I 

112TH CONGRESS 

1ST SESSION H. R. 3530 

To require the exercise of clean-up call options under securities issued by 

the Federal National Mortgage Association or the Federal Home Loan 

Mortgage Corporation and to prohibit any new mortgage-backed securities issued by such enterprises to contain provisions for a clean-up 

call option. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 30, 2011 

Mr. PERLMUTTER (for himself and Mr. SCHWEIKERT) introduced the 

following bill; which was referred to the Committee on Financial Services 

A BILL 

To require the exercise of clean-up call options under securities issued by the Federal National Mortgage Association 

or the Federal Home Loan Mortgage Corporation and 

to prohibit any new mortgage-backed securities issued 

by such enterprises to contain provisions for a cleanup call option. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Freddie Mac Debt Re5 duction Act of 2011’’. 


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1 SEC. 2. EXERCISE OF CLEAN-UP CALL OPTIONS. 

2 Subtitle B of title XIII of the Housing and Commu3 nity Development Act of 1992 (12 U.S.C. 4611 et seq.) 

4 is amended by adding at the end the following new section: 

5 ‘‘SEC. 1369F. EXERCISE OF CLEAN-UP CALL OPTIONS. 

6 ‘‘(a) REQUIREMENT.—In complying with any restric7 tion under law, regulation, order, or agreement with the 

8 Director or the Secretary of the Treasury on the mortgage 

9 assets issued by the Federal Home Loan Mortgage Cor10 poration, such Corporation or, during the term of any con11 servatorship or receivership of such enterprise pursuant 

12 to section 1367, the Director, shall in the case of any 

13 mortgage-backed security with a clean-up call option (as 

14 such term is defined in subsection (c) of this section) that 

15 is issued by such Corporation, exercise any option under 

16 which the residual holder is willing to share not less than 

17 50 percent of any excess proceeds resulting from exercise 

18 of such option or right with the Agency as conservator 

19 or receiver of such Corporation, which thereby reduces the 

20 liability of the taxpayers of the United States. 

21 ‘‘(b) PROHIBITION REGARDING ISSUANCE OF NEW

22 SECURITIES.—The Director shall prohibit the Federal 

23 Home Loan Mortgage Corporation and the Federal Na24 tional Mortgage Association from issuing, after the date 

25 of the enactment of this section, any mortgage-backed se26 curity with a clean-up call option. 


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1 ‘‘(c) USE OF PROCEEDS TO REDUCE DEFICIT.—The 

2 Director shall ensure that any excess proceeds received as 

3 result of the exercise of any clean-up call option shall be 

4 used only to reduce the budget deficit of the Federal Gov5 ernment. 

6 ‘‘(d) DEFINITIONS.— 

7 ‘‘(1) MORTGAGE ASSETS.—The term ‘mortgage 

8 assets’ means, with respect to the Federal Home 

9 Loan Mortgage Corporation, assets of such Corpora10 tion consisting of mortgages, mortgage loans, mort11 gage-related securities, participation certificates, 

12 mortgage-backed commercial paper, obligations of 

13 real estate mortgage investment conduits and similar 

14 assets, in each case to the extent such assets would 

15 appear on the balance sheet of such Corporation in 

16 accordance with generally accepted accounting prin17 ciples in effect in the United States as of September 

18 7, 2008 (as set forth in the opinions and pronounce19 ments of the Accounting Principles Board and the 

20 American Institute of Certified Public Accountants 

21 and statements and pronouncements of the Finan22 cial Accounting Standards Board from time to time; 

23 and without giving any effect to any change that 

24 may be made after September 7, 2008, in respect of 


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1 Statement of Financial Accounting Standards No. 

2 140 or any similar accounting standard). 

3 ‘‘(2) MORTGAGE-BACKED SECURITY WITH A

4 CLEAN-UP CALL OPTION.—The term ‘mortgage5 backed security with a clean-up call option’ means 

6 any mortgage-backed security under which there is 

7 an option or right to redeem all remaining classes of 

8 such security at such time when the amount of the 

9 aggregate remaining principal would be less than the 

10 amount of the optional redemption or clean-up call 

11 percentage, as defined in the applicable circular of12 fering or offering circular supplement. 

13 ‘‘(3) EXCESS PROCEEDS.—The term ‘excess 

14 proceeds’ means, with respect to exercise of any 

15 clean-up call option, the excess of the net proceeds 

16 from the sale of the collateral underlying the mort17 gage-backed security with such option, and the re18 demption price as defined in the applicable offering 

19 circular or offering circular supplement.’’. 

Æ 


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