1

FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT

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

As amended through July 25, 2019

SEC. 301. DECLARATION OF PURPOSES OF TITLE

The Congress declares that the purposes of this title are to establish secondary 

market facilities for residential mortgages, to provide that the operations thereof 

shall be financed by private capital to the maximum extent feasible, and to 

authorize such facilities to—

(1) provide stability in the secondary market for residential mortgages;

(2) respond appropriately to the private capital market;

(3) provide ongoing assistance to the secondary market for residential 

mortgages (including activities relating to mortgages on housing for lowand moderate-income families involving a reasonable economic return that 

may be less than the return earned on other activities) by increasing the 

liquidity of mortgage investments and improving the distribution of investment capital available for residential mortgage financing;

(4) promote access to mortgage credit throughout the Nation (including 

central cities, rural areas, and underserved areas) by increasing the liquidity 

of mortgage investments and improving the distribution of investment 

capital available for residential mortgage financing; and

12 U.S.C. 1716

Statutory Purposes

Secondary Market 

Operations 

(Fannie Mae)

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

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

market and minimum loss to the Federal Government.

Management and 

Liquidating 

Functions (GNMA)

SEC. 302. FEDERAL NATIONAL MORTGAGE

ASSOCIATION AND GOVERNMENT NATIONAL MORTGAGE 

ASSOCIATION 

(a) CREATION; SUCCESSION; PRINCIPAL AND OTHER OFFICES.—

(1) There is created a body corporate to be known as the “Federal National 

Mortgage Association”, which shall be in the Department of Housing and 

Urban Development. The Association shall have succession until dissolved 

by Act of Congress. It shall maintain its principal office in the District of 

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

a resident thereof. Agencies or offices may be established by the Association in such other place or places as it may deem necessary or appropriate in 

the conduct of its business.

12 U.S.C. 1717

Previous 

Corporate Status
2

(2) On September 1, 1968, the body corporate described in the foregoing 

paragraph shall cease to exist in that form and is hereby partitioned into two 

separate and distinct bodies corporate, each of which shall have continuity 

and corporate succession as a separated portion of the previously existing 

body corporate, as follows:

(A) One of such separated portions shall be a body corporate without 

capital stock to be known as Government National Mortgage 

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

in the Department of Housing and Urban Development and which shall 

retain the assets and liabilities acquired and incurred under sections 305 

and 306 prior to such date, including any and all liabilities incurred 

pursuant to subsection (c) of this section. The Association shall have 

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

principal office in the District of Columbia and shall be deemed, for 

purposes of venue in civil actions, to be a resident thereof. Agencies or 

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

places as it may deem necessary or appropriate in the conduct of its 

business.

(B) The other such separated portion shall be a body corporate to be 

known as Federal National Mortgage Association (hereinafter referred 

to as the “corporation”), which shall retain the assets and liabilities 

acquired and incurred under sections 303 and 304 prior to such date. 

The corporation shall have succession until dissolved by Act of 

Congress. It shall maintain its principal office in the District of 

Columbia or the metropolitan area thereof and shall be deemed, for 

purposes of jurisdiction and venue in civil actions, to be a District of 

Columbia corporation.

(3) The partition transaction effected pursuant to the foregoing paragraph 

constitutes a reorganization within the meaning of section 368(a)(1)(E) of 

the Internal Revenue Code of 1986; and for the purposes of such Code, no 

gain or loss is recognized by the previously existing body corporate by 

reason of the partition, and the basis and holding period of the assets of the 

corporation immediately following such partition are the same as the basis 

and holding period of such assets immediately prior to such partition.

Partition

GNMA

Fannie Mae

(b) PURCHASE AND SALE OF INSURED AND CONVENTIONAL MORTGAGES; TRANSACTIONS IN LOANS AND ADVANCES OF CREDIT.—

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

and restrictions of this title, each of the bodies corporate named in 

subsection (a)(2) is authorized, pursuant to commitments or otherwise, to 

purchase, service, sell, or otherwise deal in any mortgages which are insured 

under the National Housing Act or title V of the Housing Act of 1949, or 

Mortgage Purchase 

Authority (Fannie 

Mae and GNMA) 
3

which are insured or guaranteed under the Servicemen’s Readjustment Act 

of 1944 or chapter 37 of title 38, United States Code; and to purchase, 

service, sell, or otherwise deal in any loans made or guaranteed under part B 

of title VI of the Public Health Service Act; and the corporation is authorized to lend on the security of any such mortgages and to purchase, sell, or 

otherwise deal in any securities guaranteed by the Association under section 

306(g): Provided, That (1) the Association may not purchase any mortgage 

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

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

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

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

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

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

under section 305, except a mortgage insured under section 220 or title VIII 

or section 203(k), or under title IX with respect to a new community 

approved under section 1004 thereof, or insured under section 213 and 

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

property located in Alaska, Guam, or Hawaii, if the original principal 

obligation thereof exceeds or exceeded $55,000 in the case of property upon 

which is located a dwelling designed principally for a one-family residence; 

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

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

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

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

regulation specify in any geographical area where the Secretary finds that 

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

use. Notwithstanding the provisions of clause (3) of the preceding sentence, 

the Association may purchase a mortgage under section 305 with an original 

principal obligation which exceeds the otherwise applicable maximum 

amount per dwelling unit if the mortgage is insured under section 207(c)(3), 

213(b)(2), 220(d)(3)(B)(iii), 221(d)(3)(ii), 221(d)(4)(ii), 231(c)(2), 

234(e)(3), or 236. For the purposes of this title, the terms “mortgages” and 

“home mortgages” shall be inclusive of any mortgages or other loans 

insured under any of the provisions of the National Housing Act or title V of 

the Housing Act of 1949.

Lending Authority 

(Fannie Mae)

Price 

Limitation 

(GNMA)

Principal 

Obligation 

Limitations 

(GNMA)

Exception

(2) For the purposes set forth in section 301(a), the corporation is 

authorized, pursuant to commitments or otherwise, to purchase, service, sell, 

lend on the security of, or otherwise deal in mortgages which are not insured 

or guaranteed as provided in paragraph (1) (such mortgages referred to 

hereinafter as “conventional mortgages”). No such purchase of a conventional mortgage secured by a property comprising one- to four-family 

dwelling units shall be made if the outstanding principal balance of the 

mortgage at the time of purchase exceeds 80 per centum of the value of the 

property securing the mortgage, unless (A) the seller retains a participation 

of not less than 10 per centum in the mortgage; (B) for such period and 

under such circumstances as the corporation may require, the seller agrees 

Conventional 

Mortgages 

(Fannie Mae)

Credit 

Enhancement

Requirements
4

to repurchase or replace the mortgage upon demand of the corporation in the 

event that the mortgage is in default; or (C) that portion of the unpaid 

principal balance of the mortgage which is in excess of such 80 per centum

is guaranteed or insured by a qualified insurer as determined by the corporation. The corporation shall not issue a commitment to purchase a 

conventional mortgage prior to the date the mortgage is originated, if such 

mortgage is eligible for purchase under the preceding sentence only by 

reason of compliance with the requirements of clause (A) of such sentence. 

The corporation may purchase a conventional mortgage which was 

originated more than one year prior to the purchase date only if the seller is

the Federal Deposit Insurance Corporation, the Resolution Trust 

Corporation, the National Credit Union Administration, or any other seller 

currently engaged in mortgage lending or investing activities. For the 

purpose of this section, the term “conventional mortgages” shall include a 

mortgage, lien, or other security interest on the stock or membership 

certificate issued to a tenant-stockholder or resident-member of a 

cooperative housing corporation, as defined in section 216 of the Internal 

Revenue Code of 1986, and on the proprietary lease, occupancy agreement 

or right of tenancy in the dwelling unit of the tenant-stockholder or residentmember in such cooperative housing corporation. The corporation shall 

establish limitations governing the maximum original principal obligation of 

conventional mortgages that are purchased by it; in any case in which the 

corporation purchases a participation interest in such a mortgage, the limitation shall be calculated with respect to the total original principal obligation 

of the mortgage and not merely with respect to the interest purchased by the 

corporation. Such limitations shall not exceed $417,000 for a mortgage 

secured by a single-family residence, $533,850 for a mortgage secured by a 

2-family residence, $645,300 for a mortgage secured by a 3-family 

residence, and $801,950 for a mortgage secured by a 4-family residence, 

except that such maximum limitations shall be adjusted effective January 1 

of each year beginning after the effective date of the Federal Housing 

Finance Regulatory Reform Act of 2008 [July 30, 2008], subject to the 

limitations in this paragraph. Each adjustment shall be made by adding to 

each such amount (as it may have been previously adjusted) a percentage 

thereof equal to the percentage increase, during the most recent 12-month or 

4-quarter period ending before the time of determining such annual 

adjustment, in the housing price index maintained by the Director of the 

Federal Housing Finance Agency) pursuant to section 1322 of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992 (12 

U.S.C. 4541)). If the change in such house price index during the most 

recent 12-month or 4-quarter period ending before the time of determining 

such annual adjustment is a decrease, then no adjustment shall be made for 

the next year, and the next adjustment shall take into account prior declines 

in the house price index, so that any adjustment shall reflect the net change 

in the house price index since the last adjustment. Declines in the house 

price index shall be accumulated and then reduce increases until subsequent 

increases exceed prior declines. The foregoing limitations may be increased 

One-year 

Limitation

Loan Limitations

Annual Adjustment 

of Loan Limitations
5

by not to exceed 50 per centum with respect to the properties located in 

Alaska, Guam, Hawaii, and the Virgin Islands. Such foregoing limitations 

shall also be increased, with respect to properties of a particular size located 

in any area for which 115 percent of the median house price for such size 

residence exceeds the foregoing limitation for such size residence, to the 

lesser of 150 percent of such limitation for such size residence or the 

amount that is equal to 115 percent of the median house price in such area 

for such size residence.

(3) The corporation is authorized to purchase, service, sell, lend on the 

security of, and otherwise deal in loans or advances of credit for the 

purchase and installation of home improvements, including energy 

conserving improvements or solar energy systems described in the last 

paragraph of section 2(a) of the National Housing Act and residential 

energy conservation measures as described in section 210(11) of the 

National Energy Conservation Policy Act and financed by a public utility in 

accordance with the requirements of title II of such Act. To be eligible for 

purchase, any such loan or advance of credit (other than a loan or advance 

made with respect to energy conserving improvements or solar energy 

systems or residential energy conservation measures) not insured under title 

I of the National Housing Act shall be secured by a lien against the property 

to be improved.

Home Improvement 

Loans

(4) The corporation is authorized to purchase, service, sell, lend on the 

security of, and otherwise deal in loans or advances of credit secured by 

mortgages or other liens against manufactured homes.

Manufactured 

Homes

(5)(A) The corporation is authorized to purchase, service, sell, lend on the 

security of, and otherwise deal in (i) conventional mortgages that are 

secured by a subordinate lien against a one- to four-family residence that is 

the principal residence of the mortgagor; and (ii) conventional mortgages 

that are secured by a subordinate lien against a property comprising five or 

more family dwelling units. If the corporation, pursuant to paragraphs (1) 

through (4), shall have purchased, serviced, sold, or otherwise dealt with 

any other outstanding mortgage secured by the same residence, the 

aggregate original amount of such other mortgage and the mortgage 

authorized to be purchased, serviced, sold, or otherwise dealt with under this 

paragraph shall not exceed the applicable limitation determined under 

paragraph (2).

Subordinate 

Mortgages

(B) The corporation shall establish limitations governing the maximum 

original principal obligation of conventional mortgages described in 

subparagraph (A). In any case in which the corporation purchases a 

participation interest in such a mortgage, the limitation shall be 

calculated with respect to the total original principal obligation of such 

mortgage described in subparagraph (A) and not merely with respect to 

the interest purchased by the corporation. Such limitations shall not 

Loan Limitations

for Subordinate 

Mortgages
6

exceed (i) with respect to mortgages described in subparagraph (A)(i), 

50 per centum of the single-family residence mortgage limitation determined under paragraph (2); and (ii) with respect to mortgages described 

in subparagraph (A)(ii), the applicable limitation determined under 

paragraph (2).

(C) No subordinate mortgage against a one- to four-family residence 

shall be purchased by the corporation if the total outstanding indebtedness secured by the property as a result of such mortgage exceeds 80 per 

centum of the value of such property unless (i) that portion of such total 

outstanding indebtedness that exceeds such 80 per centum is guaranteed 

or insured by a qualified insurer as determined by the corporation; (ii) 

the seller retains a participation of not less than 10 per centum in the 

mortgage; or (iii) for such period and under such circumstances as the 

corporation may require, the seller agrees to repurchase or replace the 

mortgage upon the demand of the corporation in the event that the mortgage is in default. The corporation shall not issue a commitment to 

purchase a subordinate mortgage prior to the date the mortgage is 

originated, if such mortgage is eligible for purchase under the preceding 

sentence only by reason of compliance with the requirements of clause 

(ii) of such sentence.

(6) The corporation may not implement any new program (as such term is 

defined in section 1303 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992) before obtaining the approval of the Secretary 

under section 1322 of such Act.

Credit 

Enhancement

Requirements for 

Subordinate 

Mortgages

Approval for New 

Programs

(7)(A) DEFINITIONS.—In this paragraph—

(i) the term ‘credit score’ means a numerical value or a 

categorization created by a third party derived from a statistical tool 

or modeling system used by a person who makes or arranges a loan 

to predict the likelihood of certain credit behaviors, including 

default; and

(ii) the term ‘residential mortgage’ has the meaning given the term 

in section 302 of the Federal Home Loan Mortgage Corporation Act 

(12 U.S.C. 1451).

(B) USE OF CREDIT SCORES.—The corporation shall condition 

purchase of a residential mortgage by the corporation under this 

subsection on the provision of a credit score for the borrower only if—

(i) the credit score is derived from any credit scoring model that has 

been validated and approved by the corporation under this 

paragraph; and

Use of Credit 

Scores in 

Purchasing 

Residential 

Mortgages (Fannie 

Mae)
7

(ii) the corporation provides for the use of the credit score by all of 

the automated underwriting systems of the corporation and any other 

procedures and systems used by the corporation to purchase 

residential mortgages that use a credit score.

(C) VALIDATION AND APPROVAL PROCESS.—The corporation 

shall establish a validation and approval process for the use of credit 

score models, under which the corporation may not validate and approve 

a credit score model unless the credit score model—

(i) satisfies minimum requirements of integrity, reliability, and 

accuracy;

(ii) has a historical record of measuring and predicting default rates 

and other credit behaviors;

(iii) is consistent with the safe and sound operation of the 

corporation;

(iv) complies with any standards and criteria established by the 

Director of the Federal Housing Finance Agency under section 

1328(1) of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992; and

(v) satisfies any other requirements, as determined by the 

corporation.

(D) REPLACEMENT OF CREDIT SCORE MODEL.—If the 

corporation has validated and approved 1 or more credit score models 

under subparagraph (C) and the corporation validates and approves an 

additional credit score model, the corporation may determine that—

(i) the additional credit score model has replaced the credit score 

model or credit score models previously validated and approved; and

(ii) the credit score model or credit score models previously 

validated and approved shall no longer be considered validated and 

approved for the purposes of subparagraph (B).

(E) PUBLIC DISCLOSURE.—Upon establishing the validation and 

approval process required under subparagraph (C), the corporation shall 

make publicly available a description of the validation and approval 

process.

(F) APPLICATION.—Not later than 30 days after the effective date of 

this paragraph, the corporation shall solicit applications from developers 

of credit scoring models for the validation and approval of those models 

Validation and 

Approval Process 

for Use of Credit 

Score Models
8

under the process required under subparagraph (C).

(G) TIMEFRAME FOR DETERMINATION; NOTICE.—

(i) IN GENERAL.—The corporation shall make a determination 

with respect to any application submitted under subparagraph (F), 

and provide notice of that determination to the applicant, before a 

date established by the corporation that is not later than 180 days 

after the date on which an application is submitted to the 

corporation.

(ii) EXTENSIONS.—The Director of the Federal Housing Finance 

Agency may authorize not more than 2 extensions of the date 

established under clause (i), each of which shall not exceed 30 days, 

upon a written request and a showing of good cause by the 

corporation.

(iii) STATUS NOTICE.—The corporation shall provide notice to an 

applicant regarding the status of an application submitted under 

subparagraph (F) not later than 60 days after the date on which the 

application was submitted to the corporation.

(iv) REASONS FOR DISAPPROVAL.—If an application submitted 

under subparagraph (F) is disapproved, the corporation shall provide 

to the applicant the reasons for the disapproval not later than 30 days 

after a determination is made under this subparagraph.

(H) AUTHORITY OF DIRECTOR.—If the corporation elects to use a 

credit score model under this paragraph, the Director of the Federal 

Housing Finance Agency shall require the corporation to periodically 

review the validation and approval process required under subparagraph 

(C) as the Director determines necessary to ensure that the process 

remains appropriate and adequate and complies with any standards and 

criteria established pursuant to section 1328(1) of the Federal Housing 

Enterprises Financial Safety and Soundness Act of 1992.

(I) EXTENSION.—If, as of the effective date of this paragraph, a credit 

score model has not been approved under subparagraph (C), the 

corporation may use a credit score model that was in use before the 

effective date of this paragraph, if necessary to prevent substantial 

market disruptions, until the earlier of—

(i) the date on which a credit score model is validated and approved 

under subparagraph (C); or

(ii) the date that is 2 years after the effective date of this paragraph.

Periodic Review of 

Validation and 

Approval Process
9

(c) ADMINISTRATION OF TRUSTS; OBLIGATIONS OF DEPARTMENTS 

AND AGENCIES OF UNITED STATES; EXEMPTION OF INTEREST 

INCOME FROM TAXATION; AUTHORIZATION OF APPROPRIATIONS 

FOR DIFFERENTIAL REIMBURSEMENTS.—

(1) Notwithstanding any other provision of this Act or of any other law, the 

Association is authorized under section 306 to create, accept, execute, and 

otherwise administer in all respects such trusts, receiverships, conservatorships, liquidating or other agencies, or other fiduciary and representative 

undertakings and activities, hereinafter in this subsection called “trusts”, as 

might be appropriate for financing purposes; and in relation thereto the 

Association may acquire, hold and manage, dispose of, and otherwise deal 

in any mortgages or other types of obligations in which any department or 

agency of the United States listed in paragraph (2) of this subsection may 

have a financial interest. The Association may join in any such undertakings 

and activities, hereinafter in this subsection called “trusts”; notwithstanding 

that it is also serving in a fiduciary or representative capacity; and is 

authorized to guarantee any participations or other instruments, whether 

evidence of property rights or debt, issued for such financing purposes. 

Participations or other instruments issued by the Association pursuant to this 

subsection shall to the same extent as securities which are direct obligations 

of or obligations guaranteed as to principal or interest by the United States 

be deemed to be exempt securities within the meaning of laws administered 

by the Securities and Exchange Commission. The amounts of any 

mortgages and other obligations acquired by the Association under section 

306, pursuant to this subsection, shall not be included in the total amounts 

set forth in section 306(c).

Fiduciary Powers 

(GNMA)

Authority to 

Guarantee 

Participations 

(GNMA)

SEC Exemption

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

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

of the following departments or agencies:

Establishment of 

Trusts

(A) The Farmers Home Administration of the Department of 

Agriculture, but only with respect to operating loans, direct farm ownership loans, direct housing loans, and direct soil and water loans. Such 

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

elderly under sections 502 and 515(a) of the Housing Act of 1949, nor 

with respect to loans for nonfarm recreational development.

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

by the Secretary of Education for construction of academic facilities,

and loans to help finance student loan programs.

(C) The Department of Housing and Urban Development.

(D) The Department of Veterans Affairs.
10

(E) The Export-Import Bank.

(F) The Small Business Administration.

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

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

held by the trustor and subject them to a trust or trusts and, incident thereto, 

shall guarantee to the trustee timely payment thereof. The trust instrument 

may provide for the issuance and sale of beneficial interests or participations, by the trustee, in such obligations or in the right to receive interest and 

principal collections therefrom; and may provide for the substitution or 

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

obligations. The trust or trusts shall be exempt from all taxation. The trust 

instrument may also contain other appropriate provisions in keeping with 

the purposes of this subsection. The Association shall be named and shall 

act as trustee of any such trusts and, for the purposes thereof, the title to 

such obligations shall be deemed to have passed to the Association in trust. 

The trust instrument shall provide that custody, control, and administration 

of the obligations shall remain in the trustor subjecting the obligations to the 

trust, subject to transfer to the trustee in event of default or probable default, 

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

beneficial interests or participations. Collections from obligations subject to 

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

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

trustor the full net proceeds of any sale of beneficial interests or 

participations to the extent they are based upon such obligations or 

collections. Such proceeds shall be dealt with as otherwise provided by law 

for sales or repayment of such obligations. The effect of both past and future 

sales of any issue of beneficial interests or participations shall be the same, 

to the extent of the principal of such issue, as the direct sale with recourse of 

the obligations subject to the trust. Any trustor creating a trust or trusts 

hereunder is authorized to purchase, through the facilities of the trustee, 

outstanding beneficial interests or participations to the extent of the amount 

of the trustor’s responsibility to the trustee on beneficial interests or 

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

and expenses incurred by the Association as trustee pursuant to the trust 

instrument.

(3) When any trustor guarantees to the trustee the timely payment of obligations the trustor subjects to a trust pursuant to this subsection, and it 

becomes necessary for such trustor to meet his responsibilities under such 

guaranty, the trustor is authorized to fulfill such guaranty.

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

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

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

shall remain available only for the fiscal year for which it is granted and for 

Trust Instrument

Effect of Sales

Guaranty of 

Trustor

Appropriation Act 

Authorization
11

the succeeding fiscal year.

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

interests or participations under this subsection, notwithstanding that there 

may be an insufficiency in aggregate receipts from obligations subject to the 

related trust to provide for the payment by the trustee (on a timely basis out 

of current receipts or otherwise) of all interest or principal on such interests 

or participations (after provision for all costs and expenses incurred by the 

trustee, fairly prorated among trustors). There are authorized to be 

appropriated without fiscal year limitation such sums as may be necessary 

to enable any trustor to pay the trustee such insufficiency as the trustee may 

require on account of outstanding beneficial interests or participations 

authorized to be issued pursuant to paragraph (4) of this subsection. Such 

trustor shall make timely payments to the trustee from such appropriations, 

subject to and in accord with the trust instrument. In the event that the 

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

outstanding beneficial interests or participations authorized to be issued 

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

is authorized to elect to issue additional beneficial interests or participations 

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

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

issue of beneficial interests or participations shall be in an amount determined by the trustee but not in excess of the aggregate amount which the 

trustee would otherwise require the trustor or trustors to pay from 

appropriated funds or other sources, and may be issued without regard to the 

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

beneficial interests or participations shall be deemed to have been issued 

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

which the beneficial interests or participations were originally issued.

Appropriation 

Authority for 

Insufficiencies

Rollover Authority

SEC. 303. CAPITALIZATION OF FEDERAL NATIONAL MORTGAGE 

ASSOCIATION 

(a) COMMON STOCK; PREFERRED STOCK; TRANSFERABILITY OF 

SHARES.—The corporation shall have common stock, without par value, 

which shall be vested with all voting rights, each share being entitled to one 

vote with rights of cumulative voting at all elections of directors. The corporation may eliminate such rights of cumulative voting by a resolution adopted by 

its board of directors and approved by the holders of a majority of the shares of 

common stock voting in person or by proxy at the annual meeting, or other 

special meeting, at which such resolution is considered. The corporation may 

have preferred stock on such terms and conditions as the board of directors shall 

prescribe. The free transferability of the stock at all times to any person, firm,

corporation, or other entity shall not be restricted except that, as to the 

corporation, it shall be transferable only on the books of the corporation. The 

corporation may issue shares of common stock in return for appropriate 

payments into capital or capital and surplus.

12 U.S.C. 1718

Common Stock

Transferability
12

(b) FEES AND CHARGES; ANNUAL TRANSFER OF EARNINGS TO 

GENERAL SURPLUS ACCOUNT.—

(1) The corporation may impose charges or fees, which may be regarded as 

elements of pricing, with the objective that all costs and expenses of the 

operations of the corporation should be within its income derived from such 

operations and that such operations should be fully self-supporting.

(2) All earnings from the operations of the corporation shall annually be 

transferred to the general surplus account of the corporation. At any time, 

funds of the general surplus account may, in the discretion of the board of 

directors, be transferred to reserves.

Self-Sustaining

(c) CAPITAL DISTRIBUTIONS FROM GENERAL SURPLUS ACCOUNT; 

MINIMUM CAPITALIZATION LEVELS.—

(1) Except as provided in paragraph (2), the corporation may make such 

capital distributions (as such term is defined in section 1303 of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992) as may 

be declared by the board of directors. All capital distributions shall be 

charged against the general surplus account of the corporation.

(2) The corporation may not make any capital distribution that would 

decrease the total capital of the corporation (as such term is defined in 

section 1303 of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992) to an amount less than the risk-based capital level 

for the corporation established under section 1361 of such Act or that would 

decrease the core capital of the corporation (as such term is defined in 

section 1303 of such Act) to an amount less than the minimum capital level 

for the corporation established under section 1362 of such Act, without prior 

written approval of the distribution by the Director of the Federal Housing 

Finance Agency. 

Capital 

Distributions

(d) INSTITUTIONS ELIGIBLE TO PURCHASE STOCK.—Notwithstanding 

any other provision of law, any institution, including a national bank or State 

member bank of the Federal Reserve System or any member of the Federal 

Deposit Insurance Corporation, trust company or other banking organization, 

organized under any law of the United States, including the laws relating to the 

District of Columbia, shall be authorized to purchase shares of common stock 

of the corporation, and to hold or dispose of such stock, subject to the 

provisions of this title.

Legal 

Investment
13

SEC. 304. SECONDARY MARKET OPERATIONS

(a) PURCHASE AND SALE OF MORTGAGES; SECONDARY MARKET

OPERATIONS; ADVANCE OF FUNDS OR ORIGINATION OF LOANS;

SETTLEMENT OR EXTINGUISHMENT OF BORROWERS RIGHTS.—

12 U.S.C. 1719

(1) To carry out the purposes set forth in paragraph (a) of section 301, the 

operations of the corporation under this section shall be confined so far as 

practicable, to mortgages which are deemed by the corporation to be of such 

quality, type, and class as to meet, generally, the purchase standards 

imposed by private institutional mortgage investors. In the interest of 

assuring sound operation, the prices to be paid by the corporation for mortgages purchased in its secondary market operations under this section, 

should be established, from time to time, within the range of market prices 

for the particular class of mortgages involved, as determined by the corporation. The volume of the corporation’s purchases and sales, and the establishment of the purchase prices, sale prices, and charges or fees, in its 

secondary market operations under this section, should be determined by the 

corporation from time to time, and such determinations should be consistent 

with the objectives that such purchases and sales should be effected only at 

such prices and on such terms as will reasonably prevent excessive use of 

the corporation’s facilities, and that the operations of the corporation under 

this section should be within its income derived from such operations and 

that such operations should be fully self supporting. Nothing in this title 

shall prohibit the corporation from purchasing, and making commitments to 

purchase, any mortgage with respect to which the Secretary of Housing and 

Urban Development has entered into a contract with the corporation to 

make interest subsidy payments under section 243 of the National Housing 

Act.

Institutional 

Investor Purchase 

Standard

Operations to be 

Self-Supporting

(2) The volume of the corporation’s lending activities and the establishment 

of its loan ratios, interest rates, maturities, and charges or fees, in its 

secondary market operations under this section, should be determined by the 

corporation from time to time; and such determinations, in conjunction with 

determinations made under paragraph (1), should be consistent with the 

objectives that the lending activities should be conducted on such terms as 

will reasonably prevent excessive use of the corporation’s facilities, and that 

the operations of the corporation under this section should be within its 

income derived from such operations and that such operations should be 

fully self-supporting. The corporation shall not be permitted to use its 

lending authority (A) to advance funds to a mortgage seller on an interim 

basis, using mortgage loans as collateral, pending the sale of the mortgages 

in the secondary market; or (B) to originate mortgage loans. Notwithstanding any Federal, State, or other law to the contrary, the corporation is

empowered, in connection with any loan under this section, whether before 

or after any default, to provide by contract with the borrower for the 

settlement or extinguishment, upon default, of any redemption, equitable, 

Authority to Lend

on the Security of 

Mortgages

Prohibitions
14

legal, or other right, title, or interest of the borrower in any mortgage or 

mortgages that constitute the security for the loan; and with respect to any 

such loan, in the event of default and pursuant otherwise to the terms of the 

contract, the mortgages that constitute such security shall become the 

absolute property of the corporation.

(b) OBLIGATIONS OF THE CORPORATION.—For the purposes of this 

section, the corporation is authorized to issue, upon the approval of the 

Secretary of the Treasury, and have outstanding at any one time obligations 

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

determined by the corporation with the approval of the Secretary of the 

Treasury, to be redeemable at the option of the corporation before maturity in 

such manner as may be stipulated in such obligations. The corporation shall 

insert appropriate language in all of its obligations issued under this subsection 

clearly indicating that such obligations, together with the interest thereon, are 

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

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

corporation. The corporation is authorized to purchase in the open market any 

of its obligations outstanding under this subsection at any time and at any price.

General 

Obligations

Not Guaranteed by 

the United States

(c) PURCHASE OF OBLIGATIONS BY TREASURY; CONDITIONS AND 

RESTRICTIONS.—The Secretary of the Treasury is authorized in the 

Secretary’s discretion to purchase any obligations issued pursuant to subsection 

(b) of this section, as now or hereafter in force, and for such purpose the 

Secretary of the Treasury is authorized to use as a public debt transaction the 

proceeds of the sale of any securities hereafter issued under chapter 31 of title 

31, United States Code, and the purposes for which securities may be issued 

under chapter 31 of title 31, United States Code, are extended to include such 

purchases. The Secretary of the Treasury shall not at any time purchase any 

obligations under this subsection if such purchase would increase the aggregate 

principal amount of the Secretary’s then outstanding holdings of such obligations under this subsection to an amount greater than $2,250,000,000. Each 

purchase of obligations by the Secretary of the Treasury under this subsection 

shall be upon such terms and conditions as to yield a return at a rate determined 

by the Secretary of the Treasury, taking into consideration the current average 

rate on outstanding marketable obligations of the United States as of the last 

day of the month preceding the making of such purchase. The Secretary of the 

Treasury may, at any time, sell, upon such terms and conditions and at such 

price or prices as the Secretary shall determine, any of the obligations acquired 

by the Secretary under this subsection. All redemptions, purchases, and sales 

by the Secretary of the Treasury of such obligations under this subsection shall 

be treated as public debt transactions of the United States.

Authority of 

Treasury to 

Purchase 

Obligations

Limitations

Terms and Rates

(d) MORTGAGE-BACKED SECURITIES; ISSUANCE; MATURITIES; 

RATES OF INTEREST; EXEMPT SECURITIES; ADEQUACY OF 

MORTGAGES TO PERMIT PRINCIPAL AND INTEREST PAYMENTS; 

STATEMENT IN SECURITIES.—To provide a greater degree of liquidity to 

Authority to Issue 

Secured 

Obligations
15

the mortgage investment market and an additional means of financing its 

operations under this section, the corporation is authorized to set aside any 

mortgages held by it under this section, and, upon approval of the Secretary of 

the Treasury, to issue and sell securities based upon the mortgages so set aside.

Securities issued under this subsection may be in the form of debt obligations or 

trust certificates of beneficial interest, or both. Securities issued under this 

subsection shall have such maturities and bear such rate or rates of interest as 

may be determined by the corporation with the approval of the Secretary of the 

Treasury. Securities issued by the corporation under this subsection shall, to the 

same extent as securities which are direct obligations of or obligations 

guaranteed as to principal and interest by the United States, be deemed to be 

exempt securities within the meaning of laws administered by the Securities and 

Exchange Commission. Mortgages set aside pursuant to this subsection shall at 

all times be adequate to enable the corporation to make timely principal and 

interest payments on the securities issued and sold pursuant to this subsection. 

The corporation shall insert appropriate language in all of the securities issued 

under this subsection clearly indicating that such securities, together with the 

interest thereon, are not guaranteed by the United States and do not constitute a 

debt or obligation of the United States or any agency or instrumentality thereof 

other than the corporation.

SEC Exemption

(e) SUBORDINATED OR CONVERTIBLE OBLIGATIONS; ISSUANCE; 

MATURITIES; RATE OF INTEREST; REDEMPTION; EXEMPT 

SECURITIES; DEBT OR OBLIGATION OF UNITED STATES; 

PURCHASES IN OPEN MARKET.—For the purposes of this section, the 

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

Treasury, obligations which are subordinated to any or all other obligations of 

the corporation, including subsequent obligations. The obligations issued under 

this subsection shall have such maturities and bear such rate or rates of interest 

as may be determined by the corporation with the approval of the Secretary of 

the Treasury and may be made redeemable at the option of the corporation 

before maturity in such manner as may be stipulated in such obligations. Any 

of such obligations may be made convertible into shares of common stock in 

such manner, at such price or prices, and at such time or times as may be 

stipulated therein. Obligations issued by the corporation under this subsection 

shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, be deemed to be 

exempt securities within the meaning of laws administered by the Securities and 

Exchange Commission. The corporation shall insert appropriate language in all 

of its obligations issued under this subsection clearly indicating that such obligations, together with the interest thereon, are not guaranteed by the United 

States and do not constitute a debt or obligation of the United States or of any 

agency or instrumentality thereof other than the corporation. The corporation is 

authorized to purchase in the open market any of its obligations outstanding 

under this subsection at any time and at any price.

Authority to Issue 

Subordinated 

Obligations

Convertible

SEC Exemption

Not Guaranteed by 

the United States
16

(f) PROHIBITION ON ASSESSMENT OR COLLECTION OF FEE OR 

CHARGE BY UNITED STATES.—Except for fees paid pursuant to section 

309(g) of this Act and assessments pursuant to section 1316 of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992, no fee or 

charge may be assessed or collected by the United States (including any 

executive department, agency, or independent establishment of the United 

States) on or with regard to the purchase, acquisition, sale, pledge, issuance, 

guarantee, or redemption of any mortgage, asset, obligation, trust certificate of

beneficial interest, or other security by the corporation. No provision of this 

subsection shall affect the purchase of any obligation by the Secretary of the 

Treasury pursuant to subsection (c) of this section.

Fee Limitation

(g) TEMPORARY AUTHORITY OF TREASURY TO PURCHASE OBLIGATIONS AND SECURITIES; CONDITIONS.—

(1) AUTHORITY TO PURCHASE.—

(A) GENERAL AUTHORITY.—In addition to the authority under 

subsection (c) of this section, the Secretary of the Treasury is authorized 

to purchase any obligations and other securities issued by the corporation under any section of this Act, on such terms and conditions as the 

Secretary may determine and in such amounts as the Secretary may 

determine. Nothing in this subsection requires the corporation to issue 

obligations or securities to the Secretary without mutual agreement 

between the Secretary and the corporation. Nothing in this subsection 

permits or authorizes the Secretary, without the agreement of the corporation, to engage in open market purchases of the common securities of 

the corporation.

Temporary 

Authority of 

Treasury to 

Purchase 

Obligations and 

Other Securities

(B) EMERGENCY DETERMINATION REQUIRED.—In connection 

with any use of this authority, the Secretary must determine that such 

actions are necessary to—

(i) provide stability to the financial markets;

(ii) prevent disruptions in the availability of mortgage finance; and

(iii) protect the taxpayer.

(C) CONSIDERATIONS.—To protect the taxpayers, the Secretary of 

the Treasury shall take into consideration the following in connection 

with exercising the authority contained in this paragraph:

(i) The need for preferences or priorities regarding payments to the 

Government.

Emergency 

Determination

Considerations
17

(ii) Limits on maturity or disposition of obligations or securities to 

be purchased.

(iii) The corporation’s plan for the orderly resumption of private 

market funding or capital market access.

(iv) The probability of the corporation fulfilling the terms of any 

such obligation or other security, including repayment.

(v) The need to maintain the corporation’s status as a private 

shareholder-owned company.

(vi) Restrictions on the use of corporation resources, including 

limitations on the payment of dividends and executive compensation 

and any such other terms and conditions as appropriate for those 

purposes.

(D) REPORTS TO CONGRESS.—Upon exercise of this authority, the 

Secretary shall report to the Committees on the Budget, Financial 

Services, and Ways and Means of the House of Representatives and the 

Committees on the Budget, Finance, and Banking, Housing, and Urban 

Affairs of the Senate as to the necessity for the purchase and the 

determinations made by the Secretary under subparagraph (B) and with 

respect to the considerations required under subparagraph (C), and the 

size, terms, and probability of repayment or fulfillment of other terms of 

such purchase.

(2) RIGHTS; SALE OF OBLIGATIONS AND SECURITIES.—

(A) EXERCISE OF RIGHTS.—The Secretary of the Treasury may, at 

any time, exercise any rights received in connection with such 

purchases.

(B) SALE OF OBLIGATION AND SECURITIES.—The Secretary of 

the Treasury may, at any time, subject to the terms of the security or 

otherwise upon terms and conditions and at prices determined by the 

Secretary, sell any obligation or security acquired by the Secretary under 

this subsection.

(C) DEFICIT REDUCTION.—The Secretary of the Treasury shall 

deposit in the General Fund of the Treasury any amounts received by the 

Secretary from the sale of any obligation acquired by the Secretary 

under this subsection, where such amounts shall be—

(i) dedicated for the sole purpose of deficit reductions; and
18

(ii) prohibited from use as an offset for other spending increases or 

revenue reductions.

(D) APPLICATION OF SUNSET TO PURCHASED OBLIGATIONS 

OR SECURITIES.—The authority of the Secretary of the Treasury to 

hold, exercise any rights received in connection with, or sell, any 

obligations or securities purchased is not subject to the provisions of 

paragraph (4).

(3) FUNDING.—For the purpose of the authorities granted in this 

subsection, the Secretary of the Treasury may use the proceeds of the sale of 

any securities issued under chapter 31 of Title 31, and the purposes for 

which securities may be issued under chapter 31 of Title 31 are extended to 

include such purchases and the exercise of any rights in connection with 

such purchases. Any funds expended for the purchase of, or modifications 

to, obligations and securities, or the exercise of any rights received in 

connection with such purchases under this subsection shall be deemed 

appropriated at the time of such purchase, modification, or exercise.

(4) TERMINATION OF AUTHORITY.—The authority under this 

subsection (g), with the exception of paragraphs (2) and (3) of this 

subsection, shall expire December 31, 2009.

(5) AUTHORITY OF THE DIRECTOR WITH RESPECT TO 

EXECUTIVE COMPENSATION.—The Director shall have the power to

approve, disapprove, or modify the executive compensation of the 

corporation, as defined under Regulation S-K, 17 C.F.R. 229.

Termination of 

Authority

Temporary 

Authority Over 

Executive 

Compensation

SEC. 305. SPECIAL ASSISTANCE FUNCTIONS OF GOVERNMENT 

NATIONAL MORTGAGE ASSOCIATION

Repealed.

12 U.S.C. 1720

SEC. 306. MANAGEMENT AND LIQUIDATION FUNCTIONS OF 

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION

(a) SEPARATE ACCOUNTABILITY OF ASSETS AND LIABILITIES.—To 

carry out the purposes set forth in paragraph (c) of section 301, the Association 

is authorized and directed, as of the close of the cutoff date determined by the 

Association pursuant to section 303(d), to establish separate accountability for 

all of its assets and liabilities (exclusive of capital, surplus, surplus reserves, and 

undistributed earnings to be evidenced by preferred stock as provided in section 

303(d), but inclusive of all rights and obligations under any outstanding 

contracts), and to maintain such separate accountability for the management and 

orderly liquidation of such assets and liabilities as provided in this section.

12 U.S.C. 1721

Fannie Mae 

Portfolio as of 

October 31, 1954
19

(b) ISSUANCE OF OBLIGATIONS TO EXPEDITE SUBSTITUTION OF 

PRIVATE FINANCING.—For the purposes of this section and to assure that, 

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

substituted for Treasury borrowings otherwise required to carry mortgages held 

under the aforesaid separate accountability, the Association is authorized to 

issue, upon the approval of the Secretary of the Treasury, and have outstanding 

at any one time obligations having such maturities and bearing such rate or rates 

of interest as may be determined by the Association with the approval of the 

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

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

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

issuance, and as a consequence thereof, the resulting aggregate amount of its 

outstanding obligations under this subsection would exceed the amount of the 

Association’s ownership under the aforesaid separate accountability, free from 

any liens or encumbrances, of cash, mortgages, and obligations of the United 

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

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

of any private financing effected under this subsection shall be paid to the 

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

the Secretary of the Treasury under the aforesaid separate accountability. The 

Association shall insert appropriate language in all of its obligations issued 

under this subsection clearly indicating that such obligations, together with the 

interest thereon, are not guaranteed by the United States and do not constitute a 

debt or obligation of the United States or of any agency or instrumentality 

thereof other than the Association. The Association is authorized to purchase in 

the open market any of its obligations outstanding under this subsection at any 

time and at any price.

(c) CUTOFF DATE AS CONTROLLING PURCHASES; TOTAL AMOUNT 

OF MORTGAGES AND COMMITMENTS.—No mortgage shall be purchased 

by the Association in its operations under this section except pursuant to and in 

accordance with the terms of a contract or commitment to purchase the same 

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

commitment became a part of the aforesaid separate accountability, and the 

total amount of mortgages and commitments held by the Association under this 

section shall not, in any event, exceed $3,350,000,000: Provided, That such 

maximum amount shall be progressively reduced by the amount of cash 

realizations on account of principal of mortgages held under the aforesaid 

separate accountability and by cancellation of any commitments to purchase 

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

objective that the entire aforesaid maximum amount shall be eliminated with 

the orderly liquidation of all mortgages held under the aforesaid separate 

accountability: And provided further, That nothing in this subsection shall 

preclude the Association from granting such usual and customary increases in 

the amounts of outstanding commitments (resulting from increased costs or 

otherwise) as have theretofore been covered by like increases in commitments 

granted by the agencies of the Federal Government insuring or guaranteeing the 

Private Financing

Limitation on 

Mortgage 

Purchases
20

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

subsection the amounts of any mortgages which, subsequent to May 31, 1954, 

are transferred by law to the Association and held under the aforesaid separate 

accountability.

Exclusion from 

Limitation

(d) ISSUANCE OF OBLIGATIONS SUFFICIENT TO CARRY OUT 

FUNCTIONS; CHARACTER; PURCHASE.—The Association may issue to 

the Secretary of the Treasury its obligations in an amount outstanding at any 

one time sufficient to enable the Association to carry out its functions under this 

section, such obligations to mature not more than five years from their 

respective dates of issue, to be redeemable at the option of the Association 

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

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

Treasury, taking into consideration the current average rate on outstanding 

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

preceding the issuance of the obligation of the Association. The Secretary of the 

Treasury is authorized to purchase any obligations of the Association to be 

issued under this section, and for such purpose the Secretary of the Treasury is 

authorized to use as a public debt transaction the proceeds from the sale of any 

securities issued under chapter 31 of title 31, United States Code, and the 

purpose for which securities may be issued under chapter 31 of title 31, United 

States Code, are extended to include any purchases of the Association’s 

obligations hereunder.

Treasury Financing

Interest Rate

(e) ACQUISITION OF MORTGAGES OFFERED BY SECRETARY OF 

HOUSING AND URBAN DEVELOPMENT.—Notwithstanding any other 

provision of law, the Association is authorized, under the aforesaid separate 

accountability, to make commitments to purchase, and to purchase, service, or 

sell any obligations offered to it by the Secretary of Housing and Urban 

Development, or any mortgages covering residential property offered to it by 

any Federal instrumentality, or the head thereof. There shall be excluded from 

the total amounts set forth in subsection (c) the amounts of any obligations or 

mortgages purchased by the Association pursuant to this subsection.

Authority to 

Purchase From 

Federal 

Instrumentalities

(f) TRANSFER OF FUNDS.—Notwithstanding any of the provisions of 

this Act or of any other law, an amount equal to the net decrease for the 

preceding fiscal year in the aggregate principal amount of all mortgages 

owned by the Association under this section shall, as of July 1 of each of the 

years 1961 through 1964, be transferred to and merged with the authority 

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

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

Transfer of Dollar 

Authority to 

Presidential 

Authority
21

(g) GUARANTEE OF PRINCIPAL AND INTEREST ON TRUST CERTIFICATES AND OTHER SECURITIES; FEES AND CHARGES; SUBROGATION; CONTRACT FOR EXTINGUISHMENT OF RIGHT, TITLE, OR 

INTEREST IN MORTGAGES; PROTECTION OF INTERESTS; FULL 

FAITH AND CREDIT; COMMITMENTS LIMITED; LIMITATION ON 

FEES OR CHARGES.

(1) The Association is authorized, upon such terms and conditions as it may 

deem appropriate, to guarantee the timely payment of principal of and 

interest on such trust certificates or other securities as shall (i) be issued by 

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

purposes of this subsection by the Association, and (ii) be based on and 

backed by a trust or pool composed of mortgages which are insured under 

the National Housing Act, or which are insured or guaranteed under the 

Servicemen’s Readjustment Act of 1944, title V of the Housing Act of 

1949, or chapter 37 of title 38, United States Code, or which are guaranteed 

under title XIII of the Public Health Service Act; or guaranteed under 

section 184 of the Housing and Community Development Act of 1992. 

The Association shall collect from the issuer a reasonable fee for any 

guaranty under this subsection and shall make such charges as it may 

determine to be reasonable for the analysis of any trust or other security 

arrangement proposed by the issuer. In the event the issuer is unable to 

make any payment of principal of or interest on any security guaranteed

under this subsection, the Association shall make such payment as and when 

due in cash, and thereupon shall be subrogated fully to the rights satisfied by

such payment. In any case in which (I) Federal law requires the reduction 

of the interest rate on any mortgage backing a security guaranteed under this 

subsection, (II) the mortgagor under the mortgage is a person in the military 

service, and (III) the issuer of such security fails to receive from the 

mortgagor the full amount of interest payment due, the Association may 

make payments of interest on the security in amounts not exceeding the 

difference between the amount payable under the interest rate on the mortgage and the amount of interest actually paid by the mortgagor. The 

Association is hereby empowered, in connection with any guaranty under 

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

with the issuer for the extinguishment, upon default by the issuer, of any 

redemption, equitable, legal, or other right, title, or interest of the issuer in 

any mortgage or mortgages constituting the trust or pool against which the 

guaranteed securities are issued; and with respect to any issue of guaranteed 

securities, in the event of default and pursuant otherwise to the terms of the

contract, the mortgages that constitute such trust or pool shall become the 

absolute property of the Association subject only to the unsatisfied rights of 

the holders of the securities based on and backed by such trust or pool. No 

State or local law, and no Federal law (except Federal law enacted expressly 

in limitation of this subsection after the effective date of this sentence 

[October 8, 1980]), shall preclude or limit the exercise by the Association of 

(A) its power to contract with the issuer on the terms stated in the preceding 

Authority to 

Guarantee 

Securities
22

sentence, (B) its rights to enforce any such contract with the issuer, or (C) 

its ownership rights, as provided in the preceding sentence, in the mortgages 

constituting the trust or pool against which the guaranteed securities are 

issued. The full faith and credit of the United States is pledged to the 

payment of all amounts which may be required to be paid under any 

guaranty under this subsection. There shall be excluded from the total 

amounts set forth in subsection (c) the amounts of any mortgages acquired 

by the Association as a result of its operations under this subsection.

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

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

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

approved in appropriation Acts, the Association shall enter into commitments to issue guarantees under this subsection in an aggregate amount of 

$110,000,000,000 during fiscal year 1996. There are authorized to be 

appropriated to cover the costs (as such term is defined in section 502 of the 

Congressional Budget Act of 1974) of guarantees issued under this Act by 

the Association such sums as may be necessary for fiscal year 1996.

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

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

or independent establishment of the United States) on or with regard to any 

guaranty of the timely payment of principal or interest on securities or notes 

based on or backed by mortgages that are secured by 1- to 4-family 

dwellings and (i) insured by the Federal Housing Administration under title 

II of the National Housing Act; or (ii) insured or guaranteed under the 

Serviceman’s Readjustment Act of 1944, chapter 37 of title 38, United 

States Code, or title V of the Housing Act of 1949.

Guarantee Fee on 

MBS

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

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

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

a level not more than necessary to create reserves sufficient to meet 

anticipated claims based upon actuarial analysis, and for no other 

purpose.

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

administrative fees of the Association shall not be on a competitive 

auction basis and shall remain at the level set for such fees or charges as 

of September 1, 1985, except that such fees or charges may be increased 

if reasonably related to the cost of administering the program, and for no 

other purpose.

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

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

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

subparagraph.
23

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

the guarantee of, or commitment to guarantee, multiclass securities 

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

Association under this subsection, and other related fees shall be 

charged by the Association in an amount the Association deems 

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

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

Association’s multiclass securities program, as the Association 

determines is appropriate accrues to mortgagors who execute eligible 

mortgages after the date of the enactment of this subparagraph [August 

10, 1993].

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

the program for which fees are charged under the first sentence of 

clause (i) by notice published in the Federal Register. The notice 

shall be effective upon publication and shall provide an opportunity 

for public comment. Not later than 12 months after publication of 

the notice, the Association shall issue regulations for such program 

based on the notice, comments received, and the experience of the 

Association in carrying out the program during such period.

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

manner as the Association deems appropriate to ensure the efficient 

commencement and operation of the multiclass securities program.

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

enacted expressly in limitation of this clause after the effective date 

of this subparagraph [August 10, 1993]) shall preclude or limit the 

exercise by the Association of its power to contract with persons or 

entities, and its rights to enforce such contracts, for the purpose of 

ensuring the efficient commencement and continued operation of the 

multiclass securities program.

SEC. 307. BENEFITS AND BURDENS INCIDENT TO

ADMINISTRATION OF FUNCTIONS AND OPERATIONS

UNDER SECTIONS 305 AND 306

All of the benefits and burdens incident to the administration of the functions 

and operations of the Association under sections 305 and 306, respectively, of 

this title, after allowance for related obligations of the Association, its prorated 

expenses, and the like, including amounts required for the establishment of such 

reserves as the Secretary of Housing and Urban Development shall deem 

appropriate, shall inure solely to the Secretary of the Treasury, and such related 

earnings or other amounts as become available shall be paid annually by the 

Association to the Secretary of the Treasury for covering into miscellaneous 

receipts.

12 U.S.C. 1722

Benefits and 

Burdens that Inure 

to Secretary of the 

Treasury
24

SEC. 308. MANAGEMENT

(a) GOVERNMENT NATIONAL MORTGAGE ASSOCIATION.—All the 

powers and duties of the Government National Mortgage Association shall be 

vested in the Secretary of Housing and Urban Development and the Association

shall be administered under the direction of the Secretary. Within the limitations 

of law, the Secretary shall determine the general policies which shall govern the 

operations of the Association, and shall have power to adopt, amend, and repeal 

bylaws governing the performance of the powers and duties granted to or 

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

Housing and Urban Development the position of President, Government 

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

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

effect the appointment of qualified persons to fill the offices of vice president, 

and such other offices as may be provided for in the bylaws. Persons appointed 

under the preceding sentence shall perform such executive functions, powers, 

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

persons shall be executive officers of the Association and shall discharge all 

such executive functions, powers, and duties.

12 U.S.C. 1723

Powers and Duties 

in Secretary 

(GNMA)

Appointment of 

President (GNMA)

(b) FEDERAL NATIONAL MORTGAGE ASSOCIATION.—The Federal 

National Mortgage Association shall have a board of directors which shall 

consist of 13 persons, or such other number that the Director determines 

appropriate, who shall be elected annually by the common stockholders. 

Except to the extent that action under section 1377 of the Federal Housing 

Enterprises Financial Safety and Soundness Act of 1992 temporarily results in a 

lesser number, the board shall at all times have as members at least one person 

from the homebuilding industry, at least one person from the mortgage lending 

industry, and at least one person from the real estate industry, and at least one 

person from an organization that has represented consumer or community 

interests for not less than 2 years or one person who has demonstrated a career 

commitment to the provision of housing for low-income households. Each 

member of the board of directors shall be elected for a term ending on the date 

of the next annual meeting of the stockholders. Any seat on the board which 

becomes vacant after the annual election of the directors shall be filled by the 

board, but only for the unexpired portion of the term. Within the limitations of 

law and regulation, the board shall determine the general policies which shall 

govern the operations of the corporation, and shall have power to adopt, amend, 

and repeal bylaws governing the performance of the powers and duties granted 

to or imposed upon it by law. The board of directors shall select and effect the 

appointment of qualified persons to fill the offices of president and vice 

president, and such other offices as may be provided for in the bylaws. Any 

member of the board who is a full-time officer or employee of the Federal 

Government shall not, as such member, receive compensation for his services.

Board of Directors 

(Fannie Mae)

General Policy 

Determination
25

SEC. 309. GENERAL POWERS OF GOVERNMENT NATIONAL 

MORTGAGE ASSOCIATION AND FEDERAL NATIONAL 

MORTGAGE ASSOCIATION

(a) SEAL, AND OTHER MATTERS INCIDENT TO OPERATION.—Each of 

the bodies corporate named in section 302(a)(2) shall have power to adopt,

alter, and use a corporate seal, which shall be judicially noticed; to enter into 

and perform contracts, leases, cooperative agreements, or other transactions, on 

such terms as it may deem appropriate, with any agency or instrumentality of 

the United States, or with any State, Territory, or possession, or the 

Commonwealth of Puerto Rico, or with any political subdivision thereof, or 

with any person, firm, association, or corporation; to execute, in accordance 

with its bylaws, all instruments necessary or appropriate in the exercise of any 

of its powers; in its corporate name, to sue and to be sued, and to complain and 

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

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

against the property of the Association or against the Association with respect 

to its property; to conduct its business without regard to any qualification or 

similar statute in any State of the United States, including the District of 

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

possessions of the United States; to lease, purchase, or acquire any property, 

real, personal, or mixed, or any interest therein, to hold, rent, maintain, 

modernize, renovate, improve, use, and operate such property, and to sell, for 

cash or credit, lease, or otherwise dispose of the same, at such time and in such 

manner as and to the extent that it may deem necessary or appropriate; to 

prescribe, repeal, and amend or modify, rules, regulations, or requirements 

governing the manner in which its general business may be conducted; to accept 

gifts or donations of services, or of property, real, personal, or mixed, tangible 

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

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

its business.

12 U.S.C. 1723a

Corporate Powers 

(Fannie Mae

and GNMA)

Sue and Be Sued

Property

(b) DETERMINATION WITH RESPECT TO OBLIGATIONS AND 

EXPENDITURES.—Except as may be otherwise provided in this title, in 

chapter 91 of title 31, United States Code, or in other laws specifically 

applicable to Government corporations, the Association shall determine the 

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

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

for.

Corporate 

Expenditures of 

GNMA
26

(c) EXEMPTION FROM TAXATION.—

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

mortgages or other security holdings, and income shall be exempt from all 

taxation now or hereafter imposed by the United States, by any territory, 

dependency, or possession thereof, or by any State, county, municipality, or 

local taxing authority, except that any real property of the Association shall 

be subject to State, territorial, county, municipal, or local taxation to the 

same extent according to its value as other real property is taxed.

Exemption from 

Certain Taxes 

(GNMA)

(2) The corporation, including its franchise, capital, reserves, surplus, mortgages or other security holdings, and income, shall be exempt from all 

taxation now or hereafter imposed by any State, territory, possession, 

Commonwealth, or dependency of the United States, or by the District of 

Columbia, or by any county, municipality, or local taxing authority, except 

that any real property of the corporation shall be subject to State, territorial, 

county, municipal, or local taxation to the same extent as other real property 

is taxed.

Exemption from 

Certain Taxes 

(Fannie Mae)

(d) APPOINTMENT AND COMPENSATION OF PERSONNEL; USE OF 

SERVICES OF OTHER AGENCIES.—

(1) Subject to the provisions of section 308(a), the Secretary of Housing and 

Urban Development shall have power to select and appoint or employ such 

officers, attorneys, employees, and agents of the Association, to vest them 

with such powers and duties, and to fix and to cause the Association to pay 

such compensation to them for their services, as he may determine, subject 

to the civil service and classification laws. With the consent of any 

Government corporation or Federal Reserve bank, or of any board, 

commission, independent establishment, or executive department of the 

Government, the Association may avail itself on a reimbursable basis of the

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

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

Appointment

of Officers

and Employees 

(GNMA)

(2) The board of directors of the corporation shall have the power to select 

and appoint or employ such officers, attorneys, employees, and agents, to 

vest them with such powers and duties, and to fix and to cause the corporation to pay such compensation to them for their services as the board of 

directors determines reasonable and comparable with compensation for 

employment in other similar businesses (including other publicly held 

financial institutions or major financial services companies) involving 

similar duties and responsibilities, except that a significant portion of 

potential compensation of all executive officers (as such term is defined in 

paragraph (3)(C)) of the corporation shall be based on the performance of 

the corporation; and any such action shall be without regard to the Federal 

civil service and classification laws. Appointments, promotions, and 

separations so made shall be based on merit and efficiency, and no political 

Appointment

of Officers

and Employees 

(Fannie Mae)
27

tests or qualifications shall be permitted or given consideration. Each 

officer and employee of the corporation who is employed by the corporation 

prior to January 31, 1972, and who on the day previous to the beginning of 

such employment will have been subject to the civil service retirement law 

(subch. III of ch. 83 of title 5, United States Code) shall, so long as the 

employment of such officer or employee by the corporation continues 

without a break in continuity of service, continue to be subject to such law; 

and for the purpose of such law the employment of such officer or employee 

by the corporation without a break in continuity of service shall be deemed 

to be employment by the Government of the United States. The corporation 

shall contribute to the Civil Service Retirement and Disability Fund a sum 

as provided by section 8334(a) of title 5, United States Code, except that 

such sum shall be determined by applying to the total basic pay (as defined 

in 5 U.S.C. 8331(3) and except as hereinafter provided) paid to the 

employees of the corporation who are covered by the civil service 

retirement law, the per centum rate determined annually by the Director of 

the Office of Personnel Management to be the excess of the total normal 

cost per centum rate of the civil service retirement system over the 

employee deduction rate specified in section 8334(a) of title 5, United States 

Code. The corporation shall also pay into the Civil Service Retirement and 

Disability Fund such portion of the cost of administration of the fund as is 

determined by the Director of the Office of Personnel Management to be 

attributable to its employees. Notwithstanding the foregoing provisions, 

there shall not be considered for the purposes of the civil service retirement 

law that portion of the basic pay in any one year of any officer or employee 

of the corporation which exceeds the basic pay provided for positions listed 

in section 5312 of title 5, United States Code, on the last day of such year: 

Provided, That with respect to any person whose employment is made 

subject to the civil service retirement law by section 806 of the Housing and 

Community Development Act of 1974, there shall not be considered for the 

purposes of such law that portion of the basic pay of such person in any one 

year which exceeds the basic pay provided for positions listed in section 

5316 of such title 5 on the last day of such year. Except as provided in this 

subsection, the corporation shall not be subject to the provisions of title 5, 

United States Code.

(3)(A) Not later than June 30, 1993, and annually thereafter, the corporation 

shall submit a report to the Committee on Banking, Finance and Urban 

Affairs of the House of Representatives and the Committee on Banking, 

Housing and Urban Affairs of the Senate on (i) the comparability of the 

compensation policies of the corporation with the compensation policies of 

other similar businesses, (ii) in the aggregate, the percentage of total cash 

compensation and payments under employee benefit plans (which shall be 

defined in a manner consistent with the corporation’s proxy statement for 

the annual meeting of shareholders for the preceding year) earned by 

executive officers of the corporation during the preceding year that was 

based on the corporation’s performance, and (iii) the comparability of the 

Report on 

Compensation

Policies
28

corporation’s financial performance with the performance of other similar 

businesses. The report shall include a copy of the corporation’s proxy 

statement for the annual meeting of shareholders for the preceding year.

(B) Notwithstanding the first sentence of paragraph (2), after the date of 

the enactment of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992 [October 28, 1992], the corporation may not 

enter into any agreement or contract to provide any payment of money 

or other thing of current or potential value in connection with the 

termination of employment of any executive officer of the corporation, 

unless such agreement or contract is approved in advance by the 

Director of the Federal Housing Finance Agency. The Director may not 

approve any such agreement or contract unless the Director determines 

that the benefits provided under the agreement or contract are 

comparable to benefits under such agreements for officers of other 

public and private entities involved in financial services and housing 

interests who have comparable duties and responsibilities. For purposes 

of this subparagraph, any renegotiation, amendment, or change after 

such date of enactment [October 28, 1992], to any such agreement or 

contract entered into on or before such date of enactment [October 28, 

1992], shall be considered entering into an agreement or contract.

Termination 

Agreements

(C) For purposes of this paragraph, the term “executive officer” has the

meaning given the term in section 1303 of the Federal Housing 

Enterprises Financial Safety and Soundness Act of 1992.

(4) Notwithstanding any other provision of this section, the corporation 

shall not transfer, disburse, or pay compensation to any executive officer, or 

enter into an agreement with such executive officer, without the approval of 

the Director, for matters being reviewed under section 1318 of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992 (12 

U.S.C. 4518).

Executive Officer 

Defined

Executive 

Compensation

(e) PROHIBITION AGAINST USE OF NAMES; INJUNCTION; 

DAMAGES.—No individual, association, partnership, or corporation, except 

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

the words “Federal National Mortgage Association,” “Government National 

Mortgage Association,” or any combination of such words, as the name or a 

part thereof under which the individual, association, partnership, or corporation 

shall do business. Violations of the foregoing sentence may be enjoined by 

ENDHERE

Exclusive Use

of the Name

Fannie Mae

any court of general jurisdiction at the suit of the proper body corporate. In any 

such suit, the plaintiff may recover any actual damages flowing from such 

violation, and, in addition, shall be entitled to punitive damages (regardless of 

the existence or nonexistence of actual damages) of not exceeding $100 for 

each day during which such violation is committed or repeated.
29

(f) PREPARATION OF FORMS OF OBLIGATIONS AND CERTIFICATES.—In order that the Association may be supplied with such forms of 

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

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

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

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

engraved plates, dies, bed pieces, and other material executed in connection 

therewith shall remain in the custody of the Secretary of the Treasury. The 

Association shall reimburse the Secretary of the Treasury for any expenses 

incurred in the preparation, custody, and delivery of such forms.

Engraved Forms 

(GNMA)

(g) DEPOSITARIES, CUSTODIANS, AND FISCAL AGENTS.—The Federal 

Reserve banks are authorized and directed to act as depositaries, custodians, and 

fiscal agents for each of the bodies corporate named in section 302(a)(2), for its 

own account or as fiduciary, and such banks shall be reimbursed for such 

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

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

and for the account of others.

(h) Repealed.

(i) Repealed.

Federal Reserve 

Banks to Act as 

Fiscal Agents

(Fannie Mae

and GNMA)

(j) AUDIT; ACCESS TO BOOKS, ETC.; REPORT OF AUDIT.—

(1) The programs, activities, receipts, expenditures, and financial transactions of the corporation shall be subject to audit by the Comptroller 

General of the United States under such rules and regulations as may be 

prescribed by the Comptroller General. The representatives of the 

ENDHEREENDHERE

Audits by GAO

Government Accountability Office shall have access to such books, 

accounts, financial records, reports, files, and such other papers, things, or 

property belonging to or in use by the corporation and necessary to facilitate 

the audit, and they shall be afforded full facilities for verifying transactions 

with the balances or securities held by depositories, fiscal agents, and 

custodians. A report on each such audit shall be made by the Comptroller 

General to the Congress. The corporation shall reimburse the Government 

Accountability Office for the full cost of any such audit as billed therefor by 

the Comptroller General.

(2) To carry out this subsection, the representatives of the Government 

Accountability Office shall have access, upon request to the corporation or 

any auditor for an audit of the corporation under subsection (l), to any 

books, accounts, financial records, reports, files, or other papers, things, or 

property belonging to or in use by the corporation and used in any such 

audit and to any papers, records, files and reports of the auditor used in such 

an audit.
30

(k) FINANCIAL REPORTS; SUBMISSION TO DIRECTOR; CONTENTS.—

(1) The corporation shall submit to the Director of the Federal Housing 

Finance Agency annual and quarterly reports of the financial condition and 

operations of the corporation which shall be in such form, contain such 

information, and be submitted on such dates as the Director shall require.

Annual and 

Quarterly 

Financial Reports

(2) Each such annual report shall include―

(A) financial statements prepared in accordance with generally accepted 

accounting principles; 

(B) any supplemental information or alternative presentation that the 

Director may require; and 

(C) an assessment (as of the end of the corporation’s most recent fiscal 

year), signed by the chief executive officer and chief accounting or 

financial officer of the corporation, of―

(i) the effectiveness of the internal control structure and procedures 

of the corporation; and

(ii) the compliance of the corporation with designated safety and 

soundness laws.

(3) The corporation shall also submit to the Director any other reports 

required by the Director pursuant to section 1314 of the Federal Housing 

Enterprises Financial Safety and Soundness Act of 1992.

(4) Each report of financial condition shall contain a declaration by the 

president, vice president, treasurer, or any other officer designated by the 

board of directors of the corporation to make such declaration, that the 

report is true and correct to the best of such officer’s knowledge and belief.

(l) INDEPENDENT AUDITS OF FINANCIAL STATEMENTS.—

(1) The corporation shall have an annual independent audit made of its 

financial statements by an independent public accountant in accordance 

with generally accepted auditing standards.

(2) In conducting an audit under this subsection, the independent public 

accountant shall determine and report on whether the financial statements of 

the corporation (A) are presented fairly in accordance with generally 

accepted accounting principles, and (B) to the extent determined necessary 

by the Director, comply with any disclosure requirements imposed under 

subsection (k)(2)(B).

Independent Audits
31

(m) MORTGAGE DATA COLLECTION AND REPORTING REQUIREMENTS.—

(1) The corporation shall collect, maintain, and provide to the Director of 

the Federal Housing Finance Agency, in a form determined by the Director,

data relating to its mortgages on housing consisting of 1 to 4 dwelling units. 

Such data shall include―

(A) the income, census tract location, race, and gender of mortgagors 

under such mortgages;

(B) the loan-to-value ratios of purchased mortgages at the time of 

origination;

Reports to the 

Director on 

Housing Data

(C) whether a particular mortgage purchased is newly originated or 

seasoned;

(D) the number of units in the housing subject to the mortgage and 

whether the units are owner-occupied; and

(E) any other characteristics that the Secretary considers appropriate, to 

the extent practicable.

(2) The corporation shall collect, maintain, and provide to the Director of 

the Federal Housing Finance Agency, in a form determined by the Director, 

data relating to its mortgages on housing consisting of more than 4 dwelling 

units. Such data shall include―

(A) census tract location of the housing; 

(B) income levels and characteristics of tenants of the housing (to the 

extent practicable);

(C) rent levels for units in the housing;

(D) mortgage characteristics (such as the number of units financed per 

mortgage and the amount of loans);

(E) mortgagor characteristics (such as nonprofit, for-profit, limited 

equity cooperatives);

(F) use of funds (such as new construction, rehabilitation, refinancing);

(G) type of originating institution; and

(H) any other information that the Secretary considers appropriate to the 

extent practicable.
32

(3)(A) Except as provided in subparagraph (B), this subsection shall apply 

only to mortgages purchased by the corporation after December 31, 1992.

(B) This subsection shall apply to any mortgage purchased by the 

corporation after the date determined under subparagraph (A) if the 

mortgage was originated before such date, but only to the extent that the 

data referred in paragraph (1) or (2), as applicable, is available to the 

corporation.

(n) REPORT ON HOUSING ACTIVITIES; CONTENTS; PUBLIC 

DISCLOSURE.—

(1) The corporation shall submit to the Committee on Banking, Finance and 

Urban Affairs of the House of Representatives, the Committee on Banking, 

Housing and Urban Affairs of the Senate, and the Director of the Federal 

Housing Finance Agency a report on its activities under subpart B of part 2 

of subtitle A of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992.

Reports to 

Congress Related 

to Housing Goals

(2) The report under this subsection shall―

(A) include, in aggregate form and by appropriate category, statements 

of the dollar volume and number of mortgages on owner-occupied and 

rental properties purchased which relate to each of the annual housing 

goals established under such subpart;

(B) include, in aggregate form and by appropriate category, statements 

of the number of families served by the corporation, the income class, 

race, and gender of homebuyers served, the income class of tenants of 

rental housing (to the extent such information is available), the characteristics of the census tracts, and the geographic distribution of the 

housing financed;

(C) include a statement of the extent to which the mortgages purchased 

by the corporation have been used in conjunction with public subsidy 

programs under Federal law;

(D) include statements of the proportion of mortgages on housing 

consisting of 1 to 4 dwelling units purchased by the corporation that 

have been made to first-time homebuyers, as soon as providing such 

data is practicable, and identifying any special programs (or revisions to 

conventional practices) facilitating homeownership opportunities for 

first-time homebuyers;

(E) include, in aggregate form and by appropriate category, the data 

provided to the Secretary under subsection (m)(1)(B);
33

(F) compare the level of securitization versus portfolio activity;

(G) assess underwriting standards, business practices, repurchase 

requirements, pricing, fees, and procedures, that affect the purchase of 

mortgages for low- and moderate-income families, or that may yield 

disparate results based on the race of the borrower, including revisions 

thereto to promote affordable housing or fair lending;

(H) describe trends in both the primary and secondary multifamily 

housing mortgage markets, including a description of the progress made, 

and any factors impeding progress toward standardization and 

securitization of mortgage products for multifamily housing;

(I) describe trends in the delinquency and default rates of mortgages 

secured by housing for low- and moderate-income families that have 

been purchased by the corporation, including a comparison of such 

trends with delinquency and default information for mortgage products 

serving households with incomes above the median level that have been 

purchased by the corporation, and evaluate the impact of such trends on 

the standards and levels of risk of mortgage products serving low- and 

moderate-income families; 

(J) describe in the aggregate the seller and servicer network of the 

corporation, including the volume of mortgages purchased from 

minority-owned, women-owned, and community-oriented lenders, and 

any efforts to facilitate relationships with such lenders;

(K) describe the activities undertaken by the corporation with nonprofit 

and for-profit organizations with State and local governments and 

housing finance agencies, including how the corporation’s activities 

support the objectives of comprehensive housing affordability strategies 

under section 105 of the Cranston-Gonzalez National Affordable 

Housing Act; and

(L) include any other information that the Director of the Federal 

Housing Finance Agency considers appropriate.

(3)(A) The corporation shall make each report under this subsection 

available to the public at the principal and regional offices of the 

corporation.

(B) Before making a report under this subsection available to the public, 

the corporation may exclude from the report information that the 

Director of the Federal Housing Finance Agency has determined is 

proprietary information under section 1326 of the Federal Housing 

Enterprises Financial Safety and Soundness Act of 1992.
34

(o) AFFORDABLE HOUSING ADVISORY COUNCIL.—

(1) Not later than 4 months after the date of enactment of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992 [October 

28, 1992], the corporation shall appoint an Affordable Housing Advisory 

Council to advise the corporation regarding possible methods for promoting 

affordable housing for low- and moderate-income families.

Affordable Housing 

Advisory Council

(2) The Affordable Housing Advisory Council shall consist of 15 

individuals, who shall include representatives of community-based and 

other nonprofit and for-profit organizations and State and local government 

agencies actively engaged in the promotion, development, or financing of 

housing for low- and moderate-income families.

SEC 310. INVESTMENT OF FUNDS

Moneys of the Association not invested in mortgages or other security holdings 

or in operating facilities shall be kept in cash on hand or on deposit, or invested 

in obligations of the United States or guaranteed thereby, or in obligations, 

participations, or other instruments which are lawful investments for fiduciary, 

trust, or public funds.

12 U.S.C. 1723b

SEC. 311. OBLIGATIONS, PARTICIPATIONS, OR

OTHER INSTRUMENTS AS LAWFUL INVESTMENTS;

ACCEPTANCE AS SECURITY; EXEMPT SECURITIES 

All obligations, participations, or other instruments issued by either of the 

bodies corporate named in section 302(a)(2) shall be lawful investments, and 

may be accepted as security for all fiduciary, trust, and public funds, the 

investment or deposit of which shall be under the authority and control of the 

United States or any officer or officers thereof. All stock, obligations, 

securities, participations, or other instruments issued pursuant to this title shall, 

to the same extent as securities which are direct obligations of or obligations 

guaranteed as to principal or interest by the United States, be deemed to be 

exempt securities within the meaning of laws administered by the Securities and 

Exchange Commission.

12 U.S.C. 1723c

SEC Exemption

SEC. 312. SHORT TITLE

This title III may be referred to as the “Federal National Mortgage Association 

Charter Act”.

12 U.S.C. 1716 

note
35

SEC. 313. INTERIM AUTHORITY TO PURCHASE

CERTAIN MORTGAGES

Repealed.

12 U.S.C. 1723e

SEC. 314. PURCHASE OF ENERGY CONSERVING 

IMPROVEMENT LOANS TO LOW- AND

MODERATE-INCOME FAMILIES

Repealed.

12 U.S.C. 1723f

SEC. 315. AUTHORITY OF SOLAR ENERGY AND 

ENERGY CONSERVATION BANK TO PURCHASE

LOANS AND ADVANCES OF CREDIT FOR

ENERGY CONSERVING IMPROVEMENTS OR

SOLAR ENERGY SYSTEMS

Repealed.

12 U.S.C. 1723g

SEC. 316. AUTHORITY OF SOLAR ENERGY AND

ENERGY CONSERVATION BANK TO PURCHASE

MORTGAGES SECURED BY NEWLY CONSTRUCTED

HOMES WITH SOLAR ENERGY SYSTEMS

Repealed.

12 U.S.C. 1723h

SEC. 317. CIVIL MONEY PENALTIES AGAINST ISSUERS

(a) IN GENERAL.—

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

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

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

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

with the provisions of this section. The penalty shall be in addition to any 

other available civil remedy or any available criminal penalty and may be 

imposed whether or not the Secretary imposes other administrative 

sanctions.

12 U.S.C. 1723i

Civil Money 

Penalties

(2) AMOUNT OF PENALTY.—The amount of the penalty, as determined 

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

maximum penalty for all violations by a particular issuer or custodian 

during any one-year period shall not exceed $1,000,000. Each violation of a 

provision of subsection (b)(1) shall constitute a separate violation with 

respect to each pool of mortgages. In the case of a continuing violation, as 

determined by the Secretary, each day shall constitute a separate violation.

Amount of Penalty
36

(b) VIOLATIONS FOR WHICH A PENALTY MAY BE IMPOSED.—

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

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

following:

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

of securities guaranteed under section 306(g).

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

either principal and interest funds or escrow funds into special accounts 

with a depository institution whose accounts are insured by the National

Credit Union Administration or by the Federal Deposit Insurance 

Corporation through the Deposit Insurance Fund.

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

were received.

Violations for 

Which a Penalty 

May be Imposed

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

approved under this title, unless expressly permitted by statute, regulation, or contract approved by the Secretary.

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

requirements prescribed by the Association.

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

that materially affect the business status of an issuer.

(G) Submission to the Association of false information in connection 

with any securities guaranteed, or mortgages pooled, under section 

306(g).

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

employee whose duties involve, directly or indirectly, programs administered by the Association while such person was under suspension or 

debarment by the Secretary.

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

own behalf or on behalf of another person or entity.

(J) Failure to comply with an agreement, certification, or condition of 

approval set forth on, or applicable to, the application for approval as an 

issuer of securities under section 306(g).

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

regulation, handbook, or participant letter issued under authority of this 

title.
37

(2) NOTIFICATION TO ATTORNEY GENERAL.—Before taking action 

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

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

United States.

(c) AGENCY PROCEDURES.—

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

procedures governing the imposition of civil money penalties under 

subsection (a). The standards and procedures—

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

the penalty;

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

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

record; and

(C) may provide for review by the Secretary of any determination or 

order, or interlocutory ruling, arising from a hearing.

(2) FINAL ORDERS.—If no hearing is requested within 15 days of receipt 

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

constitute a final and unappealable determination. If the Secretary reviews 

the determination or order, the Secretary may affirm, modify, or reverse that 

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

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

determination or order shall be final.

Agency Procedures

(3) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In 

determining the amount of a penalty under subsection (a), consideration 

shall be given to such factors as the gravity of the offense, any history of 

prior offenses (including offenses occurring before enactment of this 

section), ability to pay the penalty, injury to the public, benefits received, 

deterrence of future violations, and such other factors as the Secretary may 

determine by regulations.

(4) REVIEWABILITY OF IMPOSITION OF PENALTY.—The 

Secretary’s determination or order imposing a penalty under subsection (a) 

shall not be subject to review, except as provided in subsection (d).

(d) JUDICIAL REVIEW OF AGENCY DETERMINATION.—

(1) IN GENERAL.—After exhausting all administrative remedies 

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

against which the Secretary has imposed a civil money penalty under 

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

Judicial Review

of Agency

Determination
38

as may be addressed in the notice provided under subsection (c)(1)(A) in the 

appropriate court of appeals of the United States, by filing in such court, 

within 20 days after the entry of such order or determination, a written 

petition praying that the Secretary’s order or determination be modified or 

be set aside in whole or in part.

(2) OBJECTIONS NOT RAISED IN HEARING.—A court shall not 

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

to subsection (c)(1) unless a demonstration is made of extraordinary circumstances causing the failure to raise the objection. If any party demonstrates 

to the satisfaction of the court that additional evidence, which was not 

presented at such hearing, is material and that there were reasonable 

grounds for the failure to present such evidence at the hearing, the court 

shall remand the matter to the Secretary for consideration of such additional 

evidence.

(3) SCOPE OF REVIEW.—The decisions, findings, and determinations of 

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

States Code.

(4) ORDER TO PAY PENALTY.—Notwithstanding any other provision of 

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

the penalty imposed by the Secretary.

(e) ACTION TO COLLECT PENALTY.—If any issuer or custodian fails to 

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

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

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

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

appropriate United States district court to obtain a monetary judgment against 

the issuer or custodian and such other relief as may be available. The monetary 

judgment may, in the discretion of the court, include any attorneys fees and 

other expenses incurred by the United States in connection with the action. In 

an action under this subsection, the validity and appropriateness of the 

Secretary’s determination or order imposing the penalty shall not be subject to 

review.

(f) SETTLEMENT BY SECRETARY.—The Secretary may compromise, 

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

under this section.

(g) “KNOWINGLY” DEFINED.—The term “knowingly” means having actual 

knowledge of or acting with deliberate ignorance of or reckless disregard for the 

prohibitions under this section.

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

Secretary deems appropriate to implement this section.

Action to Collect 

Penalty
39

(i) DEPOSIT OF PENALTIES.—The Secretary shall deposit all civil money 

penalties collected under this section into moneys of the Association pursuant to 

section 307.