders involved in residential mortgage loan origination and processing, and 

establishing performance based bonding requirements for mortgage 

originators or institutions that employ such brokers. 

(b) LEGISLATIVE RECOMMENDATIONS.—Not later than 6 months 

after the date of enactment of this title, the Secretary shall make 

recommendations to Congress on legislative reforms to the Real Estate Settlement Procedures Act of 1974, that the Secretary deems 

appropriate to promote more transparent disclosures, allowing consumers to better shop and compare mortgage loan terms and settlement costs. 

SEC. 1517. STUDY AND REPORTS ON DEFAULTS AND FORECLOSURES. 

(a) STUDY REQUIRED.—The Secretary shall conduct an extensive 

study of the root causes of default and foreclosure of home loans, 

using as much empirical data as is available. 

(b) PRELIMINARY REPORT TO CONGRESS.—Not later than 6 

months after the date of enactment of this title, the Secretary shall 


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submit to Congress a preliminary report regarding the study required by this section. 

(c) FINAL REPORT TO CONGRESS.—Not later than 12 months after 

the date of enactment of this title, the Secretary shall submit to 

Congress a final report regarding the results of the study required 

by this section, which shall include any recommended legislation 

relating to the study, and recommendations for best practices and 

for a process to provide targeted assistance to populations with the 

highest risk of potential default or foreclosure. 

TITLE VI—MISCELLANEOUS 

SEC. 1601. STUDY AND REPORTS ON GUARANTEE FEES. 

(a) ONGOING STUDY OF FEES.—The Director shall conduct an ongoing study of fees charged by enterprises for guaranteeing a mortgage. 

(b) COLLECTION OF DATA.—The Director shall, by regulation or 

order, establish procedures for the collection of data from enterprises for purposes of this subsection, including the format and the 

process for collection of such data. 

(c) REPORTS TO CONGRESS.—The Director shall annually submit 

a report to Congress on the results of the study conducted under 

subsection (a), based on the aggregated data collected under subsection (a) for the subject year, regarding the amount of such fees 

and the criteria used by the enterprises to determine such fees. 

(d) CONTENTS OF REPORTS.—The reports required under subsection (c) shall identify and analyze—

(1) the factors considered in determining the amount of the 

guarantee fees charged; 

(2) the total revenue earned by the enterprises from guarantee fees; 

(3) the total costs incurred by the enterprises for providing 

guarantees; 

(4) the average guarantee fee charged by the enterprises; 

(5) an analysis of any increase or decrease in guarantee fees 

from the preceding year; 

(6) a breakdown of the revenue and costs associated with 

providing guarantees, based on product type and risk classifications; and 

(7) a breakdown of guarantee fees charged based on asset 

size of the originator and the number of loans sold or transferred to an enterprise. 

(e) PROTECTION OF INFORMATION.—Nothing in this section may 

be construed to require or authorize the Director to publicly disclose information that is confidential or proprietary. 

SEC. 1602. STUDY AND REPORT ON DEFAULT RISK EVALUATION. 

(a) STUDY.—The Director shall conduct a study of ways to improve the overall default risk evaluation used with respect to residential mortgage loans. Particular attention shall be paid to the development and utilization of processes and technologies that provide a means to standardize the measurement of risk. 

(b) REPORT.—The Director shall submit a report on the study 

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cial Services of the House of Representatives, not later than 1 year 

after the date of enactment of this Act. 

SEC. 1603. CONVERSION OF HUD CONTRACTS. 

(a) IN GENERAL.—Notwithstanding any other provision of law, 

the Secretary may, at the request of an owner of a multifamily 

housing project that exceeds 5,000 units to which a contract for 

project-based rental assistance under section 8 of the United States 

Housing Act of 1937 (‘‘Act’’) (42 U.S.C. 1437f) and a Rental Assistance Payment contract is subject, convert such contracts to a contract for project-based rental assistance under section 8 of the Act. 

(b) INITIAL RENEWAL.— (1) At the request of an owner under subsection (a) made no 

later than 90 days prior to a conversion, the Secretary may, to 

the extent sufficient amounts are made available in appropriation Acts and notwithstanding any other law, treat the contemplated resulting contract as if such contract were eligible 

for initial renewal under section 524(a) of the MultiFamily Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 

1437f note) (‘‘MAHRA’’) (42 U.S.C. 1437f note). 

(2) A request by an owner pursuant to paragraph (1) shall 

be upon such terms and conditions as the Secretary may require. 

(c) RESULTING CONTRACT.—The resulting contract shall— (1) be subject to section 524(a) of MAHRA (42 U.S.C. 1437f 

note); 

(2) be considered for all purposes a contract that has been 

renewed under section 524(a) of MAHRA (42 U.S.C. 1437f 

note) for a term not to exceed 20 years; 

(3) be subsequently renewable at the request of an owner, 

under any renewal option for which the project is eligible 

under MAHRA (42 U.S.C. 1437f note); 

(4) contain provisions limiting distributions, as the Secretary 

determines appropriate, not to exceed 10 percent of the initial 

investment of the owner; 

(5) be subject to the availability of sufficient amounts in appropriation Acts; and 

(6) be subject to such other terms and conditions as the Secretary considers appropriate. 

(d) INCOME TARGETING.—To the extent that assisted dwelling 

units, subject to the resulting contract under subsection (a), serve 

low-income families, as defined in section 3(b)(2) of the Act (42 

U.S.C. 1437a(b)(2)) the units shall be considered to be in compliance with all income targeting requirements under the Act (42 

U.S.C. 1437 et seq). 

(e) TENANT ELIGIBILITY.—Notwithstanding any other provision of 

law, each family residing in an assisted dwelling unit on the date 

of conversion of a contract under this section, subject to the resulting contract under subsection (a), shall be considered to meet the 

applicable requirements for income eligibility and occupancy. 

(f) DEFINITIONS.—As used in this section—

(1) the term ‘‘Secretary’’ means the Secretary of Housing and 

Urban Development; 

(2) the term ‘‘conversion’’ means the action under which a 

contract for project-based rental assistance under section 8 of 

the Act and a Rental Assistance Payment contract become a 


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contract for project-based rental assistance under section 8 of 

the Act (42 U.S.C. 1437f) pursuant to subsection (a); 

(3) the term ‘‘resulting contract’’ means the new contract 

after a conversion pursuant to subsection (a); and 

(4) the term ‘‘assisted dwelling unit’’ means a dwelling unit 

in a multifamily housing project that exceeds 5,000 units that, 

on the date of conversion of a contract under this section, is 

subject to a contract for project-based rental assistance under 

section 8 of the Act (42 U.S.C. 1437f) or a Rental Assistance 

Payment contract. 

SEC. 1604. BRIDGE DEPOSITORY INSTITUTIONS. 

(a) IN GENERAL.—Section 11 of the Federal Deposit Insurance 

Act (12 U.S.C. 1821) is amended—

(1) in subsection (d)(2)—

(A) in subparagraph (F), by striking ‘‘as receiver’’ and all 

that follows through clause (ii) and inserting the following: 

‘‘as receiver, with respect to any insured depository institution, organize a new depository institution under subsection (m) or a bridge depository institution under subsection (n).’’; 

(B) in subparagraph (G), by striking ‘‘new bank or a 

bridge bank’’ and inserting ‘‘new depository institution or 

a bridge depository institution’’; 

(2) in the heading for subsection (e)(10)(C), by striking 

‘‘BRIDGE BANKS’’ and inserting ‘‘BRIDGE DEPOSITORY INSTITUTIONS’’; 

(3) in subsection (e)(10)(C)(i), by striking ‘‘bridge bank’’ and 

inserting ‘‘bridge depository institution’’; 

(4) in subsection (m)—

(A) in the subsection heading, by striking ‘‘BANKS’’ and 

inserting ‘‘DEPOSITORY INSTITUTIONS’’; 

(B) by striking ‘‘insured bank’’ each place such term appears and inserting ‘‘insured depository institution’’; 

(C) by striking ‘‘new bank’’ each place such term appears 

and inserting ‘‘new depository institution’’; 

(D) by striking ‘‘such bank’’ each place such term appears and inserting ‘‘such depository institution’’; 

(E) by striking ‘‘the bank’’ each place such term appears 

and inserting ‘‘the insured depository institution’’; 

(F) in paragraph (1), by inserting ‘‘or Federal savings association’’ after ‘‘national bank’’; 

(G) in paragraph (6), by striking ‘‘only bank’’ and inserting ‘‘only depository institution’’; 

(H) in paragraph (9), by inserting ‘‘or the Director of the 

Office of Thrift Supervision, as appropriate’’ after ‘‘Comptroller of the Currency’’; 

(I) in paragraph (15), by striking ‘‘, but in no event’’ and 

all that follows through ‘‘located’’; 

(J) in paragraph (16)—

(i) by inserting ‘‘or the Director of the Office of 

Thrift Supervision, as appropriate,’’ after ‘‘Comptroller 

of the Currency’’ each place such term appears; 

(ii) by striking ‘‘the bank’’ each place such term appears and inserting ‘‘the depository institution’’; 


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(iii) by inserting ‘‘or Federal savings association’’

after ‘‘national bank’’ each place such term appears; 

(iv) by inserting ‘‘or Federal savings associations’’

after ‘‘national banks’’; and 

(v) by striking ‘‘Such bank’’ and inserting ‘‘Such depository institution’’; and 

(K) in paragraph (18), by inserting ‘‘or the Director of 

the Office of Thrift Supervision, as appropriate,’’ after 

‘‘Comptroller of the Currency’’ each place such term appears; 

(5) in subsection (n)—

(A) in the subsection heading, by striking ‘‘BANKS’’ and 

inserting ‘‘DEPOSITORY INSTITUTIONS’’; 

(B) by striking ‘‘bridge bank’’ each place such term appears and inserting ‘‘bridge depository institution’’; 

(C) by striking ‘‘bridge banks’’ each place such term appears (other than in paragraph (1)(A))and inserting ‘‘bridge 

depository institutions’’; 

(D) by striking ‘‘bridge bank’s’’ each place such term appears and inserting ‘‘bridge depository institution’s’’; 

(E) by striking ‘‘insured bank’’ each place such term appears and inserting ‘‘insured depository institution’’; 

(F) by striking ‘‘insured banks’’ each place such term appears and inserting ‘‘insured depository institutions’’; 

(G) by striking ‘‘such bank’’ each place such term appears (other than in paragraph (4)(J)) and inserting ‘‘such 

depository institution’’; 

(H) by striking ‘‘the bank’’ each place such term appears 

and inserting ‘‘the depository institution’’; 

(I) by striking ‘‘bank or banks’’ each place such term appears and inserting ‘‘depository institution or institutions’’; 

(J) in paragraph (1)(A)—

(i) by inserting ‘‘, with respect to 1 or more insured 

banks, or the Director of the Office of Thrift Supervision, with respect to 1 or more insured savings associations,’’ after ‘‘Comptroller of the Currency’’; 

(ii) by inserting ‘‘or Federal savings associations, as 

appropriate,’’ after ‘‘national banks’’; 

(iii) by inserting ‘‘or Federal savings associations, as 

applicable,’’ after ‘‘banking associations’’; and 

(iv) by striking ‘‘as bridge banks’’ and inserting ‘‘as 

‘bridge depository institutions’ ’’; 

(K) in paragraph (1)(B)—

(i) by striking ‘‘of a bank’’; and 

(ii) by striking ‘‘of that bank’’; 

(L) in the heading for paragraph (1)(E), by inserting ‘‘OR

FEDERAL SAVINGS ASSOCIATION’’ before the period; 

(M) in paragraph (1)(E), by inserting before the period ‘‘, 

in the case of 1 or more insured banks, and as a Federal 

savings association, in the case of 1 or more insured savings associations’’; 

(N) in paragraph (2)—

(i) by inserting ‘‘or Federal savings association’’ after 

‘‘national bank’’ each place such term appears; 


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181 

(ii) in subparagraph (A), by inserting ‘‘or the Director of the Office of Thrift Supervision’’ after ‘‘Comptroller of the Currency’’; and 

(iii) in the heading for subparagraph (B), by inserting ‘‘OR FEDERAL SAVINGS ASSOCIATION’’ before the period; 

(O) in paragraph (4)—

(i) in the matter preceding subparagraph (A), by inserting ‘‘or Federal savings association, as appropriate’’ after ‘‘national bank’’; 

(ii) in subparagraph (C), by striking ‘‘under section 

5138 of the Revised Statutes or any other’’ and inserting ‘‘under any’’; 

(iii) by inserting ‘‘and the Director of the Office of 

Thrift Supervision, as appropriate,’’ after ‘‘Comptroller 

of the Currency’’ each place such term appears; 

(iv) in subparagraph (D), by striking ‘‘bank’s’’ and 

inserting ‘‘depository institution’s’’; and 

(v) in subparagraph (H), by striking ‘‘a bank in default’’ and inserting ‘‘a depository institution in default’’; 

(P) in paragraph (8)—

(i) in subparagraph (A), by striking ‘‘the banks’’ and 

inserting ‘‘the depository institutions’’; 

(ii) in subparagraph (B), by striking ‘‘bank’s’’ and inserting ‘‘depository institution’s’’; 

(Q) by striking ‘‘BRIDGE BANK’’ or ‘‘BRIDGE BANKS’’ as the 

case may be in the headings for paragraphs (9), (10), (12), 

and (13) and inserting ‘‘BRIDGE DEPOSITORY INSTITUTION’’

or ‘‘BRIDGE DEPOSITORY INSTITUTIONS’’ as appropriate; 

(R) in paragraph (11), by inserting ‘‘or a Federal savings 

association, as the case may be,’’ after ‘‘national bank’’

each place such term appears; 

(S) in paragraph (12)—

(i) by inserting ‘‘or the Director of the Office of 

Thrift Supervision, as appropriate,’’ after ‘‘Comptroller 

of the Currency’’ each place such term appears; and 

(ii) by inserting ‘‘or Federal savings associations, as 

appropriate’’ after ‘‘national banks’’; and 

(T) in paragraph (13), by striking ‘‘single bank’’ and inserting ‘‘single depository institution’’. 

(b) OTHER CONFORMING AMENDMENTS.—

(1) FEDERAL DEPOSIT INSURANCE ACT.—The Federal Deposit 

Insurance Act (12 U.S.C. 1811 et seq.) is amended—

(A) in section 3 (12 U.S.C. 1813), by striking subsection 

(i) and inserting the following: 

‘‘(i) NEW DEPOSITORY INSTITUTION AND BRIDGE DEPOSITORY INSTITUTION DEFINED.—

‘‘(1) NEW DEPOSITORY INSTITUTION.—The term ‘new depository institution’ means a new national bank or Federal savings 

association, other than a bridge depository institution, organized by the Corporation in accordance with section 11(m). 

‘‘(2) BRIDGE DEPOSITORY INSTITUTION.—The term ‘bridge depository institution’ means a new national bank or Federal 


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182 

savings association organized by the Corporation in accordance 

with section 11(n).’’; 

(B) in section 10(d)(5)(B) (12 U.S.C. 1820(d)(5)(B)), by 

striking ‘‘bridge bank’’ and inserting ‘‘bridge depository institution’’; 

(C) in section 12 (12 U.S.C. 1822), by striking ‘‘new 

bank’’ each place such term appears and inserting ‘‘new 

depository institution’’;and 

(D) in section 38(j)(2) (12 U.S.C. 1831o(j)(2)), by striking 

‘‘bridge bank’’ and inserting ‘‘bridge depository institution’’. 

(2) FEDERAL CREDIT UNION ACT.—Section 207(c)(10)(C)(i) of 

the Federal Credit Union Act (12 U.S.C. 1787(c)(10)(C)(i)) is 

amended by striking ‘‘bridge bank’’ and inserting ‘‘bridge depository institution’’. 

(3) TITLE 11, UNITED STATES CODE.—Section 783 of title 11, 

United States Code, is amended by striking ‘‘bridge bank’’ and 

inserting ‘‘bridge depository institution’’. 

(4) TITLE 26, UNITED STATES CODE.—Section 414(l)(2)(G) of 

the Internal Revenue Code of 1986, is amended by striking 

‘‘bridge bank’’ and inserting ‘‘bridge depository institution’’. 

(c) REPEAL OF DEPOSIT LIMITATION.—Section 11(n)(1)(B)(i) of the 

Federal Deposit Insurance Act (12 U.S.C. 1821(n)(1)(B)(i)) is 

amended by striking ‘‘, except that’’ and all that follows through 

‘‘another insured depository institution’’. 

(d) FEDERAL RESERVE BANK LENDING TO BRIDGE DEPOSITORY INSTITUTIONS.—Section 11(n)(5) of the Federal Deposit Insurance Act 

(12 U.S.C. 1821(n)(5)) is amended by adding at the end the following new subparagraph: 

‘‘(D) CAPITAL LEVELS.—A bridge depository institution 

shall not be considered an undercapitalized depository institution or a critically undercapitalized depository institution for purposes of section 10B(b) of the Federal Reserve 

Act.’’. 

SEC. 1605. SENSE OF THE SENATE. 

It is the sense of the Senate that in implementing or carrying out 

any provision of this Act, or any amendment made by this Act, the 

Senate supports a policy of noninterference regarding local government requirements that the holder of a foreclosed property maintain that property. 

DIVISION B—FORECLOSURE 

PREVENTION 

SECTION 2001. SHORT TITLE. 

This division may be cited as the ‘‘Foreclosure Prevention Act of 

2008’’. 

SEC. 2002. EMERGENCY DESIGNATION. 

For purposes of Senate enforcement, all provisions of this division are designated as emergency requirements and necessary to 

meet emergency needs pursuant to section 204 of S. Con. Res. 21 

(110th Congress), the concurrent resolution on the budget for fiscal 

year 2008. 


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183 

TITLE I—FHA MODERNIZATION ACT OF 

2008 

SEC. 2101. SHORT TITLE. 

This title may be cited as the ‘‘FHA Modernization Act of 2008’’. 

Subtitle A—Building American 

Homeownership 

SEC. 2111. SHORT TITLE. 

This subtitle may be cited as the ‘‘Building American Homeownership Act of 2008’’. 

SEC. 2112. MAXIMUM PRINCIPAL LOAN OBLIGATION. 

(a) IN GENERAL.—Paragraph (2) of section 203(b) of the National 

Housing Act (12 U.S.C. 1709(b)(2)) is amended—

(1) by striking subparagraphs (A) and (B) and inserting the 

following: 

‘‘(A) not to exceed the lesser of—

‘‘(i) in the case of a 1-family residence, 115 percent 

of the median 1-family house price in the area, as determined by the Secretary; and in the case of a 2-, 3- 

, or 4-family residence, the percentage of such median 

price that bears the same ratio to such median price 

as the dollar amount limitation determined under the 

sixth sentence of section 305(a)(2) of the Federal Home 

Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) 

for a 2-, 3-, or 4-family residence, respectively, bears 

to the dollar amount limitation determined under such 

section for a 1-family residence; or 

‘‘(ii) 150 percent of the dollar amount limitation determined under the sixth sentence of such section 

305(a)(2) for a residence of applicable size; 

except that the dollar amount limitation in effect under 

this subparagraph for any size residence for any area may 

not be less than the greater of: (I) the dollar amount limitation in effect under this section for the area on October 

21, 1998; or (II) 65 percent of the dollar amount limitation 

determined under the sixth sentence of such section 

305(a)(2) for a residence of the applicable size; and 

‘‘(B) not to exceed 100 percent of the appraised value of 

the property.’’; and 

(2) in the matter following subparagraph (B), by striking the 

second sentence (relating to a definition of ‘‘average closing 

cost’’) and all that follows through ‘‘section 3103A(d) of title 38, 

United States Code.’’. (b) TREATMENT OF UP-FRONT PREMIUMS.—Section 203(d) of the 

National Housing Act (12 U.S.C. 1709(d)) is amended—

(1) by striking ‘‘Notwithstanding any’’ and inserting the following: ‘‘Except as provided in paragraph (2) of this subsection, 

notwithstanding’’; 

(2) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 

(3) by adding at the end the following new paragraph: 


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184 

‘‘(2) The maximum amount of a mortgage determined under subsection (b)(2)(B) of this section may not be increased as provided 

in paragraph (1).’’. 

(c) EFFECTIVE DATE.— The amendments made by subsection (a) 

shall take effect upon the expiration of the date described in section 202(a) of the Economic Stimulus Act of 2008 (Public Law 110–

185; 122 Stat. 620). 

SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF 

SELLER-FUNDED DOWN PAYMENT ASSISTANCE. 

Paragraph (9) of section 203(b) of the National Housing Act (12 

U.S.C. 1709(b)(9)) is amended to read as follows: 

‘‘(9) CASH INVESTMENT REQUIREMENT.—

‘‘(A) IN GENERAL.—A mortgage insured under this section shall be executed by a mortgagor who shall have paid, 

in cash or its equivalent, on account of the property an 

amount equal to not less than 3.5 percent of the appraised 

value of the property or such larger amount as the Secretary may determine. 

‘‘(B) FAMILY MEMBERS.—For purposes of this paragraph, 

the Secretary shall consider as cash or its equivalent any 

amounts borrowed from a family member (as such term is 

defined in section 201), subject only to the requirements 

that, in any case in which the repayment of such borrowed 

amounts is secured by a lien against the property, that—

‘‘(i) such lien shall be subordinate to the mortgage; 

and 

‘‘(ii) the sum of the principal obligation of the mortgage and the obligation secured by such lien may not 

exceed 100 percent of the appraised value of the property plus any initial service charges, appraisal, inspection, and other fees in connection with the mortgage. 

‘‘(C) PROHIBITED SOURCES.—In no case shall the funds 

required by subparagraph (A) consist, in whole or in part, 

of funds provided by any of the following parties before, 

during, or after closing of the property sale: 

‘‘(i) The seller or any other person or entity that financially benefits from the transaction. 

‘‘(ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in 

clause (i). 

This subparagraph shall apply only to mortgages for which 

the mortgagee has issued credit approval for the borrower 

on or after October 1, 2008.’’. 

SEC. 2114. MORTGAGE INSURANCE PREMIUMS. 

Section 203(c)(2) of the National Housing Act (12 U.S.C. 

1709(c)(2)) is amended—

(1) in the matter preceding subparagraph (A), by striking ‘‘or 

of the General Insurance Fund’’ and all that follows through ‘‘section 234(c),,’’; and 

(2) in subparagraph (A)— (A) by striking ‘‘2.25 percent’’ and inserting ‘‘3 percent’’; 

and 

(B) by striking ‘‘2.0 percent’’ and inserting ‘‘2.75 percent’’. 


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185 

SEC. 2115. REHABILITATION LOANS. 

Subsection (k) of section 203 of the National Housing Act (12 

U.S.C. 1709(k)) is amended—

(1) in paragraph (1), by striking ‘‘on’’ and all that follows 

through ‘‘1978’’; and 

(2) in paragraph (5)—

(A) by striking ‘‘General Insurance Fund’’ the first place 

it appears and inserting ‘‘Mutual Mortgage Insurance 

Fund’’; and 

(B) in the second sentence, by striking the comma and 

all that follows through ‘‘General Insurance Fund’’. 

SEC. 2116. DISCRETIONARY ACTION. 

The National Housing Act is amended—

(1) in subsection (e) of section 202 (12 U.S.C. 1708(e))—

(A) in paragraph (3)(B), by striking ‘‘section 202(e) of the 

National Housing Act’’ and inserting ‘‘this subsection’’; and 

(B) by redesignating such subsection as subsection (f); 

(2) by striking paragraph (4) of section 203(s) (12 U.S.C. 

1709(s)(4)) and inserting the following new paragraph: 

‘‘(4) the Secretary of Agriculture;’’; and 

(3) by transferring subsection (s) of section 203 (as amended 

by paragraph (2) of this section) to section 202, inserting such 

subsection after subsection (d) of section 202, and redesignating such subsection as subsection (e). 

SEC. 2117. INSURANCE OF CONDOMINIUMS. 

(a) IN GENERAL.—Section 234 of the National Housing Act (12 

U.S.C. 1715y) is amended—

(1) in subsection (c), in the first sentence—

(A) by striking ‘‘and’’ before ‘‘(2)’’; and 

(B) by inserting before the period at the end the following: ‘‘, and (3) the project has a blanket mortgage insured by the Secretary under subsection (d)’’; and 

(2) in subsection (g), by striking ‘‘, except that’’ and all that 

follows and inserting a period. 

(b) DEFINITION OF MORTGAGE.—Section 201(a) of the National 

Housing Act (12 U.S.C. 1707(a)) is amended—

(1) before ‘‘a first mortgage’’ insert ‘‘(A)’’; 

(2) by striking ‘‘or on a leasehold (1)’’ and inserting ‘‘(B) a 

first mortgage on a leasehold on real estate (i)’’; 

(3) by striking ‘‘or (2)’’ and inserting ‘‘, or (ii)’’; and 

(4) by inserting before the semicolon the following: ‘‘, or (C) 

a first mortgage given to secure the unpaid purchase price of 

a fee interest in, or long-term leasehold interest in, real estate 

consisting of a one-family unit in a multifamily project, including a project in which the dwelling units are attached, or are 

manufactured housing units, semi-detached, or detached, and 

an undivided interest in the common areas and facilities which 

serve the project’’. 

(c) DEFINITION OF REAL ESTATE.—Section 201 of the National 

Housing Act (12 U.S.C. 1707) is amended by adding at the end the 

following new subsection: 

‘‘(g) The term ‘real estate’ means land and all natural resources 

and structures permanently affixed to the land, including residential buildings and stationary manufactured housing. The Secretary 


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186 

may not require, for treatment of any land or other property as 

real estate for purposes of this title, that such land or property be 

treated as real estate for purposes of State taxation.’’. 

SEC. 2118. MUTUAL MORTGAGE INSURANCE FUND. 

(a) IN GENERAL.—Subsection (a) of section 202 of the National 

Housing Act (12 U.S.C. 1708(a)) is amended to read as follows: ‘‘(a) MUTUAL MORTGAGE INSURANCE FUND.— ‘‘(1) ESTABLISHMENT.—Subject to the provisions of the Federal Credit Reform Act of 1990, there is hereby created a Mutual Mortgage Insurance Fund (in this title referred to as the 

‘Fund’), which shall be used by the Secretary to carry out the 

provisions of this title with respect to mortgages insured under 

section 203. The Secretary may enter into commitments to 

guarantee, and may guarantee, such insured mortgages. ‘‘(2) LIMIT ON LOAN GUARANTEES.—The authority of the Secretary to enter into commitments to guarantee such insured 

mortgages shall be effective for any fiscal year only to the extent that the aggregate original principal loan amount under 

such mortgages, any part of which is guaranteed, does not exceed the amount specified in appropriations Acts for such fiscal 

year. ‘‘(3) FIDUCIARY RESPONSIBILITY.—The Secretary has a responsibility to ensure that the Mutual Mortgage Insurance Fund 

remains financially sound. ‘‘(4) ANNUAL INDEPENDENT ACTUARIAL STUDY.—The Secretary 

shall provide for an independent actuarial study of the Fund 

to be conducted annually, which shall analyze the financial position of the Fund. The Secretary shall submit a report annually to the Congress describing the results of such study and 

assessing the financial status of the Fund. The report shall recommend adjustments to underwriting standards, program participation, or premiums, if necessary, to ensure that the Fund 

remains financially sound. The report shall also include an 

evaluation of the quality control procedures and accuracy of information utilized in the process of underwriting loans guaranteed by the Fund. Such evaluation shall include a review of the 

risk characteristics of loans based not only on borrower information and performance, but on risks associated with loans 

originated or funded by various entities or financial institutions. ‘‘(5) QUARTERLY REPORTS.—During each fiscal year, the Secretary shall submit a report to the Congress for each calendar 

quarter, which shall specify for mortgages that are obligations 

of the Fund—

‘‘(A) the cumulative volume of loan guarantee commitments that have been made during such fiscal year 

through the end of the quarter for which the report is submitted; 

‘‘(B) the types of loans insured, categorized by risk; 

‘‘(C) any significant changes between actual and projected claim and prepayment activity; 

‘‘(D) projected versus actual loss rates; and 

‘‘(E) updated projections of the annual subsidy rates to 

ensure that increases in risk to the Fund are identified 

and mitigated by adjustments to underwriting standards, 


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187 

program participation, or premiums, and the financial 

soundness of the Fund is maintained. 

The first quarterly report under this paragraph shall be submitted on the last day of the first quarter of fiscal year 2008, 

or on the last day of the first full calendar quarter following 

the enactment of the Building American Homeownership Act of 

2008, whichever is later. ‘‘(6) ADJUSTMENT OF PREMIUMS.—If, pursuant to the independent actuarial study of the Fund required under paragraph 

(4), the Secretary determines that the Fund is not meeting the 

operational goals established under paragraph (7) or there is 

a substantial probability that the Fund will not maintain its 

established target subsidy rate, the Secretary may either make 

programmatic adjustments under this title as necessary to reduce the risk to the Fund, or make appropriate premium adjustments. ‘‘(7) OPERATIONAL GOALS.—The operational goals for the 

Fund are— ‘‘(A) to minimize the default risk to the Fund and to 

homeowners by among other actions instituting fraud prevention quality control screening not later than 18 months 

after the date of enactment of the Building American 

Homeownership Act of 2008; and ‘‘(B) to meet the housing needs of the borrowers that the 

single family mortgage insurance program under this title 

is designed to serve.’’. (b) OBLIGATIONS OF FUND.—The National Housing Act is amended as follows: 

(1) HOMEOWNERSHIP VOUCHER PROGRAM MORTGAGES.—In 

section 203(v) (12 U.S.C. 1709(v))— (A) by striking ‘‘Notwithstanding section 202 of this title, 

the’’ and inserting ‘‘The’’; and 

(B) by striking ‘‘General Insurance Fund’’ the first place 

such term appears and all that follows through the end of 

the subsection and inserting ‘‘Mutual Mortgage Insurance 

Fund.’’. (2) HOME EQUITY CONVERSION MORTGAGES.—Section 

255(i)(2)(A) of the National Housing Act (12 U.S.C. 1715z– 20(i)(2)(A)) is amended by striking ‘‘General Insurance Fund’’ and inserting ‘‘Mutual Mortgage Insurance Fund’’. (c) CONFORMING AMENDMENTS.—The National Housing Act is 

amended—

(1) in section 205 (12 U.S.C. 1711), by striking subsections 

(g) and (h); and 

(2) in section 519(e) (12 U.S.C. 1735c(e)), by striking ‘‘203(b)’’

and all that follows through ‘‘203(i)’’ and inserting ‘‘203, except 

as determined by the Secretary’’. 

SEC. 2119. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS. 

(a) HAWAIIAN HOME LANDS.—Section 247(c) of the National 

Housing Act (12 U.S.C. 1715z–12(c)) is amended—

(1) by striking ‘‘General Insurance Fund established in section 519’’ and inserting ‘‘Mutual Mortgage Insurance Fund’’; 

and 

(2) in the second sentence, by striking ‘‘(1) all references’’ and 

all that follows through ‘‘and (2)’’. 


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188 

(b) INDIAN RESERVATIONS.—Section 248(f) of the National Housing Act (12 U.S.C. 1715z–13(f)) is amended—

(1) by striking ‘‘General Insurance Fund’’ the first place it 

appears through ‘‘519’’ and inserting ‘‘Mutual Mortgage Insurance Fund’’; and 

(2) in the second sentence, by striking ‘‘(1) all references’’ and 

all that follows through ‘‘and (2)’’. 

SEC. 2120. CONFORMING AND TECHNICAL AMENDMENTS. 

(a) REPEALS.—The following provisions of the National Housing 

Act are repealed: 

(1) Subsection (i) of section 203 (12 U.S.C. 1709(i)). 

(2) Subsection (o) of section 203 (12 U.S.C. 1709(o)). 

(3) Subsection (p) of section 203 (12 U.S.C. 1709(p)). 

(4) Subsection (q) of section 203 (12 U.S.C. 1709(q)). 

(5) Section 222 (12 U.S.C. 1715m). 

(6) Section 237 (12 U.S.C. 1715z–2). 

(7) Section 245 (12 U.S.C. 1715z–10). 

(b) DEFINITION OF AREA.—Section 203(u)(2)(A) of the National 

Housing Act (12 U.S.C. 1709(u)(2)(A)) is amended by striking 

‘‘shall’’ and all that follows and inserting ‘‘means a metropolitan 

statistical area as established by the Office of Management and 

Budget;’’. 

(c) DEFINITION OF STATE.—Section 201(d) of the National Housing Act (12 U.S.C. 1707(d)) is amended by striking ‘‘the Trust Territory of the Pacific Islands’’ and inserting ‘‘the Commonwealth of 

the Northern Mariana Islands’’. 

SEC. 2121. INSURANCE OF MORTGAGES. 

Subsection (n)(2) of section 203 of the National Housing Act (12 

U.S.C. 1709(n)(2)) is amended—

(1) in subparagraph (A), by inserting ‘‘or subordinate mortgage or’’ before ‘‘lien given’’; and 

(2) in subparagraph (C), by inserting ‘‘or subordinate mortgage or’’ before ‘‘lien’’. 

SEC. 2122. HOME EQUITY CONVERSION MORTGAGES. 

(a) IN GENERAL.—Section 255 of the National Housing Act (12 

U.S.C. 1715z–20) is amended—

(1) in subsection (b)(2), insert ‘‘ ‘real estate,’ ’’ after ‘‘ ‘mortgagor’,’’; 

(2) by amending subsection (d)(1) to read as follows: 

‘‘(1) have been originated by a mortgagee approved by the 

Secretary;’’; 

(3) by amending subsection (d)(2)(B) to read as follows: 

‘‘(B) has received adequate counseling, as provided in 

subsection (f), by an independent third party that is not, 

either directly or indirectly, associated with or compensated by a party involved in—

‘‘(i) originating or servicing the mortgage; 

‘‘(ii) funding the loan underlying the mortgage; or 

‘‘(iii) the sale of annuities, investments, long-term 

care insurance, or any other type of financial or insurance product;’’; 

(4) in subsection (f)—


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(A) by striking ‘‘(f) INFORMATION SERVICES FOR MORTGAGORS.—’’ and inserting ‘‘(f) COUNSELING SERVICES AND INFORMATION FOR MORTGAGORS.—’’; and 

(B) by amending the matter preceding paragraph (1) to 

read as follows: ‘‘The Secretary shall provide or cause to be 

provided adequate counseling for the mortgagor, as described in subsection (d)(2)(B). Such counseling shall be 

provided by counselors that meet qualification standards 

and follow uniform counseling protocols. The qualification 

standards and counseling protocols shall be established by 

the Secretary within 12 months of the date of enactment 

of the Building American Homeownership Act of 2008. The 

protocols shall require a qualified counselor to discuss with 

each mortgagor information which shall include—’’

(5) in subsection (g), by striking ‘‘established under section 

203(b)(2)’’ and all that follows through ‘‘located’’ and inserting 

‘‘limitation established under section 305(a)(2) of the Federal 

Home Loan Mortgage Corporation Act for a 1-family residence’’; 

(6) by striking subsection (l); 

(7) by redesignating subsection (m) as subsection (l); 

(8) by amending subsection (l), as so redesignated, to read as 

follows: 

‘‘(l) FUNDING FOR COUNSELING.—The Secretary may use a portion 

of the mortgage insurance premiums collected under the program 

under this section to adequately fund the counseling and disclosure 

activities required under subsection (f), including counseling for 

those homeowners who elect not to take out a home equity conversion mortgage, provided that the use of such funds is based upon 

accepted actuarial principles.’’; and 

(9) by adding at the end the following new subsection: 

‘‘(m) AUTHORITY TO INSURE HOME PURCHASE MORTGAGE.—

‘‘(1) IN GENERAL.—Notwithstanding any other provision of 

this section, the Secretary may insure, upon application by a 

mortgagee, a home equity conversion mortgage upon such 

terms and conditions as the Secretary may prescribe, when the 

home equity conversion mortgage will be used to purchase a 1- 

to 4-family dwelling unit, one unit of which the mortgagor will 

occupy as a primary residence, and to provide for any future 

payments to the mortgagor, based on available equity, as authorized under subsection (d)(9). 

‘‘(2) LIMITATION ON PRINCIPAL OBLIGATION.—A home equity 

conversion mortgage insured pursuant to paragraph (1) shall 

involve a principal obligation that does not exceed the dollar 

amount limitation determined under section 305(a)(2) of the 

Federal Home Loan Mortgage Corporation Act for a 1-family 

residence. 

‘‘(n) REQUIREMENTS ON MORTGAGE ORIGINATORS.—

‘‘(1) IN GENERAL.—The mortgagee and any other party that 

participates in the origination of a mortgage to be insured 

under this section shall—

‘‘(A) not participate in, be associated with, or employ any 

party that participates in or is associated with any other 

financial or insurance activity; or 


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‘‘(B) demonstrate to the Secretary that the mortgagee or 

other party maintains, or will maintain, firewalls and 

other safeguards designed to ensure that— ‘‘(i) individuals participating in the origination of the 

mortgage shall have no involvement with, or incentive 

to provide the mortgagor with, any other financial or 

insurance product; and ‘‘(ii) the mortgagor shall not be required, directly or 

indirectly, as a condition of obtaining a mortgage 

under this section, to purchase any other financial or 

insurance product. ‘‘(2) APPROVAL OF OTHER PARTIES.—All parties that participate in the origination of a mortgage to be insured under this 

section shall be approved by the Secretary. 

‘‘(o) PROHIBITION AGAINST REQUIREMENTS TO PURCHASE ADDITIONAL PRODUCTS.—The mortgagor or any other party shall not be 

required by the mortgagee or any other party to purchase an insurance, annuity, or other similar product as a requirement or condition of eligibility for insurance under subsection (c), except for title 

insurance, hazard, flood, or other peril insurance, or other such 

products that are customary and normal under subsection (c), as 

determined by the Secretary. 

‘‘(p) STUDY TO DETERMINE CONSUMER PROTECTIONS AND UNDER- WRITING STANDARDS.—The Secretary shall conduct a study to examine and determine appropriate consumer protections and underwriting standards to ensure that the purchase of products referred 

to in subsection (o) is appropriate for the consumer. In conducting 

such study, the Secretary shall consult with consumer advocates 

(including recognized experts in consumer protection), industry representatives, representatives of counseling organizations, and other 

interested parties.’’. (b) MORTGAGES FOR COOPERATIVES.—Subsection (b) of section 

255 of the National Housing Act (12 U.S.C. 1715z–20(b)) is amended— (1) in paragraph (4)— (A) by inserting ‘‘a first or subordinate mortgage or lien’’ before ‘‘on all stock’’; 

(B) by inserting ‘‘unit’’ after ‘‘dwelling’’; and 

(C) by inserting ‘‘a first mortgage or first lien’’ before ‘‘on 

a leasehold’’; and 

(2) in paragraph (5), by inserting ‘‘a first or subordinate lien 

on’’ before ‘‘all stock’’. (c) LIMITATION ON ORIGINATION FEES.—Section 255 of the National Housing Act (12 U.S.C. 1715z–20), as amended by the preceding provisions of this section, is further amended by adding at 

the end the following new subsection: 

‘‘(r) LIMITATION ON ORIGINATION FEES.—The Secretary shall establish limits on the origination fee that may be charged to a mortgagor under a mortgage insured under this section, which limitations shall— ‘‘(1) be equal to 2.0 percent of the maximum claim amount of the mortgage, up to a maximum claim amount of $200,000 

plus 1 percent of any portion of the maximum claim amount 

that is greater than $200,000, unless adjusted thereafter on 

the basis of an analysis of—


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‘‘(A) the costs to mortgagors; and 

‘‘(B) the impact on the reverse mortgage market; ‘‘(2) be subject to a minimum allowable amount; 

‘‘(3) provide that the origination fee may be fully financed 

with the mortgage; ‘‘(4) include any fees paid to correspondent mortgagees approved by the Secretary; ‘‘(5) have the same effective date as subsection (m)(2) regarding the limitation on principal obligation; and ‘‘(6) be subject to a maximum origination fee of $6,000, except that such maximum limit shall be adjusted in accordance 

with the annual percentage increase in the Consumer Price 

Index of the Bureau of Labor Statistics of the Department of 

Labor in increments of $500 only when the percentage increase 

in such index, when applied to the maximum origination fee, 

produces dollar increases that exceed $500.’’. (d) STUDY REGARDING PROGRAM COSTS AND CREDIT AVAIL- ABILITY.—

(1) IN GENERAL.—The Comptroller General of the United 

States shall conduct a study regarding the costs and availability of credit under the home equity conversion mortgages 

for elderly homeowners program under section 255 of the National Housing Act (12 U.S.C. 1715z–20) (in this subsection referred to as the ‘‘program’’). 

(2) PURPOSE.—The purpose of the study required under paragraph (1) is to help Congress analyze and determine the effects 

of limiting the amounts of the costs or fees under the program 

from the amounts charged under the program as of the date 

of the enactment of this title. 

(3) CONTENT OF REPORT.—The study required under paragraph (1) should focus on— (A) the cost to mortgagors of participating in the program; 

(B) the financial soundness of the program; 

(C) the availability of credit under the program; and 

(D) the costs to elderly homeowners participating in the 

program, including— (i) mortgage insurance premiums charged under the 

program; 

(ii) up-front fees charged under the program; and 

(iii) margin rates charged under the program. 

(4) TIMING OF REPORT.—Not later than 12 months after the 

date of the enactment of this title, the Comptroller General 

shall submit a report to the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives setting forth the 

results and conclusions of the study required under paragraph 

(1). 

SEC. 2123. ENERGY EFFICIENT MORTGAGES PROGRAM. 

Section 106(a)(2) of the Energy Policy Act of 1992 (42 U.S.C. 

12712 note) is amended—

(1) by amending subparagraph (C) to read as follows: 

‘‘(C) COSTS OF IMPROVEMENTS.—The cost of cost-effective 

energy efficiency improvements shall not exceed the greater of—


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‘‘(i) 5 percent of the property value (not to exceed 5 

percent of the limit established under section 

203(b)(2)(A)) of the National Housing Act (12 U.S.C. 

1709(b)(2)(A); or 

‘‘(ii) 2 percent of the limit established under section 

203(b)(2)(B) of such Act.’’; and 

(2) by adding at the end the following: 

‘‘(D) LIMITATION.—In any fiscal year, the aggregate number of mortgages insured pursuant to this section may not 

exceed 5 percent of the aggregate number of mortgages for 

1- to 4-family residences insured by the Secretary of Housing and Urban Development under title II of the National 

Housing Act (12 U.S.C. 1707 et seq.) during the preceding 

fiscal year.’’. 

SEC. 2124. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT SUFFICIENT CREDIT HISTORY. 

(a) ESTABLISHMENT.—Title II of the National Housing Act (12 

U.S.C. 1707 et seq.) is amended by adding at the end the following 

new section: 

‘‘SEC. 257. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT SUFFICIENT CREDIT HISTORY. 

‘‘(a) ESTABLISHMENT.—The Secretary shall carry out a pilot program to establish, and make available to mortgagees, an automated process for providing alternative credit rating information 

for mortgagors and prospective mortgagors under mortgages on 1- 

to 4-family residences to be insured under this title who have insufficient credit histories for determining their creditworthiness. 

Such alternative credit rating information may include rent, utilities, and insurance payment histories, and such other information 

as the Secretary considers appropriate. 

‘‘(b) SCOPE.—The Secretary may carry out the pilot program 

under this section on a limited basis or scope, and may consider 

limiting the program to first-time homebuyers. 

‘‘(c) LIMITATION.—In any fiscal year, the aggregate number of 

mortgages insured pursuant to the automated process established 

under this section may not exceed 5 percent of the aggregate number of mortgages for 1- to 4-family residences insured by the Secretary under this title during the preceding fiscal year. 

‘‘(d) SUNSET.—After the expiration of the 5-year period beginning 

on the date of the enactment of the Building American Homeownership Act of 2008, the Secretary may not enter into any new 

commitment to insure any mortgage, or newly insure any mortgage, pursuant to the automated process established under this 

section.’’. 

(b) GAO REPORT.—Not later than the expiration of the two-year 

period beginning on the date of the enactment of this subtitle, the 

Comptroller General of the United States shall submit to the Congress a report identifying the number of additional mortgagors 

served using the automated process established pursuant to section 

257 of the National Housing Act (as added by the amendment 

made by subsection (a) of this section) and the impact of such process and the insurance of mortgages pursuant to such process on the 

safety and soundness of the insurance funds under the National 

Housing Act of which such mortgages are obligations. 


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SEC. 2125. HOMEOWNERSHIP PRESERVATION. 

The Secretary of Housing and Urban Development and the Commissioner of the Federal Housing Administration, in consultation 

with industry, the Neighborhood Reinvestment Corporation, and 

other entities involved in foreclosure prevention activities, shall—

(1) develop and implement a plan to improve the Federal 

Housing Administration’s loss mitigation process; and 

(2) report such plan to the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives. 

SEC. 2126. USE OF FHA SAVINGS FOR IMPROVEMENTS IN FHA TECHNOLOGIES, PROCEDURES, PROCESSES, PROGRAM PERFORMANCE, STAFFING, AND SALARIES. 

(a) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to 

be appropriated for each of fiscal years 2009 through 2013, 

$25,000,000, from negative credit subsidy for the mortgage insurance programs under title II of the National Housing Act, to the 

Secretary of Housing and Urban Development for increasing funding for the purpose of improving technology, processes, program 

performance, eliminating fraud, and for providing appropriate staffing in connection with the mortgage insurance programs under 

title II of the National Housing Act. 

(b) CERTIFICATION.—The authorization under subsection (a) shall 

not be effective for a fiscal year unless the Secretary of Housing 

and Urban Development has, by rulemaking in accordance with 

section 553 of title 5, United States Code (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such section), made a determination that—

(1) premiums being, or to be, charged during such fiscal year 

for mortgage insurance under title II of the National Housing 

Act are established at the minimum amount sufficient to—

(A) comply with the requirements of section 205(f) of 

such Act (relating to required capital ratio for the Mutual 

Mortgage Insurance Fund); and 

(B) ensure the safety and soundness of the other mortgage insurance funds under such Act; and 

(2) any negative credit subsidy for such fiscal year resulting 

from such mortgage insurance programs adequately ensures 

the efficient delivery and availability of such programs. 

(c) STUDY AND REPORT.—The Secretary of Housing and Urban 

Development shall conduct a study to obtain recommendations 

from participants in the private residential (both single family and 

multifamily) mortgage lending business and the secondary market 

for such mortgages on how best to update and upgrade processes 

and technologies for the mortgage insurance programs under title 

II of the National Housing Act so that the procedures for originating, insuring, and servicing of such mortgages conform with 

those customarily used by secondary market purchasers of residential mortgage loans. Not later than the expiration of the 12-month 

period beginning on the date of the enactment of this title, the Secretary shall submit a report to the Congress describing the 

progress made and to be made toward updating and upgrading 

such processes and technology, and providing appropriate staffing 

for such mortgage insurance programs. 


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SEC. 2127. POST-PURCHASE HOUSING COUNSELING ELIGIBILITY IMPROVEMENTS. 

Section 106(c)(4) of the Housing and Urban Development Act of 

1968 (12 U.S.C. 1701x(c)(4)) is amended: 

(1) in subparagraph (C)—

(A) in clause (i), by striking ‘‘; or’’ and inserting a semicolon; 

(B) in clause (ii), by striking the period at the end and 

inserting a semicolon; and 

(C) by adding at the end the following: 

‘‘(iii) a significant reduction in the income of the 

household due to divorce or death; or 

‘‘(iv) a significant increase in basic expenses of the 

homeowner or an immediate family member of the 

homeowner (including the spouse, child, or parent for 

whom the homeowner provides substantial care or financial assistance) due to—

‘‘(I) an unexpected or significant increase in 

medical expenses; ‘‘(II) a divorce; 

‘‘(III) unexpected and significant damage to the 

property, the repair of which will not be covered 

by private or public insurance; or ‘‘(IV) a large property-tax increase; or’’; 

(2) by striking the matter that follows subparagraph (C); and 

(3) by adding at the end the following: 

‘‘(D) the Secretary of Housing and Urban Development 

determines that the annual income of the homeowner is no 

greater than the annual income established by the Secretary as being of low- or moderate-income.’’. 

SEC. 2128. PRE-PURCHASE HOMEOWNERSHIP COUNSELING DEMONSTRATION. 

(a) ESTABLISHMENT OF PROGRAM.—For the period beginning on 

the date of enactment of this title and ending on the date that is 

3 years after such date of enactment, the Secretary of Housing and 

Urban Development shall establish and conduct a demonstration 

program to test the effectiveness of alternative forms of pre-purchase homeownership counseling for eligible homebuyers. 

(b) FORMS OF COUNSELING.—The Secretary of Housing and 

Urban Development shall provide to eligible homebuyers pre-purchase homeownership counseling under this section in the form 

of—

(1) telephone counseling; 

(2) individualized in-person counseling; 

(3) web-based counseling; 

(4) counseling classes; or 

(5) any other form or type of counseling that the Secretary 

may, in his discretion, determine appropriate. 

(c) SIZE OF PROGRAM.—The Secretary shall make available the 

pre-purchase homeownership counseling described in subsection (b) 

to not more than 3,000 eligible homebuyers in any given year. 

(d) INCENTIVE TO PARTICIPATE.—The Secretary of Housing and 

Urban Development may provide incentives to eligible homebuyers 

to participate in the demonstration program established under subsection (a). Such incentives may include the reduction of any insurVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00196 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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ance premium charges owed by the eligible homebuyer to the Secretary. 

(e) ELIGIBLE HOMEBUYER DEFINED.—For purposes of this section 

an ‘‘eligible homebuyer’’ means a first-time homebuyer who has 

been approved for a home loan with a loan-to-value ratio between 

97 percent and 98.5 percent. 

(f) REPORT TO CONGRESS.—The Secretary of Housing and Urban 

Development shall report to the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial 

Services of the House of Representative—

(1) on an annual basis, on the progress and results of the 

demonstration program established under subsection (a); and 

(2) for the period beginning on the date of enactment of this 

title and ending on the date that is 5 years after such date of 

enactment, on the payment history and delinquency rates of eligible homebuyers who participated in the demonstration program. 

SEC. 2129. FRAUD PREVENTION. 

Section 1014 of title 18, United States Code, is amended in the 

first sentence—

(1) by inserting ‘‘the Federal Housing Administration,’’ before 

‘‘the Farm Credit Administration’’; and 

(2) by striking ‘‘commitment, or loan’’ and inserting ‘‘commitment, loan, or insurance agreement or application for insurance or a guarantee’’. 

SEC. 2130. LIMITATION ON MORTGAGE INSURANCE PREMIUM INCREASES. 

(a) IN GENERAL.—Notwithstanding any other provision of law, including any provision of this title and any amendment made by 

this title—

(1) for the period beginning on the date of the enactment of 

this title and ending on October 1, 2009, the premiums charged 

for mortgage insurance under multifamily housing programs 

under the National Housing Act may not be increased above 

the premium amounts in effect under such program on October 

1, 2006, unless the Secretary of Housing and Urban Development determines that, absent such increase, insurance of additional mortgages under such program would, under the Federal Credit Reform Act of 1990, require the appropriation of 

new budget authority to cover the costs (as such term is defined in section 502 of the Federal Credit Reform Act of 1990 

(2 U.S.C. 661a) of such insurance; and 

(2) a premium increase pursuant to paragraph (1) may be 

made only if not less than 30 days prior to such increase taking effect, the Secretary of Housing and Urban Development— (A) notifies the Committee on Banking, Housing, and 

Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives of such increase; and 

(B) publishes notice of such increase in the Federal Register. 

(b) WAIVER.—The Secretary of Housing and Urban Development 

may waive the 30-day notice requirement under subsection (a)(2), 

if the Secretary determines that waiting 30-days before increasing 


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premiums would cause substantial damage to the solvency of multifamily housing programs under the National Housing Act. 

SEC. 2131. SAVINGS PROVISION. 

Any mortgage insured under title II of the National Housing Act 

before the date of enactment of this subtitle shall continue to be 

governed by the laws, regulations, orders, and terms and conditions 

to which it was subject on the day before the date of the enactment 

of this subtitle. 

SEC. 2132. IMPLEMENTATION. 

The Secretary of Housing and Urban Development shall by notice establish any additional requirements that may be necessary 

to immediately carry out the provisions of this subtitle. The notice 

shall take effect upon issuance. 

SEC. 2133. MORATORIUM ON IMPLEMENTATION OF RISK-BASED PREMIUMS. 

(a) IN GENERAL.—During the 12-month period beginning on October 1, 2008, the Secretary of Housing and Urban Development 

shall not take any action to implement or carry out risk-based premiums, which are designed for mortgage lenders to offer borrowers 

an FHA-insured product that provides a range of mortgage insurance premium pricing, based on the risk that the insurance contract represents, as such planned implementation was set forth in 

the Notice published in the Federal Register on May 13, 2008 (Vol. 

73, No. 93, Pages 27703 through 27711) (effective July 14, 2008). 

(b) INSURANCE OF MORTGAGES UNDER THE NATIONAL HOUSING

ACT.—During the 12-month period beginning on October 1, 2008, 

the Secretary of Housing and Urban Development shall not take 

any action to implement or carry out any other risk-based premium 

product related to the insurance of any mortgage on a single family 

residence under title II of the National Housing Act, where the premium price for such new product is based in whole or in part on 

a borrower’s Decision Credit Score, as that term is defined in the 

Notice described under subsection (a), or any successor thereto. 

Subtitle B—Manufactured Housing Loan 

Modernization 

SEC. 2141. SHORT TITLE. 

This subtitle may be cited as the ‘‘FHA Manufactured Housing 

Loan Modernization Act of 2008’’. 

SEC. 2142. PURPOSES. 

The purposes of this subtitle are— (1) to provide adequate funding for FHA-insured manufactured housing loans for low- and moderate-income homebuyers 

during all economic cycles in the manufactured housing industry; 

(2) to modernize the FHA title I insurance program for manufactured housing loans to enhance participation by Ginnie 

Mae and the private lending markets; and 

(3) to adjust the low loan limits for title I manufactured 

home loan insurance to reflect the increase in costs since such 

limits were last increased in 1992 and to index the limits to 

inflation. 


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SEC. 2143. EXCEPTION TO LIMITATION ON FINANCIAL INSTITUTION 

PORTFOLIO. 

The second sentence of section 2(a) of the National Housing Act 

(12 U.S.C. 1703(a)) is amended—

(1) by striking ‘‘In no case’’ and inserting ‘‘Other than in connection with a manufactured home or a lot on which to place 

such a home (or both), in no case’’; and 

(2) by striking ‘‘: Provided, That with’’ and inserting ‘‘. With’’. 

SEC. 2144. INSURANCE BENEFITS. 

(a) IN GENERAL.—Subsection (b) of section 2 of the National 

Housing Act (12 U.S.C. 1703(b)), is amended by adding at the end 

the following new paragraph: 

‘‘(8) INSURANCE BENEFITS FOR MANUFACTURED HOUSING

LOANS.—Any contract of insurance with respect to loans, advances of credit, or purchases in connection with a manufactured home or a lot on which to place a manufactured home 

(or both) for a financial institution that is executed under this 

title after the date of the enactment of the FHA Manufactured 

Housing Loan Modernization Act of 2008 by the Secretary 

shall be conclusive evidence of the eligibility of such financial 

institution for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of the 

bearer from the date of the execution of such contract, except 

for fraud or misrepresentation on the part of such institution.’’. 

(b) APPLICABILITY.—The amendment made by subsection (a) shall 

only apply to loans that are registered or endorsed for insurance 

after the date of the enactment of this title. 

SEC. 2145. MAXIMUM LOAN LIMITS. 

(a) DOLLAR AMOUNTS.—Paragraph (1) of section 2(b) of the National Housing Act (12 U.S.C. 1703(b)(1)) is amended—

(1) in clause (ii) of subparagraph (A), by striking ‘‘$17,500’’

and inserting ‘‘$25,090’’; 

(2) in subparagraph (C) by striking ‘‘$48,600’’ and inserting 

‘‘$69,678’’; 

(3) in subparagraph (D) by striking ‘‘$64,800’’ and inserting 

‘‘$92,904’’; 

(4) in subparagraph (E) by striking ‘‘$16,200’’ and inserting 

‘‘$23,226’’; and 

(5) by realigning subparagraphs (C), (D), and (E) 2 ems to 

the left so that the left margins of such subparagraphs are 

aligned with the margins of subparagraphs (A) and (B). 

(b) ANNUAL INDEXING.—Subsection (b) of section 2 of the National Housing Act (12 U.S.C. 1703(b)), as amended by the preceding provisions of this title, is further amended by adding at the 

end the following new paragraph: 

‘‘(9) ANNUAL INDEXING OF MANUFACTURED HOUSING LOANS.—

The Secretary shall develop a method of indexing in order to 

annually adjust the loan limits established in subparagraphs 

(A)(ii), (C), (D), and (E) of this subsection. Such index shall be 

based on the manufactured housing price data collected by the 

United States Census Bureau. The Secretary shall establish 

such index no later than 1 year after the date of the enactment 

of the FHA Manufactured Housing Loan Modernization Act of 

2008.’’


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(c) TECHNICAL AND CONFORMING CHANGES.—Paragraph (1) of 

section 2(b) of the National Housing Act (12 U.S.C. 1703(b)(1)) is 

amended—

(1) by striking ‘‘No’’ and inserting ‘‘Except as provided in the 

last sentence of this paragraph, no’’; and 

(2) by adding after and below subparagraph (G) the following: 

‘‘The Secretary shall, by regulation, annually increase the dollar 

amount limitations in subparagraphs (A)(ii), (C), (D), and (E) (as 

such limitations may have been previously adjusted under this sentence) in accordance with the index established pursuant to paragraph (9).’’. 

SEC. 2146. INSURANCE PREMIUMS. 

Subsection (f) of section 2 of the National Housing Act (12 U.S.C. 

1703(f)) is amended—

(1) by inserting ‘‘(1) PREMIUM CHARGES.—’’ after ‘‘(f)’’; and 

(2) by adding at the end the following new paragraph: 

‘‘(2) MANUFACTURED HOME LOANS.—Notwithstanding paragraph 

(1), in the case of a loan, advance of credit, or purchase in connection with a manufactured home or a lot on which to place such a 

home (or both), the premium charge for the insurance granted 

under this section shall be paid by the borrower under the loan or 

advance of credit, as follows: 

‘‘(A) At the time of the making of the loan, advance of credit, 

or purchase, a single premium payment in an amount not to 

exceed 2.25 percent of the amount of the original insured principal obligation. 

‘‘(B) In addition to the premium under subparagraph (A), annual premium payments during the term of the loan, advance, 

or obligation purchased in an amount not exceeding 1.0 percent of the remaining insured principal balance (excluding the 

portion of the remaining balance attributable to the premium 

collected under subparagraph (A) and without taking into account delinquent payments or prepayments). 

‘‘(C) Premium charges under this paragraph shall be established in amounts that are sufficient, but do not exceed the 

minimum amounts necessary, to maintain a negative credit 

subsidy for the program under this section for insurance of 

loans, advances of credit, or purchases in connection with a 

manufactured home or a lot on which to place such a home (or 

both), as determined based upon risk to the Federal Government under existing underwriting requirements. 

‘‘(D) The Secretary may increase the limitations on premium 

payments to percentages above those set forth in subparagraphs (A) and (B), but only if necessary, and not in excess of 

the minimum increase necessary, to maintain a negative credit 

subsidy as described in subparagraph (C).’’. 

SEC. 2147. TECHNICAL CORRECTIONS. 

(a) DATES.—Subsection (a) of section 2 of the National Housing 

Act (12 U.S.C. 1703(a)) is amended—

(1) by striking ‘‘on and after July 1, 1939,’’ each place such 

term appears; and 

(2) by striking ‘‘made after the effective date of the Housing 

Act of 1954’’. 


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(b) AUTHORITY OF SECRETARY.—Subsection (c) of section 2 of the 

National Housing Act (12 U.S.C. 1703(c)) is amended to read as follows: ‘‘(c) HANDLING AND DISPOSAL OF PROPERTY.— ‘‘(1) AUTHORITY OF SECRETARY.—Notwithstanding any other 

provision of law, the Secretary may— ‘‘(A) deal with, complete, rent, renovate, modernize, insure, or assign or sell at public or private sale, or otherwise dispose of, for cash or credit in the Secretary’s discretion, and upon such terms and conditions and for such consideration as the Secretary shall determine to be reasonable, any real or personal property conveyed to or otherwise acquired by the Secretary, in connection with the payment of insurance heretofore or hereafter granted under 

this title, including any evidence of debt, contract, claim, 

personal property, or security assigned to or held by him 

in connection with the payment of insurance heretofore or 

hereafter granted under this section; and ‘‘(B) pursue to final collection, by way of compromise or 

otherwise, all claims assigned to or held by the Secretary 

and all legal or equitable rights accruing to the Secretary 

in connection with the payment of such insurance, including unpaid insurance premiums owed in connection with 

insurance made available by this title. ‘‘(2) ADVERTISEMENTS FOR PROPOSALS.—Section 3709 of the 

Revised Statutes shall not be construed to apply to any contract of hazard insurance or to any purchase or contract for 

services or supplies on account of such property if the amount 

thereof does not exceed $25,000. ‘‘(3) DELEGATION OF AUTHORITY.—The power to convey and to 

execute in the name of the Secretary, deeds of conveyance, 

deeds of release, assignments and satisfactions of mortgages, 

and any other written instrument relating to real or personal 

property or any interest therein heretofore or hereafter acquired by the Secretary pursuant to the provisions of this title 

may be exercised by an officer appointed by the Secretary without the execution of any express delegation of power or power 

of attorney. Nothing in this subsection shall be construed to 

prevent the Secretary from delegating such power by order or 

by power of attorney, in the Secretary’s discretion, to any officer or agent the Secretary may appoint.’’. 

SEC. 2148. REVISION OF UNDERWRITING CRITERIA. 

(a) IN GENERAL.—Subsection (b) of section 2 of the National 

Housing Act (12 U.S.C. 1703(b)), as amended by the preceding provisions of this title, is further amended by adding at the end the 

following new paragraph: 

‘‘(10) FINANCIAL SOUNDNESS OF MANUFACTURED HOUSING

PROGRAM.—The Secretary shall establish such underwriting 

criteria for loans and advances of credit in connection with a 

manufactured home or a lot on which to place a manufactured 

home (or both), including such loans and advances represented 

by obligations purchased by financial institutions, as may be 

necessary to ensure that the program under this title for insurance for financial institutions against losses from such loans, 

advances of credit, and purchases is financially sound.’’. 


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(b) TIMING.—Not later than the expiration of the 6-month period 

beginning on the date of the enactment of this title, the Secretary 

of Housing and Urban Development shall revise the existing underwriting criteria for the program referred to in paragraph (10) of 

section 2(b) of the National Housing Act (as added by subsection 

(a) of this section) in accordance with the requirements of such 

paragraph. 

SEC. 2149. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES. 

Title I of the National Housing Act is amended by adding at the 

end of section 9 the following new section: 

‘‘SEC. 10. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES. 

‘‘(a) IN GENERAL.—Except as provided in subsection (b), the provisions of sections 3, 8, 16, 17, 18, and 19 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) shall apply 

to each sale of a manufactured home financed with an FHA-insured loan or extension of credit, as well as to services rendered in 

connection with such transactions. ‘‘(b) AUTHORITY OF THE SECRETARY.—The Secretary is authorized 

to determine the manner and extent to which the provisions of sections 3, 8, 16, 17, 18, and 19 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) may reasonably be applied to the transactions described in subsection (a), and to grant 

such exemptions as may be necessary to achieve the purposes of 

this section. 

‘‘(c) DEFINITIONS.—For purposes of this section—

‘‘(1) the term ‘federally related mortgage loan’ as used in sections 3, 8, 16, 17, 18, and 19 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) shall include an 

FHA-insured loan or extension of credit made to a borrower for 

the purpose of purchasing a manufactured home that the borrower intends to occupy as a personal residence; and 

‘‘(2) the term ‘real estate settlement service’ as used in sections 3, 8, 16, 17, 18, and 19 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) shall include any 

service rendered in connection with a loan or extension of credit insured by the Federal Housing Administration for the purchase of a manufactured home. 

‘‘(d) UNFAIR AND DECEPTIVE PRACTICES.—In connection with the 

purchase of a manufactured home financed with a loan or extension of credit insured by the Federal Housing Administration under 

this title, the Secretary shall prohibit acts or practices in connection with loans or extensions of credit that the Secretary finds to 

be unfair, deceptive, or otherwise not in the interests of the borrower.’’. 

SEC. 2150. LEASEHOLD REQUIREMENTS. 

Subsection (b) of section 2 of the National Housing Act (12 U.S.C. 

1703(b)), as amended by the preceding provisions of this title, is 

further amended by adding at the end the following new paragraph: 

‘‘(11) LEASEHOLD REQUIREMENTS.—No insurance shall be 

granted under this section to any such financial institution 

with respect to any obligation representing any such loan, advance of credit, or purchase by it, made for the purposes of financing a manufactured home which is intended to be situated 


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in a manufactured home community pursuant to a lease, unless such lease—

‘‘(A) expires not less than 3 years after the origination 

date of the obligation; 

‘‘(B) is renewable upon the expiration of the original 3 

year term by successive 1 year terms; and 

‘‘(C) requires the lessor to provide the lessee written notice of termination of the lease not less than 180 days prior 

to the expiration of the current lease term in the event the 

lessee is required to move due to the closing of the manufactured home community, and further provides that failure to provide such notice to the mortgagor in a timely 

manner will cause the lease term, at its expiration, to 

automatically renew for an additional 1 year term.’’. 

TITLE II—MORTGAGE FORECLOSURE 

PROTECTIONS FOR SERVICEMEMBERS 

SEC. 2201. TEMPORARY INCREASE IN MAXIMUM LOAN GUARANTY 

AMOUNT FOR CERTAIN HOUSING LOANS GUARANTEED BY 

THE SECRETARY OF VETERANS AFFAIRS. 

Notwithstanding subparagraph (C) of section 3703(a)(1) of title 

38, United States Code, for purposes of any loan described in subparagraph (A)(i)(IV) of such section that is originated during the 

period beginning on the date of the enactment of this Act and ending on December 31, 2008, the term ‘‘maximum guaranty amount’’

shall mean an amount equal to 25 percent of the higher of—

(1) the limitation determined under section 305(a)(2) of the 

Federal Home Loan Mortgage Corporation Act (12 U.S.C. 

1454(a)(2)) for the calendar year in which the loan is originated 

for a single-family residence; or 

(2) 125 percent of the area median price for a single-family 

residence, but in no case to exceed 175 percent of the limitation determined under such section 305(a)(2) for the calendar 

year in which the loan is originated for a single-family residence. 

SEC. 2202. COUNSELING ON MORTGAGE FORECLOSURES FOR MEMBERS OF THE ARMED FORCES RETURNING FROM SERVICE ABROAD. 

(a) IN GENERAL.—The Secretary of Defense shall develop and implement a program to advise members of the Armed Forces (including members of the National Guard and Reserve) who are returning from service on active duty abroad (including service in Operation Iraqi Freedom and Operation Enduring Freedom) on actions 

to be taken by such members to prevent or forestall mortgage foreclosures. 

(b) ELEMENTS.—The program required by subsection (a) shall include the following: 

(1) Credit counseling. 

(2) Home mortgage counseling. 

(3) Such other counseling and information as the Secretary 

considers appropriate for purposes of the program. 

(c) TIMING OF PROVISION OF COUNSELING.—Counseling and other 

information under the program required by subsection (a) shall be 


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provided to a member of the Armed Forces covered by the program 

as soon as practicable after the return of the member from service 

as described in subsection (a). 

SEC. 2203. ENHANCEMENT OF PROTECTIONS FOR SERVICEMEMBERS 

RELATING TO MORTGAGES AND MORTGAGE FORECLOSURES. 

(a) EXTENSION OF PERIOD OF PROTECTIONS AGAINST MORTGAGE

FORECLOSURES.— (1) EXTENSION OF PROTECTION PERIOD.—Subsection (c) of section 303 of the Servicemembers Civil Relief Act (50 U.S.C. App. 

533) is amended by striking ‘‘90 days’’ and inserting ‘‘9 

months’’. (2) EXTENSION OF STAY OF PROCEEDINGS PERIOD.—Subsection 

(b) of such section is amended by striking ‘‘90 days’’ and inserting ‘‘9 months’’. (b) TREATMENT OF MORTGAGES AS OBLIGATIONS SUBJECT TO IN- TEREST RATE LIMITATION.—Section 207 of the Servicemembers 

Civil Relief Act (50 U.S.C. App. 527) is amended— (1) in subsection (a)(1), by striking ‘‘in excess of 6 percent’’ the second place it appears and all that follows and inserting 

‘‘in excess of 6 percent— ‘‘(A) during the period of military service and one year 

thereafter, in the case of an obligation or liability consisting of a mortgage, trust deed, or other security in the 

nature of a mortgage; or ‘‘(B) during the period of military service, in the case of 

any other obligation or liability.’’; and 

(2) by striking subsection (d) and inserting the following new 

subsection: ‘‘(d) DEFINITIONS.—In this section: ‘‘(1) INTEREST.—The term ‘interest’ includes service charges, 

renewal charges, fees, or any other charges (except bona fide 

insurance) with respect to an obligation or liability. 

‘‘(2) OBLIGATION OR LIABILITY.—The term ‘obligation or liability’ includes an obligation or liability consisting of a mortgage, 

trust deed, or other security in the nature of a mortgage.’’. 

(c) EFFECTIVE DATE; SUNSET.—

(1) EFFECTIVE DATE.—The amendment made by subsection 

(a) shall take effect on the date of enactment of this Act. 

(2) SUNSET.—The amendments made by subsection (a) shall 

expire on December 31, 2010. Effective January 1, 2011, the 

provisions of subsections (b) and (c) of section 303 of the 

Servicemembers Civil Relief Act, as in effect on the day before 

the date of the enactment of this Act, are hereby revived. 

TITLE III—EMERGENCY ASSISTANCE 

FOR THE REDEVELOPMENT OF ABANDONED AND FORECLOSED HOMES 

SEC. 2301. EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF 

ABANDONED AND FORECLOSED HOMES. 

(a) DIRECT APPROPRIATIONS.—There are appropriated out of any 

money in the Treasury not otherwise appropriated for the fiscal 

year 2008, $4,000,000,000, to remain available until expended, for 


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assistance to States and units of general local government (as such 

terms are defined in section 102 of the Housing and Community 

Development Act of 1974 (42 U.S.C. 5302)) for the redevelopment 

of abandoned and foreclosed upon homes and residential properties. 

(b) ALLOCATION OF APPROPRIATED AMOUNTS.— (1) IN GENERAL.—The amounts appropriated or otherwise 

made available to States and units of general local government 

under this section shall be allocated based on a funding formula established by the Secretary of Housing and Urban Development (in this title referred to as the ‘‘Secretary’’). 

(2) FORMULA TO BE DEVISED SWIFTLY.—The funding formula 

required under paragraph (1) shall be established not later 

than 60 days after the date of enactment of this section. 

(3) CRITERIA.—The funding formula required under paragraph (1) shall ensure that any amounts appropriated or otherwise made available under this section are allocated to States 

and units of general local government with the greatest need, 

as such need is determined in the discretion of the Secretary 

based on—

(A) the number and percentage of home foreclosures in 

each State or unit of general local government; 

(B) the number and percentage of homes financed by a 

subprime mortgage related loan in each State or unit of 

general local government; and 

(C) the number and percentage of homes in default or 

delinquency in each State or unit of general local government. 

(4) DISTRIBUTION.—Amounts appropriated or otherwise made 

available under this section shall be distributed according to 

the funding formula established by the Secretary under paragraph (1) not later than 30 days after the establishment of 

such formula. 

(c) USE OF FUNDS.— (1) IN GENERAL.—Any State or unit of general local government that receives amounts pursuant to this section shall, not 

later than 18 months after the receipt of such amounts, use 

such amounts to purchase and redevelop abandoned and foreclosed homes and residential properties. 

(2) PRIORITY.—Any State or unit of general local government 

that receives amounts pursuant to this section shall in distributing such amounts give priority emphasis and consideration 

to those metropolitan areas, metropolitan cities, urban areas, 

rural areas, low- and moderate-income areas, and other areas 

with the greatest need, including those— (A) with the greatest percentage of home foreclosures; 

(B) with the highest percentage of homes financed by a 

subprime mortgage related loan; and 

(C) identified by the State or unit of general local government as likely to face a significant rise in the rate of 

home foreclosures. 

(3) ELIGIBLE USES.—Amounts made available under this section may be used to— (A) establish financing mechanisms for purchase and redevelopment of foreclosed upon homes and residential 

properties, including such mechanisms as soft-seconds, 


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loan loss reserves, and shared-equity loans for low- and 

moderate-income homebuyers; 

(B) purchase and rehabilitate homes and residential 

properties that have been abandoned or foreclosed upon, in 

order to sell, rent, or redevelop such homes and properties; 

(C) establish land banks for homes that have been foreclosed upon; 

(D) demolish blighted structures; and 

(E) redevelop demolished or vacant properties. 

(d) LIMITATIONS.— (1) ON PURCHASES.—Any purchase of a foreclosed upon home 

or residential property under this section shall be at a discount 

from the current market appraised value of the home or property, taking into account its current condition, and such discount shall ensure that purchasers are paying below-market 

value for the home or property. 

(2) REHABILITATION.—Any rehabilitation of a foreclosed-upon 

home or residential property under this section shall be to the 

extent necessary to comply with applicable laws, codes, and 

other requirements relating to housing safety, quality, and 

habitability, in order to sell, rent, or redevelop such homes and 

properties. Rehabilitation may include improvements to increase the energy efficiency or conservation of such homes and 

properties or provide a renewable energy source or sources for 

such homes and properties. 

(3) SALE OF HOMES.—If an abandoned or foreclosed upon 

home or residential property is purchased, redeveloped, or otherwise sold to an individual as a primary residence, then such 

sale shall be in an amount equal to or less than the cost to acquire and redevelop or rehabilitate such home or property up 

to a decent, safe, and habitable condition. 

(4) REINVESTMENT OF PROFITS.—

(A) PROFITS FROM SALES, RENTALS, AND REDEVELOP- MENT.—

(i) 5-YEAR REINVESTMENT PERIOD.—During the 5- 

year period following the date of enactment of this Act, 

any revenue generated from the sale, rental, redevelopment, rehabilitation, or any other eligible use that 

is in excess of the cost to acquire and redevelop (including reasonable development fees) or rehabilitate 

an abandoned or foreclosed upon home or residential 

property shall be provided to and used by the State or 

unit of general local government in accordance with, 

and in furtherance of, the intent and provisions of this 

section. 

(ii) DEPOSITS IN THE TREASURY.—

(I) PROFITS.—Upon the expiration of the 5-year 

period set forth under clause (i), any revenue generated from the sale, rental, redevelopment, rehabilitation, or any other eligible use that is in excess of the cost to acquire and redevelop (including reasonable development fees) or rehabilitate 

an abandoned or foreclosed upon home or residential property shall be deposited in the Treasury of 

the United States as miscellaneous receipts, unVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00206 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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less the Secretary approves a request to use the 

funds for purposes under this Act. 

(II) OTHER AMOUNTS.—Upon the expiration of 

the 5-year period set forth under clause (i), any 

other revenue not described under subclause (I) 

generated from the sale, rental, redevelopment, 

rehabilitation, or any other eligible use of an 

abandoned or foreclosed upon home or residential 

property shall be deposited in the Treasury of the 

United States as miscellaneous receipts. 

(B) OTHER REVENUES.—Any revenue generated under 

subparagraphs (A), (C) or (D) of subsection (c)(3) shall be 

provided to and used by the State or unit of general local 

government in accordance with, and in furtherance of, the 

intent and provisions of this section. 

(e) RULES OF CONSTRUCTION.—

(1) IN GENERAL.—Except as otherwise provided by this section, amounts appropriated, revenues generated, or amounts 

otherwise made available to States and units of general local 

government under this section shall be treated as though such 

funds were community development block grant funds under 

title I of the Housing and Community Development Act of 1974 

(42 U.S.C. 5301 et seq.). 

(2) NO MATCH.—No matching funds shall be required in 

order for a State or unit of general local government to receive 

any amounts under this section. 

(f) AUTHORITY TO SPECIFY ALTERNATIVE REQUIREMENTS.—

(1) IN GENERAL.—In administering any amounts appropriated or otherwise made available under this section, the 

Secretary may specify alternative requirements to any provision under title I of the Housing and Community Development 

Act of 1974 (except for those related to fair housing, nondiscrimination, labor standards, and the environment) in accordance with the terms of this section and for the sole purpose 

of expediting the use of such funds. 

(2) NOTICE.—The Secretary shall provide written notice of its 

intent to exercise the authority to specify alternative requirements under paragraph (1) to the Committee on Banking, 

Housing and Urban Affairs of the Senate and the Committee 

on Financial Services of the House of Representatives not later 

than 10 business days before such exercise of authority is to 

occur. 

(3) LOW AND MODERATE INCOME REQUIREMENT.—

(A) IN GENERAL.—Notwithstanding the authority of the 

Secretary under paragraph (1)—

(i) all of the funds appropriated or otherwise made 

available under this section shall be used with respect 

to individuals and families whose income does not exceed 120 percent of area median income; and 

(ii) not less than 25 percent of the funds appropriated or otherwise made available under this section 

shall be used for the purchase and redevelopment of 

abandoned or foreclosed upon homes or residential 

properties that will be used to house individuals or 


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families whose incomes do not exceed 50 percent of 

area median income. 

(B) RECURRENT REQUIREMENT.—The Secretary shall, by 

rule or order, ensure, to the maximum extent practicable 

and for the longest feasible term, that the sale, rental, or 

redevelopment of abandoned and foreclosed upon homes 

and residential properties under this section remain affordable to individuals or families described in subparagraph (A). 

(g) PERIODIC AUDITS.—In consultation with the Secretary of 

Housing and Urban Development, the Comptroller General of the 

United States shall conduct periodic audits to ensure that funds 

appropriated, made available, or otherwise distributed under this 

section are being used in a manner consistent with the criteria provided in this section. 

SEC. 2302. NATIONWIDE DISTRIBUTION OF RESOURCES. 

Notwithstanding any other provision of this Act or the amendments made by this Act, each State shall receive not less than 0.5 

percent of funds made available under section 2301 (relating to 

emergency assistance for the redevelopment of abandoned and foreclosed homes). 

SEC. 2303. LIMITATION ON USE OF FUNDS WITH RESPECT TO EMINENT DOMAIN. 

No State or unit of general local government may use any 

amounts received pursuant to section 2301 to fund any project that 

seeks to use the power of eminent domain, unless eminent domain 

is employed only for a public use: Provided, That for purposes of 

this section, public use shall not be construed to include economic 

development that primarily benefits private entities. 

SEC. 2304. LIMITATION ON DISTRIBUTION OF FUNDS. 

(a) IN GENERAL.—None of the funds made available under this 

title or title IV shall be distributed to— (1) an organization which has been indicted for a violation 

under Federal law relating to an election for Federal office; or 

(2) an organization which employs applicable individuals. 

(b) APPLICABLE INDIVIDUALS DEFINED.—In this section, the term ‘‘applicable individual’’ means an individual who— (1) is—

(A) employed by the organization in a permanent or temporary capacity; 

(B) contracted or retained by the organization; or 

(C) acting on behalf of, or with the express or apparent 

authority of, the organization; and 

(2) has been indicted for a violation under Federal law relating to an election for Federal office. 

SEC. 2305. COUNSELING INTERMEDIARIES. 

Notwithstanding any other provision of this Act, the amount appropriated under section 2301(a) of this Act shall be $3,920,000,000 

and the amount appropriated under section 2401 of this Act shall 

be $180,000,000: Provided, That of the amount appropriated under 

section 2401 of this Act pursuant to this section, not less than 15 

percent shall be provided to counseling organizations that target 

counseling services regarding loss mitigation to minority and lowincome homeowners or provide such services in neighborhoods with 


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high concentrations of minority and low-income homeowners: Provided further, That of amounts appropriated under such section 

2401 $30,000,000 shall be used by the Neighborhood Reinvestment 

Corporation (referred to in this section as the ‘‘NRC’’) to make 

grants to counseling intermediaries approved by the Department of 

Housing and Urban Development or the NRC to hire attorneys to 

assist homeowners who have legal issues directly related to the 

homeowner’s foreclosure, delinquency or short sale. Such attorneys 

shall be capable of assisting homeowners of owner-occupied homes 

with mortgages in default, in danger of default, or subject to or at 

risk of foreclosure and who have legal issues that cannot be handled by counselors already employed by such intermediaries: Provided further, That of the amounts provided for in the prior provisos the NRC shall give priority consideration to counseling intermediaries and legal organizations that (1) provide legal assistance 

in the 100 metropolitan statistical areas (as defined by the Director 

of the Office of Management and Budget) with the highest home 

foreclosure rates, and (2) have the capacity to begin using the financial assistance within 90 days after receipt of the assistance: 

Provided further, That no funds provided under this Act shall be 

used to provide, obtain, or arrange on behalf of a homeowner, legal 

representation involving or for the purposes of civil litigation: Provided further, That the NRC, in awarding counseling grants under 

section 2401 of this Act, may consider, where appropriate, whether 

the entity has implemented a written plan for providing in-person 

counseling and for making contact, including personal contact, with 

defaulted mortgagors, for the purpose of providing counseling or 

providing information about available counseling. 

TITLE IV—HOUSING COUNSELING 

RESOURCES 

SEC. 2401. HOUSING COUNSELING RESOURCES. 

There are appropriated out of any money in the Treasury not 

otherwise appropriated for the fiscal year 2008, for an additional 

amount for the ‘‘Neighborhood Reinvestment Corporation—Payment to the Neighborhood Reinvestment Corporation’’

$100,000,000, to remain available until December 31, 2008, for 

foreclosure mitigation activities under the terms and conditions 

contained in the second undesignated paragraph (beginning with 

the phrase ‘‘For an additional amount’’) under the heading ‘‘Neighborhood Reinvestment Corporation—Payment to the Neighborhood 

Reinvestment Corporation’’ of Public Law 110–161. 

SEC. 2402. CREDIT COUNSELING. 

(a) IN GENERAL.—Entities approved by the Neighborhood Reinvestment Corporation or the Secretary and State housing finance 

entities receiving funds under this title shall work to identify and 

coordinate with non-profit organizations operating national or 

statewide toll-free foreclosure prevention hotlines, including those 

that—

(1) serve as a consumer referral source and data repository 

for borrowers experiencing some form of delinquency or foreclosure; 


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(2) connect callers with local housing counseling agencies approved by the Neighborhood Reinvestment Corporation or the 

Secretary to assist with working out a positive resolution to 

their mortgage delinquency or foreclosure; or 

(3) facilitate or offer free assistance to help homeowners to 

understand their options, negotiate solutions, and find the best 

resolution for their particular circumstances. 

TITLE V—MORTGAGE DISCLOSURE 

IMPROVEMENT ACT 

SEC. 2501. SHORT TITLE. 

This title may be cited as the ‘‘Mortgage Disclosure Improvement 

Act of 2008’’. 

SEC. 2502. ENHANCED MORTGAGE LOAN DISCLOSURES. 

(a) TRUTH IN LENDING ACT DISCLOSURES.—Section 128(b)(2) of 

the Truth in Lending Act (15 U.S.C. 1638(b)(2)) is amended— (1) by inserting ‘‘(A)’’ before ‘‘In the’’; 

(2) by striking ‘‘a residential mortgage transaction, as defined in section 103(w)’’ and inserting ‘‘any extension of credit 

that is secured by the dwelling of a consumer’’; 

(3) by striking ‘‘before the credit is extended, or’’ and inserting ‘‘and’’; 

(4) by inserting ‘‘, which shall be at least 7 business days before consummation of the transaction’’ after ‘‘written application’’; 

(5) by striking ‘‘, whichever is earlier’’; and 

(6) by striking ‘‘If the’’ and all that follows through the end 

of the paragraph and inserting the following: ‘‘(B) In the case of an extension of credit that is secured by 

the dwelling of a consumer, the disclosures provided under 

subparagraph (A), shall be in addition to the other disclosures 

required by subsection (a), and shall— ‘‘(i) state in conspicuous type size and format, the following: ‘You are not required to complete this agreement 

merely because you have received these disclosures or 

signed a loan application.’; and ‘‘(ii) be provided in the form of final disclosures at the 

time of consummation of the transaction, in the form and 

manner prescribed by this section. ‘‘(C) In the case of an extension of credit that is secured by 

the dwelling of a consumer, under which the annual rate of interest is variable, or with respect to which the regular payments may otherwise be variable, in addition to the other disclosures required by subsection (a), the disclosures provided 

under this subsection shall do the following: ‘‘(i) Label the payment schedule as follows: ‘Payment 

Schedule: Payments Will Vary Based on Interest Rate 

Changes’. ‘‘(ii) State in conspicuous type size and format examples 

of adjustments to the regular required payment on the extension of credit based on the change in the interest rates 

specified by the contract for such extension of credit. 

Among the examples required to be provided under this 


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clause is an example that reflects the maximum payment 

amount of the regular required payments on the extension 

of credit, based on the maximum interest rate allowed 

under the contract, in accordance with the rules of the 

Board. Prior to issuing any rules pursuant to this clause, 

the Board shall conduct consumer testing to determine the 

appropriate format for providing the disclosures required 

under this subparagraph to consumers so that such disclosures can be easily understood, including the fact that the 

initial regular payments are for a specific time period that 

will end on a certain date, that payments will adjust afterwards potentially to a higher amount, and that there is no 

guarantee that the borrower will be able to refinance to a 

lower amount. ‘‘(D) In any case in which the disclosure statement under 

subparagraph (A) contains an annual percentage rate of interest that is no longer accurate, as determined under section 

107(c), the creditor shall furnish an additional, corrected statement to the borrower, not later than 3 business days before the 

date of consummation of the transaction. ‘‘(E) The consumer shall receive the disclosures required 

under this paragraph before paying any fee to the creditor or 

other person in connection with the consumer’s application for 

an extension of credit that is secured by the dwelling of a consumer. If the disclosures are mailed to the consumer, the consumer is considered to have received them 3 business days 

after they are mailed. A creditor or other person may impose 

a fee for obtaining the consumer’s credit report before the consumer has received the disclosures under this paragraph, provided the fee is bona fide and reasonable in amount. ‘‘(F) WAIVER OF TIMELINESS OF DISCLOSURES.—To expedite 

consummation of a transaction, if the consumer determines 

that the extension of credit is needed to meet a bona fide personal financial emergency, the consumer may waive or modify 

the timing requirements for disclosures under subparagraph 

(A), provided that—

‘‘(i) the term ‘bona fide personal emergency’ may be further defined in regulations issued by the Board; 

‘‘(ii) the consumer provides to the creditor a dated, written statement describing the emergency and specifically 

waiving or modifying those timing requirements, which 

statement shall bear the signature of all consumers entitled to receive the disclosures required by this paragraph; 

and 

‘‘(iii) the creditor provides to the consumers at or before 

the time of such waiver or modification, the final disclosures required by paragraph (1). 

‘‘(G) The requirements of subparagraphs (B), (C), (D) and (E) 

shall not apply to extensions of credit relating to plans described in section 101(53D) of title 11, United States Code.’’. 

(b) CIVIL LIABILITY.—Section 130(a) of the Truth in Lending Act 

(15 U.S.C. 1640(a)) is amended— (1) in paragraph (2)(A)(iii), by striking ‘‘not less than $200 or 

greater than $2,000’’ and inserting ‘‘not less than $400 or 

greater than $4,000’’; and 


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(2) in the penultimate sentence of the undesignated matter 

following paragraph (4)—

(A) by inserting ‘‘or section 128(b)(2)(C)(ii),’’ after 

‘‘128(a),’’; and 

(B) by inserting ‘‘or section 128(b)(2)(C)(ii)’’ before the 

period. 

(c) EFFECTIVE DATES.—

(1) GENERAL DISCLOSURES.—Except as provided in paragraph 

(2), the amendments made by subsection (a) shall become effective 12 months after the date of enactment of this Act. 

(2) VARIABLE INTEREST RATES.—Subparagraph (C) of section 

128(b)(2) of the Truth in Lending Act (15 U.S.C. 1638(b)(2)(C)), 

as added by subsection (a) of this section, shall become effective on the earlier of—

(A) the compliance date established by the Board for 

such purpose, by regulation; or 

(B) 30 months after the date of enactment of this Act. 

SEC. 2503. COMMUNITY DEVELOPMENT INVESTMENT AUTHORITY FOR 

DEPOSITORY INSTITUTIONS. 

(a) NATIONAL BANKS.—The first sentence of the paragraph designated as the ‘‘Eleventh’’ of section 5136 of the Revised Statutes 

of the United States (12 U.S.C. 24) is amended by striking ‘‘promotes the public welfare by benefitting primarily’’ and inserting ‘‘is 

designed primarily to promote the public welfare, including the 

welfare of’’. 

(b) STATE MEMBER BANKS.—The first sentence of the 23rd paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 338a) is 

amended by striking ‘‘promotes the public welfare by benefitting 

primarily’’ and inserting ‘‘is designed primarily to promote the public welfare, including the welfare of’’. 

TITLE VI—VETERANS HOUSING 

MATTERS 

SEC. 2601. HOME IMPROVEMENTS AND STRUCTURAL ALTERATIONS 

FOR TOTALLY DISABLED MEMBERS OF THE ARMED 

FORCES BEFORE DISCHARGE OR RELEASE FROM THE 

ARMED FORCES. 

Section 1717 of title 38, United States Code, is amended by adding at the end the following new subsection: 

‘‘(d)(1) In the case of a member of the Armed Forces who, as determined by the Secretary, has a disability permanent in nature incurred or aggravated in the line of duty in the active military, 

naval, or air service, the Secretary may furnish improvements and 

structural alterations for such member for such disability or as otherwise described in subsection (a)(2) while such member is hospitalized or receiving outpatient medical care, services, or treatment for such disability if the Secretary determines that such 

member is likely to be discharged or released from the Armed 

Forces for such disability. ‘‘(2) The furnishing of improvements and alterations under paragraph (1) in connection with the furnishing of medical services described in subparagraph (A) or (B) of subsection (a)(2) shall be subject to the limitation specified in the applicable subparagraph.’’. 


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SEC. 2602. ELIGIBILITY FOR SPECIALLY ADAPTED HOUSING BENEFITS 

AND ASSISTANCE FOR MEMBERS OF THE ARMED FORCES 

WITH SERVICE-CONNECTED DISABILITIES AND INDIVIDUALS RESIDING OUTSIDE THE UNITED STATES. 

(a) ELIGIBILITY.—Chapter 21 of title 38, United States Code, is 

amended by inserting after section 2101 the following new section: 

‘‘§ 2101A. Eligibility for benefits and assistance: members of 

the Armed Forces with service-connected disabilities; individuals residing outside the United States 

‘‘(a) MEMBERS WITH SERVICE-CONNECTED DISABILITIES.—(1) The 

Secretary may provide assistance under this chapter to a member 

of the Armed Forces serving on active duty who is suffering from 

a disability that meets applicable criteria for benefits under this 

chapter if the disability is incurred or aggravated in line of duty 

in the active military, naval, or air service. Such assistance shall 

be provided to the same extent as assistance is provided under this 

chapter to veterans eligible for assistance under this chapter and 

subject to the same requirements as veterans under this chapter. 

‘‘(2) For purposes of this chapter, any reference to a veteran or 

eligible individual shall be treated as a reference to a member of 

the Armed Forces described in subsection (a) who is similarly situated to the veteran or other eligible individual so referred to. 

‘‘(b) BENEFITS AND ASSISTANCE FOR INDIVIDUALS RESIDING OUTSIDE THE UNITED STATES.—(1) Subject to paragraph (2), the Secretary may, at the Secretary’s discretion, provide benefits and assistance under this chapter (other than benefits under section 2106 

of this title) to any individual otherwise eligible for such benefits 

and assistance who resides outside the United States. 

‘‘(2) The Secretary may provide benefits and assistance to an individual under paragraph (1) only if—

‘‘(A) the country or political subdivision in which the housing 

or residence involved is or will be located permits the individual to have or acquire a beneficial property interest (as determined by the Secretary) in such housing or residence; and 

‘‘(B) the individual has or will acquire a beneficial property 

interest (as so determined) in such housing or residence. 

‘‘(c) REGULATIONS.—Benefits and assistance under this chapter 

by reason of this section shall be provided in accordance with such 

regulations as the Secretary may prescribe.’’. 

(b) CONFORMING AMENDMENTS.—

(1) REPEAL OF SUPERSEDED AUTHORITY.—Section 2101 of title 

38, United States Code, is amended—

(A) by striking subsection (c); and 

(B) by redesignating subsection (d) as subsection (c). 

(2) LIMITATIONS ON ASSISTANCE.—Section 2102 of title 38, 

United States Code, is amended—

(A) in subsection (a)—

(i) by striking ‘‘veteran’’ each place it appears and 

inserting ‘‘individual’’; and 

(ii) in paragraph (3), by striking ‘‘veteran’s’’ and inserting ‘‘individual’s’’; 

(B) in subsection (b)(1), by striking ‘‘a veteran’’ and inserting ‘‘an individual’’; 

(C) in subsection (c)—


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(i) by striking ‘‘a veteran’’ and inserting ‘‘an individual’’; and 

(ii) by striking ‘‘the veteran’’ each place it appears 

and inserting ‘‘the individual’’; and 

(D) in subsection (d), by striking ‘‘a veteran’’ each place 

it appears and inserting ‘‘an individual’’. (3) ASSISTANCE FOR INDIVIDUALS TEMPORARILY RESIDING IN

HOUSING OF FAMILY MEMBER.—Section 2102A of title 38, 

United States Code, is amended— (A) by striking ‘‘veteran’’ each place it appears (other 

than in subsection (b)) and inserting ‘‘individual’’; 

(B) in subsection (a), by striking ‘‘veteran’s’’ each place 

it appears and inserting ‘‘individual’s’’; and 

(C) in subsection (b), by striking ‘‘a veteran’’ each place 

it appears and inserting ‘‘an individual’’. (4) FURNISHING OF PLANS AND SPECIFICATIONS.—Section 2103 

of title 38, United States Code, is amended by striking ‘‘veterans’’ both places it appears and inserting ‘‘individuals’’. 

(5) CONSTRUCTION OF BENEFITS.—Section 2104 of title 38, 

United States Code, is amended—

(A) in subsection (a), by striking ‘‘veteran’’ each place it 

appears and inserting ‘‘individual’’; and 

(B) in subsection (b)—

(i) in the first sentence, by striking ‘‘A veteran’’ and 

inserting ‘‘An individual’’; 

(ii) in the second sentence, by striking ‘‘a veteran’’

and inserting ‘‘an individual’’; and 

(iii) by striking ‘‘such veteran’’ each place it appears 

and inserting ‘‘such individual’’. 

(6) VETERANS’ MORTGAGE LIFE INSURANCE.—Section 2106 of 

title 38, United States Code, is amended—

(A) in subsection (a)—

(i) by striking ‘‘any eligible veteran’’ and inserting ‘‘any eligible individual’’; and 

(ii) by striking ‘‘the veterans’ ’’ and inserting ‘‘the individual’s’’; 

(B) in subsection (b), by striking ‘‘an eligible veteran’’ and inserting ‘‘an eligible individual’’; 

(C) in subsection (e), by striking ‘‘an eligible veteran’’ and inserting ‘‘an individual’’; 

(D) in subsection (h), by striking ‘‘each veteran’’ and inserting ‘‘each individual’’; 

(E) in subsection (i), by striking ‘‘the veteran’s’’ each 

place it appears and inserting ‘‘the individual’s’’; 

(F) by striking ‘‘the veteran’’ each place it appears and 

inserting ‘‘the individual’’; and 

(G) by striking ‘‘a veteran’’ each place it appears and inserting ‘‘an individual’’. (7) HEADING AMENDMENTS.—(A) The heading of section 2101 

of title 38, United States Code, is amended to read as follows: 

‘‘§ 2101. Acquisition and adaptation of housing: eligible veterans’’. 

(B) The heading of section 2102A of such title is amended to 

read as follows: 


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‘‘§ 2102A. Assistance for individuals residing temporarily in 

housing owned by a family member’’. 

(8) CLERICAL AMENDMENTS.—The table of sections at the beginning of chapter 21 of title 38, United States Code, is amended—

(A) by striking the item relating to section 2101 and inserting the following new item: 

‘‘2101. Acquisition and adaptation of housing: eligible veterans.’’; 

(B) by inserting after the item relating to section 2101, 

as so amended, the following new item: 

‘‘2101A. Eligibility for benefits and assistance: members of the Armed Forces with 

service-connected disabilities; individuals residing outside the United 

States.’’; 

and 

(C) by striking the item relating to section 2102A and inserting the following new item: 

‘‘2102A. Assistance for individuals residing temporarily in housing owned by a family member.’’. 

SEC. 2603. SPECIALLY ADAPTED HOUSING ASSISTANCE FOR INDIVIDUALS WITH SEVERE BURN INJURIES. 

Section 2101 of title 38, United States Code, is amended—

(1) in subsection (a)(2), by adding at the end the following 

new subparagraph: 

‘‘(E) The disability is due to a severe burn injury (as determined pursuant to regulations prescribed by the Secretary).’’; 

and 

(2) in subsection (b)(2)—

(A) by striking ‘‘either’’ and inserting ‘‘any’’; and 

(B) by adding at the end the following new subparagraph: 

‘‘(C) The disability is due to a severe burn injury (as so determined).’’. 

SEC. 2604. EXTENSION OF ASSISTANCE FOR INDIVIDUALS RESIDING 

TEMPORARILY IN HOUSING OWNED BY A FAMILY MEMBER. 

Section 2102A(e) of title 38, United States Code, is amended by 

striking ‘‘after the end of the five-year period that begins on the 

date of the enactment of the Veterans’ Housing Opportunity and 

Benefits Improvement Act of 2006’’ and inserting ‘‘after December 

31, 2011’’. 

SEC. 2605. INCREASE IN SPECIALLY ADAPTED HOUSING BENEFITS 

FOR DISABLED VETERANS. 

(a) IN GENERAL.—Section 2102 of title 38, United States Code, is 

amended—

(1) in subsection (b)(2), by striking ‘‘$10,000’’ and inserting 

‘‘$12,000’’; 

(2) in subsection (d)—

(A) in paragraph (1), by striking ‘‘$50,000’’ and inserting 

‘‘$60,000’’; and 

(B) in paragraph (2), by striking ‘‘$10,000’’ and inserting 

‘‘$12,000’’; and 

(3) by adding at the end the following new subsection: 

‘‘(e)(1) Effective on October 1 of each year (beginning in 2009), 

the Secretary shall increase the amounts described in subsection 


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(b)(2) and paragraphs (1) and (2) of subsection (d) in accordance 

with this subsection. ‘‘(2) The increase in amounts under paragraph (1) to take effect 

on October 1 of a year shall be by an amount of such amounts 

equal to the percentage by which— ‘‘(A) the residential home cost-of-construction index for the 

preceding calendar year, exceeds ‘‘(B) the residential home cost-of-construction index for the 

year preceding the year described in subparagraph (A). ‘‘(3) The Secretary shall establish a residential home cost-of-construction index for the purposes of this subsection. The index shall 

reflect a uniform, national average change in the cost of residential 

home construction, determined on a calendar year basis. The Secretary may use an index developed in the private sector that the 

Secretary determines is appropriate for purposes of this subsection.’’. (b) EFFECTIVE DATE.—The amendments made by this section 

shall take effect on July 1, 2008, and shall apply with respect to 

payments made in accordance with section 2102 of title 38, United 

States Code, on or after that date. 

SEC. 2606. REPORT ON SPECIALLY ADAPTED HOUSING FOR DISABLED 

INDIVIDUALS. 

(a) IN GENERAL.—Not later than December 31, 2008, the Secretary of Veterans Affairs shall submit to the Committee on Veterans’ Affairs of the Senate and the Committee on Veterans’ Affairs 

of the House of Representatives a report that contains an assessment of the adequacy of the authorities available to the Secretary 

under law to assist eligible disabled individuals in acquiring— (1) suitable housing units with special fixtures or movable facilities required for their disabilities, and necessary land therefor; 

(2) such adaptations to their residences as are reasonably 

necessary because of their disabilities; and 

(3) residences already adapted with special features determined by the Secretary to be reasonably necessary as a result 

of their disabilities. 

(b) FOCUS ON PARTICULAR DISABILITIES.—The report required by 

subsection (a) shall set forth a specific assessment of the needs of—

(1) veterans who have disabilities that are not described in 

subsections (a)(2) and (b)(2) of section 2101 of title 38, United 

States Code; and 

(2) other disabled individuals eligible for specially adapted 

housing under chapter 21 of such title by reason of section 

2101A of such title (as added by section 2602(a) of this Act) 

who have disabilities that are not described in such subsections. 

SEC. 2607. REPORT ON SPECIALLY ADAPTED HOUSING ASSISTANCE 

FOR INDIVIDUALS WHO RESIDE IN HOUSING OWNED BY A 

FAMILY MEMBER ON PERMANENT BASIS. 

Not later than December 31, 2008, the Secretary of Veterans Affairs shall submit to the Committee on Veterans’ Affairs of the Senate and the Committee on Veterans’ Affairs of the House of Representatives a report on the advisability of providing assistance 

under section 2102A of title 38, United States Code, to veterans described in subsection (a) of such section, and to members of the 


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Armed Forces covered by such section 2102A by reason of section 

2101A of title 38, United States Code (as added by section 2602(a) 

of this Act), who reside with family members on a permanent basis. 

SEC. 2608. DEFINITION OF ANNUAL INCOME FOR PURPOSES OF SECTION 8 AND OTHER PUBLIC HOUSING PROGRAMS. 

Section 3(b)(4) of the United States Housing Act of 1937 (42 

U.S.C. 1437a(3)(b)(4)) is amended by inserting ‘‘or any deferred Department of Veterans Affairs disability benefits that are received in 

a lump sum amount or in prospective monthly amounts’’ before 

‘‘may not be considered’’. 

SEC. 2609. PAYMENT OF TRANSPORTATION OF BAGGAGE AND HOUSEHOLD EFFECTS FOR MEMBERS OF THE ARMED FORCES 

WHO RELOCATE DUE TO FORECLOSURE OF LEASED 

HOUSING. 

Section 406 of title 37, United States Code, is amended—

(1) by redesignating subsections (k) and (l) as subsections (l) 

and (m), respectively; and 

(2) by inserting after subsection (j) the following new subsection (k): 

‘‘(k) A member of the armed forces who relocates from leased or 

rental housing by reason of the foreclosure of such housing is entitled to transportation of baggage and household effects under subsection (b)(1) in the same manner, and subject to the same conditions and limitations, as similarly circumstanced members entitled 

to transportation of baggage and household effects under that subsection.’’. 

TITLE VII—SMALL PUBLIC HOUSING 

AUTHORITIES PAPERWORK REDUCTION ACT 

SEC. 2701. SHORT TITLE. 

This title may be cited as the ‘‘Small Public Housing Authorities 

Paperwork Reduction Act’’. 

SEC. 2702. PUBLIC HOUSING AGENCY PLANS FOR CERTAIN QUALIFIED 

PUBLIC HOUSING AGENCIES. 

(a) IN GENERAL.—Section 5A(b) of the United States Housing Act 

of 1937 (42 U.S.C. 1437c–1(b)) is amended by adding at the end the 

following: 

‘‘(3) EXEMPTION OF CERTAIN PHAS FROM FILING REQUIREMENT.—

‘‘(A) IN GENERAL.—Notwithstanding paragraph (1) or 

any other provision of this Act—

‘‘(i) the requirement under paragraph (1) shall not 

apply to any qualified public housing agency; and 

‘‘(ii) except as provided in subsection (e)(4)(B), any 

reference in this section or any other provision of law 

to a ‘public housing agency’ shall not be considered to 

refer to any qualified public housing agency, to the extent such reference applies to the requirement to submit an annual public housing agency plan under this 

subsection. 


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‘‘(B) CIVIL RIGHTS CERTIFICATION.—Notwithstanding that 

qualified public housing agencies are exempt under subparagraph (A) from the requirement under this section to 

prepare and submit an annual public housing plan, each 

qualified public housing agency shall, on an annual basis, 

make the certification described in paragraph (16) of subsection (d), except that for purposes of such qualified public housing agencies, such paragraph shall be applied by 

substituting ‘the public housing program of the agency’ for ‘the public housing agency plan’. ‘‘(C) DEFINITION.—For purposes of this section, the term ‘qualified public housing agency’ means a public housing 

agency that meets the following requirements: ‘‘(i) The sum of (I) the number of public housing 

dwelling units administered by the agency, and (II) 

the number of vouchers under section 8(o) of the 

United States Housing Act of 1937 (42 U.S.C. 1437f(o)) 

administered by the agency, is 550 or fewer. ‘‘(ii) The agency is not designated under section 

6(j)(2) as a troubled public housing agency, and does 

not have a failing score under the section 8 Management Assessment Program during the prior 12 

months.’’. (b) RESIDENT PARTICIPATION.—Section 5A of the United States 

Housing Act of 1937 (42 U.S.C. 1437c–1) is amended— (1) in subsection (e), by inserting after paragraph (3) the following: ‘‘(4) QUALIFIED PUBLIC HOUSING AGENCIES.— ‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), nothing in this section may be construed to exempt a 

qualified public housing agency from the requirement 

under paragraph (1) to establish 1 or more resident advisory boards. Notwithstanding that qualified public housing 

agencies are exempt under subsection (b)(3)(A) from the 

requirement under this section to prepare and submit an 

annual public housing plan, each qualified public housing 

agency shall consult with, and consider the recommendations of the resident advisory boards for the agency, at the 

annual public hearing required under subsection (f)(5), regarding any changes to the goals, objectives, and policies 

of that agency. ‘‘(B) APPLICABILITY OF WAIVER AUTHORITY.—Paragraph 

(3) shall apply to qualified public housing agencies, except 

that for purposes of such qualified public housing agencies, 

subparagraph (B) of such paragraph shall be applied by 

substituting ‘the functions described in the second sentence of paragraph (4)(A)’ for ‘the functions described in 

paragraph (2)’. 

‘‘(f) PUBLIC HEARINGS.—’’; and 

(2) in subsection (f) (as so designated by the amendment 

made by paragraph (1)), by adding at the end the following: ‘‘(5) QUALIFIED PUBLIC HOUSING AGENCIES.— ‘‘(A) REQUIREMENT.—Notwithstanding that qualified 

public housing agencies are exempt under subsection 

(b)(3)(A) from the requirement under this section to conVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00218 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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duct a public hearing regarding the annual public housing 

plan of the agency, each qualified public housing agency 

shall annually conduct a public hearing—

‘‘(i) to discuss any changes to the goals, objectives, 

and policies of the agency; and 

‘‘(ii) to invite public comment regarding such 

changes. 

‘‘(B) AVAILABILITY OF INFORMATION AND NOTICE.—Not 

later than 45 days before the date of any hearing described 

in subparagraph (A), a qualified public housing agency 

shall—

‘‘(i) make all information relevant to the hearing and 

any determinations of the agency regarding changes to 

the goals, objectives, and policies of the agency to be 

considered at the hearing available for inspection by 

the public at the principal office of the public housing 

agency during normal business hours; and 

‘‘(ii) publish a notice informing the public that—

‘‘(I) the information is available as required 

under clause (i); and 

‘‘(II) a public hearing under subparagraph (A) 

will be conducted.’’. 

TITLE VIII—HOUSING PRESERVATION 

Subtitle A—Preservation Under Federal 

Housing Programs 

SEC. 2801. CLARIFICATION OF DISPOSITION OF CERTAIN PROPERTIES. 

Notwithstanding any other provision of law, subtitle A of title II 

of the Deficit Reduction Act of 2005 (12 U.S.C. 1701z-11 note) and 

the amendments made by such title shall not apply to any transaction regarding a multifamily real property for which—

(1) the Secretary of Housing and Urban Development has received, before the date of the enactment of such Act, written 

expressions of interest in purchasing the property from both a 

city government and the housing commission of such city; 

(2) after such receipt, the Secretary acquires title to the 

property at a foreclosure sale; and 

(3) such city government and housing commission have resolved a previous disagreement with respect to the disposition 

of the property. 

SEC. 2802. ELIGIBILITY OF CERTAIN PROJECTS FOR ENHANCED 

VOUCHER ASSISTANCE. 

Notwithstanding any other provision of law—

(1) the property known as The Heritage Apartments (FHA 

No. 023-44804), in Malden, Massachusetts, shall be considered 

eligible low-income housing for purposes of the eligibility of 

residents of the property for enhanced voucher assistance 

under section 8(t) of the United States Housing Act of 1937 (42 

U.S.C. 1437f(t)), pursuant to paragraph (2)(A) of section 223(f) 

of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4113(f)(2)(A)); 


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(2) such residents shall receive enhanced rental housing 

vouchers upon the prepayment of the mortgage loan for the 

property under section 236 of the National Housing Act (12 

U.S.C. 1715z-1); and 

(3) the Secretary shall approve such prepayment and subsequent transfer of the property without any further condition, 

except that the property shall be restricted for occupancy, until 

the original maturity date of the prepaid mortgage loan, only 

by families with incomes not exceeding 80 percent of the adjusted median income for the area in which the property is located, as published by the Secretary. 

Amounts for the enhanced vouchers pursuant to this section shall 

be provided under amounts appropriated for tenant-based rental 

assistance otherwise authorized under section 8(t) of the United 

States Housing Act of 1937. 

SEC. 2803. TRANSFER OF CERTAIN RENTAL ASSISTANCE CONTRACTS. 

(a) TRANSFER.—Subject to subsection (c) and notwithstanding 

any other provision of law, the Secretary of Housing and Urban Development shall, at the request of the owner, transfer or authorize 

the transfer, of the contracts, restrictions, and debt described in 

subsection (b)—

(1) on the housing that is owned or managed by Community 

Properties of Ohio Management Services LLC or an affiliate of 

Ohio Capital Corporation for Housing and located in Franklin 

County, Ohio, to other properties located in Franklin County, 

Ohio; and 

(2) on the housing that is owned or managed by The Model 

Group, Inc., and located in Hamilton County, Ohio, to other 

properties located in Hamilton County, Ohio. 

(b) CONTRACTS, RESTRICTIONS, AND DEBT COVERED.—The contracts, restrictions, and debt described in this subsection are as follows: 

(1) All or a portion of a project-based rental assistance housing assistance payments contract under section 8 of the United 

States Housing Act of 1937 (42 U.S.C. 1437f). 

(2) Existing Federal use restrictions, including without limitation use agreements, regulatory agreements, and accommodation agreements. 

(3) Any subordinate debt held by the Secretary or assigned 

and any mortgages securing such debt, all related loan and security documentation and obligations, and reserve and escrow 

balances. 

(c) RETENTION OF SAME NUMBER OF UNITS AND AMOUNT OF ASSISTANCE.—Any transfer pursuant to subsection (a) shall result 

in—

(1) a total number of dwelling units (including units retained 

by the owners and units transferred) covered by assistance described in subsection (b)(1) after the transfer remaining the 

same as such number assisted before the transfer, with such 

increases or decreases in unit sizes as may be contained in a 

plan approved by a local planning or development commission 

or department; and 

(2) no reduction in the total amount of the housing assistance payments under contracts described in subsection (b)(1). 


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SEC. 2804. PUBLIC HOUSING DISASTER RELIEF. 

Section 9 of the United States Housing Act of 1937 (42 U.S.C. 

1437g) is amended—

(1) by striking subsection (k); and 

(2) by redesignating subsections (l), (m), and (n) as subsections (k), (l), and (m), respectively. 

SEC. 2805. PRESERVATION OF CERTAIN AFFORDABLE HOUSING. 

Notwithstanding any other provision of law—

(1) for the property known as Nihonmachi Terrace (FHA No. 

121-44284), in San Francisco, California, upon the refinancing 

of the existing federally insured mortgage pursuant to section 

236(b) of the National Housing Act (12 U.S.C. 1715z–1(b)), unassisted low and moderate-income residents of the property 

shall be deemed eligible for and shall receive voucher assistance under section 8(o) of the United States Housing Act of 

1937 (42 U.S.C. 1437f(o)); and 

(2) to preserve the affordability of the property, the housing 

authority shall utilize such additional voucher assistance pursuant to subsection 8(o)(13) of the United States Housing Act 

of 1937, without regard to the limitations of subparagraphs (B) 

and (D) of that subsection. 

Amounts for the vouchers pursuant to this section shall be provided under amounts appropriated for tenant-based rental assistance otherwise authorized. 

Subtitle B—Coordination of Federal Housing Programs and Tax Incentives for 

Housing 

SEC. 2831. SHORT TITLE. 

This subtitle may be cited as the ‘‘Housing Tax Credit Coordination Act of 2008’’. 

SEC. 2832. APPROVALS BY DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT. 

(a) ADMINISTRATIVE AND PROCEDURAL CHANGES.—

(1) IN GENERAL.—The Secretary of Housing and Urban Development (in this section referred to as the ‘‘Secretary’’) shall, 

not later than the expiration of the 6-month period beginning 

upon after the date of the enactment of this Act, implement administrative and procedural changes to expedite approval of 

multifamily housing projects under the jurisdiction of the Department of Housing and Urban Development that meet the 

requirements of the Secretary for such approvals. 

(2) PROJECTS.—The multifamily housing projects referred to 

in paragraph (1) shall include—

(A) projects for which assistance is provided by such Department in conjunction with any low-income housing tax 

credits under section 42 of the Internal Revenue Code of 

1986 or tax-exempt housing bonds; and 

(B) existing public housing projects and assisted housing 

projects, for which approval of the Secretary is necessary 

for transactions, in conjunction with any such low-income 


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housing tax credits or tax-exempt housing bonds, involving 

the preservation or rehabilitation of the project. 

(3) CHANGES.—The administrative and procedural changes 

referred to in paragraph (1) shall include all actions necessary 

to carry out paragraph (1), which may include—

(A) improving the efficiency of approval procedures; 

(B) simplifying approval requirements, 

(C) establishing time deadlines or target deadlines for 

required approvals; 

(D) modifying division of approval authority between 

field and national offices; 

(E) improving outreach to project sponsors regarding information that is required to be submitted for such approvals; 

(F) requesting additional funding for increasing staff, if 

necessary; and 

(G) any other actions which would expedite approvals. 

Any such changes shall be made in a manner that provides for 

full compliance with any existing requirements under law or 

regulation that are designed to protect families receiving public 

and assisted housing assistance, including income targeting, 

rent, and fair housing provisions, and shall also comply with 

requirements regarding environmental review and protection 

and wages paid to laborers. 

(b) CONSULTATION.—The Secretary shall consult with the Commissioner of the Internal Revenue Service and take such actions as 

are appropriate in conjunction with such consultation to simplify 

the coordination of rules, regulations, forms, and approval requirements for multifamily housing projects projects for which assistance is provided by such Department in conjunction with any lowincome housing tax credits under section 42 of the Internal Revenue Code of 1986 or tax-exempt housing bonds. 

(c) RECOMMENDATIONS.—In implementing the changes required 

under this section, the Secretary shall solicit recommendations regarding such changes from project owners and sponsors, investors 

and stakeholders in housing tax credits, State and local housing finance agencies, public housing agencies, tenant advocates, and 

other stakeholders in such projects. 

(d) REPORT.—Not later than the expiration of the 9-month period 

beginning on the date of the enactment of this Act, the Secretary 

shall submit a report to the Committee on Financial Services of the 

House of Representatives and the Committee on Banking, Housing, 

and Urban Affairs of the Senate that—

(1) identifies the actions taken by the Secretary to comply 

with this section; 

(2) includes information regarding any resulting improvements in the expedited approval for multifamily housing 

projects; 

(3) identifies recommendations made pursuant to subsection 

(c); 

(4) identifies actions taken by the Secretary to implement 

the provisions in the amendments made by sections 2834 and 

2835 of this Act; and 


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(5) makes recommendations for any legislative changes that 

are needed to facilitate prompt approval of assistance for such 

projects. 

SEC. 2833. PROJECT APPROVALS BY RURAL HOUSING SERVICE. 

Section 515(h) of the Housing Act of 1949 (42 U.S.C. 1485) is 

amended—

(1) by inserting ‘‘(1) CONDITION.—’’ after ‘‘(h)’’; and 

(2) by adding at the end the following new paragraphs: 

‘‘(2) ACTIONS TO EXPEDITE PROJECT APPROVALS.—

‘‘(A) IN GENERAL.—The Secretary shall take actions to facilitate timely approval of requests to transfer ownership 

or control, for the purpose of rehabilitation or preservation, 

of multifamily housing projects for which assistance is provided by the Secretary of Agriculture in conjunction with 

any low-income housing tax credits under section 42 of the 

Internal Revenue Code of 1986 or tax-exempt housing 

bonds. 

‘‘(B) CONSULTATION.—The Secretary of Agriculture shall 

consult with the Commissioner of the Internal Revenue 

Service and take such actions as are appropriate in conjunction with such consultation to simplify the coordination of rules, regulations, forms (including applications 

forms for project transfers), and approval requirements 

multifamily housing projects for which assistance is provided by the Secretary of Agriculture in conjunction with 

any low-income housing tax credits under section 42 of the 

Internal Revenue Code of 1986 or tax-exempt housing 

bonds. 

‘‘(C) EXISTING REQUIREMENTS.—Any actions taken pursuant to this paragraph shall be taken in a manner that provides for full compliance with any existing requirements 

under law or regulation that are designed to protect families receiving Federal housing assistance, including income 

targeting, rent, and fair housing provisions, and shall also 

comply with requirements regarding environmental review 

and protection and wages paid to laborers. 

‘‘(D) RECOMMENDATIONS.—In implementing the changes 

required under this paragraph, the Secretary shall solicit 

recommendations regarding such changes from project 

owners and sponsors, investors and stakeholders in housing tax credits, State and local housing finance agencies, 

tenant advocates, and other stakeholders in such 

projects.’’. 

SEC. 2834. USE OF FHA LOANS WITH HOUSING TAX CREDITS. 

(a) SUBSIDY LAYERING REQUIREMENTS.—Subsection (d) of section 

102 of the Department of Housing and Urban Development Reform 

Act of 1989 (42 U.S.C. 3545(d)) is amended—

(1) in the first sentence, by inserting after ‘‘assistance within 

the jurisdiction of the Department’’ the following: ‘‘, as such 

term is defined in subsection (m), except that for purposes of 

this subsection such term shall not include any mortgage insurance provided pursuant to title II of the National Housing 

Act (12 U.S.C. 1707 et seq.)’’; and 


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(2) in the second sentence, by inserting ‘‘such’’ before ‘‘assistance’’. (b) COST CERTIFICATION.—Section 227 of National Housing Act 

(12 U.S.C. 1715r) is amended— (1) in the matter preceding paragraph (a) (relating to a definition of ‘‘new or rehabilitated multifamily housing’’)— (A) in the first sentence— (i) by striking ‘‘Notwithstanding’’ and inserting ‘‘Except as provided in subsection (b) and notwithstanding’’; and 

(ii) by redesignating clauses (a) and (b) as clauses 

(A) and (B), respectively; and 

(B) by striking ‘‘As used in this section—’’; 

(2) in paragraph (c) (relating to a definition of ‘‘actual 

cost’’)—

(A) in clause (i), by redesignating clauses (1) and (2) as 

clauses (I) and (II), respectively; and 

(B) in clause (ii), by redesignating clauses (1) and (2) as 

clauses (I) and (II), respectively; 

(3) by redesignating paragraphs (a), (b), and (c) as paragraphs (1), (2), and (3), respectively; 

(4) by inserting before paragraph (1) (as so redesignated by 

paragraph (3) of this subsection) the following: 

‘‘(b) EXEMPTION FOR CERTAIN PROJECTS ASSISTED WITH LOW-INCOME HOUSING TAX CREDIT.—In the case of any mortgage insured 

under any provision of this title that is executed in connection with 

the construction, rehabilitation, purchase, or refinancing of a multifamily housing project for which equity provided through any lowincome housing tax credit pursuant to section 42 of the Internal 

Revenue Code of 1986 (26 U.S.C. 42), if the Secretary determines 

at the time of issuance of the firm commitment for insurance that 

the ratio of the loan proceeds to the actual cost of the project is less 

than 80 percent, subsection (a) of this section shall not apply. ‘‘(c) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply:’’; and 

(5) by inserting ‘‘(a) REQUIREMENT.—’’ after ‘‘227.’’. (c) OTHER PROVISIONS REGARDING TREATMENT OF MORTGAGES

COVERING TAX CREDIT PROJECTS.—Title II of the National Housing 

Act is amended by inserting after section 227 (12 U.S.C. 1715r) the 

following new section: 

‘‘SEC. 228. TREATMENT OF MORTGAGES COVERING TAX CREDIT 

PROJECTS. 

‘‘(a) DEFINITION.—For purposes of this section, the term ‘insured 

mortgage covering a tax credit project’ means a mortgage insured 

under any provision of this title that is executed in connection with 

the construction, rehabilitation, purchase, or refinancing of a multifamily housing project for which equity provided through any lowincome housing tax credit pursuant to section 42 of the Internal 

Revenue Code of 1986 (26 U.S.C. 42). 

‘‘(b) ACCEPTANCE OF LETTERS OF CREDIT.—In the case of an insured mortgage covering a tax credit project, the Secretary may not 

require the escrowing of equity provided by the sale of any low-income housing tax credits for the project pursuant to section 42 of 

the Internal Revenue Code of 1986, or any other form of security, 

such as a letter of credit. 


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‘‘(c) ASSET MANAGEMENT REQUIREMENTS.—In the case of an insured mortgage covering a tax credit project for which project the 

applicable tax credit allocating agency is causing to be performed 

periodic inspections in compliance with the requirements of section 

42 of the Internal Revenue Code of 1986, such project shall be exempt from requirements imposed by the Secretary regarding periodic inspections of the property by the mortgagee. To the extent 

that other compliance monitoring is being performed with respect 

to such a project by such an allocating agency pursuant to such section 42, the Secretary shall, to the extent that the Secretary determines such monitoring is sufficient to ensure compliance with any 

requirements established by the Secretary, accept such agency’s 

evidence of compliance for purposes of determining compliance with 

the Secretary’s requirements. ‘‘(d) STREAMLINED PROCESSING PILOT PROGRAM.— ‘‘(1) IN GENERAL.—The Secretary shall establish a pilot program to demonstrate the effectiveness of streamlining the review process, which shall include all applications for mortgage 

insurance under any provision of this title for mortgages executed in connection with the construction, rehabilitation, purchase, or refinancing of a multifamily housing project for which 

equity provided through any low-income housing tax credit 

pursuant to section 42 of the Internal Revenue Code of 1986. 

The Secretary shall issue instructions for implementing the 

pilot program under this subsection not later than the expiration of the 180-day period beginning upon the date of the enactment of the Housing Tax Credit Coordination Act of 2008. ‘‘(2) REQUIREMENTS.—Such pilot program shall provide for— ‘‘(A) the Secretary to appoint designated underwriters, 

who shall be responsible for reviewing such mortgage insurance applications and making determinations regarding 

the eligibility of such applications for such mortgage insurance in lieu of the processing functions regarding such applications that are otherwise performed by other employees of the Department of Housing and Urban Development; ‘‘(B) submission of applications for such mortgage insurance by mortgagees who have previously been expressly 

approved by the Secretary; and ‘‘(C) determinations regarding the eligibility of such applications for such mortgage insurance to be made by the 

chief underwriter pursuant to requirements prescribed by 

the Secretary, which shall include requiring submission of 

reports regarding applications of proposed mortgagees by 

third-party entities expressly approved by the chief underwriter.’’. 

SEC. 2835. OTHER HUD PROGRAMS. 

(a) SECTION 8 ASSISTANCE.—

(1) PHA PROJECT-BASED ASSISTANCE.—Section 8(o)(13) of the 

United States Housing Act of 1937 (42 U.S.C. 1437f(o)(13)) is 

amended—

(A) in subparagraph (D)(i)—

(i) by striking ‘‘building’’ and inserting ‘‘project’’; and 

(ii) by adding at the end the following: ‘‘For purposes 

of this subparagraph, the term’’project‘‘ means a single 


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building, multiple contiguous buildings, or multiple 

buildings on contiguous parcels of land.’’; 

(B) in the first sentence of subparagraph (F), by striking 

‘‘10 years’’ and inserting ‘‘15 years’’; 

(C) in subparagraph (G)—

(i) by inserting after the period at the end of the 

first sentence the following: ‘‘Such contract may, at the 

election of the public housing agency and the owner of 

the structure, specify that such contract shall be extended for renewal terms of up to 15 years each, if the 

agency makes the determination required by this subparagraph and the owner is in compliance with the 

terms of the contract.’’; and 

(ii) by adding at the end the following: ‘‘A public 

housing agency may agree to enter into such a contract at the time it enters into the initial agreement 

for a housing assistance payment contract or at any 

time thereafter that is before the expiration of the 

housing assistance payment contract.’’; 

(D) in subparagraph (H), by inserting before the period 

at the end of the first sentence the following: ‘‘, except that 

in the case of a contract unit that has been allocated lowincome housing tax credits and for which the rent limitation pursuant to such section 42 is less than the amount 

that would otherwise be permitted under this subparagraph, the rent for such unit may, in the sole discretion of 

a public housing agency, be established at the higher section 8 rent, subject only to paragraph (10)(A)’’; 

(E) in subparagraph (I)(i), by inserting before the semicolon the following: ‘‘, except that the contract may provide 

that the maximum rent permitted for a dwelling unit shall 

not be less than the initial rent for the dwelling unit under 

the initial housing assistance payments contract covering 

the unit’’; and 

(F) by adding at the end the following new subparagraphs: 

‘‘(L) USE IN COOPERATIVE HOUSING AND ELEVATOR BUILDINGS.—A public housing agency may enter into a housing 

assistance payments contract under this paragraph with 

respect to—

‘‘(i) dwelling units in cooperative housing; and 

‘‘(ii) notwithstanding subsection (c), dwelling units 

in a high-rise elevator project, including such a project 

that is occupied by families with children, without review and approval of the contract by the Secretary. 

‘‘(M) REVIEWS.—

‘‘(i) SUBSIDY LAYERING.—A subsidy layering review 

in accordance with section 102(d) of the Department of 

Housing and Urban Development Reform Act of 1989 

(42 U.S.C. 3545(d)) shall not be required for assistance 

under this paragraph in the case of a housing assistance payments contract for an existing structure, or if 

a subsidy layering review has been conducted by the 

applicable State or local agency. 


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‘‘(ii) ENVIRONMENTAL REVIEW.—A public housing 

agency shall not be required to undertake any environmental review before entering into a housing assistance payments contract under this paragraph for 

an existing structure, except to the extent such a review is otherwise required by law or regulation.’’. (2) VOUCHER PROGRAM RENT REASONABLENESS.—Section 

8(o)(10) of the United States Housing Act of 1937 (42 U.S.C. 

1437f(o)(10)) is amended by adding at the end the following 

new subparagraph; ‘‘(F) TAX CREDIT PROJECTS.—In the case of a dwelling 

unit receiving tax credits pursuant to section 42 of the Internal Revenue Code of 1986 or for which assistance is 

provided under subtitle A of title II of the Cranston Gonzalez National Affordable Housing Act of 1990, for which 

a housing assistance contract not subject to paragraph (13) 

of this subsection is established, rent reasonableness shall 

be determined as otherwise provided by this paragraph, 

except that— ‘‘(i) comparison with rent for units in the private, 

unassisted local market shall not be required if the 

rent is equal to or less than the rent for other comparable units receiving such tax credits or assistance 

in the project that are not occupied by families assisted with tenant-based assistance under this subsection; and ‘‘(ii) the rent shall not be considered reasonable for 

purposes of this paragraph if it exceeds the greater 

of— ‘‘(I) the rents charged for other comparable 

units receiving such tax credits or assistance in 

the project that are not occupied by families assisted with tenant-based assistance under this 

subsection; and 

‘‘(II) the payment standard established by the 

public housing agency for a unit of the size involved.’’. 

(b) SECTION 202 HOUSING FOR ELDERLY PERSONS.—Subsection (f) 

of section 202 of the Housing Act of 1959 (12 U.S.C. 1701q(f)) is 

amended— (1) by striking ‘‘SELECTION CRITERIA.—’’ and inserting ‘‘INITIAL SELECTION CRITERIA AND PROCESSING.— (1) SELECTION

CRITERIA.—’’; 

(2) by redesignating paragraphs (1) through (7) as subparagraphs (A) through (G), respectively; and 

(3) by adding at the end the following new paragraph: 

‘‘(2) DELEGATED PROCESSING.—

‘‘(A) In issuing a capital advance under this subsection 

for any project for which financing for the purposes described in the last two sentences of subsection (b) is provided by a combination of a capital advance under subsection (c)(1) and sources other than this section, within 30 

days of award of the capital advance, the Secretary shall 

delegate review and processing of such projects to a State 

or local housing agency that—


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‘‘(i) is in geographic proximity to the property; 

‘‘(ii) has demonstrated experience in and capacity for 

underwriting multifamily housing loans that provide 

housing and supportive services; ‘‘(iii) may or may not be providing low-income housing tax credits in combination with the capital advance under this section, and ‘‘(iv) agrees to issue a firm commitment within 12 

months of delegation. ‘‘(B) The Secretary shall retain the authority to process 

capital advances in cases in which no State or local housing agency has applied to provide delegated processing 

pursuant to this paragraph or no such agency has entered 

into an agreement with the Secretary to serve as a delegated processing agency. ‘‘(C) An agency to which review and processing is delegated pursuant to subparagraph (A) may assess a reasonable fee which shall be included in the capital advance 

amounts and may recommend project rental assistance 

amounts in excess of those initially awarded by the Secretary. The Secretary shall develop a schedule for reasonable fees under this subparagraph to be paid to delegated 

processing agencies, which shall take into consideration 

any other fees to be paid to the agency for other funding 

provided to the project by the agency, including bonds, tax 

credits, and other gap funding. ‘‘(D) Under such delegated system, the Secretary shall 

retain the authority to approve rents and development 

costs and to execute a capital advance within 60 days of 

receipt of the commitment from the State or local agency. 

The Secretary shall provide to such agency and the project 

sponsor, in writing, the reasons for any reduction in capital advance amounts or project rental assistance and such 

reductions shall be subject to appeal.’’. (c) MCKINNEY-VENTO ACT HOMELESS ASSISTANCE UNDER SHEL- TER PLUS CARE PROGRAM.— (1) TERM OF CONTRACTS WITH OWNER OR LESSOR.—Part I of 

subtitle F of the McKinney-Vento Homeless Assistance Act is 

amended— (A) by redesignating sections 462 and 463 (42 U.S.C. 

11403g, 11403h) as sections 463 and 464, respectively; 

(B) by striking ‘‘section 463’’ each place such term appears in sections 471, 476, 481, 486, and 488 (42 U.S.C. 

11404, 11405, 11406, 11407, and 11407b) and inserting 

‘‘section 464’’; and 

(C) by inserting after section 461 (42 U.S.C. 11403f) the 

following new section: 

‘‘SEC. 462. TERM OF CONTRACT WITH OWNER OR LESSOR. 

‘‘An applicant under this subtitle may enter into a contract with 

the owner or lessor of a property that receives rental assistance 

under this subtitle having a term of not more than 15 years, subject to the availability of sufficient funds provided in appropriation 

Acts for the purpose of renewing expiring contracts for assistance 

payments. Such contract may, at the election of the applicant and 

owner or lessor, specify that such contract shall be extended for reVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00228 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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newal terms of not more than 15 years each, subject to the availability of sufficient such appropriated funds.’’. 

(2) PROJECT-BASED RENTAL ASSISTANCE CONTRACTS.—Section 

478(a) of the McKinney-Vento Homeless Assistance Act (42 

U.S.C. 11405a(a)) is amended by inserting before the period at 

the end the following: ‘‘; except that, in the case of any project 

for which equity is provided through any low-income housing 

tax credit pursuant to section 42 of the Internal Revenue Code 

of 1986 (26 U.S.C. 42), if an expenditure of such amount for 

each unit (including the prorated share of such work) is required to make the structure decent, safe, and sanitary, and 

the owner agrees to reach initial closing on permanent financing from such other sources within two years and agrees to 

carry out the rehabilitation with resources other than assistance under this subtitle within 60 months of notification of 

grant approval, the contract shall be for a term of 10 years (except that such period may be extended by up to 1 year by the 

Secretary, which extension shall be granted unless the Secretary determines that the sponsor is primarily responsible for 

the failure to meet such deadline)’’. 

(d) DATA COLLECTION ON TENANTS OF HOUSING TAX CREDIT

PROJECTS.—Title I of the United States Housing Act of 1937 (42 

U.S.C. 1437 et seq.) is amended by adding at the end the following 

new section: 

‘‘SEC. 36. COLLECTION OF INFORMATION ON TENANTS IN TAX CREDIT 

PROJECTS. 

‘‘(a) IN GENERAL.—Each State agency administering tax credits 

under section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 

42) shall furnish to the Secretary of Housing and Urban Development, not less than annually, information concerning the race, ethnicity, family composition, age, income, use of rental assistance 

under section 8(o) of the United States Housing Act of 1937 or 

other similar assistance, disability status, and monthly rental payments of households residing in each property receiving such credits through such agency. Such State agencies shall, to the extent 

feasible, collect such information through existing reporting processes and in a manner that minimizes burdens on property owners. 

In the case of any household that continues to reside in the same 

dwelling unit, information provided by the household in a previous 

year may be used if the information is of a category that is not subject to change or if information for the current year is not readily 

available to the owner of the property. 

‘‘(b) STANDARDS.—The Secretary shall establish standards and 

definitions for the information collected under subsection (a), provide States with technical assistance in establishing systems to 

compile and submit such information, and, in coordination with 

other Federal agencies administering housing programs, establish 

procedures to minimize duplicative reporting requirements for 

properties assisted under multiple housing programs. 

‘‘(c) PUBLIC AVAILABILITY.—The Secretary shall, not less than annually, compile and make publicly available the information submitted to the Secretary pursuant to subsection (a). 

‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to 

be appropriated for the cost of activities required under subsections 


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(b) and (c) $2,500,000 for fiscal year 2009 and $900,000 for each of 

fiscal years 2010 through 2013.’’. 

TITLE IX—MISCELLANEOUS 

SEC. 2901. HOMELESS ASSISTANCE. 

(a) APPROPRIATIONS.—Section 726 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11435) is amended by striking 

‘‘$70,000,000’’ and all that follows and inserting ‘‘$100,000,000 for 

fiscal year 2009 and such sums as may be necessary for each subsequent fiscal year.’’. 

(b) EMERGENCY ASSISTANCE.—Section 722 of the McKinney-Vento 

Homeless Assistance Act (42 U.S.C. 11432) is amended by adding 

at the end the following: 

‘‘(h) SPECIAL RULE FOR EMERGENCY ASSISTANCE.—

‘‘(1) EMERGENCY ASSISTANCE.—

‘‘(A) RESERVATION OF AMOUNTS.—Subject to paragraph 

(4) and notwithstanding any other provision of this title, 

the Secretary shall use funds appropriated under section 

726 for fiscal year 2009, but not to exceed $30,000,000, for 

the purposes of providing emergency assistance through 

grants. 

‘‘(B) GENERAL AUTHORITY.—The Secretary shall use the 

funds to make grants to State educational agencies under 

paragraph (2), to enable the agencies to make subgrants to 

local educational agencies under paragraph (3), to provide 

activities described in section 723(d) for individuals referred to in subparagraph (C). 

‘‘(C) ELIGIBLE INDIVIDUALS.—Funds made available 

under this subsection shall be used to provide such activities for eligible individuals, consisting of homeless children 

and youths, and their families, who have become homeless 

due to home foreclosure, including children and youths, 

and their families, who became homeless when lenders 

foreclosed on properties rented by the families. 

‘‘(2) GRANTS TO STATE EDUCATIONAL AGENCIES.—

‘‘(A) DISBURSEMENT.—The Secretary shall make grants 

with funds provided under paragraph (1)(A) to State educational agencies based on need, consistent with the number of eligible individuals described in paragraph (1)(C) in 

the States involved, as determined by the Secretary. 

‘‘(B) ASSURANCE.—To be eligible to receive a grant under 

this paragraph, a State educational agency shall provide 

an assurance to the Secretary that the State educational 

agency, and each local educational agency receiving a 

subgrant from the State educational agency under this 

subsection shall ensure that the activities carried out 

under this subsection are consistent with the activities described in section 723(d). 

‘‘(3) SUBGRANTS TO LOCAL EDUCATIONAL AGENCIES.—A State 

educational agency that receives a grant under paragraph (2) 

shall use the funds made available through the grant to make 

subgrants to local educational agencies. The State educational 

agency shall make the subgrants to local educational agencies 


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based on need, consistent with the number of eligible individuals described in paragraph (1)(C) in the areas served by the 

local educational agencies, as determined by the State educational agency. ‘‘(4) RESTRICTION.—The Secretary— ‘‘(A) shall determine the amount (if any) by which the 

funds appropriated under section 726 for fiscal year 2009 

exceed $70,000,000; and ‘‘(B) may only use funds from that amount to carry out 

this subsection.’’. 

SEC. 2902. INCREASING ACCESS AND UNDERSTANDING OF ENERGY 

EFFICIENT MORTGAGES. 

(a) DEFINITION.—As used in this section, the term ‘‘energy efficient mortgage’’ has the same meaning as given that term in paragraph (24) of section 104 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12704(24)). 

(b) RECOMMENDATIONS TO ELIMINATE BARRIERS TO USE OF EN- ERGY EFFICIENT MORTGAGES.— (1) IN GENERAL.—Not later than 180 days after the date of 

enactment of this section, the Secretary of Housing and Urban 

Development, in conjunction with the Secretary of Energy and 

the Administrator of the Environmental Protection Agency, 

shall consult with the residential mortgage industry and States 

to develop recommendations to eliminate the barriers that 

exist to increasing the availability, use, and purchase of energy 

efficient mortgages, including such barriers as— (A) the lack of reliable and accessible information on 

such mortgages, including estimated energy savings and 

other benefits of energy efficient housing; 

(B) the confusion regarding underwriting requirements 

and differences among various energy efficient mortgage 

programs; 

(C) the complex and time consuming process of securing 

such mortgages; 

(D) the lack of publicly available research on the default 

risk of such mortgages; and 

(E) the availability of certified or accredited home energy 

rating services. 

(2) REPORT TO CONGRESS.—The Secretary of Housing and 

Urban Development shall submit a report to Congress that—

(A) summarizes the recommendations developed under 

paragraph (1); and 

(B) includes any recommendations for statutory, regulatory, or administrative changes that the Secretary deems 

necessary to institute such recommendations. 

(c) ENERGY EFFICIENT MORTGAGES OUTREACH CAMPAIGN.—

(1) IN GENERAL.—The Secretary of Housing and Urban Development, in consultation and coordination with the Secretary 

of Energy, the Administrator of the Environmental Protection 

Agency, and State Energy and Housing Finance Directors, 

shall carry out an education and outreach campaign to inform 

and educate consumers, home builders, residential lenders, and 

other real estate professionals on the availability, benefits, and 

advantages of—

(A) improved energy efficiency in housing; and 


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(B) energy efficient mortgages. 

(2) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated such sums as are necessary to carry 

out the education and outreach campaign described under 

paragraph (1). 

DIVISION C—TAX-RELATED PROVISIONS 

SECTION 3000. SHORT TITLE; ETC. 

(a) SHORT TITLE.—This division may be cited as the ‘‘Housing Assistance Tax Act of 2008’’. 

(b) AMENDMENT OF 1986 CODE.—Except as otherwise expressly 

provided, whenever in this division an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or 

other provision, the reference shall be considered to be made to a 

section or other provision of the Internal Revenue Code of 1986. 

(c) TABLE OF CONTENTS.—The table of contents for this division 

is as follows: 

Sec. 3000. Short title; etc. 

TITLE I—HOUSING TAX INCENTIVES 

Subtitle A—Multi-Family Housing 

PART I—LOW-INCOME HOUSING TAX CREDIT

Sec. 3001. Temporary increase in volume cap for low-income housing tax credit. 

Sec. 3002. Determination of credit rate. 

Sec. 3003. Modifications to definition of eligible basis. 

Sec. 3004. Other simplification and reform of low-income housing tax incentives. 

Sec. 3005. Treatment of military basic pay. 

PART II—MODIFICATIONS TO TAX-EXEMPT HOUSING BOND RULES

Sec. 3007. Recycling of tax-exempt debt for financing residential rental projects. 

Sec. 3008. Coordination of certain rules applicable to low-income housing credit and 

qualified residential rental project exempt facility bonds. 

PART III—REFORMS RELATED TO THE LOW-INCOME HOUSING CREDIT AND TAXEXEMPT HOUSING BONDS

Sec. 3009. Hold harmless for reductions in area median gross income. 

Sec. 3010. Exception to annual current income determination requirement where 

determination not relevant. 

Subtitle B—Single Family Housing 

Sec. 3011. First-time homebuyer credit. 

Sec. 3012. Additional standard deduction for real property taxes for nonitemizers. 

Subtitle C—General Provisions 

Sec. 3021. Temporary liberalization of tax-exempt housing bond rules. 

Sec. 3022. Repeal of alternative minimum tax limitations on tax-exempt housing 

bonds, low-income housing tax credit, and rehabilitation credit. 

Sec. 3023. Bonds guaranteed by Federal home loan banks eligible for treatment as 

tax-exempt bonds. 

Sec. 3024. Modification of rules pertaining to FIRPTA nonforeign affidavits. 

Sec. 3025. Modification of definition of tax-exempt use property for purposes of the 

rehabilitation credit. 

Sec. 3026. Extension of special rule for mortgage revenue bonds for residences located in disaster areas. 

Sec. 3027. Transfer of funds appropriated to carry out 2008 recovery rebates for individuals. 


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TITLE II—REFORMS RELATED TO REAL ESTATE INVESTMENT TRUSTS 

Subtitle A—Foreign Currency and Other Qualified Activities 

Sec. 3031. Revisions to REIT income tests. 

Sec. 3032. Revisions to REIT asset tests. 

Sec. 3033. Conforming foreign currency revisions. 

Subtitle B—Taxable REIT Subsidiaries 

Sec. 3041. Conforming taxable REIT subsidiary asset test. 

Subtitle C—Dealer Sales 

Sec. 3051. Holding period under safe harbor. 

Sec. 3052. Determining value of sales under safe harbor. 

Subtitle D—Health Care REITs 

Sec. 3061. Conformity for health care facilities. 

Subtitle E—Effective Dates 

Sec. 3071. Effective dates. 

TITLE III—REVENUE PROVISIONS 

Subtitle A—General Provisions 

Sec. 3081. Election to accelerate the AMT and research credits in lieu of bonus depreciation. 

Sec. 3082. Certain GO Zone incentives. 

Sec. 3083. Increase in statutory limit on the public debt. 

Subtitle B—Revenue Offsets 

Sec. 3091. Returns relating to payments made in settlement of payment card and 

third party network transactions. 

Sec. 3092. Gain from sale of principal residence allocated to nonqualified use not 

excluded from income. 

Sec. 3093. Delay in application of worldwide allocation of interest. 

Sec. 3094. Time for payment of corporate estimated taxes. 

TITLE I—HOUSING TAX INCENTIVES 

Subtitle A—Multi-Family Housing 

PART I—LOW-INCOME HOUSING TAX CREDIT 

SEC. 3001. TEMPORARY INCREASE IN VOLUME CAP FOR LOW-INCOME 

HOUSING TAX CREDIT. 

Paragraph (3) of section 42(h) is amended by adding at the end 

the following new subparagraph: ‘‘(I) INCREASE IN STATE HOUSING CREDIT CEILING FOR 2008

AND 2009.—In the case of calendar years 2008 and 2009— ‘‘(i) the dollar amount in effect under subparagraph 

(C)(ii)(I) for such calendar year (after any increase 

under subparagraph (H)) shall be increased by $0.20, 

and 

‘‘(ii) the dollar amount in effect under subparagraph 

(C)(ii)(II) for such calendar year (after any increase 

under subparagraph (H)) shall be increased by an 

amount equal to 10 percent of such dollar amount 

(rounded to the next lowest multiple of $5,000).’’. 

SEC. 3002. DETERMINATION OF CREDIT RATE. 

(a) TEMPORARY MINIMUM CREDIT RATE FOR NON-FEDERALLY SUBSIDIZED NEW BUILDINGS.—


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(1) IN GENERAL.—Subsection (b) of section 42 is amended by 

striking paragraph (1), by redesignating paragraph (2) as paragraph (1), and by inserting after paragraph (1), as so redesignated, the following new paragraph: 

‘‘(2) TEMPORARY MINIMUM CREDIT RATE FOR NON-FEDERALLY

SUBSIDIZED NEW BUILDINGS.—In the case of any new building—

‘‘(A) which is placed in service by the taxpayer after the 

date of the enactment of this paragraph and before December 31, 2013, and 

‘‘(B) which is not federally subsidized for the taxable 

year, 

the applicable percentage shall not be less than 9 percent.’’. 

(2) CONFORMING AMENDMENTS.—

(A) Subsection (b) of section 42, as amended by paragraph (1), is amended by striking ‘‘For purposes of this section—’’ and all that follows through ‘‘means the appropriate’’ and inserting the following: 

‘‘(1) DETERMINATION OF APPLICABLE PERCENTAGE.—For purposes of this section, the term ‘applicable percentage’ means, 

with respect to any building, the appropriate’’. 

(B) Clause (i) of section 42(b)(1)(B), as redesignated by 

paragraph (1), is amended by striking ‘‘a building described in paragraph (1)(A)’’ and inserting ‘‘a new building 

which is not federally subsidized for the taxable year’’. 

(C) Clause (ii) of section 42(b)(1)(B), as redesignated by 

paragraph (1), is amended by striking ‘‘a building described in paragraph (1)(B)’’ and inserting ‘‘a building not 

described in clause (i)’’. 

(b) MODIFICATIONS TO DEFINITION OF FEDERALLY SUBSIDIZED

BUILDING.—

(1) IN GENERAL.—Subparagraph (A) of section 42(i)(2) is 

amended by striking ‘‘, or any below market Federal loan,’’. 

(2) CONFORMING AMENDMENTS.—

(A) Subparagraph (B) of section 42(i)(2) is amended—

(i) by striking ‘‘BALANCE OF LOAN OR’’ in the heading 

thereof, 

(ii) by striking ‘‘loan or’’ in the matter preceding 

clause (i), and 

(iii) by striking ‘‘subsection (d)—’’ and all that follows and inserting ‘‘subsection (d) the proceeds of such 

obligation.’’. 

(B) Subparagraph (C) of section 42(i)(2) is amended—

(i) by striking ‘‘or below market Federal loan’’ in the 

matter preceding clause (i), 

(ii) in clause (i)—

(I) by striking ‘‘or loan (when issued or made)’’

and inserting ‘‘(when issued)’’, and 

(II) by striking ‘‘the proceeds of such obligation 

or loan’’ and inserting ‘‘the proceeds of such obligation’’, and 

(iii) by striking ‘‘, and such loan is repaid,’’ in clause 

(ii). 

(C) Paragraph (2) of section 42(i) is amended by striking 

subparagraphs (D) and (E). 


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(c) EFFECTIVE DATE.—The amendments made by this subsection 

shall apply to buildings placed in service after the date of the enactment of this Act. 

SEC. 3003. MODIFICATIONS TO DEFINITION OF ELIGIBLE BASIS. 

(a) INCREASE IN CREDIT FOR CERTAIN STATE DESIGNATED BUILD- INGS.—Subparagraph (C) of section 42(d)(5) (relating to increase in 

credit for buildings in high cost areas), before redesignation under 

subsection (g), is amended by adding at the end the following new 

clause: ‘‘(v) BUILDINGS DESIGNATED BY STATE HOUSING CRED- IT AGENCY.—Any building which is designated by the 

State housing credit agency as requiring the increase 

in credit under this subparagraph in order for such 

building to be financially feasible as part of a qualified 

low-income housing project shall be treated for purposes of this subparagraph as located in a difficult development area which is designated for purposes of 

this subparagraph. The preceding sentence shall not 

apply to any building if paragraph (1) of subsection (h) 

does not apply to any portion of the eligible basis of 

such building by reason of paragraph (4) of such subsection.’’. (b) MODIFICATION TO REHABILITATION REQUIREMENTS.— (1) IN GENERAL.—Clause (ii) of section 42(e)(3)(A) is amended— (A) by striking ‘‘10 percent’’ in subclause (I) and inserting ‘‘20 percent’’, and 

(B) by striking ‘‘$3,000’’ in subclause (II) and inserting ‘‘$6,000’’. (2) INFLATION ADJUSTMENT.—Paragraph (3) of section 42(e) is 

amended by adding at the end the following new subparagraph: ‘‘(D) INFLATION ADJUSTMENT.—In the case of any expenditures which are treated under paragraph (4) as placed in 

service during any calendar year after 2009, the $6,000 

amount in subparagraph (A)(ii)(II) shall be increased by an 

amount equal to— ‘‘(i) such dollar amount, multiplied by 

‘‘(ii) the cost-of-living adjustment determined under 

section 1(f)(3) for such calendar year by substituting 

‘calendar year 2008’ for ‘calendar year 1992’ in subparagraph (B) thereof. 

Any increase under the preceding sentence which is not a 

multiple of $100 shall be rounded to the nearest multiple 

of $100.’’. 

(3) CONFORMING AMENDMENT.—Subclause (II) of section 

42(f)(5)(B)(ii) is amended by striking ‘‘if subsection 

(e)(3)(A)(ii)(II)’’ and all that follows and inserting ‘‘if the dollar 

amount in effect under subsection (e)(3)(A)(ii)(II) were twothirds of such amount.’’. 

(c) INCREASE IN ALLOWABLE COMMUNITY SERVICE FACILITY SPACE

FOR SMALL PROJECTS.—Clause (ii) of section 42(d)(4)(C) (relating to 

limitation) is amended by striking ‘‘10 percent of the eligible basis 

of the qualified low-income housing project of which it is a part. 

For purposes of’’ and inserting ‘‘the sum of—


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‘‘(I) 25 percent of so much of the eligible basis 

of the qualified low-income housing project of 

which it is a part as does not exceed $15,000,000, 

plus 

‘‘(II) 10 percent of so much of the eligible basis 

of such project as is not taken into account under 

subclause (I). 

For purposes of’’. 

(d) CLARIFICATION OF TREATMENT OF FEDERAL GRANTS.—Subparagraph (A) of section 42(d)(5) is amended to read as follows: 

‘‘(A) FEDERAL GRANTS NOT TAKEN INTO ACCOUNT IN DETERMINING ELIGIBLE BASIS.—The eligible basis of a building shall not include any costs financed with the proceeds 

of a federally funded grant.’’. 

(e) SIMPLIFICATION OF RELATED PARTY RULES.—Clause (iii) of 

section 42(d)(2)(D), before redesignation under subsection (g)(2), is 

amended—

(1) by striking all that precedes subclause (II), 

(2) by redesignating subclause (II) as clause (iii) and moving 

such clause two ems to the left, and 

(3) by striking the last sentence thereof. 

(f) EXCEPTION TO 10-YEAR NONACQUISITION PERIOD FOR EXISTING

BUILDINGS APPLICABLE TO FEDERALLY- OR STATE-ASSISTED BUILDINGS.—Paragraph (6) of section 42(d) is amended to read as follows: 

‘‘(6) CREDIT ALLOWABLE FOR CERTAIN BUILDINGS ACQUIRED

DURING 10-YEAR PERIOD DESCRIBED IN PARAGRAPH (2)(B)(ii).—

‘‘(A) IN GENERAL.—Paragraph (2)(B)(ii) shall not apply to 

any federally- or State-assisted building. 

‘‘(B) BUILDINGS ACQUIRED FROM INSURED DEPOSITORY INSTITUTIONS IN DEFAULT.—On application by the taxpayer, 

the Secretary may waive paragraph (2)(B)(ii) with respect 

to any building acquired from an insured depository institution in default (as defined in section 3 of the Federal Deposit Insurance Act) or from a receiver or conservator of 

such an institution. 

‘‘(C) FEDERALLY- OR STATE-ASSISTED BUILDING.—For purposes of this paragraph—

‘‘(i) FEDERALLY-ASSISTED BUILDING.—The term ‘federally-assisted building’ means any building which is 

substantially assisted, financed, or operated under section 8 of the United States Housing Act of 1937, section 221(d)(3), 221(d)(4), or 236 of the National Housing Act, section 515 of the Housing Act of 1949, or any 

other housing program administered by the Department of Housing and Urban Development or by the 

Rural Housing Service of the Department of Agriculture. 

‘‘(ii) STATE-ASSISTED BUILDING.—The term ‘State-assisted building’ means any building which is substantially assisted, financed, or operated under any State 

law similar in purposes to any of the laws referred to 

in clause (i).’’. 

(g) REPEAL OF DEADWOOD.—


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(1) Clause (ii) of section 42(d)(2)(B) is amended by striking 

‘‘the later of—’’ and all that follows and inserting ‘‘the date the 

building was last placed in service,’’. 

(2) Subparagraph (D) of section 42(d)(2) is amended by striking clause (i) and by redesignating clauses (ii) and (iii) as 

clauses (i) and (ii), respectively. 

(3) Paragraph (5) of section 42(d) is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). 

(h) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as otherwise provided in paragraph 

(2), the amendments made by this subsection shall apply to 

buildings placed in service after the date of the enactment of 

this Act. 

(2) REHABILITATION REQUIREMENTS.—

(A) IN GENERAL.—The amendments made by subsection 

(b) shall apply to buildings with respect to which housing 

credit dollar amounts are allocated after the date of the 

enactment of this Act. 

(B) BUILDINGS NOT SUBJECT TO ALLOCATION LIMITS.—To 

the extent paragraph (1) of section 42(h) of the Internal 

Revenue Code of 1986 does not apply to any building by 

reason of paragraph (4) thereof, the amendments made by 

subsection (b) shall apply buildings financed with bonds 

issued pursuant to allocations made after the date of the 

enactment of this Act. 

SEC. 3004. OTHER SIMPLIFICATION AND REFORM OF LOW-INCOME 

HOUSING TAX INCENTIVES. 

(a) REPEAL PROHIBITION ON MODERATE REHABILITATION ASSISTANCE.—Paragraph (2) of section 42(c) (defining qualified low-income building) is amended by striking the flush sentence at the 

end. 

(b) MODIFICATION OF TIME LIMIT FOR INCURRING 10 PERCENT OF

PROJECT’S COST.—Clause (ii) of section 42(h)(1)(E) is amended by 

striking ‘‘(as of the later of the date which is 6 months after the 

date that the allocation was made or the close of the calendar year 

in which the allocation is made)’’ and inserting ‘‘(as of the date 

which is 1 year after the date that the allocation was made)’’. 

(c) REPEAL OF BONDING REQUIREMENT ON DISPOSITION OF BUILDING.—Paragraph (6) of section 42(j) (relating to no recapture on disposition of building (or interest therein) where bond posted) is 

amended to read as follows: 

‘‘(6) NO RECAPTURE ON DISPOSITION OF BUILDING WHICH CONTINUES IN QUALIFIED USE.—

‘‘(A) IN GENERAL.—The increase in tax under this subsection shall not apply solely by reason of the disposition 

of a building (or an interest therein) if it is reasonably expected that such building will continue to be operated as 

a qualified low-income building for the remaining compliance period with respect to such building. 

‘‘(B) STATUTE OF LIMITATIONS.—If a building (or an interest therein) is disposed of during any taxable year and 

there is any reduction in the qualified basis of such building which results in an increase in tax under this subVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00237 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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section for such taxable or any subsequent taxable year, 

then—

‘‘(i) the statutory period for the assessment of any 

deficiency with respect to such increase in tax shall 

not expire before the expiration of 3 years from the 

date the Secretary is notified by the taxpayer (in such 

manner as the Secretary may prescribe) of such reduction in qualified basis, and ‘‘(ii) such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.’’. (d) ENERGY EFFICIENCY AND HISTORIC NATURE TAKEN INTO ACCOUNT IN MAKING ALLOCATIONS.—Subparagraph (C) of section 

42(m)(1) (relating to plans for allocation of credit among projects) 

is amended by striking ‘‘and’’ at the end of clause (vii), by striking 

the period at the end of clause (viii) and inserting a comma, and 

by adding at the end the following new clauses: 

‘‘(ix) the energy efficiency of the project, and 

‘‘(x) the historic nature of the project.’’. 

(e) CONTINUED ELIGIBILITY FOR STUDENTS WHO RECEIVED FOS- TER CARE ASSISTANCE.—Clause (i) of section 42(i)(3)(D) is amended 

by striking ‘‘or’’ at the end of subclause (I), by redesignating subclause (II) as subclause (III), and by inserting after subclause (I) 

the following new subclause: ‘‘(II) a student who was previously under the 

care and placement responsibility of the State 

agency responsible for administering a plan under 

part B or part E of title IV of the Social Security 

Act, or’’. (f) TREATMENT OF RURAL PROJECTS.—Section 42(i) (relating to 

definitions and special rules) is amended by adding at the end the 

following new paragraph: ‘‘(8) TREATMENT OF RURAL PROJECTS.—For purposes of this 

section, in the case of any project for residential rental property located in a rural area (as defined in section 520 of the 

Housing Act of 1949), any income limitation measured by reference to area median gross income shall be measured by reference to the greater of area median gross income or national 

non-metropolitan median income. The preceding sentence shall 

not apply with respect to any building if paragraph (1) of section 42(h) does not apply by reason of paragraph (4) thereof to 

any portion of the credit determined under this section with respect to such building.’’. 

(g) CLARIFICATION OF GENERAL PUBLIC USE REQUIREMENT.—Subsection (g) of section 42 is amended by adding at the end the following new paragraph: 

‘‘(9) CLARIFICATION OF GENERAL PUBLIC USE REQUIREMENT.—

A project does not fail to meet the general public use requirement solely because of occupancy restrictions or preferences 

that favor tenants—

‘‘(A) with special needs, 

‘‘(B) who are members of a specified group under a Federal program or State program or policy that supports 

housing for such a specified group, or 


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‘‘(C) who are involved in artistic or literary activities.’’. 

(h) GAO STUDY REGARDING MODIFICATIONS TO LOW-INCOME

HOUSING TAX CREDIT.—Not later than December 31, 2012, the 

Comptroller General of the United States shall submit to Congress 

a report which analyzes the implementation of the modifications 

made by this subtitle to the low-income housing tax credit under 

section 42 of the Internal Revenue Code of 1986. Such report shall 

include an analysis of the distribution of credit allocations before 

and after the effective date of such modifications. 

(i) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to 

buildings placed in service after the date of the enactment of 

this Act. 

(2) REPEAL OF BONDING REQUIREMENT ON DISPOSITION OF

BUILDING.—The amendment made by subsection (c) shall apply 

to—

(A) interests in buildings disposed after the date of the 

enactment of this Act, and 

(B) interests in buildings disposed of on or before such 

date if—

(i) it is reasonably expected that such building will 

continue to be operated as a qualified low-income 

building (within the meaning of section 42 of the Internal Revenue Code of 1986) for the remaining compliance period (within the meaning of such section) 

with respect to such building, and 

(ii) the taxpayer elects the application of this subparagraph with respect to such disposition. 

(3) ENERGY EFFICIENCY AND HISTORIC NATURE TAKEN INTO

ACCOUNT IN MAKING ALLOCATIONS.—The amendments made by 

subsection (d) shall apply to allocations made after December 

31, 2008. 

(4) CONTINUED ELIGIBILITY FOR STUDENTS WHO RECEIVED

FOSTER CARE ASSISTANCE.—The amendments made by subsection (e) shall apply to determinations made after the date 

of the enactment of this Act. 

(5) TREATMENT OF RURAL PROJECTS.—The amendment made 

by subsection (f) shall apply to determinations made after the 

date of the enactment of this Act. 

(6) CLARIFICATION OF GENERAL PUBLIC USE REQUIREMENT.—

The amendment made by subsection (g) shall apply to buildings placed in service before, on, or after the date of the enactment of this Act. 

SEC. 3005. TREATMENT OF MILITARY BASIC PAY. 

(a) IN GENERAL.—Subparagraph (B) of section 142(d)(2) (relating 

to income of individuals; area median gross income) is amended—

(1) by striking ‘‘The income’’ and inserting the following: 

‘‘(i) IN GENERAL.—The income’’, and 

(2) by adding at the end the following: 

‘‘(ii) SPECIAL RULE RELATING TO BASIC HOUSING ALLOWANCES.—For purposes of determining income 

under this subparagraph, payments under section 403 

of title 37, United States Code, as a basic pay allowVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00239 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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ance for housing shall be disregarded with respect to 

any qualified building. 

‘‘(iii) QUALIFIED BUILDING.—For purposes of clause 

(ii), the term ‘qualified building’ means any building 

located—

‘‘(I) in any county in which is located a qualified 

military installation to which the number of members of the Armed Forces of the United States assigned to units based out of such qualified military installation, as of June 1, 2008, has increased 

by not less than 20 percent, as compared to such 

number on December 31, 2005, or 

‘‘(II) in any county adjacent to a county described in subclause (I). 

‘‘(iv) QUALIFIED MILITARY INSTALLATION.—For purposes of clause (iii), the term ‘qualified military installation’ means any military installation or facility the 

number of members of the Armed Forces of the United 

States assigned to which, as of June 1, 2008, is not 

less than 1,000.’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall apply to—

(1) determinations made after the date of the enactment of 

this Act and before January 1, 2012, in the case of any qualified building (as defined in section 142(d)(2)(B)(iii) of the Internal Revenue Code of 1986)—

(A) with respect to which housing credit dollar amounts 

have been allocated on or before the date of the enactment 

of this Act, or 

(B) with respect to buildings placed in service before 

such date of enactment, to the extent paragraph (1) of section 42(h) of such Code does not apply to such building by 

reason of paragraph (4) thereof, but only with respect to 

bonds issued before such date of enactment, and 

(2) determinations made after the date of enactment of this 

Act, in the case of qualified buildings (as so defined)—

(A) with respect to which housing credit dollar amounts 

are allocated after the date of the enactment of this Act 

and before January 1, 2012, or 

(B) with respect to which buildings placed in service 

after the date of enactment of this Act and before January 

1, 2012, to the extent paragraph (1) of section 42(h) of such 

Code does not apply to such building by reason of paragraph (4) thereof, but only with respect to bonds issued 

after such date of enactment and before January 1, 2012. 

PART II—MODIFICATIONS TO TAX-EXEMPT 

HOUSING BOND RULES 

SEC. 3007. RECYCLING OF TAX-EXEMPT DEBT FOR FINANCING RESIDENTIAL RENTAL PROJECTS. 

(a) IN GENERAL.—Subsection (i) of section 146 (relating to treatment of refunding issues) is amended by adding at the end the following new paragraph: 


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‘‘(6) TREATMENT OF CERTAIN RESIDENTIAL RENTAL PROJECT

BONDS AS REFUNDING BONDS IRRESPECTIVE OF OBLIGOR.— ‘‘(A) IN GENERAL.—If, during the 6-month period beginning on the date of a repayment of a loan financed by an 

issue 95 percent or more of the net proceeds of which are 

used to provide projects described in section 142(d), such 

repayment is used to provide a new loan for any project so 

described, any bond which is issued to refinance such issue 

shall be treated as a refunding issue to the extent the 

principal amount of such refunding issue does not exceed 

the principal amount of the bonds refunded. ‘‘(B) LIMITATIONS.—Subparagraph (A) shall apply to only 

one refunding of the original issue and only if—

‘‘(i) the refunding issue is issued not later than 4 

years after the date on which the original issue was 

issued, 

‘‘(ii) the latest maturity date of any bond of the refunding issue is not later than 34 years after the date 

on which the refunded bond was issued, and 

‘‘(iii) the refunding issue is approved in accordance 

with section 147(f) before the issuance of the refunding 

issue.’’. 

(b) LOW-INCOME HOUSING CREDIT.—Clause (ii) of section 

42(h)(4)(A) is amended by inserting ‘‘or such financing is refunded 

as described in section 146(i)(6)’’ before the period at the end. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to repayments of loans received after the date of the enactment of this Act. 

SEC. 3008. COORDINATION OF CERTAIN RULES APPLICABLE TO LOWINCOME HOUSING CREDIT AND QUALIFIED RESIDENTIAL 

RENTAL PROJECT EXEMPT FACILITY BONDS. 

(a) DETERMINATION OF NEXT AVAILABLE UNIT.—Paragraph (3) of 

section 142(d) (relating to current income determinations) is 

amended by adding at the end the following new subparagraph: ‘‘(C) EXCEPTION FOR PROJECTS WITH RESPECT TO WHICH

AFFORDABLE HOUSING CREDIT IS ALLOWED.—In the case of 

a project with respect to which credit is allowed under section 42, the second sentence of subparagraph (B) shall be 

applied by substituting ‘building (within the meaning of 

section 42)’ for ‘project’.’’. (b) STUDENTS.—Paragraph (2) of section 142(d) (relating to definitions and special rules) is amended by adding at the end the following new subparagraph: 

‘‘(C) STUDENTS.—Rules similar to the rules of 42(i)(3)(D) 

shall apply for purposes of this subsection.’’. 

(c) SINGLE-ROOM OCCUPANCY UNITS.—Paragraph (2) of section 

142(d) (relating to definitions and special rules), as amended by 

subsection (b), is amended by adding at the end the following new 

subparagraph: ‘‘(D) SINGLE-ROOM OCCUPANCY UNITS.—A unit shall not 

fail to be treated as a residential unit merely because such 

unit is a single-room occupancy unit (within the meaning 

of section 42).’’. (d) EFFECTIVE DATE.—The amendments made by this section 

shall apply to determinations of the status of qualified residential 


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rental projects for periods beginning after the date of the enactment of this Act, with respect to bonds issued before, on, or after 

such date. 

PART III—REFORMS RELATED TO THE LOW-INCOME HOUSING CREDIT AND TAX-EXEMPT 

HOUSING BONDS 

SEC. 3009. HOLD HARMLESS FOR REDUCTIONS IN AREA MEDIAN 

GROSS INCOME. 

(a) IN GENERAL.—Paragraph (2) of section 142(d), as amended by 

section 3008, is amended by adding at the end the following new 

subparagraph: ‘‘(E) HOLD HARMLESS FOR REDUCTIONS IN AREA MEDIAN

GROSS INCOME.— ‘‘(i) IN GENERAL.—Any determination of area median 

gross income under subparagraph (B) with respect to 

any project for any calendar year after 2008 shall not 

be less than the area median gross income determined 

under such subparagraph with respect to such project 

for the calendar year preceding the calendar year for 

which such determination is made. ‘‘(ii) SPECIAL RULE FOR CERTAIN CENSUS CHANGES.— In the case of a HUD hold harmless impacted project, 

the area median gross income with respect to such 

project for any calendar year after 2008 (hereafter in 

this clause referred to as the current calendar year) 

shall be the greater of the amount determined without 

regard to this clause or the sum of— ‘‘(I) the area median gross income determined 

under the HUD hold harmless policy with respect 

to such project for calendar year 2008, plus ‘‘(II) any increase in the area median gross income determined under subparagraph (B) (determined without regard to the HUD hold harmless 

policy and this subparagraph) with respect to such 

project for the current calendar year over the area 

median gross income (as so determined) with respect to such project for calendar year 2008. ‘‘(iii) HUD HOLD HARMLESS POLICY.—The term ‘HUD 

hold harmless policy’ means the regulations under 

which a policy similar to the rules of clause (i) applied 

to prevent a change in the method of determining area 

median gross income from resulting in a reduction in 

the area median gross income determined with respect 

to certain projects in calendar years 2007 and 2008. ‘‘(iv) HUD HOLD HARMLESS IMPACTED PROJECT.—The 

term ‘HUD hold harmless impacted project’ means any 

project with respect to which area median gross income was determined under subparagraph (B) for calendar year 2007 or 2008 if such determination would 

have been less but for the HUD hold harmless policy.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to determinations of area median gross income for calendar 

years after 2008. 


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SEC. 3010. EXCEPTION TO ANNUAL CURRENT INCOME DETERMINATION REQUIREMENT WHERE DETERMINATION NOT RELEVANT. 

(a) IN GENERAL.—Subparagraph (A) of section 142(d)(3) is 

amended by adding at the end the following new sentence: ‘‘The 

preceding sentence shall not apply with respect to any project for 

any year if during such year no residential unit in the project is 

occupied by a new resident whose income exceeds the applicable income limit.’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to years ending after the date of the enactment of this Act. 

Subtitle B—Single Family Housing 

SEC. 3011. FIRST-TIME HOMEBUYER CREDIT. 

(a) IN GENERAL.—Subpart C of part IV of subchapter A of chapter 1 is amended by redesignating section 36 as section 37 and by 

inserting after section 35 the following new section: 

‘‘SEC. 36. FIRST-TIME HOMEBUYER CREDIT. 

‘‘(a) ALLOWANCE OF CREDIT.—In the case of an individual who is 

a first-time homebuyer of a principal residence in the United 

States during a taxable year, there shall be allowed as a credit 

against the tax imposed by this subtitle for such taxable year an 

amount equal to 10 percent of the purchase price of the residence. 

‘‘(b) LIMITATIONS.—

‘‘(1) DOLLAR LIMITATION.—

‘‘(A) IN GENERAL.—Except as otherwise provided in this 

paragraph, the credit allowed under subsection (a) shall 

not exceed $7,500. 

‘‘(B) MARRIED INDIVIDUALS FILING SEPARATELY.—In the 

case of a married individual filing a separate return, subparagraph (A) shall be applied by substituting ‘$3,750’ for 

‘$7,500’. 

‘‘(C) OTHER INDIVIDUALS.—If two or more individuals 

who are not married purchase a principal residence, the 

amount of the credit allowed under subsection (a) shall be 

allocated among such individuals in such manner as the 

Secretary may prescribe, except that the total amount of 

the credits allowed to all such individuals shall not exceed 

$7,500. 

‘‘(2) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME.—

‘‘(A) IN GENERAL.—The amount allowable as a credit 

under subsection (a) (determined without regard to this 

paragraph) for the taxable year shall be reduced (but not 

below zero) by the amount which bears the same ratio to 

the amount which is so allowable as—

‘‘(i) the excess (if any) of—

‘‘(I) the taxpayer’s modified adjusted gross income for such taxable year, over 

‘‘(II) $75,000 ($150,000 in the case of a joint return), bears to 

‘‘(ii) $20,000. 


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‘‘(B) MODIFIED ADJUSTED GROSS INCOME.—For purposes 

of subparagraph (A), the term ‘modified adjusted gross income’ means the adjusted gross income of the taxpayer for 

the taxable year increased by any amount excluded from 

gross income under section 911, 931, or 933. ‘‘(c) DEFINITIONS.—For purposes of this section— ‘‘(1) FIRST-TIME HOMEBUYER.—The term ‘first-time homebuyer’ means any individual if such individual (and if married, 

such individual’s spouse) had no present ownership interest in 

a principal residence during the 3-year period ending on the 

date of the purchase of the principal residence to which this 

section applies. ‘‘(2) PRINCIPAL RESIDENCE.—The term ‘principal residence’

has the same meaning as when used in section 121. 

‘‘(3) PURCHASE.—

‘‘(A) IN GENERAL.—The term ‘purchase’ means any acquisition, but only if—

‘‘(i) the property is not acquired from a person related to the person acquiring such property, and 

‘‘(ii) the basis of the property in the hands of the 

person acquiring such property is not determined—

‘‘(I) in whole or in part by reference to the adjusted basis of such property in the hands of the 

person from whom acquired, or 

‘‘(II) under section 1014(a) (relating to property 

acquired from a decedent). 

‘‘(B) CONSTRUCTION.—A residence which is constructed 

by the taxpayer shall be treated as purchased by the taxpayer on the date the taxpayer first occupies such residence. ‘‘(4) PURCHASE PRICE.—The term ‘purchase price’ means the 

adjusted basis of the principal residence on the date such residence is purchased. ‘‘(5) RELATED PERSONS.—A person shall be treated as related 

to another person if the relationship between such persons 

would result in the disallowance of losses under section 267 or 

707(b) (but, in applying section 267(b) and (c) for purposes of 

this section, paragraph (4) of section 267(c) shall be treated as 

providing that the family of an individual shall include only his 

spouse, ancestors, and lineal descendants). 

‘‘(d) EXCEPTIONS.—No credit under subsection (a) shall be allowed to any taxpayer for any taxable year with respect to the purchase of a residence if—

‘‘(1) a credit under section 1400C (relating to first-time 

homebuyer in the District of Columbia) is allowable to the taxpayer (or the taxpayer’s spouse) for such taxable year or any 

prior taxable year, 

‘‘(2) the residence is financed by the proceeds of a qualified 

mortgage issue the interest on which is exempt from tax under 

section 103, ‘‘(3) the taxpayer is a nonresident alien, or 

‘‘(4) the taxpayer disposes of such residence (or such residence ceases to be the principal residence of the taxpayer (and, 

if married, the taxpayer’s spouse)) before the close of such taxable year. 


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‘‘(e) REPORTING.—If the Secretary requires information reporting 

under section 6045 by a person described in subsection (e)(2) thereof to verify the eligibility of taxpayers for the credit allowable by 

this section, the exception provided by section 6045(e) shall not 

apply. ‘‘(f) RECAPTURE OF CREDIT.— ‘‘(1) IN GENERAL.—Except as otherwise provided in this subsection, if a credit under subsection (a) is allowed to a taxpayer, the tax imposed by this chapter shall be increased by 

62⁄3 percent of the amount of such credit for each taxable year 

in the recapture period. ‘‘(2) ACCELERATION OF RECAPTURE.—If a taxpayer disposes of 

the principal residence with respect to which a credit was allowed under subsection (a) (or such residence ceases to be the 

principal residence of the taxpayer (and, if married, the taxpayer’s spouse)) before the end of the recapture period—

‘‘(A) the tax imposed by this chapter for the taxable year 

of such disposition or cessation shall be increased by the 

excess of the amount of the credit allowed over the 

amounts of tax imposed by paragraph (1) for preceding 

taxable years, and 

‘‘(B) paragraph (1) shall not apply with respect to such 

credit for such taxable year or any subsequent taxable 

year. 

‘‘(3) LIMITATION BASED ON GAIN.—In the case of the sale of 

the principal residence to a person who is not related to the 

taxpayer, the increase in tax determined under paragraph (2) 

shall not exceed the amount of gain (if any) on such sale. Solely for purposes of the preceding sentence, the adjusted basis of 

such residence shall be reduced by the amount of the credit allowed under subsection (a) to the extent not previously recaptured under paragraph (1). ‘‘(4) EXCEPTIONS.— ‘‘(A) DEATH OF TAXPAYER.—Paragraphs (1) and (2) shall 

not apply to any taxable year ending after the date of the 

taxpayer’s death. 

‘‘(B) INVOLUNTARY CONVERSION.—Paragraph (2) shall not 

apply in the case of a residence which is compulsorily or 

involuntarily converted (within the meaning of section 

1033(a)) if the taxpayer acquires a new principal residence 

during the 2-year period beginning on the date of the disposition or cessation referred to in paragraph (2). Paragraph (2) shall apply to such new principal residence during the recapture period in the same manner as if such 

new principal residence were the converted residence. ‘‘(C) TRANSFERS BETWEEN SPOUSES OR INCIDENT TO DIVORCE.—In the case of a transfer of a residence to which 

section 1041(a) applies—

‘‘(i) paragraph (2) shall not apply to such transfer, 

and ‘‘(ii) in the case of taxable years ending after such 

transfer, paragraphs (1) and (2) shall apply to the 

transferee in the same manner as if such transferee 

were the transferor (and shall not apply to the transferor). 


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‘‘(5) JOINT RETURNS.—In the case of a credit allowed under 

subsection (a) with respect to a joint return, half of such credit 

shall be treated as having been allowed to each individual filing such return for purposes of this subsection. 

‘‘(6) RETURN REQUIREMENT.—If the tax imposed by this chapter for the taxable year is increased under this subsection, the 

taxpayer shall, notwithstanding section 6012, be required to 

file a return with respect to the taxes imposed under this subtitle. 

‘‘(7) RECAPTURE PERIOD.—For purposes of this subsection, the 

term ‘recapture period’ means the 15 taxable years beginning 

with the second taxable year following the taxable year in 

which the purchase of the principal residence for which a credit is allowed under subsection (a) was made. 

‘‘(g) ELECTION TO TREAT PURCHASE IN PRIOR YEAR.—In the case 

of a purchase of a principal residence after December 31, 2008, and 

before July 1, 2009, a taxpayer may elect to treat such purchase 

as made on December 31, 2008, for purposes of this section (other 

than subsection (c)). 

‘‘(h) APPLICATION OF SECTION.—This section shall only apply to 

a principal residence purchased by the taxpayer on or after April 

9, 2008, and before July 1, 2009.’’. 

(b) CONFORMING AMENDMENTS.—

(1) Section 26(b)(2) is amended by striking ‘‘and’’ at the end 

of subparagraph (U), by striking the period and inserting ‘‘, 

and’’ and the end of subparagraph (V), and by inserting after 

subparagraph (V) the following new subparagraph: 

‘‘(W) section 36(f) (relating to recapture of homebuyer 

credit).’’. 

(2) Section 6211(b)(4)(A) is amended by striking ‘‘34,’’ and all 

that follows through ‘‘6428’’ and inserting ‘‘34, 35, 36, 53(e), 

and 6428’’. 

(3) Section 1324(b)(2) of title 31, United States Code, is 

amended by inserting ‘‘36,’’ after ‘‘35,’’. 

(4) The table of sections for subpart C of part IV of subchapter A of chapter 1 is amended by redesignating the item 

relating to section 36 as an item relating to section 37 and by 

inserting before such item the following new item: 

‘‘Sec. 36. First-time homebuyer credit.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to residences purchased on or after April 9, 2008, in 

taxable years ending on or after such date. 

SEC. 3012. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY 

TAXES FOR NONITEMIZERS. 

(a) IN GENERAL.—Section 63(c)(1) (defining standard deduction) 

is amended by striking ‘‘and’’ at the end of subparagraph (A), by 

striking the period at the end of subparagraph (B) and inserting ‘‘, 

and’’, and by adding at the end the following new subparagraph: 

‘‘(C) in the case of any taxable year beginning in 2008, 

the real property tax deduction.’’. 

(b) DEFINITION.—Section 63(c) is amended by adding at the end 

the following new paragraph: 

‘‘(7) REAL PROPERTY TAX DEDUCTION.—For purposes of paragraph (1), the real property tax deduction is the lesser of—


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‘‘(A) the amount allowable as a deduction under this 

chapter for State and local taxes described in section 

164(a)(1), or ‘‘(B) $500 ($1,000 in the case of a joint return). 

Any taxes taken into account under section 62(a) shall not be 

taken into account under this paragraph.’’. (c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years beginning after December 31, 2007. 

Subtitle C—General Provisions 

SEC. 3021. TEMPORARY LIBERALIZATION OF TAX-EXEMPT HOUSING 

BOND RULES. 

(a) TEMPORARY INCREASE IN VOLUME CAP.— (1) IN GENERAL.—Subsection (d) of section 146 is amended by 

adding at the end the following new paragraph: ‘‘(5) INCREASE AND SET ASIDE FOR HOUSING BONDS FOR 2008.— ‘‘(A) INCREASE FOR 2008.—In the case of calendar year 

2008, the State ceiling for each State shall be increased by 

an amount equal to $11,000,000,000 multiplied by a fraction— ‘‘(i) the numerator of which is the State ceiling applicable to the State for calendar year 2008, determined without regard to this paragraph, and ‘‘(ii) the denominator of which is the sum of the 

State ceilings determined under clause (i) for all 

States. ‘‘(B) SET ASIDE.— ‘‘(i) IN GENERAL.—Any amount of the State ceiling 

for any State which is attributable to an increase 

under this paragraph shall be allocated solely for one 

or more qualified housing issues. ‘‘(ii) QUALIFIED HOUSING ISSUE.—For purposes of 

this paragraph, the term ‘qualified housing issue’ means—

‘‘(I) an issue described in section 142(a)(7) (relating to qualified residential rental projects), or ‘‘(II) a qualified mortgage issue (determined by 

substituting ‘12-month period’ for ‘42-month period’ each place it appears in section 

143(a)(2)(D)(i)).’’. (2) CARRYFORWARD OF UNUSED LIMITATIONS.—Subsection (f) 

of section 146 is amended by adding at the end the following 

new paragraph: ‘‘(6) SPECIAL RULES FOR INCREASED VOLUME CAP UNDER SUB- SECTION (d)(5).—No amount which is attributable to the increase under subsection (d)(5) may be used— ‘‘(A) for any issue other than a qualified housing issue 

(as defined in subsection (d)(5)), or ‘‘(B) to issue any bond after calendar year 2010.’’. (b) TEMPORARY RULE FOR USE OF QUALIFIED MORTGAGE BONDS

PROCEEDS FOR SUBPRIME REFINANCING LOANS.— (1) IN GENERAL.—Section 143(k) (relating to other definitions 

and special rules) is amended by adding at the end the following new paragraph: 


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‘‘(12) SPECIAL RULES FOR SUBPRIME REFINANCINGS.—

‘‘(A) IN GENERAL.—Notwithstanding the requirements of 

subsection (i)(1), the proceeds of a qualified mortgage issue 

may be used to refinance a mortgage on a residence which 

was originally financed by the mortgagor through a qualified subprime loan. 

‘‘(B) SPECIAL RULES.—In applying subparagraph (A) to 

any refinancing—

‘‘(i) subsection (a)(2)(D)(i) shall be applied by substituting ‘12-month period’ for ‘42-month period’ each 

place it appears, 

‘‘(ii) subsection (d) (relating to 3-year requirement) 

shall not apply, and 

‘‘(iii) subsection (e) (relating to purchase price requirement) shall be applied by using the market value 

of the residence at the time of refinancing in lieu of 

the acquisition cost. 

‘‘(C) QUALIFIED SUBPRIME LOAN.—The term ‘qualified 

subprime loan’ means an adjustable rate single-family residential mortgage loan made after December 31, 2001, and 

before January 1, 2008, that the bond issuer determines 

would be reasonably likely to cause financial hardship to 

the borrower if not refinanced. 

‘‘(D) TERMINATION.—This paragraph shall not apply to 

any bonds issued after December 31, 2010.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to bonds issued after the date of the enactment of this 

Act. 

SEC. 3022. REPEAL OF ALTERNATIVE MINIMUM TAX LIMITATIONS ON 

TAX-EXEMPT HOUSING BONDS, LOW-INCOME HOUSING 

TAX CREDIT, AND REHABILITATION CREDIT. 

(a) TAX-EXEMPT INTEREST ON CERTAIN HOUSING BONDS EXEMPTED FROM ALTERNATIVE MINIMUM TAX.—

(1) IN GENERAL.—Subparagraph (C) of section 57(a)(5) (relating to specified private activity bonds) is amended by redesignating clauses (iii) and (iv) as clauses (iv) and (v), respectively, 

and by inserting after clause (ii) the following new clause: 

‘‘(iii) EXCEPTION FOR CERTAIN HOUSING BONDS.—For 

purposes of clause (i), the term ‘private activity bond’

shall not include any bond issued after the date of the 

enactment of this clause if such bond is—

‘‘(I) an exempt facility bond issued as part of an 

issue 95 percent or more of the net proceeds of 

which are to be used to provide qualified residential rental projects (as defined in section 142(d)), 

‘‘(II) a qualified mortgage bond (as defined in 

section 143(a)), or 

‘‘(III) a qualified veterans’ mortgage bond (as defined in section 143(b)). 

The preceding sentence shall not apply to any refunding bond unless such preceding sentence applied to the 

refunded bond (or in the case of a series of refundings, 

the original bond).’’. 


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(2) NO ADJUSTMENT TO ADJUSTED CURRENT EARNINGS.—Subparagraph (B) of section 56(g)(4) is amended by adding at the 

end the following new clause: 

‘‘(iii) TAX EXEMPT INTEREST ON CERTAIN HOUSING

BONDS.—Clause (i) shall not apply in the case of any 

interest on a bond to which section 57(a)(5)(C)(iii) applies.’’. 

(b) ALLOWANCE OF LOW-INCOME HOUSING CREDIT AGAINST ALTERNATIVE MINIMUM TAX.—Subparagraph (B) of section 38(c)(4) 

(relating to specified credits) is amended by redesignating clauses 

(ii) through (iv) as clauses (iii) through (v) and inserting after 

clause (i) the following new clause: 

‘‘(ii) the credit determined under section 42 to the 

extent attributable to buildings placed in service after 

December 31, 2007,’’. 

(c) ALLOWANCE OF REHABILITATION CREDIT AGAINST ALTERNATIVE MINIMUM TAX.—Subparagraph (B) of section 38(c)(4), as 

amended by subsection (b), is amended by striking ‘‘and’’ at the end 

of clause (iv), by redesignating clause (v) as clause (vi), and by inserting after clause (iv) the following new clause: 

‘‘(v) the credit determined under section 47 to the 

extent attributable to qualified rehabilitation expenditures properly taken into account for periods after December 31, 2007, and’’. 

(d) EFFECTIVE DATE.—

(1) HOUSING BONDS.—The amendments made by subsection 

(a) shall apply to bonds issued after the date of the enactment 

of this Act. 

(2) LOW INCOME HOUSING CREDIT.—The amendments made 

by subsection (b) shall apply to credits determined under section 42 of the Internal Revenue Code of 1986 to the extent attributable to buildings placed in service after December 31, 

2007. 

(3) REHABILITATION CREDIT.—The amendments made by subsection (c) shall apply to credits determined under section 47 

of the Internal Revenue Code of 1986 to the extent attributable 

to qualified rehabilitation expenditures properly taken into account for periods after December 31, 2007. 

SEC. 3023. BONDS GUARANTEED BY FEDERAL HOME LOAN BANKS ELIGIBLE FOR TREATMENT AS TAX-EXEMPT BONDS. 

(a) IN GENERAL.—Subparagraph (A) of section 149(b)(3) (relating 

to exceptions for certain insurance programs) is amended by striking ‘‘or’’ at the end of clause (ii), by striking the period at the end 

of clause (iii) and inserting ‘‘, or’’ and by adding at the end the following new clause: 

‘‘(iv) subject to subparagraph (E), any guarantee by 

a Federal home loan bank made in connection with 

the original issuance of a bond during the period beginning on the date of the enactment of this clause 

and ending on December 31, 2010 (or a renewal or extension of a guarantee so made).’’. 

(b) SAFETY AND SOUNDNESS REQUIREMENTS.—Paragraph (3) of 

section 149(b) is amended by adding at the end the following new 

subparagraph: 


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‘‘(E) SAFETY AND SOUNDNESS REQUIREMENTS FOR FEDERAL HOME LOAN BANKS.—Clause (iv) of subparagraph (A) 

shall not apply to any guarantee by a Federal home loan 

bank unless such bank meets safety and soundness collateral requirements for such guarantees which are at least 

as stringent as such requirements which apply under regulations applicable to such guarantees by Federal home 

loan banks as in effect on April 9, 2008.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to guarantees made after the date of the enactment of 

this Act. 

SEC. 3024. MODIFICATION OF RULES PERTAINING TO FIRPTA NONFOREIGN AFFIDAVITS. 

(a) IN GENERAL.—Subsection (b) of section 1445 (relating to exemptions) is amended by adding at the end the following: 

‘‘(9) ALTERNATIVE PROCEDURE FOR FURNISHING NONFOREIGN

AFFIDAVIT.—For purposes of paragraphs (2) and (7)—

‘‘(A) IN GENERAL.—Paragraph (2) shall be treated as applying to a transaction if, in connection with a disposition 

of a United States real property interest—

‘‘(i) the affidavit specified in paragraph (2) is furnished to a qualified substitute, and 

‘‘(ii) the qualified substitute furnishes a statement to 

the transferee stating, under penalty of perjury, that 

the qualified substitute has such affidavit in his possession. 

‘‘(B) REGULATIONS.—The Secretary shall prescribe such 

regulations as may be necessary or appropriate to carry 

out this paragraph.’’. 

(b) QUALIFIED SUBSTITUTE.—Subsection (f) of section 1445 (relating to definitions) is amended by adding at the end the following 

new paragraph: 

‘‘(6) QUALIFIED SUBSTITUTE.—The term ‘qualified substitute’

means, with respect to a disposition of a United States real 

property interest—

‘‘(A) the person (including any attorney or title company) 

responsible for closing the transaction, other than the 

transferor’s agent, and 

‘‘(B) the transferee’s agent.’’. 

(c) EXEMPTION NOT TO APPLY IF KNOWLEDGE OR NOTICE THAT

AFFIDAVIT OR STATEMENT IS FALSE.—

(1) IN GENERAL.—Paragraph (7) of section 1445(b) (relating 

to special rules for paragraphs (2) and (3)) is amended to read 

as follows: 

‘‘(7) SPECIAL RULES FOR PARAGRAPHS (2), (3), AND (9).—Paragraph (2), (3), or (9) (as the case may be) shall not apply to any 

disposition—

‘‘(A) if—

‘‘(i) the transferee or qualified substitute has actual 

knowledge that the affidavit referred to in such paragraph, or the statement referred to in paragraph 

(9)(A)(ii), is false, or 

‘‘(ii) the transferee or qualified substitute receives a 

notice (as described in subsection (d)) from a transVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00250 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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feror’s agent, transferee’s agent, or qualified substitute 

that such affidavit or statement is false, or ‘‘(B) if the Secretary by regulations requires the transferee or qualified substitute to furnish a copy of such affidavit or statement to the Secretary and the transferee or 

qualified substitute fails to furnish a copy of such affidavit 

or statement to the Secretary at such time and in such 

manner as required by such regulations.’’. (2) LIABILITY.— (A) NOTICE.—Paragraph (1) of section 1445(d) (relating 

to notice of false affidavit; foreign corporations) is amended 

to read as follows: ‘‘(1) NOTICE OF FALSE AFFIDAVIT; FOREIGN CORPORATIONS.—

If—

‘‘(A) the transferor furnishes the transferee or qualified 

substitute an affidavit described in paragraph (2) of subsection (b) or a domestic corporation furnishes the transferee an affidavit described in paragraph (3) of subsection 

(b), and 

‘‘(B) in the case of—

‘‘(i) any transferor’s agent—

‘‘(I) such agent has actual knowledge that such 

affidavit is false, or 

‘‘(II) in the case of an affidavit described in subsection (b)(2) furnished by a corporation, such corporation is a foreign corporation, or 

‘‘(ii) any transferee’s agent or qualified substitute, 

such agent or substitute has actual knowledge that 

such affidavit is false, 

such agent or qualified substitute shall so notify the transferee at such time and in such manner as the Secretary 

shall require by regulations.’’. 

(B) FAILURE TO FURNISH NOTICE.—Paragraph (2) of section 1445(d) (relating to failure to furnish notice) is 

amended to read as follows: ‘‘(2) FAILURE TO FURNISH NOTICE.— ‘‘(A) IN GENERAL.—If any transferor’s agent, transferee’s 

agent, or qualified substitute is required by paragraph (1) 

to furnish notice, but fails to furnish such notice at such 

time or times and in such manner as may be required by 

regulations, such agent or substitute shall have the same 

duty to deduct and withhold that the transferee would 

have had if such agent or substitute had complied with 

paragraph (1). ‘‘(B) LIABILITY LIMITED TO AMOUNT OF COMPENSATION.—

An agent’s or substitute’s liability under subparagraph (A) 

shall be limited to the amount of compensation the agent 

or substitute derives from the transaction.’’. 

(C) CONFORMING AMENDMENT.—The heading for section 

1445(d) is amended by striking ‘‘OR TRANSFEREE’S AGENTS’’ and inserting ‘‘, TRANSFEREE’S AGENTS, OR QUALIFIED SUB- STITUTES’’. (d) EFFECTIVE DATE.—The amendments made by this section 

shall apply to dispositions of United States real property interests 

after the date of the enactment of this Act. 


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SEC. 3025. MODIFICATION OF DEFINITION OF TAX-EXEMPT USE PROPERTY FOR PURPOSES OF THE REHABILITATION CREDIT. 

(a) IN GENERAL.—Subclause (I) of section 47(c)(2)(B)(v) is amended by striking ‘‘section 168(h)’’ and inserting ‘‘section 168(h), except 

that ‘50 percent’ shall be substituted for ‘35 percent’ in paragraph 

(1)(B)(iii) thereof’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall apply to expenditures properly taken into account for periods 

after December 31, 2007. 

SEC. 3026. EXTENSION OF SPECIAL RULE FOR MORTGAGE REVENUE 

BONDS FOR RESIDENCES LOCATED IN DISASTER AREAS. 

(a) IN GENERAL.—Paragraph (11) of section 143(k) is amended—

(1) by striking ‘‘December 31, 1996’’ and inserting ‘‘May 1, 

2008’’, and 

(2) by striking ‘‘January 1, 1999’’ and inserting ‘‘January 1, 

2010’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall apply to bonds issued after May 1, 2008. 

SEC. 3027. TRANSFER OF FUNDS APPROPRIATED TO CARRY OUT 2008 

RECOVERY REBATES FOR INDIVIDUALS. 

Of the funds made available by section 101(e)(1)(A) of the Economic Stimulus Act of 2008 (Public Law 110-185), the Secretary of 

the Treasury may transfer funds among the accounts specified in 

such section to carry out section 6428 of the Internal Revenue Code 

of 1986. The Secretary shall provide advance notification of any 

such transfer to the Committees on Appropriations of the House of 

Representatives and the Senate, and any transfer greater than 

$5,000,000 shall be subject to the approval of such Committees. 

TITLE II—REFORMS RELATED TO REAL 

ESTATE INVESTMENT TRUSTS 

Subtitle A—Foreign Currency and Other 

Qualified Activities 

SEC. 3031. REVISIONS TO REIT INCOME TESTS. 

(a) FOREIGN CURRENCY GAINS NOT GROSS INCOME IN APPLYING

REIT INCOME TESTS.—Section 856 (defining real estate investment 

trust) is amended by adding at the end the following new subsection: 

‘‘(n) RULES REGARDING FOREIGN CURRENCY TRANSACTIONS.—

‘‘(1) IN GENERAL.—For purposes of this part—

‘‘(A) passive foreign exchange gain for any taxable year 

shall not constitute gross income for purposes of subsection 

(c)(2), and 

‘‘(B) real estate foreign exchange gain for any taxable 

year shall not constitute gross income for purposes of subsection (c)(3). ‘‘(2) REAL ESTATE FOREIGN EXCHANGE GAIN.—For purposes of 

this subsection, the term ‘real estate foreign exchange gain’ means—

‘‘(A) foreign currency gain (as defined in section 

988(b)(1)) which is attributable to—


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‘‘(i) any item of income or gain described in subsection (c)(3), ‘‘(ii) the acquisition or ownership of obligations secured by mortgages on real property or on interests in 

real property (other than foreign currency gain attributable to any item of income or gain described in 

clause (i)), or ‘‘(iii) becoming or being the obligor under obligations 

secured by mortgages on real property or on interests 

in real property (other than foreign currency gain attributable to any item of income or gain described in 

clause (i)), ‘‘(B) section 987 gain attributable to a qualified business 

unit (as defined by section 989) of the real estate investment trust, but only if such qualified business unit meets 

the requirements under— ‘‘(i) subsection (c)(3) for the taxable year, and 

‘‘(ii) subsection (c)(4)(A) at the close of each quarter 

that the real estate investment trust has directly or 

indirectly held the qualified business unit, and ‘‘(C) any other foreign currency gain as determined by 

the Secretary. ‘‘(3) PASSIVE FOREIGN EXCHANGE GAIN.—For purposes of this 

subsection, the term ‘passive foreign exchange gain’ means— ‘‘(A) real estate foreign exchange gain, 

‘‘(B) foreign currency gain (as defined in section 

988(b)(1)) which is not described in subparagraph (A) and 

which is attributable to— ‘‘(i) any item of income or gain described in subsection (c)(2), ‘‘(ii) the acquisition or ownership of obligations 

(other than foreign currency gain attributable to any 

item of income or gain described in clause (i)), or ‘‘(iii) becoming or being the obligor under obligations 

(other than foreign currency gain attributable to any 

item of income or gain described in clause (i)), and 

‘‘(C) any other foreign currency gain as determined by 

the Secretary. 

‘‘(4) EXCEPTION FOR INCOME FROM SUBSTANTIAL AND REGULAR

TRADING.—Notwithstanding this subsection or any other provision of this part, any section 988 gain derived by a corporation, 

trust, or association from dealing, or engaging in substantial 

and regular trading, in securities (as defined in section 

475(c)(2)) shall constitute gross income which does not qualify 

under paragraph (2) or (3) of subsection (c). This paragraph 

shall not apply to income which does not constitute gross income by reason of subsection (c)(5)(G).’’. 

(b) ADDITION TO REIT HEDGING RULE.—Subparagraph (G) of section 856(c)(5) is amended to read as follows: 

‘‘(G) TREATMENT OF CERTAIN HEDGING INSTRUMENTS.— Except to the extent as determined by the Secretary— ‘‘(i) any income of a real estate investment trust 

from a hedging transaction (as defined in clause (ii) or 

(iii) of section 1221(b)(2)(A)) which is clearly identified 

pursuant to section 1221(a)(7), including gain from the 


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sale or disposition of such a transaction, shall not constitute gross income under paragraphs (2) and (3) to 

the extent that the transaction hedges any indebtedness incurred or to be incurred by the trust to acquire 

or carry real estate assets, and 

‘‘(ii) any income of a real estate investment trust 

from a transaction entered into by the trust primarily 

to manage risk of currency fluctuations with respect to 

any item of income or gain described in paragraph (2) 

or (3) (or any property which generates such income or 

gain), including gain from the termination of such a 

transaction, shall not constitute gross income under 

paragraphs (2) and (3), but only if such transaction is 

clearly identified as such before the close of the day on 

which it was acquired, originated, or entered into (or 

such other time as the Secretary may prescribe).’’. 

(c) AUTHORITY TO EXCLUDE ITEMS OF INCOME FROM REIT INCOME TESTS.—Section 856(c)(5) is amended by adding at the end 

the following new subparagraph: 

‘‘(J) SECRETARIAL AUTHORITY TO EXCLUDE OTHER ITEMS

OF INCOME.—To the extent necessary to carry out the purposes of this part, the Secretary is authorized to determine, solely for purposes of this part, whether any item of 

income or gain which—

‘‘(i) does not otherwise qualify under paragraph (2) 

or (3) may be considered as not constituting gross income for purposes of paragraphs (2) or (3), or 

‘‘(ii) otherwise constitutes gross income not qualifying under paragraph (2) or (3) may be considered as 

gross income which qualifies under paragraph (2) or 

(3).’’. 

SEC. 3032. REVISIONS TO REIT ASSET TESTS. 

(a) CLARIFICATION OF VALUATION TEST.—The first sentence in 

the matter following section 856(c)(4)(B)(iii)(III) is amended by inserting ‘‘(including a discrepancy caused solely by the change in the 

foreign currency exchange rate used to value a foreign asset)’’ after 

‘‘such requirements’’. 

(b) CLARIFICATION OF PERMISSIBLE ASSET CATEGORY.—Section 

856(c)(5), as amended by section 3031(c), is amended by adding at 

the end the following new subparagraph: 

‘‘(K) CASH.—If the real estate investment trust or its 

qualified business unit (as defined in section 989) uses any 

foreign currency as its functional currency (as defined in 

section 985(b)), the term ‘cash’ includes such foreign currency but only to the extent such foreign currency—

‘‘(i) is held for use in the normal course of the activities of the trust or qualified business unit which give 

rise to items of income or gain described in paragraph 

(2) or (3) of subsection (c) or are directly related to acquiring or holding assets described in subsection (c)(4), 

and 

‘‘(ii) is not held in connection with an activity described in subsection (n)(4).’’. 


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SEC. 3033. CONFORMING FOREIGN CURRENCY REVISIONS. 

(a) NET INCOME FROM FORECLOSURE PROPERTY.—Clause (i) of 

section 857(b)(4)(B) is amended to read as follows: ‘‘(i) gain (including any foreign currency gain, as defined in section 988(b)(1)) from the sale or other disposition of foreclosure property described in section 

1221(a)(1) and the gross income for the taxable year 

derived from foreclosure property (as defined in section 856(e)), but only to the extent such gross income 

is not described in (or, in the case of foreign currency 

gain, not attributable to gross income described in) 

section 856(c)(3) other than subparagraph (F) thereof, 

over’’. (b) NET INCOME FROM PROHIBITED TRANSACTIONS.—Clause (i) of 

section 857(b)(6)(B) is amended to read as follows: ‘‘(i) the term ‘net income derived from prohibited 

transactions’ means the excess of the gain (including 

any foreign currency gain, as defined in section 

988(b)(1)) from prohibited transactions over the deductions (including any foreign currency loss, as defined 

in section 988(b)(2)) allowed by this chapter which are 

directly connected with prohibited transactions;’’. 

Subtitle B—Taxable REIT Subsidiaries 

SEC. 3041. CONFORMING TAXABLE REIT SUBSIDIARY ASSET TEST. 

Section 856(c)(4)(B)(ii) is amended— (1) by striking ‘‘20 percent’’ and inserting ‘‘25 percent’’, and 

(2) by striking ‘‘REIT subsidiaries’’ and all that follows, and 

inserting ‘‘REIT subsidiaries,’’. 

Subtitle C—Dealer Sales 

SEC. 3051. HOLDING PERIOD UNDER SAFE HARBOR. 

(a) IN GENERAL.—Section 857(b)(6) (relating to income from prohibited transactions) is amended—

(1) by striking ‘‘4 years’’ in subparagraphs (C)(i), (C)(iv), and 

(D)(i) and inserting ‘‘2 years’’, 

(2) by striking ‘‘4-year period’’ in subparagraphs (C)(ii), 

(D)(ii), and (D)(iii) and inserting ‘‘2-year period’’, and 

(3) by striking ‘‘real estate asset’’and all that follows through 

‘‘if’’ in the matter preceding clause (i) of subparagraphs (C) and 

(D), respectively, and inserting ‘‘real estate asset (as defined in 

section 856(c)(5)(B)) and which is described in section 

1221(a)(1) if’’. 

(b) RETENTION OF EXISTING LAW.—Section 857(b)(6) is amended—

(1) by striking subparagraph (G) and redesignating subparagraphs (H) and (I) as subparagraphs (G) and (H), respectively, 

and 

(2) in subparagraph (G), as so redesignated, by adding at the 

end the following: ‘‘For purposes of the preceding sentence, the 

reference to subparagraph (D) shall be a reference to such subparagraph as in effect on the day before the enactment of the 


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Housing Assistance Tax Act of 2008, as modified by subparagraph (G) as so in effect.’’. 

SEC. 3052. DETERMINING VALUE OF SALES UNDER SAFE HARBOR. 

Section 857(b)(6) is amended— (1) by striking the semicolon at the end of subparagraph 

(C)(iii) and inserting ‘‘, or (III) the fair market value of property (other than sales of foreclosure property or sales to which 

section 1033 applies) sold during the taxable year does not exceed 10 percent of the fair market value of all of the assets of 

the trust as of the beginning of the taxable year;’’, and 

(2) by adding ‘‘or’’ at the end of subclause (II) of subparagraph (D)(iv) and by adding at the end of such subparagraph 

the following new subclause: 

‘‘(III) the fair market value of property (other than 

sales of foreclosure property or sales to which section 

1033 applies) sold during the taxable year does not exceed 10 percent of the fair market value of all of the 

assets of the trust as of the beginning of the taxable 

year,’’. 

Subtitle D—Health Care REITs 

SEC. 3061. CONFORMITY FOR HEALTH CARE FACILITIES. 

(a) RELATED PARTY RENTALS.—Subparagraph (B) of section 

856(d)(8) (relating to special rule for taxable REIT subsidiaries) is 

amended to read as follows: ‘‘(B) EXCEPTION FOR CERTAIN LODGING FACILITIES AND

HEALTH CARE PROPERTY.—The requirements of this subparagraph are met with respect to an interest in real property which is a qualified lodging facility (as defined in 

paragraph (9)(D)) or a qualified health care property (as 

defined in subsection (e)(6)(D)(i)) leased by the trust to a 

taxable REIT subsidiary of the trust if the property is operated on behalf of such subsidiary by a person who is an 

eligible independent contractor. For purposes of this section, a taxable REIT subsidiary is not considered to be operating or managing a qualified health care property or 

qualified lodging facility solely because it—

‘‘(i) directly or indirectly possesses a license, permit, 

or similar instrument enabling it to do so, or 

‘‘(ii) employs individuals working at such facility or 

property located outside the United States, but only if 

an eligible independent contractor is responsible for 

the daily supervision and direction of such individuals 

on behalf of the taxable REIT subsidiary pursuant to 

a management agreement or similar service contract.’’. 

(b) ELIGIBLE INDEPENDENT CONTRACTOR.—Subparagraphs (A) 

and (B) of section 856(d)(9) (relating to eligible independent contractor) are amended to read as follows: 

‘‘(A) IN GENERAL.—The term ‘eligible independent contractor’ means, with respect to any qualified lodging facility or qualified health care property (as defined in subsection (e)(6)(D)(i)), any independent contractor if, at the 

time such contractor enters into a management agreement 


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or other similar service contract with the taxable REIT 

subsidiary to operate such qualified lodging facility or 

qualified health care property, such contractor (or any related person) is actively engaged in the trade or business 

of operating qualified lodging facilities or qualified health 

care properties, respectively, for any person who is not a 

related person with respect to the real estate investment 

trust or the taxable REIT subsidiary. 

‘‘(B) SPECIAL RULES.—Solely for purposes of this paragraph and paragraph (8)(B), a person shall not fail to be 

treated as an independent contractor with respect to any 

qualified lodging facility or qualified health care property 

(as so defined) by reason of the following: 

‘‘(i) The taxable REIT subsidiary bears the expenses 

for the operation of such qualified lodging facility or 

qualified health care property pursuant to the management agreement or other similar service contract. 

‘‘(ii) The taxable REIT subsidiary receives the revenues from the operation of such qualified lodging facility or qualified health care property, net of expenses 

for such operation and fees payable to the operator 

pursuant to such agreement or contract. 

‘‘(iii) The real estate investment trust receives income from such person with respect to another property that is attributable to a lease of such other property to such person that was in effect as of the later 

of—

‘‘(I) January 1, 1999, or 

‘‘(II) the earliest date that any taxable REIT 

subsidiary of such trust entered into a management agreement or other similar service contract 

with such person with respect to such qualified 

lodging facility or qualified health care property.’’. 

(c) TAXABLE REIT SUBSIDIARIES.—The last sentence of section 

856(l)(3) is amended—

(1) by inserting ‘‘or a health care facility’’ after ‘‘a lodging facility’’, and 

(2) by inserting ‘‘or health care facility’’ after ‘‘such lodging 

facility’’. 

Subtitle E—Effective Dates 

SEC. 3071. EFFECTIVE DATES. 

(a) IN GENERAL.—Except as otherwise provided in this section, 

the amendments made by this title shall apply to taxable years beginning after the date of the enactment of this Act. 

(b) REIT INCOME TESTS.—

(1) The amendments made by section 3031(a) and (c) shall 

apply to gains and items of income recognized after the date 

of the enactment of this Act. 

(2) The amendment made by section 3031(b) shall apply to 

transactions entered into after the date of the enactment of 

this Act. 

(c) CONFORMING FOREIGN CURRENCY REVISIONS.—


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(1) The amendment made by section 3033(a) shall apply to 

gains recognized after the date of the enactment of this Act. 

(2) The amendment made by section 3033(b) shall apply to 

gains and deductions recognized after the date of the enactment of this Act. 

(d) DEALER SALES.—The amendments made by subtitle C shall 

apply to sales made after the date of the enactment of this Act. 

TITLE III—REVENUE PROVISIONS 

Subtitle A—General Provisions 

SEC. 3081. ELECTION TO ACCELERATE THE AMT AND RESEARCH 

CREDITS IN LIEU OF BONUS DEPRECIATION. 

(a) IN GENERAL.—Section 168(k) is amended by adding at the 

end the following new paragraph: 

‘‘(4) ELECTION TO ACCELERATE THE AMT AND RESEARCH CREDITS IN LIEU OF BONUS DEPRECIATION.—

‘‘(A) IN GENERAL.—If a corporation elects to have this 

paragraph apply for the first taxable year of the taxpayer 

ending after March 31, 2008, in the case of such taxable 

year and each subsequent taxable year—

‘‘(i) paragraph (1) shall not apply to any eligible 

qualified property placed in service by the taxpayer, 

‘‘(ii) the applicable depreciation method used under 

this section with respect to such property shall be the 

straight line method, and 

‘‘(iii) each of the limitations described in subparagraph (B) for any such taxable year shall be increased 

by the bonus depreciation amount which is—

‘‘(I) determined for such taxable year under subparagraph (C), and 

‘‘(II) allocated to such limitation under subparagraph (E). 

‘‘(B) LIMITATIONS TO BE INCREASED.—The limitations described in this subparagraph are—

‘‘(i) the limitation imposed by section 38(c), and 

‘‘(ii) the limitation imposed by section 53(c). 

‘‘(C) BONUS DEPRECIATION AMOUNT.—For purposes of 

this paragraph—

‘‘(i) IN GENERAL.—The bonus depreciation amount 

for any taxable year is an amount equal to 20 percent 

of the excess (if any) of—

‘‘(I) the aggregate amount of depreciation which 

would be allowed under this section for eligible 

qualified property placed in service by the taxpayer during such taxable year if paragraph (1) 

applied to all such property, over 

‘‘(II) the aggregate amount of depreciation which 

would be allowed under this section for eligible 

qualified property placed in service by the taxpayer during such taxable year if paragraph (1) 

did not apply to any such property. 


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The aggregate amounts determined under subclauses 

(I) and (II) shall be determined without regard to any 

election made under subsection (b)(2)(C), (b)(3)(D), or 

(g)(7) and without regard to subparagraph (A)(ii). ‘‘(ii) MAXIMUM AMOUNT.—The bonus depreciation 

amount for any taxable year shall not exceed the maximum increase amount under clause (iii), reduced (but 

not below zero) by the sum of the bonus depreciation 

amounts for all preceding taxable years. ‘‘(iii) MAXIMUM INCREASE AMOUNT.—For purposes of 

clause (ii), the term ‘maximum increase amount’ means, with respect to any corporation, the lesser of— ‘‘(I) $30,000,000, or 

‘‘(II) 6 percent of the sum of the business credit 

increase amount, and the AMT credit increase 

amount, determined with respect to such corporation under subparagraph (E). ‘‘(iv) AGGREGATION RULE.—All corporations which 

are treated as a single employer under section 52(a) 

shall be treated— ‘‘(I) as 1 taxpayer for purposes of this paragraph, and ‘‘(II) as having elected the application of this 

paragraph if any such corporation so elects. ‘‘(D) ELIGIBLE QUALIFIED PROPERTY.—For purposes of 

this paragraph, the term ‘eligible qualified property’ means 

qualified property under paragraph (2), except that in applying paragraph (2) for purposes of this paragraph— ‘‘(i) ‘March 31, 2008’ shall be substituted for ‘December 31, 2007’ each place it appears in subparagraph 

(A) and clauses (i) and (ii) of subparagraph (E) thereof, 

and ‘‘(ii) only adjusted basis attributable to manufacture, 

construction, or production after March 31, 2008, and 

before January 1, 2009, shall be taken into account 

under subparagraph (B)(ii) thereof. 

‘‘(E) ALLOCATION OF BONUS DEPRECIATION AMOUNTS.— ‘‘(i) IN GENERAL.—Subject to clauses (ii) and (iii), the 

taxpayer shall, at such time and in such manner as 

the Secretary may prescribe, specify the portion (if 

any) of the bonus depreciation amount for the taxable 

year which is to be allocated to each of the limitations 

described in subparagraph (B) for such taxable year. ‘‘(ii) LIMITATION ON ALLOCATIONS.—The portion of 

the bonus depreciation amount which may be allocated 

under clause (i) to the limitations described in subparagraph (B) for any taxable year shall not exceed—

‘‘(I) in the case of the limitation described in 

subparagraph (B)(i), the excess of the business 

credit increase amount over the bonus depreciation amount allocated to such limitation for all 

preceding taxable years, and ‘‘(II) in the case of the limitation described in 

subparagraph (B)(ii), the excess of the AMT credit 

increase amount over the bonus depreciation 


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amount allocated to such limitation for all preceding taxable years. ‘‘(iii) BUSINESS CREDIT INCREASE AMOUNT.—For purposes of this paragraph, the term ‘business credit increase amount’ means the amount equal to the portion 

of the credit allowable under section 38 (determined 

without regard to subsection (c) thereof) for the first 

taxable year ending after March 31, 2008, which is allocable to business credit carryforwards to such taxable year which are— ‘‘(I) from taxable years beginning before January 1, 2006, and ‘‘(II) properly allocable (determined under the 

rules of section 38(d)) to the research credit determined under section 41(a). ‘‘(iv) AMT CREDIT INCREASE AMOUNT.—For purposes 

of this paragraph, the term ‘AMT credit increase 

amount’ means the amount equal to the portion of the 

minimum tax credit under section 53(b) for the first 

taxable year ending after March 31, 2008, determined 

by taking into account only the adjusted minimum tax 

for taxable years beginning before January 1, 2006. 

For purposes of the preceding sentence, credits shall 

be treated as allowed on a first-in, first-out basis. 

‘‘(F) CREDIT REFUNDABLE.—For purposes of section 

6401(b), the aggregate increase in the credits allowable 

under part IV of subchapter A for any taxable year resulting from the application of this paragraph shall be treated 

as allowed under subpart C of such part (and not any 

other subpart). ‘‘(G) OTHER RULES.— ‘‘(i) ELECTION.—Any election under this paragraph 

(including any allocation under subparagraph (E)) may 

be revoked only with the consent of the Secretary. ‘‘(ii) PARTNERSHIPS WITH ELECTING PARTNERS.—In 

the case of a corporation making an election under 

subparagraph (A) and which is a partner in a partnership, for purposes of determining such corporation’s 

distributive share of partnership items under section 

702— ‘‘(I) paragraph (1) shall not apply to any eligible 

qualified property, and ‘‘(II) the applicable depreciation method used 

under this section with respect to such property 

shall be the straight line method. ‘‘(iii) SPECIAL RULE FOR PASSENGER AIRCRAFT.—In 

the case of any passenger aircraft, the written binding 

contract limitation under paragraph (2)(A)(iii)(I) shall 

not apply for purposes of subparagraphs (C)(i)(I) and 

(D).’’. (b) APPLICATION TO CERTAIN AUTOMOTIVE PARTNERSHIPS.— (1) IN GENERAL.—If an applicable partnership elects the application of this subsection— (A) the partnership shall be treated as having made a 

payment against the tax imposed by chapter 1 of the InterVerDate Aug 31 2005 06:51 Jul 23, 2008 Jkt 043642 PO 00000 Frm 00260 Fmt 6659 Sfmt 6602 E:\HR\OC\HR767.XXX HR767

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nal Revenue Code of 1986 for any applicable taxable year 

of the partnership in the amount determined under paragraph (3), 

(B) in the case of any eligible qualified property placed 

in service by the partnership during any applicable taxable 

year—

(i) section 168(k) of such Code shall not apply in determining the amount of the deduction allowable with 

respect to such property under section 168 of such 

Code, 

(ii) the applicable depreciation method used with respect to such property shall be the straight line method, and 

(C) the amount of the credit determined under section 41 

of such Code for any applicable taxable year with respect 

to the partnership shall be reduced by the amount of the 

deemed payment under subparagraph (A) for the taxable 

year. 

(2) TREATMENT OF DEEMED PAYMENT.—

(A) IN GENERAL.—Notwithstanding any other provision 

of the Internal Revenue Code of 1986, the Secretary of the 

Treasury or his delegate shall not use the payment of tax 

described in paragraph (1) as an offset or credit against 

any tax liability of the applicable partnership or any partner but shall refund such payment to the applicable partnership. 

(B) NO INTEREST.—The payment described in paragraph 

(1) shall not be taken into account in determining any 

amount of interest under such Code. 

(3) AMOUNT OF DEEMED PAYMENT.—The amount determined 

under this paragraph for any applicable taxable year shall be 

the least of the following: 

(A) The amount which would be determined for the taxable year under section 168(k)(4)(C)(i) of the Internal Revenue Code of 1986 (as added by the amendments made by 

this section) if an election under section 168(k)(4) of such 

Code were in effect with respect to the partnership. 

(B) The amount of the credit determined under section 

41 of such Code for the taxable year with respect to the 

partnership. 

(C) $30,000,000, reduced by the amount of any payment 

under this subsection for any preceding taxable year. 

(4) DEFINITIONS.—For purposes of this subsection—

(A) APPLICABLE PARTNERSHIP.—The term ‘‘applicable 

partnership’’ means a domestic partnership that—

(i) was formed effective on August 3, 2007, and 

(ii) will produce in excess of 675,000 automobiles 

during the period beginning on January 1, 2008, and 

ending on June 30, 2008. 

(B) APPLICABLE TAXABLE YEAR.—The term ‘‘applicable 

taxable year’’ means any taxable year during which eligible qualified property is placed in service. 

(C) ELIGIBLE QUALIFIED PROPERTY.—The term ‘‘eligible 

qualified property’’ has the meaning given such term by 


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section 168(k)(4)(D) of the Internal Revenue Code of 1986 

(as added by the amendments made by this section). 

(c) CONFORMING AMENDMENT.—Section 1324(b)(2) of title 31, 

United States Code, as amended by this Act, is amended— (1) by inserting ‘‘168(k)(4)(F),’’ after ‘‘36,’’, and 

(2) by inserting ‘‘, or due under section 3081(b)(2) of the 

Housing Assistance Tax Act of 2008’’ before the period at the 

end. 

(d) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years ending after March 31, 2008. 

SEC. 3082. CERTAIN GO ZONE INCENTIVES. 

(a) USE OF AMENDED INCOME TAX RETURNS TO TAKE INTO AC- COUNT RECEIPT OF CERTAIN HURRICANE-RELATED CASUALTY LOSS

GRANTS BY DISALLOWING PREVIOUSLY TAKEN CASUALTY LOSS DE- DUCTIONS.— (1) IN GENERAL.—Notwithstanding any other provision of the 

Internal Revenue Code of 1986, if a taxpayer claims a deduction for any taxable year with respect to a casualty loss to a 

principal residence (within the meaning of section 121 of such 

Code) resulting from Hurricane Katrina, Hurricane Rita, or 

Hurricane Wilma and in a subsequent taxable year receives a 

grant under Public Law 109–148, 109–234, or 110–116 as reimbursement for such loss, such taxpayer may elect to file an 

amended income tax return for the taxable year in which such 

deduction was allowed (and for any taxable year to which such 

deduction is carried) and reduce (but not below zero) the 

amount of such deduction by the amount of such reimbursement. 

(2) TIME OF FILING AMENDED RETURN.—Paragraph (1) shall 

apply with respect to any grant only if any amended income 

tax returns with respect to such grant are filed not later than 

the later of— (A) the due date for filing the tax return for the taxable 

year in which the taxpayer receives such grant, or 

(B) the date which is 1 year after the date of the enactment of this Act. 

(3) WAIVER OF PENALTIES AND INTEREST.—Any underpayment of tax resulting from the reduction under paragraph 

(1) of the amount otherwise allowable as a deduction shall not 

be subject to any penalty or interest under such Code if such 

tax is paid not later than 1 year after the filing of the amended 

return to which such reduction relates. 

(b) WAIVER OF DEADLINE ON CONSTRUCTION OF GO ZONE PROPERTY ELIGIBLE FOR BONUS DEPRECIATION.—

(1) IN GENERAL.—Subparagraph (B) of section 1400N(d)(3) is 

amended to read as follows: 

‘‘(B) without regard to ‘and before January 1, 2009’ in 

clause (i) thereof, and’’. 

(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to property placed in service after December 

31, 2007. 

(c) INCLUSION OF CERTAIN COUNTIES IN GULF OPPORTUNITY ZONE

FOR PURPOSES OF TAX-EXEMPT BOND FINANCING.—

(1) IN GENERAL.—Subsection (a) of section 1400N is amended 

by adding at the end the following new paragraph: 


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‘‘(8) INCLUSION OF CERTAIN COUNTIES.—For purposes of this 

subsection, the Gulf Opportunity Zone includes Colbert County, Alabama and Dallas County, Alabama.’’. 

(2) EFFECTIVE DATE.—The amendment made by this subsection shall take effect as if included in the provisions of the 

Gulf Opportunity Zone Act of 2005 to which it relates. 

SEC. 3083. INCREASE IN STATUTORY LIMIT ON THE PUBLIC DEBT. 

Subsection (b) of section 3101 of title 31, United States Code, is 

amended by striking out the dollar limitation contained in such 

subsection and inserting in lieu thereof $10,615,000,000,000. 

Subtitle B—Revenue Offsets 

SEC. 3091. RETURNS RELATING TO PAYMENTS MADE IN SETTLEMENT 

OF PAYMENT CARD AND THIRD PARTY NETWORK TRANSACTIONS. 

(a) IN GENERAL.—Subpart B of part III of subchapter A of chapter 61 is amended by adding at the end the following new section: 

‘‘SEC. 6050W. RETURNS RELATING TO PAYMENTS MADE IN SETTLEMENT OF PAYMENT CARD AND THIRD PARTY NETWORK 

TRANSACTIONS. 

‘‘(a) IN GENERAL.—Each payment settlement entity shall make a 

return for each calendar year setting forth—

‘‘(1) the name, address, and TIN of each participating payee 

to whom one or more payments in settlement of reportable 

payment transactions are made, and 

‘‘(2) the gross amount of the reportable payment transactions 

with respect to each such participating payee. 

Such return shall be made at such time and in such form and manner as the Secretary may require by regulations. 

‘‘(b) PAYMENT SETTLEMENT ENTITY.—For purposes of this section—

‘‘(1) IN GENERAL.—The term ‘payment settlement entity’

means—

‘‘(A) in the case of a payment card transaction, the merchant acquiring entity, and 

‘‘(B) in the case of a third party network transaction, the 

third party settlement organization. 

‘‘(2) MERCHANT ACQUIRING ENTITY.—The term ‘merchant acquiring entity’ means the bank or other organization which has 

the contractual obligation to make payment to participating 

payees in settlement of payment card transactions. 

‘‘(3) THIRD PARTY SETTLEMENT ORGANIZATION.—The term 

‘third party settlement organization’ means the central organization which has the contractual obligation to make payment 

to participating payees of third party network transactions. 

‘‘(4) SPECIAL RULES RELATED TO INTERMEDIARIES.—For purposes of this section—

‘‘(A) AGGREGATED PAYEES.—In any case where reportable 

payment transactions of more than one participating payee 

are settled through an intermediary—

‘‘(i) such intermediary shall be treated as the participating payee for purposes of determining the reporting 


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obligations of the payment settlement entity with respect to such transactions, and 

‘‘(ii) such intermediary shall be treated as the payment settlement entity with respect to the settlement 

of such transactions with the participating payees. 

‘‘(B) ELECTRONIC PAYMENT FACILITATORS.—In any case 

where an electronic payment facilitator or other third 

party makes payments in settlement of reportable payment transactions on behalf of the payment settlement entity, the return under subsection (a) shall be made by such 

electronic payment facilitator or other third party in lieu 

of the payment settlement entity. 

‘‘(c) REPORTABLE PAYMENT TRANSACTION.—For purposes of this 

section—

‘‘(1) IN GENERAL.—The term ‘reportable payment transaction’

means any payment card transaction and any third party network transaction. 

‘‘(2) PAYMENT CARD TRANSACTION.—The term ‘payment card 

transaction’ means any transaction in which a payment card is 

accepted as payment. 

‘‘(3) THIRD PARTY NETWORK TRANSACTION.—The term ‘third 

party network transaction’ means any transaction which is settled through a third party payment network. 

‘‘(d) OTHER DEFINITIONS.—For purposes of this section—

‘‘(1) PARTICIPATING PAYEE.—

‘‘(A) IN GENERAL.—The term ‘participating payee’

means—

‘‘(i) in the case of a payment card transaction, any 

person who accepts a payment card as payment, and 

‘‘(ii) in the case of a third party network transaction, 

any person who accepts payment from a third party 

settlement organization in settlement of such transaction. 

‘‘(B) EXCLUSION OF FOREIGN PERSONS.—Except as provided by the Secretary in regulations or other guidance, 

such term shall not include any person with a foreign address. 

‘‘(C) INCLUSION OF GOVERNMENTAL UNITS.—The term 

‘person’ includes any governmental unit (and any agency 

or instrumentality thereof). 

‘‘(2) PAYMENT CARD.—The term ‘payment card’ means any 

card which is issued pursuant to an agreement or arrangement 

which provides for—

‘‘(A) one or more issuers of such cards, 

‘‘(B) a network of persons unrelated to each other, and 

to the issuer, who agree to accept such cards as payment, 

and 

‘‘(C) standards and mechanisms for settling the transactions between the merchant acquiring entities and the 

persons who agree to accept such cards as payment. 

The acceptance as payment of any account number or other indicia associated with a payment card shall be treated for purposes of this section in the same manner as accepting such 

payment card as payment. 


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‘‘(3) THIRD PARTY PAYMENT NETWORK.—The term ‘third party 

payment network’ means any agreement or arrangement—

‘‘(A) which involves the establishment of accounts with a 

central organization by a substantial number of persons 

who—

‘‘(i) are unrelated to such organization, 

‘‘(ii) provide goods or services, and 

‘‘(iii) have agreed to settle transactions for the provision of such goods or services pursuant to such agreement or arrangement, 

‘‘(B) which provides for standards and mechanisms for 

settling such transactions, and 

‘‘(C) which guarantees persons providing goods or services pursuant to such agreement or arrangement that such 

persons will be paid for providing such goods or services. 

Such term shall not include any agreement or arrangement 

which provides for the issuance of payment cards. 

‘‘(e) EXCEPTION FOR DE MINIMIS PAYMENTS BY THIRD PARTY SETTLEMENT ORGANIZATIONS.—A third party settlement organization 

shall be required to report any information under subsection (a) 

with respect to third party network transactions of any participating payee only if—

‘‘(1) the amount which would otherwise be reported under 

subsection (a)(2) with respect to such transactions exceeds 

$20,000, and 

‘‘(2) the aggregate number of such transactions exceeds 200. 

‘‘(f) STATEMENTS TO BE FURNISHED TO PERSONS WITH RESPECT

TO WHOM INFORMATION IS REQUIRED.—Every person required to 

make a return under subsection (a) shall furnish to each person 

with respect to whom such a return is required a written statement 

showing—

‘‘(1) the name, address, and phone number of the information 

contact of the person required to make such return, and 

‘‘(2) the gross amount of the reportable payment transactions 

with respect to the person required to be shown on the return. 

The written statement required under the preceding sentence shall 

be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) 

was required to be made. Such statement may be furnished electronically, and if so, the email address of the person required to 

make such return may be shown in lieu of the phone number. 

‘‘(g) REGULATIONS.—The Secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry 

out this section, including rules to prevent the reporting of the 

same transaction more than once.’’. 

(b) PENALTY FOR FAILURE TO FILE.—

(1) RETURN.—Subparagraph (B) of section 6724(d)(1) is 

amended—

(A) by striking ‘‘or’’ at the end of clause (xx), 

(B) by redesignating the clause (xix) that follows clause 

(xx) as clause (xxi), 

(C) by striking ‘‘and’’ at the end of clause (xxi), as redesignated by subparagraph (B) and inserting ‘‘or’’, and 

(D) by adding at the end the following: 


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‘‘(xxii) section 6050W (relating to returns to payments made in settlement of payment card transactions), and’’. (2) STATEMENT.—Paragraph (2) of section 6724(d) is amended by striking ‘‘or’’ at the end of subparagraph (BB), by striking the period at the end of the subparagraph (CC) and inserting ‘‘, or’’, and by inserting after subparagraph (CC) the following: ‘‘(DD) section 6050W(c) (relating to returns relating to 

payments made in settlement of payment card transactions).’’. (c) APPLICATION OF BACKUP WITHHOLDING.—Paragraph (3) of section 3406(b) is amended by striking ‘‘or’’ at the end of subparagraph (D), by striking the period at the end of subparagraph (E) 

and inserting ‘‘, or’’, and by adding at the end the following new 

subparagraph: 

‘‘(F) section 6050W (relating to returns relating to payments made in settlement of payment card transactions).’’. 

(d) CLERICAL AMENDMENT.—The table of sections for subpart B 

of part III of subchapter A of chapter 61 is amended by inserting 

after the item relating to section 6050V the following: 

‘‘Sec. 6050W. Returns relating to payments made in settlement of payment card 

transactions.’’. 

(e) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to 

returns for calendar years beginning after December 31, 2010. 

(2) APPLICATION OF BACKUP WITHHOLDING.—

(A) IN GENERAL.—The amendment made by subsection 

(c) shall apply to amounts paid after December 31, 2011. 

(B) ELIGIBILITY FOR TIN MATCHING PROGRAM.—Solely for 

purposes of carrying out any TIN matching program established by the Secretary under section 3406(i) of the Internal Revenue Code of 1986— (i) the amendments made this section shall be treated as taking effect on the date of the enactment of this 

Act, and 

(ii) each person responsible for setting the standards 

and mechanisms referred to in section 6050W(d)(2)(C) 

of such Code, as added by this section, for settling 

transactions involving payment cards shall be treated 

in the same manner as a payment settlement entity. 

SEC. 3092. GAIN FROM SALE OF PRINCIPAL RESIDENCE ALLOCATED 

TO NONQUALIFIED USE NOT EXCLUDED FROM INCOME. 

(a) IN GENERAL.—Subsection (b) of section 121 of the Internal 

Revenue Code of 1986 (relating to limitations) is amended by adding at the end the following new paragraph: 

‘‘(4) EXCLUSION OF GAIN ALLOCATED TO NONQUALIFIED USE.—

‘‘(A) IN GENERAL.—Subsection (a) shall not apply to so 

much of the gain from the sale or exchange of property as 

is allocated to periods of nonqualified use. 

‘‘(B) GAIN ALLOCATED TO PERIODS OF NONQUALIFIED

USE.—For purposes of subparagraph (A), gain shall be allocated to periods of nonqualified use based on the ratio 

which—


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‘‘(i) the aggregate periods of nonqualified use during 

the period such property was owned by the taxpayer, 

bears to 

‘‘(ii) the period such property was owned by the taxpayer. 

‘‘(C) PERIOD OF NONQUALIFIED USE.—For purposes of this 

paragraph—

‘‘(i) IN GENERAL.—The term ‘period of nonqualified 

use’ means any period (other than the portion of any 

period preceding January 1, 2009) during which the 

property is not used as the principal residence of the 

taxpayer or the taxpayer’s spouse or former spouse. 

‘‘(ii) EXCEPTIONS.—The term ‘period of nonqualified 

use’ does not include—

‘‘(I) any portion of the 5-year period described in 

subsection (a) which is after the last date that 

such property is used as the principal residence of 

the taxpayer or the taxpayer’s spouse, 

‘‘(II) any period (not to exceed an aggregate period of 10 years) during which the taxpayer or the 

taxpayer’s spouse is serving on qualified official 

extended duty (as defined in subsection (d)(9)(C)) 

described in clause (i), (ii), or (iii) of subsection 

(d)(9)(A), and 

‘‘(III) any other period of temporary absence (not 

to exceed an aggregate period of 2 years) due to 

change of employment, health conditions, or such 

other unforeseen circumstances as may be specified by the Secretary. 

‘‘(D) COORDINATION WITH RECOGNITION OF GAIN ATTRIBUTABLE TO DEPRECIATION.—For purposes of this paragraph—

‘‘(i) subparagraph (A) shall be applied after the application of subsection (d)(6), and 

‘‘(ii) subparagraph (B) shall be applied without regard to any gain to which subsection (d)(6) applies.’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to sales and exchanges after December 31, 2008. 

SEC. 3093. DELAY IN APPLICATION OF WORLDWIDE ALLOCATION OF 

INTEREST. 

(a) IN GENERAL.—Paragraphs (5)(D) and (6) of section 864(f) are 

each amended by striking ‘‘December 31, 2008’’ and inserting ‘‘December 31, 2010’’. 

(b) TRANSITIONAL RULE.—Subsection (f) of section 864 is amended by adding at the end the following new paragraph: 

‘‘(7) TRANSITION.—In the case of the first taxable year to 

which this subsection applies, the increase (if any) in the 

amount of the interest expense allocable to sources within the 

United States by reason of the application of this subsection 

shall be 30 percent of the amount of such increase determined 

without regard to this paragraph.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years beginning after December 31, 2008. 


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SEC. 3094. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES. 

(a) REPEAL OF ADJUSTMENT FOR 2012.—Subparagraph (B) of section 401(1) of the Tax Increase Prevention and Reconciliation Act 

of 2005 is amended by striking the percentage contained therein 

and inserting ‘‘100 percent’’. No other provision of law which would 

change such percentage shall have any force and effect. 

(b) MODIFICATION OF ADJUSTMENT FOR 2013.—The percentage 

under subparagraph (C) of section 401(1) of the Tax Increase Prevention and Reconciliation Act of 2005 in effect on the date of the 

enactment of this Act is increased by 16.75 percentage points. 

Æ 


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