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[110th Congress Public Law 289]
[From the U.S. Government Printing Office]

[DOCID: f:publ289.110]

[[Page 2653]]

                   HOUSING AND ECONOMIC RECOVERY ACT 
                                 OF 2008

[[Page 122 STAT. 2654]]

Public Law 110-289
110th Congress

                                 An Act

 
 To provide needed housing reform and for other purposes. <<NOTE: July 
                       30, 2008 -  [H.R. 3221]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress <<NOTE: Housing and Economic 
Recovery Act of 2008.>> assembled,

SECTION. 1. <<NOTE: 42 USC 4501 note.>> 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 Content.--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.
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.

[[Page 122 STAT. 2655]]

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.
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.

[[Page 122 STAT. 2656]]

                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.

               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.

[[Page 122 STAT. 2657]]

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.

                   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.

[[Page 122 STAT. 2658]]

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.

   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.
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.

[[Page 122 STAT. 2659]]

                      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.

 DIVISION A--HOUSING <<NOTE: Federal Housing Finance Regulatory Reform 
Act of 2008.>>  FINANCE REFORM

SEC. 1001. <<NOTE: 12 USC 4501 note.>> 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;

[[Page 122 STAT. 2660]]

            (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, limited-life 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--
                          ``(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 case-by-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

[[Page 122 STAT. 2661]]

                      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 `limited-
        life regulated entity' means an entity established by the Agency 
        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) <<NOTE: 12 USC 4511 note.>> 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.) <<NOTE: 12 USC 4511, 4512.>>  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

[[Page 122 STAT. 2662]]

        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).

``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 <<NOTE: President.>>  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 <<NOTE: Effective date. Termination date.>>  
        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.--

[[Page 122 STAT. 2663]]

            ``(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.
            ``(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 <<NOTE: President.>>  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

[[Page 122 STAT. 2664]]

                    ``(B) to ensure that--
                          ``(i) each regulated entity operates in a safe 
                      and sound manner, including maintenance of 
                      adequate capital and internal controls;
                          ``(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''.

[[Page 122 STAT. 2665]]

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:

``SEC. 1313A. <<NOTE: 12 USC 4513a.>> FEDERAL HOUSING FINANCE OVERSIGHT 
            BOARD.

    ``(a) In General.--There <<NOTE: Establishment.>>  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) <<NOTE: Notices.>>  Meetings.--
            ``(1) In general.--The <<NOTE: Deadlines.>>  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 <<NOTE: Deadline.>>  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:

[[Page 122 STAT. 2666]]

            ``(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;
                    ``(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.--

[[Page 122 STAT. 2667]]

                    ``(A) First tier.--
                          ``(i) In general.--A violation described in 
                      paragraph (1) shall be subject to a penalty of not 
                      more than $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 <<NOTE: Deadline.>>  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. <<NOTE: Applicability.>> 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 <<NOTE: 12 USC 4547, 4548.>>  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

[[Page 122 STAT. 2668]]

                    (B) by striking ``to determine the condition of an 
                enterprise for the purpose of ensuring its financial 
                safety and soundness'' and inserting ``or appropriate'';
            (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, Economists, 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 Examiners.--
            ``(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 Entities.--
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 <<NOTE: Establishment. Regulations.>>  
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.''.

[[Page 122 STAT. 2669]]

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:

    ``(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

[[Page 122 STAT. 2670]]

        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 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.

[[Page 122 STAT. 2671]]

                    ``(B) Government obligations.--Pursuant to a request 
                under subparagraph (A), the Secretary of the Treasury 
                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 <<NOTE: Reports.>>  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 <<NOTE: Deadline.>>  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 <<NOTE: Deadline. Records.>>  
        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

[[Page 122 STAT. 2672]]

        transactions with the balances 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 <<NOTE: Guidelines.>>  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:

[[Page 122 STAT. 2673]]

``SEC. 1313B. PRUDENTIAL <<NOTE: 12 USC 4513b.>> MANAGEMENT AND 
            OPERATIONS STANDARDS.

    ``(a) Standards.--The <<NOTE: Regulations. Guidelines.>>  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 <<NOTE: Regulations.>>  Director shall by regulation 
                establish deadlines that--
                          ``(i) provide the regulated entities with 
                      reasonable time to submit plans required under 
                      subparagraph (A), and generally require a 
                      regulated entity to submit

[[Page 122 STAT. 2674]]

                      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 <<NOTE: Applicability.>>  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.''.

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--

[[Page 122 STAT. 2675]]

            (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. <<NOTE: 12 USC 4624.>> REVIEWS OF ENTERPRISE ASSETS AND 
            LIABILITIES.

    ``(a) In General.--The <<NOTE: Regulations. Criteria.>>  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 <<NOTE: Deadline. Standards. 12 USC 
4624 note.>>  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 <<NOTE: Regulations.>>  Director 
        shall, by regulation, establish risk-based capital requirements 
        for the enterprises to ensure that the enterprises operate in a 
        safe and sound manner, 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 <<NOTE: Standards.>>  
        Director shall establish risk-based capital standards under 
        section 6 of the Federal Home Loan Bank Act for the Federal Home 
        Loan Banks.

[[Page 122 STAT. 2676]]

    ``(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 <<NOTE: Regulations.>>  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 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);

[[Page 122 STAT. 2677]]

                    ``(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 <<NOTE: 15 USC 7800.>> 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 <<NOTE: Deadline.>>  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 
        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.''.

[[Page 122 STAT. 2678]]

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 
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).''.
            (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,

[[Page 122 STAT. 2679]]

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 <<NOTE: Regulations.>>  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
                    ``(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

[[Page 122 STAT. 2680]]

                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
                          ``(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

[[Page 122 STAT. 2681]]

                          ``(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. <<NOTE: 12 USC 4642.>> 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. <<NOTE: Procedures.>>  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, 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

[[Page 122 STAT. 2682]]

        ``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 <<NOTE: Establishment.>>  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 <<NOTE: Standards. Procedures.>>  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, broker-dealers, 
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 <<NOTE: Contracts.>>  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 Director 
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:

[[Page 122 STAT. 2683]]

    ``(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;
                          ``(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.

[[Page 122 STAT. 2684]]

                          ``(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 
        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:

[[Page 122 STAT. 2685]]

    ``(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.
                          ``(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.--

[[Page 122 STAT. 2686]]

                    ``(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.--
                    ``(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;

[[Page 122 STAT. 2687]]

                          ``(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.--
                    ``(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

[[Page 122 STAT. 2688]]

        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.
                    ``(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.''.

[[Page 122 STAT. 2689]]

             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 <<NOTE: 12 USC 4541.>> striking the heading for the 
        part and inserting the following:

           ``PART 2--ADDITIONAL AUTHORITIES OF THE DIRECTOR'';

            and
            (2) by striking <<NOTE: 12 USC 4541, 4542.>>  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 <<NOTE: 12 USC 4543, 4546-
        4548, 4566.>>  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. <<NOTE: 12 USC 4541.>> 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.
    ``(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

[[Page 122 STAT. 2690]]

            ``(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 <<NOTE: Publication. Notice.>>  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 <<NOTE: Deadline.>>  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, 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.

[[Page 122 STAT. 2691]]

            ``(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). <<NOTE: Regulations.>>  The Director 
                shall establish, by regulation, the form and content of 
                such written notice.
                    ``(B) Director determination.--
                Not <<NOTE: Deadline. Notification.>>  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: <<NOTE: Effective dates.>>  ``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-
        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

[[Page 122 STAT. 2692]]

        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 <<NOTE: 12 USC 1717 note.>> 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: <<NOTE: Effective dates.>>  ``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-
        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 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

[[Page 122 STAT. 2693]]

        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 <<NOTE: 12 USC 1454 note.>> 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. <<NOTE: 12 USC 4542.>> HOUSING PRICE INDEX.

    ``The <<NOTE: Assessments.>>  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.
    (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. <<NOTE: 12 USC 4544.>> 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--

[[Page 122 STAT. 2694]]

                          ``(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.

    ``(c) Data Collection and Reporting.--
            ``(1) In general.--To <<NOTE: Deadlines. Surveys.>>  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;

[[Page 122 STAT. 2695]]

                          ``(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.'';
            (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 <<NOTE: Deadline.>>  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:

[[Page 122 STAT. 2696]]

    ``(d) Mortgage <<NOTE: Public information. Regulations. Order.>>  
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. <<NOTE: 12 USC 4561.>> ESTABLISHMENT OF HOUSING GOALS.

    ``(a) In General.--The <<NOTE: Regulations. Effective date.>>  
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 <<NOTE: Deadline. Regulations.>>  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 <<NOTE: Deadline. Review.>>  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 to 
determine the feasibility of such goals given the market conditions 
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 <<NOTE: Records.>>  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

[[Page 122 STAT. 2697]]

        exists pursuant to the data provided by an enterprise in 
        paragraph (1), the Director shall_
                    ``(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 property-
        related or financial information that would enable a borrower to 
        be identified shall be made public.

``SEC. 1332. <<NOTE: 12 USC 4562.>> SINGLE-FAMILY HOUSING GOALS.

    ``(a) In General.--The <<NOTE: Regulations.>>  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, single-
        family 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 (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 <<NOTE: Reports. Deadline.>>  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.--

[[Page 122 STAT. 2698]]

            ``(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 <<NOTE: Regulations.>>  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 originated in such year that serve 
                      such type of family, or
                          ``(ii) the number of conventional, conforming, 
                      single-family, 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 <<NOTE: Regulations.>>  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.

[[Page 122 STAT. 2699]]

                          ``(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 <<NOTE: Deadline.>>  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 <<NOTE: Deadline.>>  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).
            ``(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

[[Page 122 STAT. 2700]]

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. <<NOTE: 12 USC 4563.>> MULTIFAMILY SPECIAL AFFORDABLE 
            HOUSING GOAL.

    ``(a) Establishment of Goal.--
            ``(1) In general.--The <<NOTE: Regulations.>>  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 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

[[Page 122 STAT. 2701]]

                    ``(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. <<NOTE: 12 USC 4564.>> 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 constraint of liquidity, over-investment in certain market 
        segments, 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 <<NOTE: Public comment.>>  Director shall, 
promptly upon receipt of a petition regarding a reduction, seek public 
comment on the reduction for a period of 30 days. <<NOTE: Deadline.>>  
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_
            (1) in section 1335(a) (12 U.S.C. 4565(a)), in the matter 
        preceding paragraph (1), by striking ``low- and moderate-income

[[Page 122 STAT. 2702]]

        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.
            ``(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.

[[Page 122 STAT. 2703]]

            ``(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.
                    ``(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

[[Page 122 STAT. 2704]]

                    (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 under_
                          ``(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;
                          ``(v) the supportive housing program for 
                      persons with disabilities under section 811 of the 
                      Cranston-Gonzalez National Affordable Housing Act;
                          ``(vi) the programs under title IV of the 
                      McKinney-Vento 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 <<NOTE: Guidelines.>>  
                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

[[Page 122 STAT. 2705]]

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 <<NOTE: Regulations.>>  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 consideration_
                    ``(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 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)

[[Page 122 STAT. 2706]]

        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 
amended_
            (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) 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

[[Page 122 STAT. 2707]]

                of the enterprise to comment on the proposed 
                determination or action of the Director.
            ``(3) Consideration of information and final 
        determination.--
                    ``(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 substantial 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

[[Page 122 STAT. 2708]]

                    ``(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 <<NOTE: Review. Deadline.>>  
        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.
            ``(6) Resubmission.--If <<NOTE: Deadline.>>  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. <<NOTE: 12 USC 4581.>> 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--

[[Page 122 STAT. 2709]]

            ``(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.
            ``(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:

[[Page 122 STAT. 2710]]

``SEC. 1345. <<NOTE: 12 USC 4585.>> 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
            ``(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 <<NOTE: Standards.>>  Director 
        shall establish standards and procedures governing the 
        imposition of civil money penalties under this section. Such 
        standards and procedures--
                    ``(A) <<NOTE: Records.>>  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,

[[Page 122 STAT. 2711]]

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 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. <<NOTE: 12 USC 4567.>> 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--

[[Page 122 STAT. 2712]]

                    ``(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.

    ``(c) <<NOTE: Regulations.>>  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. <<NOTE: 12 USC 4568.>> 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

[[Page 122 STAT. 2713]]

                    ``(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
                    ``(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 Self-
        Determination 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 <<NOTE: Regulations. Deadline. Disadvantaged 
                persons.>>  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:

[[Page 122 STAT. 2714]]

                          ``(i) The ratio of the shortage of standard 
                      rental units both affordable and available to 
                      extremely low-income 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, (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 <<NOTE: Deadline. Federal 
                Register, publication.>>  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 <<NOTE: State and local 
                governments.>>  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.

[[Page 122 STAT. 2715]]

                    ``(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 accordance 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 <<NOTE: Notification. Public comments.>>  
                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 <<NOTE: Public information.>>  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

[[Page 122 STAT. 2716]]

                    ``(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) <<NOTE: Disadvantaged persons.>>  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
                    ``(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 Cranston-
                                Gonzalez 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

[[Page 122 STAT. 2717]]

        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--
                    ``(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 <<NOTE: Regulations.>> 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.

[[Page 122 STAT. 2718]]

                    ``(C) Use of returns.--The <<NOTE: Regulations.>>  
                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 <<NOTE: Regulations.>>  
                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;
                                    ``(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

[[Page 122 STAT. 2719]]

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 amount of all reductions for all State or State 
                designated entities for such year pursuant to 
                subparagraph (A); or
            ``(2) <<NOTE: Payments.>>  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) <<NOTE: Requirements.>>  establish 
                      minimum requirements for agreements, between the 
                      State or State designated entity and recipients, 
                      regarding assistance under this section, which 
                      shall include--
                                    
                                ``(I) <<NOTE: Reports. Recordkeeping.>>  
                                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 <<NOTE: Deadline.>>  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

[[Page 122 STAT. 2720]]

                      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) <<NOTE: Notification.>>  the 
                                State or State designated entity 
                                provides notification of the 
                                determination to the Secretary 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 <<NOTE: Notification.>>  
                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.

[[Page 122 STAT. 2721]]

            ``(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 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 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.--

[[Page 122 STAT. 2722]]

            ``(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) <<NOTE: Deadline.>>  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;
                    ``(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

[[Page 122 STAT. 2723]]

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).
    ``(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 <<NOTE: Records.>>  
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. <<NOTE: 12 USC 4569.>> 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 <<NOTE: Grants.>>  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 <<NOTE: Requirements.>>  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

[[Page 122 STAT. 2724]]

            ``(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.
            ``(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 <<NOTE: Regulations.>>  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

[[Page 122 STAT. 2725]]

        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 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 <<NOTE: Regulations.>>  
        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 Sec. 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) <<NOTE: Records.>>  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

[[Page 122 STAT. 2726]]

                          ``(ii) establish minimum requirements for 
                      agreements, between the grantee and the Capital 
                      Magnet Fund, regarding assistance from the Capital 
                      Magnet Fund, which shall include--
                                    ``(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) <<NOTE: Deadline.>>  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

[[Page 122 STAT. 2727]]

                Statements on Standards for Accounting and Review 
                Services, issued by the American Institute of Certified 
                Public Accountants; and
                    ``(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. <<NOTE: 12 USC 1701x note.>> 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--

[[Page 122 STAT. 2728]]

                    (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;
                    (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 <<NOTE: Grants.>>  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. <<NOTE: 12 USC 4511 note.>> TRANSFER AND RIGHTS OF CERTAIN 
            HUD EMPLOYEES.

    (a) Transfer.--Each <<NOTE: Deadline.>>  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

[[Page 122 STAT. 2729]]

Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 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.--

[[Page 122 STAT. 2730]]

                    (A) In general.--The <<NOTE: Payments.>>  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 <<NOTE: Deadline.>>  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 <<NOTE: Regulations.>>  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 <<NOTE: Deadline. 12 USC 4613 note.>>  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:

    ``(b) Federal Home Loan Banks.--

[[Page 122 STAT. 2731]]

            ``(1) Establishment and criteria.--
        For <<NOTE: Regulations.>>  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.

[[Page 122 STAT. 2732]]

            ``(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 <<NOTE: Deadline.>>  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) <<NOTE: Review.>>  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

[[Page 122 STAT. 2733]]

                rate sufficient 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 
                ``Discretionary'';
                    (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.

[[Page 122 STAT. 2734]]

                    ``(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.
                    ``(B) Substantial dissipation.--Substantial 
                dissipation of assets or earnings due to--

[[Page 122 STAT. 2735]]

                          ``(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 <<NOTE: Notification.>>  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.
            ``(4) Mandatory receivership.--

[[Page 122 STAT. 2736]]

                    ``(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) <<NOTE: Deadlines.>>  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 
                already 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 <<NOTE: Deadline.>>  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 appointment 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 of 
        the United States or any State in the exercise of the rights, 
        powers, and privileges of the Agency.

[[Page 122 STAT. 2737]]

    ``(b) Powers and Duties of the Agency as Conservator or Receiver.--
            ``(1) Rulemaking authority of the agency.--
        The <<NOTE: Regulations.>>  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 
                shareholders 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 exercise of any other rights or 
                privileges granted to the Agency under this paragraph.

[[Page 122 STAT. 2738]]

                    ``(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 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

[[Page 122 STAT. 2739]]

                      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 <<NOTE: Publication. Deadline.>>  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 <<NOTE: Notice.>>  
                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 <<NOTE: Deadline.>> 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 <<NOTE: Deadline. Notification.>>  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.
                          ``(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

[[Page 122 STAT. 2740]]

                      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 
                period.--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 
                      creditors.--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.
                    ``(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

[[Page 122 STAT. 2741]]

                      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 <<NOTE: Deadline.>>  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, 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 <<NOTE: Procedures.>>  Agency shall establish a 
                procedure for expedited relief outside of the routine 
                claims process established under paragraph (5) for 
                claimants who--

[[Page 122 STAT. 2742]]

                          ``(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 <<NOTE: Deadline.>>  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) <<NOTE: Notification.>>  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 <<NOTE: Deadline.>>  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 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--

[[Page 122 STAT. 2743]]

                          ``(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.
                    ``(B) Rights and remedies of conservator or 
                receiver.--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

[[Page 122 STAT. 2744]]

                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 
                accrues.--For <<NOTE: Effective date.>>  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
                          ``(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.

[[Page 122 STAT. 2745]]

                    ``(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 
                entity-affiliated 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, 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

[[Page 122 STAT. 2746]]

                          ``(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 <<NOTE: Applicability.>>  
        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.--
                          ``(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

[[Page 122 STAT. 2747]]

                      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 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

[[Page 122 STAT. 2748]]

                    ``(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
                          ``(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

[[Page 122 STAT. 2749]]

                                    ``(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) <<NOTE: Payments.>>  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
                          ``(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--

[[Page 122 STAT. 2750]]

                                    ``(I) 
                                shall <<NOTE: Payments.>> 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--
                          ``(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) <<NOTE: Payments.>>  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 subsequent 
                repudiation.--The acceptance by the conservator or 
                receiver of services referred to under subparagraph (B)

[[Page 122 STAT. 2751]]

                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 to the avoidance of preferential or 
                      fraudulent transfers, 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.

[[Page 122 STAT. 2752]]

                          ``(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 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

[[Page 122 STAT. 2753]]

                                    ``(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;
                                    ``(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,

[[Page 122 STAT. 2754]]

                                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), (II), 
                                (III), or (IV), including any guarantee 
                                or reimbursement 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

[[Page 122 STAT. 2755]]

                                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
                                    ``(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

[[Page 122 STAT. 2756]]

                                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 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.

[[Page 122 STAT. 2757]]

                    ``(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).
                    ``(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

[[Page 122 STAT. 2758]]

                      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.-- 
                <<NOTE: Deadline. Contracts.>> 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.--
                          ``(i) <<NOTE: Effective dates.>>  
                      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

[[Page 122 STAT. 2759]]

                      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 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.-- <<NOTE: Effective 
                      dates.>> 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

[[Page 122 STAT. 2760]]

                                    ``(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.
            ``(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

[[Page 122 STAT. 2761]]

                    ``(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.-- 
        <<NOTE: Applicability.>> 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.--
                    ``(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

[[Page 122 STAT. 2762]]

                      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 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 
                regulated 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 limited-life 
                      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 limited-life 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 
                limited-life 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.

[[Page 122 STAT. 2763]]

                    ``(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 
        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.-- <<NOTE: Deadline.>> 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.-- 
                                <<NOTE: Deadline.>> 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.

[[Page 122 STAT. 2764]]

                          ``(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).
                          ``(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

[[Page 122 STAT. 2765]]

                      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;
                                    ``(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--

[[Page 122 STAT. 2766]]

                          ``(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.
                    ``(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 mortgage-
                      backed 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.

[[Page 122 STAT. 2767]]

            ``(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.
            ``(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

[[Page 122 STAT. 2768]]

        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.
            ``(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-than-
satisfactory 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

[[Page 122 STAT. 2769]]

                          (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'';
            (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

[[Page 122 STAT. 2770]]

                    (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--
            (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. <<NOTE: 12 USC 4636a.>> 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.--

[[Page 122 STAT. 2771]]

            ``(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--
                    ``(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,

[[Page 122 STAT. 2772]]

        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--
            ``(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-Affiliated 
Party.-- <<NOTE: Deadline.>> 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,

[[Page 122 STAT. 2773]]

                with the commission of or participation in a crime 
                involving dishonesty or breach of trust which is 
                punishable by 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

[[Page 122 STAT. 2774]]

                board shall vest in and be exercisable by the director 
                or directors on 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) <<NOTE: Deadline. Notification.>> 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), <<NOTE: 12 USC 4517.>> by 
                striking ``section 1379B'' and inserting ``section 
                1379D'';
                    (B) in section <<NOTE: 12 USC 4633.>> 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

[[Page 122 STAT. 2775]]

                          (iii) in paragraph (4), by inserting ``or 
                      removal or prohibition'' after ``cease and 
                      desist''; and
                    (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;

[[Page 122 STAT. 2776]]

                    ``(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
                    (C) by inserting ``or entity-affiliated party'' 
                before ``has been given'';
            (4) in subsection (d)--

[[Page 122 STAT. 2777]]

                    (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. <<NOTE: 12 USC 4636b.>> 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 <<NOTE: 12 USC 4637.>> (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 <<NOTE: 12 USC 4638.>> (as so 
        designated by this Act), by striking ``an enterprise'' and 
        inserting ``a regulated entity'';
            (3) in section 1379B(c) <<NOTE: 12 USC 4639.>> (as so 
        designated by this Act), by striking ``enterprise'' and 
        inserting ``regulated entity''; and
            (4) in section 1379D <<NOTE: 12 USC 4641.>> (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'';
            (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.''.

[[Page 122 STAT. 2778]]

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.''.

                     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)--

[[Page 122 STAT. 2779]]

                          (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'';
                    (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''.

[[Page 122 STAT. 2780]]

    (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 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,

[[Page 122 STAT. 2781]]

        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
                          (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 <<NOTE: 12 USC 1723 note.>> 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.--

[[Page 122 STAT. 2782]]

            (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 <<NOTE: 12 USC 1452 note.>> 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. <<NOTE: 5 USC 13132 note.>> 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 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

[[Page 122 STAT. 2783]]

            ``(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 Interest.--
            ``(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.
            ``(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

[[Page 122 STAT. 2784]]

                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 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--

[[Page 122 STAT. 2785]]

                          (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 Federal 
        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--

[[Page 122 STAT. 2786]]

            (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 
                Director''; 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 <<NOTE: 12 USC 1422 et al.>> ``the Board'' 
        each place that term appears and inserting ``the Director'';
            (9) by <<NOTE: 12 USC 1427 et al.>> striking ``The Board'' 
        each place that term appears and inserting ``The Director'';
            (10) by <<NOTE: 12 USC 1422 et al.>> 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 <<NOTE: 12 USC 1430 et al.>> striking ``Federal 
        Housing Finance Board'' each place that term appears and 
        inserting ``Director''.

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. <<NOTE: 12 USC 1430c.>> HOUSING GOALS.

    ``(a) In General.--The Director shall establish housing goals with 
respect to the purchase of mortgages, if any, by the Federal

[[Page 122 STAT. 2787]]

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. <<NOTE: 12 USC 1440a.>> SHARING OF INFORMATION AMONG FEDERAL 
            HOME LOAN BANKS.

    ``(a) <<NOTE: Reports. Records.>> 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.--
            ``(1)  <<NOTE: Regulations.>> 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

[[Page 122 STAT. 2788]]

        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. <<NOTE: 12 USC 1426a.>> 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.
            (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--

[[Page 122 STAT. 2789]]

                    (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.--
            ``(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.''.

[[Page 122 STAT. 2790]]

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:
                    ``(D)  <<NOTE: Deadline.>> 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.--

[[Page 122 STAT. 2791]]

            ``(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 <<NOTE: 12 USC 
1441b.>> 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. <<NOTE: Deadline. Notification.>> 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 <<NOTE: Records.>> 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.''.

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;

[[Page 122 STAT. 2792]]

            (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. 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''.

[[Page 122 STAT. 2793]]

    (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)  <<NOTE: Deadline.>> 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) <<NOTE: Recommen- dations.>> 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) <<NOTE: Public comment.>> 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) <<NOTE: Effective date.>> 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.''.

[[Page 122 STAT. 2794]]

 TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND 
                    THE FEDERAL HOUSING FINANCE BOARD

                            Subtitle A--OFHEO

SEC. 1301. <<NOTE: 12 USC 4511 note.>> ABOLISHMENT OF OFHEO.

    (a) In <<NOTE: Effective date.>> 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)  <<NOTE: Effective date.>> 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 as is 
reasonable to facilitate the orderly transfer of functions

[[Page 122 STAT. 2795]]

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, 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. <<NOTE: 12 USC 4511 note.>> 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
            (2) is in effect on the effective date of the abolishment 
        under section 1301(a).

[[Page 122 STAT. 2796]]

SEC. 1303. <<NOTE: 12 USC 4511 note.>> TRANSFER AND RIGHTS OF EMPLOYEES 
            OF OFHEO.

    (a)  <<NOTE: Deadline.>> 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)  <<NOTE: Effective date.>> 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)  <<NOTE: Effective date.>> 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--
                    (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.

[[Page 122 STAT. 2797]]

            (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)  <<NOTE: Deadline.>> 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. <<NOTE: 12 USC 4511 note.>> 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. <<NOTE: 12 USC 4511 note.>> ABOLISHMENT OF THE FEDERAL 
            HOUSING FINANCE BOARD.

    (a)  <<NOTE: Effective date. Termination date.>> 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)  <<NOTE: Effective date.>> 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)  <<NOTE: Deadline.>> 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 
        Board before the expiration of the 1-year period under 
        subsection (a) in connection with functions that are transferred 
        to the Director shall--

[[Page 122 STAT. 2798]]

                    (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. <<NOTE: 12 USC 4511 note.>> CONTINUATION AND COORDINATION OF 
            CERTAIN ACTIONS.

    (a)  <<NOTE: Regulations. Orders.>> 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. <<NOTE: 12 USC 4511 note.>> TRANSFER AND RIGHTS OF EMPLOYEES 
            OF THE FEDERAL HOUSING FINANCE BOARD.

    (a)  <<NOTE: Deadline.>> 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.

    (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.

[[Page 122 STAT. 2799]]

            (2)  <<NOTE: Effective date.>> 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)  <<NOTE: Deadline.>> 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.

SEC. 1314. <<NOTE: Effective date. 12 USC 4511 note.>> 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.

[[Page 122 STAT. 2800]]

                      TITLE IV--HOPE FOR HOMEOWNERS

SEC. 1401. <<NOTE: 12 USC 1701 note.>> 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. <<NOTE: 12 USC 1715z-23.>> 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 Requirements.--
            ``(1) Duties of the board.--In order to carry out the 
        purposes of the HOPE for Homeowners Program, the Board shall--
                    ``(A) <<NOTE: Standards.>> establish requirements 
                and standards for the program; and
                    ``(B) <<NOTE: Regulations.>> 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 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:

[[Page 122 STAT. 2801]]

            ``(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)  <<NOTE: Records.>> 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 mortgage 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

[[Page 122 STAT. 2802]]

                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)  <<NOTE: Standards. Policies.>> 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 
        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;

[[Page 122 STAT. 2803]]

                    ``(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)  <<NOTE: Procedures. Standards.>> 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;
                          ``(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;

[[Page 122 STAT. 2804]]

                          ``(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 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)  <<NOTE: Regulations. Orders.>> 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.

[[Page 122 STAT. 2805]]

            ``(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)  <<NOTE: Effective dates.>> 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 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

[[Page 122 STAT. 2806]]

                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.
            ``(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--

[[Page 122 STAT. 2807]]

            ``(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 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.

[[Page 122 STAT. 2808]]

            ``(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 transportation 
        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.
    ``(v) Rule of Construction Related to Insurance of Mortgages.--
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

[[Page 122 STAT. 2809]]

                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. <<NOTE: 15 USC 1639a.>> 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
            ``(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

[[Page 122 STAT. 2810]]

                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)  <<NOTE: Effective date.>> 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) <<NOTE: Certification.>> 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. <<NOTE: 12 USC 5101 note.>> 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. <<NOTE: States. 12 USC 5101 note.>> 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:
            (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

[[Page 122 STAT. 2811]]

        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. <<NOTE: 12 USC 5102.>> 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
                          (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

[[Page 122 STAT. 2812]]

                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, 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--

[[Page 122 STAT. 2813]]

                          (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 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

[[Page 122 STAT. 2814]]

                shall use unique identifiers in lieu of social security 
                numbers.

SEC. 1504. <<NOTE: 12 USC 5103.>> 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 State-licensed 
        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. <<NOTE: 12 USC 5104.>> 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--
                    (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.

[[Page 122 STAT. 2815]]

            (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 pre-licensure 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.--
            (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.--

[[Page 122 STAT. 2816]]

                    (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. <<NOTE: 12 USC 5105.>> 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;
                    (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.

[[Page 122 STAT. 2817]]

            (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. <<NOTE: 12 USC 5106.>> 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. <<NOTE: Deadline.>> 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
                    (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)  <<NOTE: Public information.>> 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

[[Page 122 STAT. 2818]]

        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)  <<NOTE: Information technology.>> 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 <<NOTE: States. Deadlines. 12 USC 5107.>> 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 State-licensed 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 State-licensed loan 
originators.
    (c)  <<NOTE: Public infomation.>> 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 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) <<NOTE: Reports.>> The State loan originator supervisory 
        authority is required to regularly report violations of such 
        law, as well

[[Page 122 STAT. 2819]]

        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. <<NOTE: 12 USC 5108.>> 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.

SEC. 1510. <<NOTE: 12 USC 5109.>> 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. <<NOTE: 12 USC 5110.>> 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 State-licensed 
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

[[Page 122 STAT. 2820]]

and distributing information between the Department of Justice and the 
appropriate State agencies.

SEC. 1512. <<NOTE: 12 USC 5111.>> CONFIDENTIALITY OF INFORMATION.

    (a) System <<NOTE: Applicability.>> 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 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. <<NOTE: 12 USC 5112.>> 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.

[[Page 122 STAT. 2821]]

SEC. 1514. <<NOTE: 12 USC 5113.>> 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; evidence.--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 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

[[Page 122 STAT. 2822]]

        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)  <<NOTE: Notification. Deadline.>> 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. <<NOTE: Effective date.>> A 
        temporary order shall become effective upon service upon the 
        respondent and, unless set aside, 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,

[[Page 122 STAT. 2823]]

                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 <<NOTE: Notification. Hearings.>> 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 failed to comply with any requirement of this 
        title or any regulation 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. <<NOTE: 12 USC 5114.>> 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) <<NOTE: Records.>> 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

[[Page 122 STAT. 2824]]

        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. <<NOTE: 12 USC 5115.>> 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)  <<NOTE: Deadline.>> 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. <<NOTE: 12 USC 5116.>> 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)  <<NOTE: Deadline.>> Preliminary Report to Congress.--Not later 
than 6 months after the date of enactment of this title, the Secretary 
shall submit to Congress a preliminary report regarding the study 
required by this section.

    (c)  <<NOTE: Deadline.>> 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. <<NOTE: 12 USC 4514a.>> 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)  <<NOTE: Regulations. Orders. Procedures. Deadline.>> 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.

[[Page 122 STAT. 2825]]

    (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)  <<NOTE: Deadline.>> Report.--The Director shall submit a report 
on the study conducted under this section 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 1 year after 
the date of enactment of this Act.

SEC. 1603. <<NOTE: 42 USC 1437f note.>> 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);

[[Page 122 STAT. 2826]]

            (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 
        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'';

[[Page 122 STAT. 2827]]

            (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'';
                          (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'';

[[Page 122 STAT. 2828]]

                    (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;
                          (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;

[[Page 122 STAT. 2829]]

                    (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 
        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.''.

[[Page 122 STAT. 2830]]

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-- <<NOTE: Foreclosure Prevention Act of 2008.>> FORECLOSURE 
PREVENTION

SEC. 2001. <<NOTE: 12 USC 1701 note.>> 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.

                 TITLE I--FHA MODERNIZATION ACT OF 2008

SEC. 2101. <<NOTE: 12 USC 1701 note.>> SHORT TITLE.

    This title may be cited as the ``FHA Modernization Act of 2008''.

   Subtitle <<NOTE: Building American Homeownership Act of 2008.>> A--
Building American Homeownership

SEC. 2111. <<NOTE: 12 USC 1701 note.>> 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

[[Page 122 STAT. 2831]]

                          ``(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:

    ``(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 <<NOTE: 12 USC 1709 note.>> 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,

[[Page 122 STAT. 2832]]

                      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).
                <<NOTE: Applicability. Effective date.>> 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''.

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--

[[Page 122 STAT. 2833]]

                    (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 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. <<NOTE: Reports.>> 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

[[Page 122 STAT. 2834]]

        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, program participation, or premiums, and the 
                financial soundness of the Fund is maintained.
        <<NOTE: Deadline.>> 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) <<NOTE: Deadline.>> 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

[[Page 122 STAT. 2835]]

                    (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)''.

    (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''.

[[Page 122 STAT. 2836]]

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)--
                    (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. <<NOTE: Standards. Deadline.>> 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

[[Page 122 STAT. 2837]]

        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
                    ``(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 Underwriting 
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

[[Page 122 STAT. 2838]]

            (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--
                    ``(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 Availability.--
            (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.

[[Page 122 STAT. 2839]]

            (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--
                          ``(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. <<NOTE: 12 USC 1715z-24.>> 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

[[Page 122 STAT. 2840]]

any new commitment to insure any mortgage, or newly insure any mortgage, 
pursuant to the automated process established under this section.''.
    (b) GAO Report.-- <<NOTE: Deadline.>> 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.

SEC. 2125. <<NOTE: 12 USC 1710 note.>> 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) <<NOTE: Plans.>> develop and implement a plan to improve 
        the Federal Housing Administration's loss mitigation process; 
        and
            (2) <<NOTE: Reports.>> 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.-- <<NOTE: Regulations.>> 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

[[Page 122 STAT. 2841]]

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. <<NOTE: Deadline. Reports.>> 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.

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. <<NOTE: 12 USC 1701x note.>> 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--

[[Page 122 STAT. 2842]]

            (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 insurance 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 <<NOTE: Deadline.>> 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. <<NOTE: 12 USC 1709 note.>> 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

[[Page 122 STAT. 2843]]

            (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) <<NOTE: Notification.>> 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) <<NOTE: Federal 
                Register, publication.>> 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 premiums 
would cause substantial damage to the solvency of multifamily housing 
programs under the National Housing Act.

SEC. 2131. <<NOTE: 12 USC 1701 note.>> 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. <<NOTE: Requirements. Notification. Effective date. 12 USC 
            1701 note.>> 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.-- <<NOTE: Effective date.>> 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.-- 
<<NOTE: Effective date.>> 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.

[[Page 122 STAT. 2844]]

Subtitle B-- <<NOTE: FHA Manufactured Housing Loan Modernization Act of 
2008.>> Manufactured Housing Loan Modernization

SEC. 2141. <<NOTE: 12 USC 1701 note.>> SHORT TITLE.

    This subtitle may be cited as the ``FHA Manufactured Housing Loan 
Modernization Act of 2008''.

SEC. 2142. <<NOTE: 12 USC 1703 note.>> 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.

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 <<NOTE: Contracts.>> 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.-- <<NOTE: 12 USC 1703 note.>> 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'';

[[Page 122 STAT. 2845]]

            (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. <<NOTE: Deadline.>> 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.''

    (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:

     <<NOTE: Regulations.>> ``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).

[[Page 122 STAT. 2846]]

            ``(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''.

    (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

[[Page 122 STAT. 2847]]

        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.''.

    (b) Timing.--Not <<NOTE: 12 USC 1703 note.>> 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. <<NOTE: 12 USC 1706f.>> 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

[[Page 122 STAT. 2848]]

        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 
        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 <<NOTE: Definition.>> 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

[[Page 122 STAT. 2849]]

        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. <<NOTE: 10 USC 992 note.>> 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 
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 Interest 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.

[[Page 122 STAT. 2850]]

            ``(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 <<NOTE: 50 USC app. 533 note.>> 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. <<NOTE: 42 USC 5301 note.>> 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 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)  <<NOTE: State and local governments.>> 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)  <<NOTE: Deadline.>> 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)  <<NOTE: Deadline.>> 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.--

[[Page 122 STAT. 2851]]

            (1)  <<NOTE: Deadline.>> 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) <<NOTE: Urban and rural areas.>>  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, 
                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)  <<NOTE: Discounts.>> 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 
                redevelopment.--

[[Page 122 STAT. 2852]]

                          (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, 
                                unless 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 <<NOTE: State and 
                local governments.>> .--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)  <<NOTE: State and local governments.>> 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.

[[Page 122 STAT. 2853]]

            (2) Notice.-- <<NOTE: Deadline.>> 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 families whose incomes do 
                      not exceed 50 percent of area median income.
                    (B)  <<NOTE: Regulations. Orders.>> 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. <<NOTE: 42 USC 5301 note.>> 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. <<NOTE: 42 USC 5301 note.>> 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. <<NOTE: 42 USC 5301 note.>> 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.

[[Page 122 STAT. 2854]]

    (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. <<NOTE: 42 USC 5301 note.>> 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:  <<NOTE: Disadvantaged persons.>> 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 low-income homeowners or provide such services in 
neighborhoods with high concentrations of minority and low-income 
homeowners:  <<NOTE: Grants.>> 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:  <<NOTE: Legal 
assistance. Deadline.>> 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. <<NOTE: Appropriations authorization.>> HOUSING COUNSELING 
            RESOURCES.

    There are appropriated out of any money in the Treasury not 
otherwise appropriated for the fiscal year 2008, for an additional

[[Page 122 STAT. 2855]]

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;
            (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. <<NOTE: 15 USC 1601 note.>> SHORT TITLE.

    This title may be cited as the ``Mortgage Disclosure Improvement Act 
of 2008''.

SEC. 2502. <<NOTE: Creditors.>> 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

[[Page 122 STAT. 2856]]

                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 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. <<NOTE: Consumer 
                testing.>> 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 <<NOTE: Deadline.>> 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 <<NOTE: Definition. Regulations.>> term 
                `bona fide personal emergency' may be further defined in 
                regulations issued by the Board;

[[Page 122 STAT. 2857]]

                    ``(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
            (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 <<NOTE: 15 USC 1638 note.>> 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''.

[[Page 122 STAT. 2858]]

                   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.''.

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:

``Sec. 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

[[Page 122 STAT. 2859]]

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)--
                          (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

[[Page 122 STAT. 2860]]

                          (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:

``Sec. 2101. Acquisition and adaptation of housing: eligible veterans''.

            (B) The heading of section 2102A of such title is amended to 
        read as follows:

``Sec. 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)--

[[Page 122 STAT. 2861]]

                    (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 <<NOTE: Effective date.>> on October 1 of each 
year (beginning in 2009), the Secretary shall increase the amounts 
described in subsection (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.-- <<NOTE: 38 USC 2102 note.>> 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.-- <<NOTE: Deadline.>> 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--

[[Page 122 STAT. 2862]]

            (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 <<NOTE: Deadline.>> 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 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.''.

[[Page 122 STAT. 2863]]

   TITLE VII--SMALL PUBLIC HOUSING AUTHORITIES PAPERWORK REDUCTION ACT

SEC. 2701. <<NOTE: 42 USC 1437 note.>> 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.
                    ``(B) Civil <<NOTE: Applicability.>> 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.--

[[Page 122 STAT. 2864]]

                    ``(A) In general.-- <<NOTE: Establishment.>> 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 
                conduct 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 <<NOTE: Public comment.>> invite 
                      public comment regarding such changes.
                    ``(B) Availability <<NOTE: Deadline.>> 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.''.

[[Page 122 STAT. 2865]]

                    TITLE VIII--HOUSING PRESERVATION

         Subtitle A--Preservation Under Federal Housing Programs

SEC. 2801. <<NOTE: Deadlines.>> 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. <<NOTE: Massachusetts. Disadvantaged persons.>> 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));
            (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 <<NOTE: Public information.>> 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.-- <<NOTE: Ohio.>> 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

[[Page 122 STAT. 2866]]

        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).

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. <<NOTE: California.>> 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.

[[Page 122 STAT. 2867]]

      Subtitle B-- <<NOTE: Housing Tax Credit Cooridination Act of 
2008. Disadvantaged persons.>> Coordination of Federal Housing Programs 
and Tax Incentives for Housing

SEC. 2831. <<NOTE: 12 USC 1701 note.>> SHORT TITLE.

    This subtitle may be cited as the ``Housing Tax Credit Coordination 
Act of 2008''.

SEC. 2832. <<NOTE: 12 USC 1715s.>> APPROVALS BY DEPARTMENT OF HOUSING 
            AND URBAN DEVELOPMENT.

    (a) Administrative and Procedural Changes.--
            (1) In general.--The <<NOTE: Deadline.>> 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 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

[[Page 122 STAT. 2868]]

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 low-income 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 <<NOTE: Deadline.>> 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
            (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.

[[Page 122 STAT. 2869]]

                    ``(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
            (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 low-income 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

[[Page 122 STAT. 2870]]

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. <<NOTE: 12 USC 1715s.>> 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 low-income 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.
    ``(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. <<NOTE: Intructions. Deadline.>> 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--

[[Page 122 STAT. 2871]]

                    ``(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 <<NOTE: Reports.>> 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 <<NOTE: Definition.>> adding at the 
                      end the following: ``For purposes of this 
                      subparagraph, the term''project`` means a single 
                      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 low-income 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)'';

[[Page 122 STAT. 2872]]

                    (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.
                          ``(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

[[Page 122 STAT. 2873]]

                                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 <<NOTE: Deadline.>> 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--
                          ``(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 <<NOTE: Deadline.>> 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 <<NOTE: Deadline.>> 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

[[Page 122 STAT. 2874]]

                advance amounts or project rental assistance and such 
                reductions shall be subject to appeal.''.

    (c) McKinney-Vento Act Homeless Assistance Under Shelter 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. <<NOTE: 42 USC 11403f-1.>> 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 renewal terms of not 
more than 15 years each, subject to the availability of sufficient such 
appropriated funds.''.
            (2) Project-based <<NOTE: Termination date. Extension. 42 
        USC 11405b.>> 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. <<NOTE: 42 USC 1437z-8.>> COLLECTION OF INFORMATION ON 
            TENANTS IN TAX CREDIT PROJECTS.

    ``(a) In General.-- <<NOTE: Deadline.>> 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

[[Page 122 STAT. 2875]]

other similar assistance, disability status, and monthly rental payments 
of households residing in each property receiving such credits through 
such agency. <<NOTE: Reports.>> 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 <<NOTE: Deadline.>>  
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 (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 <<NOTE: State and local 
                governments. Grants.>> 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,

[[Page 122 STAT. 2876]]

                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 
        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. <<NOTE: 12 USC 1701z-17.>> 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 Energy Efficient 
Mortgages.--
            (1) In general.--Not <<NOTE: Deadline.>> 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;

[[Page 122 STAT. 2877]]

                    (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
                    (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-- <<NOTE: Housing Assistance Tax Act of 2008.>> TAX-RELATED 
PROVISIONS

SEC. 3000. <<NOTE: 26 USC 1 note.>> 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 Tax-
                          Exempt Housing Bonds

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

[[Page 122 STAT. 2878]]

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.

                     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:

[[Page 122 STAT. 2879]]

                    ``(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.--
            (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

[[Page 122 STAT. 2880]]

                          (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).

    (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 Buildings.--
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 
                      credit 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

[[Page 122 STAT. 2881]]

                          ``(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 
        two-thirds 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--
                                    ``(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

[[Page 122 STAT. 2882]]

                      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.--
            (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 <<NOTE: 26 USC 42 note.>> 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:

[[Page 122 STAT. 2883]]

            ``(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 subsection for such taxable or any subsequent 
                taxable year, then--
                          ``(i) the <<NOTE: Notification.>> 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 Foster 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.''.

[[Page 122 STAT. 2884]]

    (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
                    ``(C) who are involved in artistic or literary 
                activities.''.

    (h) GAO Study Regarding Modifications to Low-Income Housing Tax 
Credit.--Not <<NOTE: Deadline. Reports.>> 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 <<NOTE: 26 USC 42 note.>> 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 <<NOTE: Applicability.>> 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.

[[Page 122 STAT. 2885]]

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 allowance 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.-- <<NOTE: 26 USC 142 note.>> 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.

[[Page 122 STAT. 2886]]

         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:
            ``(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.-- 
                <<NOTE: Applicability.>> 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.-- <<NOTE: 26 USC 42 note.>> 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 LOW-INCOME 
            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

[[Page 122 STAT. 2887]]

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.-- <<NOTE: 26 USC 142 note.>> The amendments made 
by this section shall apply to determinations of the status of qualified 
residential 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.

[[Page 122 STAT. 2888]]

                          ``(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.-- <<NOTE: 26 USC 142 note.>> The amendment made 
by this section shall apply to determinations of area median gross 
income for calendar years after 2008.

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 <<NOTE: 26 USC 142 note.>> 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

[[Page 122 STAT. 2889]]

                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.
                    ``(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,

[[Page 122 STAT. 2890]]

            ``(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.

    ``(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 
        6\2/3\ 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--

[[Page 122 STAT. 2891]]

                          ``(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).
            ``(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 <<NOTE: 26 USC 26 note.>> 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:

[[Page 122 STAT. 2892]]

                    ``(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--
                    ``(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 <<NOTE: 26 USC 63 note.>> 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 
        subsection (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

[[Page 122 STAT. 2893]]

                    ``(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:
            ``(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 <<NOTE: Applicability.>> 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 <<NOTE: 26 USC 143 note.>> 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)).

[[Page 122 STAT. 2894]]

                      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).''.
            (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 <<NOTE: 26 USC 56 note.>> amendments 
        made by subsection (a) shall apply to bonds issued after the 
        date of the enactment of this Act.
            (2) Low <<NOTE: 26 USC 38 note.>> 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 <<NOTE: 26 USC 38 note.>> 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).''.

[[Page 122 STAT. 2895]]

    (b) Safety and Soundness Requirements.--Paragraph (3) of section 
149(b) is amended by adding at the end the following new subparagraph:
                    ``(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 <<NOTE: 26 USC 149 note.>> 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

[[Page 122 STAT. 2896]]

                          ``(ii) the transferee or qualified substitute 
                      receives a notice (as described in subsection (d)) 
                      from a transferor'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 <<NOTE: Regulations.>> 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 Substitutes''.

    (d) Effective Date.--The <<NOTE: Real property. 26 USC 
1445 note.>> amendments made by this section shall apply to dispositions 
of United States real property interests after the date of the enactment 
of this Act.

[[Page 122 STAT. 2897]]

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 <<NOTE: 26 USC 47 note.>> 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.-- <<NOTE: 26 USC 143 note.>> 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. <<NOTE: Notification.>> 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--

[[Page 122 STAT. 2898]]

                          ``(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

[[Page 122 STAT. 2899]]

                      the 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).''.

[[Page 122 STAT. 2900]]

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

[[Page 122 STAT. 2901]]

        to such subparagraph as in effect on the day before the 
        enactment of the 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

[[Page 122 STAT. 2902]]

                (e)(6)(D)(i)), any independent contractor if, at the 
                time such contractor enters into a management agreement 
                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. <<NOTE: 26 USC 856 note.>> 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.

[[Page 122 STAT. 2903]]

    (c) Conforming <<NOTE: Applicability. Effective dates.>> Foreign 
Currency Revisions.--
            (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.

[[Page 122 STAT. 2904]]

                      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

[[Page 122 STAT. 2905]]

                                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 
                Internal Revenue Code of 1986 for any applicable taxable

[[Page 122 STAT. 2906]]

                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 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--

[[Page 122 STAT. 2907]]

            (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 <<NOTE: 26 USC 168 note.>> 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 Account Receipt 
of Certain Hurricane-Related Casualty Loss Grants by Disallowing 
Previously Taken Casualty Loss Deductions.--
            (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 <<NOTE: Deadline.>> 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.-- <<NOTE: 26 USC 1400N note.>> 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.-- <<NOTE: Alabama.>> Subsection (a) of 
        section 1400N is amended by adding at the end the following new 
        paragraph:
            ``(8) Inclusion of certain counties.--For purposes of this 
        subsection, the Gulf Opportunity Zone includes Colbert County, 
        Alabama and Dallas County, Alabama.''.

[[Page 122 STAT. 2908]]

            (2) Effective date.--The <<NOTE: 26 USC 
        1400N note.>> 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 obligations of the 
                      payment settlement entity with respect to such 
                      transactions, and

[[Page 122 STAT. 2909]]

                          ``(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.
            ``(3) Third party payment network.--The term `third party 
        payment network' means any agreement or arrangement--

[[Page 122 STAT. 2910]]

                    ``(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 <<NOTE: Reports.>> 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 <<NOTE: Records.>> 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 <<NOTE: Deadline.>> 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. <<NOTE: E-mail.>> 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:
                          ``(xxii) section 6050W (relating to returns to 
                      payments made in settlement of payment card 
                      transactions), and''.

[[Page 122 STAT. 2911]]

            (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 <<NOTE: 26 USC 3406 note.>> 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--

[[Page 122 STAT. 2912]]

                          ``(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 <<NOTE: Applicability.>> 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 <<NOTE: 26 USC 121 note.>> 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 <<NOTE: 26 USC 864 note.>> amendments made 
by this section shall apply to taxable years beginning after December 
31, 2008.

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

[[Page 122 STAT. 2913]]

Act of 2005 <<NOTE: 26 USC 6655 note.>> 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 <<NOTE: 26 USC 6655 note.>> 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.

    Approved July 30, 2008.

LEGISLATIVE HISTORY--H.R. 3221:
---------------------------------------------------------------------------

CONGRESSIONAL RECORD:
                                                        Vol. 153 (2007):
                                    Aug. 4, considered and passed House.
                                                        Vol. 154 (2008):
                                    Apr. 3, 4, 7-10, considered and 
                                        passed Senate, amended.
                                    May 8, House concurred in Senate 
                                        amendment with amendments.
                                    June 19, 20, 23-26, July 7-11, 
                                        Senate considered and concurred 
                                        in House amendments with 
                                        amendment.
                                    July 23, House concurred in Senate 
                                        amendment with amendment.
                                    July 25, 26, Senate considered and 
                                        concurred in House amendment.

                                  <all>
```