I 

113TH CONGRESS 

1ST SESSION H. R. 2767 

To protect American taxpayers and homeowners by creating a sustainable 

housing finance system for the 21st century. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 22, 2013 

Mr. GARRETT (for himself, Mr. HENSARLING, Mr. NEUGEBAUER, Mrs. CAPITO, and Mr. MCHENRY) introduced the following bill; which was referred 

to the Committee on Financial Services, and in addition to the Committee 

on Ways and Means, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To protect American taxpayers and homeowners by creating 

a sustainable housing finance system for the 21st century. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Protecting American 

5 Taxpayers and Homeowners Act of 2013’’. 

6 SEC. 2. TABLE OF CONTENTS. 

7 The table of contents for this Act is as follows: 

Sec. 1. Short title. 

Sec. 2. Table of contents. 


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TITLE I—WIND-DOWN OF FANNIE MAE AND FREDDIE MAC 

Sec. 101. Short title. 

Sec. 102. Definitions. 

Sec. 103. Termination of current conservatorship; mandatory receivership. 

Sec. 104. Limitations on enterprise authority. 

Sec. 105. Modifications to increases in conforming loan limits. 

Sec. 106. Mandatory risk-sharing. 

Sec. 107. Limitation of enterprise mortgage purchases to qualified mortgages. 

Sec. 108. Prohibition relating to use of power of eminent domain. 

Sec. 109. Receiver’s discretionary authority to create receivership entity. 

Sec. 110. Authority of receiver to repeal enterprise charter. 

TITLE II—FHA REFORM 

Sec. 201. Short title. 

Sec. 202. Definitions. 

Subtitle A—Organization 

Sec. 211. Establishment. 

Sec. 212. Purposes. 

Sec. 213. General powers. 

Sec. 214. Board of Directors. 

Sec. 215. Officers and personnel. 

Sec. 216. Financial, underwriting, and operations systems. 

Sec. 217. Procurement. 

Sec. 218. Applicability of laws. 

Sec. 219. Evaluation. 

Sec. 220. Funding. 

Sec. 221. Effective date. 

Subtitle B—Business Authority and Requirements 

Sec. 231. Authority to carry out FHA and other business. 

Sec. 232. Eligible single-family mortgages. 

Sec. 233. Risk-sharing. 

Sec. 234. Limitation on mortgage insurance coverage. 

Sec. 235. Premiums. 

Sec. 236. Default and foreclosure statement. 

Sec. 237. Occupancy and rent limitations for multifamily mortgage insurance. 

Sec. 238. Effective date. 

Subtitle C—Financial Safety and Soundness 

Sec. 251. Authority of Director. 

Sec. 252. Budgets and business plans. 

Sec. 253. Annual business plan; use of GAAP. 

Sec. 254. Examinations, reports, and cost estimates. 

Sec. 255. Reimbursement of costs. 

Sec. 256. Mutual Mortgage Insurance Fund capital reserve. 

Sec. 257. Capital classifications and performance measures for Mutual Mortgage Insurance Fund. 

Sec. 258. Enforcement. 

Sec. 259. Capital reserve requirements for other funds. 

Sec. 260. Authority to establish temporary capital ratios in cases of nationwide 

countercyclical market adjustment. 


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Sec. 261. 7-year borrower suspension for foreclosure. 

Sec. 262. Borrower ineligibility upon second foreclosure. 

Sec. 263. Limitation on seller concessions. 

Sec. 264. Lender repurchase requirement. 

Sec. 265. Indemnification by mortgagees. 

Sec. 266. Prohibitions relating to use of power of eminent domain. 

Sec. 267. Residual income requirement. 

Sec. 268. Effective date. 

Subtitle D—Transition 

Sec. 281. Transition period. 

Sec. 282. Authority during transition period. 

Sec. 283. Advisory Board. 

Sec. 284. Transfer of HUD authority. 

Sec. 285. Wind-up of HUD affairs. 

Sec. 286. Continuation and coordination of certain actions. 

Sec. 287. Transfer and rights of HUD employees. 

Sec. 288. Transfer of property and facilities. 

Sec. 289. Effective date. 

Subtitle E—Related Amendments and Provisions 

Sec. 291. GNMA authority. 

Sec. 292. Repeal of certain FHA programs. 

Sec. 293. Conforming amendments. 

Sec. 294. Rule of construction. 

Sec. 295. Effective date. 

TITLE III—BUILDING A NEW MARKET STRUCTURE 

Subtitle A—National Mortgage Market Utility 

Sec. 301. Short title. 

Sec. 302. Findings and purposes. 

Sec. 303. Definitions. 

PART 1—ESTABLISHMENT AND AUTHORITY OF THE UTILITY

Sec. 311. Establishment. 

Sec. 312. General powers; authorized and prohibited activities. 

Sec. 313. Transfer of ownership of Platform. 

Sec. 314. Funding. 

Sec. 315. Regulation, supervision, and enforcement. 

Sec. 316. Civil and criminal liability. 

PART 2—STANDARDS FOR QUALIFIED SECURITIES

Sec. 321. Qualified securities. 

Sec. 322. Standards for qualified securities. 

Sec. 323. Liability for misleading statements. 

Sec. 324. Unlawful representations. 

Sec. 325. Contrary stipulations void. 

PART 3—NATIONAL MORTGAGE DATA REPOSITORY

Sec. 331. Organization and operation. 

Sec. 332. Legal effect of registration with Repository. 


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Sec. 333. Grants to States; repayment. 

Sec. 334. Judicial review. 

Sec. 335. Transition provisions. 

PART 4—CONFORMING AMENDMENTS

Sec. 341. Conforming amendment to Federal Home Loan Bank Act. 

Sec. 342. Conforming amendments to the Dodd-Frank Wall Street Reform and 

Consumer Protection Act. 

Sec. 343. Conforming amendments to Securities Act of 1933. 

Sec. 344. Conforming amendments to title 18, United States Code. 

Subtitle B—Covered Bonds 

Sec. 351. Short title. 

Sec. 352. Definitions. 

Sec. 353. Regulatory oversight of covered bond programs established. 

Sec. 354. Resolution upon default or insolvency. 

Sec. 355. Securities law provisions. 

Sec. 356. Miscellaneous provisions. 

TITLE IV—REMOVING BARRIERS TO NEW INVESTMENT 

Sec. 401. Basel III impact study. 

Sec. 402. Basel III Liquidity Coverage Ratio amendments. 

Sec. 403. Definition of points and fees. 

Sec. 404. Exclusion of issuers of asset-backed securities from covered funds. 

Sec. 405. Suspension of regulation AB II rulemaking. 

Sec. 406. Effective date of certain mortgage reform regulations. 

Sec. 407. Repeal of credit risk retention regulations. 

Sec. 408. Mortgages in qualified securities. 

Sec. 409. Mortgage loans held in portfolio. 

Sec. 410. Repeal of certain mortgage-related provisions. 

Sec. 411. Amendments to the Truth in Lending Act. 

Sec. 412. Financial Institutions Examination Fairness and Reform. 

Sec. 413. Notice of junior mortgage or lien. 

Sec. 414. Limitation on mortgages held by loan servicers. 

TITLE V—MISCELLANEOUS PROVISIONS 

Sec. 501. Preserving access to manufactured housing. 

Sec. 502. Common sense economic recovery. 

Sec. 503. Technical Amendments to Federal Home Loan Bank Act. 

Sec. 504. Preservation of attorney-client privilege for information provided to 

FHFA. 

Sec. 505. FHFA Liaison Membership in Federal Financial Institutions Examination Council. 

Sec. 506. Recognition of FHFA enforcement authority with regard to regulated 

entities. 

Sec. 507. Exception from Right to Financial Privacy Act for FHFA as conservator or receiver. 

Sec. 508. Technical amendment to Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992. 

Sec. 509. Application of presumption to enterprise streamlined refinancings. 

Sec. 510. FHFA authority to regulate and examine contractual counterparties. 

Sec. 511. Election of directors of a merged Federal Home Loan Bank. 


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1 TITLE I—WIND-DOWN OF FANNIE 

2 MAE AND FREDDIE MAC 

3 SEC. 101. SHORT TITLE. 

4 This title may be cited as the ‘‘GSE Bailout Elimi5 nation and Taxpayer Protection Act’’. 

6 SEC. 102. DEFINITIONS. 

7 For purposes of this title, the following definitions 

8 shall apply: 

9 (1) CHARTER.—The term ‘‘charter’’ means— 

10 (A) with respect to the Federal National 

11 Mortgage Association, the Federal National 

12 Mortgage Association Charter Act (12 U.S.C. 

13 1716 et seq.); and 

14 (B) with respect to the Federal Home 

15 Loan Mortgage Corporation, the Federal Home 

16 Loan Mortgage Corporation Act (12 U.S.C. 

17 1451 et seq.). 

18 (2) DIRECTOR.—The term ‘‘Director’’ means 

19 the Director of the Federal Housing Finance Agen20 cy. 

21 (3) ENTERPRISE.—The term ‘‘enterprise’’ 

22 means— 

23 (A) the Federal National Mortgage Asso24 ciation; and 


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1 (B) the Federal Home Loan Mortgage 

2 Corporation. 

3 SEC. 103. TERMINATION OF CURRENT CONSERVATORSHIP; 

4 MANDATORY RECEIVERSHIP. 

5 Upon the expiration of the 5-year period beginning 

6 upon the date of the enactment of this Act, the Director 

7 shall, with respect to each enterprise, immediately appoint 

8 the Federal Housing Finance Agency as receiver under 

9 section 1367 of the Federal Housing Enterprises Finan10 cial Safety and Soundness Act of 1992 and carry out such 

11 receivership under the authority of such section. 

12 SEC. 104. LIMITATIONS ON ENTERPRISE AUTHORITY. 

13 (a) PORTFOLIO LIMITATIONS.—Subtitle B of title 

14 XIII of the Housing and Community Development Act of 

15 1992 (12 U.S.C. 4611 et seq.) is amended by adding at 

16 the end the following new section: 

17 ‘‘SEC. 1369E. RESTRICTION ON MORTGAGE ASSETS OF EN18 TERPRISES. 

19 ‘‘(a) RESTRICTION.—Subject to subsection (b), no 

20 enterprise shall own, as of any applicable date in this sub21 section or thereafter, mortgage assets in excess of— 

22 ‘‘(1) as of December 31, 2013, 

23 $550,000,000,000; or 

24 ‘‘(2) as of December 31 of each year thereafter, 

25 85 percent of the aggregate amount of mortgage asVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 sets that the enterprise was permitted to own pursu2 ant to this section as of December 31 of the imme3 diately preceding calendar year. 

4 ‘‘(b) LIMITATION.—In no event shall an enterprise be 

5 required under this section to own less than 

6 $250,000,000,000 in mortgage assets. 

7 ‘‘(c) DEFINITION OF MORTGAGE ASSETS.—For pur8 poses of this section, the term ‘mortgage assets’ means, 

9 with respect to an enterprise, assets of such enterprise 

10 consisting of mortgages, mortgage loans, mortgage-related 

11 securities, participation certificates, mortgage-backed 

12 commercial paper, obligations of real estate mortgage in13 vestment conduits and similar assets, in each case to the 

14 extent such assets would appear on the balance sheet of 

15 such enterprise in accordance with generally accepted ac16 counting principles in effect in the United States as of 

17 September 7, 2008 (as set forth in the opinions and pro18 nouncements of the Accounting Principles Board and the 

19 American Institute of Certified Public Accountants and 

20 statements and pronouncements of the Financial Account21 ing Standards Board from time to time; and without giv22 ing any effect to any change that may be made after Sep23 tember 7, 2008, in respect of Statement of Financial Ac24 counting Standards No. 140 or any similar accounting 

25 standard).’’. 


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1 (b) EQUITABILITY IN GUARANTEE FEES.—Section 

2 1327 of Federal Housing Enterprises Financial Safety 

3 and Soundness Act of 1992 (12 U.S.C. 4547) is amended 

4 by adding at the end the following new subsection: 

5 ‘‘(f) EQUITABILITY IN GUARANTEE FEES.— 

6 ‘‘(1) REQUIREMENT.—Notwithstanding any 

7 other provision of this section, the Director shall en8 sure, pursuant to the annual review conducted under 

9 paragraph (2), that each enterprise charges a guar10 antee fee, in connection with any mortgage guaran11 teed after the date of the enactment of the Pro12 tecting American Taxpayers and Homeowners Act of 

13 2013, in an amount that the Director determines is 

14 equivalent to the amount that the enterprise would 

15 charge if the enterprise were held to the same cap16 ital standards as private banks or financial institu17 tions. 

18 ‘‘(2) ANNUAL DETERMINATION.—Not less often 

19 than annually, the Director shall review the guar20 antee fees charged by each enterprise and determine 

21 how such fees compare to the amount determined by 

22 the Director under paragraph (1). If the Director 

23 determines that such fees charged by an enterprise 

24 are less than such amount, the Director shall, by 

25 order, require the enterprise to increase such fees in 


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1 such amount as the Director determines necessary to 

2 comply with paragraph (1). 

3 ‘‘(3) FLEXIBILITY IN DETERMINATION OF IN4 CREASE.—To determine the amount of any increase 

5 under this subsection, the Director shall establish a 

6 pricing mechanism as the Director considers appro7 priate, taking into consideration current market con8 ditions, including the current market share of an en9 terprise, and any data collected pursuant to section 

10 1601 of the Housing and Economic Recovery Act of 

11 2008 (12 U.S.C. 4514a).’’. 

12 (c) REPEAL OF MANDATORY HOUSING ACTIVI13 TIES.— 

14 (1) REPEAL OF HOUSING GOALS.—The Federal 

15 Housing Enterprises Financial Safety and Sound16 ness Act of 1992 is amended by striking sections 

17 1331 through 1336 (12 U.S.C. 4561–6). 

18 (2) CONFORMING AMENDMENTS.—Federal 

19 Housing Enterprises Financial Safety and Sound20 ness Act of 1992 is amended— 

21 (A) in section 1303(28) (12 U.S.C. 

22 4502(28)), by striking ‘‘, and, for the purposes’’ 

23 and all that follows through ‘‘designated dis24 aster areas’’; 


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1 (B) in section 1324(b)(1)(A) (12 U.S.C. 

2 4544(b)(1)(A)), by striking clauses (i), (ii), and 

3 (iv); 

4 (C) in section 1339(h) (12 U.S.C. 

5 4569(h)), by striking paragraph (7); 

6 (D) in section 1341 (12 U.S.C. 4581)— 

7 (i) in subsection (a)— 

8 (I) in paragraph (1), by inserting 

9 ‘‘or’’ after the semicolon at the end; 

10 (II) in paragraph (2), by striking 

11 the semicolon at the end and inserting 

12 a period; and 

13 (III) by striking paragraphs (3) 

14 and (4); and 

15 (ii) in subsection (b)(2)— 

16 (I) in subparagraph (A), by in17 serting ‘‘or’’ after the semicolon at the 

18 end; 

19 (II) by striking subparagraphs 

20 (B) and (C); and 

21 (III) by redesignating subpara22 graph (D) as subparagraph (B); 

23 (E) in section 1345(a) (12 U.S.C. 

24 4585(a))— 


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1 (i) in paragraph (1), by inserting ‘‘or’’ 

2 after the semicolon at the end; 

3 (ii) in paragraph (2), by striking the 

4 semicolon at the end and inserting a pe5 riod; and 

6 (iii) by striking paragraphs (3) and 

7 (4); and 

8 (F) in section 1371(a)(2) (12 U.S.C. 

9 4631(a)(2)), by striking ‘‘with any housing goal 

10 established under subpart B of part 2 of sub11 title A of this title, with section 1336 or 1337 

12 of this title,’’. 

13 (3) REPEAL OF HOUSING TRUST FUND.— 

14 (A) REPEAL.—The Federal Housing En15 terprises Financial Safety and Soundness Act 

16 of 1992 is amended by striking sections 1337 

17 and 1338 (12 U.S.C. 4567, 4568). 

18 (B) CONFORMING AMENDMENTS.—The 

19 Federal Housing Enterprises Financial Safety 

20 and Soundness Act of 1992 is amended— 

21 (i) in section 1303(24)(B) (12 U.S.C. 

22 4502(24)(B)), by striking ‘‘1338 and’’; 

23 (ii) in section 1324(b)(1)(A) (12 

24 U.S.C. 4544(b)(1)(A)), as amended by the 

25 preceding provisions of this Act— 


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1 (I) by striking clause (iii); 

2 (II) by striking the dash after 

3 ‘‘which’’ and inserting the text of 

4 clause (v) and a period; and 

5 (III) by striking clause (v); 

6 (iii) in section 1339(b)— 

7 (I) by striking paragraph (1); 

8 (II) by striking the dash after 

9 ‘‘consist of’’ and inserting the text of 

10 paragraph (2) and a period; and 

11 (III) by striking paragraph (2); 

12 and 

13 (iv) in section 1345 (12 U.S.C. 4585), 

14 by striking subsection (f). 

15 SEC. 105. MODIFICATIONS TO INCREASES IN CONFORMING 

16 LOAN LIMITS. 

17 (a) FANNIE MAE.—Section 302(b)(2) of the Federal 

18 National Mortgage Association Charter Act (12 U.S.C. 

19 1717(b)(2)) is amended— 

20 (1) in the 8th sentence— 

21 (A) in inserting ‘‘or subtracting from’’ 

22 after ‘‘adding to’’; and 

23 (B) by inserting ‘‘or decrease, respectively’’ 

24 before the first comma; 

25 (2) by striking the 9th and 10th sentences; 


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1 (3) by striking the last sentence; 

2 (4) by inserting ‘‘(A)’’ after the paragraph des3 ignation; and 

4 (5) by adding at the end the following new sub5 paragraph: 

6 ‘‘(B) HIGH-COST AREAS.— 

7 ‘‘(i) MAXIMUM ORIGINAL PRINCIPAL LIMITA8 TION.—Subject to clause (ii), the limitations estab9 lished pursuant to subparagraph (A) shall also be in10 creased, with respect to properties of a particular 

11 size located in any area for which 115 percent of the 

12 median house price for such size residence exceeds 

13 the limitation under subparagraph (A) for such size 

14 residence, to the lesser of— 

15 ‘‘(I)(aa) for the first year beginning after 

16 the date of the enactment of the Protecting 

17 American Taxpayers and Homeowners Act of 

18 2013, the difference between— 

19 ‘‘(AA) 150 percent of the limitation 

20 under subparagraph (A) for such size resi21 dence; and 

22 ‘‘(BB) $20,000 in the case of a 1- 

23 family residence, $25,604 in the case of a 

24 2-family residence, $30,950 in the case of 


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1 a 3-family residence, and $38,463 in the 

2 case of a 4-family residence; 

3 ‘‘(bb) for the second year beginning after 

4 the date of the enactment of the Protecting 

5 American Taxpayers and Homeowners Act of 

6 2013, the difference between— 

7 ‘‘(AA) 150 percent of the limitation 

8 under subparagraph (A) for such size resi9 dence; and 

10 ‘‘(BB) $40,000 in the case of a 1- 

11 family residence, $51,208 in the case of a 

12 2-family residence, $61,900 in the case of 

13 a 3-family residence, and $76,926 in the 

14 case of a 4-family residence; 

15 ‘‘(cc) for the third year beginning after the 

16 date of the enactment of the Protecting Amer17 ican Taxpayers and Homeowners Act of 2013, 

18 the difference between— 

19 ‘‘(AA) 150 percent of the limitation 

20 under subparagraph (A) for such size resi21 dence; and 

22 ‘‘(BB) $60,000 in the case of a 1- 

23 family residence, $76,812 in the case of a 

24 2-family residence, $92,850 in the case of 


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1 a 3-family residence, and $103,389 in the 

2 case of a 4-family residence; 

3 ‘‘(dd) for the fourth year beginning after 

4 the date of the enactment of the Protecting 

5 American Taxpayers and Homeowners Act of 

6 2013, the difference between— 

7 ‘‘(AA) 150 percent of the limitation 

8 under subparagraph (A) for such size resi9 dence; and 

10 ‘‘(BB) $80,000 in the case of a 1- 

11 family residence, $102,416 in the case of a 

12 2-family residence, $123,800 in the case of 

13 a 3-family residence, and $153,852 in the 

14 case of a 4-family residence; and 

15 ‘‘(ee) for the fifth year beginning after the 

16 date of the enactment of the Protecting Amer17 ican Taxpayers and Homeowners Act of 2013, 

18 the difference between— 

19 ‘‘(AA) 150 percent of the limitation 

20 under subparagraph (A) for such size resi21 dence; and 

22 ‘‘(BB) $100,000 in the case of a 1- 

23 family residence, $128,020 in the case of a 

24 2-family residence, $154,750 in the case of 


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1 a 3-family residence, and $192,315 in the 

2 case of a 4-family residence; 

3 ‘‘(II) the amount that is equal to 115 per4 cent of the median house price in such area for 

5 such size residence; or 

6 ‘‘(III) the limitation in effect for such size 

7 residence for such area, pursuant to the last 

8 sentence of this paragraph as in effect imme9 diately before the enactment of the Protecting 

10 American Taxpayers and Homeowners Act of 

11 2013, as of the date of such enactment. 

12 ‘‘(ii) PROHIBITION ON NEW HIGH-COST

13 AREAS.—The limitations established pursuant to 

14 subparagraph (A) may not be increased, with respect 

15 to properties of any size located in a particular area 

16 unless, as of the date of the enactment of the Pro17 tecting American Taxpayers and Homeowners Act of 

18 2013, such foregoing limitations in effect for such 

19 area for any size residence were determined under 

20 the authority provided in the last sentence of this 

21 paragraph, as in effect immediately before such en22 actment.’’. 

23 (b) FREDDIE MAC.—Section 305(a)(2) of the Fed24 eral Home Loan Mortgage Corporation Act (12 U.S.C. 

25 1454(a)(2)) is amended— 


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1 (1) in the 7th sentence— 

2 (A) in inserting ‘‘or subtracting from’’ 

3 after ‘‘adding to’’; and 

4 (B) by inserting ‘‘or decrease, respectively’’ 

5 before the first comma; and 

6 (2) by striking the 8th and 9th sentences; 

7 (3) by striking the last sentence; 

8 (4) by inserting ‘‘(A)’’ after the paragraph des9 ignation; and 

10 (5) by adding at the end the following new sub11 paragraph: 

12 ‘‘(B) HIGH-COST AREAS.— 

13 ‘‘(i) MAXIMUM ORIGINAL PRINCIPAL LIMITA14 TION.—Subject to clause (ii), the limitations estab15 lished pursuant to subparagraph (A) shall also be in16 creased, with respect to properties of a particular 

17 size located in any area for which 115 percent of the 

18 median house price for such size residence exceeds 

19 the limitation under subparagraph (A) for such size 

20 residence, to the lesser of— 

21 ‘‘(I)(aa) for the first year beginning after 

22 the date of the enactment of the Protecting 

23 American Taxpayers and Homeowners Act of 

24 2013, the difference between— 


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1 ‘‘(AA) 150 percent of the limitation 

2 under subparagraph (A) for such size resi3 dence; and 

4 ‘‘(BB) $20,000 in the case of a 1- 

5 family residence, $25,604 in the case of a 

6 2-family residence, $30,950 in the case of 

7 a 3-family residence, and $38,463 in the 

8 case of a 4-family residence; 

9 ‘‘(bb) for the second year beginning after 

10 the date of the enactment of the Protecting 

11 American Taxpayers and Homeowners Act of 

12 2013, the difference between— 

13 ‘‘(AA) 150 percent of the limitation 

14 under subparagraph (A) for such size resi15 dence; and 

16 ‘‘(BB) $40,000 in the case of a 1- 

17 family residence, $51,208 in the case of a 

18 2-family residence, $61,900 in the case of 

19 a 3-family residence, and $76,926 in the 

20 case of a 4-family residence; 

21 ‘‘(cc) for the third year beginning after the 

22 date of the enactment of the Protecting Amer23 ican Taxpayers and Homeowners Act of 2013, 

24 the difference between— 


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1 ‘‘(AA) 150 percent of the limitation 

2 under subparagraph (A) for such size resi3 dence; and 

4 ‘‘(BB) $60,000 in the case of a 1- 

5 family residence, $76,812 in the case of a 

6 2-family residence, $92,850 in the case of 

7 a 3-family residence, and $103,389 in the 

8 case of a 4-family residence; 

9 ‘‘(dd) for the fourth year beginning after 

10 the date of the enactment of the Protecting 

11 American Taxpayers and Homeowners Act of 

12 2013, the difference between— 

13 ‘‘(AA) 150 percent of the limitation 

14 under subparagraph (A) for such size resi15 dence; and 

16 ‘‘(BB) $80,000 in the case of a 1- 

17 family residence, $102,416 in the case of a 

18 2-family residence, $123,800 in the case of 

19 a 3-family residence, and $153,852 in the 

20 case of a 4-family residence; and 

21 ‘‘(ee) for the fifth year beginning after the 

22 date of the enactment of the Protecting Amer23 ican Taxpayers and Homeowners Act of 2013, 

24 the difference between— 


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1 ‘‘(AA) 150 percent of the limitation 

2 under subparagraph (A) for such size resi3 dence; and 

4 ‘‘(BB) $100,000 in the case of a 1- 

5 family residence, $128,020 in the case of a 

6 2-family residence, $154,750 in the case of 

7 a 3-family residence, and $192,315 in the 

8 case of a 4-family residence; 

9 ‘‘(II) the amount that is equal to 115 per10 cent of the median house price in such area for 

11 such size residence; or 

12 ‘‘(III) the limitation in effect for such size 

13 residence for such area, pursuant to the last 

14 sentence of this paragraph as in effect imme15 diately before the enactment of the Protecting 

16 American Taxpayers and Homeowners Act of 

17 2013, as of the date of such enactment. 

18 ‘‘(ii) PROHIBITION ON NEW HIGH-COST

19 AREAS.—The limitations established pursuant to 

20 subparagraph (A) may not be increased, with respect 

21 to properties of any size located in a particular area 

22 unless, as of the date of the enactment of the Pro23 tecting American Taxpayers and Homeowners Act of 

24 2013, such foregoing limitations in effect for such 

25 area for any size residence were determined under 


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1 the authority provided in the last sentence of this 

2 paragraph, as in effect immediately before such en3 actment.’’. 

4 SEC. 106. MANDATORY RISK-SHARING. 

5 Subpart A of part 2 of subtitle A of the Federal 

6 Housing Enterprises Financial Safety and Soundness Act 

7 of 1992 is amended by adding after section 1327 (12 

8 U.S.C. 4547) the following new section: 

9 ‘‘SEC. 1328. MANDATORY RISK-SHARING TRANSACTIONS. 

10 ‘‘(a) IN GENERAL.—The Director shall require each 

11 enterprise to develop and undertake transactions involving 

12 the guarantee by the enterprises of securities and obliga13 tions based on or backed by mortgages on residential real 

14 properties designed principally for occupancy of from 1 to 

15 4 families that provide for private market participants to 

16 share or assume credit risk associated with such mort17 gages, as follows: 

18 ‘‘(1) REQUIRED PERCENTAGE OF BUSINESS.— 

19 The Director shall require that not less than 10 per20 cent of the annual business of each enterprise (as 

21 measured in such manner as the Director shall de22 termine) in guaranteeing such securities and obliga23 tions involve such transactions. 

24 ‘‘(2) MULTIPLE TYPES OF TRANSACTIONS.— 

25 The Director shall require that in complying with 


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1 paragraph (1), each enterprise undertake multiple 

2 types of the various transactions and structures de3 scribed in subsection (b). 

4 ‘‘(b) TYPES OF TRANSACTIONS.—The risk-sharing 

5 transactions referred to in subsection (a) may include 

6 transactions involving increased mortgage insurance re7 quirements, credit-linked notes and securities, senior and 

8 subordinated security structures, and such other struc9 tures and transactions as the Director considers appro10 priate to increase private market assumption of credit 

11 risk.’’. 

12 SEC. 107. LIMITATION OF ENTERPRISE MORTGAGE PUR13 CHASES TO QUALIFIED MORTGAGES. 

14 (a) FANNIE MAE.—Section 302(b) of the Federal 

15 National Mortgage Association Charter Act (12 U.S.C. 

16 1717(b)) is amended by adding at the end the following 

17 new paragraph: 

18 ‘‘(7) Effective for mortgages with application dates 

19 on or after January 10, 2014, the corporation may only 

20 purchase, make commitments to purchase, service, sell, 

21 lend on the security of, or otherwise deal in a mortgage 

22 that is a qualified mortgage (as such term is defined in 

23 section 129C(b) of the Truth in Lending Act (15 U.S.C. 

24 1639c(b); as added by section 1412 of the Dodd-Frank 

25 Wall Street Reform and Consumer Protection Act (124 


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1 Stat. 2145)), in accordance with the regulations issued by 

2 the Bureau of Consumer Financial Protection to carry out 

3 such section.’’. 

4 (b) FREDDIE MAC.—Section 305(a) of the Federal 

5 Home Loan Mortgage Corporation Act (12 U.S.C. 

6 1454(a)) is amended by adding at the end the following 

7 new paragraph: 

8 ‘‘(6) Effective for mortgages with application dates 

9 on or after January 10, 2014, the Corporation may only 

10 purchase, make commitments to purchase, service, sell, 

11 lend on the security of, or otherwise deal in a mortgage 

12 that is a qualified mortgage (as such term is defined in 

13 section 129C(b) of the Truth in Lending Act (15 U.S.C. 

14 1639c(b); as added by section 1412 of the Dodd-Frank 

15 Wall Street Reform and Consumer Protection Act (124 

16 Stat. 2145)), in accordance with the regulations issued by 

17 the Bureau of Consumer Financial Protection to carry out 

18 such section.’’. 

19 SEC. 108. PROHIBITION RELATING TO USE OF POWER OF 

20 EMINENT DOMAIN. 

21 (a) FANNIE MAE.—Subsection (b) of section 302 of 

22 the Federal National Mortgage Association Charter Act 

23 (12 U.S.C. 1717(b)) is amended by adding at the end the 

24 following new paragraph: 


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1 ‘‘(7)(A) Notwithstanding any other provision of law, 

2 the corporation may not purchase or guarantee any mort3 gage that is secured by a structure or dwelling unit that 

4 is located within a county that contains any structure or 

5 dwelling unit that secures or secured a residential mort6 gage loan which mortgage loan was obtained by the State 

7 during the preceding 120 months by exercise of the power 

8 of eminent domain. 

9 ‘‘(B) For purposes of this paragraph, the following 

10 definitions shall apply: 

11 ‘‘(i) The term ‘residential mortgage loan’ means 

12 a mortgage loan that is evidenced by a promissory 

13 note and secured by a mortgage, deed of trust, or 

14 other security instrument on a residential structure 

15 or a dwelling unit in a residential structure. Such 

16 term includes a first mortgage loan or any subordi17 nate mortgage loan. 

18 ‘‘(ii) The term ‘State’ includes the District of 

19 Columbia, the Commonwealth of Puerto Rico, and 

20 any territory or possession of the United States, and 

21 includes any agency or political subdivision of a 

22 State.’’. 

23 (b) FREDDIE MAC.—Subsection (a) of section 305 of 

24 the Federal Home Loan Mortgage Corporation Act (12 


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1 U.S.C. 1454(a)) is amended by adding at the end the fol2 lowing new paragraph: 

3 ‘‘(6)(A) Notwithstanding any other provision of law, 

4 the Corporation may not purchase or guarantee any mort5 gage that is secured by a structure or dwelling unit that 

6 is located within a county that contains any structure or 

7 dwelling unit that secures or secured a residential mort8 gage loan which mortgage loan was obtained by the State 

9 during the preceding 120 months by exercise of the power 

10 of eminent domain. 

11 ‘‘(B) For purposes of this paragraph, the following 

12 definitions shall apply: 

13 ‘‘(i) The term ‘residential mortgage loan’ means 

14 a mortgage loan that is evidenced by a promissory 

15 note and secured by a mortgage, deed of trust, or 

16 other security instrument on a residential structure 

17 or a dwelling unit in a residential structure. Such 

18 term includes a first mortgage or any subordinate 

19 mortgage. 

20 ‘‘(ii) The term ‘State’ includes the District of 

21 Columbia, the Commonwealth of Puerto Rico, and 

22 any territory or possession of the United States, and 

23 includes any agency or political subdivision of a 

24 State.’’. 


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1 SEC. 109. RECEIVER’S DISCRETIONARY AUTHORITY TO 

2 CREATE RECEIVERSHIP ENTITY. 

3 Section 1367 of the Federal Housing Enterprises Fi4 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

5 4617) is amended by striking subsection (i) and inserting 

6 the following: 

7 ‘‘(i) RECEIVERSHIP ENTITY.— 

8 ‘‘(1) AUTHORITY; ORGANIZATION.—The Agen9 cy, as receiver appointed pursuant to subsection (a), 

10 may establish a receivership entity in such form or 

11 structure as the Agency deems appropriate to meet 

12 the purposes of receivership and this section. 

13 ‘‘(2) POWERS.—Upon creation of such receiver14 ship entity, the Agency may transfer to it any assets 

15 or liabilities of the regulated entity in default as the 

16 Agency, in its discretion, determines to be appro17 priate, and may authorize the receivership entity to 

18 perform any temporary function that the Agency, in 

19 its discretion, prescribes in accordance with this sec20 tion. The transfer of any assets or liabilities of a 

21 regulated entity for which the Agency has been ap22 pointed receiver shall be effective without any fur23 ther approval under Federal or State law, assign24 ment, or consent with respect thereto. Such author25 ity is in addition to any other power the Agency may 


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1 have as receiver or may confer on the receivership 

2 entity. 

3 ‘‘(3) EXEMPTION FROM TAXATION.—Notwith4 standing any other provision of Federal or State 

5 law, any receivership entity established by the Agen6 cy pursuant to this section, its franchise, property 

7 and income, shall be exempt from all taxation now 

8 or hereafter imposed by the United States, by any 

9 territory, dependency, or possession thereof, or by 

10 any State, county, municipality, or local taxing au11 thority. 

12 ‘‘(4) REGULATIONS.—The Agency may promul13 gate such regulations as the Agency determines to 

14 be necessary or appropriate to implement this sub15 section. 

16 ‘‘(5) NO FEDERAL STATUS.—A receivership en17 tity established pursuant to this section shall not be 

18 an agency, establishment, or instrumentality of the 

19 United States.’’. 

20 SEC. 110. AUTHORITY OF RECEIVER TO REPEAL ENTER21 PRISE CHARTER. 

22 Section 1367 of the Federal Housing Enterprises Fi23 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

24 4617) is amended by striking subsection (k) and inserting 

25 the following new subsection: 


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1 ‘‘(k) REPEAL OF ENTERPRISE CHARTERS.— 

2 ‘‘(1) FANNIE MAE.—Effective five years after 

3 the date of the enactment of the Protecting Amer4 ican Taxpayers and Homeowners Act of 2013, the 

5 charter of the Federal National Mortgage Associa6 tion is repealed and the Federal National Mortgage 

7 Association shall have no authority to conduct new 

8 business under such charter, except that the provi9 sions of such charter in effect immediately before 

10 such repeal shall continue to apply with respect to 

11 the rights and obligations of any holders of— 

12 ‘‘(A) outstanding debt obligations of the 

13 Federal National Mortgage Association, includ14 ing any— 

15 ‘‘(i) bonds, debentures, notes, or other 

16 similar instruments; 

17 ‘‘(ii) capital lease obligations; or 

18 ‘‘(iii) obligations in respect of letters 

19 of credit, bankers’ acceptances, or other 

20 similar instruments; or 

21 ‘‘(B) mortgage-backed securities guaran22 teed by the Federal National Mortgage Associa23 tion. 

24 ‘‘(2) FREDDIE MAC.—Effective five years after 

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1 ican Taxpayers and Homeowners Act of 2013, the 

2 charter of the Federal Home Loan Mortgage Cor3 poration is repealed and the Federal Home Loan 

4 Mortgage Corporation shall have no authority to 

5 conduct new business under such charter, except 

6 that the provisions of such charter in effect imme7 diately before such repeal shall continue to apply 

8 with respect to the rights and obligations of any 

9 holders of— 

10 ‘‘(A) outstanding debt obligations of the 

11 Federal Home Loan Mortgage Corporation, in12 cluding any— 

13 ‘‘(i) bonds, debentures, notes, or other 

14 similar instruments; 

15 ‘‘(ii) capital lease obligations; or 

16 ‘‘(iii) obligations in respect of letters 

17 of credit, bankers’ acceptances, or other 

18 similar instruments; or 

19 ‘‘(B) mortgage-backed securities guaran20 teed by the Federal Home Loan Mortgage Cor21 poration. 

22 ‘‘(3) EXISTING GUARANTEE OBLIGATIONS.— 

23 ‘‘(A) EXPLICIT GUARANTEE.—The full 

24 faith and credit of the United States is pledged 

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1 quired to be paid under any obligation de2 scribed in paragraph (1) or (2). 

3 ‘‘(B) CONTINUED DIVIDEND PAYMENTS.— 

4 Notwithstanding any other provision of law, 

5 provision 2(a) (relating to Dividend Payment 

6 Dates and Dividend Periods) and provision 2(c) 

7 (relating to Dividend Rates and Dividend 

8 Amount) of the Senior Preferred Stock Pur9 chase Agreement, or any provision of any cer10 tificate in connection with such Agreement cre11 ating or designating the terms, powers, pref12 erences, privileges, limitations, or any other 

13 conditions of the Variable Liquidation Pref14 erence Senior Preferred Stock of an enterprise 

15 issued pursuant to such Agreement— 

16 ‘‘(i) shall not be amended, restated, or 

17 otherwise changed to reduce the rate or 

18 amount of dividends in effect pursuant to 

19 such Agreement as of the Third Amend20 ment to such Agreement dated August 17, 

21 2012, except that any amendment to such 

22 Agreement to facilitate the sale of assets of 

23 the enterprises shall be permitted; and 

24 ‘‘(ii) shall remain in effect until the 

25 guarantee obligations described under 


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1 paragraphs (1)(B) and (2)(B) of this sub2 section are fully extinguished. 

3 ‘‘(C) APPLICABILITY.—All guarantee fee 

4 amounts derived from the single-family mort5 gage guarantee business of the enterprises in 

6 existence as of five years after the date of the 

7 enactment of the Protecting American Tax8 payers and Homeowners Act of 2013 shall be 

9 deposited into the United States Treasury, for 

10 purposes of deficit reduction. 

11 ‘‘(D) SENIOR PREFERRED STOCK PUR12 CHASE AGREEMENT DEFINED.—For purposes 

13 of this paragraph, the term ‘Senior Preferred 

14 Stock Purchase Agreement’ means— 

15 ‘‘(i) the Amended and Restated Senior 

16 Preferred Stock Purchase Agreement, 

17 dated September 26, 2008, as such Agree18 ment has been amended on May 6, 2009, 

19 December 24, 2009, and August 17, 2012, 

20 respectively, and as such Agreement may 

21 be further amended and restated, entered 

22 into between the Department of the Treas23 ury and each enterprise, as applicable; and 

24 ‘‘(ii) any provision of any certificate in 

25 connection with such Agreement creating 


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1 or designating the terms, powers, pref2 erences, privileges, limitations, or any 

3 other conditions of the Variable Liquida4 tion Preference Senior Preferred Stock of 

5 an enterprise issued or sold pursuant to 

6 such Agreement.’’. 

7 TITLE II—FHA REFORM 

8 SEC. 201. SHORT TITLE. 

9 This title may be cited as the ‘‘FHA Reform and 

10 Modernization Act of 2013’’. 

11 SEC. 202. DEFINITIONS. 

12 For purposes of this title, the following definitions 

13 shall apply: 

14 (1) BOARD.—The term ‘‘Board’’ means the 

15 Board of Directors of the FHA established under 

16 section 214. 

17 (2) DIRECTOR.—The term ‘‘Director’’ means 

18 the Director of the Federal Housing Finance Agen19 cy. 

20 (3) FHA.—The term ‘‘FHA’’ means the Fed21 eral Housing Administration established under this 

22 title. 

23 (4) FIRST-TIME HOMEBUYER.—The term ‘‘first24 time homebuyer’’ means an individual who meets 

25 any of the following criteria: 


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1 (A) An individual, and his or her spouse, 

2 who has never had ownership in a principal res3 idence. 

4 (B) A single parent (as such term is de5 fined in section 956 of the Cranston-Gonzalez 

6 National Affordable Housing Act (42 U.S.C. 

7 12713)) who has only owned a principal resi8 dence with a former spouse while married. 

9 (C) An individual who is a displaced home10 maker (as such term is defined in such section 

11 956 of the Cranston-Gonzalez National Afford12 able Housing Act) and has only owned a prin13 cipal residence with a spouse. 

14 (D) An individual who has only owned a 

15 principal residence not permanently affixed to a 

16 permanent foundation in accordance with appli17 cable regulations. 

18 (E) An individual who has only owned a 

19 property that was not in compliance with state, 

20 local or model building codes and which cannot 

21 be brought into compliance for less than the 

22 cost of constructing a permanent structure. 

23 (5) NATIVE AMERICAN GOVERNMENT.—The 

24 term ‘‘Native American government’’ means the gov25 ernment of any Indian or Alaska native tribe, band, 


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1 nation, pueblo, village or community that the Sec2 retary of the Interior acknowledges to exist as an In3 dian Tribe, pursuant to the Federally Recognized 

4 Indian Tribe List Act of 1994. 

5 (6) RESIDENTIAL HEALTH CARE FACILITY.— 

6 The term ‘‘residential health care facility’’ includes 

7 a nursing home, a facility for long-term care, an in8 termediate care facility, a board and care home, an 

9 assisted living facility, a public health center, an out10 patient facility, and a rehabilitation facility. 

11 (7) SECRETARY.—The term ‘‘Secretary’’ means 

12 the Secretary of Housing and Urban Development. 

13 (8) UNITED STATES.—The term ‘‘United 

14 States’’ includes the States, the District of Colum15 bia, the Commonwealth of Puerto Rico, the Com16 monwealth of the Northern Mariana Islands, Guam, 

17 the Virgin Islands, American Samoa, and Native 

18 American governments. 

19 Subtitle A—Organization 

20 SEC. 211. ESTABLISHMENT. 

21 (a) IN GENERAL.—There is hereby established the 

22 Federal Housing Administration, which shall be a body 

23 corporate without capital stock and shall have succession 

24 until dissolved by Act of Congress. 


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1 (b) GOVERNMENT CORPORATION.—The FHA shall 

2 be established as a wholly owned Government corporation 

3 subject to chapter 91 of title 31, United States Code (com4 monly referred to as the Government Corporation Control 

5 Act), except as otherwise provided in this subtitle. 

6 (c) FEDERAL AGENCY.— 

7 (1) IN GENERAL.—The FHA shall be an agency 

8 of the United States, except that the FHA shall not 

9 be considered an agency for purposes of holding, 

10 managing, and disposing of assets acquired by the 

11 FHA under the provisions of this title or the Na12 tional Housing Act. 

13 (2) HOLDING, MANAGEMENT, AND DISPOSAL

14 AUTHORITY.—For purposes of this subsection, the 

15 term ‘‘holding, managing, and disposing of assets’’ 

16 includes the powers to— 

17 (A) deal with, complete, reconstruct, rent, 

18 renovate, modernize, insure, make contracts for 

19 the management of, establish suitable agencies 

20 for the management of, or exercise discretion to 

21 sell for cash or credit or lease, any acquired 

22 property; 

23 (B) pursue collection by way of com24 promise or otherwise all assigned and trans25 ferred claims; and 


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1 (C) at any time, upon default, foreclose on 

2 any property secured by any assigned or trans3 ferred mortgage. 

4 (d) SELF-SUFFICIENT ENTITY.—The FHA shall op5 erate and conduct its business as a self-sufficient entity 

6 in accordance with section 235(c). 

7 (e) CORPORATE OFFICES AND RESIDENCY.—The 

8 FHA shall maintain its principal office in the District of 

9 Columbia and shall be deemed, for purposes of venue in 

10 civil actions, to be a resident of the District of Columbia. 

11 The FHA may establish other offices in such other places 

12 as the FHA considers appropriate in the conduct of its 

13 business. 

14 (f) TAX STATUS.—The FHA, including its franchise, 

15 activities, income, and assets, shall be exempt from all tax16 ation now or hereafter imposed by any taxing authority 

17 in the United States, except that any real property of the 

18 FHA (other than real property that the FHA uses as an 

19 office) shall be subject to taxation to the same extent ac20 cording to its value as any taxing authority taxes other 

21 real property. 

22 (g) PROTECTION OF NAME.— 

23 (1) PROHIBITION.—No person shall, except the 

24 body corporate established under this section, after 

25 the date of the enactment of this Act, use the words 


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1 ‘‘Federal Housing Administration’’ or the initials 

2 ‘‘FHA’’ as the name or part thereof under which 

3 such person shall do business. 

4 (2) ENFORCEMENT.—Violations of paragraph 

5 (1) may be enjoined by any court of general jurisdic6 tion at the suit of the FHA. In any such suit, the 

7 FHA may recover any actual damages resulting 

8 from such violation, and, in addition, shall be enti9 tled to punitive damages (regardless of the existence 

10 or nonexistence of actual damages) of not more than 

11 $100 for each day during which such violation is 

12 committed or repeated. 

13 SEC. 212. PURPOSES. 

14 The FHA is established for the following purposes: 

15 (1) To provide mortgage insurance and other 

16 credit enhancement and related activities, for— 

17 (A) single family homeownership to first18 time homebuyers, low- and moderate-income 

19 homebuyers, homebuyers in areas subject to 

20 counter-cyclical markets or Presidentially de21 clared disasters; 

22 (B) the provision of affordable rental hous23 ing; and 

24 (C) the provision of residential health care 

25 facilities. 


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1 (2) To supplement private sector activity by 

2 serving hard-to-serve markets, developing new mort3 gage products, and filling gaps in the provision and 

4 delivery of mortgage credit. 

5 (3) To deliver housing mortgage insurance and 

6 credit enhancement and provide other services in a 

7 non-discriminatory manner. 

8 (4) To promote liquidity and provide stability to 

9 the single family and multifamily housing finance 

10 market, by continuing to provide mortgage insurance 

11 and credit enhancement on a sound basis during 

12 times of regional and national economic downturn. 

13 (5) To engage in research, development, and 

14 testing of new products designed to make single 

15 family and multifamily housing and residential 

16 health care facility credit available to hard-to-serve 

17 markets. 

18 (6) To establish uniformity in operations and 

19 risk management and loss mitigation in housing 

20 mortgage insurance and rural housing loan pro21 grams. 

22 SEC. 213. GENERAL POWERS. 

23 To further the purposes of this subtitle, in accordance 

24 with chapter 91 of title 31 of the United States Code (re25 lating to government corporations), the FHA— 


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1 (1) may adopt, amend, and repeal by-laws, and 

2 other written administrative guidance; 

3 (2) may adopt, alter, and use a corporate seal, 

4 which shall be judicially noted; 

5 (3) may insure, and make commitments to in6 sure mortgages, to the extent authorized under this 

7 title, and enhance and make commitments to other8 wise enhance credit, and in providing such insurance 

9 may reinsure, advance, incur liabilities, pool loans, 

10 and risk share; 

11 (4) may acquire, hold, use, improve, deal in, or 

12 dispose of, by any means, any interests in any real 

13 property or any personal property; 

14 (5) may execute contracts, and make other 

15 agreements in its own name, with any agency, public 

16 or private entity, or other person, and carry out any 

17 lawful requirement of such contracts, grants, or 

18 other agreements; 

19 (6) may take any actions, including the restruc20 turing of debt, that the FHA determines are nec21 essary to manage any portfolio (including the port22 folio of the FHA) of property, assets, and obliga23 tions; 

24 (7) may— 


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1 (A) create and supply, alone or in coopera2 tion with public or private entities or persons, 

3 any product or service consistent with its cor4 porate purposes; and 

5 (B) assess fees and charges for such prod6 ucts, information, and services in amounts, as 

7 determined by the FHA, that— 

8 (i) do not exceed their value in the 

9 market; 

10 (ii) permit the FHA to recover its 

11 fully allocated long-term costs; and 

12 (iii) permit the FHA to maintain the 

13 level of capital determined by the FHA to 

14 be necessary and sufficient to carry out the 

15 public purposes of the FHA and as re16 quired under subtitle C; 

17 (8) may create distinct insurance funds or other 

18 devices to segregate or permit limitations on liability 

19 for business activities or accounts; 

20 (9) may qualify any person or entity to engage 

21 in business with the FHA and may enforce and im22 pose penalties for the breach of any duties, obliga23 tions, and other commitments made by such persons 

24 or entities; 


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1 (10) shall take actions necessary to administer 

2 its business in a nondiscriminatory manner; 

3 (11) may use the services or obtain the goods 

4 of any Federal agency, including the Department of 

5 Housing and Urban Development, under working or 

6 cooperation agreements or contracts with such agen7 cies and make or receive payment for the cost of 

8 such activities; 

9 (12) shall have the power, in its corporate 

10 name, to sue and be sued, and to complain and de11 fend, in any court of competent jurisdiction, State or 

12 Federal, but no attachment, garnishment, injunc13 tion, or other similar process, mesne or final, shall 

14 be issued against the property of the FHA or 

15 against the FHA with respect to its property, and 

16 the FHA shall not be liable for interest prior to 

17 judgment, for punitive or exemplary damages, for 

18 penalties, or for claims based upon unjust enrich19 ment, quasi-contract, or contracts implied-in-law, 

20 nor shall the FHA be subject to trial by jury; 

21 (13) notwithstanding any other provision of 

22 law— 

23 (A) shall be an agency of the United 

24 States Government and the officers and employ25 ees of the FHA shall be officers and employees 


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1 of the United States Government for purposes 

2 of part IV of title 28, United States Code; 

3 (B) shall have all civil actions to which the 

4 FHA is a party deemed to arise under the laws 

5 of the United States; and 

6 (C) may, at any time before trial and with7 out bond or security, remove any civil or crimi8 nal action or proceeding in a State court to 

9 which the FHA is a party to the United States 

10 district court for the District of Columbia or to 

11 the United States district court with jurisdic12 tion over the place where the civil action or pro13 ceeding is pending, by following any procedure 

14 for removal of actions in effect at the time of 

15 such removal; 

16 (14) may— 

17 (A) accept and use voluntary and uncom18 pensated services and accept, hold, administer, 

19 and use gifts and bequests of property, both 

20 real and personal, for the purpose of aiding or 

21 facilitating the work of the FHA, and 

22 (B) hold gifts and bequests of money and 

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1 count, and such amounts shall be disbursed as 

2 provided by the FHA; 

3 except that property accepted pursuant to this para4 graph, and the proceeds thereof, shall be used as 

5 nearly as possible in accordance with the terms of 

6 the gift or bequest and, for the purpose of Federal 

7 income, estate, and gift taxes, property accepted 

8 under this paragraph shall be considered as a gift or 

9 bequest to or for the use of the United States; 

10 (15) shall have any transaction in which it par11 ticipates be exempt from the terms of any State or 

12 other law or prohibition against payment of usurious 

13 interest; 

14 (16) may act as a fiduciary in connection with 

15 any of its undertakings; 

16 (17) may foreclose any single family mortgages 

17 held by the FHA pursuant to the same procedures 

18 and authority applicable to the Secretary under the 

19 Single Family Mortgage Foreclosure Act of 1994; 

20 (18) may foreclose any multifamily housing 

21 mortgages held by the FHA pursuant to the same 

22 procedures and authority applicable to the Secretary 

23 under the Multifamily Mortgage Foreclosure Act of 

24 1981; 


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1 (19) shall have the priority of the United States 

2 with respect to the payment of debts out of bank3 rupt, insolvent, and decedents’ estates; 

4 (20) may invest in systems, technology, or other 

5 capital resources, to enhance its ability to carry out 

6 the purposes of this title; and 

7 (21) shall have and exercise all powers nec8 essary or appropriate to effect any of the purposes 

9 of this title, including the power to carry out any au10 thority delegated to the FHA by the Secretary. 

11 SEC. 214. BOARD OF DIRECTORS. 

12 (a) IN GENERAL.—The powers of the FHA shall be 

13 vested in the Board of Directors of the FHA. 

14 (b) MEMBERS AND APPOINTMENT.—The Board of 

15 Directors shall consist of 9 individuals appointed by the 

16 President, who shall include the following individuals: 

17 (1) The Secretary of Housing and Urban Devel18 opment. 

19 (2) The Secretary of Agriculture. 

20 (3) Not less than 5 individuals who have exper21 tise in mortgage finance. 

22 (4) Not less than 2 individuals who have exper23 tise in affordable housing serving low- and mod24 erate-income populations. 


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1 (c) CHAIRPERSON.—The Secretary of Housing and 

2 Urban Development shall serve as the chairperson of the 

3 Board. 

4 (d) TERMS.— 

5 (1) IN GENERAL.—Each member of the Board 

6 appointed under paragraph (3) or (4) of subsection 

7 (b) shall be appointed for a term of 3 years, except 

8 as provided in paragraphs (2) and (3). 

9 (2) TERMS OF INITIAL APPOINTEES.—As des10 ignated by the President at the time of appointment, 

11 of the members first appointed to the Board pursu12 ant to paragraphs (3) and (4) of subsection (b)— 

13 (A) 3 shall be appointed for terms of 1 

14 year; and 

15 (B) 4 shall be appointed for terms of 2 

16 years. 

17 (3) VACANCIES.—Any member appointed to fill 

18 a vacancy on the Board occurring before the expira19 tion of the term for which the member’s predecessor 

20 was appointed shall be appointed only for the re21 mainder of that term. A member may serve after the 

22 expiration of that member’s term until a successor 

23 has taken office. A vacancy on the Board shall be 

24 filled in the manner in which the original appoint25 ment was made. 


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1 (e) MEETINGS AND QUORUM.—The Board shall meet 

2 at any time pursuant to the call of the Chairperson or 

3 a majority of its members and as provided by the bylaws 

4 of the FHA, but not less than quarterly. A majority of 

5 the members of the Board shall constitute a quorum. 

6 (f) POWERS.—The Board shall be responsible for the 

7 general management of the FHA and shall have the same 

8 authority, privileges, and responsibilities as the board of 

9 directors of a private corporation incorporated under the 

10 District of Columbia Business Corporation Act. 

11 (g) DUTIES.—In performing its duties, the Board 

12 shall— 

13 (1) obtain guidance from participants in the 

14 mortgage markets served by the FHA; 

15 (2) assess the housing and mortgage insurance 

16 needs of consumers and providers of single family 

17 and multifamily housing and communities, and the 

18 mortgage insurance needs of providers of residential 

19 health care facilities; 

20 (3) obtain information concerning housing fi21 nance markets in order to better assess how the 

22 FHA can complement the roles of public and private 

23 participants in such markets; and 

24 (4) assist the Secretary of Housing and Urban 

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1 ordinating the roles of Federal housing, banking, 

2 and credit agencies generally, and particularly in the 

3 delivery of housing credit enhancement to families, 

4 communities, and hard-to-serve markets. 

5 (h) COMPENSATION.—Members of the Board shall 

6 serve on a part-time basis and shall serve without pay. 

7 (i) TRAVEL EXPENSES.—Each member shall receive 

8 travel expenses, including per diem in lieu of subsistence, 

9 in accordance with sections 5702 and 5703 of title 5, 

10 United States Code. 

11 SEC. 215. OFFICERS AND PERSONNEL. 

12 (a) APPOINTMENT OF OFFICERS.—The Board shall 

13 appoint a president and vice president of the FHA, and, 

14 except as provided in subsections (b) and (c), such other 

15 officers as are provided for in the bylaws of the FHA. 

16 (b) CHIEF RISK OFFICER.—There shall be in the 

17 FHA a Chief Risk Officer, who— 

18 (1) shall be appointed by the Board of Direc19 tors of the FHA; 

20 (2) shall be selected from among individuals 

21 who possess demonstrated ability in the general 

22 management of, and knowledge of and extensive 

23 practical experience in, risk evaluation practices in 

24 large governmental or business entities; 

25 (3) shall be— 


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1 (A) responsible for all matters relating to 

2 managing and mitigating risk to the mortgage 

3 insurance programs of the FHA and ensuring 

4 the performance of mortgages insured by the 

5 FHA; and 

6 (B) responsible for all matters relating to 

7 managing and mitigating risk to the housing 

8 loans made, insured, or guaranteed under title 

9 V of the Housing Act of 1949 (42 U.S.C. 1471 

10 et seq.) and ensuring the performance of such 

11 housing loans; 

12 (4) shall not be subject to the review or ap13 proval of the Board of Directors of the FHA or the 

14 Secretary of Agriculture with respect to the exercise 

15 of the responsibilities under subparagraph (A) or 

16 (B), respectively, of paragraph (3); and 

17 (5) shall not be required to obtain the prior ap18 proval, comment, or review of any officer or agency 

19 of the United States before submitting to the Con20 gress, or any committee or subcommittee thereof, 

21 any reports, recommendations, testimony, or com22 ments if such submissions include a statement indi23 cating that the views expressed therein are those of 

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1 essarily represent the views of the Board of Direc2 tors of the FHA or the Secretary of Agriculture. 

3 (c) CHIEF TECHNOLOGY OFFICER.—There shall be 

4 in the FHA a Chief Technology Officer, who— 

5 (1) shall be appointed by the Board of Direc6 tors of the FHA; 

7 (2) shall be selected from among individuals 

8 who possess demonstrated ability in the general 

9 management of, and knowledge of and extensive 

10 practical experience in, information technology man11 agement practices in, large governmental or business 

12 entities; 

13 (3) shall be— 

14 (A) responsible for all matters relating to 

15 information technology management relating to 

16 the mortgage insurance programs of the FHA; 

17 and 

18 (B) responsible for all matters relating to 

19 information technology management relating to 

20 the programs for making, insuring, and guaran21 teeing housing loans under title V of the Hous22 ing Act of 1949 (42 U.S.C. 1471 et seq.); 

23 including analysis and assessment of the information 

24 technology infrastructures, information technology 

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1 ing the security and privacy of information tech2 nology infrastructure and networks, and promoting 

3 technological innovation; 

4 (4) shall not be subject to the review or ap5 proval of the Board of Directors of the FHA or the 

6 Secretary of Agriculture with respect to the exercise 

7 of the responsibilities under subparagraph (A) or 

8 (B), respectively of paragraph (3); and 

9 (5) shall not be required to obtain the prior ap10 proval, comment, or review of any officer or agency 

11 of the United States before submitting to the Con12 gress, or any committee or subcommittee thereof, 

13 any reports, recommendations, testimony, or com14 ments if such submissions include a statement indi15 cating that the views expressed therein are those of 

16 the Chief Technology Officer of the FHA and do not 

17 necessarily represent the views of the Board of Di18 rectors of the FHA or the Secretary of Agriculture. 

19 (d) APPOINTMENT OF EMPLOYEES.—Subject to sub20 title D, the Board shall appoint such other employees of 

21 the FHA as the Board considers necessary for the trans22 action of the FHA’s business. 

23 (e) COMPENSATION, DUTIES, AND REMOVAL.— 

24 (1) IN GENERAL.—The Board shall fix the com25 pensation of all officers and employees of the FHA 


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1 and define their duties. Officers and employees shall 

2 be appointed, promoted, assigned, and removed on 

3 the basis of qualifications, and any such actions 

4 taken shall be consistent with the principles of fair5 ness, nondiscrimination, and due process. 

6 (2) CONSIDERATIONS IN FIXING COMPENSA7 TION.—In fixing and directing compensation for offi8 cers and employees of the FHA, the Board shall 

9 consult and maintain comparability with the com10 pensation provided by the Government National 

11 Mortgage Association, the Federal Housing Finance 

12 Agency, the Comptroller of Currency, the Board of 

13 Governors of the Federal Reserve System, and the 

14 Federal Deposit Insurance Corporation to officers 

15 and employees of such entities. 

16 (f) APPLICABILITY OF CERTAIN CIVIL SERVICE

17 LAWS.—The officers and employees of the FHA shall be 

18 appointed without regard to the provisions of title 5, 

19 United States Code, governing appointments in the com20 petitive service, and may be paid without regard to the 

21 provisions of chapter 51 and subchapter III of chapter 53 

22 of that title relating to classification and General Schedule 

23 pay rates. 

24 (g) USE OF FEDERAL AGENCIES.—In carrying out 

25 its purposes, the FHA may use information, services, 


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1 staff, and facilities of any executive agency, independent 

2 agency, or department (including the Department of 

3 Housing and Urban Development), with the consent of the 

4 agency or department, and shall reimburse the agency or 

5 department for the cost of such information, services, 

6 staff, and facilities. 

7 (h) INDEMNIFICATION.—The FHA may provide for 

8 the indemnification of any officer, employee, contractor, 

9 or agent of the FHA on such terms as the FHA deter10 mines proper, except that, to the extent that the FHA self11 insures for any indemnification— 

12 (1) the aggregate maximum amount of indem13 nification outstanding at any time shall not exceed 

14 5 percent of the amount of capital required under 

15 section 256 to be maintained by the Mutual Mort16 gage Insurance Fund; and 

17 (2) not more than $1,000,000 may be paid as 

18 an indemnity for any single event. 

19 (i) AMENDMENTS TO HOUSING ACT OF 1949.—Sec20 tion 501 of the Housing Act of 1949 (42 U.S.C. 1471) 

21 is amended by adding at the end the following new sub22 sections: 

23 ‘‘(k) AUTHORITY OF CHIEF RISK OFFICER OF

24 FHA.—The Chief Risk Officer of the FHA appointed pur25 suant to section 215(b) of the FHA Reform and ModVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 ernization Act of 2013 shall be solely responsible for all 

2 matters relating to evaluating, managing, and mitigating 

3 risk to the programs under this title for making, insuring, 

4 and guaranteeing housing loans and ensuring the perform5 ance of such housing loans, and such authority shall not 

6 be subject to the review or approval of the Secretary. 

7 ‘‘(l) AUTHORITY OF CHIEF TECHNOLOGY OFFICER

8 OF FHA.—The Chief Technology Officer of the FHA ap9 pointed pursuant to section 215(c) of the FHA Reform 

10 and Modernization Act of 2013 shall be solely responsible 

11 for all matters relating to information technology manage12 ment relating to the programs under this title for making, 

13 insuring, and guaranteeing housing loans, and such au14 thority shall not be subject to the review or approval of 

15 the Secretary.’’. 

16 SEC. 216. FINANCIAL, UNDERWRITING, AND OPERATIONS 

17 SYSTEMS. 

18 (a) IN GENERAL.—The FHA shall develop and main19 tain such financial, underwriting, and operations systems 

20 as may be necessary to carry out the responsibilities of 

21 the FHA. Such systems shall be designed and developed 

22 in a manner so that such systems shall also be used for 

23 the financial, underwriting, and operations systems, re24 spectively, of the programs under title V of the Housing 


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1 Act of 1949 for making, guaranteeing, and insuring rural 

2 housing loan programs. 

3 (b) USE BY RURAL HOUSING SERVICE PROGRAMS.— 

4 (1) AVAILABILITY.—All financial, underwriting, 

5 and operations systems of the FHA shall be avail6 able to the Secretary of Agriculture to the extent 

7 necessary to ensure compliance with section 501(m) 

8 of the Housing Act of 1949 (42 U.S.C. 1471(l)). 

9 (2) USE.—Section 501 of the Housing Act of 

10 1949 (42 U.S.C. 1471), as amended by the pre11 ceding provisions of this title, is further amended by 

12 adding at the end the following new subsection: 

13 ‘‘(m) USE OF FHA SYSTEMS.—The Secretary, the 

14 Chief Risk Officer of the FHA, and the Chief Technology 

15 Officer of the FHA shall utilize the financial, under16 writing, and operations systems of the FHA in carrying 

17 out all financial, underwriting, and operations functions 

18 with respect to the programs under this title for making, 

19 insuring, or guaranteeing housing loans.’’. 

20 SEC. 217. PROCUREMENT. 

21 (a) IN GENERAL.—The FHA shall establish an eco22 nomical and results-oriented system for the procurement, 

23 supply, and disposition by the FHA of personal property 

24 and services, which shall include performance measures 

25 and standards for determining the extent to which the 


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1 FHA’s procurement of property and services satisfies the 

2 objective for which the procurement was undertaken. The 

3 system shall be consistent with the principles of impar4 tiality and competitiveness. 

5 (b) EXEMPTION FROM FEDERAL PROPERTY AND AD6 MINISTRATIVE SERVICE ACT REQUIREMENTS.—Section 

7 113(e) of title 40, United States Code, is amended— 

8 (1) in paragraph (19), by striking ‘‘or’’ at the 

9 end; 

10 (2) in paragraph (20), by striking the period at 

11 the end and inserting ‘‘; or’’ ; and 

12 (3) by adding at the end the following new 

13 paragraph: 

14 ‘‘(21) The Federal Housing Administration; 

15 and’’. 

16 (c) EXEMPTION FROM PROCUREMENT PROTEST SYS17 TEM.—Subchapter V of chapter 35 of title 31, United 

18 States Code, relating to the procurement protest system, 

19 shall not apply to the FHA. 

20 SEC. 218. APPLICABILITY OF LAWS. 

21 (a) EXEMPTION FROM NOTICE AND COMMENT

22 RULEMAKING.—Any matter relating to credit enhance23 ment or other business activities of the FHA authorized 

24 under this title shall be considered a matter relating to 

25 agency management or personnel or to public property, 


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1 loans, grants, benefits, or contracts, for purposes of sec2 tion 553(a) of title 5, United States Code. 

3 (b) SUBSIDY LAYERING.—For purposes of section 

4 102(d) of the Department of Housing and Urban Develop5 ment Reform Act of 1989, mortgage insurance and other 

6 credit enhancement provided under this title shall not be 

7 considered assistance within the jurisdiction of the De8 partment. 

9 (c) GOVERNMENT CORPORATION CONTROL ACT.— 

10 Section 9101(3) of title 31, United States Code, is amend11 ed by adding at the end the following new subparagraph: 

12 ‘‘(S) the Federal Housing Administra13 tion.’’. 

14 (d) TAX EXEMPT STATUS OF FHA.—Section 501(l) 

15 of the Internal Revenue Code of 1986 (26 U.S.C. 501(l)) 

16 is amended by adding at the end the following new para17 graph: 

18 ‘‘(5) The Federal Housing Administration es19 tablished under the FHA Reform and Modernization 

20 Act of 2013.’’. 

21 SEC. 219. EVALUATION. 

22 (a) IN GENERAL.—The Director shall conduct a 

23 study and submit a report to the President and the Con24 gress on— 


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1 (1) whether this title provides sufficient author2 ity to permit the FHA to accomplish its public pur3 poses efficiently and effectively, and in a safe and 

4 sound manner; 

5 (2) the impact of the limitations on business ac6 tivities as to mortgage amounts and aggregate com7 mitments, and any other statutory limitations, on 

8 the current and anticipated business activity of the 

9 FHA; and 

10 (3) whether the provisions of subtitle C appro11 priately provide that the FHA will be operated in a 

12 safe and sound manner and will fulfill the public 

13 purposes of its establishment. 

14 (b) TIMING.—The report required by this section 

15 shall be submitted on the third January 1st occurring 

16 after the conclusion of the transition period under section 

17 281. 

18 SEC. 220. FUNDING. 

19 (a) FUNDING OF SALARIES AND EXPENSES.—There 

20 is authorized to be appropriated for each fiscal year to 

21 the FHA, for salaries, expenses, and technology for the 

22 management and operations of the FHA an amount not 

23 exceeding the amount of the negative subsidy credited to 

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1 serves of the funds of the FHA pursuant to sections 256 

2 and 259. 

3 (b) FUNDING OF CLAIMS.— 

4 (1) AVAILABILITY OF FUNDS.—Amounts cred5 ited to the financing account of the FHA, estab6 lished pursuant to title V of the Congressional 

7 Budget Act of 1974, shall be permanently and in8 definitely available for payment of any claim that 

9 the FHA approves under a contract of insurance or 

10 other credit enhancement instrument pursuant to 

11 this title. 

12 (2) BORROWING AUTHORITY.— 

13 (A) IN GENERAL.—To the extent that such 

14 amounts are insufficient for such purpose, the 

15 FHA may borrow from the Treasury pursuant 

16 to title V of the Congressional Budget Act of 

17 1974. 

18 (B) NOTICE TO CONGRESS.—Upon exer19 cising the authority referred to in subparagraph 

20 (A), the FHA shall submit to the Congress— 

21 (i) notice of such exercise of authority 

22 and the extent of the borrowing under23 taken; 

24 (ii) a plan for repayment to the 

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1 fying the time and amounts of such pay2 ments; and 

3 (iii) if such borrowing is for the Mu4 tual Mortgage Insurance Fund, how the 

5 FHA will comply with the capital restora6 tion plan required under section 257(c). 

7 SEC. 221. EFFECTIVE DATE. 

8 This subtitle shall take effect on the date of the en9 actment of this Act. 

10 Subtitle B—Business Authority and 

11 Requirements 

12 SEC. 231. AUTHORITY TO CARRY OUT FHA AND OTHER 

13 BUSINESS. 

14 (a) IN GENERAL.—After the expiration of the transi15 tion period under section 281— 

16 (1) the FHA may exercise (in addition to pow17 ers set forth in section 282) any authority and un18 dertake any responsibilities of the Secretary of 

19 Housing and Urban Development under the Na20 tional Housing Act (as amended by this title) relat21 ing to mortgage insurance, except as otherwise pro22 vided in this title and except that any authority that 

23 requires an appropriation may be conducted only to 

24 the extent that amounts are so appropriated; 


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1 (2) any amounts in the Mutual Mortgage Insur2 ance Fund under section 202(a) of the National 

3 Housing Act (12 U.S.C. 1708(a)), any amounts in 

4 the General Insurance Fund and Special Risk Insur5 ance Fund under sections 519 and 238(b), respec6 tively, of such Act (12 U.S.C. 1735c, 1715z–3(b)), 

7 and any amounts in the Cooperative Management 

8 Housing Insurance Fund under section 213(k) of 

9 such Act (12 U.S.C. 1715e(k)), shall be used by the 

10 FHA only— 

11 (A) for meeting any obligations of such 

12 Funds entered into before such transition date; 

13 and 

14 (B) for carrying out the mortgage insur15 ance obligations of the FHA pursuant to sec16 tion 282(1) of this title and paragraph (1) of 

17 this section; and 

18 (3) the FHA may exercise any authority of the 

19 FHA under this title. 

20 (b) TERMINATION OF SECRETARY’S FHA AUTHOR21 ITY.—After the expiration of the transition period under 

22 section 281, the Secretary may not exercise any authority 

23 under the National Housing Act relating to mortgage in24 surance. This subsection may not be construed to limit 


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1 or otherwise affect the Secretary’s authority under title 

2 I of the National Housing Act (12 U.S.C. 1702 et seq.). 

3 (c) CONTINUATION OF OBLIGATIONS.—This section 

4 and section 282(1) may not be construed to affect the va5 lidity of any right, duty, or obligation of the United States 

6 or other person arising under or pursuant to any commit7 ment or agreement lawfully entered into with the Sec8 retary of Housing and Urban Development under the Na9 tional Housing Act. 

10 SEC. 232. ELIGIBLE SINGLE-FAMILY MORTGAGES. 

11 (a) IN GENERAL.—Notwithstanding section 203 of 

12 the National Housing Act (12 U.S.C. 1709) or any other 

13 provision of law, the FHA may insure, and make commit14 ments to insure, a mortgage on a 1- to 4-family residential 

15 property only if the mortgage complies with the following 

16 requirements: 

17 (1) MORTGAGE AMOUNT.—The mortgage shall 

18 involve a principal obligation (including such initial 

19 service charges, appraisal, inspection, and other fees 

20 as the FHA shall approve) in an amount not to ex21 ceed the following amounts: 

22 (A) APPRAISED VALUE.—100 percent of 

23 the appraised value of the property. 

24 (B) AREA LIMITATION.— 


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1 (i) MAXIMUM LIMIT.—The lesser of 

2 the following amounts: 

3 (I) In the case of— 

4 (aa) a 1-family residence, 

5 115 percent of the median 1-fam6 ily house price in the area in 

7 which such residence is located, 

8 as determined by the FHA; and 

9 (bb) in the case of a 2-, 3- 

10 , or 4-family residence, the per11 centage of such median price 

12 that bears the same ratio to such 

13 median price as the dollar 

14 amount limitation determined 

15 under the sixth sentence of sec16 tion 305(a)(2) of the Federal 

17 Home Loan Mortgage Corpora18 tion Act (12 U.S.C. 1454(a)(2)) 

19 for a 2-, 3-, or 4-family resi20 dence, respectively, bears to the 

21 dollar amount limitation deter22 mined under such section for a 1- 

23 family residence; or 

24 (II) 150 percent of the dollar 

25 amount limitation determined under 


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1 the sixth sentence of such section 

2 305(a)(2) for a residence of the appli3 cable size. 

4 For purposes of the preceding sentence, 

5 the term ‘‘area’’ means a metropolitan sta6 tistical area as established by the Office of 

7 Management and Budget; and the median 

8 1-family house price for an area shall be 

9 equal to the median 1-family house price of 

10 the county within the area that has the 

11 highest such median price. 

12 (ii) MINIMUM LIMIT.—Notwith13 standing clause (i), the principal obligation 

14 limitation in effect for any area under this 

15 subparagraph may not be less than the 

16 greater of— 

17 (I) 375 percent of the median in18 come for the area, as determined by 

19 the FHA; or 

20 (II) $200,000. 

21 (2) DOWNPAYMENT.—The mortgage shall be 

22 executed by a mortgagor who shall have paid on ac23 count of the property subject to the mortgage an 

24 amount, in cash or its equivalent, equal to or exceed25 ing— 


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1 (A) 5 percent of the cost of acquisition of 

2 the property, as determined by the FHA; or 

3 (B) in the case of a mortgage under which 

4 the mortgagor is a first-time homebuyer and for 

5 which such credit enhancement as the FHA 

6 shall determine has been provided, 3.5 percent 

7 of the cost of acquisition of the property, as de8 termined by the FHA. 

9 (3) PUBLIC PURPOSE REQUIREMENT.—The 

10 mortgage shall meet the requirements of any one of 

11 the following subparagraphs: 

12 (A) FIRST-TIME HOMEBUYER.—The mort13 gagor under the mortgage is a first-time home14 buyer (as such term is defined in section 202) 

15 of the property subject to the mortgage and the 

16 property is used as the principal residence of 

17 the mortgagor. 

18 (B) LOW- OR MODERATE-INCOME MORT19 GAGOR.—The mortgagor under the mortgage is 

20 a member of a family as follows: 

21 (i) IN GENERAL.—A family having an 

22 income that is less than 115 percent of the 

23 median income, as determined by the 

24 FHA, for the area in which the property 

25 subject to the mortgage is located, except 


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1 that the FHA may establish income ceil2 ings higher or lower than 115 percent of 

3 the median for the area to take into con4 sideration various sizes of families. 

5 (ii) HIGH-COST AREAS.—A family 

6 that— 

7 (I) resides in any area for which 

8 the median 1-family house price ex9 ceeds the maximum dollar amount 

10 limitation in effect for that year on 

11 the original principal obligation of a 

12 mortgage on a 1-family residence that 

13 may be purchased by the Federal 

14 Home Loan Mortgage Corporation, as 

15 determined under section 305(a)(2) of 

16 the Federal Home Loan Mortgage 

17 Corporation Act (12 U.S.C. 

18 1454(a)(2)); and 

19 (II) has an income that is less 

20 than 150 percent of the median in21 come, as determined by the FHA, for 

22 the area in which the property subject 

23 to the mortgage is located, except that 

24 the FHA may establish income ceil25 ings higher or lower than 150 percent 


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1 of the median for the area to take 

2 into consideration various sizes of 

3 families. 

4 For purposes of this subparagraph, the term 

5 ‘‘area’’ has the meaning given such term in the 

6 last sentence of paragraph (1)(B)(i). 

7 (C) COUNTER-CYCLICAL MARKET ADJUST8 MENT.—The property subject to the mortgage 

9 is located in a county or counties for which a 

10 determination under this subparagraph has 

11 been made, as follows: 

12 (i) DETERMINATION.—A mortgage 

13 may be insured pursuant to this subpara14 graph only upon a joint determination by 

15 the Director and the Chief Risk Officer 

16 that— 

17 (I) available credit for the pur18 chase of 1- to 4-family homes located 

19 in such county or counties has con20 tracted significantly, as measured by 

21 the credit availability measure of the 

22 Office of the Comptroller of the Cur23 rency; 

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1 cantly, as measured by the applicable 

2 housing price index of the Federal 

3 Housing Finance Agency; or 

4 (III) available credit for the pur5 chase of housing or such other eco6 nomic conditions exist sufficient to 

7 evidence a significant contraction of 

8 capital in such county or counties, as 

9 measured by a metric identified by the 

10 Director and the Chief Risk Officer in 

11 a written notice made publicly avail12 able, and provided to the Congress, in 

13 advance of such determination. 

14 (ii) CONDITIONS OF TERMINATION.— 

15 Upon making a determination under clause 

16 (i), the Director and the Chief Risk Officer 

17 shall also identify measurable criteria for 

18 determining that the conditions determined 

19 under clause (i) for such county or coun20 ties have ceased to exist. 

21 (iii) NOTICE TO CONGRESS.—Upon 

22 making a determination under clause (i), 

23 the Director and the Chief Risk Officer 

24 shall provide written notice to the Congress 

25 of such determination and the specific 


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1 measurable criteria identified pursuant to 

2 clause (ii). 

3 (iv) TERMINATION.—The authority to 

4 insure mortgages pursuant to this subpara5 graph on properties located in a county or 

6 counties shall terminate upon the earlier 

7 of— 

8 (I) the expiration of the 18- 

9 month period beginning upon the date 

10 that notification under clause (iii) is 

11 provided to the Congress of the deter12 mination under clause (i) with respect 

13 to such county or counties; or 

14 (II) the occurrence of the condi15 tions identified pursuant to clause (ii) 

16 with respect to such county or coun17 ties. 

18 (v) MULTIPLE DETERMINATIONS.— 

19 Nothing in this subparagraph may be con20 strued to prevent multiple or consecutive 

21 periods for a county or counties during 

22 which mortgages on properties located in 

23 such county or counties may be insured 

24 pursuant to this subparagraph. 


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1 (D) DISASTER AREA.—The Board of Di2 rectors exercises the authority to insure mort3 gages under this subparagraph, subject to the 

4 following requirements: 

5 (i) IMPLEMENTATION.—The Board of 

6 Directors may implement authority to in7 sure mortgages under this subparagraph 

8 only if the Board— 

9 (I) by a vote of the majority of 

10 its members, approves such implemen11 tation for a specific disaster area 

12 under clause (iii) and a specific dis13 aster period under clause (iv); and 

14 (II) notifies the Congress and the 

15 President in writing of such approval, 

16 such disaster period, and such dis17 aster area not less than 30 days be18 fore the commencement of the dis19 aster period. 

20 (ii) ELIGIBLE MORTGAGES.—The 

21 FHA may insure, or make a commitment 

22 to insure, a mortgage under authority 

23 under this subparagraph only if— 

24 (I) the mortgage is made for the 

25 purchase of a principal residence by a 


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1 mortgagor whose home (that the 

2 mortgagor occupied as an owner or 

3 tenant) was located in a disaster area 

4 described under clause (iii) and was 

5 destroyed or damaged to such an ex6 tent that reconstruction is required, 

7 as a result of a major disaster de8 clared by the President under the 

9 Robert T. Stafford Disaster Relief 

10 and Emergency Assistance Act; and 

11 (II) the commitment for mort12 gage insurance is made during the 

13 disaster period established under 

14 clause (iv) for such disaster area. 

15 (iii) DISASTER AREA.—A disaster 

16 area may be established for purposes of 

17 this subparagraph only for the area af18 fected by a major disaster, as declared by 

19 the President under the Robert T. Stafford 

20 Disaster Relief and Emergency Assistance 

21 Act, or a portion of such area, as deter22 mined by the FHA. 

23 (iv) DISASTER PERIOD.—A disaster 

24 period established for purposes of this sub25 paragraph shall— 


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1 (I) commence upon or after the 

2 declaration of the major disaster re3 ferred to in clause (iii); and 

4 (II) terminate on the date certain 

5 approved by the Board of Directors 

6 under clause (i)(I) and contained in 

7 the notice under clause (i)(II), which 

8 shall not be later than 18 months 

9 after the commencement of the period. 

10 (b) CONFORMING AMENDMENTS.—Section 203(b) of 

11 the National Housing Act (12 U.S.C. 1709(b)) is amend12 ed— 

13 (1) by striking paragraph (2); and 

14 (2) in paragraph (9)— 

15 (A) by striking subparagraph (A); and 

16 (B) in subparagraph (B), by striking ‘‘this 

17 paragraph’’ and inserting ‘‘section 202(a)(2) of 

18 the FHA Reform and Modernization Act of 

19 2013’’. 

20 SEC. 233. RISK-SHARING. 

21 (a) DEVELOPMENT OF DEMONSTRATION MODEL.— 

22 Not later than the expiration of the 2-year period begin23 ning on the date of the enactment of this Act, the FHA 

24 shall develop and implement a model and standards for 

25 entering into risk-sharing agreements with respect to 


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1 mortgages insured by the FHA, under which the FHA 

2 shall insure a portion of the amount of the mortgage and 

3 persons or entities determined under the guidelines estab4 lished pursuant to subsection (b) to be qualified to partici5 pate in such an agreement shall insure the remainder (or 

6 another) portion of the amount of the eligible mortgage. 

7 (b) QUALIFICATIONS OF RISK-SHARING PART8 NERS.— 

9 (1) ESTABLISHMENT.—The model and stand10 ards established under this section shall include 

11 guidelines for the qualification of persons or entities 

12 to participate in risk-sharing and other credit en13 hancement activities with the FHA. 

14 (2) PROCEDURES.—In establishing such guide15 lines, the FHA shall review the guidelines estab16 lished by the Director for qualification of persons or 

17 entities to participate in risk-sharing and other cred18 it enhancement activities with the Federal National 

19 Mortgage Association or the Federal Home Loan 

20 Mortgage Corporation. The FHA shall determine 

21 whether such guidelines for such enterprises are suf22 ficient for purposes of the FHA, including whether 

23 such guidelines meet the requirements under para24 graph (3), and— 


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1 (A) if the FHA determines that such 

2 guidelines are so sufficient, the FHA shall 

3 adopt such guidelines for purposes of this sec4 tion, to the extent appropriate, with any 

5 changes necessary to account for differences be6 tween the mortgages insured under this title 

7 and the National Housing Act and the business 

8 under such provisions and the business of such 

9 enterprises; or 

10 (B) if the FHA determines that such 

11 guidelines are not so sufficient, the FHA shall 

12 adopt such guidelines for purposes of this sec13 tion, to the extent appropriate and with changes 

14 referred to in subparagraph (A), together with 

15 additional criteria sufficient to address any 

16 such insufficiency. 

17 (3) CONTENT.—Such guidelines shall ensure 

18 that— 

19 (A) persons or entities participating in 

20 risk-sharing and other credit enhancement ac21 tivities pursuant to this section have sufficient 

22 capital, credit worthiness, and liquidity, and are 

23 otherwise capable of fulfilling their obligations 

24 to the FHA; 


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1 (B) such persons or entities and their prin2 cipals or officers are not engaged in a business 

3 the goals of which would conflict with the pur4 poses of the FHA or the National Housing Act; 

5 and 

6 (C) product or service delivery will be con7 ducted in a manner that is efficient and effec8 tive, and that will comply with the requirement 

9 under section 211(d). 

10 (c) RISK-SHARING REQUIREMENT.— 

11 (1) REQUIREMENT.—After the expiration of the 

12 2-year period referred to in subsection (a), the FHA 

13 shall ensure that, in each fiscal year, not less than 

14 10 percent of any new business in mortgages on 1- 

15 to 4-family residential property is insured pursuant 

16 to a risk-sharing agreement with respect to such 

17 mortgage that complies with the standards estab18 lished pursuant to subsection (a). 

19 (2) LIMITATION.—In any fiscal year, the FHA 

20 may not comply with paragraph (1) by entering into 

21 risk-sharing agreements with respect only to one or 

22 a limited number of types or categories of mort23 gages, or mortgages having only particular, or a par24 ticular range of, original principal obligation 

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1 ments for all types and amounts of mortgages in2 sured by the FHA, to the extent required under 

3 paragraph (1). 

4 (3) NEW BUSINESS.—For purposes of this sub5 section, with respect to a fiscal year, the term ‘‘new 

6 business’’ means the aggregate dollar amount of the 

7 principal obligations of mortgages for which a com8 mitment to insure is made pursuant to the National 

9 Housing Act or this title, as applicable, during such 

10 fiscal year. 

11 (d) REPORTS TO CONGRESS.—Upon the expiration of 

12 each of the 3- and 5-year periods beginning on the date 

13 of the enactment of this Act, the FHA shall submit a re14 port to the Congress on the findings and results of risk15 sharing activities under this section. Such reports shall de16 scribe the model and standards for entering into risk-shar17 ing agreements, analyze appropriate dollar amount limits 

18 for the original principal obligations of mortgages that 

19 should be subject to a risk-sharing requirement, identify 

20 the effects of such risk-sharing activities on the Mutual 

21 Mortgage Insurance Fund, and make recommendations 

22 regarding expanding the risk-sharing requirement under 

23 subsection (c). 

24 (e) EFFECTIVE DATE.—This section shall take effect 

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1 sition period under section 281, any reference in this sec2 tion to the FHA shall be construed to refer to the Sec3 retary to the extent the Secretary has not delegated au4 thority under this section to the FHA pursuant to section 

5 282(1). 

6 SEC. 234. LIMITATION ON MORTGAGE INSURANCE COV7 ERAGE. 

8 (a) LIMITATION.—Notwithstanding any other provi9 sion of this title or the National Housing Act, the FHA 

10 may not insure, or make any commitment to insure, any 

11 portion of any mortgage on a 1- to 4-family residential 

12 property in excess of the amount equal to the following 

13 percentage of the original principal obligation of the mort14 gage: 

15 (1) In the case of any such mortgage insured 

16 after the expiration of the 1-year period beginning 

17 on the date of the enactment of this Act, 90 percent 

18 of such original principal obligation, subject to para19 graphs (2) through (5). 

20 (2) In the case of any such mortgage insured 

21 after the expiration of the 2-year period beginning 

22 on the date of the enactment of this Act, 80 percent 

23 of such original principal obligation, subject to para24 graphs (3) through (5). 


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1 (3) In the case of any such mortgage insured 

2 after the expiration of the 3-year period beginning 

3 on the date of the enactment of this Act, 70 percent 

4 of such original principal obligation, subject to para5 graphs (4) and (5). 

6 (4) In the case of any such mortgage insured 

7 after the expiration of the 4-year period beginning 

8 on the date of the enactment of this Act, 60 percent 

9 of such original principal obligation, subject to para10 graph (5). 

11 (5) In the case of any such mortgage insured 

12 after the expiration of the 5-year period beginning 

13 on the date of the enactment of this Act, 50 percent 

14 of such original principal obligation. 

15 (b) EFFECTIVE DATE.—This section shall take effect 

16 on the date of the enactment of this Act. During the tran17 sition period under section 281, any reference in this sec18 tion to the FHA shall be construed to refer to the Sec19 retary to the extent the Secretary has not delegated au20 thority under this section to the FHA pursuant to section 

21 282(1). 

22 SEC. 235. PREMIUMS. 

23 (a) ESTABLISHMENT.—The FHA shall establish and 

24 collect premium payments for mortgage insurance pro25 vided pursuant to this title and the amendments made by 


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1 this title, and shall provide for sharing of premiums with 

2 entities entering into risk-sharing agreements with the 

3 FHA pursuant to section 233 based on the relative portion 

4 of the mortgage insured and the risk of loss borne. 

5 (b) MINIMUM PREMIUMS.—In the case of mortgages 

6 on 1- to 4-family residential properties insured by the 

7 FHA, the premiums established and collected by the FHA 

8 shall include an annual premium payment in an amount 

9 not less than 0.55 percent of the remaining insured prin10 cipal balance (excluding the portion of the remaining bal11 ance attributable to any premium collected at the time of 

12 insurance and without taking into account delinquent pay13 ments or prepayments) for the entire term of the mort14 gage. 

15 (c) SELF-SUFFICIENT OPERATIONS.—Notwith16 standing section 203(c) of the National Housing Act (12 

17 U.S.C. 1709(c)) or any other provision of law, premium 

18 rates established under this section shall be established in 

19 amounts sufficient to cover— 

20 (1) costs of providing mortgage insurance cov21 erage under this title; 

22 (2) costs for administration, operations, man23 agement, and technology systems for the FHA for 

24 carrying out this title; 


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1 (3) the capital ratio required for the Mutual 

2 Mortgage Insurance Fund under section 256(b) and 

3 under section 259 with respect to mortgage insur4 ance for mortgages on multifamily properties; and 

5 (4) salaries and expenses for officers and per6 sonnel of the FHA. 

7 (d) RISK-BASED PREMIUMS.—The FHA may, with 

8 respect to mortgages on 1- to 4-family residential prop9 erties insured by the FHA, establish a mortgage insurance 

10 premium structure involving a single premium payment 

11 collected prior to the insurance of the mortgage or annual 

12 payments (which may be collected on a periodic basis), or 

13 both. Under such structure, the rate of premiums for such 

14 a mortgage may vary according to the credit risk associ15 ated with the mortgage and the rate of any annual pre16 mium for such a mortgage may vary during the mortgage 

17 term, except that the basis for determining the variable 

18 rate shall be established before the execution of the mort19 gage. The FHA may change a premium structure estab20 lished under this subsection, but only to the extent that 

21 such change is not applied to any mortgage already exe22 cuted. 

23 (e) SAVINGS PROVISION.—Nothing in this section 

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1 gage insurance provided for mortgages insured before the 

2 date of the enactment of this Act. 

3 SEC. 236. DEFAULT AND FORECLOSURE STATEMENT. 

4 (a) WRITTEN STATEMENT.—The FHA shall ensure 

5 that each mortgagor under a mortgage on a 1- to 4-family 

6 residential property insured by the FHA is provided, by 

7 the mortgagee at the time that such mortgage is origi8 nated, with a written statement containing the informa9 tion required under subsection (b). 

10 (b) DEFAULT AND FORECLOSURE INFORMATION.— 

11 The information required under this subsection with re12 spect to a mortgage is information identifying the percent13 age (as determined according to historical rates of default 

14 and foreclosure) of mortgages on 1- to 4-family residential 

15 properties that were insured pursuant to this title and the 

16 National Housing Act and that had mortgagors who have 

17 the same risk profile and mortgage product as the mort18 gagor receiving the written statement pursuant to this sec19 tion (as determined in accordance with guidelines estab20 lished by the FHA) that— 

21 (1) during the terms of such mortgages, experi22 enced a default on payments due under such mort23 gages; and 

24 (2) were foreclosed upon during the terms of 

25 such mortgages. 


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1 SEC. 237. OCCUPANCY AND RENT LIMITATIONS FOR MULTI2 FAMILY MORTGAGE INSURANCE. 

3 (a) IN GENERAL.—Notwithstanding any provision of 

4 the National Housing Act or any other provision of law, 

5 the FHA may not insure any mortgage on a residential 

6 property having 5 or more dwelling units unless the prop7 erty is subject to such binding terms and conditions, in8 cluding such occupancy and rent restrictions, as are satis9 factory to the FHA to ensure that the property includes 

10 dwelling units, to the extent determined by the FHA to 

11 be appropriate, for which occupancy is restricted during 

12 the entire term of the mortgage to only the following fami13 lies: 

14 (1) IN GENERAL.—A family having an income 

15 that is less than 115 percent of the median income, 

16 as determined by the FHA, for the area in which the 

17 property subject to the mortgage is located, except 

18 that the FHA may establish income ceilings higher 

19 or lower than 115 percent of the median for the area 

20 to take into consideration various sizes of families. 

21 (2) HIGH-COST AREAS.—A family that— 

22 (A) resides in any area in which the me23 dian 1-family house price exceeds the maximum 

24 dollar amount limitation in effect for that year 

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1 chased by the Federal Home Loan Mortgage 

2 Corporation, as determined under section 

3 305(a)(2) of the Federal Home Loan Mortgage 

4 Corporation Act (12 U.S.C. 1454(a)(2)); and 

5 (B) has an income that is less than 150 

6 percent of the median income, as determined by 

7 the FHA, for the area in which the property 

8 subject to the mortgage is located, except that 

9 the FHA may establish income ceilings higher 

10 or lower than 150 percent of the median for the 

11 area to take into consideration various sizes of 

12 families. 

13 (b) LOWER INCOMES.—Subsection (a) may not be 

14 construed to prevent the FHA from establishing occu15 pancy, income, and rent restrictions that establish limits 

16 on incomes for families occupying income-restricted units 

17 in a property that are lower than the incomes specified 

18 in subsection (a). 

19 (c) AREA.—For purposes of this section, the term 

20 ‘‘area’’ has the meaning given such term in the last sen21 tence of section 232(a)(1)(b)(i). 

22 SEC. 238. EFFECTIVE DATE. 

23 This subtitle and the amendments made by this sub24 title, except for sections 233 and 234, shall take effect 


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1 upon the expiration of the transition period under section 

2 281. 

3 Subtitle C—Financial Safety and 

4 Soundness 

5 SEC. 251. AUTHORITY OF DIRECTOR. 

6 (a) DUTY.—The Director of the Federal Housing Fi7 nance Agency shall supervise and regulate the safety and 

8 soundness of the FHA and the programs of the Rural 

9 Housing Service of the Department of Agriculture for 

10 housing loans made, insured, or guaranteed under title V 

11 of the Housing Act of 1949, and it shall be the duty of 

12 the Director to ensure that the FHA and such Rural 

13 Housing Service programs are adequately capitalized and 

14 operating safely. 

15 (b) AUTHORITY.—The Director may make such de16 terminations, take such actions, and perform such func17 tions as the Director determines necessary to meet the re18 sponsibilities of the Director under this subtitle. 

19 SEC. 252. BUDGETS AND BUSINESS PLANS. 

20 (a) SUBMISSION OF BUSINESS-TYPE BUDGET.—In 

21 each year, the FHA shall prepare and submit an annual 

22 budget as required under section 9103 of title 31, United 

23 States Code, and shall submit such budget to the Director 

24 by a date sufficient to enable the Director to produce, pur25 suant to section 255(c) of this title, the credit subsidy cost 


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1 estimates that are required for the budget of the United 

2 States Government under section 1105(a) of title 31, 

3 United States Code. 

4 (b) SUBMISSION OF BUDGET AND CREDIT COST ES5 TIMATES TO OMB.—For purposes of inclusion in the 

6 budget of the United States Government, the FHA shall 

7 submit the annual budget of the FHA and the annual 

8 credit subsidy cost estimates produced pursuant to section 

9 255(c) of this title to the Director of the Office of Manage10 ment and Budget. 

11 (c) RESERVES.— 

12 (1) ESTABLISHMENT.—Subject to sections 256 

13 and 259, the FHA may establish any reserve that 

14 the FHA determines is necessary for the business 

15 operations of the FHA. 

16 (2) AMOUNTS.—The FHA may hold as a re17 serve in any financing account, as defined in section 

18 502 of the Congressional Budget Act of 1974 (2 

19 U.S.C. 661a), such amounts as the FHA considers 

20 necessary to comply with the capital requirements 

21 established for the FHA under sections 256 and 259 

22 of this title and to fulfill the purposes of this title. 

23 SEC. 253. ANNUAL BUSINESS PLAN; USE OF GAAP. 

24 (a) ANNUAL BUSINESS PLAN.—The FHA shall es25 tablish a business plan on an annual basis and shall make 


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1 such plan available for review by the Director. Such plan 

2 shall specify the products and operational strategy of the 

3 FHA, including plans to address compliance with the safe4 ty and soundness requirements applicable to the FHA. 

5 (b) USE OF GAAP.—Any financial reporting of the 

6 FHA, including the preparation of the annual business 

7 plan required by subsection (a), the annual budget re8 quired in accordance with section 252(a), and any finan9 cial statements of the FHA, shall be conducted in accord10 ance with generally accepted accounting principles applica11 ble to the private sector. 

12 SEC. 254. EXAMINATIONS, REPORTS, AND COST ESTIMATES. 

13 (a) EXAMINATIONS.—The Director shall conduct 

14 such examinations of the FHA and the Rural Housing 

15 Service programs referred to in section 251(a) as the Di16 rector determines necessary to evaluate the safety and 

17 soundness of the FHA and such programs. Such examina18 tions shall be subject to and governed by subsections (c) 

19 through (h) of section 1317 of the Federal Housing Enter20 prises Financial Safety and Soundness Act of 1992 (12 

21 U.S.C. 4517), except that the last sentence of subsection 

22 (c) shall not apply and any reimbursements referred to 

23 in such sentence shall be made from amounts collected 

24 under section 255 of this title. 


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1 (b) REPORTS.—The Director may require the FHA 

2 and the Rural Housing Service to submit, within a reason3 able period of time, any regular or special report, data, 

4 or other information whenever, in the judgment of the Di5 rector, such report, data, or information is necessary to 

6 carry out the Director’s responsibilities under this title. 

7 (c) CREDIT SUBSIDY COST ESTIMATES.— 

8 (1) IN GENERAL.—The Director shall produce 

9 and submit to the Director of the Office of Manage10 ment and Budget the annual credit subsidy cost esti11 mates for the FHA and the Rural Housing Service 

12 programs referred to in section 251(a) required for 

13 the President’s budget. Such estimates shall be con14 sistent with the estimates of performance generated 

15 by the risk-based capital model developed in accord16 ance with section 257(b), and with the President’s 

17 economic forecast. 

18 (2) UNIFIED ESTIMATES.—The annual credit 

19 subsidy cost estimates produced under this sub20 section by the Director shall be reported on a unified 

21 basis, which shall be based upon the business of the 

22 FHA, and the Rural Housing Service programs re23 ferred to in section 251(a), as a whole. 

24 (d) ANNUAL REPORT ON SAFETY AND SOUND25 NESS.—The Director shall submit an annual report to 


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1 Congress and the Director of the Office of Management 

2 and Budget on the financial safety and soundness of the 

3 FHA and the Rural Housing Service programs referred 

4 to in section 251(a), as measured pursuant to this subtitle. 

5 SEC. 255. REIMBURSEMENT OF COSTS. 

6 (a) ASSESSMENT AND COLLECTION.—The Director 

7 shall assess and collect from the FHA and the Secretary 

8 of Agriculture annual assessments in such amounts deter9 mined by the Director as necessary to reimburse the Fed10 eral Housing Finance Agency for the reasonable costs and 

11 expenses of the activities undertaken by such Agency to 

12 carry out the duties of the Director under this subtitle, 

13 including the costs of examination, enforcement, and over14 sight expenses. 

15 (b) REQUIREMENTS.—Annual assessments imposed 

16 by the Director shall be— 

17 (1) imposed prior to October 1 of each year; 

18 (2) allocated among the FHA and the Secretary 

19 of Agriculture proportionally based on the costs and 

20 expenses of the Agency of carrying out the duties 

21 under this subtitle with respect to FHA and the 

22 Rural Housing Service program referred to in sec23 tion 251(a), respectively; 


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1 (3) collected at such time or times during each 

2 assessment year as determined necessary or appro3 priate by the Director; and 

4 (4) treated in the same manner as provided 

5 under section 1316(f) of the Federal Housing Enter6 prises Financial Safety and Soundness Act of 1992 

7 (12 U.S.C. 4516(f)) with respect to amounts re8 ceived by the Director from assessments under sec9 tion 1316 of such Act, except that amounts from as10 sessments under this section may be used only for 

11 expenses of the Director and the Agency relating to 

12 the functions and responsibilities under this subtitle. 

13 SEC. 256. MUTUAL MORTGAGE INSURANCE FUND CAPITAL 

14 RESERVE. 

15 (a) SEGREGATION OF BOOKS.—To ensure accurate 

16 determinations of the capital ratio under subsection (b) 

17 of this section and such ratio under section 205(f) of the 

18 National Housing Act, as amended by subsection (d) of 

19 this section, the FHA shall establish separate accounts in 

20 the Mutual Mortgage Insurance Fund and take such other 

21 actions as may be necessary to segregate the following 

22 amounts: 

23 (1) Capital attributable to new business. 


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1 (2) Capital attributable to mortgages that be2 come insured before the expiration of the transition 

3 period under section 281. 

4 (b) CAPITAL RATIO FOR NEW BUSINESS.—The FHA 

5 shall ensure that the account for the Mutual Mortgage In6 surance Fund that is established pursuant to subsection 

7 (a)(1) of this section at all times maintains a capital ratio 

8 of not less than 4.0 percent. 

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

10 following definitions shall apply: 

11 (1) CAPITAL.—The term ‘‘capital’’ means the 

12 economic net worth of the account of the Fund that 

13 is established pursuant to subsection (a)(1) of this 

14 section, as determined by the FHA under the annual 

15 audit required under section 538 of the National 

16 Housing Act (12 U.S.C. 1735f–16). 

17 (2) CAPITAL RATIO.—The term ‘‘capital ratio’’ 

18 means the ratio of capital to unamortized insurance19 in-force. 

20 (3) ECONOMIC NET WORTH.—The term ‘‘eco21 nomic net worth’’ means the current cash available 

22 to the account of the Fund that is established pursu23 ant to subsection (a)(1) of this section, plus the net 

24 present value of all future cash inflows and outflows 

25 expected to result from outstanding new business. 


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1 (4) FUND.—The term ‘‘Fund’’ means the Mu2 tual Mortgage Insurance Fund established under 

3 section 205 of the National Housing Act (12 U.S.C. 

4 1711). 

5 (5) NEW BUSINESS.—The term ‘‘new business’’ 

6 means mortgages that are obligations of the Mutual 

7 Mortgage Insurance Fund that become insured by 

8 the FHA after the expiration of the transition period 

9 under section 281. 

10 (6) UNAMORTIZED INSURANCE IN FORCE.—The 

11 term ‘‘unamortized insurance-in-force’’ means the 

12 remaining obligation on outstanding new business, 

13 as estimated by the FHA. 

14 (d) TREATMENT OF EXISTING CAPITAL RATIO.— 

15 Paragraph (4) of section 205(f) of the National Housing 

16 Act (12 U.S.C. 1711(f)(4)) is amended— 

17 (1) in subparagraph (A), by striking ‘‘Mutual 

18 Mortgage Insurance Fund’’ and inserting ‘‘account 

19 of the Mutual Mortgage Insurance Fund that is es20 tablished pursuant to subsection (a)(2) of the FHA 

21 Reform and Modernization Act of 2013’’; 

22 (2) in subparagraph (C)— 

23 (A) by striking ‘‘Fund’’ the first place such 

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1 lished pursuant to subsection (a)(2) of the 

2 FHA Reform and Modernization Act of 2013’’; 

3 and 

4 (B) by striking ‘‘the Fund.’’ and inserting 

5 the following: ‘‘such account that become in6 sured by the Secretary of Housing and Urban 

7 Development (or the FHA, pursuant to subtitle 

8 D of the FHA Reform and Modernization Act 

9 of 2013) before the expiration of the transition 

10 period under section 281 of such Act.’’; and 

11 (3) in subparagraph (D), by inserting before 

12 the comma the following: ‘‘and become insured be13 fore the expiration of the transition period under 

14 section 281 of the FHA Reform and Modernization 

15 Act of 2013’’. 

16 SEC. 257. CAPITAL CLASSIFICATIONS AND PERFORMANCE 

17 MEASURES FOR MUTUAL MORTGAGE INSUR18 ANCE FUND. 

19 (a) CAPITAL CLASSIFICATION; EFFECT ON INSUR20 ANCE AUTHORITY.— 

21 (1) ADEQUATELY CAPITALIZED.—At any time 

22 that the capital ratio (as such term is defined in sec23 tion 256(c)(2) of this title) is greater than 4.0 per24 cent, the account for the Mutual Mortgage Insur25 ance Fund established pursuant to section 256(a)(1) 


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1 shall be classified as adequately capitalized for pur2 poses of this subtitle. 

3 (2) UNDERCAPITALIZED.—At any time that the 

4 capital ratio is less than 4.0 percent— 

5 (A) the account for the Mutual Mortgage 

6 Insurance Fund established pursuant to section 

7 256(a)(1) shall be classified as undercapitalized 

8 for purposes of this subtitle; and 

9 (B) if such capital ratio is— 

10 (i) equal to or greater than 2.0 per11 cent, the FHA may not enter into any new 

12 commitment to insure any mortgage on a 

13 1- to 4-family residential property that in14 volves a principal obligation (including 

15 such initial service charges, appraisal, in16 spection, and other fees as the FHA shall 

17 approve) in an amount exceeding 90 per18 cent of the appraised value of the property; 

19 and 

20 (ii) less than 2.0 percent but equal to 

21 or greater than 0.0 percent, the FHA may 

22 not enter into any new commitment to in23 sure any mortgage on a 1- to 4-family resi24 dential property that involves a principal 

25 obligation (including such initial service 


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1 charges, appraisal, inspection, and other 

2 fees as the FHA shall approve) in an 

3 amount exceeding 80 percent of the ap4 praised value of the property. 

5 (3) SIGNIFICANTLY UNDERCAPITALIZED.—At 

6 any time that the capital ratio is less than 0.0 per7 cent— 

8 (A) the account for the Mutual Mortgage 

9 Insurance Fund established pursuant to section 

10 256(a)(1) shall be classified as significantly 

11 undercapitalized for purposes of this subtitle; 

12 and 

13 (B) the Director may, pursuant to section 

14 258(a)(1), take actions under section 258(b). 

15 (4) QUARTERLY DETERMINATION OF CAPITAL

16 RATIO.—The Director shall determine the capital 

17 ratio and the capital classification of the account for 

18 the Mutual Mortgage Insurance Fund established 

19 pursuant to section 256(a)(1) for purposes of this 

20 subtitle not less frequently than each calendar quar21 ter. 

22 (b) STRESS TEST.— 

23 (1) IN GENERAL.—The Director shall develop a 

24 risk-based capital model to determine the amount of 

25 capital that is sufficient for the FHA to maintain 


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1 positive capital during a period of economic stress. 

2 The model shall incorporate the assumptions under 

3 paragraphs (2) and (3). 

4 (2) CREDIT RISK.—For purposes of paragraph 

5 (1), the Director shall assume that, during the pe6 riod of economic stress referred to in paragraph (1), 

7 credit losses occur at a rate consistent with a nation8 wide economic recession of average severity based on 

9 nationwide economic recessions since 1950. 

10 (3) OTHER RISKS.—For purposes of paragraph 

11 (1), the Director shall make assumptions about such 

12 other aspects of the period of economic stress as the 

13 Director determines are appropriate and consistent. 

14 (c) CAPITAL RESTORATION PLAN REQUIREMENT.— 

15 If the account for the Mutual Mortgage Insurance Fund 

16 established pursuant to section 256(a)(1) is classified as 

17 undercapitalized or significantly undercapitalized, the 

18 FHA shall— 

19 (1) submit to the Director a capital restoration 

20 plan meeting the requirements of section 258(d) for 

21 raising or restoring the capital of such account to an 

22 amount not less than the amount required for such 

23 account to be classified as adequately capitalized; 

24 and 


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1 (2) upon approval by the Director, carry out 

2 such plan. 

3 If the Director disapproves a capital restoration plan sub4 mitted under this subsection, the Director shall convey in 

5 writing reasons for such disapproval and shall provide for 

6 the FHA to resubmit a revised plan for approval by the 

7 Director. 

8 SEC. 258. ENFORCEMENT. 

9 (a) GROUNDS.—The Director may take actions under 

10 subsection (b) only if— 

11 (1) the account for the Mutual Mortgage Insur12 ance Fund established pursuant to section 256(a)(1) 

13 is classified under section 257(a) as significantly 

14 undercapitalized; 

15 (2) the account for the Mutual Mortgage Insur16 ance Fund established pursuant to section 256(a)(1) 

17 is classified under section 257(a) as undercapitalized 

18 and— 

19 (A) the FHA does not submit a capital 

20 restoration plan that is substantially in compli21 ance with section 257(c) within the applicable 

22 period, or the Director disapproves the capital 

23 restoration plan submitted by the FHA; or 


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1 (B) the FHA has failed to make, in good 

2 faith, reasonable efforts necessary to comply 

3 with the capital restoration plan; or 

4 (3) the FHA is engaging or has engaged, or the 

5 Director has reasonable cause to believe that the 

6 FHA is about to engage in— 

7 (A) any conduct that is likely to threaten 

8 the adequacy of the capital of the account for 

9 the Mutual Mortgage Insurance Fund estab10 lished pursuant to section 256(a)(1); 

11 (B) any failure to comply with any written 

12 agreement entered into by the FHA with the 

13 Director; or 

14 (C) any failure to comply with any request 

15 by the Director for a report, data, or informa16 tion under section 254(b). 

17 (b) ACTIONS.—The Director may, under this sub18 section, require the FHA— 

19 (1) to cease and desist from any conduct or ac20 tivity that— 

21 (A) with respect to the account for the 

22 Mutual Mortgage Insurance Fund established 

23 pursuant to section 256(a)(1), is described in 

24 paragraph (2) or (3) of subsection (a), or that 


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1 contributes to the condition described in sub2 section (a)(1); and 

3 (B) with respect to any other Fund, con4 tributes to a failure to meet a capital reserve 

5 requirement established pursuant to section 

6 259(a) or is likely to threaten the adequacy of 

7 the capital of such Fund; and 

8 (2) to take corrective or remedial action, includ9 ing— 

10 (A) restricting the growth of, or con11 tracting, any category of assets or liabilities; 

12 (B) reducing, modifying, or terminating 

13 any activity that the Director determines cre14 ates excessive risk to the FHA; 

15 (C) terminating agreements or contracts; 

16 (D) engaging or employing qualified em17 ployees (who may be subject to approval by the 

18 Director at the direction of the Director); or 

19 (E) submitting to the Director for review 

20 and approval a detailed and complete operating 

21 plan. 

22 (c) REPORTS.—If the Director is authorized under 

23 subsection (a) of this section or section 259(b) to take ac24 tion under subsection (b) of this section and determines 

25 not to take any such action, the Director shall prepare 


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1 a report detailing the basis of the Director’s decision not 

2 to take such action and shall, within 30 days of the deci3 sion, submit the report to the President, the Director of 

4 the Office of Management and Budget, the Comptroller 

5 General of the United States, the Committee on Banking 

6 and Financial Services of the House of Representatives, 

7 and the Committee on Banking, Housing, and Urban Af8 fairs of the Senate. 

9 (d) CAPITAL RESTORATION PLANS.—A capital res10 toration plan submitted pursuant to section 257(c), 

11 259(b), or 260(d)(3) shall— 

12 (1) set forth a feasible plan for raising or re13 storing the capital of the Fund for which it is pre14 pared; 

15 (2) specify the level of capital to be achieved 

16 and maintained; 

17 (3) be submitted to the Director within 45 days 

18 from the date of notification, or if the Director de19 termines that an extension is necessary, within such 

20 additional time as the Director so determines; 

21 (4) describe the actions that the FHA shall 

22 take for such Fund to become classified as ade23 quately capitalized; 

24 (5) establish a schedule for completing the ac25 tions set forth in the plan; and 


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1 (6) specify the types and levels of activities (in2 cluding existing and new business activities) in 

3 which the FHA shall engage during the term of the 

4 plan. 

5 SEC. 259. CAPITAL RESERVE REQUIREMENTS FOR OTHER 

6 FUNDS. 

7 (a) REQUIREMENTS.—The Director shall establish 

8 capital reserve requirements for— 

9 (1) the General Insurance Fund established 

10 under section 519 of the National Housing Act (12 

11 U.S.C. 1735c); 

12 (2) the Special Risk Insurance Fund estab13 lished under section 238(b) of such Act (12 U.S.C. 

14 1715z–3(b)); 

15 (3) the Cooperative Management Housing In16 surance Fund established under section 213(k) of 

17 such Act (12 U.S.C. 1715e(k)); and 

18 (4) the Rural Housing Insurance Fund estab19 lished under title V of the Housing Act of 1949 (42 

20 U.S.C. 1471), or the various accounts of such Fund. 

21 (b) ENFORCEMENT.—The Director may enforce com22 pliance with the requirements under subsection (a) of this 

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1 toration plan for such Fund meeting the requirements of 

2 section 258(d). 

3 SEC. 260. AUTHORITY TO ESTABLISH TEMPORARY CAPITAL 

4 RATIOS IN CASES OF NATIONWIDE COUNTER5 CYCLICAL MARKET ADJUSTMENT. 

6 (a) AUTHORITY; DETERMINATION.—The Director 

7 may suspend the applicability of the capital ratio under 

8 section 256(b) for the Mutual Mortgage Insurance Fund 

9 or any capital reserve requirement established pursuant 

10 to section 259 for any Fund specified under such section 

11 and establish a temporary alternative capital ratio with 

12 respect to such Fund for a specified period of time, but 

13 only upon a joint determination by the Director and the 

14 Chief Risk Officer that— 

15 (1) available credit throughout the United 

16 States or a significant portion of the United States 

17 for the purchase of the types of residences for which 

18 mortgages that obligations of such Fund are made 

19 has contracted significantly, as measured by the 

20 credit availability measure of the Office of the 

21 Comptroller of the Currency; 

22 (2) housing prices throughout the United States 

23 or a significant portion of the United States have 

24 declined significantly, as measured by the applicable 


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1 housing price index of the Federal Housing Finance 

2 Agency; or 

3 (3) available credit for the purchase of housing 

4 or such other economic conditions exist sufficient to 

5 evidence a significant contraction of capital through6 out the United States or a significant portion of the 

7 United States, as measured by a metric identified by 

8 the Director and the Chief Risk Officer in a written 

9 notice made publicly available, and provided to the 

10 Congress, in advance of such determination. 

11 (b) CONDITIONS OF TERMINATION.—Upon making a 

12 determination under subsection (a), the Director and the 

13 Chief Risk Officer shall also identify measurable criteria 

14 for determining that the conditions determined under sub15 section (a) have ceased to exist. 

16 (c) NOTICE TO CONGRESS.—Upon making a deter17 mination under subsection (a), the Director and the Chief 

18 Risk Officer shall provide written notice to the Congress 

19 of such determination and the specific measurable criteria 

20 identified pursuant to subsection (b). 

21 (d) EFFECT OF TEMPORARY ALTERNATIVE CAPITAL

22 RATIO.—During any period that a temporary alternative 

23 capital ratio is in effect pursuant to subsection (a) with 

24 respect to any Fund— 


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1 (1) in the case of a temporary capital ratio for 

2 the Mutual Mortgage Insurance Fund, subsections 

3 (a) and (c) of section 257 and section 258 shall not 

4 apply; 

5 (2) such temporary and alternative capital clas6 sifications as the Director shall establish shall be in 

7 effect with respect to such Fund; and 

8 (3) the Director shall require the FHA or the 

9 Secretary of Agriculture (as appropriate) to submit 

10 and carry out a capital restoration plan for such 

11 Fund meeting the requirements under section 

12 258(d) and may take actions under section 258(b) 

13 with respect to such Fund only in accordance with 

14 such standards relating to such temporary and alter15 native capital classifications for such Fund as the 

16 Director shall establish. 

17 (e) TERMINATION.—Any temporary alternative cap18 ital ratio established pursuant to subsection (a) shall ter19 minate upon the earlier of— 

20 (1) the expiration of the 18-month period begin21 ning upon the date that notification under sub22 section (c) is provided to the Congress of the deter23 mination under subsection (a); or 

24 (2) the occurrence of the conditions identified 

25 pursuant to subsection (b). 


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1 (f) MULTIPLE DETERMINATIONS.—Nothing in this 

2 section may be construed to prevent multiple or consecu3 tive periods during which temporary alternative capital ra4 tios are in effect pursuant to this section. 

5 SEC. 261. 7-YEAR BORROWER SUSPENSION FOR FORE6 CLOSURE. 

7 (a) FHA.— 

8 (1) IN GENERAL.—Except as provided in para9 graph (2), with respect to any mortgage on a 1- to 

10 4-family residential property that is foreclosed upon, 

11 during the 7-year period beginning upon the date of 

12 such foreclosure, the FHA may not newly insure, 

13 under any provision of this title, the National Hous14 ing Act, or any FHA program, any other mortgage 

15 under which the mortgagor is the individual who was 

16 the mortgagor under the mortgage that was fore17 closed upon. 

18 (2) WAIVER.—The FHA shall provide, by regu19 lation, for the FHA to waive the applicability of 

20 paragraph (1) with respect to a mortgagor in cases 

21 in which hardship circumstances materially contrib22 uted to the default and foreclosure of the mortgage. 

23 For purposes of this subsection, such hardship cir24 cumstances may include divorce, job or other income 


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1 loss, health problems, death in the family, and such 

2 other situations as the FHA may prescribe. 

3 (b) RURAL HOUSING.—Section 505 of the Housing 

4 Act of 1949 (42 U.S.C. 1475) is amended by adding at 

5 the end the following new subsection: 

6 ‘‘(c) 7-YEAR BORROWER SUSPENSION FOR FORE7 CLOSURE.— 

8 ‘‘(1) IN GENERAL.—Except as provided in para9 graph (2), with respect to any mortgage on a 1- to 

10 4-family residential property that is foreclosed upon, 

11 during the 7-year period beginning upon the date of 

12 such foreclosure, the Secretary may not newly make, 

13 insure, or guarantee, under any provision of this 

14 title, any other loan under which the borrower is in15 dividual who was the mortgagor under the mortgage 

16 that was foreclosed upon. 

17 ‘‘(2) WAIVER.—The Secretary shall provide, by 

18 regulation, for waiver of the applicability of para19 graph (1) with respect to a borrower in cases in 

20 which hardship circumstances materially contributed 

21 to the default and foreclosure of the mortgage. For 

22 purposes of this subsection, such hardship cir23 cumstances may include divorce, job or other income 

24 loss, health problems, death in the family, and such 

25 other situations as the Secretary may prescribe.’’. 


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1 (c) REGULATIONS.—The FHA and the Secretary of 

2 Agriculture shall jointly issue regulations required under 

3 subsection (a) of this section and section 505(c) of the 

4 Housing Act of 1949, as added by subsection (b) of this 

5 section. 

6 SEC. 262. BORROWER INELIGIBILITY UPON SECOND FORE7 CLOSURE. 

8 (a) FHA.—If any individual is the mortgagor under 

9 any two mortgages on 1- to 4-family residential properties 

10 that have been foreclosed upon, the FHA may not newly 

11 insure, under any provision of this title, the National 

12 Housing Act, or any FHA program, any other mortgage 

13 under which such individual is the mortgagor. 

14 (b) RURAL HOUSING.—Section 505 of the Housing 

15 Act of 1949 (42 U.S.C. 1475), as amended by the pre16 ceding provisions of this title, is further amended by add17 ing at the end the following new subsection: 

18 ‘‘(d) BORROWER INELIGIBILITY UPON SECOND

19 FORECLOSURE.—If any individual is the mortgagor under 

20 any two mortgages for 1- to 4-family residential properties 

21 that have been foreclosed upon, the Secretary may not 

22 newly make, insure, or guarantee, under any provision of 

23 this title, any other loan under which such individual is 

24 the borrower.’’. 


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1 SEC. 263. LIMITATION ON SELLER CONCESSIONS. 

2 (a) FHA.—The FHA may not newly insure, under 

3 any provision of this title, the National Housing Act, or 

4 any FHA program, any mortgage on a 1- to 4-family resi5 dential property with respect to which the seller of the 

6 property subject to such mortgage (or any third party or 

7 entity that is reimbursed directly or indirectly by the sell8 er) contributes toward the acquisition of the property by 

9 the mortgagor any amount in excess of 3 percent of the 

10 total closing costs (as determined by the FHA) in connec11 tion with such acquisition. 

12 (b) RURAL HOUSING.—Section 501 of the Housing 

13 Act of 1949 (42 U.S.C. 1471), as amended by the pre14 ceding provisions of this title, is further amended by add15 ing at the end the following new subsection: 

16 ‘‘(n) LIMITATION ON SELLER CONCESSIONS.—The 

17 Secretary may not newly make, insure, or guarantee, 

18 under any provision of this title, any loan for a 1- to 4- 

19 family residential property with respect to which the seller 

20 of the property for which the loan is made (or any third 

21 party or entity that is reimbursed directly or indirectly by 

22 the seller) contributes toward the acquisition of the prop23 erty by the borrower any amount in excess of 3 percent 

24 of the total closing costs (as determined by the Secretary) 

25 in connection with such acquisition.’’. 


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1 SEC. 264. LENDER REPURCHASE REQUIREMENT. 

2 (a) REQUIREMENT.—The FHA may not newly in3 sure, under any provision of this title, the National Hous4 ing Act, or any FHA program, any mortgage on a 1- to 

5 4-family residential property unless the mortgagee under 

6 such mortgage enters into such binding agreements as the 

7 FHA considers necessary to ensure that, if the mortgagor 

8 is in default with respect to the mortgagor’s obligation to 

9 make payments under the mortgage for 60 or more con10 secutive days during the 24-month period beginning upon 

11 origination of the mortgage, the mortgagee will, upon no12 tice by the FHA, repurchase such mortgage in an amount 

13 equal to the remaining principal obligation under the 

14 mortgage, as determined in accordance with guidelines 

15 issued by the FHA. 

16 (b) EFFECTIVE DATE.—This section shall take effect 

17 upon the date of the enactment of this Act. 

18 SEC. 265. INDEMNIFICATION BY MORTGAGEES. 

19 (a) IN GENERAL.—If the FHA determines that at or 

20 before the time of loan closing the mortgagee knew, or 

21 should have known based on the information then reason22 ably available to the mortgagee, of a serious and material 

23 violation of the requirements established by the FHA with 

24 respect to a mortgage executed after the date of the enact25 ment of this Act by such mortgagee approved by the FHA 

26 under the direct endorsement program or insured by a 


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1 mortgagee pursuant to the delegation of authority under 

2 section 256 of the National Housing Act (12 U.S.C. 

3 1715z–21) such that the mortgage loan should not have 

4 been approved and endorsed for insurance, and the FHA 

5 pays an insurance claim with respect to the mortgage 

6 within a reasonable period specified by the FHA, the FHA 

7 may require the mortgagee approved by the FHA under 

8 the direct endorsement program or the mortgagee dele9 gated authority under such section 256 to indemnify the 

10 FHA for the loss, or any portion thereof, if the violation 

11 was a materially contributing factor to the cause of the 

12 mortgage default. 

13 (b) FRAUD OR MATERIAL MISREPRESENTATION.—If 

14 fraud or material misrepresentation was involved in con15 nection with the origination or underwriting of a mortgage 

16 executed after enactment by the mortgagee and the FHA 

17 determines that at or before the time of loan closing such 

18 mortgagee knew or should have known, based on the infor19 mation then reasonably available to such mortgagee, of the 

20 fraud or material misrepresentation such that the mort21 gage loan should not have been approved and endorsed 

22 for insurance, the FHA shall require the mortgagee ap23 proved by the FHA under the direct endorsement program 

24 or the mortgagee delegated authority under such section 

25 256 to indemnify the FHA for the loss, or any portion 


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1 thereof, if the fraud or material misrepresentation was a 

2 materially contributing factor to the cause of the mortgage 

3 default. 

4 (c) APPEALS PROCESS.—The FHA shall, by regula5 tion, establish an appeals process for mortgagees to appeal 

6 indemnification determinations made pursuant to sub7 section (a) or (b). 

8 (d) REQUIREMENTS AND PROCEDURES.—The FHA 

9 shall issue regulations establishing appropriate require10 ments and procedures governing the indemnification of the 

11 FHA by the mortgagee, including public reporting on— 

12 (1) the number of loans that— 

13 (A) were not originated or underwritten in 

14 accordance with the requirements established by 

15 the FHA; 

16 (B) involved fraud or material misrepre17 sentation in connection with the origination or 

18 underwriting that was a material contributing 

19 factor to the cause of the mortgage default; and 

20 (C) the financial impact on the Mutual 

21 Mortgage Insurance Fund when indemnification 

22 is required. 

23 (e) QUALITY CONTROL AND ASSURANCE.— 

24 (1) MANUAL.—The FHA shall, pursuant to its 

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1 nually a manual, handbook, or guide that collects all 

2 of the origination and underwriting requirements 

3 that a mortgagee must follow to make residential 

4 mortgage loans eligible for insurance by the FHA 

5 which shall— 

6 (A) provide clear and concise directions so 

7 that a mortgagee can reasonably know what is 

8 expected of it; 

9 (B) identify examples of specific serious 

10 and material violations that could be the basis 

11 for an indemnification demand under this sec12 tion; 

13 (C) apply nationally and be interpreted by 

14 the FHA uniformly with respect to all mort15 gages endorsed for insurance; and 

16 (D) permit prospective changes with rea17 sonable advance notice to mortgagees, which 

18 such changes must be incorporated into the fol19 lowing year’s revised version of the manual, 

20 handbook, or guide and may not provide for 

21 retroactive changes to mortgages previously en22 dorsed for insurance. 

23 (2) REQUIREMENTS.—The FHA shall— 

24 (A) make prompt initial determinations of 

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1 demnification under this section or other ad2 ministrative remedies or sanctions that may be 

3 available under the National Housing Act or 

4 other applicable laws, based on either self-re5 ports by the mortgagee or other findings by the 

6 FHA through its examination processes of po7 tential serious and material violations of such 

8 origination and underwriting requirements es9 tablished under paragraph (1) or other fraud 

10 and material misrepresentations; 

11 (B) promptly notify the mortgagee of such 

12 initial determination and afford the lender the 

13 opportunity to provide additional information 

14 and analysis before a final determination is 

15 made; and 

16 (C) not pursue indemnification under sub17 sections (a) and (b) with respect to those mort18 gages reviewed under this subsection unless an 

19 initial determination of mortgagee liability is 

20 made and communicated to the mortgagee with21 in six months of the FHA’s receipt of informa22 tion that is reasonably sufficient to enable the 

23 FHA to determine initially that a serious and 

24 material violation or fraud or material mis25 representation may have occurred. 


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1 (f) EFFECTIVE DATE.—This section shall take effect 

2 on the date of the enactment of this Act. During the tran3 sition period under section 281, any reference in this sec4 tion to the FHA shall be construed to refer to the Sec5 retary to the extent the Secretary has not delegated au6 thority under this section to the FHA pursuant to section 

7 282(1). 

8 SEC. 266. PROHIBITIONS RELATING TO USE OF POWER OF 

9 EMINENT DOMAIN. 

10 (a) FHA.— 

11 (1) IN GENERAL.—Notwithstanding any other 

12 provision of law, neither the Secretary nor the FHA 

13 may newly insure, under any provision of this title, 

14 the National Housing Act, or any FHA program, 

15 any mortgage that is secured by a structure or 

16 dwelling unit that is located within a county that 

17 contains any structure or dwelling unit that secures 

18 or secured a residential mortgage loan which mort19 gage loan was obtained by the State during the pre20 ceding 120 months by exercise of the power of emi21 nent domain. 

22 (2) DEFINITIONS.—For purposes of this para23 graph, the following definitions shall apply: 

24 (A) RESIDENTIAL MORTGAGE LOAN.—The 

25 term ‘‘residential mortgage loan’’ means a 


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1 mortgage loan that is evidenced by a promis2 sory note and secured by a mortgage, deed of 

3 trust, or other security instrument on a residen4 tial structure or a dwelling unit in a residential 

5 structure. Such term includes a first mortgage 

6 or any subordinate mortgage. 

7 (B) STATE.—The term ‘‘State’’ includes 

8 the District of Columbia, the Commonwealth of 

9 Puerto Rico, and any territory or possession of 

10 the United States, and includes any agency or 

11 political subdivision of a State. 

12 (b) RURAL HOUSING.—Section 501 of the Housing 

13 Act of 1949 (42 U.S.C. 1471), as amended by the pre14 ceding provisions of this title, is further amended by add15 ing at the end the following new subsection: 

16 ‘‘(o) PROHIBITION RELATING TO USE OF POWER OF

17 EMINENT DOMAIN.— 

18 ‘‘(1) IN GENERAL.—Notwithstanding any other 

19 provision of law, the Secretary may not newly guar20 antee, make, or insure under this title any mortgage 

21 that is secured by a structure or dwelling unit that 

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1 tained by the State during the preceding 120 

2 months by exercise of the power of eminent domain. 

3 ‘‘(2) DEFINITIONS.—For purposes of this sub4 section, the following definitions shall apply: 

5 ‘‘(A) RESIDENTIAL MORTGAGE LOAN.— 

6 The term ‘residential mortgage loan’ means a 

7 mortgage loan that is evidenced by a promis8 sory note and secured by a mortgage, deed of 

9 trust, or other security instrument on a residen10 tial structure or a dwelling unit in a residential 

11 structure. Such term includes a first mortgage 

12 or any subordinate mortgage. 

13 ‘‘(B) STATE.—The term ‘State’ has the 

14 meaning given such term in section 502(h)(12), 

15 and includes any agency or political subdivision 

16 of a State.’’. 

17 (c) EFFECTIVE DATE.—This section and the amend18 ment made by this section shall take effect upon the date 

19 of the enactment of this Act. 

20 SEC. 267. RESIDUAL INCOME REQUIREMENT. 

21 (a) IN GENERAL.—The FHA may not newly insure, 

22 under any provision of this title, the National Housing 

23 Act, or any FHA program, any mortgage on a 1- to 4- 

24 family residential property unless the mortgagor under 

25 such mortgage meets such requirements as the FHA shall, 


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1 by regulation, establish to ensure that the mortgagor has 

2 sufficient residual income. 

3 (b) RESIDUAL INCOME.—For purposes of this sec4 tion, the term ‘‘residual income’’ means, with respect to 

5 a mortgagor, the net monthly income of the mortgagor, 

6 as provided by regulation by the FHA, after taking into 

7 consideration— 

8 (1) any assets of the mortgagor other than the 

9 property subject to such mortgage; and 

10 (2) any monthly obligations of the mortgagor 

11 with respect to mortgage payments, insurance pay12 ment, and taxes for the property subject to the 

13 mortgage, income and other taxes, maintenance, and 

14 utility expenses for the property, child care expenses, 

15 auto, consumer, and any other debt obligations, ali16 mony and child support expenses, and such other ex17 penses as the FHA may provide. 

18 (c) EFFECTIVE DATE.—This section and the amend19 ment made by this section shall take effect upon the date 

20 of the enactment of this Act. 

21 SEC. 268. EFFECTIVE DATE. 

22 This subtitle and the amendments made by this sub23 title (except for sections 264, 265, 266, and 267, and any 

24 amendments made by such sections) shall take effect upon 

25 the expiration of the transition period under section 281. 


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1 Subtitle D—Transition 

2 SEC. 281. TRANSITION PERIOD. 

3 (a) IN GENERAL.—For purposes of this subtitle, the 

4 term ‘‘transition period’’ means the period that— 

5 (1) begins on the date of the enactment of this 

6 Act; and 

7 (2) ends upon the earlier of— 

8 (A) the date that the Director publishes 

9 notice in the Federal Register that the Director 

10 has determined that all of the requirements 

11 under subsection (b) have been completed; or 

12 (B) the expiration of the 5-year period be13 ginning on the date of the enactment of this 

14 Act. 

15 (b) REQUIREMENTS FOR ENDING TRANSITION PE16 RIOD.—The requirements under this subsection are the 

17 following: 

18 (1) APPROVAL OF INITIAL ANNUAL BUDGET

19 AND BUSINESS PLAN.—The FHA has submitted to 

20 the Director of the Federal Housing Finance Agency 

21 an initial annual budget and business plan and the 

22 Director has approved the budget and plan. 

23 (2) DETERMINATION OF CORPORATE CAPAC24 ITY.—The Director of the Office of Management 

25 and Budget has determined, and notified the DirecVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00116 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 tor, that the staff, systems, and administrative infra2 structure of the FHA are sufficient to permit the 

3 FHA to fully conduct the operation of its business. 

4 SEC. 282. AUTHORITY DURING TRANSITION PERIOD. 

5 During the transition period the FHA may— 

6 (1) carry out any power or responsibility of the 

7 Secretary relating to mortgage insurance programs 

8 under the National Housing Act that the Secretary 

9 delegates to the FHA, using the staff, systems, and 

10 administrative infrastructure that the FHA engages 

11 or acquires during the transition period, or the per12 sonnel and other resources of the Secretary; 

13 (2) incur any obligation consistent with— 

14 (A) the carrying out of a power or respon15 sibility delegated under paragraph (1); or 

16 (B) the acquisition, engagement, or devel17 opment of staff, systems (including technology 

18 to enhance the ability of the FHA to engage in 

19 the business authorized by the title), and ad20 ministrative structure; and 

21 (3) engage in any activity or undertake any re22 sponsibility (not including entering into, or making 

23 any commitment to enter into, any contract of insur24 ance under this title) that the FHA determines to 

25 be consistent with the establishment of the FHA. 


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1 SEC. 283. ADVISORY BOARD. 

2 (a) ESTABLISHMENT.—The Secretary of Housing 

3 and Urban Development shall establish an advisory board 

4 to provide advice to the Board of Directors of the FHA 

5 regarding establishing and organizing the FHA and cre6 ating the business plan, premium structure, and product 

7 lines of the FHA. 

8 (b) FUNCTIONS.—In carrying out its responsibilities 

9 under subsection (a) the advisory board may— 

10 (1) obtain guidance from participants in the 

11 mortgage markets to be served by the FHA; 

12 (2) assess the housing and mortgage credit 

13 needs; 

14 (3) obtain information concerning single family 

15 housing finance markets to assess how the FHA can 

16 complement the roles of public and private partici17 pants in such markets; and 

18 (4) consult with the relevant Federal agencies 

19 generally regarding how the FHA can improve the 

20 delivery of single family housing credit enhancement 

21 to families, communities, and hard-to-serve markets. 

22 (c) MEMBERSHIP.—The advisory board shall consist 

23 of— 

24 (1) the Assistant Secretary of Housing and 

25 Urban Development who is the Federal Housing 

26 Commissioner; 


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1 (2) the Administrator of the Rural Housing 

2 Service of the Department of Agriculture; 

3 (3) not less than 5 individuals appointed by the 

4 Secretary who are representatives of the mortgage 

5 finance industry; and 

6 (4) not less than 2 individuals who have exper7 tise in affordable housing serving low- and mod8 erate-income populations. 

9 Members of the advisory board shall serve at the pleasure 

10 of the Secretary. 

11 (d) TERMINATION.—The advisory board shall termi12 nate upon the expiration of the transition period under 

13 section 281. 

14 SEC. 284. TRANSFER OF HUD AUTHORITY. 

15 (a) TRANSFER.—Except as provided in subsections 

16 (c) and (d), effective upon the expiration of the transition 

17 period, the functions of, authority provided to, and the re18 sponsibilities of the Secretary of Housing and Urban De19 velopment and the Department of Housing and Urban De20 velopment under the following provisions of law are trans21 ferred to the FHA: 

22 (1) Titles II and V of the National Housing Act 

23 (12 U.S.C. 1707 et seq., 1735a et seq.). 

24 (2) Section 3 of Public Law 99–289 (12 U.S.C. 

25 1721 note; relating to estimates of use of insuring 


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1 authority), except that this paragraph shall not ter2 minate or transfer any authority of the Secretary 

3 under such section relating to section 306(g) of the 

4 National Housing Act (12 U.S.C. 1721(g)). 

5 (3) Section 801 of the Housing Act of 1954 (12 

6 U.S.C. 1701j–1; relating to builders warranties). 

7 (4) Section 424 of the Housing and Community 

8 Development Act of 1987 (12 U.S.C. 1715z–1c; re9 lating to residential water treatment). 

10 (5) Section 328 of the Cranston-Gonzalez Na11 tional Affordable Housing Act (12 U.S.C. 1713 

12 note; relating to delegation of processing). 

13 (6) Section 106 of the Energy Policy Act of 

14 1992 (12 U.S.C. 1701z–16; relating to energy effi15 cient mortgages pilot program). 

16 (7) Section 542 of the Housing and Community 

17 Development Act of 1992 (12 U.S.C. 1715z–22; re18 lating to multifamily mortgage credit programs). 

19 (8) Section 103(h) of the Multifamily Housing 

20 Property Disposition Reform Act of 1994 (12 U.S.C. 

21 1715z–1a note; relating to alternative uses of multi22 family projects to prevent default). 

23 (b) REPEAL OF ASSIGNMENT PROVISIONS.—Effec24 tive upon the date of the enactment of this Act, section 


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1 204(a)(1)(B) of the National Housing Act (12 U.S.C. 

2 1710(a)) is amended by striking the last sentence. 

3 (c) APPLICABILITY.—The repeals under subsections 

4 (a) and (b) shall not affect any legally binding obligations 

5 entered into pursuant to the provisions repealed before the 

6 applicable effective date under such subsections. Any 

7 mortgage insurance, funds, or activities subject, before re8 peal, to a provision of law repealed by such subsections 

9 shall continue to be governed by the provision as it existed 

10 immediately before repeal, except that the FHA may exer11 cise any authority under such provision otherwise trans12 ferred to the FHA by this title. 

13 (d) REFERENCES.—After the expiration of the tran14 sition period, any reference in Federal law to the Secretary 

15 of Housing and Urban Development, in connection with 

16 any function of the Secretary transferred under subsection 

17 (a) or any other provision of this subtitle, shall be deemed 

18 to be a reference to the FHA. 

19 SEC. 285. WIND-UP OF HUD AFFAIRS. 

20 (a) ABOLISHMENT OF POSITIONS.—Effective upon 

21 the expiration of the transition period, any offices of the 

22 Department of Housing and Urban Development respon23 sible for functions transferred pursuant to section 284(a), 

24 to the extent of such functions, and the position of the 


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1 Federal Housing Commissioner in the Department of 

2 Housing and Urban Development, are abolished. 

3 (b) DISPOSITION OF AFFAIRS.—During the transi4 tion period, the Secretary, solely for the purpose of wind5 ing up the affairs of the Department relating to the func6 tions transferred under section 284— 

7 (1) shall manage the employees of the Depart8 ment responsible for such functions and provide for 

9 the payment of the compensation and benefits of any 

10 such employee which accrue before the effective date 

11 of the transfer of such employee under section 287; 

12 and 

13 (2) may take any other action necessary for the 

14 purpose of winding up the affairs of the Department 

15 relating to such functions. 

16 (c) STATUS OF EMPLOYEES BEFORE TRANSFER.— 

17 The provisions of and amendments made by this title and 

18 the abolishments under subsection (a) of this section may 

19 not be construed to affect the status of any employee of 

20 the Department as an employee of an agency of the United 

21 States for purposes of any other provision of law before 

22 the effective date of the transfer of any such employee 

23 under section 287. 

24 (d) USE OF PROPERTY AND SERVICES.— 


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1 (1) PROPERTY.—The FHA may use the prop2 erty of the Department of Housing and Urban De3 velopment to perform functions which have been 

4 transferred to the FHA for such time as is reason5 able to facilitate the orderly transfer of functions 

6 transferred under any other provision of this title or 

7 any amendment made by this title to any other pro8 vision of law. 

9 (2) AGENCY SERVICES.—Any agency, depart10 ment, or other instrumentality of the United States, 

11 and any successor to any such agency, department, 

12 or instrumentality, which was providing supporting 

13 services to the Department of Housing and Urban 

14 Development before the expiration of the transition 

15 period under subsection (a) in connection with func16 tions that are transferred under section 284 to the 

17 FHA shall— 

18 (A) continue to provide such services, on a 

19 reimbursable basis, until the transfer of such 

20 functions is complete; and 

21 (B) consult with the FHA to coordinate 

22 and facilitate a prompt and reasonable transi23 tion. 

24 (e) CONTINUATION OF SERVICES.—The FHA may 

25 use the services of employees and other personnel of the 


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1 Department of Housing and Urban Development relating 

2 to the functions transferred under section 284, on a reim3 bursable basis, to perform functions which have been 

4 transferred to the FHA for such time as is reasonable to 

5 facilitate the orderly transfer of functions pursuant to any 

6 other provision of this title or any amendment made by 

7 this title to any other provision of law. 

8 (f) SAVINGS PROVISIONS.— 

9 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA10 TIONS NOT AFFECTED.—Subsection (a) shall not af11 fect the validity of any right, duty, or obligation of 

12 the United States, the Secretary of Housing and 

13 Urban Development, or any other person, which— 

14 (A) arises under— 

15 (i) the National Housing Act; or 

16 (ii) any other provision of law applica17 ble with respect to the functions of the De18 partment of Housing and Urban Develop19 ment transferred under section 284; and 

20 (B) existed on the day before the date of 

21 abolishment under subsection (a). 

22 (2) CONTINUATION OF SUITS.—No action or 

23 other proceeding commenced by or against the Sec24 retary of Housing and Urban Development in con25 nection with functions transferred to the FHA under 


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1 section 284 shall abate by reason of the enactment 

2 of this title, except that the FHA shall be sub3 stituted for the Secretary as a party to any such ac4 tion or proceeding. 

5 SEC. 286. CONTINUATION AND COORDINATION OF CERTAIN 

6 ACTIONS. 

7 (a) IN GENERAL.—All regulations, orders, and deter8 minations described in subsection (b) shall remain in ef9 fect according to the terms of such regulations, orders, 

10 and determinations, and shall be enforceable by or against 

11 the FHA, until modified, terminated, set aside, or super12 seded in accordance with applicable law by the FHA, as 

13 the case may be, any court of competent jurisdiction, or 

14 operation of law. 

15 (b) APPLICABILITY.—A regulation, order, or deter16 mination is described in this subsection if it— 

17 (1) was issued, made, prescribed, or allowed to 

18 become effective by— 

19 (A) the Secretary of Housing and Urban 

20 Development and relates to a function of the 

21 Secretary transferred under section 284; or 

22 (B) a court of competent jurisdiction, and 

23 relates to functions transferred under section 

24 284; and 


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1 (2) is in effect upon the expiration of the tran2 sition period. 

3 SEC. 287. TRANSFER AND RIGHTS OF HUD EMPLOYEES. 

4 (a) TRANSFER.—Each employee of the Department 

5 of Housing and Urban Development who performs func6 tions transferred under section 284 shall be transferred 

7 to the FHA for employment, not later than the date of 

8 the expiration of the transition period, and such transfer 

9 shall be deemed a transfer of function for purposes of sec10 tion 3503 of title 5, United States Code. 

11 (b) GUARANTEED POSITIONS.— 

12 (1) IN GENERAL.—Each employee transferred 

13 under subsection (a) shall be guaranteed a position 

14 with the same status, tenure, grade, and pay as the 

15 position held by such employee on the day imme16 diately preceding the transfer. 

17 (2) NO INVOLUNTARY SEPARATION OR REDUC18 TION.—An employee transferred under subsection 

19 (a) holding a permanent position on the day imme20 diately preceding the transfer may not be involun21 tarily separated or reduced in grade or compensation 

22 during the 12-month period beginning on the date of 

23 transfer, except for cause, or, in the case of a tem24 porary employee, separated in accordance with the 

25 terms of the appointment of the employee. 


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1 (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND

2 SENIOR EXECUTIVE SERVICE EMPLOYEES.— 

3 (1) IN GENERAL.—In the case of an employee 

4 occupying a position in the excepted service or the 

5 Senior Executive Service, any appointment authority 

6 established under law or by regulations of the Office 

7 of Personnel Management for filling such position 

8 shall be transferred, subject to paragraph (2). 

9 (2) DECLINE OF TRANSFER.—The FHA may 

10 decline a transfer of authority under paragraph (1) 

11 to the extent that such authority relates to— 

12 (A) a position excepted from the competi13 tive service because of its confidential, policy14 making, policy-determining, or policy-advocating 

15 character; or 

16 (B) a noncareer position in the Senior Ex17 ecutive Service (within the meaning of section 

18 3132(a)(7) of title 5, United States Code). 

19 (d) REORGANIZATION.—If the FHA determines, after 

20 the end of the 1-year period beginning on the expiration 

21 of the transition period, that a reorganization of the com22 bined workforce is required, that reorganization shall be 

23 deemed a major reorganization for purposes of affording 

24 affected employee retirement under section 8336(d)(2) or 

25 8414(b)(1)(B) of title 5, United States Code. 


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1 (e) EMPLOYEE BENEFIT PROGRAMS.— 

2 (1) IN GENERAL.—Any employee of the Depart3 ment of Housing and Urban Development accepting 

4 employment with the FHA as a result of a transfer 

5 under subsection (a) may retain, for 12 months after 

6 the date on which such transfer occurs, membership 

7 in any employee benefit program of the FHA or the 

8 Department of Housing and Urban Development, as 

9 applicable, including insurance, to which such em10 ployee belongs on the date of the expiration of the 

11 transition period, if— 

12 (A) the employee does not elect to give up 

13 the benefit or membership in the program; and 

14 (B) the benefit or program is continued by 

15 the FHA. 

16 (2) COST DIFFERENTIAL.— 

17 (A) IN GENERAL.—The difference in the 

18 costs between the benefits which would have 

19 been provided by the Department of Housing 

20 and Urban Development and those provided by 

21 this section shall be paid by the FHA. 

22 (B) HEALTH INSURANCE.—-If any em23 ployee elects to give up membership in a health 

24 insurance program or the health insurance pro25 gram is not continued by the FHA, the emVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00128 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 ployee shall be permitted to select an alternate 

2 Federal health insurance program not later 

3 than 30 days after the date of such election or 

4 notice, without regard to any other regularly 

5 scheduled open season. 

6 SEC. 288. TRANSFER OF PROPERTY AND FACILITIES. 

7 Upon the expiration of the transition period, all prop8 erty of the Department of Housing and Urban Develop9 ment relating to the functions transferred under section 

10 284 shall transfer to the FHA. 

11 SEC. 289. EFFECTIVE DATE. 

12 This subtitle shall take effect on the date of the en13 actment of this Act. 

14 Subtitle E—Related Amendments 

15 and Provisions 

16 SEC. 291. GNMA AUTHORITY. 

17 Title III of the National Housing Act is amended— 

18 (1) in section 301(5) (12 U.S.C. 1716(5)), by 

19 inserting after ‘‘federally owned mortgage portfolios’’ 

20 the following: ‘‘(including any owned by the Federal 

21 Housing Administration)’’; 

22 (2) in section 302 (12 U.S.C. 1717)— 

23 (A) in subsection (b)(1), by inserting ‘‘, 

24 the FHA Reform and Modernization Act of 


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1 2013,’’ after ‘‘National Housing Act’’ each 

2 place such term appears; and 

3 (B) in subsection (c)(2), by inserting after 

4 subparagraph (F) the following new subpara5 graph: 

6 ‘‘(G) The Federal Housing Administration.’’; 

7 and 

8 (3) in section 306(g) (12 U.S.C. 1721(g))— 

9 (A) in the clause (ii) of the first sentence 

10 of paragraph (1), by inserting ‘‘or the FHA Re11 form and Modernization Act of 2013’’ before ‘‘, 

12 or which are insured’’; and 

13 (B) in paragraph (3)(A), by inserting 

14 ‘‘under the FHA Reform and Modernization 

15 Act of 2013 or are insured’’ after ‘‘Federal 

16 Housing Administration’’. 

17 SEC. 292. REPEAL OF CERTAIN FHA PROGRAMS. 

18 (a) REPEALS.—Effective upon the expiration of the 

19 2-year period that begins upon the date of the enactment 

20 of this Act, the following sections are repealed: 

21 (1) HOME EQUITY CONVERSION MORTGAGE

22 PROGRAM.—Section 255 of the National Housing 

23 Act (12 U.S.C. 1715z–20). 

24 (2) MORTGAGE INSURANCE FOR HOSPITALS.— 

25 Section 242 (12 U.S.C. 1715z–7). 


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1 (b) CONFORMING AMENDMENTS.— 

2 (1) The penultimate sentence of section 212(a) 

3 (12 U.S.C. 1715c(a)) is amended by inserting after 

4 ‘‘section 242’’ each place such term appears the fol5 lowing: ‘‘(as such section was in effect immediately 

6 before the effective date under section 292(a) of the 

7 FHA Reform and Modernization Act of 2013)’’. 

8 (2) Section 223 (12 U.S.C. 1715n) is amend9 ed— 

10 (A) in subsection (a)(7), in the matter pre11 ceding subparagraph (A), by inserting before 

12 the first comma the following: ‘‘but not includ13 ing a mortgage insured under section 242 ‘(as 

14 such section was in effect immediately before 

15 the effective date under section 292(a) of the 

16 FHA Reform and Modernization Act of 

17 2013)’ ’’; 

18 (B) in subsection (d)(2)(A)— 

19 (i) in clause (i) by striking ‘‘and’’ at 

20 the end; and 

21 (ii) by inserting before the semicolon 

22 at the end the following: ‘‘and (iii) shall 

23 not be insured under section 242 (as such 

24 section was in effect immediately before 

25 the effective date under section 292(a) of 


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1 the FHA Reform and Modernization Act 

2 of 2013)’’; and 

3 (C) in subsection (f)— 

4 (i) in paragraph (1)— 

5 (I) by striking ‘‘existing hospital 

6 (or’’; and 

7 (II) by striking ‘‘thereof)’’ and 

8 inserting ‘‘thereof’’; and 

9 (ii) in paragraph (4)— 

10 (I) in the matter preceding sub11 paragraph (A), by striking ‘‘existing 

12 hospital (or’’; 

13 (II) in the matter preceding sub14 paragraph (A), by striking ‘‘thereof)’’ 

15 and inserting ‘‘thereof,’’; 

16 (III) in subparagraphs (A), (B), 

17 and (C)— 

18 (aa) by striking ‘‘existing 

19 hospital (or’’ each place such 

20 term appears; and 

21 (bb) by striking ‘‘thereof)’’ 

22 each place such term appears 

23 and inserting ‘‘thereof’’; and 

24 (IV) in subparagraph (D), by 

25 striking ‘‘or of section 242 (for the 


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1 existing hospital proposed to be refi2 nanced)’’. 

3 (3) Section 541(a) (12 U.S.C. 1735f–19(a)) is 

4 amended by inserting after ‘‘section 242 of this Act’’ 

5 the following: ‘‘, as such section was in effect imme6 diately before the effective date under section 292(a) 

7 of the FHA Reform and Modernization Act of 

8 2013’’. 

9 (c) SAVINGS PROVISIONS.— 

10 (1) EFFECT OF REPEALS.—The repeals under 

11 subsection (a) shall not affect any legally binding ob12 ligations entered before the effective date of such re13 peals. 

14 (2) INSURANCE AUTHORITY.—Notwithstanding 

15 the repeals under subsection (a), the Secretary (or 

16 the FHA, pursuant to subtitle D of this title) may 

17 insure any mortgage for which a commitment to in18 sure under section 242 or 255 of the National Hous19 ing Act was made before the expiration of the period 

20 referred to in subsection (a). Any such mortgage in21 sured under such section 242 or 255 shall be subject 

22 to the terms of such section as in effect immediately 

23 before the expiration of such period. 

24 (3) SAVINGS PROVISION.—Any funds or activi25 ties subject, before the effective date of the repeals 


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1 under subsection (a) of this section, to section 242 

2 or 255 of the National Housing Act shall continue 

3 to be governed by such sections as in effect imme4 diately before such effective date. 

5 SEC. 293. CONFORMING AMENDMENTS. 

6 (a) PENALTIES FOR EQUITY SKIMMING.—Paragraph 

7 (1) of section 912 of the Housing and Urban Development 

8 Act of 1970 (12 U.S.C. 1709–2(1)) is amended by insert9 ing ‘‘or Federal Housing Administration’’ after ‘‘Housing 

10 and Urban Development’’. 

11 (b) FRAUDULENTLY MISAPPROPRIATED MORTGAGE

12 PROCEEDS.—Section 819 of the Housing and Community 

13 Development Act of 1974 (12 U.S.C. 1701l–1) is amend14 ed— 

15 (1) by inserting ‘‘or the Federal Housing Ad16 ministration’’ after ‘‘Secretary of Housing and 

17 Urban Development’’; and 

18 (2) by inserting ‘‘or such Administration, as ap19 propriate,’’ before ‘‘has reason’’. 

20 (c) UNAUTHORIZED USE OF MULTIFAMILY HOUSING

21 ASSETS AND INCOME.—Section 421 of the Housing and 

22 Community Development Act of 1987 (12 U.S.C. 1715z– 

23 4a) is amended— 

24 (1) in subsection (a)— 

25 (A) in paragraph (1)— 


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1 (i) by inserting ‘‘or the FHA, as ap2 plicable,’’ after ‘‘Secretary’)’’; 

3 (ii) by inserting ‘‘or by the FHA pur4 suant to the FHA Reform and Moderniza5 tion Act of 2013’’ after ‘‘National Housing 

6 Act’’; and 

7 (iii) in the last sentence, by inserting 

8 ‘‘or the FHA’’ after ‘‘Secretary’’ each 

9 place such term appears; 

10 (B) in paragraph (2), by inserting ‘‘or the 

11 FHA Reform and Modernization Act of 2013’’ 

12 before the first comma; and 

13 (2) in subsections (b) through (e)— 

14 (A) by inserting ‘‘or the FHA, as applica15 ble,’’ after ‘‘Secretary,’’ each place such term 

16 appears; and 

17 (B) by inserting ‘‘or the FHA, as applica18 ble,’’ after ‘‘Secretary’’ each place such term 

19 appears (except the penultimate occurrence in 

20 subsection (c)). 

21 (d) SINGLE FAMILY MORTGAGE FORECLOSURE.— 

22 The Single Family Mortgage Foreclosure Act of 1994 (12 

23 U.S.C. 3751 et seq.) is amended— 

24 (1) in section 802(b)(1) (12 U.S.C. 

25 3751(b)(1)), by inserting ‘‘or by the FHA pursuant 


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1 to the FHA Reform and Modernization Act of 

2 2013’’ before the semicolon; 

3 (2) in section 803(10)(A) (12 U.S.C. 

4 3752(10)(A))— 

5 (A) in subparagraph (A), by striking ‘‘or’’ 

6 at the end; 

7 (B) by redesignating subparagraph (B) as 

8 subparagraph (C); and 

9 (C) by inserting after subparagraph (A) 

10 the following new subparagraph: 

11 ‘‘(B) is held by the FHA pursuant to the 

12 FHA Reform and Modernization Act of 2013; 

13 or’’; and 

14 (3) by adding at the end the following new sec15 tion: 

16 ‘‘SEC. 820. AUTHORITY OF FHA. 

17 ‘‘After the expiration of the transition period under 

18 section 281 of the FHA Reform and Modernization Act 

19 of 2013, any reference in sections 804 through 819 of this 

20 Act to the Secretary shall be considered to also refer to 

21 the FHA (as established pursuant to subtitle A of such 

22 Act), but only with respect to single family mortgages de23 scribed in section 803(10)(B).’’. 


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1 (e) MULTIFAMILY MORTGAGE FORECLOSURE.—The 

2 Multifamily Mortgage Foreclosure Act of 1981 (12 U.S.C. 

3 3701 et seq.) is amended— 

4 (1) in section 363(2) (12 U.S.C. 3702(2)), by 

5 adding after and below subparagraph (E) the fol6 lowing: 

7 ‘‘Such term includes a mortgage on a property consisting 

8 of 5 or more dwelling units that is held by the FHA pursu9 ant to the FHA Reform and Modernization Act of 2013.’’. 

10 (2) by adding at the end the following new sec11 tion: 

12 ‘‘AUTHORITY OF FHA

13 ‘‘SEC. 369J. After the expiration of the transition pe14 riod under section 281 of the FHA Reform and Mod15 ernization Act of 2013, any reference in sections 364 

16 through 369I of this Act to the Secretary shall be consid17 ered to also refer to the FHA (as established pursuant 

18 to subtitle A of such Act), but only with respect to multi19 family mortgages described in the last sentence of section 

20 363(2).’’. 

21 SEC. 294. RULE OF CONSTRUCTION. 

22 Notwithstanding any other evidence of the intent of 

23 the Congress, it is hereby declared to be the intent of Con24 gress that the provisions of this title shall be construed 

25 broadly to achieve the purposes of the title, and the provi26 sions of any other Act that must be construed with any 


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1 provision of this title shall similarly be construed to 

2 achieve the purposes of this title to the extent reasonably 

3 possible. This section shall take effect on the date of the 

4 enactment of this Act. 

5 SEC. 295. EFFECTIVE DATE. 

6 The amendments made by this subtitle shall be made, 

7 and shall apply beginning on, the expiration of the transi8 tion period under section 281. 

9 TITLE III—BUILDING A NEW 

10 MARKET STRUCTURE 

11 Subtitle A—National Mortgage 

12 Market Utility 

13 SEC. 301. SHORT TITLE. 

14 This subtitle may be cited as the ‘‘National Mortgage 

15 Market Utility Act of 2013’’. 

16 SEC. 302. FINDINGS AND PURPOSES. 

17 (a) FINDINGS.—The Congress finds that— 

18 (1) the liquidity and efficiency of the national 

19 housing finance market is enhanced by a robust sec20 ondary market for residential mortgage loans, in21 cluding securities backed by residential mortgage 

22 loans; 

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1 lated to residential mortgage-backed securities, in2 cluding— 

3 (A) weaknesses in standards— 

4 (i) for underwriting and servicing resi5 dential mortgage loans that may be collat6 eral for mortgage-backed securities; and 

7 (ii) for issuers and trustees of such 

8 securities; 

9 (B) weaknesses in the manner of recording 

10 and registering ownership and security interests 

11 in residential mortgage loans that backed pools 

12 of securities; and 

13 (C) weaknesses in the availability of infor14 mation to assess performance of pools; 

15 (3) weaknesses revealed in the financial crisis 

16 created uncertainty and impeded timely and success17 ful resolution of troubled residential mortgage loans, 

18 and have impeded the return of private capital to 

19 the market for securities backed by residential mort20 gage loans in the absence of a Federal guarantee of 

21 timely payment of principal and interest to investors; 

22 and 

23 (4) improved standards and information avail24 ability and a national system for registering mort25 gage-related documents, including notes, mortgages 


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1 and deeds of trust, and ownership and security in2 terests established therein, with standard procedures 

3 for demonstrating the right to act with regard to 

4 such notes or other registered data, would assist in 

5 addressing these weaknesses. 

6 (b) PURPOSES.—The purposes of the national mort7 gage market utility created by this title are— 

8 (1) to enhance efficiency, liquidity, and security 

9 in the secondary market for residential mortgages, 

10 including mortgage-backed securities; 

11 (2) to establish standards related to originating 

12 and servicing eligible collateral and for issuers and 

13 trustees of qualified securities, which would be ex14 empt from the Securities Act of 1933; 

15 (3) to improve uniformity, quality and accessi16 bility of information related to the performance of 

17 residential mortgage loans; 

18 (4) to operate a common securitization platform 

19 that could be available to issuers of residential mort20 gage-backed securities; 

21 (5) to foster the use and uniformity of elec22 tronic methods for the creation, authentication, 

23 transmission, storage, and availability of materials 

24 relating to mortgages; 


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1 (6) to provide a central repository for notes, 

2 mortgages, and other mortgage-related information, 

3 and address problems that can arise when paper 

4 notes cannot be produced, due to loss or destruction 

5 as a result of natural disaster or other causes; and 

6 (7) to provide a uniform procedure for dem7 onstrating the right to act with regard to such notes 

8 or other registered data for all actions in any State 

9 or Federal proceeding, judicial or nonjudicial, involv10 ing such notes or other data. 

11 SEC. 303. DEFINITIONS. 

12 For purposes of this subtitle, the following definitions 

13 shall apply: 

14 (1) AFFILIATE.—With respect to the Utility, 

15 the term ‘‘affiliate’’ means any entity that controls, 

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

17 the Utility. 

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

19 Federal Housing Finance Agency. 

20 (3) DEPOSITOR.—The term ‘‘depositor’’ 

21 means— 

22 (A) any person authorized to submit docu23 ments or data for registration with the Reposi24 tory; and 


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1 (B) any person qualified pursuant to sec2 tion 331 (relating to organization and operation 

3 of the Repository) to inform the Repository 

4 of— 

5 (i) newly identified interest holders, 

6 whether through creation, assignment, or 

7 transfer; or 

8 (ii) changes to interests of existing 

9 holders, including through modification, 

10 amendment, or restatement of, or dis11 charge related to, any registered mortgage12 related document. 

13 (4) DIRECTOR.—The term ‘‘Director’’ means 

14 the Director of the Federal Housing Finance Agen15 cy. 

16 (5) ELIGIBLE COLLATERAL.—The term ‘‘eligi17 ble collateral’’ means a residential mortgage loan 

18 that meets any standard for mortgage classification 

19 established pursuant to section 322 (relating to 

20 standards for qualified securities). 

21 (6) ENTERPRISE.—The term ‘‘enterprise’’ 

22 means— 

23 (A) the Federal National Mortgage Asso24 ciation and any affiliate thereof, and 


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1 (B) the Federal Home Loan Mortgage 

2 Corporation and any affiliate thereof. 

3 (7) MORTGAGE-RELATED DOCUMENT.—The 

4 term ‘‘mortgage-related document’’ means any docu5 ment or other information or data related to the use 

6 of residential real estate as security for a loan, in7 cluding documents establishing an obligation to 

8 repay a loan secured by residential real estate, es9 tablishing a security interest in real estate, estab10 lishing the value of the real estate at the time the 

11 security interest is created, and insuring clear title 

12 to residential real estate pledged as security, or as 

13 the Director by regulation may define. Such docu14 ments may include electronic documents. 

15 (8) ORGANIZER.—The term ‘‘organizer’’ means 

16 the person or entity that establishes the Utility. 

17 (9) PARTICIPANT.—The term ‘‘participant’’ 

18 means any person authorized to use data maintained 

19 or created by the Repository that is not otherwise 

20 available to the public. 

21 (10) PLATFORM.—The term ‘‘Platform’’ means 

22 the securitization infrastructure announced by the 

23 Federal Housing Finance Agency on October 4, 

24 2012, and as developed by an enterprise or the en25 terprises in conservatorship, under authority of the 


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1 Federal Housing Finance Agency pursuant to the 

2 Federal Housing Enterprises Financial Safety and 

3 Soundness Act of 1992. 

4 (11) REPOSITORY.—The term ‘‘Repository’’ 

5 means the national mortgage data repository orga6 nized under section 331. 

7 (12) UTILITY.—The term ‘‘Utility’’ means the 

8 national mortgage market utility established under 

9 section 311. 

10 (13) UTILITY-AFFILIATED PARTY.—The term 

11 ‘‘utility-affiliated party’’ means— 

12 (A) any director, officer, employee or con13 trolling stockholder of, or agent for, the Utility; 

14 (B) any shareholder, affiliate, consultant, 

15 or joint venture partner of the Utility, and any 

16 other person, as determined by the Director (by 

17 regulation or on a case-by-case basis) that par18 ticipates in the conduct of the affairs of the 

19 Utility; 

20 (C) any independent contractor of the Util21 ity (including any attorney, appraiser or ac22 countant) if— 

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1 duciary duty or any unsafe or unsound 

2 practice; and 

3 (ii) such violation, breach or practice 

4 caused, or is likely to cause, more than a 

5 minimal financial loss to, or a significant 

6 adverse effect on, the Utility. 

7 PART 1—ESTABLISHMENT AND AUTHORITY OF 

8 THE UTILITY 

9 SEC. 311. ESTABLISHMENT. 

10 (a) AUTHORITY OF DIRECTOR.—Under such regula11 tions as the Director may prescribe, the Director shall pro12 vide for the organization, incorporation, examination, op13 eration, and regulation of a national mortgage market 

14 utility (‘‘Utility’’), and issuance of a charter for such Util15 ity. The Utility shall be organized, operated, and managed 

16 as a not-for-profit entity. 

17 (b) FORMATION OF UTILITY; APPLICATION.— 

18 (1) FORMATION.—Subject to the terms of this 

19 subtitle and any regulations issued by the Director, 

20 a person or entity may file an application with the 

21 Director to establish the Utility. The Utility may be 

22 chartered as a corporation, mutual association, part23 nership, limited liability corporation, cooperative, or 

24 any other organizational form that the applicant 

25 may deem appropriate. 


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1 (2) CONTENTS OF APPLICATION.—An applica2 tion for establishment of the Utility shall include— 

3 (A) the proposed articles of association; 

4 (B) a statement of the general object and 

5 purpose of the Utility, consistent with the provi6 sions of this subtitle; 

7 (C) the proposed capitalization and busi8 ness plan for the Utility; 

9 (D) the proposed State whose law would 

10 govern, by election of the applicant, the oper11 ation of the Utility to the extent not otherwise 

12 covered by this subtitle; 

13 (E) information on the financial resources 

14 of the applicant; 

15 (F) a statement of the relevant housing fi16 nance experience of the applicant; 

17 (G) identification of the proposed senior 

18 managers of the Utility, and the relevant expe19 rience of such individuals; and 

20 (H) any other information the Director de21 termines to be necessary to evaluate the back22 ground, experience, and integrity of the appli23 cant and the proposed senior managers, or in24 formation otherwise relevant to determine the 

25 likely success of the proposed Utility. 


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1 (c) ISSUANCE OF CHARTER AND CHARTERING CRI2 TERIA.— 

3 (1) CHARTER.—Not later than the end of the 

4 2-year period following the date of the enactment of 

5 this Act, the Director shall issue a charter for the 

6 Utility to the applicant that the Director determines, 

7 in the Director’s sole discretion, has the managerial, 

8 financial, and operational resources to succeed, con9 sistent with the purposes of this subtitle. At the dis10 cretion of the Director, the charter may require the 

11 Utility to obtain specific approval from the Director 

12 before commencing any business operation, including 

13 operations related to the Platform or the Repository, 

14 which approval shall be provided when the Director 

15 determines, in the Director’s sole discretion, that the 

16 Utility demonstrates appropriate operational, mana17 gerial, and governance capability with regard to such 

18 operation, including successful completion of testing 

19 and transition periods. 

20 (2) CHARTERING CRITERIA.—In making a de21 termination under paragraph (1), the Director shall 

22 consider the competence, experience, and integrity of 

23 the applicant and proposed senior managers of the 

24 Utility, and the financial and operational resources 


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1 and future prospects of the Utility. The Director 

2 may not issue a charter if the applicant fails to— 

3 (A) comply with all applicable formation 

4 requirements; 

5 (B) provide all information requested by 

6 the Director; 

7 (C) demonstrate the competence, experi8 ence, and integrity necessary to operate the 

9 Utility in a safe and sound manner; 

10 (D) demonstrate sufficient financial re11 sources necessary to operate the Utility in a 

12 safe and sound manner; 

13 (E) provide the Director with assurances 

14 that it will operate and maintain the Platform 

15 in an open-access manner that does not dis16 criminate against eligible loan originators, 

17 aggregators, or qualified issuers; or 

18 (F) provide the Director with assurances 

19 that the Utility will make available to the Di20 rector, on an on-going basis, such information 

21 on the operation and activities of the Utility, or 

22 any affiliate of the Utility, that the Director 

23 deems necessary to ensure the safe and sound 

24 operation of the Utility and to enforce compli25 ance with this subtitle. 


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1 (3) EXPLANATION FOR DENIAL.—Within 30 

2 days of denying any application for the issuance of 

3 a charter under this section, the Director shall pro4 vide the applicant with a written explanation of the 

5 basis for the denial. 

6 (d) AUTHORITY TO SUSPEND.— 

7 (1) IN GENERAL.—The authority of the Direc8 tor shall include the authority to suspend the charter 

9 of the Utility, if the Director determines, in the Di10 rector’s discretion, that— 

11 (A) the organizers have failed to make ade12 quate progress in establishing the Utility or any 

13 business operation; 

14 (B) the organizers engaged in waste of ap15 propriated funds made available for establish16 ment of the Repository; or 

17 (C) such suspension is necessary for any 

18 other reason related to safe and sound oper19 ation of the Utility. 

20 (2) RULEMAKING.—The Director shall issue 

21 regulations to address suspension of the charter, in22 cluding a process for remediation. 

23 (e) STATUS.— 

24 (1) NOT A FEDERAL GOVERNMENT INSTRUMEN25 TALITY.—The Utility is not, and shall not be 


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1 deemed to be, a department, agency, or instrumen2 tality of the United States Government and shall not 

3 be subject to title 5 or 31 of the United States Code. 

4 (2) SUPERVISION.—Notwithstanding any other 

5 provision of law, the Utility shall be subject to the 

6 exclusive supervision and regulation by the Agency, 

7 and shall not be subject to supervision or regulation 

8 by any other Federal department or agency or by 

9 any State. The Utility is authorized to conduct its 

10 business without regard to any qualification or simi11 lar statute in any State. 

12 (3) EXEMPTION FROM TAXATION.—The Utility 

13 shall be exempt from all taxation imposed by the 

14 United States, any territory, dependency, or posses15 sion of the United States or any State, county, mu16 nicipality, or local taxing authority, except that any 

17 real property of the Repository shall be subject to 

18 State, territorial, county, municipal, or local taxation 

19 to the same extent according to its value as other 

20 real property. 

21 (f) DIRECTORS.—The Utility shall be governed by a 

22 board of directors, which shall consist of a number of di23 rectors determined by the Director to meet the needs of 

24 the Utility, of which— 


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1 (1) not less than two members shall be from 

2 larger financial institutions; 

3 (2) not less than two members shall be from 

4 smaller financial institutions; 

5 (3) not less than two members shall have exper6 tise in residential mortgage securitizations, 

7 (4) not less than two members shall have exper8 tise in legal and electronic documentation and sys9 tems; and 

10 (5) such other members as the Director may 

11 provide, who shall have such qualifications as the 

12 Director may establish in the charter or by regula13 tion to meet the requirements for independence and 

14 any provisions of applicable State law. 

15 (g) REPORTS TO CONGRESS.—Commencing with the 

16 first annual report of the Director following the date of 

17 the enactment of this Act, the annual report of the Direc18 tor under section 1319B of the Federal Housing Enter19 prises Financial Safety and Soundness Act of 1992 (12 

20 U.S.C. 4521) shall include a description of the Agency’s 

21 activities with regard to organization, incorporation, ex22 amination, operation, and regulation of the Utility. 

23 SEC. 312. GENERAL POWERS; AUTHORIZED AND PROHIB24 ITED ACTIVITIES. 

25 (a) GENERAL POWERS.—The Utility may— 


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1 (1) adopt and use a corporate seal; 

2 (2) determine a State whose law will govern the 

3 corporate business activities of the Utility; 

4 (3) adopt, amend, and repeal by-laws; 

5 (4) sue or be sued, subject to section 334 (re6 lating to judicial review); 

7 (5) make contracts, incur liabilities, borrow 

8 money, and issue notes, bonds, or other obligations; 

9 (6) purchase, receive, hold, and use real and 

10 personal property and other assets necessary for the 

11 conduct of its operations; 

12 (7) elect or appoint directors, officers, employ13 ees and agents, subject to section 311(f); and 

14 (8) upon receipt of the Director’s prior written 

15 approval, establish subsidiaries or affiliates that 

16 shall be subject to the same rights, duties and re17 sponsibilities as the Utility. 

18 (b) AUTHORIZED ACTIVITIES.—In addition to the 

19 general powers under subsection (a), the Utility shall— 

20 (1) develop standards related to originating, 

21 servicing, pooling, and securitizing residential mort22 gage loans in accordance with part 2; 

23 (2) operate and maintain the Platform and es24 tablish fees for use of the Platform; 


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1 (3) establish the Repository and establish fees 

2 for registration of mortgage-related documents and 

3 maintenance and use of data of the Repository, in 

4 accordance with part 3; 

5 (4) perform any other service or engage in any 

6 other activity that the Director determines, by regu7 lation or order, to be incidental to the activities enu8 merated in this subsection; and 

9 (5) establish fees for the provision of other re10 lated or incidental services not inconsistent with the 

11 purposes of this subtitle. 

12 (c) PROHIBITED ACTIVITIES.—The Utility shall 

13 not— 

14 (1) originate, service, insure, or guarantee any 

15 residential mortgage or other financial instrument 

16 that is associated with a residential mortgage; 

17 (2) guarantee timely payment of principal or in18 terest on any mortgage-related security; 

19 (3) adopt access rules or fees for the Platform 

20 the effect of which is to discriminate against eligible 

21 loan originators, aggregators, or qualified issuers 

22 based on size, composition, business line, or loan vol23 ume; or 

24 (4) perform any service or engage in any activ25 ity other than those authorized under this subtitle, 


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1 unless such activity has been determined by the Di2 rector to be incidental to an authorized activity. 

3 SEC. 313. TRANSFER OF OWNERSHIP OF PLATFORM. 

4 (a) VALUATION.—Not later than the end of the 6- 

5 month period beginning on the date of the enactment of 

6 this Act, the Director shall determine a method for recov7 ering the cost to each enterprise of developing the Plat8 form, in consultation with Treasury, and agree on a valu9 ation of the Platform upon transfer to the Utility. 

10 (b) TRANSFER.—Not later than the end of the 1-year 

11 period beginning on the date of the issuance of the charter 

12 of the Utility by the Director, the Director shall oversee 

13 the transfer to the Utility of ownership of the Platform. 

14 At the time of such transfer, the value of the Platform 

15 as established in accordance with subsection (a) shall be 

16 deemed transferred to the Utility, and shall be repaid to 

17 the Treasury of the United States by the Utility within 

18 10 years after such transfer. 

19 (c) AVAILABILITY TO DIRECTOR.—After transfer of 

20 the Platform to the Utility, to the extent feasible the Plat21 form shall be made available to the Agency on terms and 

22 conditions applicable to other users, to assist with man23 aging the wind-down of any enterprise for which the Agen24 cy has been appointed conservator or receiver pursuant to 


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1 section 1367 of the Federal Housing Enterprises Finan2 cial Safety and Soundness Act of 1992 (12 U.S.C. 4617). 

3 SEC. 314. FUNDING. 

4 (a) INITIAL FUNDING.—There is authorized to be ap5 propriated $150,000,000 for the establishment and initial 

6 oversight, regulation, and supervision of the Utility and 

7 its operation. 

8 (b) REPAYMENT OF INITIAL FUNDING.—The Utility 

9 shall repay to the Treasury of the United States the 

10 amount of the initial funding provided in subsection (a) 

11 within the 10-year period beginning on the date that the 

12 Utility is chartered. 

13 (c) ONGOING FUNDING.— 

14 (1) COLLECTION OF FEES.—After establish15 ment, all expenses of the Utility shall be paid for by 

16 fees collected based on services provided by and op17 erations of the Utility. 

18 (2) ESTABLISHMENT OF FEE SCHEDULE.—The 

19 Utility shall— 

20 (A) establish, subject to the approval of 

21 the Director, a fee schedule and may differen22 tiate fees based on classes or types of services, 

23 operations, and users of services or operations, 

24 and such differentiation shall not be deemed 

25 discriminatory; and 


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1 (B) review and publish the fee schedule not 

2 less frequently than annually, but may review, 

3 revise, and publish the schedule more frequently 

4 than annually. 

5 SEC. 315. REGULATION, SUPERVISION, AND ENFORCEMENT. 

6 (a) GENERAL OVERSIGHT.—The Director shall exer7 cise, by rule, order, or guidance, oversight of the Utility, 

8 which shall include the authority to regulate, supervise, 

9 and examine the Utility and take enforcement actions 

10 against the Utility or any Utility-affiliated party, con11 sistent with the provisions of the Federal Housing Enter12 prise Financial Safety and Soundness Act of 1992. 

13 (b) SCOPE OF AUTHORITY.—The authority of the Di14 rector under this section shall include the authority to ex15 ercise such incidental powers as may be necessary or ap16 propriate to fulfill the duties and responsibilities of the 

17 Director in the oversight, supervision, and regulation of 

18 the Utility. 

19 (c) DIVISION OF UTILITY REGULATION.—The Direc20 tor shall establish within the Agency a Division of Utility 

21 Regulation, which shall— 

22 (1) be headed by a Deputy Director designated 

23 by the Director from among individuals who are citi24 zens of the United States who have a demonstrated 

25 understanding of financial management or oversight 


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1 and of mortgage securities markets and housing fi2 nance; and 

3 (2) as requested by the Director, conduct exam4 ination and supervision activities, gather any infor5 mation attendant to such activities, and provide rec6 ommendations to the Director regarding the safe 

7 and sound operation of the Utility and regarding 

8 any requests to revise, alter, or amend existing or 

9 proposed activities. 

10 (d) CONSULTATION WITH OTHER AGENCIES.—In ex11 ercising authority to regulate and supervise the Utility, the 

12 Director shall consult with other Federal departments and 

13 agencies that regulate or supervise entities, institutions, 

14 or companies that are or may become subject to stand15 ards, rules, processes, or procedures developed by the Util16 ity (including issuers through the Platform and depositors 

17 or participants in the Repository), including the Bureau 

18 of Consumer Financial Protection and any appropriate 

19 Federal banking agency (as defined under section 3 of the 

20 Federal Deposit Insurance Act). 

21 (e) ANNUAL ASSESSMENT.—The Director shall es22 tablish and collect from the Utility an annual assessment 

23 in an amount not exceeding the amount sufficient to pro24 vide for reasonable costs (including administrative costs) 

25 and expenses of the Agency related to its oversight of the 


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1 Utility. The amounts received by the Director from assess2 ments under this section shall not be construed to be Gov3 ernment or public funds or appropriated money. Notwith4 standing any other provision of law, the amounts received 

5 by the Director from assessments under this section shall 

6 not be subject to apportionment for the purpose of chapter 

7 15 of title 31, United States Code, or under any other 

8 authority. 

9 SEC. 316. CIVIL AND CRIMINAL LIABILITY. 

10 (a) USE OF NAMES.— 

11 (1) IN GENERAL.—Except as expressly author12 ized by statute of the United States, no person or 

13 organization (except the Repository, Utility, and 

14 Platform) shall use the term ‘‘National Mortgage 

15 Market Utility’’, ‘‘Common Securitization Platform’’, 

16 or ‘‘National Mortgage Data Repository’’, or such 

17 other name as the Director may establish in the 

18 charter of the Utility or any combination of words 

19 that appears to indicate that such use of the term 

20 conflicts with the operation of the Utility or any 

21 function created herein. No individual or organiza22 tion shall use or display— 

23 (A) any sign, device, or insignia prescribed 

24 or approved by the Utility for use of display by 

25 the Utility; 


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1 (B) any copy, reproduction or colorable 

2 imitation of any such sign, device, or insignia; 

3 or 

4 (C) any sign, device or insignia reasonably 

5 calculated to convey the impression that it is a 

6 sign, device or insignia used by the Utility or 

7 prescribed by the Utility contrary to policies or 

8 procedures of the Utility prohibiting, limiting or 

9 restricting such use by any individual or organi10 zation. 

11 (2) RELIEF.—The Agency or Utility may seek 

12 to enjoin or recover damages for any breach of this 

13 section and refer to the Attorney General any mat14 ters that may constitute criminal activity for a 

15 breach of this section. 

16 (b) EXCLUSIVE OPERATION OF THE REPOSITORY.— 

17 Except as expressly authorized by statute of the United 

18 States, no person or organization (except the Utility) shall 

19 operate a national registry or repository of mortgage-re20 lated documents. Any State of the United States may op21 erate a State registry or repository system, subject to the 

22 laws of that State, provided that any such State registry 

23 or repository system does not conflict with the Repository 

24 or the purposes of this subtitle. 


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1 (c) ACTIONS FOR BREACH.—In any action for breach 

2 of contract, including breach of representation or war3 ranty, or breach of privacy related to data collected and 

4 maintained by the Repository, no prevailing party may re5 cover more than an amount established by the Director, 

6 by regulation. When issuing any such regulation, the Di7 rector shall take into consideration intentional, willful, 

8 reckless, or negligent actions or omissions. Such regula9 tions shall be reviewed not less frequently than annually, 

10 and may be revised in the Director’s discretion. 

11 PART 2—STANDARDS FOR QUALIFIED 

12 SECURITIES 

13 SEC. 321. QUALIFIED SECURITIES. 

14 For purposes of this subtitle, the term ‘‘qualified se15 curity’’ means a security that— 

16 (1) is collateralized by a class, or multiple class17 es, of residential mortgages established under sec18 tion 322(a); 

19 (2) is issued in accordance with a standard 

20 form securitization agreement under section 322(b); 

21 (3) is issued by a qualified issuer in accordance 

22 with section 322(g); 

23 (4) is issued through the Platform; and 

24 (5) is not guaranteed, in whole or in part, by 

25 the United States Government. 


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1 SEC. 322. STANDARDS FOR QUALIFIED SECURITIES. 

2 (a) STANDARD MORTGAGE CLASSIFICATIONS.— 

3 (1) ESTABLISHMENT OF MORTGAGE CLASSI4 FICATIONS.—The Utility shall prescribe classifica5 tions for residential mortgages having various de6 grees of credit risk, ranging from a classification of 

7 mortgages having little to no credit risk to a classi8 fication of mortgages having higher credit risk. In 

9 prescribing such classifications the Utility shall seek 

10 to allow for the pricing of credit risk, allow for the 

11 trading of securities collateralized by each classifica12 tion of mortgages established pursuant to this sub13 section in the forward market, and maintain well14 functioning liquid markets in securities collateralized 

15 by each of the classifications of mortgages estab16 lished pursuant to this subsection. 

17 (2) UNDERWRITING CRITERIA.—For each clas18 sification of mortgages established under paragraph 

19 (1), the Utility shall establish standards for each of 

20 the following underwriting criteria: 

21 (A) DEBT-TO-INCOME RATIO.—The ratio 

22 of the amount of the total monthly debt of the 

23 mortgagor to the amount of the monthly income 

24 of the mortgagor. 

25 (B) LOAN-TO-VALUE RATIO.—The ratio of 

26 the principal obligation under the mortgage to 


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1 the value of the residence subject to the mort2 gage, at the time of mortgage origination. 

3 (C) CREDIT HISTORY.—Information on the 

4 credit history of the mortgagor, including credit 

5 scores of the mortgagor. 

6 (D) LOAN DOCUMENTATION.—The extent 

7 of loan documentation and verification of the fi8 nancial resources of the mortgagor used to 

9 qualify the mortgagor for the mortgage, includ10 ing any appraisal. 

11 (E) OCCUPANCY.—Whether the residence 

12 subject to the mortgage is occupied by the 

13 mortgagor. 

14 (F) CREDIT ENHANCEMENT.—Whether 

15 any mortgage insurance or other type of insur16 ance or credit enhancement was obtained at the 

17 time of origination. 

18 (G) LOAN PAYMENT TERMS.— 

19 (i) IN GENERAL.—The terms of the 

20 mortgage that determine the magnitude 

21 and timing of payments due from the 

22 mortgagor, including the term to maturity 

23 of the mortgage, the frequency of payment, 

24 the type of amortization, any prepayment 


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1 penalties, and whether the interest rate is 

2 fixed or may vary. 

3 (ii) INCLUSION OF 30-YEAR FIXED IN4 TEREST RATE.—Terms established under 

5 clause (i) shall include a 30-year fixed in6 terest rate mortgage. 

7 (H) OTHER.—Such other underwriting cri8 teria as the Utility may establish, consistent 

9 with the goals of this subtitle. 

10 (3) DEFINITIONS.—The Utility shall, for pur11 poses of this subsection, prescribe definitions for 

12 each of the following terms: 

13 (A) MORTGAGE.—The term ‘‘mortgage’’, 

14 which definition shall include only mortgages on 

15 residential properties. 

16 (B) DEFAULT.—The term ‘‘default’’, with 

17 respect to a mortgage. 

18 (C) DELINQUENCY.—The term ‘‘delin19 quency’’, with respect to a mortgage. 

20 (D) LOAN DOCUMENTATION.—The term 

21 ‘‘loan documentation’’, with respect to a mort22 gage. 

23 (E) ADDITIONAL TERMS.—Such other 

24 terms as the Utility may establish. 


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1 (b) STANDARD FORM SECURITIZATION AGREE2 MENTS.— 

3 (1) IN GENERAL.—The Utility shall develop, 

4 adopt, and publish standard form securitization 

5 agreements for eligible collateral. 

6 (2) REQUIRED CONTENT.—The standard form 

7 securitization agreements to be developed under 

8 paragraph (1) shall include terms relating to— 

9 (A) pooling and servicing; 

10 (B) purchase and sale; 

11 (C) representations and warranties, includ12 ing representations and warranties as to com13 pliance or conformity with standards estab14 lished by the Utility, as appropriate; 

15 (D) indemnification and remedies, includ16 ing principles of a repurchase program that will 

17 ensure an appropriate amount of risk retention 

18 under the representations and warranties set 

19 forth under subparagraph (C); and 

20 (E) the qualification, responsibilities, and 

21 duties of trustees. 

22 (c) REGISTRATION WITH THE REPOSITORY.—The 

23 Utility shall require that any mortgage-related document 

24 associated with eligible collateral for qualified securities be 

25 registered with the Repository. 


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1 (d) STANDARDS FOR SERVICING.—The Utility shall 

2 develop, adopt, and publish— 

3 (1) servicing standards, including for the modi4 fication, restructuring, or work-out of any mortgage 

5 that serves as collateral for a qualified security; and 

6 (2) a servicer succession plan, which may in7 clude provisions for— 

8 (A) a specialty servicer that can replace 

9 the existing servicer if the performance of the 

10 mortgage pool deteriorates to specified levels; 

11 and 

12 (B) a plan to achieve consistency in serv13 icing systems related to systematic note-taking, 

14 consistent mailing addresses, and other points 

15 of contact for borrowers to use, among other 

16 items. 

17 (e) STANDARDS FOR SERVICER REPORTING.—The 

18 Utility shall develop, adopt, and publish standards for the 

19 reporting obligations of servicers of any mortgage that 

20 serves as collateral for a qualified security. 

21 (f) STANDARDS FOR AGGREGATORS.—The Utility 

22 may develop, adopt, and publish standards for aggregation 

23 of eligible collateral by entities, institutions, or companies 

24 other than an issuer. Notwithstanding any such standards 

25 developed by the Utility, any Federal Home Loan Bank 


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1 may act as an aggregator and offer the service of aggrega2 tion to any member of such Bank, subject to regulations 

3 prescribed by the Director. 

4 (g) STANDARDS FOR QUALIFIED ISSUERS.— 

5 (1) IN GENERAL.—The Utility shall develop, 

6 adopt, and publish standards for an issuer to qualify 

7 as a qualified issuer. Such standards shall only in8 clude— 

9 (A) the experience, financial resources, and 

10 integrity of the issuer and its principals, includ11 ing compliance history with Federal and State 

12 laws; 

13 (B) the adequacy of insurance and fidelity 

14 coverage of the issuer with respect to errors 

15 and omissions; and 

16 (C) a requirement that the issuer submit 

17 audited financial statements to the Utility, who 

18 shall make such statements publicly available 

19 through the Utility’s Web site. 

20 (2) APPLICATION PROCESS.— 

21 (A) IN GENERAL.—The Utility shall estab22 lish an application process for the qualification 

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1 scribe, in accordance with standards adopted 

2 under paragraph (1). 

3 (B) APPROVAL.—The Utility shall approve 

4 any application made pursuant to subparagraph 

5 (A) unless the issuer does not meet the stand6 ards adopted under paragraph (1). 

7 (C) PUBLICATION.—The Agency shall pub8 lish a list of newly qualified issuers in the Fed9 eral Register and the Utility shall maintain an 

10 updated list of qualified issuers on the Utility’s 

11 Web site. 

12 (3) REVIEW AND REVOCATION OF QUALIFIED

13 STATUS.— 

14 (A) IN GENERAL.—The Utility may review 

15 the status of a qualified issuer if the Utility is 

16 notified that a claim has been made against the 

17 issuer by a trustee with respect to a violation 

18 of a contractual term in a securitization docu19 ment of the issuer. 

20 (B) REVOCATION.— 

21 (i) IN GENERAL.—Subject to subpara22 graph (C), if the Utility determines, sub23 ject to the approval of the Director, in a 

24 review pursuant to subparagraph (A), that 

25 an issuer no longer meets the standards 


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1 for qualification, the Utility shall revoke 

2 the issuer’s qualified status. 

3 (ii) CONSTRUCTION.—The revocation 

4 of an issuer’s qualified status under this 

5 subparagraph shall— 

6 (I) have no effect on the qualified 

7 status of any security issued before 

8 such revocation; and 

9 (II) not relieve the issuer of any 

10 obligation associated with any rep11 resentation or warranty or any repur12 chase obligations related to any quali13 fied security issued before such rev14 ocation. 

15 (C) GRACE PERIOD.—The Utility shall es16 tablish standards by which a qualified issuer 

17 who no longer meets the standards for quali18 fication may remediate and return to meeting 

19 the standards, without losing the issuer’s quali20 fied status. 

21 (D) PUBLICATION.—The Agency shall pub22 lish a list of issuers who are no longer qualified 

23 in the Federal Register and the Utility shall 

24 maintain an updated list of such issuers on the 

25 Utility’s Web site. 


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1 (h) STANDARDS FOR TRUSTEES.— 

2 (1) IN GENERAL.—There shall at all times be 

3 one or more trustee for each pool of mortgages that 

4 acts as collateral for a qualified security. 

5 (2) RULEMAKING.—The Director shall issue 

6 regulations regarding the qualifications of trustees 

7 under paragraph (1) that shall, to the extent prac8 ticable, be consistent with the qualification provi9 sions applicable to trustees under section 310(a) of 

10 the Trust Indenture Act of 1934 (15 U.S.C. 

11 77jjj(a)). 

12 (3) CONFLICTS OF INTEREST.—The Director 

13 shall issue conflict of interest regulations that apply 

14 to a qualified trustee. Such regulations shall, to the 

15 extent practicable, be consistent with those conflict 

16 of interest provisions applicable to an indenture 

17 trustee under section 310(b) of the Trust Indenture 

18 Act of 1934 (15 U.S.C. 77jjj(b)). 

19 (4) REPORTING OF CLAIMS.—Any time a trust20 ee brings a claim against a qualified issuer on behalf 

21 of investors with respect to a standard form 

22 securitization agreement, the trustee shall notify the 

23 Director of such claim. 


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1 (5) PROTECTION OF INVESTOR RIGHTS.—For 

2 the purpose of protecting investor rights, each trust3 ee shall— 

4 (A) maintain a list of all investors (bene5 ficial owners) in a qualified security; 

6 (B) update such list from time to time; 

7 (C) not make such list available to inves8 tors (beneficial owners); and 

9 (D) act as a means to communicate infor10 mation about the qualified security to investors 

11 (beneficial owners) and act as a means for in12 vestors (beneficial owners) to communicate with 

13 each other. 

14 (6) NO LIABILITY FOR CERTAIN COMMUNICA15 TIONS.—A trustee shall not be liable for the content 

16 of any information provided to the trustee by an in17 vestor (beneficial owner) that the trustee commu18 nicates to another investor (beneficial owner). 

19 (7) INVESTOR (BENEFICIAL OWNER) NOTIFICA20 TION OF TRUSTEE.—A person who becomes an in21 vestor (beneficial owner) in a qualified security shall 

22 promptly notify the trustee of such security of the 

23 change in ownership. 

24 (i) INDEPENDENT THIRD PARTY.—If the majority of 

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1 ties chooses to hire an independent third party to act on 

2 behalf of the best interests of the investors (beneficial own3 ers), such party shall— 

4 (1) be granted access to the loan documents for 

5 the mortgage loans backing such security and all 

6 servicing reports the servicer provides to investors 

7 (beneficial owners) or the trustee; 

8 (2) be granted access to the list of investors 

9 (beneficial owners) maintained by the trustee, on the 

10 condition that the independent third party will not 

11 make the list available to the investors (beneficial 

12 owners); and 

13 (3) have the right, on behalf of the investors 

14 (beneficial owners), to inform the trustee of such se15 curities of any breach of the securitization agree16 ment identified by the third party. 

17 (j) MANDATORY ARBITRATION.— 

18 (1) IN GENERAL.—All disputes between an 

19 owner of a qualified security and the qualified issuer 

20 of such security relating to representations and war21 ranties shall be subject to mandatory arbitration 

22 procedures established by the Utility, in accordance 

23 with current market practices. 

24 (2) SELECTION OF ARBITRATOR.—Investors 

25 (beneficial owners) and issuers subject to a dispute 


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1 described under paragraph (1) shall have the right 

2 to agree on an independent arbitrator. If the parties 

3 cannot agree on an independent arbitrator, the Util4 ity shall select an independent arbitrator for the par5 ties. 

6 (3) REPORTING DUTY OF ARBITRATOR.— 

7 (A) UPON COMMENCEMENT.—The arbi8 trator shall provide the Utility with notice upon 

9 commencement of any arbitration under this 

10 subsection. 

11 (B) UPON CONCLUSION.—Upon conclusion 

12 of any arbitration under this subsection, the ar13 bitrator shall provide the Utility with— 

14 (i) the decision reached by the arbi15 trator; and 

16 (ii) the basis for the arbitrator’s deci17 sion, including any evidence or testimony 

18 received during the arbitration process. 

19 (k) DATA STANDARDS; DISCLOSURE STANDARDS.— 

20 (1) DATA STANDARDS.—The Utility shall de21 velop, adopt, and publish standard data definitions 

22 for all aspects of loan origination, appraisals, and 

23 servicing. In developing such definitions, the Utility 

24 shall consider the data standard-setting work under25 taken by the Mortgage Industry Standards MainteVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00172 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 nance Organization through the enterprises’ Uni2 form Mortgage Data Program announced by the 

3 Agency on May 24, 2010. 

4 (2) DISCLOSURE STANDARDS.—The Utility 

5 shall develop, adopt, and publish standards for dis6 closure of loan origination, appraisal, and servicing 

7 data, including data required in subsection (a)(2) 

8 (relating to underwriting criteria) for residential 

9 mortgage loans that comprise qualified securities, 

10 and that allow for trading of qualified securities 

11 under this subtitle in a forward market. 

12 (3) COORDINATION.—In developing the data 

13 and disclosure standards required by this subsection, 

14 the Utility shall ensure that such standards are co15 ordinated. 

16 (4) PRIVACY PROTECTIONS.—In prescribing the 

17 definitions and standards required under this sub18 section, the Utility shall take into consideration 

19 issues of consumer privacy and all statutes, rules, 

20 and regulations related to privacy of consumer credit 

21 information and personally identifiable information. 

22 Such standards shall expressly prohibit the identi23 fication of specific borrowers. 

24 (5) CONSULTATION.—When reviewing any dis25 closure standards established under this subsection, 


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1 the Director shall consult with the Securities and 

2 Exchange Commission. 

3 (l) TIMING OF ISSUANCE; AGENCY REVIEW; AUTHOR4 ITY TO REVISE STANDARDS.— 

5 (1) TIMING.—The Director shall issue any reg6 ulations required by this section not later than the 

7 end of the 12-month period beginning on the date of 

8 the enactment of this Act. The Utility shall issue 

9 any definitions, standards, rules, processes, or proce10 dures required by this section not later than the end 

11 of the 12-month period beginning on the date of 

12 issuance of the charter by the Director. 

13 (2) AGENCY REVIEW.—Any definition, stand14 ard, rule, process or procedure established by the 

15 Utility shall be submitted to the Director for review 

16 and approval prior to its implementation if, in the 

17 Director’s discretion, the Director requires such sub18 mission. Any definition, standard, rule, process or 

19 procedure that the Director requires be submitted to 

20 the Agency for review and approval shall be reviewed 

21 within three months of submission. 

22 (3) AUTHORITY TO REVISE.— 

23 (A) IN GENERAL.—The Utility may review, 

24 revise, and, if revised, re-publish any standard 

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1 tion, standard, rule, process, or procedure re2 quired to be developed by this subtitle if the 

3 Utility determines review or revision to be nec4 essary or appropriate to satisfy the goals of this 

5 subtitle. 

6 (B) APPLICATION OF REVISIONS.—Any re7 visions made pursuant to subparagraph (A) 

8 shall apply only to securitizations made after 

9 the date of such revision. 

10 (m) EFFECT OF CONFLICT.—In the event a defini11 tion, standard, rule, process, or procedure established by 

12 the Utility is in conflict with any definition, standard, rule, 

13 process, or procedure established by another Federal de14 partment or agency, the Director shall consult with the 

15 other Federal department or agency, and provide prompt 

16 written notification to the Committee on Banking, Hous17 ing, and Urban Affairs of the Senate and the Committee 

18 on Financial Services of the House of Representatives, of 

19 the conflict. 

20 (n) PUBLIC INVOLVEMENT.—In developing defini21 tions, standards, rules, processes, and procedures required 

22 by this subtitle, the Utility shall work with market partici23 pants, including servicers, originators, and mortgage in24 vestors, and develop methods for gathering information 

25 and comment from such groups. 


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1 SEC. 323. LIABILITY FOR MISLEADING STATEMENTS. 

2 (a) IN GENERAL.—Any person who shall make or 

3 cause to be made any statement in any application, report, 

4 or document filed with the Agency or Utility pursuant to 

5 any provisions of this subtitle, or any rule, regulation, or 

6 order thereunder, which statement was at the time and 

7 in light of the circumstances under which it was made 

8 false or misleading with respect to any material fact, or 

9 who shall omit to state any material fact required to be 

10 stated therein or necessary to make the statements therein 

11 not misleading, shall be liable to any person (not knowing 

12 that such statement was false or misleading or of such 

13 omission) who, in reliance upon such statement or omis14 sion, shall have purchased or sold a qualified security 

15 issued under the indenture to which such application, re16 port, or document relates, for damages caused by such re17 liance, unless the person sued shall prove that such person 

18 acted in good faith and had no knowledge that such state19 ment was false or misleading or of such omission. A per20 son seeking to enforce such liability may sue at law or 

21 in equity in any court of competent jurisdiction. In any 

22 such suit the court may, in its discretion, require an un23 dertaking for the payment of the costs of such suit and 

24 assess reasonable costs, including reasonable attorneys’ 

25 fees, against either party litigant, having due regard for 

26 the merits and good faith of the suit or defense. No action 


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1 shall be maintained to enforce any liability created under 

2 this section unless brought within one year after the dis3 covery of the facts constituting the cause of action and 

4 within three years after such cause of action accrued. 

5 (b) RIGHTS AND REMEDIES UNDER OTHER LAWS.— 

6 The rights and remedies provided by this part shall be 

7 in addition to any and all other rights and remedies that 

8 may exist under the Securities Act of 1933 or the Securi9 ties Exchange Act of 1934 or otherwise at law or in equity; 

10 but no person permitted to maintain a suit for damages 

11 under the provisions of this subtitle shall recover, through 

12 satisfaction of judgment in one or more actions, a total 

13 amount in excess of the person’s actual damages on ac14 count of the act complained of. 

15 SEC. 324. UNLAWFUL REPRESENTATIONS. 

16 It shall be unlawful for any person in offering, selling, 

17 or issuing any qualified security pursuant to this subtitle 

18 to represent or imply in any manner whatsoever that any 

19 action or failure to act by the Agency or Utility in the 

20 administration of this subtitle means that the Agency or 

21 Utility has in any way passed upon the merits of, or given 

22 approval to, any trustee, indenture, or security, or any 

23 transaction or transactions therein, or that any such ac24 tion or failure to act with regard to any statement or re25 port files or examined by the Agency or Utility pursuant 


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1 to this subtitle or any rule, regulation, or order there2 under, has the effect of a finding by the Agency or Utility 

3 that such statement or report is true and accurate on its 

4 face or that it is not false or misleading. 

5 SEC. 325. CONTRARY STIPULATIONS VOID. 

6 Any condition, stipulation, or provision binding any 

7 person to waive compliance with any provision of this sub8 title or with any rule, regulation, or order thereunder shall 

9 be void. 

10 PART 3—NATIONAL MORTGAGE DATA 

11 REPOSITORY 

12 SEC. 331. ORGANIZATION AND OPERATION. 

13 (a) ORGANIZATION AND OPERATION.—Under such 

14 regulations as the Director may prescribe, the Utility shall 

15 organize and operate a national mortgage data repository 

16 (‘‘Repository’’). 

17 (b) AUTHORIZED ACTIVITIES.—In addition to orga18 nizing and operating the Repository, the Utility shall— 

19 (1) establish and operate a repository for mort20 gage-related documents; 

21 (2) establish standards for qualification of any 

22 depositor of mortgage-related documents to the Re23 pository; 

24 (3) establish standards and procedures for sub25 mission of mortgage-related documents to the ReVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00178 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 pository, including required information and the type 

2 and format of information and data; 

3 (4) establish procedures for validation of mort4 gage-related documents and the data contained in 

5 the Repository; 

6 (5) establish standards and procedures for ac7 ceptance of mortgage-related documents (including 

8 electronic copies), and notice of acceptance, by the 

9 Repository; 

10 (6) establish standards and procedures for reg11 istration of any mortgage-related document with the 

12 Repository, including notice of registration and the 

13 assignment of a unique identifier; 

14 (7) establish standards and procedures for re15 cording the creation, assignment, or transfer of an 

16 interest in any registered mortgage-related docu17 ment; 

18 (8) establish standards and procedures for qual19 ification of depositors and participants in the Repos20 itory; 

21 (9) establish procedures for proper demonstra22 tion of registration of mortgage-related documents 

23 with the Repository and recordation of an interest 

24 by the holder of an interest in any such document, 

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1 cordance with section 332 (relating to legal effect of 

2 registration with the Repository); 

3 (10) establish and maintain a catalog of the 

4 mortgage-related documents registered with the Re5 pository; 

6 (11) establish standards and procedures for dis7 position of mortgage-related documents, including 

8 safekeeping, long-term storage, or destruction of 

9 paper documents; 

10 (12) establish standards and procedures for 

11 making data publicly available; 

12 (13) ensure that data collected and maintained 

13 by the Repository are kept secure and protected 

14 against unauthorized disclosure, including disclosure 

15 of personally identifiable information that is not oth16 erwise available as part of any public record; 

17 (14) establish a process, including notification 

18 from the public, for identification and correction of 

19 incorrect information submitted to or maintained by 

20 the Repository; 

21 (15) establish fees for registration of mortgage22 related documents and maintenance and use of data, 

23 and for the provision of other related services not in24 consistent with the purposes of this subtitle; and 


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1 (16) perform any other service or engage in any 

2 other activity that the Director determines, by regu3 lation or order, to be incidental to the activities enu4 merated in this subsection. 

5 (c) REQUIREMENTS ON PARTICIPANTS.—Each par6 ticipant shall— 

7 (1) comply with such requirements as may be 

8 set by the Repository for using data maintained or 

9 created by the Repository; and 

10 (2) use such designation as the Repository may 

11 provide, such as a unique identifier. 

12 SEC. 332. LEGAL EFFECT OF REGISTRATION WITH REPOSI13 TORY. 

14 Notwithstanding any provision of State or Federal 

15 law to the contrary, by proper demonstration of registra16 tion with the Repository, any holder of an interest in any 

17 mortgage-related note shall satisfy any requirement for 

18 demonstration of a right to act regarding such note or 

19 other registered data that exists in State or Federal law, 

20 including any obligation to produce or possess an original 

21 note. The Director shall provide for the establishment of 

22 procedures for proper demonstration of registration of any 

23 mortgage-related document and of an interest by the hold24 er of an interest in any such document with the Reposi25 tory. Once registered with the Repository, such registraVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00181 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 tion shall be a legal right enforceable in any judicial or 

2 nonjudicial process. 

3 SEC. 333. GRANTS TO STATES; REPAYMENT. 

4 (a) GRANTS TO STATES.—There is hereby authorized 

5 to be appropriated $50,000,000 to the Director for the 

6 establishment of a fund to be administered by the Agency 

7 for providing grants to States, on application to the Agen8 cy, to facilitate participation in the Repository by any de9 positor or participant or class of depositors or partici10 pants, or any other person upon appropriate demonstra11 tion to the Agency that such a grant would assist in the 

12 accomplishment of the purposes of this subtitle. Any such 

13 amounts appropriated and not granted by the Agency 

14 within five years of the date of the enactment of this Act 

15 shall be returned to the Treasury of the United States. 

16 (b) REPAYMENT.—The Director shall cause to be col17 lected from the Utility and deposit in the Treasury of the 

18 United States an amount equal to the aggregate amount 

19 provided as grants to States pursuant to subsection (a) 

20 within the 10-year period beginning on the date that the 

21 first grant is made pursuant to subsection (a). 

22 SEC. 334. JUDICIAL REVIEW. 

23 Except as otherwise expressly provided under this 

24 part, no person other than the Director or the Attorney 

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1 resentative of the Director or the Attorney General, may 

2 proceed against the Repository in any State or Federal 

3 court. The prohibition in the preceding sentence shall not 

4 apply to a civil action against the Repository or any duly 

5 authorized agent thereof for breach of a contract, includ6 ing breach of a representation or warranty, or breach of 

7 privacy related to data collected and maintained by the 

8 Repository or any duly authorized agent thereof. 

9 SEC. 335. TRANSITION PROVISIONS. 

10 (a) IN GENERAL.—The Agency shall provide for a 

11 transition period to permit the efficient implementation of 

12 the provisions of this part. Such transition may include 

13 periods for testing, early adoption, and final mandatory 

14 adoption for all recorded mortgages. 

15 (b) ELECTRONIC SUBMISSIONS.—The Repository 

16 shall accept electronic submissions and paper-based docu17 ments submitted electronically subject to rules of the Re18 pository. After the expiration of the 10-year period that 

19 begins upon the date of the enactment of this Act, subject 

20 to an extension of such period for up to 5 additional years 

21 if the Director determines appropriate, the Repository 

22 shall require only electronic submission. 


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1 PART 4—CONFORMING AMENDMENTS 

2 SEC. 341. CONFORMING AMENDMENT TO FEDERAL HOME 

3 LOAN BANK ACT. 

4 Section 11 of the Federal Home Loan Bank Act (12 

5 U.S.C. 1431) is amended by adding at the end the fol6 lowing new subsection: 

7 ‘‘(m) AGGREGATION OF LOANS ORIGINATED BY

8 MEMBERS.—Any Federal Home Loan Bank may aggre9 gate for securitization through the common securitization 

10 platform (as such term is defined in section 303 of the 

11 National Mortgage Market Utility Act of 2013) residential 

12 mortgage loans originated by any member of such Bank, 

13 pursuant to regulations issued by the Director.’’. 

14 SEC. 342. CONFORMING AMENDMENTS TO THE DODD15 FRANK WALL STREET REFORM AND CON16 SUMER PROTECTION ACT. 

17 Section 803(8)(A) of the Dodd-Frank Wall Street 

18 Reform and Consumer Protection Act (12 U.S.C. 

19 5462(8)(A)) is amended— 

20 (1) redesignating clause (iv) as clause (v); and 

21 (2) inserting after clause (iii) the following new 

22 clause: 

23 ‘‘(iv) The Federal Housing Finance 

24 Agency, with respect to a designated finan25 cial market utility that is subject to the ex26 clusive supervision of that Agency pursuVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00184 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 ant to the National Mortgage Market Util2 ity Act of 2013.’’. 

3 SEC. 343. CONFORMING AMENDMENTS TO SECURITIES ACT 

4 OF 1933. 

5 (a) EXEMPTED SECURITIES.—Section 3(a) of the Se6 curities Act of 1933 (15 U.S.C. 77c(a)) is amended by 

7 adding at the end the following new paragraph: 

8 ‘‘(15) Any qualified security, as such term is 

9 defined in section 321 of the National Mortgage 

10 Market Utility Act of 2013.’’. 

11 (b) REMOVAL OF CREDIT RISK RETENTION REF12 ERENCE.—Section 27B of the Securities Act of 1933 (15 

13 U.S.C. 77z–2a) is amended by striking subsection (d). 

14 SEC. 344. CONFORMING AMENDMENTS TO TITLE 18, UNITED 

15 STATES CODE. 

16 (a) FALSE ADVERTISING.—Section 709 of title 18, 

17 United States Code, is amended by inserting after ‘‘a Fed18 eral Home Loan Bank; or’’ the following: ‘‘Whoever uses 

19 the words ‘National Mortgage Data Repository’ or such 

20 other name as the Director of the Federal Housing Fi21 nance Agency may establish in the charter of the reposi22 tory or any combination of words that appears to indicate 

23 that such use of the term conflicts with the exclusive oper24 ation of the repository created by part 3 of the National 

25 Mortgage Market Utility Act of 2013 as a business name 


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1 or any part of a business name, or falsely publishes, adver2 tises, or represents by any device or symbol or other means 

3 reasonably calculated to convey the impression that he or 

4 it is the repository created by such part; or’’. 

5 (b) FRAUD AND FALSE STATEMENTS.—Chapter 47 

6 of title 18, United States Code, is amended— 

7 (1) by adding at the end the following new sec8 tion: 

9 ‘‘§ 1041. Information security; false statements and 

10 concealment of facts related to the Na11 tional Mortgage Market Utility Act of 

12 2013 

13 ‘‘Whoever, with regard to any mortgage-related docu14 ment (as such term is defined in section 303 of the Na15 tional Mortgage Market Utility Act of 2013) or the reg16 istration of any document or any interest in any such doc17 ument pursuant to that Act, makes any false statement 

18 or representation of fact, knowing it to be false, or know19 ingly conceals, covers up or fails to disclose any material 

20 fact the disclosure of which is required by such Act or 

21 regulation, shall be fined under this title, or imprisoned 

22 not more than five years, or both.’’; and 

23 (2) in the table of contents for such chapter, by 

24 inserting after the item relating to section 1040 the 

25 following: 


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‘‘1041. Information security; false statements and concealment of facts related 

to the National Mortgage Market Utility Act of 2013.’’. 

1 Subtitle B—Covered Bonds 

2 SEC. 351. SHORT TITLE. 

3 This subtitle may be cited as the ‘‘United States Cov4 ered Bond Act of 2013’’. 

5 SEC. 352. DEFINITIONS. 

6 For purposes of this subtitle, the following definitions 

7 shall apply: 

8 (1) ANCILLARY ASSET.—The term ‘‘ancillary 

9 asset’’ means— 

10 (A) any interest rate or currency swap as11 sociated with 1 or more eligible assets, sub12 stitute assets, or other assets in a cover pool; 

13 (B) any credit enhancement or liquidity ar14 rangement associated with 1 or more eligible 

15 assets, substitute assets, or other assets in a 

16 cover pool; 

17 (C) any guarantee, letter-of-credit right, or 

18 other secondary obligation that supports any 

19 payment or performance of 1 or more eligible 

20 assets, substitute assets, or other assets in a 

21 cover pool; and 

22 (D) any proceeds of, or other property in23 cident to, 1 or more eligible assets, substitute 

24 assets, or other assets in a cover pool. 


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1 (2) CORPORATION.—The term ‘‘Corporation’’ 

2 means the Federal Deposit Insurance Corporation. 

3 (3) COVER POOL.—The term ‘‘cover pool’’ 

4 means a dynamic pool of assets that is comprised 

5 of— 

6 (A) in the case of any eligible issuer de7 scribed in subparagraph (A), (B), or (C) of 

8 paragraph (9)— 

9 (i) 1 or more eligible assets from a 

10 single eligible asset class; and 

11 (ii) 1 or more substitute assets or an12 cillary assets; and 

13 (B) in the case of any eligible issuer de14 scribed in paragraph (9)(D)— 

15 (i) the covered bonds issued by each 

16 sponsoring eligible issuer; and 

17 (ii) 1 or more substitute assets or an18 cillary assets. 

19 (4) COVERED BOND.—The term ‘‘covered 

20 bond’’ means any recourse debt obligation of an eli21 gible issuer that— 

22 (A) has an original term to maturity of not 

23 less than 1 year; 

24 (B) is secured by a perfected security in25 terest in or other perfected lien on a cover pool 


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1 that is owned directly or indirectly by the issuer 

2 of the obligation; 

3 (C) is issued under a covered bond pro4 gram that has been approved by the applicable 

5 covered bond regulator; 

6 (D) is identified in a register of covered 

7 bonds that is maintained by the Secretary; and 

8 (E) is not a deposit (as defined in section 

9 3(l) of the Federal Deposit Insurance Act (12 

10 U.S.C. 1813(l))). 

11 (5) COVERED BOND PROGRAM.—The term 

12 ‘‘covered bond program’’ means any program of an 

13 eligible issuer under which, on the security of a sin14 gle cover pool, 1 or more series of covered bonds 

15 may be issued. 

16 (6) COVERED BOND REGULATOR.—The term 

17 ‘‘covered bond regulator’’ means— 

18 (A) for any eligible issuer that is subject to 

19 the jurisdiction of an appropriate Federal bank20 ing agency (as defined in section 3(q) of the 

21 Federal Deposit Insurance Act (12 U.S.C. 

22 1813(q))), the appropriate Federal banking 

23 agency; 

24 (B) for any eligible issuer that is described 

25 in paragraph (9)(D), that is not subject to the 


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1 jurisdiction of an appropriate Federal banking 

2 agency, and that is sponsored by only 1 eligible 

3 issuer, the covered bond regulator for the spon4 sor; 

5 (C) for any eligible issuer that is described 

6 in paragraph (9)(D), that is not subject to the 

7 jurisdiction of an appropriate Federal banking 

8 agency, and that is sponsored by more than 1 

9 eligible issuer, the covered bond regulator for 

10 the sponsor whose covered bonds constitute the 

11 largest share of the cover pool of the issuer; 

12 and 

13 (D) for any other eligible issuer that is not 

14 subject to the jurisdiction of an appropriate 

15 Federal banking agency, the Secretary. 

16 (7) ELIGIBLE ASSET.—The term ‘‘eligible 

17 asset’’ means— 

18 (A) in the case of the residential mortgage 

19 asset class, any first-lien mortgage loan that— 

20 (i) is secured by 1- to 4-family resi21 dential property; and 

22 (ii) is not made, insured, or guaran23 teed by the Government; 


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1 (B) in the case of the commercial mort2 gage asset class, any commercial mortgage loan 

3 (including any multifamily mortgage loan); 

4 (C) in the case of the public sector asset 

5 class— 

6 (i) any security issued by a State, mu7 nicipality, or other governmental authority; 

8 (ii) any loan made to a State, munici9 pality, or other governmental authority; 

10 and 

11 (iii) any loan, security, or other obli12 gation that is insured or guaranteed, in 

13 full or substantially in full, by the full faith 

14 and credit of the United States Govern15 ment (whether or not such loan, security, 

16 or other obligation is also part of another 

17 eligible asset class); 

18 (D) in the case of the auto asset class, any 

19 auto loan or lease; 

20 (E) in the case of the student loan asset 

21 class, any student loan (whether guaranteed or 

22 nonguaranteed); 

23 (F) in the case of the credit or charge card 

24 asset class, any extension of credit to a person 

25 under an open-end credit plan; 


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1 (G) in the case of the small business asset 

2 class, any loan that is made or guaranteed 

3 under a program of the Small Business Admin4 istration; and 

5 (H) in the case of any other eligible asset 

6 class, any asset designated by the Secretary, by 

7 rule and in consultation with the covered bond 

8 regulators, as an eligible asset for purposes of 

9 such class. 

10 (8) ELIGIBLE ASSET CLASS.—The term ‘‘eligi11 ble asset class’’ means— 

12 (A) a residential mortgage asset class; 

13 (B) a commercial mortgage asset class; 

14 (C) a public sector asset class; 

15 (D) an auto asset class; 

16 (E) a student loan asset class; 

17 (F) a credit or charge card asset class; 

18 (G) a small business asset class; and 

19 (H) any other eligible asset class des20 ignated by the Secretary, by rule and in con21 sultation with the covered bond regulators. 

22 (9) ELIGIBLE ISSUER.—The term ‘‘eligible 

23 issuer’’ means— 

24 (A) any insured depository institution and 

25 any subsidiary of such institution; 


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1 (B) any bank holding company, any sav2 ings and loan holding company, and any sub3 sidiary of any of such companies; 

4 (C) any nonbank financial company (as de5 fined in section 102(a)(4) of the Dodd-Frank 

6 Wall Street Reform and Consumer Protection 

7 Act (12 U.S.C. 5311(a)(4))) that is supervised 

8 by the Board of Governors of the Federal Re9 serve System under section 113 of the Dodd10 Frank Wall Street Reform and Consumer Pro11 tection Act (12 U.S.C. 5323), including any in12 termediate holding company supervised as a 

13 nonbank financial company, and any subsidiary 

14 of such a nonbank financial company; and 

15 (D) any issuer that is sponsored by 1 or 

16 more eligible issuers for the sole purpose of 

17 issuing covered bonds on a pooled basis. 

18 (10) OVERSIGHT PROGRAM.—The term ‘‘over19 sight program’’ means the covered bond regulatory 

20 oversight program established under section 353(a). 

21 (11) SECRETARY.—The term ‘‘Secretary’’ 

22 means the Secretary of the Department of the 

23 Treasury. 

24 (12) SUBSTITUTE ASSET.—The term ‘‘sub25 stitute asset’’ means— 


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1 (A) cash; 

2 (B) any direct obligation of the United 

3 States Government, and any security or other 

4 obligation whose full principal and interest are 

5 insured or guaranteed by the full faith and 

6 credit of the United States Government; 

7 (C) any direct obligation of a United 

8 States Government corporation or Government9 sponsored enterprise of the highest credit qual10 ity, and any other security or other obligation 

11 of the highest credit quality whose full principal 

12 and interest are insured or guaranteed by such 

13 corporation or enterprise, except that the out14 standing principal amount of these obligations 

15 in any cover pool may not exceed an amount 

16 equal to 20 percent of the outstanding principal 

17 amount of all assets in the cover pool without 

18 the approval of the applicable covered bond reg19 ulator; 

20 (D) any overnight investment in Federal 

21 funds; 

22 (E) any other substitute asset designated 

23 by the Secretary, by rule and in consultation 

24 with the covered bond regulators; and 


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1 (F) any deposit account or securities ac2 count into which only an asset described in sub3 paragraph (A), (B), (C), (D), or (E) may be de4 posited or credited. 

5 SEC. 353. REGULATORY OVERSIGHT OF COVERED BOND 

6 PROGRAMS ESTABLISHED. 

7 (a) ESTABLISHMENT.— 

8 (1) IN GENERAL.—Not later than 180 days 

9 after the date of the enactment of this Act, the Sec10 retary shall, by rule and in consultation with the 

11 covered bond regulators, establish a covered bond 

12 regulatory oversight program that provides for— 

13 (A) covered bond programs to be evaluated 

14 according to reasonable and objective standards 

15 in order to be approved under paragraph (2), 

16 including any additional eligibility standards for 

17 eligible assets and any other criteria determined 

18 appropriate by the Secretary to further the pur19 poses of this subtitle; 

20 (B) covered bond programs to be main21 tained in a manner that is consistent with this 

22 subtitle and safe and sound asset-liability man23 agement and other financial practices; and 

24 (C) any estate created under section 354 

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1 sistent with maximizing the value and the pro2 ceeds of the related cover pool in a resolution 

3 under this subtitle. 

4 (2) APPROVAL OF EACH COVERED BOND PRO5 GRAM.— 

6 (A) IN GENERAL.—A covered bond shall be 

7 subject to this subtitle only if the covered bond 

8 is issued by an eligible issuer under a covered 

9 bond program that is approved by the applica10 ble covered bond regulator. 

11 (B) APPROVAL PROCESS.—Each covered 

12 bond regulator shall apply the standards estab13 lished by the Secretary under the oversight pro14 gram to evaluate a covered bond program that 

15 has been submitted by an eligible issuer for ap16 proval. Each covered bond regulator also shall 

17 take into account relevant supervisory factors, 

18 including safety and soundness considerations, 

19 in evaluating a covered bond program that has 

20 been submitted for approval. Each covered bond 

21 regulator, promptly after approving a covered 

22 bond program, shall provide the Secretary with 

23 the name of the covered bond program, the 

24 name of the eligible issuer, and all other infor25 mation reasonably requested by the Secretary in 


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1 order to update the registry under paragraph 

2 (3)(A). Each eligible issuer, promptly after 

3 issuing a covered bond under an approved cov4 ered bond program, shall provide the Secretary 

5 with all information reasonably requested by 

6 the Secretary in order to update the registry 

7 under paragraph (3)(B). 

8 (C) EXISTING COVERED BOND PRO9 GRAMS.—A covered bond regulator may approve 

10 a covered bond program that is in existence on 

11 the date of the enactment of this Act. Upon 

12 such approval, each covered bond under the 

13 covered bond program shall be subject to this 

14 subtitle, regardless of when the covered bond 

15 was issued. 

16 (D) MULTIPLE COVERED BOND PROGRAMS

17 PERMITTED.—An eligible issuer may have more 

18 than 1 covered bond program. 

19 (E) CEASE AND DESIST AUTHORITY.—The 

20 applicable covered bond regulator may direct an 

21 eligible issuer to cease issuing covered bonds 

22 under an approved covered bond program if the 

23 covered bond program is not maintained in a 

24 manner that is consistent with this subtitle and 

25 the oversight program and if, after notice that 


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1 is reasonable under the circumstances, the 

2 issuer does not remedy all deficiencies identified 

3 by the applicable covered bond regulator. 

4 (F) CAP ON THE AMOUNT OF OUT5 STANDING COVERED BONDS.— 

6 (i) IN GENERAL.—With respect to 

7 each eligible issuer that submits a covered 

8 bond program for approval, the applicable 

9 covered bond regulator shall set, consistent 

10 with safety and soundness considerations 

11 and the financial condition of the eligible 

12 issuer, the maximum amount, as a percent13 age of the eligible issuer’s total assets, of 

14 outstanding covered bonds that the eligible 

15 issuer may issue. 

16 (ii) REVIEW OF CAP.—The applicable 

17 covered bond regulator may, not more fre18 quently than quarterly, review the percent19 age set under clause (i) and, if safety and 

20 soundness considerations or the financial 

21 condition of the eligible issuer has 

22 changed, increase or decrease such per23 centage. Any decrease made pursuant to 

24 this clause shall have no effect on existing 

25 covered bonds issued by the eligible issuer. 


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1 (3) REGISTRY.—Under the oversight program, 

2 the Secretary shall maintain a registry that is pub3 lished on a Web site available to the public and that, 

4 for each covered bond program approved by a cov5 ered bond regulator, contains— 

6 (A) the name of the covered bond program, 

7 the name of the eligible issuer, and all other in8 formation that the Secretary considers nec9 essary to adequately identify the covered bond 

10 program and the eligible issuer; and 

11 (B) all information that the Secretary con12 siders necessary to adequately identify all out13 standing covered bonds issued under the cov14 ered bond program (including the reports de15 scribed in paragraphs (3) and (4) of subsection 

16 (b)). 

17 (4) FEES.—Each covered bond regulator may 

18 levy, on the issuers of covered bonds under the pri19 mary supervision of such covered bond regulator, 

20 reasonably apportioned fees that such covered bond 

21 regulator considers necessary, in the aggregate, to 

22 defray the costs of such covered bond regulator car23 rying out the provisions of this subtitle. Such funds 

24 shall not be construed to be Government funds or 

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1 portionment for purposes of chapter 15 of title 31, 

2 United States Code, or any other provision of law. 

3 (b) MINIMUM OVER-COLLATERALIZATION REQUIRE4 MENTS.— 

5 (1) REQUIREMENTS ESTABLISHED.—The Sec6 retary, by rule and in consultation with the covered 

7 bond regulators, shall establish minimum over8 collateralization requirements for covered bonds 

9 backed by each of the eligible asset classes. The min10 imum over-collateralization requirements shall be de11 signed to ensure that sufficient eligible assets and 

12 substitute assets are maintained in the cover pool to 

13 satisfy all principal and interest payments on the 

14 covered bonds when due through maturity and shall 

15 be based on the credit, collection, and interest rate 

16 risks (excluding the liquidity risks) associated with 

17 the eligible asset class. 

18 (2) ASSET COVERAGE TEST.—The eligible as19 sets and the substitute assets in any cover pool shall 

20 be required, in the aggregate, to meet at all times 

21 the applicable minimum over-collateralization re22 quirements. 

23 (3) MONTHLY REPORTING.—On a monthly 

24 basis, each issuer of covered bonds shall submit a re25 port on whether the cover pool that secures the covVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00200 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 ered bonds meets the applicable minimum over2 collateralization requirements to— 

3 (A) the Secretary; 

4 (B) the applicable covered bond regulator; 

5 (C) the applicable indenture trustee; 

6 (D) the applicable covered bondholders; 

7 and 

8 (E) the applicable independent asset mon9 itor. 

10 (4) INDEPENDENT ASSET MONITOR.— 

11 (A) APPOINTMENT.—Each issuer of cov12 ered bonds shall appoint the indenture trustee 

13 for the covered bonds, or another unaffiliated 

14 entity, as an independent asset monitor for the 

15 applicable cover pool. 

16 (B) DUTIES.—An independent asset mon17 itor appointed under subparagraph (A) shall, on 

18 an annual or other more frequent periodic basis 

19 determined by the Secretary under the over20 sight program— 

21 (i) verify whether the cover pool meets 

22 the applicable minimum over-collateraliza23 tion requirements; and 

24 (ii) report to the Secretary, the appli25 cable covered bond regulator, the applicaVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00201 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 ble indenture trustee, and the applicable 

2 covered bondholders on whether the cover 

3 pool meets the applicable minimum over4 collateralization requirements. 

5 (5) NO LOSS OF STATUS.—Covered bonds shall 

6 remain subject to this subtitle regardless of whether 

7 the applicable cover pool ceases to meet the applica8 ble minimum over-collateralization requirements. 

9 (6) FAILURE TO MEET REQUIREMENTS.— 

10 (A) IN GENERAL.—If a cover pool fails to 

11 meet the applicable minimum over-collateraliza12 tion requirements, and if the failure is not 

13 cured within the time specified in the related 

14 transaction documents, the failure shall be an 

15 uncured default for purposes of section 354(a). 

16 (B) NOTICE REQUIRED.—An issuer of cov17 ered bonds shall promptly give the Secretary 

18 and the applicable covered bond regulator writ19 ten notice if the cover pool securing the covered 

20 bonds fails to meet the applicable minimum 

21 over-collateralization requirements, if the failure 

22 is cured within the time specified in the related 

23 transaction documents, or if the failure is not 

24 so cured. 

25 (c) REQUIREMENTS FOR ELIGIBLE ASSETS.— 


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1 (1) REQUIREMENTS.— 

2 (A) LOANS.—A loan shall not qualify as an 

3 eligible asset for so long as the loan is delin4 quent for more than 60 consecutive days. 

5 (B) SECURITIES.—A security shall not 

6 qualify as an eligible asset for so long as the se7 curity does not meet any credit-quality require8 ment under this subtitle. 

9 (C) ORIGINATION.—An asset shall not 

10 qualify as an eligible asset if the asset was not 

11 originated in compliance with any rule or super12 visory guidance of a Federal agency applicable 

13 to the asset at the time of origination. 

14 (D) NO DOUBLE PLEDGE.—An asset shall 

15 not qualify as an eligible asset for so long as 

16 the asset is subject to a prior perfected security 

17 interest or other prior perfected lien that has 

18 been granted in an unrelated transaction. Noth19 ing in this subtitle shall affect such a prior per20 fected security interest or other prior perfected 

21 lien, and the rights of such lien holders. 

22 (2) FAILURE TO MEET REQUIREMENTS.—Sub23 ject to paragraph (1)(D), if an asset in a cover pool 

24 does not satisfy any applicable requirement de25 scribed in paragraph (1) or any other applicable 


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1 standard or criterion described in this subtitle, the 

2 oversight program, or the related transaction docu3 ments, the asset shall not qualify as an eligible asset 

4 for purposes of the asset coverage test described in 

5 subsection (b)(2). A disqualified asset shall remain 

6 in the cover pool unless and until removed by the 

7 issuer in compliance with the provisions of this sub8 title, the oversight program, and the related trans9 action documents. No disqualified asset may be re10 moved from the cover pool after an estate has been 

11 created for the related covered bond program under 

12 section 354(b)(1) or 354(c)(2), except in connection 

13 with the management of the cover pool under section 

14 354(d)(1)(E). 

15 (d) OTHER REQUIREMENTS.— 

16 (1) BOOKS AND RECORDS OF ISSUER.—Each 

17 issuer of covered bonds shall clearly mark its books 

18 and records to identify the assets that comprise the 

19 cover pool securing the covered bonds. 

20 (2) SCHEDULE OF ELIGIBLE ASSETS AND SUB21 STITUTE ASSETS.—Each issuer of covered bonds 

22 shall deliver to the applicable indenture trustee and 

23 the applicable independent asset monitor, on at least 

24 a monthly basis, a schedule that identifies all eligible 


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1 assets and substitute assets in the cover pool secur2 ing the covered bonds. 

3 (3) SINGLE ELIGIBLE ASSET CLASS.—No cover 

4 pool described in section 352(3)(A) may include eli5 gible assets from more than 1 eligible asset class. No 

6 cover poll described in section 2(3)(B) may include 

7 covered bonds backed by more than 1 eligible asset 

8 class. 

9 SEC. 354. RESOLUTION UPON DEFAULT OR INSOLVENCY. 

10 (a) UNCURED DEFAULT DEFINED.—For purposes of 

11 this section, the term ‘‘uncured default’’ means a default 

12 on a covered bond that has not been cured within the time, 

13 if any, specified in the related transaction documents. 

14 (b) DEFAULT ON COVERED BONDS PRIOR TO CON15 SERVATORSHIP, RECEIVERSHIP, LIQUIDATION, OR BANK16 RUPTCY.— 

17 (1) CREATION OF SEPARATE ESTATE.—If an 

18 uncured default occurs on a covered bond before the 

19 issuer of the covered bond enters conservatorship, 

20 receivership, liquidation, or bankruptcy, an estate 

21 shall be immediately and automatically created by 

22 operation of law and shall exist and be administered 

23 separate and apart from the issuer or any subse24 quent conservatorship, receivership, liquidating agen25 cy, or estate in bankruptcy for the issuer or any 


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1 other assets of the issuer. A separate estate shall be 

2 created for each affected covered bond program. 

3 (2) ASSETS AND LIABILITIES OF ESTATE.—Any 

4 estate created under paragraph (1) shall be com5 prised of the cover pool (including over-collateraliza6 tion in the cover pool) that secures the covered bond. 

7 The cover pool shall be immediately and automati8 cally released to and held by the estate free and 

9 clear of any right, title, interest, or claim of the 

10 issuer or any conservator, receiver, liquidating agent, 

11 or trustee in bankruptcy for the issuer or any other 

12 assets of the issuer. The estate shall be fully liable 

13 on the covered bond and all other covered bonds and 

14 related obligations of the issuer (including obliga15 tions under related derivative transactions) that are 

16 secured by a perfected security interest in or other 

17 perfected lien on the cover pool when the estate is 

18 created. The estate shall not be liable on any obliga19 tion of the issuer that is not secured by a perfected 

20 security interest in or other perfected lien on the 

21 cover pool when the estate is created. No conser22 vator, receiver, liquidating agent, or trustee in bank23 ruptcy for the issuer may charge or assess the estate 

24 for any claim of the conservator, receiver, liquidating 

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1 ship, receivership, liquidating agency, or estate in 

2 bankruptcy and may not obtain or perfect a security 

3 interest in or other lien on the cover pool to secure 

4 such a claim. 

5 (3) RETENTION OF CLAIMS.—Any holder of a 

6 covered bond or related obligation for which an es7 tate has become liable under paragraph (2) shall re8 tain a claim against the issuer for any deficiency 

9 with respect to the covered bond or related obliga10 tion. If the issuer enters conservatorship, receiver11 ship, liquidation, or bankruptcy, any contingent 

12 claim for such a deficiency shall be allowed as a 

13 provable claim in the conservatorship, receivership, 

14 liquidating agency, or bankruptcy case. The contin15 gent claim shall be estimated by the conservator, re16 ceiver, liquidating agent, or bankruptcy court for 

17 purposes of allowing the claim as a provable claim 

18 if awaiting the fixing of the contingent claim would 

19 unduly delay the resolution of the conservatorship, 

20 receivership, liquidating agency, or bankruptcy case. 

21 (4) RESIDUAL INTEREST.— 

22 (A) ISSUANCE OF RESIDUAL INTEREST.— 

23 Upon the creation of an estate under paragraph 

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1 mediately and automatically issued by operation 

2 of law to the issuer. 

3 (B) NATURE OF RESIDUAL INTEREST.— 

4 The residual interest under subparagraph (A) 

5 shall— 

6 (i) be an exempted security as de7 scribed in section 355; 

8 (ii) represent the right to any surplus 

9 from the cover pool after the covered bonds 

10 and all other liabilities of the estate have 

11 been fully and irrevocably paid; and 

12 (iii) be evidenced by a certificate exe13 cuted by the trustee of the estate. 

14 (5) OBLIGATIONS OF ISSUER.— 

15 (A) IN GENERAL.—After the creation of an 

16 estate under paragraph (1), the issuer shall— 

17 (i) transfer to or at the direction of 

18 the trustee for the estate all property of 

19 the estate that is in the possession or 

20 under the control of the issuer, including 

21 all tangible or electronic books, records, 

22 files, and other documents or materials re23 lating to the assets and liabilities of the es24 tate; and 


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1 (ii) at the election of the trustee or a 

2 servicer or administrator for the estate, 

3 continue servicing the applicable cover pool 

4 for 120 days after the creation of the es5 tate in return for a fair-market-value fee, 

6 as determined by the trustee in consulta7 tion with the applicable covered bond regu8 lator, that shall be payable from the estate 

9 as an administrative expense. 

10 (B) OBLIGATIONS ABSOLUTE.—Neither 

11 the issuer, whether acting as debtor in posses12 sion or in any other capacity, nor any conser13 vator, receiver, liquidating agent, or trustee in 

14 bankruptcy for the issuer or any other assets of 

15 the issuer may disaffirm, repudiate, or reject 

16 the obligation to turn over property or to con17 tinue servicing the cover pool as provided in 

18 subparagraph (A). 

19 (c) DEFAULT ON COVERED BONDS UPON CON20 SERVATORSHIP, RECEIVERSHIP, LIQUIDATION, OR BANK21 RUPTCY.— 

22 (1) CORPORATION CONSERVATORSHIP OR RE23 CEIVERSHIP.— 

24 (A) IN GENERAL.—If the Corporation is 

25 appointed as conservator or receiver for an 


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1 issuer of covered bonds before an uncured de2 fault results in the creation of an estate under 

3 subsection (b), the Corporation as conservator 

4 or receiver shall have an exclusive right, during 

5 the 1-year period beginning on the date of the 

6 appointment, to transfer any cover pool owned 

7 by the issuer in its entirety, together with all 

8 covered bonds and related obligations that are 

9 secured by a perfected security interest in or 

10 other perfected lien on the cover pool, to an11 other eligible issuer that meets all conditions 

12 and requirements specified in the related trans13 action documents. The Corporation as conser14 vator or receiver may not remove any asset 

15 from the cover pool, except to the extent other16 wise agreed by a transferee that has assumed 

17 the covered bond program pursuant to subpara18 graph (C). 

19 (B) OBLIGATIONS DURING 1-YEAR PE20 RIOD.—During the 1-year period described in 

21 subparagraph (A), the Corporation as conser22 vator or receiver shall fully and timely satisfy 

23 all monetary and nonmonetary obligations of 

24 the issuer under all covered bonds and the re25 lated transaction documents and shall fully and 


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1 timely cure all defaults by the issuer (other 

2 than its conservatorship or receivership) under 

3 the applicable covered bond program, in each 

4 case, until the earlier of— 

5 (i) the transfer of the applicable cov6 ered bond program to another eligible 

7 issuer as provided in subparagraph (A); or 

8 (ii) the delivery to the Secretary, the 

9 applicable covered bond regulator, the ap10 plicable indenture trustee, and the applica11 ble covered bondholders of a written notice 

12 from the Corporation as conservator or re13 ceiver electing to cease further perform14 ance under the applicable covered bond 

15 program. 

16 (C) ASSUMPTION BY TRANSFEREE.—If the 

17 Corporation as conservator or receiver transfers 

18 a covered bond program to another eligible 

19 issuer within the 1-year period as provided in 

20 subparagraph (A), the transferee shall take 

21 ownership of the applicable cover pool and shall 

22 become fully liable on all covered bonds and re23 lated obligations of the issuer that are secured 

24 by a perfected security interest in or other per25 fected lien on the cover pool. 


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1 (2) OTHER CIRCUMSTANCES.—An estate shall 

2 be immediately and automatically created by oper3 ation of law and shall exist and be administered sep4 arate and apart from an issuer of covered bonds and 

5 any conservatorship, receivership, liquidating agency, 

6 or estate in bankruptcy for the issuer or any other 

7 assets of the issuer, if— 

8 (A) a conservator, receiver, liquidating 

9 agent, or trustee in bankruptcy, other than the 

10 Corporation, is appointed for the issuer before 

11 an uncured default results in the creation of an 

12 estate under subsection (b); or 

13 (B) in the case of the appointment of the 

14 Corporation as conservator or receiver as de15 scribed in paragraph (1)(A), the Corporation as 

16 conservator or receiver— 

17 (i) does not complete the transfer of 

18 the applicable covered bond program to an19 other eligible issuer within the 1-year pe20 riod as provided in paragraph (1)(A); 

21 (ii) delivers to the Secretary, the ap22 plicable covered bond regulator, the appli23 cable indenture trustee, and the applicable 

24 covered bondholders a written notice electVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00212 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 ing to cease further performance under the 

2 applicable covered bond program; or 

3 (iii) fails to fully and timely satisfy all 

4 monetary and nonmonetary obligations of 

5 the issuer under the covered bonds and the 

6 related transaction documents or to fully 

7 and timely cure all defaults by the issuer 

8 (other than its conservatorship or receiver9 ship) under the applicable covered bond 

10 program. 

11 A separate estate shall be created for each affected 

12 covered bond program. 

13 (3) ASSETS AND LIABILITIES OF ESTATE.—Any 

14 estate created under paragraph (2) shall be com15 prised of the cover pool (including over-collateraliza16 tion in the cover pool) that secures the covered 

17 bonds. The cover pool shall be immediately and 

18 automatically released to and held by the estate free 

19 and clear of any right, title, interest, or claim of the 

20 issuer or any conservator, receiver, liquidating agent, 

21 or trustee in bankruptcy for the issuer or any other 

22 assets of the issuer. The estate shall be fully liable 

23 on the covered bonds and all other covered bonds 

24 and related obligations of the issuer (including obli25 gations under related derivative transactions) that 


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1 are secured by a perfected security interest in or 

2 other perfected lien on the cover pool when the es3 tate is created. The estate shall not be liable on any 

4 obligation of the issuer that is not secured by a per5 fected security interest in or other perfected lien on 

6 the cover pool when the estate is created. No conser7 vator, receiver, liquidating agent, or trustee in bank8 ruptcy for the issuer may charge or assess the estate 

9 for any claim of the conservator, receiver, liquidating 

10 agent, or trustee in bankruptcy or the conservator11 ship, receivership, liquidating agency, or estate in 

12 bankruptcy and may not obtain or perfect a security 

13 interest in or other lien on the cover pool to secure 

14 such a claim. 

15 (4) CONTINGENT CLAIM.—Any contingent claim 

16 against an issuer for a deficiency with respect to a 

17 covered bond or related obligation for which an es18 tate has become liable under paragraph (3) shall be 

19 allowed as a provable claim in the conservatorship, 

20 receivership, liquidating agency, or bankruptcy case 

21 for the issuer. The contingent claim shall be esti22 mated by the conservator, receiver, liquidating 

23 agent, or bankruptcy court for purposes of allowing 

24 the claim as a provable claim if awaiting the fixing 

25 of the contingent claim would unduly delay the resoVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00214 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 lution of the conservatorship, receivership, liqui2 dating agency, or bankruptcy case. 

3 (5) RESIDUAL INTEREST.— 

4 (A) ISSUANCE OF RESIDUAL INTEREST.— 

5 Upon the creation of an estate under paragraph 

6 (2), and regardless of whether any contingent 

7 claim described in paragraph (4) becomes fixed 

8 or is estimated, a residual interest in the estate 

9 shall be immediately and automatically issued 

10 by operation of law to the conservator, receiver, 

11 liquidating agent, or trustee in bankruptcy for 

12 the issuer. 

13 (B) NATURE OF RESIDUAL INTEREST.— 

14 The residual interest under subparagraph (A) 

15 shall— 

16 (i) be an exempted security as de17 scribed in section 355; 

18 (ii) represent the right to any surplus 

19 from the cover pool after the covered bonds 

20 and all other liabilities of the estate have 

21 been fully and irrevocably paid; and 

22 (iii) be evidenced by a certificate exe23 cuted by the trustee of the estate. 

24 (6) OBLIGATIONS OF ISSUER.— 


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1 (A) IN GENERAL.—After the creation of an 

2 estate under paragraph (2), the issuer and its 

3 conservator, receiver, liquidating agent, or 

4 trustee in bankruptcy shall— 

5 (i) transfer to or at the direction of 

6 the trustee for the estate all property of 

7 the estate that is in the possession or 

8 under the control of the issuer or its con9 servator, receiver, liquidating agent, or 

10 trustee in bankruptcy, including all tan11 gible or electronic books, records, files, and 

12 other documents or materials relating to 

13 the assets and liabilities of the estate; and 

14 (ii) at the election of the trustee or a 

15 servicer or administrator for the estate, 

16 continue servicing the applicable cover pool 

17 for 120 days after the creation of the es18 tate in return for a fair-market-value fee, 

19 as determined by the trustee in consulta20 tion with the applicable covered bond regu21 lator, that shall be payable from the estate 

22 as an administrative expense. 

23 (B) OBLIGATIONS ABSOLUTE.—Neither 

24 the issuer, whether acting as debtor in posses25 sion or in any other capacity, nor any conserVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00216 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 vator, receiver, liquidating agent, or trustee in 

2 bankruptcy for the issuer or any other assets of 

3 the issuer may disaffirm, repudiate, or reject 

4 the obligation to turn over property or to con5 tinue servicing the cover pool as provided in 

6 subparagraph (A). 

7 (d) ADMINISTRATION AND RESOLUTION OF ES8 TATES.— 

9 (1) TRUSTEE, SERVICER, AND ADMINIS10 TRATOR.— 

11 (A) IN GENERAL.—Upon the creation of 

12 any estate under subsection (b)(1) or (c)(2), the 

13 applicable covered bond regulator shall— 

14 (i) appoint the trustee for the estate; 

15 (ii) appoint 1 or more servicers or ad16 ministrators for the cover pool held by the 

17 estate; and 

18 (iii) give the Secretary, the applicable 

19 indenture trustee, the applicable covered 

20 bondholders, and the owner of the residual 

21 interest written notice of the creation of 

22 the estate. 

23 (B) TERMS AND CONDITIONS OF APPOINT24 MENT.—All terms and conditions of any ap25 pointment under paragraph (1), including the 


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1 terms and conditions relating to compensation, 

2 shall conform to the requirements of this sub3 title and the oversight program and otherwise 

4 shall be determined by the applicable covered 

5 bond regulator. 

6 (C) QUALIFICATION.—The applicable cov7 ered bond regulator may require the trustee or 

8 any servicer or administrator for an estate to 

9 post in favor of the United States, for the ben10 efit of the estate, a bond that is conditioned on 

11 the faithful performance of the duties of the 

12 trustee or the servicer or administrator. The 

13 covered bond regulator shall determine the 

14 amount of any bond required under this sub15 paragraph and the sufficiency of the surety on 

16 the bond. A proceeding on a bond required 

17 under this subparagraph may not be com18 menced after two years after the date on which 

19 the trustee or the servicer or administrator was 

20 discharged. 

21 (D) POWERS AND DUTIES OF TRUSTEE.— 

22 The trustee for an estate is the representative 

23 of the estate and, subject to the provisions of 

24 this subtitle, has capacity to sue and be sued. 

25 The trustee shall— 


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1 (i) administer the estate in compliance 

2 with this subtitle, the oversight program, 

3 and the related transaction documents; 

4 (ii) be accountable for all property of 

5 the estate that is received by the trustee; 

6 (iii) make a final report and file a 

7 final account of the administration of the 

8 estate with the applicable covered bond 

9 regulator; and 

10 (iv) after the estate has been fully ad11 ministered, close the estate. 

12 (E) POWERS AND DUTIES OF SERVICER OR

13 ADMINISTRATOR.—Any servicer or adminis14 trator for an estate— 

15 (i) shall— 

16 (I) collect, realize on (by liquida17 tion or other means), and otherwise 

18 manage the cover pool held by the es19 tate for the purpose of winding down 

20 the related cover bond program in 

21 compliance with this subtitle, the 

22 oversight program, and the related 

23 transaction documents and in a man24 ner consistent with maximizing the 


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1 value and the proceeds of the cover 

2 pool; 

3 (II) deposit or invest all proceeds 

4 and funds received in compliance with 

5 this subtitle, the oversight program, 

6 and the related transaction documents 

7 and in a manner consistent with maxi8 mizing the net return to the estate, 

9 taking into account the safety of the 

10 deposit or investment; and 

11 (III) apply, or direct the trustee 

12 for the estate to apply, all proceeds 

13 and funds received and the net return 

14 on any deposit or investment to make 

15 distributions in compliance with para16 graphs (3) and (4); 

17 (ii) may borrow funds or otherwise ob18 tain credit, for the benefit of the estate, in 

19 compliance with paragraph (2) on a se20 cured or unsecured basis and on a priority, 

21 pari passu, or subordinated basis; 

22 (iii) shall, at the times and in the 

23 manner required by the applicable covered 

24 bond regulator, submit to the covered bond 

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1 denture trustee, the applicable covered 

2 bondholders, the owner of the residual in3 terest, and any other person designated by 

4 the covered bond regulator, reports that 

5 describe the activities of the servicer or ad6 ministrator on behalf of the estate, the 

7 performance of the cover pool held by the 

8 estate, and distributions made by the es9 tate; and 

10 (iv) shall assist the trustee in pre11 paring the final report and the final ac12 count of the administration of the estate. 

13 (F) SUPERVISION OF TRUSTEE, SERVICER, 

14 AND ADMINISTRATOR.—The applicable covered 

15 bond regulator shall supervise the trustee and 

16 any servicer or administrator for an estate. The 

17 covered bond regulator shall require that all re18 ports submitted under subparagraph (E)(iii) do 

19 not contain any untrue statement of a material 

20 fact and do not omit to state a material fact 

21 necessary in order to make the statements 

22 made, in light of the circumstances under which 

23 they are made, not misleading. 

24 (G) REMOVAL AND REPLACEMENT OF

25 TRUSTEE, SERVICER, AND ADMINISTRATOR.—If 


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1 the covered bond regulator determines that it is 

2 in the best interests of an estate, the covered 

3 bond regulator may remove or replace the trust4 ee or any servicer or administrator for the es5 tate. The removal of the trustee or any servicer 

6 or administrator does not abate any pending ac7 tion or proceeding involving the estate, and any 

8 successor or other trustee, servicer, or adminis9 trator shall be substituted as a party in the ac10 tion or proceeding. 

11 (H) PROFESSIONALS.—The trustee or any 

12 servicer or administrator for an estate may em13 ploy 1 or more attorneys, accountants, apprais14 ers, auctioneers, or other professional persons 

15 to represent or assist the trustee or the servicer 

16 or administrator in carrying out its duties. The 

17 employment of any professional person and all 

18 terms and conditions of employment, including 

19 the terms and conditions relating to compensa20 tion, shall conform to the requirements of this 

21 subtitle and the oversight program and other22 wise shall be subject to the approval of the ap23 plicable covered bond regulator. 

24 (I) APPROVED FEES AND EXPENSES.—Un25 less otherwise provided in the applicable terms 


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1 and conditions of appointment or employment, 

2 all approved fees and expenses of the trustee, 

3 any servicer or administrator, or any profes4 sional person employed by the trustee or any 

5 servicer or administrator shall be payable from 

6 the estate as administrative expenses. 

7 (J) ACTIONS BY OR ON BEHALF OF ES8 TATE.—The trustee or any servicer or adminis9 trator for an estate may commence or continue 

10 judicial, administrative, or other actions, in the 

11 name of the estate or in its own name on behalf 

12 of the estate, for the purpose of collecting, real13 izing on, or otherwise managing the cover pool 

14 held by the estate or exercising its other powers 

15 or duties on behalf of the estate. 

16 (K) ACTIONS AGAINST ESTATE.—No court 

17 may issue an attachment or execution on any 

18 property of an estate. Except at the request of 

19 the applicable covered bond regulator or as oth20 erwise provided in this subparagraph or sub21 paragraph (J), no court may take any action to 

22 restrain or affect the resolution of an estate 

23 under this subtitle. No person (including the 

24 applicable indenture trustee and any applicable 

25 covered bondholder) may commence or continue 


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1 any judicial, administrative, or other action 

2 against the estate, the trustee, or any servicer 

3 or administrator or take any other act to affect 

4 the estate, the trustee, or any servicer or ad5 ministrator that is not expressly permitted by 

6 this subtitle, the oversight program, and the re7 lated transaction documents, except for a judi8 cial or administrative action to compel the re9 lease of funds that— 

10 (i) are available to the estate; 

11 (ii) are permitted to be distributed 

12 under this subtitle and the oversight pro13 gram; and 

14 (iii) are permitted and required to be 

15 distributed under the related transaction 

16 documents and any contracts executed by 

17 or on behalf of the estate. 

18 (L) SOVEREIGN IMMUNITY.—Except in 

19 connection with a guarantee provided under 

20 paragraph (4) or any other contract executed 

21 by the applicable covered bond regulator under 

22 this section 354, the Secretary and the covered 

23 bond regulator shall be entitled to sovereign im24 munity in carrying out the provisions of this 

25 subtitle. 


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1 (2) BORROWINGS AND CREDIT.— 

2 (A) IN GENERAL.—Any servicer or admin3 istrator for an estate created under subsection 

4 (b)(1) or (c)(2) may borrow funds or otherwise 

5 obtain credit, on behalf of and for the benefit 

6 of the estate, from any person in compliance 

7 with this paragraph (2) solely for the purpose 

8 of providing liquidity in the case of timing 

9 mismatches among the assets and the liabilities 

10 of the estate. Except with respect to an under11 writer, section 5 of the Securities Act of 1933, 

12 the Trust Indenture Act of 1939, and any State 

13 or local law requiring registration for an offer 

14 or sale of a security or registration or licensing 

15 of an issuer of, underwriter of, or broker or 

16 dealer in a security does not apply to the offer 

17 or sale under this paragraph (2) of a security 

18 that is not an equity security. 

19 (B) CONDITIONS.—A servicer or adminis20 trator may borrow funds or otherwise obtain 

21 credit under subparagraph (A)— 

22 (i) on terms affording the lender only 

23 claims or liens that are fully subordinated 

24 to the claims and interests of the applica25 ble indenture trustee and the applicable 


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1 covered bondholders and all other claims 

2 against and interests in the estate, except 

3 for the residual interest, if the servicer or 

4 administrator certifies to the applicable 

5 covered bond regulator that, in the busi6 ness judgment of the servicer or adminis7 trator, the borrowing or credit is in the 

8 best interests of the estate and is expected 

9 to maximize the value and the proceeds of 

10 the cover pool held by the estate; or 

11 (ii) on terms affording the lender 

12 claims or liens that have priority over or 

13 are pari passu with the claims or interests 

14 of the applicable indenture trustee or the 

15 applicable covered bondholders or other 

16 claims against or interests in the estate, 

17 if— 

18 (I) the servicer or administrator 

19 certifies to the applicable covered 

20 bond regulator that, in the business 

21 judgment of the servicer or adminis22 trator, the borrowing or credit is in 

23 the best interests of the estate and is 

24 expected to maximize the value and 


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1 the proceeds of the cover pool held by 

2 the estate; and 

3 (II) the applicable covered bond 

4 regulator authorizes the borrowing or 

5 credit. 

6 (C) LIMITED LIABILITY.—A servicer or ad7 ministrator shall not be liable for any error in 

8 business judgment when borrowing funds or 

9 otherwise obtaining credit under this paragraph 

10 (2) unless the servicer or administrator acted in 

11 bad faith or in willful disregard of its duties. 

12 (D) LIMITS ON BORROWINGS AND CRED13 IT.—Funds may not be borrowed or credit oth14 erwise obtained under subparagraph (A)— 

15 (i) for the purpose of investing in ad16 ditional portfolios of eligible assets through 

17 the issuance of new covered bonds; or 

18 (ii) otherwise for a purpose other than 

19 winding down the related covered bond 

20 program in compliance with this Act, the 

21 oversight program, and the related trans22 action documents. 

23 (E) STUDY ON BORROWINGS AND CRED24 IT.—The Comptroller General of the United 

25 States shall conduct a study on whether the 


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1 Federal reserve banks should be authorized to 

2 lend funds or otherwise extend credit to an es3 tate under this paragraph (2) and, if so, what 

4 conditions and limits should be established to 

5 mitigate any risk that the United States Gov6 ernment could absorb credit losses on the cover 

7 pool held by the estate. The Comptroller Gen8 eral shall submit a report to the Committee on 

9 Banking, Housing, and Urban Affairs of the 

10 Senate and the Committee on Financial Serv11 ices of the House of Representatives on the re12 sults of the study not later than 6 months after 

13 the date of enactment of this Act. 

14 (3) DISTRIBUTIONS BY ESTATE.—All payments 

15 or other distributions by an estate shall be made at 

16 the times, in the amounts, and in the manner set 

17 forth in the covered bonds, the related transaction 

18 documents, and any contracts executed by or on be19 half of the estate in compliance with this subtitle 

20 and the oversight program. To the extent that the 

21 relative priority of the liabilities of the estate are not 

22 specified in or otherwise ascertainable from their 

23 terms, distributions shall be made on each distribu24 tion date under the covered bonds, the related transVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00228 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 action documents, or any contracts executed by or 

2 on behalf of the estate— 

3 (A) first, to pay accrued and unpaid super4 priority claims under paragraph (2)(B)(ii); 

5 (B) second, to pay accrued and unpaid ad6 ministrative expense claims under paragraph 

7 (1)(I), paragraph (2)(B)(ii), section 

8 354(b)(5)(A), or section 354(c)(6)(A); 

9 (C) third, to pay— 

10 (i) accrued and unpaid claims under 

11 the covered bonds and the related trans12 action documents according to their terms; 

13 and 

14 (ii) accrued and unpaid pari passu 

15 claims under paragraph (2)(B)(ii); and 

16 (D) fourth, to pay accrued and unpaid 

17 subordinated claims under paragraph (2)(B)(i). 

18 (4) DISTRIBUTIONS ON RESIDUAL INTEREST.— 

19 After all other claims against and interests in an es20 tate have been fully and irrevocably paid or 

21 defeased, the trustee shall or shall cause a servicer 

22 or administrator to distribute the remainder of the 

23 estate to or at the direction of the owner of the re24 sidual interest. No interim distribution on the residVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00229 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 ual interest may be made before that time, unless 

2 the applicable covered bond regulator— 

3 (A) approves the distribution after deter4 mining that all other claims against and inter5 ests in the estate will be fully, timely, and irrev6 ocably paid according to their terms; and 

7 (B) provides an indemnity, for the benefit 

8 of the estate, assuring that all other claims 

9 against and interests in the estate will be fully, 

10 timely, and irrevocably paid according to their 

11 terms. 

12 (5) CLOSING OF ESTATE.—After an estate has 

13 been fully administered, the trustee shall close the 

14 estate and, except as otherwise directed by the appli15 cable covered bond regulator, shall destroy all 

16 records of the estate. 

17 (6) NO LOSS TO TAXPAYERS.—Taxpayers shall 

18 bear no losses from the resolution of an estate under 

19 this subtitle. To the extent that the Secretary and 

20 the Corporation jointly determine that the Deposit 

21 Insurance Fund incurred actual losses that are high22 er because the covered bond program of an insured 

23 depository institution was subject to resolution 

24 under this subtitle rather than as part of the receiv25 ership of the institution under the Federal Deposit 


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1 Insurance Act (12 U.S.C. 1811 et seq.), the Cor2 poration may exercise the powers available under 

3 section 7(b) of the Federal Deposit Insurance Act 

4 (12 U.S.C. 1817(b)) to recover an amount equal to 

5 those losses after consulting with the Secretary. 

6 SEC. 355. SECURITIES LAW PROVISIONS. 

7 (a) EXISTING EXEMPTIONS APPLICABLE TO COV8 ERED BONDS.— 

9 (1) TREATMENT OF CERTAIN BANKS AND

10 OTHER ENTITIES.—Any covered bond issued or 

11 guaranteed by a bank or by an eligible issuer de12 scribed in section 352(9)(D) and sponsored solely by 

13 1 or more banks for the sole purpose of issuing cov14 ered bonds is and shall be treated as a security 

15 issued or guaranteed by a bank under section 

16 3(a)(2) of the Securities Act of 1933 (15 U.S.C. 

17 77c(a)(2)), section 3(c)(3) of the Investment Com18 pany Act of 1940 (15 U.S.C. 80a–3(c)(3)), and sec19 tion 304(a)(4)(A) of the Trust Indenture Act of 

20 1939 (15 U.S.C. 77ddd(a)(4)(A)). No covered bond 

21 issued or guaranteed by a bank or by an eligible 

22 issuer described in section 352(9)(D) and sponsored 

23 solely by 1 or more banks for the sole purpose of 

24 issuing covered bonds shall be treated as an asset25 backed security (as defined in section 3 of the SecuVerDate Mar 15 2010 21:05 Jul 24, 2013 Jkt 029200 PO 00000 Frm 00231 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 rities and Exchange Act of 1934 (15 U.S.C. 78c)). 

2 Each covered bond regulator for 1 or more banks 

3 shall adopt disclosure and reporting regulations for 

4 offers or sales of covered bonds by a bank or an eli5 gible issuer described in this paragraph. Such regu6 lations shall provide for uniform and consistent 

7 standards for such covered bond issuers, to the ex8 tent possible, and shall be consistent with existing 

9 regulations governing offers or sales of nonconvert10 ible debt. 

11 (2) TREATMENT OF CERTAIN ASSOCIATIONS

12 AND COOPERATIVE BANKS.—Any covered bond 

13 issued by an entity described in section 3(a)(5)(A) 

14 of the Securities Act of 1933 (15 U.S.C. 

15 77c(a)(5)(A)) or by an eligible issuer described in 

16 section 352(9)(D) and sponsored solely by 1 or more 

17 such entities for the sole purpose of issuing covered 

18 bonds is and shall be treated as a security issued by 

19 such an entity under section 3(a)(5)(A) of the Secu20 rities Act of 1933 (15 U.S.C. 77c(a)(5)(A)), section 

21 3(c)(3) of the Investment Company Act of 1940 (15 

22 U.S.C. 80a-3(c)(3)), and section 304(a)(4)(A) of the 

23 Trust Indenture Act of 1939 (15 U.S.C. 

24 77ddd(a)(4)(A)). No covered bond issued by an enti25 ty described in section 3(a)(5)(A) of the Securities 


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1 Act of 1933 (15 U.S.C. 77c(a)(5)(A)) or by an eligi2 ble issuer described in section 352(9)(D) and spon3 sored solely by 1 or more such entities for the sole 

4 purpose of issuing covered bonds shall be treated as 

5 an asset-backed security (as defined in section 3 of 

6 the Securities and Exchange Act of 1934 (15 U.S.C. 

7 78c)). Each covered bond regulator for 1 or more 

8 entities described in section 3(a)(5)(A) of the Securi9 ties Act of 1933 (15 U.S.C. 77c(a)(5)(A)) shall 

10 adopt, as part of the securities regulations of the 

11 covered bond regulator, a separate scheme of reg12 istration, disclosure, and reporting obligations and 

13 exemptions for offers or sales of covered bonds that 

14 are described in this paragraph. Such regulations 

15 shall provide for uniform and consistent standards 

16 for such covered bond issuers, to the extent possible, 

17 and shall be consistent with regulations governing 

18 offers or sales of similar securities. 

19 (3) CONSTRUCTION.—No provision of this sub20 title, including paragraph (1) or (2), may be con21 strued or applied in a manner that impairs or limits 

22 any other exemption that is available under applica23 ble securities laws. 


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1 (b) EXEMPTIONS FOR ESTATES.—Any estate that is 

2 or may be created under section 354(b)(1) or 354(c)(2) 

3 shall be exempt from all securities laws but— 

4 (1) shall be subject to the reporting require5 ments established by the applicable covered bond 

6 regulator under section 354(d)(1)(E)(iii); and 

7 (2) shall succeed to any requirement of the 

8 issuer to file such periodic information, documents, 

9 and reports in respect of the covered bonds as speci10 fied in section 13(a) of the Securities and Exchange 

11 Act of 1934 (15 U.S.C. 78m(a)) or rules established 

12 by an appropriate Federal banking agency. 

13 (c) EXEMPTIONS FOR RESIDUAL INTERESTS.—Any 

14 residual interest in an estate that is or may be created 

15 under section 354(b)(1) or 354(c)(2) shall be exempt from 

16 all securities laws. 

17 SEC. 356. MISCELLANEOUS PROVISIONS. 

18 (a) DOMESTIC SECURITIES.—Section 106(a)(1) of 

19 the Secondary Mortgage Market Enhancement Act of 

20 1984 (15 U.S.C. 77r–1(a)(1)) is amended— 

21 (1) in subparagraph (C), by striking ‘‘or’’ at 

22 the end; 

23 (2) in subparagraph (D), by adding ‘‘or’’ at the 

24 end; and 


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1 (3) by inserting after subparagraph (D) the fol2 lowing: 

3 ‘‘(E) covered bonds (as defined in section 352 

4 of the United States Covered Bond Act of 2013),’’. 

5 (b) TAX TREATMENT OF COVERED BOND PRO6 GRAMS.— 

7 (1) TREATMENT OF ESTATES CREATED UNDER

8 COVERED BOND PROGRAMS.—Section 7701 of the 

9 Internal Revenue Code of 1986 is amended by redes10 ignating subsection (p) as subsection (q) and by in11 serting after subsection (o) the following new sub12 section: 

13 ‘‘(p) TREATMENT OF ESTATES CREATED UNDER

14 COVERED BOND PROGRAMS.—For purposes of this title— 

15 ‘‘(1) TREATMENT AS DISREGARDED ENTITY.— 

16 Any estate created with respect to a covered bond 

17 program— 

18 ‘‘(A) shall not be treated as an entity sub19 ject to taxation separate from the owner of the 

20 residual interest with respect to such estate; 

21 and 

22 ‘‘(B) shall be treated as a disregarded enti23 ty that is owned by the owner of such residual 

24 interest. 


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1 ‘‘(2) LIMITATIONS ON TREATMENT AS DIS2 REGARDED ENTITY.— 

3 ‘‘(A) MAXIMUM DURATION.—Paragraph 

4 (1) shall not apply with respect to an estate 

5 after the earlier of— 

6 ‘‘(i) the end of the 30-year period be7 ginning on the date of the creation of such 

8 estate; or 

9 ‘‘(ii) the end of the 180-day period be10 ginning on the date of the final payment 

11 on the last outstanding covered bond that 

12 is secured by the cover pool held by such 

13 estate. 

14 ‘‘(B) RESTRICTIONS ON OWNER OF RESID15 UAL INTEREST.—Paragraph (1) shall apply 

16 with respect to an estate for any period only 

17 if— 

18 ‘‘(i) at no time during such period 

19 does more than one person hold a residual 

20 interest with respect to such estate; 

21 ‘‘(ii) such person is— 

22 ‘‘(I) subject to tax under subtitle 

23 A on the net income of such estate for 

24 the taxable year of such person which 

25 includes such period; or 


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1 ‘‘(II) a conservator, receiver, liq2 uidating agent, or trustee in bank3 ruptcy with respect to the issuer for 

4 such period; and 

5 ‘‘(iii) such person is not a regulated 

6 investment company (as defined in section 

7 851) or real estate investment trust (as de8 fined in section 856) for the taxable year 

9 which includes such period. 

10 ‘‘(3) TREATMENT AS CORPORATION.—With re11 spect to any period for which paragraph (1) does not 

12 apply to an estate created with respect to a covered 

13 bond program, such estate shall be treated as a cor14 poration. 

15 ‘‘(4) COORDINATION WITH RULES FOR TAX16 ABLE MORTGAGE POOLS.—No portion of any estate 

17 created with respect to a covered bond program shall 

18 be treated as a taxable mortgage pool for purposes 

19 of subsection (i) during any period for which para20 graph (1) applies to such estate. 

21 ‘‘(5) DEFINITIONS.—For purposes of this sub22 section, the terms ‘covered bond program’, ‘cover 

23 pool’, ‘estate’, and ‘residual interest’ shall each have 

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1 poses of the United States Covered Bond Act of 

2 2013. 

3 ‘‘(6) CROSS REFERENCES.— 

4 ‘‘(A) For nonrecognition with respect to 

5 certain transfers under covered bond programs, 

6 see section 1001(f). 

7 ‘‘(B) For excise tax on estates created 

8 under covered bond programs by reason of de9 fault, see section 4475.’’. 

10 (2) TREATMENT OF CERTAIN TRANSFERS

11 UNDER COVERED BOND PROGRAMS.—Section 1001 

12 of such Code is amended by adding at the end the 

13 following new subsection: 

14 ‘‘(f) CERTAIN TRANSFERS UNDER COVERED BOND

15 PROGRAMS.— 

16 ‘‘(1) IN GENERAL.—With respect to any cov17 ered bond program, none of the following shall be 

18 treated as a taxable exchange of a covered bond to 

19 a covered bond holder or to a notional principal con20 tract counterparty: 

21 ‘‘(A) The transfer of all of the assets and 

22 liabilities of such program. 

23 ‘‘(B) The creation of an estate with respect 

24 to such program. 


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1 ‘‘(C) The transfer of the residual interest 

2 in such estate. 

3 ‘‘(2) DEFINITIONS.—For purposes of this sub4 section, the terms ‘covered bond program’, ‘estate’, 

5 and ‘residual interest’ shall each have the same re6 spective meanings as when used for purposes of the 

7 United States Covered Bond Act of 2013.’’. 

8 (3) EXCISE TAX ON ESTATES CREATED UNDER

9 COVERED BOND PROGRAMS BY REASON OF DE10 FAULT.— 

11 (A) IN GENERAL.—Chapter 36 of such 

12 Code is amended by inserting after subchapter 

13 B the following new subchapter: 

14 ‘‘Subchapter C—Tax on Certain Estates 

15 Created Under Covered Bond Programs 

‘‘Sec. 4475. Tax on estates created under covered bond programs by reason of 

default. 

16 ‘‘SEC. 4475. TAX ON ESTATES CREATED UNDER COVERED 

17 BOND PROGRAMS BY REASON OF DEFAULT. 

18 ‘‘(a) IMPOSITION OF TAX.—A tax is hereby imposed 

19 on the creation of an estate by operation of section 

20 354(b)(1) of the United States Covered Bond Act of 2013. 

21 ‘‘(b) AMOUNT OF TAX.—The tax imposed under sub22 section (a) with respect to the creation of any estate shall 

23 be equal to 1 percent of the principal amount of the cov24 ered bonds secured by the cover pool with respect to such 


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1 estate determined as of the close of the day before the 

2 creation of such estate. 

3 ‘‘(c) BY WHOM PAID.—The tax imposed under sub4 section (a) shall be paid by the issuer of the covered bonds 

5 with respect to the covered bond program with respect to 

6 which the estate referred to in subsection (a) is created. 

7 ‘‘(d) NO EFFECT ON COVER POOL.—The tax im8 posed under subsection (a) shall not reduce the assets of 

9 the cover pool and no liability for such tax shall attach 

10 to the estate or to the assets of the cover pool. 

11 ‘‘(e) REFUND IN CASE OF BANKRUPTCY, ETC.—If an 

12 issuer liable for the tax imposed under subsection (a) en13 ters conservatorship, receivership, liquidation, or bank14 ruptcy during the 5-year period beginning on the date of 

15 the creation of the estate referred to in subsection (a), 

16 such liability shall be extinguished and any such tax paid 

17 shall refunded to the issuer immediately upon such event. 

18 ‘‘(f) DEFINITIONS.—For purposes of this section, the 

19 terms ‘covered bond program’, ‘cover pool’, and ‘estate’ 

20 shall each have the same respective meanings as when 

21 used for purposes of the United States Covered Bond Act 

22 of 2013.’’. 

23 (B) CLERICAL AMENDMENT.—The table of 

24 subchapters for chapter 36 of such Code is 


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1 amended by inserting after the item relating to 

2 subchapter B the following new item: 

‘‘SUBCHAPTER C—TAX ON CERTAIN ESTATES CREATED UNDER COVERED

BOND PROGRAMS’’. 

3 (4) EFFECTIVE DATE.—The amendments made 

4 by this subsection shall apply to estates created, and 

5 transfers made, after the date of the enactment of 

6 this Act. 

7 (c) STATE AND LOCAL TAXES.—The Secretary may 

8 promulgate regulations under this subtitle that are similar 

9 to the provisions of section 346 of title 11, United States 

10 Code, including regulations to provide that— 

11 (1) if an estate created under section 354(b)(1) 

12 or 354(c)(2) is not treated as an entity subject to 

13 taxation separate from the owner of the residual in14 terest for purposes of the Internal Revenue Code of 

15 1986 (26 U.S.C. 1 et seq.), no separate taxable enti16 ty shall be created with respect to the estate for pur17 poses of any State or local law imposing a tax on 

18 or measured by income; and 

19 (2) if a transfer or assumption of an asset or 

20 liability to or by an estate or an eligible issuer under 

21 section 354(b) or 354(c) does not cause or constitute 

22 an event in which gain or loss is recognized under 

23 section 1001 of the Internal Revenue Code of 1986 

24 (26 U.S.C. 1001), the transfer or assumption shall 


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1 not cause or constitute a disposition for purposes of 

2 any provision assigning tax consequences to a dis3 position in connection with any State or local law 

4 imposing a tax on or measured by income. 

5 (d) NO CONFLICT.—The provisions of this subtitle 

6 shall apply, notwithstanding any provision of the Federal 

7 Deposit Insurance Act (12 U.S.C. 1811 et seq.), title 11, 

8 United States Code, title II of the Dodd-Frank Wall 

9 Street Reform and Consumer Protection Act (12 U.S.C. 

10 5381 et seq.), or any other provision of Federal law with 

11 respect to conservatorship, receivership, liquidation, or 

12 bankruptcy. No provision of the Federal Deposit Insur13 ance Act (12 U.S.C. 1811 et seq.), title 11, United States 

14 Code, title II of the Dodd-Frank Wall Street Reform and 

15 Consumer Protection Act (12 U.S.C. 5381 et seq.), or any 

16 other provision of Federal law with respect to conservator17 ship, receivership, liquidation, or bankruptcy may be con18 strued or applied in a manner that defeats or interferes 

19 with the purpose or operation of this subtitle. 

20 (e) ANNUAL REPORT TO CONGRESS.—The covered 

21 bond regulators shall, annually— 

22 (1) submit a joint report to the Congress de23 scribing the current state of the covered bond mar24 ket in the United States; and 


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1 (2) testify on the current state of the covered 

2 bond market in the United States before the Com3 mittee on Financial Services of the House of Rep4 resentatives and the Committee on Banking, Hous5 ing, and Urban Affairs of the Senate. 

6 TITLE IV—REMOVING BARRIERS 

7 TO NEW INVESTMENT 

8 SEC. 401. BASEL III IMPACT STUDY. 

9 (a) IN GENERAL.—The Board of Governors of the 

10 Federal Reserve System, the Federal Deposit Insurance 

11 Corporation, and the Office of the Comptroller of the Cur12 rency (in this section collectively referred to as the ‘‘Fed13 eral banking agencies’’) shall conduct an empirical study 

14 on the Regulatory Capital Rules finalized by the Board 

15 of Governors of the Federal Reserve on July 2, 2013 

16 (‘‘Final Rule’’) in accordance with subsection (b) and re17 lease a final report in accordance with subsection (d). 

18 (b) ISSUES TO BE STUDIED.—The study required 

19 under subsection (a) shall include— 

20 (1) the potential impact of the Final Rule on 

21 the financial services sector of the United States, 

22 and specifically covered financial institutions, includ23 ing changes to required capital levels in the aggre24 gate, per asset class and institution size; 


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1 (2) the long-term potential impact of the Final 

2 Rule, including changes to the current risk weight 

3 framework; 

4 (3) the potential cost and complexity of the 

5 Final Rule for covered financial institutions; 

6 (4) the potential indicators of covered financial 

7 institutions having to maintain higher leverage cap8 ital ratios and higher total risk-based capital ratios 

9 than non-covered financial institutions, and if such 

10 capital levels are commensurate with higher histor11 ical losses or greater risk; 

12 (5) whether the Final Rule will cause capital 

13 levels at covered financial institutions to fluctuate 

14 with more frequency or by greater amounts than the 

15 current capital rules and what, if any, safety and 

16 soundness issues such fluctuations raise for covered 

17 financial institutions or the financial system includ18 ing whether such fluctuations will make the United 

19 States financial system more or less safe than the 

20 current rules; 

21 (6) whether the Final Rule will result in the 

22 discontinuation of the use of certain risk manage23 ment tools by covered financial institutions and 

24 thereby undermine the safety and soundness of cov25 ered financial institutions and the financial system; 


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1 (7) the cumulative impact that the Final Rule 

2 will have on— 

3 (A) United States economic growth, in 

4 general, and specifically, on the Gross Domestic 

5 Product; 

6 (B) the availability and cost of credit, both 

7 generally and in low- and moderate-income 

8 areas; 

9 (C) the availability and cost of residential 

10 mortgages and home equity lines of credit, auto 

11 loans, student loans, and commercial loans, in12 cluding small business loans; and 

13 (D) regulatory capital levels, capital qual14 ity, asset quality, and risk management at cov15 ered financial institutions. 

16 (c) VOLUNTARY PARTICIPATION.—Any financial in17 stitution may voluntarily provide information for the study 

18 upon the request of the Federal banking agencies, but may 

19 not be required to provide such information. 

20 (d) FINAL REPORT.— 

21 (1) AVAILABILITY TO THE PUBLIC.—A final re22 port on the completed study required under sub23 section (a) shall be made available to the public for 

24 notice and comment for a period of not less than 90 

25 days. 


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1 (2) REPORT TO CONGRESS.—The Federal bank2 ing agencies shall issue a report to the Committee 

3 on Banking, Housing, and Urban Affairs of the Sen4 ate and the Committee on Financial Services of the 

5 House of Representatives, and testify before such 

6 committees, on the results of the study required 

7 under subsection (a) and a summary of the com8 ments received under paragraph (1). 

9 (3) REVIEW.—The Federal banking agencies 

10 shall review any comments submitted under para11 graphs (1) and (2) and considerations provided pur12 suant to paragraphs (1) and (2), and following such 

13 review, shall prescribe new rules, if appropriate, 

14 based on the results of the study and such com15 ments and considerations. Notwithstanding any 

16 other provision of law, a new rulemaking following 

17 such comment period shall include an additional 

18 comment period of not less than 90 days. 

19 (e) DELAY OF RULEMAKING.—The Final Rule may 

20 not take effect for a covered financial institution until the 

21 later of— 

22 (1) 2 years after the date of the enactment of 

23 this Act; and 

24 (2) 1 year after the promulgation of revised 

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1 termination by the Federal banking agencies that no 

2 revised rules are needed in accordance with that sub3 section, which shall be published in the Federal Reg4 ister. 

5 (f) DEFINITION OF COVERED FINANCIAL INSTITU6 TION.—For purposes of this section, the term ‘‘covered fi7 nancial institution’’ means any bank, thrift, bank holding 

8 company, and savings and loan holding company (as such 

9 terms are defined under section 3 of the Federal Deposit 

10 Insurance Act) other than a bank, thrift, bank holding 

11 company, or savings and loan holding company identified 

12 by the Financial Stability Board as a ‘‘global systemically 

13 important bank’’, as of the date of the enactment of this 

14 Act. 

15 SEC. 402. BASEL III LIQUIDITY COVERAGE RATIO AMEND16 MENTS. 

17 (a) IN GENERAL.—In implementing the Basel III Li18 quidity Coverage Ratio amendments, the Board of Gov19 ernors of the Federal Reserve System, the Federal Deposit 

20 Insurance Corporation, and the Office of the Comptroller 

21 of the Currency may not require, as a condition for status 

22 as a high quality liquid asset, that residential mortgage23 backed securities be collateralized only by (or be 

24 collateralized by a certain percentage of) full recourse 

25 mortgage loans. 


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1 (b) DEFINITION.—The term ‘‘Basel III Liquidity 

2 Coverage Ratio amendments’’ means the amendments to 

3 the Liquidity Coverage Ratio endorsed by the Basel Com4 mittee on Banking Supervision on January 6, 2013. 

5 SEC. 403. DEFINITION OF POINTS AND FEES. 

6 (a) AMENDMENT TO SECTION 103 OF TILA.—Sec7 tion 103(bb)(4) of the Truth in Lending Act (15 U.S.C. 

8 1602(bb)(4)) is amended— 

9 (1) by striking ‘‘paragraph (1)(B)’’ and insert10 ing ‘‘paragraph (1)(A) and section 129C’’; 

11 (2) in subparagraph (A), by striking ‘‘except in12 terest or the time-price differential’’ and inserting 

13 the following: 

14 ‘‘except— 

15 ‘‘(i) interest and the time-price dif16 ferential; and 

17 ‘‘(ii) the amount of any loan level 

18 price adjustment payment set by the Fed19 eral National Mortgage Association, the 

20 Federal Home Loan Mortgage Corpora21 tion, the Federal Housing Administration, 

22 or similar governmental entity or govern23 ment-sponsored enterprise’’; 

24 (3) by striking subparagraph (B) and inserting 

25 the following new subparagraph: 


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1 ‘‘(B) all compensation paid directly by a 

2 consumer to a mortgage originator, including a 

3 mortgage originator that is also the creditor in 

4 a table-funded transaction, but not including 

5 compensation paid by a mortgage originator or 

6 a creditor to an individual employed by the 

7 mortgage originator or creditor’’; 

8 (4) in subparagraph (C)— 

9 (A) by inserting ‘‘and insurance’’ after 

10 ‘‘taxes’’; 

11 (B) in clause (ii), by inserting ‘‘, except as 

12 retained by a creditor or its affiliate as a result 

13 of their participation in an affiliated business 

14 arrangement (as defined in section 2(7) of the 

15 Real Estate Settlement Procedures Act of 1974 

16 (12 U.S.C. 2602(7))’’ after ‘‘compensation’’; 

17 and 

18 (C) by striking clause (iii) and inserting 

19 the following: 

20 ‘‘(iii) the charge is— 

21 ‘‘(I) a bona fide third-party 

22 charge not retained by the mortgage 

23 originator, creditor, or an affiliate of 

24 the creditor or mortgage originator; or 


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1 ‘‘(II) a charge set forth in section 

2 106(e)(1);’’; and 

3 (5) in subparagraph (D)— 

4 (A) by striking ‘‘accident,’’; and 

5 (B) by striking ‘‘or any payments’’ and in6 serting ‘‘and any payments’’. 

7 (b) AMENDMENT TO SECTION 129C OF TILA.—Sec8 tion 129C of the Truth in Lending Act (15 U.S.C. 1639c) 

9 is amended— 

10 (1) in subsection (a)(5)(C), by striking ‘‘103’’ 

11 and all that follows through ‘‘or mortgage origi12 nator’’ and inserting ‘‘103(bb)(4)’’; and 

13 (2) in subsection (b)(2)(C)(i), by striking ‘‘103’’ 

14 and all that follows through ‘‘or mortgage origi15 nator)’’ and inserting ‘‘103(bb)(4)’’. 

16 SEC. 404. EXCLUSION OF ISSUERS OF ASSET-BACKED SECU17 RITIES FROM COVERED FUNDS. 

18 Section 13(h)(2) of the Bank Holding Company Act 

19 of 1956 (12 U.S.C. 1851(h)(2)) is amended— 

20 (1) by striking ‘‘ ‘private equity fund’ mean an 

21 issuer’’ and inserting the following: ‘‘ ‘private equity 

22 fund’— 

23 ‘‘(A) mean an issuer’’; 

24 (2) by striking the period and inserting ‘‘; 

25 and’’; and 


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1 (3) by adding at the end the following: 

2 ‘‘(B) does not include an issuer, if such 

3 issuer is described under subparagraph (A) 

4 solely because such issuer issues asset-backed 

5 securities (as such term is defined under section 

6 3(a) of the Securities Exchange Act of 1934 

7 (15 U.S.C. 78c(a))).’’. 

8 SEC. 405. SUSPENSION OF REGULATION AB II RULE9 MAKING. 

10 Section 4 of the Securities Act of 1933 (15 U.S.C. 

11 77d) is amended— 

12 (1) by redesignating the two subsections fol13 lowing subsection (a) (each designated as subsection 

14 (b)) as subsections (c) and (d), respectively; and 

15 (2) by inserting after subsection (a) the fol16 lowing new subsection: 

17 ‘‘(b) With respect to paragraphs (1) and (2) of sub18 section (a), or any rule or regulation promulgated there19 under or in furtherance thereof (including Rule 144, Rule 

20 144A and Rule 506), the Commission shall not condition 

21 the availability of the exemptions afforded by any such 

22 paragraph, rule, or regulation upon an issuer’s under23 taking to provide to investors, in connection with initial 

24 offers or sales or on an ongoing basis thereafter, the same 


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1 or substantially similar information as would be required 

2 in a transaction to which section 5 applies.’’. 

3 SEC. 406. EFFECTIVE DATE OF CERTAIN MORTGAGE RE4 FORM REGULATIONS. 

5 (a) IN GENERAL.—Section 1400(c) of the Dodd6 Frank Wall Street Reform and Consumer Protection Act 

7 (15 U.S.C. 1601 note) is amended— 

8 (1) in paragraph (1), by amending subpara9 graph (B) to read as follows: 

10 ‘‘(B) take effect 24 months after the 

11 issuance of the regulations in final form, or 

12 such later time as specified by regulation.’’; and 

13 (2) by striking paragraph (3). 

14 (b) EFFECTIVE DATE.—The amendments made by 

15 subsection (a) shall take effect on the date of the enact16 ment of the Dodd-Frank Wall Street Reform and Con17 sumer Protection Act, as if included in such Act. 

18 SEC. 407. REPEAL OF CREDIT RISK RETENTION REGULA19 TIONS. 

20 (a) IN GENERAL.— 

21 (1) DODD-FRANK.—The Dodd-Frank Wall 

22 Street Reform and Consumer Protection Act (12 

23 U.S.C. 5301 et seq.) is amended— 

24 (A) by striking section 941; and 


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1 (B) in the table of contents for such Act, 

2 by striking the item relating to section 941. 

3 (2) SECURITIES EXCHANGE ACT OF 1934.—The 

4 Securities Exchange Act of 1934 (15 U.S.C. 78a et 

5 seq.) is amended— 

6 (A) in section 3(a), by striking paragraph 

7 (77) (relating to asset-backed security), as 

8 added by section 941(a) of the Dodd-Frank 

9 Wall Street Reform and Consumer Protection 

10 Act; and 

11 (B) by striking section 15G. 

12 (b) PROHIBITION ON RISK RETENTION AND PRE13 MIUM CAPTURE CASH RESERVE ACCOUNTS.—The Comp14 troller of the Currency, the Board of Governors of the 

15 Federal Reserve System, the Federal Deposit Insurance 

16 Corporation, the Bureau of Consumer Financial Protec17 tion, and the Securities and Exchange Commission may 

18 not issue any rule or regulation to require risk retention, 

19 the creation or maintenance of a premium capture cash 

20 reserve account, or any similar mechanism, unless directly 

21 authorized by an Act of Congress. 

22 (c) EFFECTIVE DATE.—The amendments made by 

23 subsection (a) shall take effect on the date of the enact24 ment of the Dodd-Frank Wall Street Reform and Con25 sumer Protection Act, as if included in such Act. 


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1 SEC. 408. MORTGAGES IN QUALIFIED SECURITIES. 

2 Section 129C of the Truth in Lending Act (15 U.S.C. 

3 1639c), as amended by section 411(1), is further amended 

4 by inserting after subsection (e) the following: 

5 ‘‘(f) MORTGAGES IN QUALIFIED SECURITIES.—This 

6 section and any regulations promulgated under this sec7 tion do not apply to a mortgage serving as collateral for 

8 a qualified security, as such term is defined under section 

9 321 of the Protecting American Taxpayers and Home10 owners Act of 2013.’’. 

11 SEC. 409. MORTGAGE LOANS HELD IN PORTFOLIO. 

12 (a) HOME MORTGAGE DISCLOSURE ACT OF 1975.— 

13 Section 304(g) of the Home Mortgage Disclosure Act of 

14 1975 (12 U.S.C. 2803(g)) is amended— 

15 (1) in paragraph (1), by striking ‘‘and’’ at the 

16 end; 

17 (2) in paragraph (2), by striking the period and 

18 inserting ‘‘; and’’; and 

19 (3) by adding at the end the following: 

20 ‘‘(3) made by the creditor, so long as such loan 

21 appears on the balance sheet of such creditor.’’. 

22 (b) TRUTH IN LENDING ACT.—The Truth in Lend23 ing Act (15 U.S.C. 1601 et seq.) is amended— 

24 (1) in section 129C (15 U.S.C. 1639c), as 

25 amended by section 408, by inserting after sub26 section (f) the following: 


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1 ‘‘(g) MORTGAGE LOANS HELD IN PORTFOLIO.—This 

2 section and any regulations promulgated under this sec3 tion do not apply to a residential mortgage loan made by 

4 the creditor so long as such loan appears on the balance 

5 sheet of such creditor.’’; and 

6 (2) in section 129D (15 U.S.C. 1639d), by add7 ing at the end the following: 

8 ‘‘(k) MORTGAGE LOANS HELD IN PORTFOLIO.—This 

9 section and any regulations promulgated under this sec10 tion do not apply to a residential mortgage loan made by 

11 the creditor so long as such loan appears on the balance 

12 sheet of such creditor.’’. 

13 SEC. 410. REPEAL OF CERTAIN MORTGAGE-RELATED PRO14 VISIONS. 

15 (a) REPEAL.—Sections 1413, 1431, and 1432 of the 

16 Dodd-Frank Wall Street Reform and Consumer Protec17 tion Act are hereby repealed, and the provisions of law 

18 amended or repealed by such sections are restored or re19 vived as if such sections had not been enacted. 

20 (b) CLERICAL AMENDMENT.—The table of contents 

21 for the Dodd-Frank Wall Street Reform and Consumer 

22 Protection Act is amended by striking the items relating 

23 to sections 1413, 1431, and 1432. 


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1 SEC. 411. AMENDMENTS TO THE TRUTH IN LENDING ACT. 

2 The Truth in Lending Act (15 U.S.C. 1601 et seq.) 

3 is amended— 

4 (1) in section 129 (15 U.S.C. 1639)— 

5 (A) in subsection (b)(3), by adding at the 

6 end the following: ‘‘The Bureau may not, by 

7 regulation or otherwise, prohibit a consumer 

8 from modifying or waiving the rights provided 

9 to the consumer under this subsection.’’; and 

10 (B) in subsection (u), by adding at the end 

11 the following: 

12 ‘‘(4) ENSURING ACCESS TO COUNSELING SERV13 ICES FOR RURAL COMMUNITIES.—Certification de14 scribed under paragraph (1) may be provided by a 

15 person who operates an online or telephone-operated 

16 counseling service approved by the Secretary of 

17 Housing and Urban Development or by an online or 

18 telephone-operated counseling service operated by 

19 the Department of Housing and Urban Develop20 ment. 

21 ‘‘(5) EFFECTIVE DATE.—Notwithstanding sec22 tion 1400(c) of the Mortgage Reform and Anti-Pred23 atory Lending Act, this subsection shall take effect 

24 after the end of the 1-year period beginning on the 

25 earlier of— 


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1 ‘‘(A) the date on which the first online or 

2 telephone-operated counseling service is ap3 proved under paragraph (4); and 

4 ‘‘(B) the date on which the Department of 

5 Housing and Urban Development begins pro6 viding online or telephone-operated counseling 

7 services described under paragraph (4).’’; 

8 (2) in section 129C (15 U.S.C. 1639c)— 

9 (A) in subsection (b)(2)(A)(viii), by strik10 ing ‘‘30’’ and inserting ‘‘40’’; 

11 (B) by striking subsections (c), (d), and 

12 (e); and 

13 (C) by redesignating subsections (f), (g), 

14 (h), and (i) as subsections (c), (d), (e), and (f), 

15 respectively; and 

16 (3) in section 129E(k)(1) (15 U.S.C. 

17 1639e(k)(1)) by inserting after ‘‘this section’’ the 

18 following: ‘‘, other than subsection (e),’’. 

19 SEC. 412. FINANCIAL INSTITUTIONS EXAMINATION FAIR20 NESS AND REFORM. 

21 (a) TIMELINESS OF EXAMINATION REPORTS.—The 

22 Federal Financial Institutions Examination Council Act of 

23 1978 (12 U.S.C. 3301 et seq.) is amended by adding at 

24 the end the following: 


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1 ‘‘SEC. 1012. TIMELINESS OF EXAMINATION REPORTS. 

2 ‘‘(a) IN GENERAL.— 

3 ‘‘(1) FINAL EXAMINATION REPORT.—A Federal 

4 financial institutions regulatory agency shall provide 

5 a final examination report to a financial institution 

6 not later than 60 days after the later of— 

7 ‘‘(A) the exit interview for an examination 

8 of the institution; or 

9 ‘‘(B) the provision of additional informa10 tion by the institution relating to the examina11 tion. 

12 ‘‘(2) EXIT INTERVIEW.—If a financial institu13 tion is not subject to a resident examiner program, 

14 the exit interview shall occur not later than the end 

15 of the 9-month period beginning on the commence16 ment of the examination, except that such period 

17 may be extended by the Federal financial institu18 tions regulatory agency by providing written notice 

19 to the institution and the Office of Examination 

20 Ombudsman describing with particularity the rea21 sons that a longer period is needed to complete the 

22 examination. 

23 ‘‘(b) EXAMINATION MATERIALS.—Upon the request 

24 of a financial institution, the Federal financial institutions 

25 regulatory agency shall include with the final report an 

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1 tion relied upon by the agency in support of a material 

2 supervisory determination.’’. 

3 (b) EXAMINATION STANDARDS.— 

4 (1) IN GENERAL.—The Federal Financial Insti5 tutions Examination Council Act of 1978 is further 

6 amended by adding after section 1012 the following: 

7 ‘‘SEC. 1013. EXAMINATION STANDARDS. 

8 ‘‘(a) IN GENERAL.—In the examination of financial 

9 institutions— 

10 ‘‘(1) a commercial loan shall not be placed in 

11 non-accrual status solely because the collateral for 

12 such loan has deteriorated in value; 

13 ‘‘(2) a modified or restructured commercial loan 

14 shall be removed from non-accrual status if the bor15 rower demonstrates the ability to perform on such 

16 loan over a maximum period of 6 months, except 

17 that with respect to loans on a quarterly, semi18 annual, or longer repayment schedule such period 

19 shall be a maximum of 3 consecutive repayment pe20 riods; 

21 ‘‘(3) a new appraisal on a performing commer22 cial loan shall not be required unless an advance of 

23 new funds is involved; 

24 ‘‘(4) in classifying a commercial loan in which 

25 there has been deterioration in collateral value, the 


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1 amount to be classified shall be the portion of the 

2 deficiency relating to the decline in collateral value 

3 and repayment capacity of the borrower. 

4 ‘‘(b) WELL CAPITALIZED INSTITUTIONS.—The Fed5 eral financial institutions regulatory agencies may not re6 quire a financial institution that is well capitalized to raise 

7 additional capital in lieu of an action prohibited under 

8 subsection (a). 

9 ‘‘(c) CONSISTENT LOAN CLASSIFICATIONS.—The 

10 Federal financial institutions regulatory agencies shall de11 velop and apply identical definitions and reporting require12 ments for non-accrual loans.’’. 

13 (2) DEFINITION OF MATERIAL SUPERVISORY

14 DETERMINATION.—Section 309(f)(1)(A) of the Rie15 gle Community Development and Regulatory Im16 provement Act of 1994 (12 U.S.C. 4806(f)(1)(A)) is 

17 amended— 

18 (A) in clause (ii), by striking ‘‘and’’ at the 

19 end; and 

20 (B) by inserting after clause (iii) the fol21 lowing: 

22 ‘‘(iv) any issue specifically listed in an 

23 exam report as a matter requiring atten24 tion by the institution’s management or 

25 board of directors; and’’. 


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1 (c) EXAMINATION OMBUDSMAN.— 

2 (1) IN GENERAL.—The Federal Financial Insti3 tutions Examination Council Act of 1978 is further 

4 amended by adding after section 1013 the following: 

5 ‘‘SEC. 1014. OFFICE OF EXAMINATION OMBUDSMAN. 

6 ‘‘(a) ESTABLISHMENT.—There is established in the 

7 Council an Office of Examination Ombudsman. 

8 ‘‘(b) HEAD OF OFFICE.—There is established the po9 sition of the Ombudsman, who shall serve as the head of 

10 the Office of Examination Ombudsman, and who shall be 

11 hired separately by the Council and shall be independent 

12 from any member agency of the Council. 

13 ‘‘(c) STAFFING.—The Ombudsman is authorized to 

14 hire staff to support the activities of the Office of Exam15 ination Ombudsman. 

16 ‘‘(d) DUTIES.—The Ombudsman shall— 

17 ‘‘(1) receive and, at the Ombudsman’s discre18 tion, investigate complaints from financial institu19 tions, their representatives, or another entity acting 

20 on behalf of such institutions, concerning examina21 tions, examination practices, or examination reports; 

22 ‘‘(2) hold meetings, at least once every three 

23 months and in locations designed to encourage par24 ticipation from all sections of the United States, 

25 with financial institutions, their representatives, or 


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1 another entity acting on behalf of such institutions, 

2 to discuss examination procedures, examination 

3 practices, or examination policies; 

4 ‘‘(3) review examination procedures of the Fed5 eral financial institutions regulatory agencies to en6 sure that the written examination policies of those 

7 agencies are being followed in practice and adhere to 

8 the standards for consistency established by the 

9 Council; 

10 ‘‘(4) conduct a continuing and regular program 

11 of examination quality assurance for all examination 

12 types conducted by the Federal financial institutions 

13 regulatory agencies; 

14 ‘‘(5) process any supervisory appeal initiated 

15 under section 1015 or section 309(e) of the Riegle 

16 Community Development and Regulatory Improve17 ment Act of 1994; and 

18 ‘‘(6) report annually to the Committee on Fi19 nancial Services of the House of Representatives, the 

20 Committee on Banking, Housing, and Urban Affairs 

21 of the Senate, and the Council, on the reviews car22 ried out pursuant to paragraphs (3) and (4), includ23 ing compliance with the requirements set forth in 

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1 provements in examination procedures, practices, 

2 and policies. 

3 ‘‘(e) CONFIDENTIALITY.—The Ombudsman shall 

4 keep confidential all meetings, discussions, and informa5 tion provided by financial institutions.’’. 

6 (2) DEFINITION.—Section 1003 of the Federal 

7 Financial Institutions Examination Council Act of 

8 1978 is amended— 

9 (A) in paragraph (2), by striking ‘‘and’’ at 

10 the end; 

11 (B) in paragraph (3), by adding ‘‘and’’ at 

12 the end; and 

13 (C) by adding at the end the following: 

14 ‘‘(4) the term ‘Ombudsman’ means the Om15 budsman established under section 1014(a).’’. 

16 (d) RIGHT TO APPEAL BEFORE AN INDEPENDENT

17 ADMINISTRATIVE LAW JUDGE.—The Federal Financial 

18 Institutions Examination Council Act of 1978 is further 

19 amended by adding after section 1014 the following: 

20 ‘‘SEC. 1015. RIGHT TO APPEAL BEFORE AN INDEPENDENT 

21 ADMINISTRATIVE LAW JUDGE. 

22 ‘‘(a) IN GENERAL.—A financial institution shall have 

23 the right to appeal a material supervisory determination 

24 contained in a final report of examination. 

25 ‘‘(b) NOTICE.— 


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1 ‘‘(1) TIMING.—A financial institution seeking 

2 an appeal under this section shall file a written no3 tice with the Ombudsman within 60 days after re4 ceiving the final report or examination that is the 

5 subject of such appeal. 

6 ‘‘(2) IDENTIFICATION OF DETERMINATION.— 

7 The written notice shall identify the material super8 visory determination that is the subject of the ap9 peal, and a statement of the reasons why the institu10 tion believes that the determination is incorrect or 

11 should otherwise be modified. 

12 ‘‘(3) INFORMATION TO BE PROVIDED TO INSTI13 TUTION.—Any information relied upon by the agen14 cy in the final report that is not in the possession 

15 of the financial institution may be requested by the 

16 financial institution and shall be delivered promptly 

17 by the agency to the financial institution. 

18 ‘‘(c) HEARING BEFORE INDEPENDENT ADMINISTRA19 TIVE LAW JUDGE.— 

20 ‘‘(1) IN GENERAL.—The Ombudsman shall de21 termine the merits of the appeal on the record, after 

22 an opportunity for a hearing before an independent 

23 administrative law judge. 


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1 ‘‘(2) HEARING PROCEDURES.—If a hearing is 

2 requested by the financial institution, the hearing 

3 shall— 

4 ‘‘(A) take place not later than 60 days 

5 after the notice of the appeal was received by 

6 the Ombudsman; and 

7 ‘‘(B) be conducted pursuant to the proce8 dures set forth under sections 556 and 557 of 

9 title 5, United States Code. 

10 ‘‘(3) JUDGE RECOMMENDATION; STANDARD OF

11 REVIEW.—In any hearing under this subsection— 

12 ‘‘(A) the administrative law judge shall 

13 recommend to the Ombudsman what determina14 tion should be made; and 

15 ‘‘(B) in making such recommendation, the 

16 administrative law judge shall not defer to the 

17 opinions of the examiner or agency, but shall 

18 independently determine the appropriateness of 

19 the agency’s decision based upon the relevant 

20 statutes, regulations, and other appropriate 

21 guidance. 

22 ‘‘(d) FINAL DECISION.—A decision by the Ombuds23 man on an appeal under this section shall— 

24 ‘‘(1) be made not later than 60 days after the 

25 record has been closed; and 


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1 ‘‘(2) be final agency action and shall bind the 

2 agency whose supervisory determination was the 

3 subject of the appeal and the financial institution 

4 making the appeal. 

5 ‘‘(e) REPORT.—The Ombudsman shall report annu6 ally to the Committee on Financial Services of the House 

7 of Representatives, the Committee on Banking, Housing, 

8 and Urban Affairs of the Senate on actions taken on ap9 peals under this section, including the types of issues that 

10 financial institutions have appealed and the results of 

11 those appeals. In no case shall such a report contain infor12 mation about individual financial institutions or any con13 fidential or privileged information shared by financial in14 stitutions. 

15 ‘‘(f) RETALIATION PROHIBITED.—A Federal finan16 cial institution’s regulatory agency may not— 

17 ‘‘(1) retaliate against a financial institution, in18 cluding service providers, or any institution-affiliated 

19 party, for exercising appellate rights under this sec20 tion; or 

21 ‘‘(2) delay or deny any agency action that 

22 would benefit a financial institution or any institu23 tion-affiliated party on the basis that an appeal 

24 under this section is pending under this section.’’. 

25 (e) ADDITIONAL AMENDMENTS.— 


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1 (1) RIEGLE COMMUNITY DEVELOPMENT AND

2 REGULATORY IMPROVEMENT ACT OF 1994.—Section 

3 309 of the Riegle Community Development and Reg4 ulatory Improvement Act of 1994 (12 U.S.C. 4806), 

5 is amended— 

6 (A) in subsection (a), by inserting after 

7 ‘‘appropriate Federal banking agency’’ the fol8 lowing: ‘‘, the Bureau of Consumer Financial 

9 Protection,’’; 

10 (B) in subsection (b)— 

11 (i) in paragraph (2), by striking ‘‘the 

12 appellant from retaliation by agency exam13 iners’’ and inserting ‘‘the insured deposi14 tory institution or insured credit union 

15 from retaliation by the agencies referred to 

16 in subsection (a)’’; and 

17 (ii) by adding at the end the following 

18 flush-left text: 

19 ‘‘For purposes of this subsection and subsection (e), retal20 iation includes delaying consideration of, or withholding 

21 approval of, any request, notice, or application that other22 wise would have been approved, but for the exercise of the 

23 institution’s or credit union’s rights under this section.’’; 

24 and 

25 (C) in subsection (e)(2)— 


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1 (i) in subparagraph (B), by striking 

2 ‘‘and’’ at the end; 

3 (ii) in subparagraph (C), by striking 

4 the period and inserting ‘‘; and’’; and 

5 (iii) by adding at the end the fol6 lowing: 

7 ‘‘(D) ensure that appropriate safeguards 

8 exist for protecting the insured depository insti9 tution or insured credit union from retaliation 

10 by any agency referred to in subsection (a) for 

11 exercising its rights under this subsection.’’. 

12 (2) FEDERAL DEPOSIT INSURANCE ACT.—Sec13 tion 18(x) of the Federal Deposit Insurance Act (12 

14 U.S.C. 1828(x)) is amended by inserting ‘‘the Bu15 reau of Consumer Financial Protection,’’ before 

16 ‘‘any Federal banking agency’’ each place such term 

17 appears. 

18 (3) FEDERAL CREDIT UNION ACT.—Section 

19 205(j) of the Federal Credit Union Act (12 U.S.C. 

20 1785(j)) is amended by inserting ‘‘the Bureau of 

21 Consumer Financial Protection,’’ before ‘‘the Ad22 ministration’’ each place such term appears. 

23 (4) TECHNICAL CORRECTIONS.—The Federal 

24 Financial Institutions Examination Council Act of 

25 1978 (12 U.S.C. 3301 et seq.) is amended— 


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1 (A) in section 1003(1), by striking ‘‘the 

2 Office of Thrift Supervision,’’; and 

3 (B) in section 1005, by striking ‘‘One4 fifth’’ and inserting ‘‘One-fourth’’. 

5 SEC. 413. NOTICE OF JUNIOR MORTGAGE OR LIEN. 

6 With respect to the dwelling of a borrower that serves 

7 as security for a securitized senior mortgage loan, if the 

8 borrower enters into any credit transaction that would re9 sult in the creation of a new mortgage or other lien on 

10 such dwelling, the creditor of such new mortgage or other 

11 lien shall notify the servicer of the senior mortgage loan 

12 of the existence of the new mortgage or other lien. 

13 SEC. 414. LIMITATION ON MORTGAGES HELD BY LOAN 

14 SERVICERS. 

15 (a) LIMITATION.—Neither the servicer of a residen16 tial mortgage loan, nor any affiliate of such servicer, may 

17 own, or hold any interest in, any other residential mort18 gage loan that is secured by a mortgage, deed of trust, 

19 or other equivalent consensual security interest on the 

20 same dwelling or residential real property that is subject 

21 to the mortgage, deed of trust, or other security interest 

22 that secures the residential mortgage loan serviced by the 

23 servicer. 

24 (b) DEFINITIONS.—For purposes of this section, the 

25 following definitions shall apply: 


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1 (1) AFFILIATE.—The term ‘‘affiliate’’ has the 

2 meaning given such term under section 104(g) of 

3 the Gramm-Leach-Bliley Act (15 U.S.C. 6701(g)). 

4 (2) RESIDENTIAL MORTGAGE LOAN.—The term 

5 ‘‘residential mortgage loan’’ means any consumer 

6 credit transaction that is secured by a mortgage, 

7 deed of trust, or other equivalent consensual security 

8 interest on a dwelling or on residential real property 

9 that includes a dwelling, other than a consumer 

10 credit transaction under an open end credit plan or 

11 an extension of credit relating to a plan described in 

12 section 101(53D) of title 11, United States Code. 

13 (3) SERVICER.—The term ‘‘servicer’’ has the 

14 meaning provided such term in section 129A of the 

15 Truth in Lending Act, except that such term in16 cludes a person who makes or holds a residential 

17 mortgage loan (including a pool of residential mort18 gage loans) if such person also services the loan. 

19 (c) INTERESTS.—For purposes of subsection (a), 

20 ownership of, or holding an interest in, a residential mort21 gage loan includes ownership of, or holding an interest 

22 in— 

23 (1) a pool of residential mortgage loans that 

24 contains such residential mortgage loan; or 


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1 (2) any security based on or backed by a pool 

2 of residential mortgage loans that contains such res3 idential mortgage loan. 

4 (d) EFFECTIVE DATE.—This section shall apply— 

5 (1) with respect to the servicer (or affiliate of 

6 the servicer) of a residential mortgage loan that is 

7 originated after the date of the enactment of this 

8 Act, on such date of enactment; and 

9 (2) with respect to the servicer (or affiliate of 

10 the servicer) of a residential mortgage loan that is 

11 originated on or before the date of the enactment of 

12 this Act, upon the expiration of the 12-month period 

13 beginning upon such date of enactment. 

14 TITLE V—MISCELLANEOUS 

15 PROVISIONS 

16 SEC. 501. PRESERVING ACCESS TO MANUFACTURED HOUS17 ING. 

18 (a) AMENDMENT TO MORTGAGE ORIGINATOR DEFI19 NITION.—Section 1401 of the Dodd-Frank Wall Street 

20 Reform and Consumer Protection Act is amended, in 

21 paragraph (2)(C)(ii) of the matter proposed to be added 

22 to section 103 of the Truth in Lending Act, by striking 

23 ‘‘an employee of a retailer of manufactured homes who 

24 is not described in clause (i) or (iii) of subparagraph (A) 

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1 cluding rates, fees, and other costs)’’ and inserting ‘‘a re2 tailer of manufactured or modular homes or its employees 

3 unless such retailer or its employees receive compensation 

4 or gain for engaging in activities described in subpara5 graph (A) that is in excess of any compensation or gain 

6 received in a comparable cash transaction’’. 

7 (b) TECHNICAL AMENDMENTS.—Section 1401 of the 

8 Dodd-Frank Wall Street Reform and Consumer Protec9 tion Act is amended, in the matter proposed to be added 

10 to section 103 of the Truth in Lending Act, by redesig11 nating subsection (cc) as subsection (dd). 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall take effect as if included in the provisions 

14 of the Dodd-Frank Wall Street Reform and Consumer 

15 Protection Act to which they relate. 

16 SEC. 502. COMMON SENSE ECONOMIC RECOVERY. 

17 (a) SHORT TITLE.—This section may be cited as the 

18 ‘‘Common Sense Economic Recovery Act of 2013’’. 

19 (b) TREATMENT OF CERTAIN LOANS.— 

20 (1) IN GENERAL.—For purposes of determining 

21 capital requirements or measuring capital of an in22 sured depository institution under section 38 of the 

23 Federal Deposit Insurance Act (12 U.S.C. 1831o) or 

24 any other provision of law or regulatory guidance, an 

25 insured depository institution that would otherwise 


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1 be required to treat a loan as a non-accrual loan 

2 may treat such loan as an accrual loan, if— 

3 (A) the loan is current; 

4 (B) during the previous 6-month period, no 

5 monthly payment on the loan has been more 

6 than 30 days delinquent; and 

7 (C) the payments on the loan are being 

8 made pursuant to the contractual terms of the 

9 loan agreement and any refinances and modi10 fications that are agreed to by all of the parties. 

11 (2) DEMONSTRATION OF ABILITY TO PERFORM

12 ON A LOAN.—Notwithstanding paragraph (1), a 

13 modified or restructured loan may not be treated as 

14 a non-accrual loan if the borrower demonstrates the 

15 ability to perform on such a loan— 

16 (A) over a period of 6 months; or 

17 (B) with respect to a loan on a quarterly, 

18 semi-annual, or longer repayment schedule, over 

19 a period of 3 consecutive payments. 

20 (3) NO ADDITIONAL ADVERSE TREATMENT.— 

21 With respect to a loan held by an insured depository 

22 institution and treated as an accrual loan by reason 

23 of paragraph (1), an appropriate Federal banking 

24 agency may not impose any additional accounting 

25 requirements on such institution with respect to 


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1 such loan compared to the requirements that would 

2 otherwise have been placed on such institution with 

3 respect to such loan if such loan were not being 

4 treated as an accrual loan by reason of paragraph 

5 (1), if the result of such additional requirement 

6 would adversely impact the measurement of capital 

7 of the institution. 

8 (4) PROHIBITION ON THE RE-CLASSIFICATION

9 OF LOANS BASED SOLELY ON COLLATERAL

10 VALUE.—An appropriate Federal banking agency 

11 may not require an insured depository institution to 

12 treat a loan as a non-accrual loan solely on the basis 

13 that the collateral of such loan has reduced in value. 

14 (5) PROVISIONS NOT APPLICABLE TO PUBLICLY

15 TRADED INSTITUTIONS.—This subsection shall not 

16 apply with respect to any issuer of a security reg17 istered pursuant to section 12 of the Securities Ex18 change Act of 1934 (15 U.S.C. 78l). 

19 (c) STUDY.— 

20 (1) IN GENERAL.—The Financial Stability 

21 Oversight Council shall conduct a study of how best 

22 to prevent contradictory guidance from being issued 

23 by appropriate Federal banking agencies to insured 

24 depository institutions with respect to loan classifica25 tions and capital requirements. 


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1 (2) REPORT.—Not later than the end of the 60- 

2 day period beginning on the date of the enactment 

3 of this Act, the Financial Stability Oversight Council 

4 shall issue a report to the Congress containing— 

5 (A) all determinations and conclusions 

6 made by the Council in carrying out the study 

7 required under paragraph (1); and 

8 (B) legislative recommendations that the 

9 Council believe will prevent contradictory guid10 ance from being issued by appropriate Federal 

11 banking agencies to insured depository institu12 tions with respect to loan classifications and 

13 capital requirements. 

14 (d) DEFINITIONS.—For purposes of this section: 

15 (1) APPROPRIATE FEDERAL BANKING AGEN16 CY.—The term ‘‘appropriate Federal banking agen17 cy’’— 

18 (A) has the meaning given such term 

19 under section 3 of the Federal Deposit Insur20 ance Act (12 U.S.C. 1813); and 

21 (B) means the National Credit Union Ad22 ministration Board, in the case of a credit 

23 union. 

24 (2) INSURED DEPOSITORY INSTITUTION.—The 

25 term ‘‘insured depository institution’’ means— 


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1 (A) an insured depository institution, as 

2 defined under section 3 of the Federal Deposit 

3 Insurance Act (12 U.S.C. 1813); and 

4 (B) a credit union. 

5 (e) SUNSET.—Effective after the end of the 2-year 

6 period beginning on the date of the enactment of this Act, 

7 this section shall cease to have any force or effect. 

8 SEC. 503. TECHNICAL AMENDMENTS TO FEDERAL HOME 

9 LOAN BANK ACT. 

10 (a) IN GENERAL.—Section 10 of the Federal Home 

11 Loan Bank Act (12 U.S.C. 1430) is amended— 

12 (1) in subsection (a)— 

13 (A) by redesignating paragraph (6) as 

14 paragraph (7); and 

15 (B) by inserting after paragraph (5) the 

16 following: 

17 ‘‘(6) REPORT ON COLLATERAL.—The Director 

18 shall annually report to the Committee on Banking, 

19 Housing, and Urban Affairs of the Senate and the 

20 Committee on Financial Services of the House of 

21 Representatives on the collateral pledged to the 

22 Banks, including an analysis of collateral by type 

23 and by Bank district.’’; 

24 (2) by striking subsection (g); and 


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1 (3) in subsection (j)(12), by striking subpara2 graphs (C) and (D). 

3 (b) INITIAL REPORT.—The Director of the Federal 

4 Housing Finance Agency shall make the first report re5 quired under section 10(a)(7) of the Federal Home Loan 

6 Bank Act, as added by subsection (a), not later than the 

7 end of the 180-day period beginning on the date of the 

8 enactment of this Act. 

9 SEC. 504. PRESERVATION OF ATTORNEY-CLIENT PRIVI10 LEGE FOR INFORMATION PROVIDED TO 

11 FHFA. 

12 Section 1317 of the Federal Housing Enterprises Fi13 nancial Safety and Soundness Act of 1992 (12 

14 U.S.C.4517) is amended by adding at the end the fol15 lowing new subsection: 

16 ‘‘(j) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO

17 AGENCY.— 

18 ‘‘(1) IN GENERAL.—The submission by any per19 son of any information to the Agency for any pur20 pose in the course of any supervisory or regulatory 

21 process of the Agency shall not be construed as 

22 waiving, destroying, or otherwise affecting any privi23 lege such person may claim with respect to such in24 formation under Federal or State law as to any per25 son or entity other than such Agency. 


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1 ‘‘(2) RULE OF CONSTRUCTION.—No provision 

2 of paragraph (1) may be construed as implying or 

3 establishing that— 

4 ‘‘(A) any person waives any privilege appli5 cable to information that is submitted or trans6 ferred under any circumstance to which para7 graph (1) does not apply; or 

8 ‘‘(B) any person would waive any privilege 

9 applicable to any information by submitting the 

10 information to the Agency, but for this sub11 section.’’. 

12 SEC. 505. FHFA LIAISON MEMBERSHIP IN FEDERAL FINAN13 CIAL INSTITUTIONS EXAMINATION COUNCIL. 

14 Section 1007 of the Federal Financial Institutions 

15 Examination Council Act of 1978 (12 U.S.C. 3306) is 

16 amended— 

17 (1) in the section heading, by inserting after 

18 ‘‘STATE’’ the following: ‘‘AND FEDERAL HOUSING

19 FINANCE AGENCY’’; 

20 (2) in the first sentence, by inserting after ‘‘fi21 nancial institutions’’ the following: ‘‘, and one rep22 resentative of the Federal Housing Finance Agen23 cy,’’; and 

24 (3) in the last sentence, by inserting ‘‘State’’ 

25 after ‘‘among the’’. 


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1 SEC. 506. RECOGNITION OF FHFA ENFORCEMENT AUTHOR2 ITY WITH REGARD TO REGULATED ENTITIES. 

3 Section 1125(c) of the Financial Institution Reform, 

4 Recovery and Enforcement Act of 1989 (12 U.S.C. 

5 3354(c); as added by section 1473(q) of the Dodd Frank 

6 Wall Street Reform and Consumer Protection Act) is 

7 amended— 

8 (1) in paragraph (1), by striking ‘‘and’’ at the 

9 end; 

10 (2) by redesignating paragraph (2) as para11 graph (3); and 

12 (3) by inserting after paragraph (1) the fol13 lowing new paragraph: 

14 ‘‘(2) with respect to any regulated entity (as 

15 such term is defined in section 1303 of the Federal 

16 Housing Enterprises Financial Safety and Sound17 ness Act of 1992 (12 U.S.C. 4502)), the Federal 

18 Housing Finance Agency; and’’. 

19 SEC. 507. EXCEPTION FROM RIGHT TO FINANCIAL PRIVACY 

20 ACT FOR FHFA AS CONSERVATOR OR RE21 CEIVER. 

22 Section 1113(o) of the Right to Financial Privacy Act 

23 of 1978 (12 U.S.C. 3413(o)) is amended— 

24 (1) by striking ‘‘(o)’’ and inserting ‘‘(o)(1)’’; 

25 and 


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1 (2) by adding at the end the following new 

2 paragraph: 

3 ‘‘(2) This title shall not apply to the examination by 

4 or disclosure to the Federal Housing Finance Agency or 

5 its employees or agents of financial records or information 

6 in the exercise of its supervisory or regulatory functions, 

7 including conservatorship and receivership functions, with 

8 respect to any regulated entity or other person partici9 pating in the conduct of the affairs thereof.’’. 

10 SEC. 508. TECHNICAL AMENDMENT TO FEDERAL HOUSING 

11 ENTERPRISES FINANCIAL SAFETY AND 

12 SOUNDNESS ACT OF 1992. 

13 Section 1368(d) of the Federal Housing Enterprises 

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

15 4618(d)) is amended by striking ‘‘Committee on Banking, 

16 Finance and Urban Affairs’’ and inserting ‘‘Committee on 

17 Financial Services’’. 

18 SEC. 509. APPLICATION OF PRESUMPTION TO ENTERPRISE 

19 STREAMLINED REFINANCINGS. 

20 Section 129C(b)(3)(B)(ii) of the Truth in Lending 

21 Act (15 U.S.C. 1639c(b)(3)(B)(ii); as added by section 

22 1412 of the Dodd Frank Wall Street Reform and Con23 sumer Protection Act) is amended— 


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1 (1) by inserting after ‘‘administer,’’ the fol2 lowing: ‘‘or that are owned or guaranteed by an enti3 ty regulated or supervised by such agency,’’; and 

4 (2) by adding at the end the following new sub5 clause: 

6 ‘‘(V) The Federal Housing Fi7 nance Agency, with regard to mort8 gages owned or guaranteed by an en9 tity regulated or supervised by such 

10 agency.’’. 

11 SEC. 510. FHFA AUTHORITY TO REGULATE AND EXAMINE 

12 CONTRACTUAL COUNTERPARTIES. 

13 Section 1317 of the Federal Housing Enterprises Fi14 nancial Safety and Soundness Act of 1992, as amended 

15 by the preceding provisions of this Act, is further amended 

16 (12 U.S.C. 4517) by adding at the end the following new 

17 subsection: 

18 ‘‘(k) REGULATION AND EXAMINATION OF CONTRAC19 TUAL COUNTERPARTIES.— 

20 ‘‘(1) AUTHORITY.—When a regulated entity or 

21 the Office of Finance causes to be performed for 

22 itself, by contract or otherwise and whether on or off 

23 its premises, any services authorized to that regu24 lated entity or the Office of Finance by its authorVerDate Mar 15 2010 00:56 Jul 25, 2013 Jkt 029200 PO 00000 Frm 00281 Fmt 6652 Sfmt 6201 E:\BILLS\H2767.IH H2767

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1 izing statute or the Federal Housing Enterprises Fi2 nancial Safety and Soundness Act of 1992— 

3 ‘‘(A) such performance shall be subject to 

4 regulation and examination by the Federal 

5 Housing Finance Agency to the same extent as 

6 if such services were being performed by the 

7 regulated entity or the Office of Finance itself 

8 on its own premises, and 

9 ‘‘(B) the regulated entity or the Office of 

10 Finance shall notify the Director of the exist11 ence of the service relationship within thirty 

12 days after the making of such service contract 

13 or the performance of the service, whichever oc14 curs first. 

15 ‘‘(2) REGULATIONS AND ORDERS.—The Direc16 tor may issue such regulations and orders as may be 

17 necessary to enable the Agency to administer and to 

18 carry out the purposes of this subsection and to pre19 vent evasions thereof.’’. 

20 SEC. 511. ELECTION OF DIRECTORS OF A MERGED FED21 ERAL HOME LOAN BANK. 

22 Section 7 of the Federal Home Loan Bank Act (12 

23 U.S.C. 1427) is amended— 

24 (1) in subsection (a)(1), by inserting ‘‘and sub25 section (d)’’ after ‘‘paragraphs (2) through (4)’’; 


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1 (2) in subsection (b)— 

2 (A) in the matter preceding paragraph 

3 (2)— 

4 (i) by striking ‘‘Each’’ and inserting 

5 ‘‘(1)(A) Except as provided in subsection 

6 (d), each’’; 

7 (ii) by inserting ‘‘(B)’’ before ‘‘No 

8 person’’; 

9 (iii) by inserting ‘‘(C)’’ before ‘‘As 

10 used’’; and 

11 (iv) in the third sentence— 

12 (I) by striking ‘‘this subsection’’ 

13 and inserting ‘‘subparagraph (A)’’; 

14 and 

15 (II) by striking ‘‘home loan 

16 bank’’ and inserting ‘‘Home Loan 

17 Bank’’; and 

18 (B) in paragraph (2)(A)(ii), by inserting 

19 ‘‘or subsection (d)(4), if applicable,’’ after 

20 ‘‘paragraph (1)’’; 

21 (3) by striking subsections (c), (d), and (h); 

22 (4) by redesignating subsections (d), (e), (f), 

23 and (g) as subsections (e), (f), (g), and (h), respec24 tively; and 


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1 (5) by inserting after subsection (b) the fol2 lowing: 

3 ‘‘(c) ALLOCATION OF MEMBER DIRECTORSHIPS

4 AMONG STATES IN BANK DISTRICT.— 

5 ‘‘(1) DESIGNATION OF MEMBER LOCATION.— 

6 The Director shall designate the State in which each 

7 member of each Federal Home Loan Bank shall be 

8 deemed to be located for the purposes of this sub9 section and subsections (b) and (d), and may from 

10 time to time change any such designation. If the 

11 principal place of business of any Bank member is 

12 located in a State within the district of the Bank of 

13 which it is a member, the Director shall designate 

14 that State as the State in which the member shall 

15 be deemed to be located for those purposes. 

16 ‘‘(2) STOCK-BASED ALLOCATION OF DES17 IGNATED MEMBER DIRECTORSHIPS.—The number of 

18 member directorships designated as representing the 

19 members located in each separate State in a Federal 

20 Home Loan Bank district shall be determined by the 

21 Director in the approximate ratio of the percentage 

22 of the required stock, as prescribed by regulation of 

23 the Director, of the members located in that State 

24 at the end of the calendar year next preceding the 

25 date of the election to the total required stock, as so 


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1 determined, of all members of the Bank as of that 

2 same date. 

3 ‘‘(3) LIMITATIONS ON STOCK-BASED ALLOCA4 TIONS.—Except as provided in subsection (d), the 

5 following provisions shall apply to the allocation of 

6 member directorships among the States of a Bank 

7 district, notwithstanding the requirements of para8 graph (2): 

9 ‘‘(A) In the case of each State, the number 

10 of member directorships designated as rep11 resenting the members located in that State 

12 shall not be less than one and shall not be more 

13 than six. 

14 ‘‘(B) If at any time the number of member 

15 directorships designated as representing the 

16 members located in any State would not be at 

17 least equal to the total number of member di18 rectorships which, on December 31, 1960, were 

19 filled by officers or directors of members whose 

20 principal places of business were located in that 

21 State, the Director shall add to the board of di22 rectors of the Bank of the district in which that 

23 State is located such number of member direc24 torships, and shall so designate the directorship 

25 or directorships thus added, that the number of 


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1 member directorships designated as rep2 resenting the members located in that State will 

3 equal said total number. Any member director4 ship so added shall exist only until the expira5 tion of its first term. 

6 ‘‘(d) BOARD SIZE, COMPOSITION, AND ELECTIONS

7 FOR COMBINED BANKS.—Notwithstanding any other pro8 vision of this section, the following requirements shall 

9 apply to the size and composition of, and the election of 

10 directors to, the board of any Bank created as result of 

11 the combination of two or more Banks under section 26: 

12 ‘‘(1) BOARD SIZE.—The management of a com13 bined Bank shall be vested in a board of 15 direc14 tors, or such lesser number as the Director deter15 mines appropriate, consistent with the safe and 

16 sound operation of the combined Bank. 

17 ‘‘(2) BOARD MAKEUP.—The Director shall es18 tablish the respective number of member director19 ships and independent directorships for the board of 

20 the combined Bank such that— 

21 ‘‘(A) member directors shall comprise at 

22 least the majority of the members of the board 

23 of directors; and 


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1 ‘‘(B) independent directors shall comprise 

not fewer than 2 2 ⁄5 of the members of the board 

3 of directors. 

4 ‘‘(3) ALLOCATION OF MEMBER DIRECTOR5 SHIPS.—The Director shall allocate the member di6 rectorships of the board of a combined Bank among 

7 the States of the Bank district in accordance with 

8 the requirements of subsection (c)(2), except that— 

9 ‘‘(A) no State shall be allocated more than 

10 two member directorships until every state has 

11 been allocated at least one member directorship; 

12 and 

13 ‘‘(B) if, after the Director has allocated all 

14 but one of the member directorships, there re15 main any States to which no member director16 ship has yet been allocated, then the Director 

17 shall allocate the remaining member director18 ship to represent the members located in all of 

19 the States that have not otherwise been allo20 cated a member directorship. 

21 ‘‘(4) ELECTION OF DIRECTORS.—The directors 

22 of a combined Bank shall be nominated and elected 

23 as provided in subsection (b), except that, in the 

24 case of a member directorship that has been des25 ignated as representing the members of two or more 


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1 States pursuant to paragraph (3)(B), the following 

2 requirements shall apply in lieu of those set forth in 

3 subsection (b)(1)(A): 

4 ‘‘(A) The directorship shall be filled by a 

5 person who is an officer or director of a mem6 ber located in one of the States represented. 

7 ‘‘(B) Each member located in each State 

8 represented shall be entitled to nominate an eli9 gible person to fill the directorship, and the 

10 member director shall be elected from persons 

11 so nominated by a plurality of the votes that 

12 those members may cast under subparagraph 

13 (C). 

14 ‘‘(C) Each member located in each State 

15 represented may cast a number of votes equal 

16 to the number of shares of stock in the Bank 

17 required to be held by the member at the end 

18 of the calendar year next preceding the election, 

19 but not in excess of the average number of 

20 shares of stock in the Bank required to be held 

21 at the end of that year by the respective mem22 bers of the Bank located in those States. 

23 ‘‘(5) INITIAL DIRECTORS FOR NEWLY COM24 BINED BANKS.—The following requirements shall 

25 apply to the selection of the individuals to serve as 


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1 the initial directors of a combined Bank as of the ef2 fective date of the combination: 

3 ‘‘(A) The terms of office of any directors 

4 of the combining Banks who do not become di5 rectors of the combined Bank shall terminate as 

6 of the effective date of the combination. 

7 ‘‘(B) The individuals to serve as the initial 

8 directors of a newly combined Bank shall be 

9 chosen from among the incumbent directors of 

10 the predecessor Banks serving immediately 

11 prior to the effective date of the combination of 

12 those Banks and shall be— 

13 ‘‘(i) as designated by the Director in 

14 the case of a Bank created from a com15 bination of two or more Banks pursuant to 

16 a reorganization under section 26(a); and 

17 ‘‘(ii) as agreed upon among the merg18 ing Banks and approved by the Director in 

19 the case of a Bank created from a vol20 untary merger of two or more Banks pur21 suant to section 26(b). 

22 ‘‘(C) Each initial director of the combined 

23 Bank shall be entitled to serve for the remain24 der of the term of office that the director had 

25 with the predecessor Bank. Terms served as a 


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1 director of a predecessor Bank shall be counted 

2 as being served as a director of the combined 

3 Bank for purposes of determining term limits 

4 under subsection (e)(3). 

5 ‘‘(D) Beginning with the first election of 

6 directors occurring after the combination of the 

7 predecessor Banks, the Director shall adjust the 

8 term of any directorship of the combined Bank 

9 as necessary to achieve and maintain the stag10 gering of terms that is required under sub11 section (e)(2). 

12 ‘‘(e) TERMS; RULES AND REGULATIONS GOVERNING

13 NOMINATIONS AND ELECTIONS.— 

14 ‘‘(1) TERMS.—Except as provided in paragraph 

15 (2), the term of each Federal Home Loan Bank di16 rector shall be 4 years. 

17 ‘‘(2) ADJUSTMENT OF TERMS.—The Director 

18 shall adjust the terms of members from time to time 

19 as necessary to ensure that the terms of the mem20 bers of the board of directors are staggered with approximately 1 21 ⁄4 of the terms expiring each year. 

22 ‘‘(3) TERM LIMITS.—If any person has been 

23 elected to each of three consecutive full terms as a 

24 director of a Federal Home Loan Bank and has 

25 served for all or part of each of those terms, that 


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1 person shall not be eligible for election to a director2 ship of that Bank for a term which begins earlier 

3 than two years after the expiration of the last expir4 ing of the three terms. 

5 ‘‘(4) RULES AND REGULATIONS GOVERNING

6 NOMINATIONS AND ELECTIONS.—The Director is 

7 hereby authorized to prescribe such rules and regu8 lations as the Director may deem necessary or ap9 propriate for the nomination and election of direc10 tors of Federal Home Loan Banks, including, with11 out limitation on the generality of the foregoing, 

12 rules and regulations with respect to the breaking of 

13 ties and with respect to the inclusion of more than 

14 one directorship on a single ballot and the methods 

15 of voting and of determining the results of voting in 

16 such cases.’’; 

17 (6) in subsection (f), as so redesignated, by 

18 striking the first and second sentences; 

19 (7) in subsection (h), as so redesignated— 

20 (A) by striking ‘‘home loan bank’’ each 

21 place such term appears and inserting ‘‘Home 

22 Loan Bank’’; and 

23 (B) in paragraph (1), by striking ‘‘such 

24 bank’’ and ‘‘the bank’’ and inserting ‘‘such 

25 Bank’’ and ‘‘the Bank’’, respectively; 


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1 (8) in subsection (i)(1)— 

2 (A) by striking ‘‘bank’’ and inserting 

3 ‘‘Bank’’; and 

4 (B) by striking ‘‘board’’ and inserting ‘‘Di5 rector’’; 

6 (9) in subsection (j), by striking ‘‘bank’’ and in7 serting ‘‘Bank’’; and 

8 (10) by striking the second subsection (l), as 

9 added by section 1202(8) of the Housing and Eco10 nomic Recovery Act of 2008. 

Æ 


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