I 

114TH CONGRESS 

2D SESSION H. R. 4913 

To ensure the sufficient capitalization of Fannie Mae and Freddie Mac 

and prevent any further bailout of such enterprises by the Federal 

Government, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 12, 2016 

Mr. MULVANEY introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To ensure the sufficient capitalization of Fannie Mae and 

Freddie Mac and prevent any further bailout of such 

enterprises by the Federal Government, and for other 

purposes. 

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 ‘‘Housing Finance Re5 structuring Act of 2016’’. 

6 SEC. 2. REPAYMENT OF LIQUIDATION PREFERENCE. 

7 (a) REPAYMENT AND REDEMPTION.—Not later than 

8 the expiration of the 60-day period beginning on the date 


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1 of the enactment of this Act, the Secretary of the Treasury 

2 shall modify the Senior Preferred Stock Purchase Agree3 ment for each enterprise to provide as follows: 

4 (1) DEEMED REPAYMENT IN FULL.—Effective 

5 on the date of the date of the enactment of this Act, 

6 the liquidation preference on the Variable Liquida7 tion Preference Senior Preferred Stocks of each en8 terprise is reduced to zero. 

9 (2) REDEMPTION OF VARIABLE LIQUIDATION

10 PREFERENCE SENIOR PREFERRED STOCK.—Pursu11 ant to paragraph (1), the Variable Liquidation Pref12 erence Senior Preferred Stock of each enterprise 

13 shall be redeemed upon the date of the modification 

14 of the Senior Preferred Stock Purchase Agreement 

15 required under this subsection and, upon and after 

16 such redemption— 

17 (A) shares of such Variable Liquidation 

18 Preference Senior Preferred Stock of each en19 terprise shall no longer be deemed to be out20 standing and all rights of the holders thereof, 

21 as such holders, shall cease; 

22 (B) shares of redeemed Variable Liquida23 tion Preference Senior Preferred Stock of each 

24 enterprise shall no longer have the status of au25 thorized, issued, or outstanding shares; 


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1 (C) the Senior Preferred Stock Purchase 

2 Agreement for each enterprise shall be termi3 nated, except that sections 2.1 and 2.2 of such 

4 Agreement, as modified by the Second Amend5 ment to the Senior Preferred Stock Purchase 

6 Agreement for the enterprise (dated December 

7 24, 2009), shall remain in force and effect; and 

8 (D) the Department of the Treasury shall 

9 retain any dividend payments made by an en10 terprise to the Department of the Treasury be11 fore the date of the enactment of this Act. 

12 (b) NO RESUMPTION OF PERIODIC COMMITMENT

13 FEE.—The Department of the Treasury shall not require 

14 the enterprises to pay a periodic commitment fee, as de15 scribed in section 3.2 of the Senior Preferred Stock Pur16 chase Agreements. 

17 (c) EXERCISE OF WARRANTS FOR COMMON

18 STOCK.—Notwithstanding subsection (a)(2)(C) of this 

19 section, upon the enactment of this Act, the Department 

20 of the Treasury shall exercise the warrants for the pur21 chase of common stock of the enterprises provided to the 

22 Department under the Senior Preferred Stock Purchase 

23 Agreements. 


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1 SEC. 3. REBUILDING OF ENTERPRISE RETAINED CAPITAL. 

2 (a) APPLICABILITY.—Notwithstanding any other pro3 vision of law or any provision of the Senior Preferred 

4 Stock Purchase Agreement for an enterprise, the provi5 sions of this section shall apply to each enterprise, includ6 ing during the term of any conservatorship of an enter7 prise pursuant to section 1367 of the Federal Housing 

8 Enterprises Financial Safety and Soundness Act of 1992 

9 (12 U.S.C. 4617). 

10 (b) USE OF NET INCOME FOR CAPITAL RESERVES.— 

11 At any time that an enterprise is not fully capitalized (as 

12 such term is defined in subsection (c)(3))— 

13 (1) section 1337 of the Federal Housing Enter14 prises Financial Safety and Soundness Act of 1992 

15 (42 U.S.C. 4567) shall not apply to the enterprise; 

16 and 

17 (2) the Director shall require that, in each fis18 cal year, the net income of each enterprise, as deter19 mined by the Director, for such fiscal year shall be 

20 retained and maintained by the enterprise as re21 tained capital reserves. 

22 (c) FULL CAPITALIZATION.— 

23 (1) ALLOCATION TO HOUSING TRUST FUND

24 AND CAPITAL MAGNET FUND.—At any time that an 

25 enterprise is fully capitalized, as determined by the 

26 Director, subsection (b) shall not apply to the enterVerDate Sep 11 2014 20:31 Apr 15, 2016 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4913.IH H4913

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1 prise and section 1337 of the Federal Housing En2 terprises Financial Safety and Soundness Act of 

3 1992 shall apply to the enterprise. 

4 (2) DIVIDENDS.—An enterprise may not, unless 

5 the enterprise is fully capitalized, declare or pay any 

6 dividend (whether common or preferred) with re7 spect to any equity interests of the enterprise. 

8 (3) DEFINITION.—For purposes of this sub9 section, the term ‘‘fully capitalized’’ means, with re10 spect to an enterprise, that the enterprise maintains 

11 an amount of total capital, as such term is defined 

12 in section 1303 of the Federal Housing Enterprises 

13 Financial Safety and Soundness Act of 1992 (12 

14 U.S.C. 4502), that is equal to or exceeds 10 percent 

15 of the risk-weighted assets of the enterprise. 

16 (d) CAPITAL RESTORATION PLAN.— 

17 (1) REQUIREMENT.—Not later than the expira18 tion of the 45-day period beginning on the date of 

19 the enactment of this Act, the Director shall prepare 

20 and submit to the Committee on Financial Services 

21 of the House of Representatives and the Committee 

22 on Banking, Housing, and Urban Affairs of the Sen23 ate a capital restoration plan for each enterprise 

24 that complies with section 1369C(a) of the Federal 


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1 Housing Enterprises Financial Safety and Sound2 ness Act of 1992 (12 U.S.C. 4622(a)). 

3 (2) ANNUAL UPDATES.—After submission of a 

4 capital restoration plan for an enterprise pursuant 

5 to paragraph (1), during any period that an enter6 prise remains not fully capitalized (as such term is 

7 defined in subsection (c)(3)), the Director shall up8 date the plan for such enterprise on an annual basis 

9 and submit such updated plan to the Committees re10 ferred to in paragraph (1), together with a report 

11 describing any progress made toward restoring the 

12 capital of the enterprise during the preceding 1-year 

13 period. 

14 (3) PUBLIC AVAILABILITY.—The Director shall 

15 make publicly available each capital restoration plan 

16 prepared pursuant to paragraph (1) and each up17 dated plan prepared pursuant to paragraph (2). 

18 (e) TERMINATION OF CONSERVATORSHIPS.—The Di19 rector shall terminate the conservatorship of an enterprise 

20 under section 1367 of the Federal Housing Enterprises 

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

22 4617) at such time that the enterprise attains, as deter23 mined by the Director, an amount of capital that is equal 

24 to or exceeds 5 percent of the risk-weighted assets of the 

25 enterprise. 


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1 (f) REGULATIONS.—Not later than the expiration of 

2 the 180-day period beginning on the date of the enactment 

3 of this Act, the Director shall issue regulations necessary 

4 to carry out this section and the amendments made by 

5 this section. 

6 SEC. 4. PRIVATE RIGHT OF ACTION. 

7 (a) IN GENERAL.—Any individual or entity adversely 

8 affected or aggrieved by action or inaction on the part of 

9 the Director or the Secretary of the Treasury in violation 

10 of this Act or title XIII of the Federal Housing Enter11 prises Financial Safety and Soundness Act of 1992 (12 

12 U.S.C. 4501 et seq.) may commence a civil action for pro13 spective injunctive relief against the Director or the Sec14 retary, as appropriate. 

15 (b) EQUITABLE RELIEF.—In any action under this 

16 section, the court may award appropriate equitable relief, 

17 including temporary, preliminary, or permanent injunctive 

18 relief. 

19 (c) COSTS.—In any action under this section, the 

20 court shall award the costs of litigation, including reason21 able attorney and expert witness fees, to any prevailing 

22 or substantially prevailing plaintiff. 

23 (d) JURISDICTION.—The district courts of the United 

24 States shall have jurisdiction over proceedings commenced 

25 pursuant to this section and shall exercise the same withVerDate Sep 11 2014 20:31 Apr 15, 2016 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4913.IH H4913

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1 out regard to whether the party aggrieved shall have ex2 hausted any administrative or other remedies that may be 

3 provided for by law. 

4 SEC. 5. DEFINITIONS. 

5 For purposes of this Act, the following definitions 

6 shall apply: 

7 (1) DIRECTOR.—The term ‘‘Director’’ means 

8 the Director of the Federal Housing Finance Agen9 cy, in the capacity of such Director and in the ca10 pacity as conservator of an enterprise pursuant to 

11 section 1367 of the Federal Housing Enterprises Fi12 nancial Safety and Soundness Act of 1992 (12 

13 U.S.C. 4617), as the case may be. 

14 (2) ENTERPRISE.—The term ‘‘enterprise’’ has 

15 the meaning given such term in section 1303 of the 

16 Federal Housing Enterprises Financial Safety and 

17 Soundness Act of 1992 (12 U.S.C. 4502). 

18 (3) NET INCOME.—The term ‘‘net income’’ 

19 means, with respect to an enterprise, income after 

20 deduction of all associated expenses, as calculated in 

21 accordance with generally accepted accounting prin22 ciples. 

23 (4) RISK-WEIGHTED.—The term ‘‘risk-weight24 ed’’ means, with respect to the assets of an enter25 prise, that the amount of any such assets that are 


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1 single family housing mortgages meeting the re2 quirements of section 618(a)(1)(B) of the Resolution 

3 Trust Corporation, Refinancing, Restructuring, and 

4 Improvement Act of 1991 (12 U.S.C. 1831n note) 

5 are calculated using a risk-weighting of 50 percent, 

6 in the same manner required under subsection 

7 (a)(1)(A) of such section 618 with respect to single 

8 family housing loans. 

9 (5) SENIOR PREFERRED STOCK PURCHASE

10 AGREEMENT.—The term ‘‘Senior Preferred Stock 

11 Purchase Agreement’’ means, with respect to an en12 terprise, the Amended and Restated Senior Pre13 ferred Stock Purchase Agreements, dated September 

14 26, 2008, amended May 6, 2009, further amended 

15 December 24, 2009, and further amended August 

16 17, 2012, between the Department of the Treasury 

17 and such enterprise. 

Æ 


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