GOVERNMENT NATIONAL MORTGAGE ASSOCIATION

STATUTORY AUTHORITY

(Title III of National Housing Act, 12 U.S.C. 1716 et seq.)1

TITLE III--NATIONAL MORTGAGE ASSOCIATIONS

PURPOSES

Sec. 301. The Congress hereby declares that the purposes of this

title are to establish secondary market facilities for residential

mortgages, to provide that the operations thereof shall be financed by

private capital to the maximum extent feasible, and to authorize such

facilities to–

(1) provide stability in the secondary market for residential

mortgages2;

(2) respond appropriately to the private capital market;

(3) provide ongoing assistance to the secondary market for

residential mortgages (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) by increasing the liquidity of mortgage investments and

Declaration

of Statutory 

Purposes 

Secondary 

Market

Activities

1 Revised through October 27, 1997. References throughout are principally to the revisions to Title III

of the National Housing Act, ch. 847, 48 Stat. 1246 (1934) that were enacted in the Housing Act of 1954, ch.

649, § 201, 68 Stat. 590, 612 and subsequent amendments. Section 312 of this 1954 revision of Title III

identified the revision as the “Federal National Mortgage Association Charter Act,” the name by which it is still

known. This 1954 revision of Title III, as amended, is referred to herein as the “Charter Act.”

The Government National Mortgage Association is referred to herein as “Ginnie Mae.” Ginnie Mae,

a wholly-owned corporate instrumentality of the United States within the Department of Housing and Urban

Development, was created on February 10, 1938 by the Federal Housing Administrator, acting under Title III

of the National Housing Act. Originally called the “National Mortgage Association of Washington,” later the

same year its name was changed to the “Federal National Mortgage Association” (“Fannie Mae”). In 1948,

Fannie Mae was chartered by Congress. Act of July 1, 1948, ch. 784, § 1, 62 Stat. 1716. In 1954, in the

Charter Act, Fannie Mae was rechartered by Congress and authorized to conduct secondary market

operations in mortgages insured by FHA or insured or guaranteed by VA, to perform special assistance

functions in the purchase of mortgages and to manage and liquidate certain mortgages. Housing Act of 1954,

ch. 649, § 201, 68 Stat. 590, 612. Effective September 1, 1968, Fannie Mae was partitioned into two separate

bodies, Ginnie Mae and Fannie Mae. At the same time, Fannie Mae’s functions were partitioned, with

secondary market operations retained by Fannie Mae and special assistance and management and liquidating

functions transferred to Ginnie Mae. See Section 302 of the Charter Act.

2 Section 731(m)(1)(A) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989,

Pub. L. No. 101-73, 103 Stat. 183, 435 (“FIRREA”) substituted this paragraph (1) and paragraphs (2) and (3)

for what had been paragraphs “(a)” and “(b)” of Section 301 of the Charter Act.

FIRREA also designated what had been paragraph “(c)” of Section 301 as paragraph “(4).” §

731(m)(1)(B), 103 Stat. at 435. This 1989 version of paragraph (4) now appears as paragraph (5) of Section

301 of the Charter Act. See footnote 3, below.

1
improving the distribution of investment capital available for residential

mortgage financing;

(4) promote access to mortgage credit throughout the Nation

(including central cities, rural areas, and underserved areas) by increasing

the liquidity of mortgage investments and improving the distribution of

investment capital available for residential mortgage financing; and3

(5) manage and liquidate federally owned mortgage portfolios in an

orderly manner, with a minimum of adverse effect upon the residential

mortgage market and minimum loss to the Federal Government

4

. [12

U.S.C. 1716.]

CREATION OF GINNIE MAE

Sec. 302. (a)(1) There is hereby created a body corporate to be known

as the “Federal National Mortgage Association”, which shall be

in the Department of Housing and Urban Development. The 

Association shall have succession until dissolved by Act of Congress. It 

shall maintain its principal office in the District of Columbia and shall be 

deemed, for purposes of venue in civil actions, to be a resident thereof. 

Agencies or offices may be established by the Association in such other 

place or places as it may deem necessary or appropriate in the conduct

of its business.

(2) On September 1, 19685, the body corporate described in the

foregoing paragraph shall cease to exist in that form and is hereby

partitioned into two separate and distinct bodies corporate, each of which

shall have continuity and corporate succession as a separated portion of

the previously existing body corporate, as follows:

(A) One of such separated portions shall be a body corporate

without capital stock to be known as Government National Mortgage

Association (hereinafter referred to as the “Association”), which shall

be in the Department of Housing and Urban Development and which

shall retain the assets and liabilities acquired and incurred under

sections 305 and 306 prior to such date, including any and all

liabilities incurred pursuant to section 302(c). The Association shall

have succession until dissolved by Act of Congress. It shall maintain

its principal office in the District of

Management

and Liquidation 

Functions

Fannie Mae Prior to 

9/1/68

9/1/68 Partition of 

Fannie Mae into

Two Entities

Creation of

Ginnie Mae

3 Section 1381(a)(4) of the Housing and Community Development Act of 1992, Pub. L. No. 102550, 

106 Stat. 3672, 3994 redesignated what had been paragraph “(4)” of Section 301 as paragraph “(5)”, and added 

the current paragraph (4).

4 See footnotes 2 and 3, above.

5 Section 806(a)(1) of the Housing and Community Development Act of 1974, Pub. L. No. 93-383, 88 

Stat. 633, 727 substituted “September 1, 1968” for “the effective date established pursuant to section 808 of 

the Housing and Urban Development Act of 1968.”

2
Columbia and shall be deemed, for purposes of venue in civil actions,

to be a resident thereof. Agencies or offices may be established by

the Association in such other place or places as it may deem

necessary or appropriate in the conduct of its business.6

. . . .

(b)(1) For the purposes set forth in section 301 and subject to the 

limitations and restrictions of this title, each of the bodies corporate 

named in subsection (a)(2)7is authorized, pursuant to commitments or 

otherwise, to purchase, service, sell, or otherwise deal in any mortgages 

which are insured under the National Housing Act or title V of the Housing 

Act of 1949, or which are insured or guaranteed under the Servicemen’s 

Readjustment Act of 1944 or chapter 37 of title 38, United States Code; 

and to purchase, service, sell, or otherwise deal in any loans made or 

guaranteed under part B of title VI of the Public Health Service Act;8. . . 

Provided, That (1) the Association may not purchase any mortgage at a 

price exceeding 100 per centum of the unpaid principal amount thereof at 

the time of purchase, with adjustments for interest and any comparable 

items; (2) the Association may not purchase any mortgage, except a 

mortgage insured under title V of the Housing Act of 1949, if it is offered 

by or covers property held by, a State, territorial, or municipal 

instrumentality; and (3) the Association may not purchase any mortgage 

under section 305, except

Ginnie Mae’s

Authority to

Buy Mortgages

Limitation on Price

Limitations on 

Ownership of 

Mortgaged Property

6 Section 302(a)(2), which created Ginnie Mae, was added to the Charter Act by section 802(c)(3) of 

the Housing and Urban Development Act of 1968, Pub. L. No. 90-448 (the “1968 Act”), 82 Stat. 476, 536. 

Section 801 of the 1968 Act, 82 Stat. at 536, states:

The purposes of this title include the partition of the Federal National Mortgage Association 

as heretofore existing into two separate and distinct corporations, each of which shall have 

continuity and corporate succession as a separated portion of the previously existing 

corporation. One of such corporations, to be known as Federal National Mortgage 

Association, will be a Government-sponsored private corporation, will retain the assets and 

liabilities of the previously existing corporation accounted for under section 304 of the Federal 

National Mortgage Association Charter Act, and will continue to operate the secondary market 

operations authorized by such section 304. The other, to be known as Government National 

Mortgage Association, will remain in the Government, will retain the assets and liabilities of 

the previously existing corporation accounted for under sections 305 and 306 of such Act, and 

will continue to operate the special assistance functions and management and liquidating 

functions authorized by such sections 305 and 306.

7 Section 802(d)(1) of the 1968 Act, 82 Stat. at 536 substituted “each of the bodies corporate named 

in subsection (a)(2)” for “the Association,” making the portion of this sentence that precedes the proviso 

applicable to both Fannie Mae and Ginnie Mae. Because the term “Association,” which had theretofore meant 

Fannie Mae, would now mean Ginnie Mae, however, the limitations in the Section 302(b)(1) proviso would 

henceforth apply only to Ginnie Mae.

8 Congress has broadened the authority of Ginnie Mae and Fannie Mae under this section over the 

years. Originally, authority under Title III of the National Housing Act to deal in mortgages was limited to FHAinsured mortgages. In 1948, authority was extended to deal in VA-guaranteed home mortgages. Act of July 

1, 1948, ch. 784, § 1, 62 Stat. 1716. In 1965, authority was expanded again, this time to include rural housing 

mortgages insured by the Farmers Home Administration under title V of the Housing Act of 1949. Housing 

and Urban Development Act of 1965, Pub. L. No. 89-117, §1004(a)(1), 79 Stat. 451, 501. This authority was 

later expanded to include dealing in certain public health service loans. Medical Facilities Construction and 

Modernization Amendments of 1970, Pub. L. No. 91-296, § 202, 84 Stat. 336, 350; Act of December 26, 1974, 

Pub. L. No. 93-541, § 2, 88 Stat. 1739.

3
a mortgage insured under section 220 or title VIII or section 203(k), or 

under title X with respect to a new community approved under section 

1004 thereof, or insured under section 213 and covering property located 

in an urban renewal area, or a mortgage covering property located in 

Alaska, Guam, or Hawaii, if the original principal obligation thereof 

exceeds or exceeded $55,000 in the case of property upon which is 

located a dwelling designed principally for a one-family residence; or 

$60,000 in the case of a two- or three-family residence; or $68,750 in the 

case of a four-family residence; or, in the case of a property containing 

more than four dwelling units, $38,000 per dwelling unit (or such higher 

amount not in excess of $45,000 per dwelling unit as the Secretary may 

by regulation specify in any geographical area where the Secretary finds 

that cost levels so require) for that part of the property attributable to 

dwelling use9. Notwithstanding the provisions of clause (3) of the 

preceding sentence, the Association may purchase a mortgage under 

section 305 with an original principal obligation which exceeds the 

otherwise applicable maximum amount per dwelling unit if the mortgage 

is insured under section 207(c)(3), 213(b)(2), 220(d)(3)(B)(iii), 

221(d)(3)(ii), 221(d)(4)(ii), 231(c)(2), 234(e)(3), or 236. For the purposes 

of this title, the terms “mortgages” and “home mortgages” shall be 

inclusive of any mortgages or other loans insured under any of the 

provisions of the National Housing Act or title V of the Housing Act of 

1949.

. . ..

(c)(1) Notwithstanding any other provision of this Act or of any 

other law, the Association is authorized under section 306 to create, 

accept, execute and otherwise administer in all respects such trusts, 

receiverships, conservatorships, liquidating or other agencies, or other 

fiduciary and representative undertakings and activities, hereinafter in 

this subsection called “trusts,” as might be appropriate for financing 

purposes; and in relation thereto the Association may acquire, hold and 

manage, dispose of, and otherwise deal in any mortgages or other types 

of obligations in which any department or agency of the United States 

listed in paragraph (2) of this subsection may have a financial interest. 

The Association may join in any such undertakings and activities 

notwithstanding that it is also serving in a fiduciary or representative 

capacity; and is authorized to guarantee any participations or other 

instruments, whether evidence of property rights or debt, issued for such 

financing purposes. Participations or other instruments issued by the 

Association pursuant to this subsection shall to the same extent as 

securities which are direct obligations of or obligations guaranteed as to 

principal or interest by the United States be deemed to be exempt 

securities within the meaning of laws administered by the Securities and 

Exchange Commission. The

Limitations on

Original Principal 

Amount of

Purchased

Mortgages

Exception to

Limitation on

Original Principal 

Amount

Definition of

“Mortgages” and

“Home Mortgages”

Ginnie Mae’s

Fiduciary Powers

Ginnie Mae’s

Authority to

Guarantee

Participations

Ginnie Mae’s

Participations

Entitled to SEC 

Exemption

9 Both the dollar limitations on the original principal obligation of mortgages that may be purchased 

under Section 302 of the Charter Act and the types of purchased mortgages that are subject to the limitations 

have been modified repeatedly since the Charter Act was adopted.

4
amounts of any mortgages and other obligations acquired by the

Association under section 306, pursuant to this subsection, shall not be 

included in the total amounts set forth in section 306(c).

(2) Subject to the limitations provided in paragraph (4) of this

subsection, one or more trusts may be established as provided in this 

subsection by each of the following departments or agencies:

(A) The Farmers Home Administration of the Department of

Agriculture, but only with respect to operating loans, direct farm

ownership loans, direct housing loans, and direct soil and water loans.

Such trusts may not be established with respect to loans for housing

for the elderly under sections 502 and 515(a) of the Housing Act of

1949, nor with respect to loans for nonfarm recreational development.

(B) The Department of Education, but only with respect to loans

made by the Secretary of Education for construction of academic

facilities, and loans to help finance student loan programs.

(C) The Department of Housing and Urban Development.

(D) The Department of Veterans Affairs.

(E) The Export-Import Bank.

(F) The Small Business Administration.

The head of each such department or agency, hereinafter in this

subsection called the “trustor,” is authorized to set aside a part or all of

any obligations held by the trustor and subject them to a trust or trusts

and, incident thereto, shall guarantee to the trustee timely payment

thereof. The trust instrument may provide for the issuance and sale of

beneficial interests or participations, by the trustee, in such obligations or

in the right to receive interest and principal collections therefrom; and may

provide for the substitution or withdrawal of such obligations, or for the

substitution of cash for obligations. The trust or trusts shall be exempt

from all taxation. The trust instrument may also contain other appropriate

provisions in keeping with the purposes of this subsection. The

Association shall be named and shall act as trustee of any such trusts 

and, for the purposes thereof, the title to such obligations shall be deemed

to have passed to the Association in trust. The trust instrument shall

provide that custody, control, and administration of the obligations shall

remain in the trustor subjecting the obligations to the trust, subject to

transfer to the trustee in event of default or probable default, as

determined by the trustee, in the payment of principal and interest of the

beneficial interests or participations. Collections from obligations subject

to the trust shall be dealt with as provided in the instrument creating the

trust. The trust instrument shall provide that the trustee will promptly pay

to the trustor the full net proceeds of any sale of beneficial

Certain

Agencies May

Establish Trusts

Permissible

Trust Instrument

Provisions

Disposition of Sale 

Proceeds

5
interests or participations to the extent they are based upon such 

obligations or collections. Such proceeds shall be dealt with as otherwise 

provided by law for sales or repayment of such obligations. The effect of 

both past and future sales of any issue of beneficial interests or 

participations shall be the same, to the extent of the principal of such 

issue, as the direct sale with recourse of the obligations subject to the 

trust. Any trustor creating a trust or trusts hereunder is authorized to 

purchase, through the facilities of the trustee, outstanding beneficial 

interests or participations to the extent of the amount of the trustor’s 

responsibility to the trustee on beneficial interests or participations 

outstanding, and to pay the trustor’s proper share of the costs and 

expenses incurred by the Association as trustee pursuant to the trust 

instrument.

(3) When any trustor guarantees to the trustee the timely payment of 

obligations the trustor subjects to a trust pursuant to this subsection, and 

it becomes necessary for such trustor to meet his responsibilities under 

such guaranty, the trustor is authorized to fulfill such guaranty.

(4) Beneficial interests or participations shall not be issued for the 

account of any trustor in an aggregate principal amount greater than is 

authorized with respect to such trustor in an appropriation Act. Any such 

authorization shall remain available only for the fiscal year for which it is 

granted and for the succeeding fiscal year.

(5) The Association, as trustee, is authorized to issue and sell 

beneficial interests or participations under this subsection, 

notwithstanding that there may be an insufficiency in aggregate receipts 

from obligations subject to the related trust to provide for the payment by 

the trustee (on a timely basis out of current receipts or otherwise) of all 

interest or principal on such interests or participations (after provision for 

all costs and expenses incurred by the trustee, fairly prorated among 

trustors). There are authorized to be appropriated without fiscal year 

limitation such sums as may be necessary to enable any trustor to pay 

the trustee such insufficiency as the trustee may require on account of 

outstanding beneficial interests or participations authorized to be issued 

pursuant to paragraph (4) of this subsection. Such trustor shall make 

timely payments to the trustee from such appropriations, subject to and 

in accord with the trust instrument. In the event that the insufficiency 

required by the trustee is on account of principal maturities of outstanding 

beneficial interests or participations authorized to be issued pursuant to 

paragraph (4) of this subsection, or pursuant hereto, the trustee is 

authorized to elect to issue additional beneficial interests or participations 

for refinancing purposes in lieu of requiring any trustor or trustors to make 

payments to the trustee from appropriated funds or other sources. Each 

such issue of beneficial interests or participations shall be in an amount 

determined by the trustee but not in excess of the aggregate amount 

which the trustee would otherwise require the trustor or trustors to pay 

from appropriated funds or other sources, and may be issued without 

regard to the

Effect of Sales

Trustors’ Guaranty 

of Timely Payment

Issuance of 

Participations 

Limited to 

Appropriation 

Act 

Authorization

Appropriation

Authorization for

Insufficiencies

Refinancing 

Authority

6
provisions of paragraph (4) of this subsection. All refinancing issues of 

beneficial interests or participations shall be deemed to have been issued 

pursuant to the authority contained in the appropriation Act or Acts under 

which the beneficial interests or participations were originally issued.

. . . .

[12 U.S.C. 1717.]

SPECIAL ASSISTANCE FUNCTIONS —

GINNIE MAE

Sec. 305. [Repealed.]

10 [12 U.S.C. 1720.]

MANAGEMENT AND LIQUIDATION FUNCTIONS — 

GINNIE MAE

Sec. 306. (a) To carry out the purposes set forth in paragraph (c) of

section 301, the Association is authorized and directed, as of the close

of the cutoff date determined by the Association pursuant to section

303(d) of this title, to establish separate accountability for all of its assets 

and liabilities (exclusive of capital, surplus, surplus reserves, and

undistributed earnings to be evidenced by preferred stock as provided

in section 303(d) hereof, but inclusive of all rights and obligations under

any outstanding contracts), and to maintain such separate

accountability for the management and orderly liquidation of such assets 

and liabilities as provided in this section.

(b) For the purposes of this section and to assure that, to the

maximum extent, and as rapidly as possible, private financing will be

substituted for Treasury borrowings otherwise required to carry

mortgages held under the aforesaid separate accountability, the

Association is authorized to issue, upon the approval of the Secretary of 

the Treasury, and have outstanding at any one time obligations having 

such maturities and bearing such rate or rates of interest as may be 

determined by the Association with the approval of the Secretary of the 

Treasury, to be redeemable at the option of the Association before 

maturity in such manner as may be stipulated in such obligations; but in 

no event shall any such obligations be issued if, at the time of such 

proposed issuance, and as a consequence thereof, the resulting 

aggregate amount of its outstanding obligations under this subsection 

would exceed the amount of the Association’s ownership under the 

aforesaid separate accountability, free from any liens or

Ginnie Mae

Portfolio as of

October 31, 1954

Private Financing

10 Section 305 of the Charter Act was repealed by section 483(a) of the Housing and Urban-Rural 

Recovery Act of 1983, Pub. L. No. 98-181, 97 Stat. 1153, 1240 (1983).

7
encumbrances, of cash, mortgages, and obligations of the United States 

or guaranteed thereby, or obligations, participations, or other instruments 

which are lawful investments for fiduciary, trust, or public funds. The 

proceeds of any private financing effected under this subsection shall be 

paid to the Secretary of the Treasury in reduction of the indebtedness of 

the Association to the Secretary of the Treasury under the aforesaid 

separate accountability. The Association shall insert appropriate 

language in all of its obligations issued under this subsection clearly 

indicating that such obligations, together with the interest thereon, are not 

guaranteed by the United States and do not constitute a debt or obligation 

of the United States or of any agency or instrumentality thereof other than 

the Association. The Association is authorized to purchase in the open 

market any of its obligations outstanding under this subsection at any 

time and at any price.

(c) No mortgage shall be purchased by the Association in its

operations under this section except pursuant to and in accordance with

the terms of a contract or commitment to purchase the same made prior

to the cutoff date provided for in section 303(d), which contract or

commitment became a part of the aforesaid separate accountability,

and the total amount of mortgages and commitments held by the

Association under this section shall not, in any event, exceed 

$3,350,000,000: Provided, That such maximum amount shall be 

progressively reduced by the amount of cash realizations on account of 

principal of mortgages held under the aforesaid separate accountability 

and by cancellation of any commitments to purchase mortgages 

thereunder, as reflected by the books of the Association, with the 

objective that the entire aforesaid maximum amount shall be eliminated 

with the orderly liquidation of all mortgages held under the aforesaid 

separate accountability: And provided further, That nothing in this

subsection shall preclude the Association from granting such usual and

customary increases in the amounts of outstanding commitments

(resulting from increased costs or otherwise) as have theretofore been

covered by like increases in commitments granted by the agencies of

the Federal Government insuring or guaranteeing the mortgages.

There shall be excluded from the total amounts set forth in this 

subsection the amounts of any mortgages which, subsequent to May 

31, 1954, are transferred by law to the Association and held under the

aforesaid separate accountability.

(d) The Association may issue to the Secretary of the Treasury its

obligations in an amount outstanding at any one time sufficient to enable

the Association to carry out its functions under this section, such

obligations to mature not more than five years from their respective dates

of issue, to be redeemable at the option of the Association before maturity

in such manner as may be stipulated in such obligations. Each such

obligation shall bear interest at a rate determined by the Secretary of the

Treasury, taking into consideration the current average rate on

outstanding marketable obligations of the United States as of the last day

of the month preceding the issuance of the obligation of the

Limitations

on Purchases 

of Mortgages

Exclusions From 

Limitations

Treasury

Financing

Interest Rates

on Ginnie Mae

Obligations

8
Association. The Secretary of the Treasury is authorized to purchase any 

obligations of the Association to be issued under this section, and for such

purpose the Secretary of the Treasury is authorized to use as a public 

debt transaction the proceeds from the sale of any securities issued under

chapter 31 of title 31, United States Code, and the purposes for which

securities may be issued under chapter 31 of title 31, United States Code,

are extended to include any purchases of the Association’s obligations

hereunder.

(e) Notwithstanding any other provision of law, the Association is 

authorized, under the aforesaid separate accountability, to make 

commitments to purchase, and to purchase, service, or sell any 

obligations offered to it by the Secretary of Housing and Urban 

Development, or any mortgages covering residential property offered to 

it by any Federal instrumentality, or the head thereof. There shall be 

excluded from the total amounts set forth in subsection (c) the amounts 

of any obligations or mortgages purchased by the Association pursuant 

to this subsection.

(f) Notwithstanding any of the provisions of this Act or of any other 

law, an amount equal to the net decrease for the preceding fiscal year in 

the aggregate principal amount of all mortgages owned by the 

Association under this section shall, as of July 1 of each of the years 1961 

through 1964, be transferred to and merged with the authority provided 

under section 305(a), and the amount of such authority as specified in 

section 305(c) shall be increased by any amounts so transferred.

11

(g)(1)12 The Association is authorized, upon such terms and conditions 

as it may deem appropriate, to guarantee the timely payment of principal 

of and interest on such trust certificates or other securities as shall (i) be 

issued by the corporation under section 304(d), or by any other issuer 

approved for the purposes of this subsection by the Association, and (ii) 

be based on and backed by a trust or pool composed of mortgages which 

are insured under the National Housing Act or title V of the Housing Act of 

1949, or which are insured or guaranteed under the Servicemen’s 

Readjustment Act of 1944 or chapter 37 of title 38, or which are 

guaranteed under title XIII of the Public Health Service Act13 [42 U.S.C. 

300e et seq.]; [2] or guaranteed under

Ginnie Mae’s

Authority to

Purchase

Mortgages from

Federal

Instrumentalities

Transfer of 

Dollar Authority 

to Presidential

Authority

Ginnie Mae’s 

Authority to

Guarantee

Securities

11 Section 601(c) of the Housing Act of 1961, Pub. L. No. 87-70, 75 Stat. 149, 176 added subsection 

(f) to Section 306 of the Charter Act.

12 Subsection (g) was added to Section 306 of the Charter Act in the same legislation in which 

Congress created Ginnie Mae. 1968 Act, § 804(b), 82 Stat. at 542. Section 333(a)(3) of the Omnibus Budget 

Reconciliation Act of 1981, Pub. L. No. 97-35. 95 Stat. 357, 413 redesignated section “306(g)” as “306(g)(1)” 

and added a new paragraph “(2).”

13 The relevant portions of the Public Health Service Act have been repealed.

9
section 184 of the Housing and Community Development Act of 1992, 

section 1715z-13a of this title 14. The Association shall collect from the 

issuer a reasonable fee for any guaranty under this subsection and shall 

make such charges as it may determine to be reasonable for the analysis 

of any trust or other security arrangement proposed by the issuer. In the 

event the issuer is unable to make any payment of principal of or interest 

on any security guaranteed under this subsection, the Association shall 

make such payments as and when due in cash, and thereupon shall be 

subrogated fully to the rights satisfied by such payment. In any case in 

which (I) Federal law requires the reduction of the interest rate on any 

mortgage backing a security guaranteed under this subsection, (II) the 

mortgagor under the mortgage is a person in the military service, and (III) 

the issuer of such security fails to receive from the mortgagor the full 

amount of interest payment due, the Association may make payments of 

interest on the security in amounts not exceeding the difference between 

the amount payable under the interest rate on the mortgage and the 

amount of interest actually paid by the mortgagor.15 The Association is 

hereby empowered, in connection with any guaranty

Ginnie Mae May

Collect Fees and 

Charges

Soldiers’ and

Sailors’ Civil Relief 

Act Payments

Default by Issuer of

14 Ginnie Mae’s authority to guarantee securities backed by loans guaranteed under section 184 of 

the Housing and Community Development Act of 1992 was inserted by section 701(k) of the Native American 

Housing Assistance and Self-Determination Act of 1996, Pub. L. No. 104-330, 110 Stat. 4016, 4050.

15 This sentence, which authorizes Ginnie Mae to absorb the costs of reduced interest payments by 

persons in the military whose mortgage interest rates are reduced under the Soldiers’ and Sailors’ Civil Relief 

Act of 1940, as amended, was inserted in Section 306(g)(1) by section 532 of the Housing and Community 

Development Act of 1992, Pub. L. No. 102-550, 106 Stat. 3672, 3793. See H.R. Rep. No. 102760, at 33 (1992).

16 October 8, 1980. This was the effective date of the Housing and Community Development Act of 

1980, Pub.L. No. 96-399, 94 Stat. 1614, which added this sentence. See footnote 17, below.

17 Section 335(2) of the Housing and Community Development Act of 1980, Pub. L. No. 96-399, 94 

Stat. 1614, 1654 inserted this sentence. Section 335(1) substituted “The” in place of the words “Any Federal, 

State, or other law to the contrary notwithstanding, the,” which had theretofore appeared at the beginning of 

what is now the fifth sentence of Section 306(g)(1). The purpose of these changes was described in the report 

of the Committee on Banking, Finance and Urban Affairs:

In amending the bankruptcy laws in 1978, Congress amended and repealed many Federal 

statutes to conform these Federal Laws to the Bankruptcy Code. However, Congress did 

not expressly amend or repeal section 306(g). Because the Committee feels that GNMA’s 

authority to terminate issuer status under section 306(g) is essential to effecting the GNMA 

guaranty of timely payment, it has acted to clarify that the changes accomplished by the 

new Bankruptcy Code are not intended to limit that authority.

H.R. Rep. No. 96-979, at 49 (1980).

18 William H. Rehnquist, then Assistant Attorney General of the United States, delivered an opinion, 

dated December 9, 1969, to the Secretary of HUD that said:

Section 306(g) of the Charter Act expressly authorizes the Association to guarantee the 

timely payment of principal and interest on securities described therein, and the 

regulations cited above conform to the statutory grant of authority. The statute provides 

that: “The full faith and credit of the United States is pledged to the payment of all amounts 

which may be required to be paid under any guaranty under this subsection.” I therefore 

conclude that the Association is authorized to make the proposed guaranties and that

they would constitute general obligations of the United States backed by its full faith and 

credit.

10
under this subsection, whether before or after any default, to provide by 

contract with the issuer for the extinguishment, upon default by the issuer, 

of any redemption, equitable, legal, or other right, title, or interest of the 

issuer in any mortgage or mortgages constituting the trust or pool against 

which the guaranteed securities are issued; and with respect to any issue 

of guaranteed securities, in the event of default and pursuant otherwise 

to the terms of the contract, the mortgages that constitute such trust or 

pool shall become the absolute property of the Association subject only 

to the unsatisfied rights of the holders of the securities based on and 

backed by such trust or pool. No State or local law, and no Federal law 

(except Federal law enacted expressly in limitation of this subsection 

after the effective date of this sentence16), shall preclude or limit the 

exercise by the Association of (A) its power to contract with the issuer on 

the terms stated in the preceding sentence, (B) its rights to enforce any 

such contract with the issuer, or (C) its ownership rights, as provided in 

the preceding sentence, in the mortgages constituting the trust or pool 

against which the guaranteed securities are issued.17 The full faith and 

credit of the United States is pledged to the payment of all amounts which 

may be required to be paid under any guaranty under this subsection.18

There shall be excluded from the total amounts set forth in subsection (c) 

the amounts of any mortgages acquired by the Association as a result of 

its operations under this subsection.

(2) Notwithstanding any other provision of law and subject only to the 

absence of qualified requests for guarantees, to the authority provided in 

this subsection, and to the extent of or in such amounts as any funding 

limitation approved in appropriation Acts, the Association shall enter into 

commitments to issue guarantees under this subsection in an aggregate 

amount of $110,000,000,000 during fiscal year 1996.19 There are 

authorized to be appropriated to cover the costs (as such term is defined 

in section 502 of the Congressional Budget Act of 1974) of guarantees 

issued under this Act by the Association such sums as may be necessary 

for fiscal year 1996.

20

(3)(A) No fee or charge in excess of 6 basis points may be assessed 

or collected by the United States (including any executive department, 

agency, or independent establishment of the United

Guaranteed 

Securities

MBS Program: 

Preemption

Full Faith

and Credit

Limitation on Ginnie 

Mae’s Authority to

Guarantee

Securities

Guaranty Fees 

on MBS

19The limit on new commitment authority is set annually by Congress in appropriations acts. For fiscal 

year 1998, the limit on commitment authority is set at $130,000,000,000. Departments of Veterans Affairs and 

Housing and Urban Development, and Independent Agencies Appropriations Act, 1998, Pub. L. No. 105-65, 

tit. II, 111 Stat. 1344 (1997). No separate commitment authority is required in order for Ginnie Mae to guarantee 

timely payments of principal and interest on multiclass securities backed by Ginnie Mae mortgage-backed 

securities. See H.R. Rep. No. 103-50 at 34 (1994).

20 Section 531 of the Housing and Community Development Act of 1992, Pub. L. No. 102-550, 106 

Stat. 3672, 3793 added the final sentence of the paragraph, and the sentence was amended by section 7 of 

the Housing Opportunity Program Extension Act of 1996, Pub. L. No. 104-120, 110 Stat. 834, 836. The 

sentence authorizes an appropriation for positive credit subsidy for fiscal year 1996. See Congressional 

Budget and Impoundment Control Act of 1974, Pub. L. No. 93-344, tit. V, 88 Stat. 297, 321-322.

11
States) on or with regard to any guaranty of the timely payment of

principal or interest on securities or notes based on or backed by

mortgages that are secured by 1- to 4-family dwellings and (i) insured by

the Federal Housing Administration under title II of the National Housing

Act; or (ii) insured or guaranteed under the Serviceman’s [sic]

Readjustment Act of 1944, chapter 37 of title 38, United States Code, or

title V of the Housing Act of 1949.

(B) The fees charged for the guaranty of securities or on notes based

on or backed by mortgages not referred to in subparagraph (A), as

authorized by other provisions of law, shall be set by the Association at a

level not more than necessary to create reserves sufficient to meet

anticipated claims based upon actuarial analysis, and for no other

purpose.

(C) Fees or charges for the issuance of commitments or

miscellaneous administrative fees of the Association shall not be on a

competitive auction basis and shall remain at the level set for such fees

or charges as of September 1, 1985, except that such fees or charges

may be increased if reasonably related to the cost of administering the

program, and for no other purpose.

(D) Not less than 90 days before increasing any fee or charge under

subparagraph (B) or (C), the Secretary shall submit to the Congress a

certification that such increase is solely for the purpose specified in such

subparagraph.

21

(E)(i) Notwithstanding subparagraphs (A) through (D), fees charged

for the guarantee of, or commitment to guarantee, multiclass securities

backed by a trust or pool of securities or notes guaranteed by the

Association under this subsection, and other related fees shall be

charged by the Association in an amount the Association deems

appropriate. The Association shall take such action as may be necessary

to reasonably assure that such portion of the benefit, resulting from the

Association’s multiclass securities program, as the Association

determines is appropriate accrues to mortgagors who execute eligible

mortgages after the date of the enactment of this subparagraph.

(ii) The Association shall provide for the initial implementation of the

program for which fees are charged under the first sentence of clause (i)

by notice published in the Federal Register. The notice shall be effective

upon publication and shall provide an opportunity for public comment.

Not later than 12 months after publication of the notice, the Association

shall issue regulations for such program based on the

Guaranty Fees

on Multiclass

Securities

Multiclass

Securities

Program:

Implementation

21 Subparagraphs 3(A) through 3(D) of Section 306(g) of the Charter Act, which impose certain limits

on the fees Ginnie Mae may collect in connection with its guarantee of mortgage-backed securities, were

added by the Act of March 24, 1987, Pub. L. No. 100-14, 101 Stat. 128.

12
notice, comments received, and the experience of the Association in

carrying out the program during such period.

(iii) The Association shall consult with persons or entities in such

manner as the Association deems appropriate to ensure the efficient

commencement and operation of the multiclass securities program.

(iv) No State or local law, and no Federal law (except Federal law

enacted expressly in limitation of this clause after the effective date of

this subparagraph) shall preclude or limit the exercise by the Association

of its power to contract with persons or entities, and its rights to enforce

such contracts, for the purpose of ensuring the efficient commencement

and continued operation of the multiclass securities program.

22 [12

U.S.C. 1721.]

SEPARATE ACCOUNTABILITY

Sec. 307. All of the benefits and burdens incident to the administration

of the functions and operations of the Association under sections 305 and

306, respectively, of this title, after allowance for related obligations of the

Association, its prorated expenses, and the like, including amounts

required for the establishment of such reserves as the Secretary of

Housing and Urban Development shall deem appropriate, shall inure

solely to the Secretary of the Treasury, and such related earnings or other

amounts as become available shall be paid annually by the Association

to the Secretary of the Treasury for covering into miscellaneous receipts.

[12 U.S.C. 1722.]

MANAGEMENT

Sec. 308. (a) All the powers and duties of the Government National

Mortgage Association shall be vested in the Secretary of Housing and

Urban Development and the Association shall be administered under the

direction of the Secretary. Within the limitations of law, the Secretary shall

determine the general policies which shall govern the operations of the

Association, and shall have power to adopt, amend, and repeal bylaws

governing the performance of the powers and duties granted to or

imposed upon it by law. There is hereby established in the Department of

Housing and Urban Development the position of President, Government

National Mortgage Association, who shall be appointed by the President,

by and with the advice and consent of the Senate. The Secretary shall

select and effect the appointment of qualified persons to fill the offices of

vice president, and such other

Multiclass

Securities Program: 

Consultation

Multiclass

Securities Program: 

Preemption

Benefits and

Burdens of Ginnie 

Mae Operations

Inure to

Secretary of

Treasury

Ginnie Mae’s 

Powers and Duties 

Vested in

Secretary of HUD

President of 

Ginnie Mae

22 Subparagraph (E) of Section 306(g) of the Charter Act was added by section 3006 of the Omnibus 

Budget Reconciliation Act of 1993, Pub. L. No. 103-66, 107 Stat. 312, 339 in order to provide for the 

implementation by Ginnie Mae of a multiclass securities program, including the collection of appropriate fees 

for the guarantee of multiclass securities backed by Ginnie Mae mortgage-backed securities. Compare 

subparagraph (E)(iv) with the sixth sentence of Section 306(g)(1).

13
offices as may be provided for in the bylaws. Persons appointed under the

preceding sentence shall perform such executive functions, powers, and

duties as may be prescribed by the bylaws or by the Secretary, and such

persons shall be executive officers of the Association and shall discharge

all such executive functions, powers, and duties.

23

. . ..

[12 U.S.C. 1723.]

23 Section 17(a) of the Housing Authorization Act of 1976, Pub. L. No. 94-375, 90 Stat. 1067, 1076

established the position of president of Ginnie Mae, to be filled by the President of the United States by and

with the consent of the Senate.

14
GENERAL POWERS

Sec. 309. (a) Each of the bodies corporate named in section 302(a)(2) 

shall have power to adopt, alter, and use a corporate seal, which shall be 

judicially noticed; to enter into and perform contracts, leases, cooperative 

agreements, or other transactions, on such terms as it may deem 

appropriate, with any agency or instrumentality of the United States, or 

with any State, Territory, or possession, or the Commonwealth of Puerto 

Rico, or with any political subdivision thereof, or with any person, firm, 

association, or corporation; to execute, in accordance with its bylaws, all 

instruments necessary or appropriate in the exercise of any of its powers; 

in its corporate name, to sue and to be sued, and to complain and to 

defend, in any court of competent jurisdiction, State or Federal, but no 

attachment, injunction, or other similar process, mesne or final, shall be 

issued against the property of the Association or against the Association 

with respect to its property; to conduct its business without regard to any 

qualification or similar statute in any State of the United States, including 

the District of Columbia, the Commonwealth of Puerto Rico, and the 

Territories and possessions of the United States; to lease, purchase, or 

acquire any property, real, personal, or mixed, or any interest therein, to 

hold, rent, maintain, modernize, renovate, improve, use, and operate 

such property, and to sell, for cash or credit, lease, or otherwise dispose 

of the same, at such time and in such manner as and to the extent that it 

may deem necessary or appropriate; to prescribe, repeal, and amend or 

modify, rules, regulations, or requirements governing the manner in which 

its general business may be conducted; to accept gifts or donations of 

services, or of property, real, personal, or mixed, tangible, or intangible, 

in aid of any of its purposes; and to do all things as are necessary or 

incidental to the proper management of its affairs and the proper conduct 

of its business.

(b) Except as may be otherwise provided in this title, in chapter 91 of 

title 31, United States Code, or in other laws specifically applicable to 

Government corporations, the Association shall determine the necessity 

for and the character and amount of its obligations and expenditures and 

the manner in which they shall be incurred, allowed, paid, and accounted 

for.

(c)(1) The Association, including its franchise, capital, reserves, 

surplus, mortgages or other security holdings, 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, except that any real 

property of the Association 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.

. . . .

Ginnie Mae’s

Corporate

Powers

Perform Contracts

15

Sue and Be Sued

Lease or Buy 

Property

Ginnie Mae’s 

Expenditures

Ginnie Mae’s 

Exemption from 

Certain Taxes
(d)(1) Subject to the provisions of section 308(a)

24

, the Secretary of 

Housing and Urban Development shall have power to select and appoint 

or employ such officers, attorneys, employees, and agents of the 

Association, to vest them with such powers and duties, and to fix and to 

cause the Association to pay such compensation to them for their 

services, as he may determine, subject to the civil service and 

classification laws. With the consent of any Government corporation or 

Federal Reserve bank, or of any board, commission, independent 

establishment, or executive department of the Government, the 

Association may avail itself on a reimbursable basis of the use of 

information, services, facilities, officers, and employees thereof, 

including any field service thereof, in carrying out the provisions of this 

title.

. . . .

(e) No individual, association, partnership, or corporation, except 

the bodies corporate named in section 302(a)(2) of this title, shall 

hereafter use the words “Federal National Mortgage Association,” 

“Government National Mortgage Association,” or any combination of 

such words, as the name or a part thereof under which the individual, 

association, partnership, or corporation shall do business. Violations of 

the foregoing sentence may be enjoined by any court of general 

jurisdiction at the suit of the proper body corporate. In any such suit, 

the plaintiff may recover any actual damages flowing from such 

violation, and, in addition, shall be entitled to punitive damages 

(regardless of the existence or nonexistence of actual damages) of not 

exceeding $100 for each day during which such violation is committed 

or repeated.

25

( ) In order that the Association may be supplied with such forms of 

obligations or certificates as it may need for issuance under this title, the 

Secretary of the Treasury is authorized, upon request of the Association, 

to prepare such forms as shall be suitable and approved by the 

Association, to be held in the Treasury subject to delivery, upon order of 

the Association. The engraved plates, dies, bed pieces, and other 

material executed in connection therewith shall remain in the custody of 

the Secretary of the Treasury. The Association shall reimburse the 

Secretary of the Treasury for any expenses incurred in the preparation, 

custody, and delivery of such forms.

(g) The Federal Reserve banks are authorized and directed to act as 

depositaries, custodians, and fiscal agents for each of the bodies 

corporate named in section 302(a)(2), for its own account or as

Appointment of

Other Ginnie Mae 

Officers and

Employees

Exclusive Use of 

Ginnie Mae’s Name

Engraved Forms 

of Certificates

Federal Reserve 

Banks to Act as 

Ginnie Mae’s Fiscal

24 This qualification was added by section 17(b) of the Housing Authorization Act of 1976, Pub. L. No. 

94-375, 90 Stat. 1067, 1076 in light of the new provision, added in the same legislation, that the position of 

president of Ginnie Mae would henceforth be filled by Presidential appointment.

25 Section 802(cc)(3) of the 1968 Act, 82 Stat. at 541 substituted the existing second and third 

sentences for a provision that had made violation of Section 309(e) a misdemeanor.

16
fiduciary, and such banks shall be reimbursed for such services in such Agents

manner as may be agreed upon; and each of such bodies corporate

may itself act in such capacities, for its own account or as fiduciary, and

for the account of others.

. . ..

[12 U.S.C. 1723a.]

INVESTMENT OF FUNDS

Sec. 310. Moneys of the Association not invested in mortgages or

other security holdings or in operating facilities shall be kept in cash on

hand or on deposit, or invested in obligations of the United States or

guaranteed thereby, or in obligations, participations, or other instruments 

which are lawful investments for fiduciary, trust, or public funds. [12

U.S.C. 1723b.]

OBLIGATIONS OF GINNIE MAE ARE

LEGAL INVESTMENTS

Sec. 311. All obligations, participations, or other instruments issued

by either of the bodies corporate named in section 302(a)(2) shall be

lawful investments, and may be accepted as security for all fiduciary,

trust, and public funds, the investment or deposit of which shall be under

the authority and control of the United States or any officer or officers

thereof. All stock, obligations, securities, participations, or other

instruments issued pursuant to this title shall, to the same extent as

securities which are direct obligations of or obligations guaranteed as to

principal or interest by the United States, be deemed to be exempt

securities within the meaning of laws administered by the Securities and

Exchange Commission. [12 U.S.C. 1723c.]

INTERIM AUTHORITY TO PURCHASE

CERTAIN MORTGAGES

Sec. 313. [Repealed]

26

. [12 U.S.C. 1723e.]

PURCHASE OF ENERGY CONSERVING

IMPROVEMENT LOANS TO LOW- AND

MODERATE-INCOME FAMILIES

Sec. 314. [Repealed]

27

. [12 U.S.C. 1723f.]

AUTHORITY OF SOLAR ENERGY AND ENERGY

26 Section 313 of the Charter Act was repealed in 1983. Housing and Urban-Rural Recovery Act of

1983, Pub. L. No. 98-181, § 483(a), 97 Stat. 1153, 1240.

27 Section 314 of the Charter Act was repealed in 1980. Energy Security Act, Pub. L. No. 96-294, §

533, 94 Stat. 611, 740.

17

Securities Issued 

Under This Title

Entitled To SEC

Exemption
CONSERVATION BANK TO PURCHASE LOANS AND

ADVANCES OF CREDIT FOR ENERGY CONSERVING

IMPROVEMENTS OR SOLAR ENERGY SYSTEMS

Sec. 315. [Repealed]

28

. [12 U.S.C. 1723g.]

AUTHORITY OF SOLAR ENERGY AND ENERGY

CONSERVATION BANK TO PURCHASE MORTGAGES

SECURED BY NEWLY CONSTRUCTED HOMES WITH

SOLAR ENERGY SYSTEMS

Sec. 316. [ Repealed]

29

. [12 U.S.C. 1723h.]

CIVIL MONEY PENALTIES AGAINST GINNIE MAE ISSUERS

Sec. 317. (a) In General. —

(1) Authority. — Whenever an issuer or custodian approved under

section 306(g) knowingly and materially violates any provisions of

subsection (b), the Secretary of Housing and Urban Development may

impose a civil money penalty on the issuer or the custodian in

accordance with the provisions of this section. The penalty shall be in

addition to any other available civil remedy or any available criminal

penalty and may be imposed whether or not the Secretary imposes other

administrative sanctions.

(0) Amount of Penalty. — The amount of the penalty, as

determined by the Secretary, may not exceed $5,000 for each violation,

except that the maximum penalty for all violations by a particular issuer

or custodian during any one-year period shall not exceed $1,000,000.

Each violation of a provision of subsection (b)(1) shall constitute a

separate violation with respect to each pool of mortgages. In the case of

a continuing violation, as determined by the Secretary, each day shall

constitute a separate violation.

(b) Violations for which a Penalty May Be Imposed. — Violations

(1) Violations. — The violations by an issuer or a custodian for which

the Secretary may impose a civil money penalty under subsection (a) are

the following:

(A) Failure to make timely payments of principal and interest to

holders of securities guaranteed under section 306(g).

28 Section 315 of the Charter Act was repealed in 1992. Housing and Community Development Act

of 1992, Pub. L. No. 102-550, § 912(i)(2), 106 Stat. 3672, 3876.

29 Section 316 of the Charter Act was repealed in 1992. Housing and Community Development Act

of 1992, Pub. L. No. 102-550, § 912(i)(2), 106 Stat. 3672, 3876.

18
(B) Failure to segregate cash flow from pooled mortgages or to

deposit either principal and interest funds or escrow funds into special

accounts with a depository institution whose accounts are insured by

the National Credit Union Administration or by the Federal Deposit

Insurance Corporation through the Bank Insurance Fund for banks or

through the Savings Association Insurance Fund for savings

associations.30

(C) Use of escrow funds for any purpose other than that for which

they were received.

(D) Transfer of servicing for a pool of mortgages to an issuer not

approved under this title, unless expressly permitted by statute,

regulation, or contract approved by the Secretary.

(E) Failure to maintain a minimum net worth in accordance with

requirements prescribed by the Association.

(F) Failure to promptly notify the Association in writing of any

changes that materially affect the business status of an issuer.

(G) Submission to the Association of false information in

connection with any securities guaranteed, or mortgages pooled,

under section 306(g).

(H) Hiring, or retaining in employment, an officer, director,

principal, or employee whose duties involve, directly or indirectly,

programs administered by the Association while such person was

under suspension or debarment by the Secretary.

( ) Submission to the Association of a false certification either on

its own behalf or on behalf of another person or entity.

(I) Failure to comply with an agreement, certification, or

condition of approval set forth on, or applicable to, the application for

approval as an issuer of securities under section 306(g).

(J) Violation of any provisions of this title or any implementing

regulation, handbook, or participant letter issued under authority of

this title.

(2) Notification to Attorney General. — Before taking action to impose

a civil money penalty for violation under paragraph (1)(G) or paragraph

(1)(I), the Secretary shall inform the Attorney General of the

30Section 2704(d)(13)(A) of the Omnibus Consolidated Appropriations Act, 1997, Pub. L. No. 104208,

110 Stat. 3009, 3009-490 (1996) would substitute “Deposit Insurance Fund” for “Bank Insurance Fund for

banks or through the Savings Association Insurance Fund for savings associations.” This provision will not

take effect, however, until January 1, 1999, and then only if no insured depository institution is a savings

association on that date. § 2704(c), 110 Stat. at 3009-487.

19
United States.

(c) Agency Procedures. — 

(1) Establishment. — The Secretary shall establish standards and 

procedures governing the imposition of civil money penalties under 

subsection (a). The standards and procedures–

(A) shall provide for the Secretary to make the determination to 

impose the penalty;

(B) shall provide for the imposition of a penalty only after an issuer 

or a custodian has been given notice of, and opportunity for, a hearing 

on the record; and

( ) may provide for review by the Secretary of any 

determination or order, or interlocutory ruling, arising from a hearing.

(2) Final Orders. — If no hearing is requested within 15 days of receipt 

of a notice of opportunity for hearing, the imposition of a penalty shall 

constitute a final and unappealable determination. If the Secretary 

reviews the determination or order, the Secretary may affirm, modify, or 

reverse that determination or order. If the Secretary does not review the 

determination or order within 90 days of the issuance of the determination 

or order, the determination or order shall be final.

(3) Factors in Determining Amount of Penalty. — In determining the 

amount of a penalty under subsection (a), consideration shall be given 

to such factors as the gravity of the offense, any history of prior offenses 

(including offenses occurring before enactment of this section), ability 

to pay the penalty, injury to the public, benefits received, deterrence of 

future violations, and such other factors as the Secretary may determine 

by regulations.

(4) Reviewability of Imposition of Penalty. — The Secretary’s 

determination or order imposing a penalty under subsection (a) shall not 

be subject to review, except as provided in subsection (d).

(d) Judicial Review of Agency Determination. —

(1) In General. - After exhausting all administrative remedies 

established by the Secretary under subsection (c)(1), an issuer or a 

custodian against which the Secretary has imposed a civil money penalty 

under subsection (a) may obtain a review of the penalty and such 

ancillary issues as may be addressed in the notice provided under 

subsection (c)(1)(A) in the appropriate court of appeals of the United 

States, by filing in such court, within 20 days after the entry of such order 

or determination, a written petition praying that the Secretary’s order or 

determination be modified or be set aside in whole or in part.

Agency 

Procedures

Judicial Review

20
(2) Objections not Raised in Hearing. — A court shall not consider

any objection that was not raised in the hearing conducted pursuant to

subsection (c)(1) unless a demonstration is made of extraordinary

circumstances causing the failure to raise the objection. If any party

demonstrates to the satisfaction of the court that additional evidence,

which was not presented at such hearing, is material and that there were

reasonable grounds for the failure to present such evidence at the

hearing, the court shall remand the matter to the Secretary for

consideration of such additional evidence.

(3) Scope of Review. — The decisions, findings, and determinations 

of the Secretary shall be reviewed pursuant to section 706 of title 5, United

States Code.

(4) Order to Pay Penalty. — Notwithstanding any other provision of

law, the court shall have the power in any such review to order payment

of the penalty imposed by the Secretary.

(e) Action to Collect Penalty. — If any issuer or custodian fails to

comply with the Secretary’s determination or order imposing a civil money

penalty under subsection (a), after the determination or order is no longer

subject to review as provided by subsections (c)(1) and (d), the Secretary

may request the Attorney General of the United States to bring an action

in an appropriate United States district court to obtain a monetary

judgment against the issuer or custodian and such other relief as may be

available. The monetary judgment may, in the discretion of the court,

include any 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 Secretary’s determination or order

imposing the penalty shall not be subject to review.

(f) Settlement by Secretary. — The Secretary may compromise,

modify, or remit any civil money penalty which may be, or has been,

imposed under this section.

(g) Definition of Knowingly. — The term “knowingly” means having

actual knowledge of or acting with deliberate ignorance of or reckless

disregard for the prohibitions under this section.

(h) Regulations. — The Secretary shall issue such regulations as the

Secretary deems appropriate to implement this section.

(i) Deposit of Penalties. — The Secretary shall deposit all civil money 

penalties collected under this section into moneys of the Association

pursuant to section 307. [12 U.S.C. 1723i.]

21

Collection of 

Penalty