49–008 

109TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 109–254 

PROVIDING FOR CONSIDERATION OF H.R. 1461, FEDERAL 

HOUSING FINANCE REFORM ACT OF 2005 

OCTOBER 25, 2005.—Referred to the House Calendar and ordered to be printed 

Mr. SESSIONS, from the Committee on Rules, 

submitted the following 

R E P O R T 

[To accompany H. Res. 509] 

The Committee on Rules, having had under consideration House 

Resolution 509, by a record vote of 7 to 3, report the same to the 

House with the recommendation that the resolution be adopted. 

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for the consideration of H.R. 1461, the 

Federal Housing Finance Reform Act of 2005, under a structured 

rule. The rule provides one hour of general debate equally divided 

and controlled by the chairman and ranking minority member of 

the Committee on Financial Services. The rule waives all points of 

order against consideration of the bill. 

The rule provides that the amendment in the nature of a substitute recommended by the Committee on Financial Services now 

printed in the bill shall be considered as an original bill for the 

purpose of amendment and shall be considered as read. The rule 

waives all points of order against the committee amendment in the 

nature of a substitute. 

The rule makes in order only those amendments printed in this 

report. The rule provides that the amendments made in order may 

be offered only in the order printed in this report, may be offered 

only by a Member designated in this report, shall be considered as 

read, shall be debatable for the time specified in this report equally 

divided and controlled by the proponent and an opponent, shall not 

be subject to amendment, and shall not be subject to a demand for 

division of the question in the House or in the Committee of the 

Whole. The rule waives all points of order against the amendments 

printed in this report. 

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Finally, the rule provides one motion to recommit with or without instructions. 

EXPLANATION OF WAIVERS

The waiver of all points of order against the bill is necessary because the bill, as reported by the Committee in Financial Services, 

is in violation of section 302 of the Congressional Budget Act, because the Financial Services Committee does not have any remaining allocation of direct spending. The proposed manager’s amendment modifies the bill such that its revenue increases match or exceed its spending increases, thereby remedying the violation of the 

Budget Act. 

COMMITTEE VOTES

Pursuant to clause 3(b) of House rule XIII the results of each 

record vote on an amendment or motion to report, together with 

the names of those voting for and against, are printed below: 

Rules Committee record vote No. 134 

Date: October 25, 2005. 

Measure: H.R. 1461, Federal Housing Finance Reform Act of 

2005. 

Motion by: Mr. McGovern. 

Summary of motion: To make in order and provide the appropriate waivers for the amendment offered by Rep. Frank which permits non-profits that have affordable housing as among their primary purposes, rather than as their sole purpose, to qualify for 

funding from the Affordable Housing Funds. Allows a non-profit 

applicant to the Affordable Housing Fund or its affiliates to engage 

in non-partisan voter registration, voter identification, and get-outthe-vote activities using their own funds. 

Results: Defeated 3 to 7. 

Vote by Members: Hastings (WA)—Nay; Sessions—Nay; Putnam—Nay; Capito—Nay; Cole—Nay; Bishop—Nay; McGovern— 

Yea; Hastings (FL)—Yea; Matsui—Yea; Dreier—Nay. 

Rules Committee record vote No. 135 

Date: October 25, 2005. 

Measure: H.R. 1461, Federal Housing Finance Reform Act of 

2005. 

Motion by: Mr. Hastings of Washington. 

Summary of motion: To report the rule. 

Results: Agreed to 7 to 3. 

Vote by Members: Hastings (WA)—Yea; Sessions—Yea; Putnam—Yea; Capito—Yea; Cole—Yea; Bishop—Yea; McGovern—Nay; 

Hastings (FL)—Nay; Matsui—Nay; Dreier—Yea. 

SUMMARY OF AMENDMENTS MADE IN ORDER

(Summaries derived from information provided by the sponsors.) 

1. Oxley: Manager’s Amendment. Expands the affordable housing 

role of Fannie Mae and Freddie Mac. Includes new sections on new 

single-family and multi-family housing goals, duty to serve lowerincome markets, and a new affordable housing fund with contributions from the enterprises. The amendment moves the effective 

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date of the entire bill up from one year to six months following enactment, including the affordable housing fund. For the first two 

years, Fannie Mae and Freddie Mac will contribute 3.5% of aftertax earnings, and subsequently 5% of such earnings. 25% of the 

GSEs’ contributions will go annually to the Treasury Department 

to help payoff REFCorp (S&L) bonds, with the remainder going to 

the fund. The amendment sunsets the fund in five years, when its 

extension will be considered. During the first two years, priority 

consideration will be given to areas impacted by Hurricanes 

Katrina and Rita, thereafter priority in funding will be based on 

greatest impact, geographic diversity, timely action, as well as 

other disaster area needs. Eligible recipients—for-profit builders, 

state housing agencies, and non-profit organizations—must have a 

demonstrated capacity for affordable housing activities and make 

assurances that they will comply with limits on the use of funds. 

Funds may not be used for political activities, advocacy, lobbying, 

counseling services, travel expenses, and tax return advice. Nonprofit recipients must have affordable housing as their primary 

purpose and, beginning one-year before applying, non-profits and 

their affiliates cannot have engaged in federal election activity, 

electioneering communication, or lobbying. Recipient use of funds 

will be closely tracked. Those misusing funds will be permanently 

barred from participation and must make reimbursement. The 

amendment also clarifies that federally recognized tribes and Alaskan Native villages qualify for funding under the Affordable Housing Fund established by the bill. In addition, the amendment includes a request from the Judiciary Committee to require consultation with the Attorney General by the GSE regulator when exercising new litigation authority, and from the Government Reform 

Committee to remove a FOIA exemption for the proceedings of the 

new agency’s oversight board. The Federal Housing Finance Agency will establish an ombudsman to hear complaints and appeals 

from the GSEs and those having business relationships with the 

GSEs. H.R. 1461 consolidates current GSE regulation by two agencies and HUD into one agency. The manager’s amendment clarifies 

that existing rules and regulations will remain in force during the 

six-month transition period and until changed by the new Federal 

Housing Finance Agency. (20 minutes) 

2. Carson: Permits personal property loans secured by manufactured housing to be considered in determining whether a GSE has 

met its duty to serve underserved markets. Permits manufactured 

homes that have not been attached to ground owned by a manufactured home owner to count towards this goal. (10 minutes). 

3. Davis, Artur (AL): Clarifies the definition of ‘‘rural’’ to make 

it consistent with the same definition in the Housing Act of 1949. 

Retains ‘‘micro-politan area’’ and ‘‘tribal trust lands’’ as part of the 

definition. (10 minutes). 

4. Leach: Gives the newly created regulator (FHFA) greater authority to impose capital strictures on GSEs. (10 minutes). 

5. Royce: Authorizes the regulator to require one or both of the 

enterprises to dispose or acquire assets or liabilities if the regulator 

deems those assets or liabilities to be a potential systemic risk to 

the housing market, the capital markets, or the financial system. 

(10 minutes). 

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6. Paul: Eliminates the ability of Fannie Mae, Freddie Mac, and 

the Federal Home Loan Bank Board to borrow from the Treasury. 

(10 minutes). 

7. Garrett: Strikes the language in the bill that raises the Conforming Loan Limit. (10 minutes). 

8. Sanchez, Loretta: Adds ‘‘alternative credit scoring’’ as an additional element to the Annual Housing Report Regarding Regulated 

Entities (Section 1324). (10 minutes). 

9. Kanjorski: Restores Presidential appointees on the boards of 

Fannie Mae and Freddie Mac by retaining the regulatory appointees on the boards of the Federal Home Loan Banks. Makes 

modifications to the boards of the Federal Home Loan Banks related to the number of regulatory appointees, the expertise of appointees in community and economic development, and the allowable continued service of appointees after the expiration of their 

terms. (10 minutes). 

TEXT OF AMENDMENTS MADE IN ORDER

1. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE OXLEY OF

OHIO, OR HIS DESIGNEE, TO BE DEBATABLE FOR 20 MINUTES

Page 6, strike lines 3 through 5 and insert the following new subparagraph: 

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

(including any attorney, appraiser, or accountant), if— 

‘‘(i) the independent contractor knowingly or recklessly participates in— 

‘‘(I) any violation of any law or regulation; 

‘‘(II) any breach of fiduciary duty; or 

‘‘(III) any unsafe or unsound practice; and 

‘‘(ii) such violation, breach, or practice caused, or is 

likely to cause, more than a minimal financial loss to, 

or a significant adverse effect on, the regulated entity; 

and’’. 

Page 12, line 8, strike the quotations marks and the last period. 

Page 12, after line 8, insert the following new subsection: 

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

Office of the Ombudsman in the Agency. Such regulations shall 

provide that the Ombudsman will consider complaints and appeals 

from any regulated entity and any person that has a business relationship with a regulated entity and shall specify the duties and 

authority of the Ombudsman.’’. 

Page 15, line 2, before the period insert ‘‘, or request that the Attorney General of the United States act on behalf of the Director’’. 

Page 15, after line 2, insert the following new paragraph: 

‘‘(2) CONSULTATION WITH ATTORNEY GENERAL.—The Director 

shall provide notice to, and consult with, the Attorney General 

of the United States before taking an action under paragraph 

(1) of this subsection or under section 1344(a), 1345(d), 1348(c), 

1372(e), 1375(a), 1376(d), or 1379D(c), except that, if the Director determines that any delay caused by such prior notice and 

consultation may adversely affect the safety and soundness responsibilities of the Director under this title, the Director shall 

notify the Attorney General as soon as reasonably possible 

after taking such action.’’. 

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Page 15, line 3, strike ‘‘(2)’’ and insert ‘‘(3)’’. 

Page 25, line 13, after the period insert quotation marks and a 

period. 

Page 25, strike lines 14 through 16. 

Page 66, after line 12 add the following new subsection: 

(e) EFFECTIVE DATE.—This section shall take effect on the date 

of the enactment of this Act. 

Page 102, after line 19, insert the following new subparagraph: 

‘‘(A) Mortgages that finance dwelling units for low-income families.’’. 

Page 102, line 20, strike ‘‘(A)’’ and insert ‘‘(B)’’. 

Page 102, line 22, strike ‘‘(B)’’ and insert ‘‘(C)’’. 

Strike line 17 on page 119 and all that follows through line 9 on 

page 138 and insert the following: 

SEC. 128. AFFORDABLE HOUSING FUND. 

(a) IN GENERAL.—The Housing and Community Development Act 

of 1992 is amended by striking sections 1337 and 1338 (12 U.S.C. 

4562 note) and inserting the following new section: 

‘‘SEC. 1337. AFFORDABLE HOUSING FUND. 

‘‘(a) ESTABLISHMENT AND PURPOSE.—Each enterprise shall establish and manage an affordable housing fund in accordance with 

this section. The purpose of the affordable housing fund shall be— 

‘‘(1) to increase homeownership for extremely low-and very 

low-income families; 

‘‘(2) to increase investment in housing in low-income areas, 

and areas designated as qualified census tracts or an area of 

chronic economic distress pursuant to section 143(j) of the Internal Revenue Code of 1986 (26 U.S.C. 143(j)); 

‘‘(3) to increase and preserve the supply of rental and owneroccupied housing for extremely low- and very low-income families; 

‘‘(4) to increase investment in public infrastructure development in connection with housing assisted under this section; 

and 

‘‘(5) to leverage investments from other sources in affordable 

housing and in public infrastructure development in connection 

with housing assisted under this section 

‘‘(b) ALLOCATION OF AMOUNTS BY ENTERPRISES.— 

‘‘(1) IN GENERAL.—In accordance with regulations issued by 

the Director under subsection (k) and subject to paragraphs (2) 

and (3) of this subsection and subsection (f)(5), each enterprise 

shall allocate to the affordable housing fund established under 

subsection (a) by the enterprise— 

‘‘(A) in the year in which the effective date under section 

185 of the Federal Housing Finance Reform Act of 2005 occurs, 3.5 percent of the after-tax income of the enterprise 

for the preceding year; 

‘‘(B) in the year after the year referred to in subparagraph (A), 3.5 percent of the after-tax income of the enterprise for the preceding year; and 

‘‘(C) in each of the first three years after the year referred to in subparagraph (B), 5 percent of the after-tax income of the enterprise for the preceding year. 

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‘‘(2) LIMITATION.—An enterprise shall not be required to 

make an allocation for a year to the affordable housing fund 

of the enterprise established under subsection (a) unless the 

enterprise generated after-tax income for the preceding year. 

‘‘(3) SUSPENSION OF CONTRIBUTIONS.—The Director shall 

temporarily suspend the allocation under paragraph (1) by an 

enterprise to the affordable housing fund of the enterprise 

upon a finding by the Director that such allocations— 

‘‘(A) are contributing, or would contribute, to the financial instability of the enterprise; 

‘‘(B) are causing, or would cause, the enterprise to be 

classified as undercapitalized; or 

‘‘(C) are preventing, or would prevent, the enterprise 

from successfully completing a capital restoration plan 

under section 1369C. 

‘‘(4) 5-YEAR SUNSET AND REPORT.— 

‘‘(A) SUNSET.—The enterprises shall not be required to 

make allocations to the affordable housing funds in the 5th 

year after the year in which the effective date under section 185 of the Federal Housing Finance Reform Act of 

2005 occurs or in any year thereafter. 

‘‘(B) REPORT ON PROGRAM CONTINUANCE.—Not later 6 

months before the end of the last year in which the allocations are required under paragraph (1), 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 making 

recommendations on whether the program under this section, including the requirement for the enterprises to make 

allocations to the affordable housing funds, should be extended and on any modifications for the program. 

‘‘(5) DETERMINATION OF AFTER-TAX INCOME.—For purposes of 

this section, the term ‘after-tax income’ means, with respect to 

an enterprise for a year, the amount reported by the enterprise 

for such year in the enterprise’s annual report for such year 

that is filed with the Securities and Exchange Commission, except that for any year in which no such filing is made by an 

enterprise or such filing is not timely made, such term means 

the amount determined by the Director based on the income 

tax return filings of the enterprise. 

‘‘(c) SELECTION OF ACTIVITIES FUNDED USING AFFORDABLE HOUSING FUND AMOUNTS.—Amounts from the affordable housing fund of 

the enterprise may be used, or committed for use, only for activities 

that— 

‘‘(1) are eligible under subsection (d) for such use; and 

‘‘(2) are selected for funding by the enterprise in accordance 

with the process and criteria for such selection established pursuant to subsection (k)(2)(C). 

‘‘(d) ELIGIBLE ACTIVITIES.—Amounts from the affordable housing 

fund of an enterprise shall be eligible for use, or for commitment 

for use, only for assistance for— 

‘‘(1) the production, preservation, and rehabilitation of rental 

housing, including housing under the programs identified in 

section 1335(a)(2)(B), except that amounts provided from the 

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Fund may be used for the benefit only of extremely low- and 

very low-income families; 

‘‘(2) the production, preservation, and rehabilitation of housing for homeownership, including such forms as downpayment 

assistance, closing cost assistance, and assistance for interestrate buy-downs, that— 

‘‘(A) 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 section be considered to refer to assistance from the affordable housing fund of the enterprise; 

‘‘(B) has an initial purchase price that meets the requirements of section 215(b)(1) of the Cranston-Gonzalez National Affordable Housing Act; and 

‘‘(C) 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 

‘‘(3) public infrastructure development activities in connection with housing activities funded under paragraph (1) or (2). 

‘‘(e) ELIGIBLE RECIPIENTS.— 

‘‘(1) IN GENERAL.—Amounts from the affordable housing fund 

of an enterprise may be provided only to a recipient that is an 

organization, agency, or other entity (including a for-profit entity, a nonprofit entity, a federally recognized tribe, an Alaskan 

Native village, and a faith-based organization) that— 

‘‘(A) has a demonstrated capacity for carrying out activities of the type that are to be funded with such affordable 

housing fund amounts; and 

‘‘(B) makes such assurances to the enterprise as the Director shall, by regulation, require to ensure that the recipient will comply with the requirements of this section 

(including, in the case of any organization, agency, or entity subject to paragraph (2), all of the requirements specified under such paragraph) during the entire period that 

begins upon selection of the recipient to receive amounts 

from the affordable housing fund of the enterprise and 

ending upon the conclusion of all activities under subsection (d) that are engaged in by the recipient and funded 

with such affordable housing fund amounts; and 

‘‘(C) in the case of any recipient who is not a for-profit 

entity or a government agency or authority, complies with 

all of the requirements under paragraph (2). 

‘‘(2) ADDITIONAL REQUIREMENTS FOR RECIPIENTS OTHER THAN

FOR-PROFIT ENTITIES.—The requirements under this paragraph 

with respect to any organization, agency, or entity that is not 

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a for-profit entity or a government agency or authority are that 

the organization, agency, or entity— 

‘‘(A) shall have as its primary purpose the provision of 

affordable housing, as defined by the Director; 

‘‘(B) shall make such assurances to the enterprise as the 

Director shall, by regulation, require to ensure that such 

affordable housing fund amounts— 

‘‘(i) are used only to supplement, and to the extent 

practical, to increase the level of funds that would, in 

the absence of amounts made available from the affordable housing fund, be made available from other 

sources for the recipient to carry out activities of the 

type that are eligible under subsection (d) for funding 

with affordable housing fund amounts; and 

‘‘(ii) are not in any case used so as to supplant any 

funds from other sources that are made available for 

such activities of the recipient; and 

‘‘(C) does not, at the time during the period that begins 

12 months before submission of an application for funding 

from the affordable housing fund of the enterprise and 

ending upon the expiration of the period referred to in 

paragraph (1)(B)— 

‘‘(i) engage in any Federal election activity, as such 

term is defined in paragraph (20) of section 301 of the 

Federal Election Campaign Act of 1971 (2 U.S.C. 

431(20)), except that, notwithstanding the 120-day 

limitation in subparagraph (A)(i) of such paragraph, 

such term shall include voter registration activity during any period; 

‘‘(ii) make any expenditure for any electioneering 

communication (as such term is defined in section 

304(f)(3) of the Federal Election Campaign Act of 1971 

(2 U.S.C. 434(f)(3)); 

‘‘(iii) make any lobbying expenditure, (as such term 

is defined in such section 501(h)(2)), except that this 

clause shall not apply to any such expenditure by an 

organization described in section 501(c)(3) of the Internal Revenue Code of 1986 that is exempt from taxation under subsection (a) of such section 501, to the 

extent that such expenditure does not exceed the 

amount under such Code for which such exemption 

may be denied; or 

‘‘(iv) maintain any affiliation with any organization, 

agency, or other entity that does not comply with 

clauses (i), (ii), and (iii) of this subparagraph. 

‘‘(3) AFFILIATION.— 

‘‘(A) IN GENERAL.—A recipient organization, agency, or 

entity shall be considered to be affiliated with another entity, for purposes of paragraph (2), if such recipient entity 

controls, is controlled by, or is under common control with 

such other entity. 

‘‘(B) CONTROL.—The existence of any of the following relationships between a recipient entity and another entity 

shall indicate that control exists for purposes of subparagraph (A): 

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‘‘(i) OVERLAPPING BOARD MEMBERSHIP.—Individuals 

serve in a similar capacity as officers, executives, or 

staff of both the recipient entity and the other entity. 

‘‘(ii) SHARED RESOURCES.—The recipient entity and 

the other entity share office space, staff members, supplies, resources, or marketing materials, including 

Internet and other forms of public communication. 

‘‘(iii) FUNDING.—The recipient entity receives more 

than 20 percent of its total funding from such other 

entity or provides more than 20 percent of the total 

funding of such other entity. 

‘‘(iv) OTHER.—The recipient entity or such other entity exhibits any other indicia of substantial overlap or 

common control as may be set forth in regulation by 

the Director. 

‘‘(4) FOR PROFIT.—For purposes of this subsection, the term 

‘for-profit entity’ means any entity any part of the net earnings 

of which inure to the benefit of any private shareholder, member, founder, contributor, or individual. 

‘‘(f) LIMITATIONS ON USE.— 

‘‘(1) REQUIRED AMOUNT FOR REFCORP.—Of any amounts allocated pursuant to subsection (b) in each year to the affordable 

housing fund of an enterprise, 25 percent shall be used as provided in section 21B(f)(2)(E) of the Federal Home Loan Bank 

Act (12 U.S.C. 1441b(f)(2)(E)). 

‘‘(2) REQUIRED AMOUNT FOR HOMEOWNERSHIP ACTIVITIES.—Of 

any amounts allocated pursuant to subsection (b) in each year 

to the affordable housing fund of an enterprise, not less than 

10 percent shall be used for activities under paragraph (2) of 

subsection (d). 

‘‘(3) MAXIMUM AMOUNT FOR PUBLIC INFRASTRUCTURE DEVELOPMENT ACTIVITIES IN CONNECTION WITH AFFORDABLE HOUSING

ACTIVITIES.—Of any amounts allocated pursuant to subsection 

(b) in each year to the affordable housing fund of an enterprise, 

not more than 12.5 percent may be used for activities under 

paragraph (3) of subsection (d). 

‘‘(4) DEADLINE FOR COMMITMENT OR USE.—Any amounts allocated to the affordable housing fund of an enterprise shall be 

used or committed for use within two years of the date of such 

allocation. 

‘‘(5) USE OF RETURNS.—The Director shall, by regulation— 

‘‘(A) provide that any return on a loan or other investment of any amounts allocated pursuant to subsection (b) 

to the affordable housing fund of an enterprise shall count 

against the allocation required under subsection (b) to be 

made by the enterprise for the year following such return; 

and 

‘‘(B) establish such limitations as may be necessary to 

ensure that the amount or likelihood of return is not the 

primary consideration of awarding of allocated amounts to 

recipients. 

‘‘(6) PROHIBITED USES.—The Director shall— 

‘‘(A) by regulation, set forth prohibited uses of amounts 

from the affordable housing funds of the enterprises, which 

shall include use for— 

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‘‘(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; 

‘‘(B) by regulation, provide that, except as provided in 

subparagraph (C), amounts allocated to the affordable 

housing fund of an enterprise may not be used for administrative, outreach, or other costs of— 

‘‘(i) the enterprise; or 

‘‘(ii) any recipient of amounts from the affordable 

housing fund; and 

‘‘(C) by regulation, limit the amount of any such contributions that may be used for administrative costs of the 

enterprise of maintaining the affordable housing fund and 

carrying out the program under this section. 

‘‘(7) PROHIBITION OF CONSIDERATION OF USE FOR MEETING

HOUSING GOALS.—In determining compliance with the housing 

goals under this subpart, the Director may not consider 

amounts used under this section for eligible activities under 

subsection (d). The Director shall give credit toward the 

achievement of such housing goals to purchases of mortgages 

for housing that receives funding under this section, but only 

to the extent that such purchases are funded other than under 

this section. 

‘‘(8) PROHIBITION ON CERTAIN REDISTRIBUTION OF AMOUNTS.— The Director shall, by regulation, ensure that amounts from 

the affordable housing fund of an enterprise awarded under 

this section to a national nonprofit housing intermediary are 

not redistributed to other nonprofit entities. 

‘‘(g) ACCOUNTABILITY OF RECIPIENTS AND ENTERPRISES.— ‘‘(1) RECIPIENTS.— 

‘‘(A) TRACKING OF FUNDS.—The Director shall— 

‘‘(i) require each enterprise to develop and maintain 

a system to ensure that each recipient of amounts 

from the affordable housing fund of the enterprise 

uses such amounts in accordance with this section, the 

regulations issued under this section, and any requirements or conditions under which such amounts were 

provided; and 

‘‘(ii) establish minimum requirements for agreements, between the enterprises and recipients, regarding grants from the affordable housing funds of the enterprises, which shall include— 

‘‘(I) appropriate continuing financial and project 

reporting, record retention, and audit requirements for the duration of the grant to ensure compliance with the limitations and requirements of 

this section and the regulation under this section; 

and 

‘‘(II) any other requirements that the Director 

determines are necessary to ensure appropriate 

grant administration and compliance. 

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‘‘(B) MISUSE OF FUNDS.—If an enterprise determines that 

any recipient of amounts from the affordable housing fund 

of the enterprise has 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— 

‘‘(i) the enterprise shall notify the Director of such 

misuse of amounts and the actions taken under this 

subparagraph with respect to the recipient; 

‘‘(ii) such recipient shall be ineligible in perpetuity 

to receive of any further amounts from the affordable 

housing fund of such enterprise; and 

‘‘(iii) the enterprise shall require the recipient to reimburse the enterprise for such misused amounts and 

return to the enterprise any amounts from the affordable housing fund of the enterprise that remain unused or uncommitted for use. 

The remedies under this subparagraph are in addition to 

any other remedies that may be available under law. 

‘‘(2) ENTERPRISES.— 

‘‘(A) QUARTERLY REPORTS.—The Director shall require 

each enterprise to submit a report, on a quarterly basis, to 

the Director and the affordable housing board established 

under subsection (j) describing the activities funded under 

this section during such quarter with amounts from the affordable housing fund of the enterprise established under 

this section. The Director shall make such reports publicly 

available. The affordable housing board shall review each 

report by an enterprise to determine the consistency of 

such activities funded with the criteria for selection of such 

activities established pursuant to subsection (k)(2)(C). 

‘‘(B) REPLENISHMENT.—If the Director determines that 

an activity funded by an enterprise with amounts from the 

affordable housing fund of the enterprise is not consistent 

with the criteria established pursuant to subsection 

(k)(2)(C), the Director shall require the enterprise to allocate to such affordable housing fund (in addition to 

amounts allocated in compliance with subsection (b)) an 

amount equal to the sum of the amounts from the affordable housing fund used and further committed for use for 

such activity. 

‘‘(h) CAPITAL REQUIREMENTS.—The utilization or commitment of 

amounts from the affordable housing fund of an enterprise shall 

not be subject to the risk-based capital requirements established 

pursuant to section 1361(a). 

‘‘(i) REPORTING REQUIREMENT.—Each enterprise shall include, in 

the report required under section 309(m) of the Federal National 

Mortgage Association Charter Act or section 307(f) of the Federal 

Home Loan Mortgage Corporation Act, as applicable, a description 

of the actions taken by the enterprise to utilize or commit amounts 

allocated under this section to the affordable housing fund of the 

enterprise established under this section. 

‘‘(j) AFFORDABLE HOUSING BOARD.— 

‘‘(1) APPOINTMENT.—The Director shall appoint an affordable 

housing board of 7, 9, or 11 persons, who shall include— 

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‘‘(A) the Director, or the Director’s designee; 

‘‘(B) the Secretary of Housing and Urban Development, 

or the Secretary’s designee; 

‘‘(C) the Secretary of Agriculture, or the Secretary’s designee; 

‘‘(D) 2 persons from for-profit organizations or businesses 

actively involved in providing or promoting affordable 

housing for extremely low- and very low-income households; and 

‘‘(E) 2 persons from nonprofit organizations actively involved in providing or promoting affordable housing for extremely low- and very low-income households. 

‘‘(2) TERMS.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), the term of each member of the affordable housing 

board appointed pursuant to paragraph (1) (but not including members appointed pursuant to subparagraphs (A), 

(B), and (C)) shall be 3 years. 

‘‘(B) INITIAL APPOINTEES.—The Director shall appoint the 

initial members of the affordable housing board not later 

than the expiration of the 60-day period beginning on the 

effective date under section 185 of the Federal Housing Finance Reform Act of 2005. As designated by the Director 

at the time of appointment, of the members of the affordable housing board first appointed pursuant to paragraph 

(1) (but not including members appointed pursuant to subparagraphs (A), (B), and (C))— 

‘‘(i) in the case of a board having 7 members— 

‘‘(I) one shall be appointed for a term of one 

year; and 

‘‘(II) one shall be appointed for a term of two 

years; 

‘‘(ii) in the case of a board having 9 members— 

‘‘(I) two shall be appointed for a term of one 

year; and 

‘‘(II) two shall be appointed for a term of two 

years; and 

‘‘(iii) in the case of a board having 11 members— 

‘‘(I) two shall be appointed for a term of one 

year; and 

‘‘(II) three shall be appointed for a term of two 

years; 

‘‘(3) DUTIES.—The duties of the affordable housing board 

shall be— 

‘‘(A) to determine extremely low- and very low-income 

housing needs; 

‘‘(B) to advise the Director with respect to— 

‘‘(i) establishment of the selection criteria under subsection (k)(2)(C) that provide for appropriate use of 

amounts from the affordable housing funds of the enterprises to meet such needs; and 

‘‘(ii) operation of, and changes to, the program under 

this section appropriate to meet such needs; and 

‘‘(C) to review the reports submitted by the enterprises 

pursuant to subsection (g)(1) to determine whether the acVerDate Aug 31 2005 04:51 Oct 26, 2005 Jkt 049008 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\HR254.XXX HR254
13 

tivities funded using amounts from the affordable housing 

funds of the enterprises comply with the regulations issued 

pursuant to subsection (k)(2)(C) and inform the Director of 

such determinations, for purposes of subsection (g)(2). 

‘‘(4) MEETINGS.—The board shall meet not less than quarterly, except that during the 2-year period referred to in paragraph (7), the board shall meet only as the Director determines 

necessary. 

‘‘(5) EXPENSES AND PER DIEM.—Members of the board shall 

receive travel expenses, including per diem in lieu of subsistence, in accordance with sections 5702 and 5703 of title 5, 

United States Code. 

‘‘(6) ADVISORY COMMITTEE.—The board shall be considered 

an advisory committee for purposes of the Federal Advisory 

Committee Act (5 U.S.C. App.). 

‘‘(7) TERMINATION.— The board shall terminate upon the expiration of the 2-year period that begins upon the conclusion 

of the last year referred to in subsection (b)(1)(C). 

‘‘(k) REGULATIONS.— 

‘‘(1) IN GENERAL.—The Director shall issue regulations to 

carry out this section. 

‘‘(2) REQUIRED CONTENTS.—The regulations issued under this 

subsection shall include— 

‘‘(A) authority for the Director to audit, provide for an 

audit, or otherwise verify an enterprise’s activities, to ensure compliance with this section; 

‘‘(B) a requirement that the Director ensure that the affordable housing fund of each enterprise is audited not less 

than annually to ensure compliance with this section; 

‘‘(C) requirements for a process for application to, and 

selection by, an enterprise for activities to be funded with 

amounts from the affordable housing fund, which shall 

provide that— 

‘‘(i) selection shall be based upon specific criteria, 

which shall provide that— 

‘‘(I) in any selection of activities occurring during the 2-year period beginning on the effective 

date under section 185 of the Federal Housing Finance Reform Act of 2005, additional weight shall 

be given to applications for eligible activities 

under subsection (d) that— 

‘‘(aa) are to be carried out in any area that 

was declared by the President as a major disaster area pursuant to the Robert T. Stafford 

Disaster Relief and Emergency Assistance Act 

as result of Hurricane Katrina or Hurricane 

Rita in 2005; or 

‘‘(bb) the enterprise determines, in accordance with regulations issued by the Director, 

serve persons significantly affected by the occurrence of Hurricane Katrina or Hurricane 

Rita in 2005 (including persons displaced as a 

result of such hurricanes and persons whose 

affordable housing opportunities are signifiVerDate Aug 31 2005 04:51 Oct 26, 2005 Jkt 049008 PO 00000 Frm 00013 Fmt 6659 Sfmt 6602 E:\HR\OC\HR254.XXX HR254
14 

cantly affected by the presence of persons displaced as a result of such hurricanes); and 

‘‘(II) taking into consideration any additional 

weight afforded applications pursuant to subclause (I), priority in funding shall be based 

upon— 

‘‘(aa) whether activities are to be carried out 

in any area that, not more than 2 years before 

such selection, was declared by the President 

as a major disaster area pursuant to the Robert T. Stafford Disaster Relief and Emergency 

Assistance Act; 

‘‘(bb) greatest impact; 

‘‘(cc) geographic diversity; 

‘‘(dd) ability to obligate amounts and undertake activities so funded in a timely manner; 

‘‘(ee) in the case of rental housing projects 

under subsection (d)(1), the extent to which 

rents for units in the project funded are affordable, especially for extremely low-income 

families; and 

‘‘(ff) in the case of rental housing projects 

under subsection (d)(1), the extent of the duration for which such rents will remain affordable; and 

‘‘(ii) an enterprise may not require for such selection 

that an activity involve financing or underwriting of 

any kind by the enterprise (other than funding 

through the affordable housing fund of the enterprise) 

and may not give preference in such selection to activities that involve such financing; 

‘‘(D) requirements to ensure that amounts from the affordable housing funds of the enterprises used for rental 

housing under subsection (d)(1) are used only for the benefit of extremely low- and very-low income families; and 

‘‘(E) limitations on public infrastructure development activities that are eligible pursuant to subsection (d)(3) for 

funding with amounts from the affordable housing funds of 

the enterprises and requirements for the connection between such activities and housing activities funded under 

paragraph (1) or (2) of subsection (d). 

‘‘(l) ENFORCEMENT.—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.’’. 

(b) CONTRIBUTIONS FOR TRANSITION PERIOD.— 

(1) RESERVATION AND CONTRIBUTION; PROHIBITION OF DOUBLE

CONTRIBUTIONS.—If the date of the enactment of this Act does 

not occur in the same calendar year as the effective date under 

section 185 of this Act, each enterprise (as such term is defined 

in section 1303 of the Housing and Community Development 

Act of 1992) shall, in the year that such date of enactment occurs, reserve for contribution to the affordable housing fund to 

be established by the enterprise pursuant to section 1337 of 

15 

such Act (as amended by subsection (a) of this section) an 

amount equal to 3.5 percent of the after-tax income of the enterprise for the preceding year. Upon the establishment of such 

affordable housing fund, each enterprise shall allocate to such 

fund the amounts reserved under this paragraph by the enterprise. 

(2) EXCEPTION TO DEADLINE FOR COMMITMENT.—Section 

1337(f)(4) of the Housing and Community Development Act of 

1992 (as amended by subsection (a) of this section) shall not 

apply to any amounts allocated to the affordable housing fund 

of an enterprise pursuant to paragraph (1) of this subsection. 

(3) AFTER-TAX INCOME.—For purposes of this subsection, the 

term ‘‘after-tax income’’ has the meaning provided in subsection (b)(5) of the new section 1337 to be inserted by the 

amendment made by subsection (a) of this section. 

(4) EFFECTIVE DATE.—This subsection shall take effect on the 

date of the enactment of this Act. 

(c) REFCORP PAYMENTS.—Section 21B(f)(2) of the Federal Home 

Loan Bank Act (12 U.S.C. 1441b(f)(2)) is amended— 

(1) in subparagraph (E), by striking ‘‘and (D)’’ and inserting 

‘‘(D), and (E)’’; 

(2) by redesignating subparagraph (E) as subparagraph (F); 

and 

(3) by inserting after subparagraph (D) the following new 

subparagraph: 

‘‘(E) PAYMENTS BY FANNIE MAE AND FREDDIE MAC.—To 

the extent that the amounts available pursuant to subparagraphs (A), (B), (C), and (D) are insufficient to cover 

the amount of interest payments, each enterprise (as such 

term is defined in section 1303 of the Housing and Community Development Act of 1992 (42 U.S.C. 4502)) shall 

transfer to the Funding Corporation in each calendar year 

the amounts allocated for use under this subparagraph 

pursuant to section 1337(f)(1) of such Act.’’. 

Page 238, strike line 6 and insert the following: 

(b) CONFORMING AMENDMENTS.— (1) HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992.— Subtitle B of title 

Page 238, after line 10, insert the following new paragraph: 

(2) FEDERAL HOME LOAN BANKS.—Section 25 of the Federal 

Home Loan Bank Act (12 U.S.C. 1445) is amended by striking 

‘‘Board under this Act’’ and inserting ‘‘Director under section 

1367 of the Housing and Community Development Act of 

1992’’. 

Page 248, line 4, after the semicolon insert ‘‘or’’. 

Page 248, strike lines 5 through 11 and insert the following: 

‘‘(D) violates any written agreement between the regulated entity and the Director; 

shall forfeit and pay a civil money penalty of not more than 

$10,000 for each day during which such violation continues.’’. 

Page 249, strike lines 4 through 10 and insert the following: 

‘‘(iii) results in pecuniary gain or other benefit to 

such party, 

the regulated entity or regulated entity-affiliated party shall 

forfeit and pay a civil penalty of not more than $50,000 for 

16 

each day during which such violation, practice, or breach continues.’’. 

Strike line 22 on page 249 and all that follows through line 5 on 

page 250, and insert the following: 

‘‘(B) knowingly or recklessly causes a substantial loss to 

such regulated entity or a substantial pecuniary gain or 

other benefit to such party by reason of such violation, 

practice, or breach, 

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.’’. 

Page 278, line 21, after the comma insert ‘‘this title shall take 

effect on and’’. 

Page 278, line 23, strike ‘‘1-year’’ and insert ‘‘6-month’’. 

Page 296, line 19, after the period insert the following: ‘‘This section shall take effect on the date of the enactment of this Act.’’ 

Page 296, line 21, after the comma insert ‘‘this title shall take 

effect on and’’. 

Page 296, line 23, strike ‘‘1-year’’ and insert ‘‘6-month’’. 

Page 297, line 13, strike ‘‘1-year’’ and insert ‘‘6-month’’ 

Page 297, line 19, strike ‘‘1-year’’ and insert ‘‘6-month’’. 

Page 297, line 22, strike ‘‘solely’’. 

Page 297, line 24, after ‘‘sight’’ insert ‘‘and in addition to carrying 

out its other responsibilities under law’’. 

Page 302, line 25, strike ‘‘201(a)’’ and insert ‘‘301(a)’’. 

Page 303, line 14, strike ‘‘201(a)’’ and insert ‘‘301(a)’’. 

Page 304, line 13, strike ‘‘1-year’’ and insert ‘‘6-month’’. 

Page 304, line 17, strike ‘‘1-year’’ and insert ‘‘6-month’’. 

Page 304, line 19, strike ‘‘solely’’. 

Page 304, line 20, after ‘‘Board’’ insert ‘‘and in addition to carrying out its other responsibilities under law’’. 

Page 305, lines 23 and 24, strike ‘‘1-year’’. 

Page 311, line 7, strike ‘‘one year’’ and insert ‘‘6 months’’. 

Page 311, line 11, strike ‘‘6-month’’ and insert ‘‘3-month’’. 

Page 312, line 17, strike ‘‘1-year’’ and insert ‘‘6-month’’. 

Page 312, line 20, strike ‘‘solely’’. 

Page 312, line 24, strike ‘‘ment)’ ’’ and insert ‘‘ment’) and in addition to carrying out the Secretary’s other responsibilities under law 

regarding such functions’’. 

2. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE CARSON OF

INDIANA, OR HER DESIGNEE, TO BE DEBATABLE FOR 10 MINUTES

Page 114, line 6, strike the quotation marks and the last period. 

Page 114, after line 6, insert the following new paragraph: 

‘‘(3) MANUFACTURED HOUSING MARKET.—In determining 

whether an enterprise has complied with the duty under subparagraph (A) of subsection (a)(2), the Director may consider 

loans secured by both real and personal property.’’. 

17 

3. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE DAVIS OF

ALABAMA, OR HIS DESIGNEE, TO BE DEBATABLE FOR 10 MINUTES

Page 107, strike lines 20 through 24 and insert the following new 

paragraph: 

‘‘(26) RURAL AREA.—The term ‘rural area’ has the meaning 

given such term in section 520 of the Housing Act of 1949 (42 

U.S.C. 1490), except that such term includes micropolitan 

areas and tribal trust lands.’’. 

4. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE LEACH OF

IOWA, OR HIS DESIGNEE, TO BE DEBATABLE FOR 10 MINUTES

Strike line 21 on page 49 and all that follows through line 4 on 

page 51 and insert the following new subsections: 

‘‘(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(b) or by order— 

‘‘(1) establish a minimum capital level, for any particular enterprise, that is higher than the level specified in subsection (a) 

or, for any particular Federal home loan bank, that is higher 

than the level specified in subsection (b), as the Director deems 

necessary or appropriate taking into consideration the particular circumstances of the particular regulated entity, which 

may include any prudential standards necessary to ensure 

long-term institutional viability and competitive equity in the 

market; or 

‘‘(2) establish a minimum capital level for the enterprises, for 

the Federal home loans 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) EFFECT ON OTHER AUTHORITY.—Nothing in this section may 

be construed to limit the authority of the Director to require a regulated entity to raise or maintain capital under other provisions of 

law, or pursuant to prompt corrective action or administrative enforcement actions, or in connection with conservatorship or receivership powers.’’. 

5. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE ROYCE OF

CALIFORNIA, OR HIS DESIGNEE, TO BE DEBATABLE FOR 10 MINUTES

Page 53, line 20, after ‘‘enterprise’’ insert the following: ‘‘, with 

mitigating systemic risk to the housing or capital markets or the 

financial system,’’. 

6. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE PAUL OF

TEXAS, OR HIS DESIGNEE, TO BE DEBATABLE FOR 10 MINUTES

Page 64, after line 12, insert the following new section: 

18 

SEC. 117. ELIMINATION OF AUTHORITY TO BORROW FROM TREASURY 

OF THE UNITED STATES. 

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

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

subsection (c). 

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

(c) FEDERAL HOME LOAN BANKS.—Section 11 of the Federal 

Home Loan Bank Act (12 U.S.C. 1431) is amended by striking subsection (i). 

7. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE GARRETT

OF NEW JERSEY, OR HIS DESIGNEE, TO BE DEBATABLE FOR 10 

MINUTES

Strike line 21 on page 81 and all that follows through line 4 on 

page 91. 

8. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE LORETTA

SANCHEZ OF CALIFORNIA, OR HER DESIGNEE, TO BE DEBATABLE

FOR 10 MINUTES

Page 93, line 17, before the semicolon insert ‘‘, including the use 

of alternative credit scoring’’. 

9. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE KANJORSKI

OF PENNSYLVANIA, OR HIS DESIGNEE, TO BE DEBATABLE FOR 10 

MINUTES

Strike line 8 on page 270 and all that follows through line 3 on 

page 271 and insert the following: 

SEC. 181. BOARDS OF ENTERPRISES. 

(a) FANNIE MAE.— 

(1) IN GENERAL.—Subsection (b) of section 308 of the Federal 

National Mortgage Association Charter Act (12 U.S.C. 1723(b)) 

is amended in the first sentence by striking ‘‘eighteen persons,’’ 

and inserting ‘‘not less than 7 and not more than 15 persons,’’. 

Strike line 10 on page 271 and all that follows through line 6 on 

page 272 and insert the following: 

(b) FREDDIE MAC.— 

(1) IN GENERAL.—Paragraph (2) of section 303(a) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 

1452(a)(2)) is amended in subparagraph (A) by striking ‘‘eighteen persons,’’ and inserting ‘‘not less than 7 and not more than 

15 persons,’’. 

Page 280, lines 1 and 2, strike ‘‘shall be elected by the members 

and’’. 

Page 280, line 3, after the period insert ‘‘All directors of a Bank 

who are not independent members pursuant to paragraph (3) shall 

be elected by the members.’’. 

Page 280, lines 8 and 9, strike ‘‘one-third’’ and insert ‘‘two-fifths’’. 

Page 280, line 10, strike ‘‘as follows’’ and insert ‘‘, who shall be 

appointed by the Director of the Federal Housing Finance Agency 

19 

from a list of individuals recommended made by the Housing Finance Oversight Board, and shall meet the following criteria’’. 

Page 280, line 20, after ‘‘housing,’’ insert ‘‘community development, economic development,’’. 

Page 281, line 5, strike ‘‘An’’ and insert ‘‘Notwithstanding subsection (f)(2), an’’. 

Page 281, strike lines 11 through 14, and insert the following 

new paragraph: 

(2) in the first sentence of subsection (b), by striking ‘‘directorship’’ and inserting ‘‘member directorship pursuant to subsection (a)(2)’’; 

Page 281, strike lines 15 through 23. 

Page 281, line 25, after the semicolon insert ‘‘and’’. 

Page 282, strike lines 1 through 8. 

Page 282, line 9, strike ‘‘(5)’’ and insert ‘‘(4)’’. 

Page 282, line 10, strike ‘‘subsection (e)’’ and insert ‘‘subsections 

(e) and (f)’’. 

Page 283, strike lines 5 through 19 and insert the following: 

(c) CONTINUED SERVICE OF INDEPENDENT DIRECTORS AFTER EXPIRATION OF TERM.—Section 7(f)(2) of the Federal Home Loan Bank 

Act (12 U.S.C. 1427(f)(2)) is amended— 

(1) in the second sentence, by striking ‘‘or the term of such 

office expires, whichever comes first’’; and 

(2) by adding at the end the following new sentence: ‘‘An appointive Bank director may continue to serve as a director 

after the expiration of the term of such director until a successor is appointed.’’. 

Æ