IIB 

109TH CONGRESS 

1ST SESSION H. R. 1461 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 31, 2005 

Received; read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

AN ACT 

To reform the regulation of certain housing-related 

Government-sponsored enterprises, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Federal Housing Finance Reform Act of 2005’’. 

4 (b) TABLE OF CONTENTS.—The table of contents for 

5 this Act is as follows: 

Sec. 1. Short title and table of contents. 

Sec. 2. Definitions. 

TITLE I—REFORM OF REGULATION OF ENTERPRISES AND 

FEDERAL HOME LOAN BANKS 

Subtitle A—Improvement of Safety and Soundness 

Sec. 101. Establishment of the Federal Housing Finance Agency. 

Sec. 102. Duties and authorities of Director. 

Sec. 103. Housing Finance Oversight Board. 

Sec. 104. Authority to require reports by regulated entities. 

Sec. 105. Disclosure of charitable contributions by enterprises. 

Sec. 106. Assessments. 

Sec. 107. Examiners and accountants. 

Sec. 108. Prohibition and withholding of executive compensation. 

Sec. 109. Reviews of regulated entities. 

Sec. 110. Regulations and orders. 

Sec. 111. Risk-based capital requirements. 

Sec. 112. Minimum and critical capital levels. 

Sec. 113. Review of and authority over enterprise assets and liabilities. 

Sec. 114. Corporate governance of enterprises. 

Sec. 115. Required registration under Securities Exchange Act of 1934. 

Sec. 116. Financial Institutions Examination Council. 

Sec. 117. Guarantee fee study. 

Sec. 118. Conforming amendments. 

Subtitle B—Improvement of Mission Supervision 

Sec. 121. Transfer of program and activities approval and housing goal oversight. 

Sec. 122. Review by Director of new programs and activities of enterprises. 

Sec. 123. Conforming loan limits. 

Sec. 124. Annual housing report regarding regulated entities. 

Sec. 125. Revision of housing goals. 

Sec. 126. Duty to serve underserved markets. 

Sec. 127. Monitoring and enforcing compliance with housing goals. 

Sec. 128. Affordable housing fund. 

Sec. 129. Consistency with mission. 

Sec. 130. Enforcement. 

Sec. 131. Conforming amendments. 

Subtitle C—Prompt Corrective Action 

Sec. 141. Capital classifications. 

Sec. 142. Supervisory actions applicable to undercapitalized regulated entities. 
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Sec. 143. Supervisory actions applicable to significantly undercapitalized regulated entities. 

Sec. 144. Authority over critically undercapitalized regulated entities. 

Sec. 145. Conforming amendments. 

Subtitle D—Enforcement Actions 

Sec. 161. Cease-and-desist proceedings. 

Sec. 162. Temporary cease-and-desist proceedings. 

Sec. 163. Prejudgment attachment. 

Sec. 164. Enforcement and jurisdiction. 

Sec. 165. Civil money penalties. 

Sec. 166. Removal and prohibition authority. 

Sec. 167. Criminal penalty. 

Sec. 168. Subpoena authority. 

Sec. 169. Conforming amendments. 

Subtitle E—General Provisions 

Sec. 181. Boards of enterprises. 

Sec. 182. Report on portfolio operations, safety and soundness, and mission of 

enterprises. 

Sec. 183. Conforming and technical amendments. 

Sec. 184. Study of alternative secondary market systems. 

Sec. 185. Effective date. 

TITLE II—FEDERAL HOME LOAN BANKS 

Sec. 201. Definitions. 

Sec. 202. Directors. 

Sec. 203. Federal Housing Finance Agency oversight of Federal Home Loan 

Banks. 

Sec. 204. Joint activities of banks. 

Sec. 205. Sharing of information between Federal Home Loan Banks. 

Sec. 206. Reorganization of banks and voluntary merger. 

Sec. 207. Securities and Exchange Commission disclosure. 

Sec. 208. Community financial institution members. 

Sec. 209. Technical and conforming amendments. 

Sec. 210. Study of affordable housing program use for long-term care facilities. 

Sec. 211. Effective date. 

TITLE III—TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT, FEDERAL HOUSING FINANCE BOARD, AND DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Subtitle A—Office of Federal Housing Enterprise Oversight 

Sec. 301. Abolishment of OFHEO. 

Sec. 302. Continuation and coordination of certain regulations. 

Sec. 303. Transfer and rights of employees of OFHEO. 

Sec. 304. Transfer of property and facilities. 

Subtitle B—Federal Housing Finance Board 

Sec. 321. Abolishment of the Federal Housing Finance Board. 

Sec. 322. Continuation and coordination of certain regulations. 
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Sec. 323. Transfer and rights of employees of the Federal Housing Finance 

Board. 

Sec. 324. Transfer of property and facilities. 

Subtitle C—Department of Housing and Urban Development 

Sec. 341. Termination of enterprise-related functions. 

Sec. 342. Continuation and coordination of certain regulations. 

Sec. 343. Transfer and rights of employees. 

Sec. 344. Transfer of appropriations, property, and facilities. 

1 SEC. 2. DEFINITIONS. 

2 Section 1303 of the Housing and Community Devel3 opment Act of 1992 (12 U.S.C. 4502) is amended— 

4 (1) in paragraph (7), by striking ‘‘an enter5 prise’’ and inserting ‘‘a regulated entity’’; 

6 (2) by striking ‘‘the enterprise’’ each place such 

7 term appears (except in paragraphs (4) and (18)) 

8 and inserting ‘‘the regulated entity’’; 

9 (3) in paragraph (5), by striking ‘‘Office of 

10 Federal Housing Enterprise Oversight of the De11 partment of Housing and Urban Development’’ and 

12 inserting ‘‘Federal Housing Finance Agency’’; 

13 (4) in each of paragraphs (8), (9), (10), and 

14 (19), by striking ‘‘Secretary’’ each place that term 

15 appears and inserting ‘‘Director’’; 

16 (5) in paragraph (13), by inserting ‘‘, with re17 spect to an enterprise,’’ after ‘‘means’’; 

18 (6) by redesignating paragraphs (16) through 

19 (19) as paragraphs (20) through (23), respectively; 

20 (7) by striking paragraphs (14) and (15) and 

21 inserting the following new paragraphs: 
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1 ‘‘(18) REGULATED ENTITY.—The term ‘regu2 lated entity’ means— 

3 ‘‘(A) the Federal National Mortgage Asso4 ciation and any affiliate thereof; 

5 ‘‘(B) the Federal Home Loan Mortgage 

6 Corporation and any affiliate thereof; and 

7 ‘‘(C) each Federal home loan bank. 

8 ‘‘(19) REGULATED ENTITY-AFFILIATED

9 PARTY.—The term ‘regulated entity-affiliated party’ 

10 means— 

11 ‘‘(A) any director, officer, employee, or 

12 controlling stockholder of, or agent for, a regu13 lated entity; 

14 ‘‘(B) any shareholder, affiliate, consultant, 

15 or joint venture partner of a regulated entity, 

16 and any other person, as determined by the Di17 rector (by regulation or on a case-by-case basis) 

18 that participates in the conduct of the affairs of 

19 a regulated entity; 

20 ‘‘(C) any independent contractor for a reg21 ulated entity (including any attorney, appraiser, 

22 or accountant), if— 

23 ‘‘(i) the independent contractor know24 ingly or recklessly participates in— 
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1 ‘‘(I) any violation of any law or 

2 regulation; 

3 ‘‘(II) any breach of fiduciary 

4 duty; or 

5 ‘‘(III) any unsafe or unsound 

6 practice; and 

7 ‘‘(ii) such violation, breach, or prac8 tice caused, or is likely to cause, more than 

9 a minimal financial loss to, or a significant 

10 adverse effect on, the regulated entity; 

11 and’’. 

12 ‘‘(D) any not-for-profit corporation that re13 ceives its principal funding, on an ongoing 

14 basis, from any regulated entity.’’; 

15 (8) by redesignating paragraphs (8) through 

16 (13) as paragraphs (12) through (17), respectively; 

17 and 

18 (9) by inserting after paragraph (7) the fol19 lowing new paragraph: 

20 ‘‘(11) FEDERAL HOME LOAN BANK.—The term 

21 ‘Federal home loan bank’ means a bank established 

22 under the authority of the Federal Home Loan 

23 Bank Act.’’; 
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1 (10) by redesignating paragraphs (2) through 

2 (7) as paragraphs (5) through (10), respectively; 

3 and 

4 (11) by inserting after paragraph (1) the fol5 lowing new paragraphs: 

6 ‘‘(2) AGENCY.—The term ‘Agency’ means the 

7 Federal Housing Finance Agency. 

8 ‘‘(3) AUTHORIZING STATUTES.—The term ‘au9 thorizing statutes’ means— 

10 ‘‘(A) the Federal National Mortgage Asso11 ciation Charter Act; 

12 ‘‘(B) the Federal Home Loan Mortgage 

13 Corporation Act; and 

14 ‘‘(C) the Federal Home Loan Bank Act. 

15 ‘‘(4) BOARD.—The term ‘Board’ means the 

16 Housing Finance Oversight Board established under 

17 section 1313B.’’. 
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1 TITLE I—REFORM OF REGULA2 TION OF ENTERPRISES AND 

3 FEDERAL HOME LOAN BANKS 

4 Subtitle A—Improvement of Safety 

5 and Soundness 

6 SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING FI7 NANCE AGENCY. 

8 (a) IN GENERAL.—The Housing and Community De9 velopment Act of 1992 (12 U.S.C. 4501 et seq.) is amend10 ed by striking sections 1311 and 1312 and inserting the 

11 following: 

12 ‘‘SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING 

13 FINANCE AGENCY. 

14 ‘‘(a) ESTABLISHMENT.—There is established the 

15 Federal Housing Finance Agency, which shall be an inde16 pendent agency of the Federal Government. 

17 ‘‘(b) GENERAL SUPERVISORY AND REGULATORY AU18 THORITY.— 

19 ‘‘(1) IN GENERAL.—Each regulated entity shall, 

20 to the extent provided in this title, be subject to the 

21 supervision and regulation of the Agency. 

22 ‘‘(2) AUTHORITY OVER FANNIE MAE, FREDDIE

23 MAC, AND FEDERAL HOME LOAN BANKS.—The Di24 rector of the Federal Housing Finance Agency shall 

25 have general supervisory and regulatory authority 
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1 over each regulated entity and shall exercise such 

2 general regulatory authority, including such duties 

3 and authorities set forth under section 1313 of this 

4 Act, to ensure that the purposes of this Act, the au5 thorizing statutes, and any other applicable law are 

6 carried out. 

7 ‘‘(c) SAVINGS PROVISION.—The authority of the Di8 rector to take actions under subtitles B and C shall not 

9 in any way limit the general supervisory and regulatory 

10 authority granted to the Director. 

11 ‘‘SEC. 1312. DIRECTOR. 

12 ‘‘(a) ESTABLISHMENT OF POSITION.—There is estab13 lished the position of the Director of the Federal Housing 

14 Finance Agency, who shall be the head of the Agency. 

15 ‘‘(b) APPOINTMENT; TERM.— 

16 ‘‘(1) APPOINTMENT.—The Director shall be ap17 pointed by the President, by and with the advice and 

18 consent of the Senate, from among individuals who 

19 are citizens of the United States, have a dem20 onstrated understanding of financial management or 

21 oversight, and have a demonstrated understanding 

22 of capital markets, including the mortgage securities 

23 markets and housing finance. 
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1 ‘‘(2) TERM AND REMOVAL.—The Director shall 

2 be appointed for a term of 5 years and may be re3 moved by the President only for cause. 

4 ‘‘(3) VACANCY.—A vacancy in the position of 

5 Director that occurs before the expiration of the 

6 term for which a Director was appointed shall be 

7 filled in the manner established under paragraph 

8 (1), and the Director appointed to fill such vacancy 

9 shall be appointed only for the remainder of such 

10 term. 

11 ‘‘(4) SERVICE AFTER END OF TERM.—An indi12 vidual may serve as the Director after the expiration 

13 of the term for which appointed until a successor 

14 has been appointed. 

15 ‘‘(5) TRANSITIONAL PROVISION.—Notwith16 standing paragraphs (1) and (2), the Director of the 

17 Office of Federal Housing Enterprise Oversight of 

18 the Department of Housing and Urban Development 

19 shall serve as the Director until a successor has been 

20 appointed under paragraph (1). 

21 ‘‘(c) DEPUTY DIRECTOR OF THE DIVISION OF EN22 TERPRISE REGULATION.— 

23 ‘‘(1) IN GENERAL.—The Agency shall have a 

24 Deputy Director of the Division of Enterprise Regu25 lation, who shall be appointed by the Director from 
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1 among individuals who are citizens of the United 

2 States, have a demonstrated understanding of finan3 cial management or oversight and of mortgage secu4 rities markets and housing finance. 

5 ‘‘(2) FUNCTIONS.—The Deputy Director of the 

6 Division of Enterprise Regulation shall have such 

7 functions, powers, and duties with respect to the 

8 oversight of the enterprises as the Director shall pre9 scribe. 

10 ‘‘(d) DEPUTY DIRECTOR OF THE DIVISION OF FED11 ERAL HOME LOAN BANK REGULATION.— 

12 ‘‘(1) IN GENERAL.—The Agency shall have a 

13 Deputy Director of the Division of Federal Home 

14 Loan Bank Regulation, who shall be appointed by 

15 the Director from among individuals who are citi16 zens of the United States, have a demonstrated un17 derstanding of financial management or oversight 

18 and of the Federal Home Loan Bank System and 

19 housing finance. 

20 ‘‘(2) FUNCTIONS.—The Deputy Director of the 

21 Division of Federal Home Loan Bank Regulation 

22 shall have such functions, powers, and duties with 

23 respect to the oversight of the Federal home loan 

24 banks as the Director shall prescribe. 

25 ‘‘(e) DEPUTY DIRECTOR FOR HOUSING.— 
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1 ‘‘(1) IN GENERAL.—The Agency shall have a 

2 Deputy Director for Housing, who shall be ap3 pointed by the Director from among individuals who 

4 are citizens of the United States, and have a dem5 onstrated understanding of the housing markets and 

6 housing finance. 

7 ‘‘(2) FUNCTIONS.—The Deputy Director for 

8 Housing shall have such functions, powers, and du9 ties with respect to the oversight of the housing mis10 sion and goals of the enterprises, and with respect 

11 to oversight of the housing mission of the Federal 

12 home loan banks, as the Director shall prescribe. 

13 ‘‘(f) LIMITATIONS.—The Director and each of the 

14 Deputy Directors may not— 

15 ‘‘(1) have any direct or indirect financial inter16 est in any regulated entity or regulated entity-affili17 ated party; 

18 ‘‘(2) hold any office, position, or employment in 

19 any regulated entity or regulated entity-affiliated 

20 party; or 

21 ‘‘(3) have served as an executive officer or di22 rector of any regulated entity, or regulated entity-af23 filiated party, at any time during the 3-year period 

24 ending on the date of appointment of such individual 

25 as Director or Deputy Director. 
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1 ‘‘(g) OMBUDSMAN.—The Director shall establish, by 

2 regulation, an Office of the Ombudsman in the Agency. 

3 Such regulations shall provide that the Ombudsman will 

4 consider complaints and appeals from any regulated entity 

5 and any person that has a business relationship with a 

6 regulated entity and shall specify the duties and authority 

7 of the Ombudsman.’’. 

8 (b) APPOINTMENT OF DIRECTOR.—Notwithstanding 

9 any other provision of law or of this Act, the President 

10 may, any time after the date of the enactment of this Act, 

11 appoint an individual to serve as the Director of the Fed12 eral Housing Finance Agency, as such office is established 

13 by the amendment made by subsection (a). This sub14 section shall take effect on the date of the enactment of 

15 this Act. 

16 SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR. 

17 (a) IN GENERAL.—The Housing and Community De18 velopment Act of 1992 (12 U.S.C. 4513) is amended by 

19 striking section 1313 and inserting the following new sec20 tions: 

21 ‘‘SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR. 

22 ‘‘(a) DUTIES.— 

23 ‘‘(1) PRINCIPAL DUTIES.—The principal duties 

24 of the Director shall be— 
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1 ‘‘(A) to oversee the operations of each reg2 ulated entity; and 

3 ‘‘(B) to ensure that— 

4 ‘‘(i) each regulated entity operates in 

5 a safe and sound manner, including main6 tenance of adequate capital and internal 

7 controls; 

8 ‘‘(ii) the operations and activities of 

9 each regulated entity foster liquid, effi10 cient, competitive, and resilient national 

11 housing finance markets that minimize the 

12 cost of housing finance (including activities 

13 relating to mortgages on housing for low14 and moderate- income families involving a 

15 reasonable economic return that may be 

16 less than the return earned on other activi17 ties); 

18 ‘‘(iii) each regulated entity complies 

19 with this title and the rules, regulations, 

20 guidelines, and orders issued under this 

21 title and the authorizing statutes; and 

22 ‘‘(iv) each regulated entity carries out 

23 its statutory mission only through activi24 ties that are consistent with this title and 

25 the authorizing statutes. 
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1 ‘‘(2) SCOPE OF AUTHORITY.—The authority of 

2 the Director shall include the authority— 

3 ‘‘(A) to review and, if warranted based on 

4 the principal duties described in paragraph (1), 

5 reject any acquisition or transfer of a control6 ling interest in an enterprise; and 

7 ‘‘(B) to exercise such incidental powers as 

8 may be necessary or appropriate to fulfill the 

9 duties and responsibilities of the Director in the 

10 supervision and regulation of each regulated en11 tity. 

12 ‘‘(b) DELEGATION OF AUTHORITY.—The Director 

13 may delegate to officers or employees of the Agency, in14 cluding each of the Deputy Directors, any of the functions, 

15 powers, or duties of the Director, as the Director considers 

16 appropriate. 

17 ‘‘(c) LITIGATION AUTHORITY.— 

18 ‘‘(1) IN GENERAL.—In enforcing any provision 

19 of this title, any regulation or order prescribed under 

20 this title, or any other provision of law, rule, regula21 tion, or order, or in any other action, suit, or pro22 ceeding to which the Director is a party or in which 

23 the Director is interested, and in the administration 

24 of conservatorships and receiverships, the Director 

25 may act in the Director’s own name and through the 
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1 Director’s own attorneys, or request that the Attor2 ney General of the United States act on behalf of 

3 the Director. 

4 ‘‘(2) CONSULTATION WITH ATTORNEY GEN5 ERAL.—The Director shall provide notice to, and 

6 consult with, the Attorney General of the United 

7 States before taking an action under paragraph (1) 

8 of this subsection or under section 1344(a), 1345(d), 

9 1348(c), 1372(e), 1375(a), 1376(d), or 1379D(c), 

10 except that, if the Director determines that any 

11 delay caused by such prior notice and consultation 

12 may adversely affect the safety and soundness re13 sponsibilities of the Director under this title, the Di14 rector shall notify the Attorney General as soon as 

15 reasonably possible after taking such action. 

16 ‘‘(3) SUBJECT TO SUIT.—Except as otherwise 

17 provided by law, the Director shall be subject to suit 

18 (other than suits on claims for money damages) by 

19 a regulated entity or director or officer thereof with 

20 respect to any matter under this title or any other 

21 applicable provision of law, rule, order, or regulation 

22 under this title, in the United States district court 

23 for the judicial district in which the regulated entity 

24 has its principal place of business, or in the United 

25 States District Court for the District of Columbia, 
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1 and the Director may be served with process in the 

2 manner prescribed by the Federal Rules of Civil 

3 Procedure. 

4 ‘‘SEC. 1313A. PRUDENTIAL MANAGEMENT AND OPERATIONS 

5 STANDARDS. 

6 ‘‘(a) STANDARDS.—The Director shall establish 

7 standards, by regulation, guideline, or order, for each reg8 ulated entity relating to— 

9 ‘‘(1) adequacy of internal controls and informa10 tion systems taking into account the nature and 

11 scale of business operations; 

12 ‘‘(2) independence and adequacy of internal 

13 audit systems; 

14 ‘‘(3) management of credit and counterparty 

15 risk, including systems to identify concentrations of 

16 credit risk and prudential limits to restrict exposure 

17 of the regulated entity to a single counterparty or 

18 groups of related counterparties; 

19 ‘‘(4) management of interest rate risk exposure; 

20 ‘‘(5) management of market risk, including 

21 standards that provide for systems that accurately 

22 measure, monitor, and control market risks and, as 

23 warranted, that establish limitations on market risk; 

24 ‘‘(6) adequacy and maintenance of liquidity and 

25 reserves; 
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1 ‘‘(7) management of any asset and investment 

2 portfolio; 

3 ‘‘(8) investments and acquisitions by a regu4 lated entity, to ensure that they are consistent with 

5 the purposes of this Act and the authorizing stat6 utes; 

7 ‘‘(9) maintenance of adequate records, in ac8 cordance with consistent accounting policies and 

9 practices that enable the Director to evaluate the fi10 nancial condition of the regulated entity; 

11 ‘‘(10) issuance of subordinated debt by that 

12 particular regulated entity, as the Director considers 

13 necessary; 

14 ‘‘(11) overall risk management processes, in15 cluding adequacy of oversight by senior management 

16 and the board of directors and of processes and poli17 cies to identify, measure, monitor, and control mate18 rial risks, including reputational risks, and for ade19 quate, well-tested business resumption plans for all 

20 major systems with remote site facilities to protect 

21 against disruptive events; and 

22 ‘‘(12) such other operational and management 

23 standards as the Director determines to be appro24 priate. 

25 ‘‘(b) FAILURE TO MEET STANDARDS.— 
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1 ‘‘(1) PLAN REQUIREMENT.— 

2 ‘‘(A) IN GENERAL.—If the Director deter3 mines that a regulated entity fails to meet any 

4 standard established under subsection (a)— 

5 ‘‘(i) if such standard is established by 

6 regulation, the Director shall require the 

7 regulated entity to submit an acceptable 

8 plan to the Director within the time al9 lowed under subparagraph (C); and 

10 ‘‘(ii) if such standard is established by 

11 guideline, the Director may require the 

12 regulated entity to submit a plan described 

13 in clause (i). 

14 ‘‘(B) CONTENTS.—Any plan required 

15 under subparagraph (A) shall specify the ac16 tions that the regulated entity will take to cor17 rect the deficiency. If the regulated entity is 

18 undercapitalized, the plan may be a part of the 

19 capital restoration plan for the regulated entity 

20 under section 1369C. 

21 ‘‘(C) DEADLINES FOR SUBMISSION AND

22 REVIEW.—The Director shall by regulation es23 tablish deadlines that— 

24 ‘‘(i) provide the regulated entities with 

25 reasonable time to submit plans required 
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1 under subparagraph (A), and generally re2 quire a regulated entity to submit a plan 

3 not later than 30 days after the Director 

4 determines that the entity fails to meet 

5 any standard established under subsection 

6 (a); and 

7 ‘‘(ii) require the Director to act on 

8 plans expeditiously, and generally not later 

9 than 30 days after the plan is submitted. 

10 ‘‘(2) REQUIRED ORDER UPON FAILURE TO SUB11 MIT OR IMPLEMENT PLAN.—If a regulated entity 

12 fails to submit an acceptable plan within the time al13 lowed under paragraph (1)(C), or fails in any mate14 rial respect to implement a plan accepted by the Di15 rector, the following shall apply: 

16 ‘‘(A) REQUIRED CORRECTION OF DEFI17 CIENCY.—The Director shall, by order, require 

18 the regulated entity to correct the deficiency. 

19 ‘‘(B) OTHER AUTHORITY.—The Director 

20 may, by order, take one or more of the fol21 lowing actions until the deficiency is corrected: 

22 ‘‘(i) Prohibit the regulated entity from 

23 permitting its average total assets (as such 

24 term is defined in section 1316(b)) during 

25 any calendar quarter to exceed its average 
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1 total assets during the preceding calendar 

2 quarter, or restrict the rate at which the 

3 average total assets of the entity may in4 crease from one calendar quarter to an5 other. 

6 ‘‘(ii) Require the regulated entity— 

7 ‘‘(I) in the case of an enterprise, 

8 to increase its ratio of core capital to 

9 assets. 

10 ‘‘(II) in the case of a Federal 

11 home loan bank, to increase its ratio 

12 of total capital (as such term is de13 fined in section 6(a)(5) of the Federal 

14 Home Loan Bank Act (12 U.S.C. 

15 1426(a)(5)) to assets. 

16 ‘‘(iii) Require the regulated entity to 

17 take any other action that the Director de18 termines will better carry out the purposes 

19 of this section than any of the actions de20 scribed in this subparagraph. 

21 ‘‘(3) MANDATORY RESTRICTIONS.—In com22 plying with paragraph (2), the Director shall take 

23 one or more of the actions described in clauses (i) 

24 through (iii) of paragraph (2)(B) if— 
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1 ‘‘(A) the Director determines that the reg2 ulated entity fails to meet any standard pre3 scribed under subsection (a); 

4 ‘‘(B) the regulated entity has not corrected 

5 the deficiency; and 

6 ‘‘(C) during the 18-month period before 

7 the date on which the regulated entity first 

8 failed to meet the standard, the entity under9 went extraordinary growth, as defined by the 

10 Director. 

11 ‘‘(c) OTHER ENFORCEMENT AUTHORITY NOT AF12 FECTED.—The authority of the Director under this sec13 tion is in addition to any other authority of the Director.’’. 

14 (b) INDEPENDENCE IN CONGRESSIONAL TESTIMONY

15 AND RECOMMENDATIONS.—Section 111 of Public Law 

16 93–495 (12 U.S.C. 250) is amended by striking ‘‘the Fed17 eral Housing Finance Board’’ and inserting ‘‘the Director 

18 of the Federal Housing Finance Agency’’. 

19 SEC. 103. HOUSING FINANCE OVERSIGHT BOARD. 

20 (a) IN GENERAL.—Title XIII of the Housing and 

21 Community Development Act of 1992 (12 U.S.C. 4501 et 

22 seq.) is amended by inserting after section 1313A, as 

23 added by section 102 of this Act, the following new sec24 tion: 
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1 ‘‘SEC. 1313B. HOUSING FINANCE OVERSIGHT BOARD. 

2 ‘‘(a) IN GENERAL.—There is established the Housing 

3 Finance Oversight Board. 

4 ‘‘(b) DUTIES.— 

5 ‘‘(1) IN GENERAL.—The Board shall advise the 

6 Director with respect to overall strategies and poli7 cies in carrying out the duties of the Director under 

8 this title, at the request of the Director and at the 

9 initiative of the Board, and shall carry out such 

10 functions as otherwise provided by law. 

11 ‘‘(2) LIMITATION.—The Director may not dele12 gate to the Board any of the functions, powers, or 

13 duties of the Director. 

14 ‘‘(c) COMPOSITION.—The Board shall be comprised 

15 of 5 members, as follows: 

16 ‘‘(1) One member shall be the Director, who 

17 shall serve as the Chairperson of the Board. 

18 ‘‘(2) One member shall be the Secretary of the 

19 Treasury or the designee of the Secretary. 

20 ‘‘(3) One member shall be the Secretary of 

21 Housing and Urban Development or the designee of 

22 the Secretary. 

23 ‘‘(4) Two members shall be appointed by the 

24 President, by and with the advice and consent of the 

25 Senate, who shall include— 
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1 ‘‘(A) one individual who has extensive ex2 perience and expertise in the capital markets 

3 (including debt markets), the secondary mort4 gage market, and mortgage-backed securities; 

5 and 

6 ‘‘(B) one individual who has extensive ex7 perience and expertise in mortgage finance (in8 cluding single family and multifamily housing 

9 mortgage finance), development of affordable 

10 housing, and economic development and revital11 ization. 

12 ‘‘(d) TERMS AND VACANCIES.— 

13 ‘‘(1) TERMS.—Each member of the Board pur14 suant to paragraph (4) shall be appointed for a term 

15 of 3 years, and may be removed by the President 

16 only for cause. 

17 ‘‘(2) VACANCIES.—A member of the Board ap18 pointed to fill a vacancy occurring before the expira19 tion of the term for which the member’s predecessor 

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

22 serve after the expiration of the member’s term until 

23 a successor has been appointed. 

24 ‘‘(e) PROHIBITION OF ADDITIONAL COMPENSA25 TION.—Notwithstanding any other provision of law, mem-
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1 bers of Board pursuant to paragraphs (1), (2), and (3) 

2 shall not receive additional compensation by reason of 

3 service on the Board. 

4 ‘‘(f) LIMITATIONS.—Each member of the Board may 

5 not— 

6 ‘‘(1) have any direct or indirect financial inter7 est in any regulated entity or regulated entity-affili8 ated party; or 

9 ‘‘(2) hold any office, position, or employment in 

10 any regulated entity or regulated entity-affiliated 

11 party. 

12 ‘‘(g) FULL-TIME MEMBERS AND STAFF.— 

13 ‘‘(1) FULL-TIME MEMBERS.—The members of 

14 the Board pursuant to subsection (c)(4) shall serve 

15 on a full-time basis. 

16 ‘‘(2) STAFF.—The staff of the Board shall be 

17 appointed subject to the provisions of title 5, United 

18 States Code, governing appointments in the competi19 tive service, and shall be paid in accordance with the 

20 provisions of chapter 51 and subchapter III of chap21 ter 53 of that title relating to classification and Gen22 eral Schedule pay rates, except that each member of 

23 the Board pursuant to paragraph (4) may appoint 

24 one staff member without regard to the such provi25 sions governing appointments in the competitive 
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1 service and such staff members may be paid by the 

2 Board without regard to the such provisions relating 

3 to classification and General Schedule pay rates. 

4 ‘‘(h) MEETINGS.— 

5 ‘‘(1) IN GENERAL.—The Board shall meet upon 

6 notice by the Director, but in no event shall the 

7 Board meet less frequently than once every 3 

8 months. 

9 ‘‘(2) SPECIAL MEETINGS.—Any member of the 

10 Board may, upon giving written notice to the Direc11 tor, require a special meeting of the Board, which 

12 shall be convened by the Director within 30 days 

13 after such notice. 

14 ‘‘(i) TESTIMONY.—On an annual basis, the Board 

15 shall testify before Congress regarding— 

16 ‘‘(1) the safety and soundness of the regulated 

17 entities; 

18 ‘‘(2) any material deficiencies in the conduct of 

19 the operations of the regulated entities; 

20 ‘‘(3) the overall operational status of the regu21 lated entities; 

22 ‘‘(4) an evaluation of the performance of the 

23 regulated entities in carrying out their respective 

24 missions; 
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1 ‘‘(5) operations, resources, and performance of 

2 the Agency and the Board; and 

3 ‘‘(6) such other matters relating to the Agency, 

4 the Board, and the regulated entities, and their ful5 fillment of their missions, as the Board determines 

6 appropriate. 

7 ‘‘(j) COSTS.—Costs of the Board, including staff, 

8 shall be paid by the Agency as a cost and expense of the 

9 Agency.’’. 

10 (b) ANNUAL REPORT OF THE DIRECTOR.—Section 

11 1319B(a) of the Housing and Community Development 

12 Act of 1992 (12 U.S.C. 4521 (a)) is amended— 

13 (1) in paragraph (3), by striking ‘‘and’’ at the 

14 end; and 

15 (2) by striking paragraph (4) and inserting the 

16 following new paragraphs: 

17 ‘‘(4) an assessment of the Board with respect 

18 to— 

19 ‘‘(A) the safety and soundness of the regu20 lated entities; 

21 ‘‘(B) any material deficiencies in the con22 duct of the operations of the regulated entities; 

23 ‘‘(C) the overall operational status of the 

24 regulated entities; 
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1 ‘‘(D) an evaluation of the performance of 

2 the regulated entities in carrying out their mis3 sions, including compliance of the enterprises 

4 with the housing goals under subpart B of part 

5 2 of this subtitle and compliance of the Federal 

6 home loan banks with the community invest7 ment and affordable housing programs under 

8 subsections (i) and (j) of section 10 of the Fed9 eral Home Loan Bank Act; 

10 ‘‘(E) an evaluation of the performance of 

11 the Agency in fulfilling its duties and respon12 sibilities under law; and 

13 ‘‘(F) such other matters relating to the 

14 Board and the fulfillment of its duties as the 

15 Board considers appropriate; 

16 ‘‘(5) operations, resources, and performance of 

17 the Agency; and 

18 ‘‘(6) such other matters relating to the Agency 

19 and its fulfillment of its mission.’’. 

20 SEC. 104. AUTHORITY TO REQUIRE REPORTS BY REGU21 LATED ENTITIES. 

22 Section 1314 of the Housing and Community Devel23 opment Act of 1992 (12 U.S.C. 4514) is amended— 

24 (1) in the section heading, by striking ‘‘ENTER25 PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 
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1 (2) in subsection (a)— 

2 (A) in the subsection heading, by striking 

3 ‘‘Special Reports and Reports of Financial Con4 dition’’ and inserting ‘‘Regular and Special Re5 ports’’; 

6 (B) in paragraph (1)— 

7 (i) in the paragraph heading, by strik8 ing ‘‘FINANCIAL CONDITION’’ and inserting 

9 ‘‘REGULAR REPORTS’’; and 

10 (ii) by striking ‘‘reports of financial 

11 condition and operations’’ and inserting 

12 ‘‘regular reports on the condition (includ13 ing financial condition), management, ac14 tivities, or operations of the regulated enti15 ty, as the Director considers appropriate’’; 

16 and 

17 (C) in paragraph (2), after ‘‘submit special 

18 reports’’ insert ‘‘on any of the topics specified 

19 in paragraph (1) or such other topics’’; and 

20 (3) by adding at the end the following new sub21 section: 

22 ‘‘(c) REPORTS OF FRAUDULENT FINANCIAL TRANS23 ACTIONS.— 

24 ‘‘(1) REQUIREMENT TO REPORT.—The Director 

25 shall require a regulated entity to submit to the Di-
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1 rector a timely report upon discovery by the regu2 lated entity that it has purchased or sold a fraudu3 lent loan or financial instrument or suspects a pos4 sible fraud relating to a purchase or sale of any loan 

5 or financial instrument. The Director shall require 

6 the regulated entities to establish and maintain pro7 cedures designed to discover any such transactions. 

8 ‘‘(2) PROTECTION FROM LIABILITY FOR RE9 PORTS.— 

10 ‘‘(A) IN GENERAL.—If a regulated entity 

11 makes a report pursuant to paragraph (1), or 

12 a regulated entity-affiliated party makes, or re13 quires another to make, such a report, and such 

14 report is made in a good faith effort to comply 

15 with the requirements of paragraph (1), such 

16 regulated entity or regulated entity-affiliated 

17 party shall not be liable to any person under 

18 any law or regulation of the United States, any 

19 constitution, law, or regulation of any State or 

20 political subdivision of any State, or under any 

21 contract or other legally enforceable agreement 

22 (including any arbitration agreement), for such 

23 report or for any failure to provide notice of 

24 such report to the person who is the subject of 
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1 such report or any other person identified in 

2 the report. 

3 ‘‘(B) RULE OF CONSTRUCTION.—Subpara4 graph (A) shall not be construed as creating— 

5 ‘‘(i) any inference that the term ‘per6 son’, as used in such subparagraph, may 

7 be construed more broadly than its ordi8 nary usage so as to include any govern9 ment or agency of government; or 

10 ‘‘(ii) any immunity against, or other11 wise affecting, any civil or criminal action 

12 brought by any government or agency of 

13 government to enforce any constitution, 

14 law, or regulation of such government or 

15 agency.’’. 

16 SEC. 105. DISCLOSURE OF CHARITABLE CONTRIBUTIONS 

17 BY ENTERPRISES. 

18 Section 1314 of the Housing and Community Devel19 opment Act of 1992 (12 U.S.C. 4514), as amended by 

20 the preceding provisions of this Act, is further amended 

21 by adding at the end the following new subsection: 

22 ‘‘(d) DISCLOSURE OF CHARITABLE CONTRIBUTIONS

23 BY ENTERPRISES.— 

24 ‘‘(1) REQUIRED DISCLOSURE.—The Director 

25 shall, by regulation, require each enterprise to sub-
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1 mit a report annually, in a format designated by the 

2 Director, containing the following information: 

3 ‘‘(A) TOTAL VALUE.—The total value of 

4 contributions made by the enterprise to non5 profit organizations during its previous fiscal 

6 year. 

7 ‘‘(B) SUBSTANTIAL CONTRIBUTIONS.—If 

8 the value of contributions made by the enter9 prise to any nonprofit organization during its 

10 previous fiscal year exceeds the designated 

11 amount, the name of that organization and the 

12 value of contributions. 

13 ‘‘(C) SUBSTANTIAL CONTRIBUTIONS TO IN14 SIDER-AFFILIATED CHARITIES.—Identification 

15 of each contribution whose value exceeds the 

16 designated amount that were made by the en17 terprise during the enterprise’s previous fiscal 

18 year to any nonprofit organization of which a 

19 director, officer, or controlling person of the en20 terprise, or a spouse thereof, was a director or 

21 trustee, the name of such nonprofit organiza22 tion, and the value of the contribution. 

23 ‘‘(2) DEFINITIONS.—For purposes of this sub24 section— 
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1 ‘‘(A) the term ‘designated amount’ means 

2 such amount as may be designated by the Di3 rector by regulation, consistent with the public 

4 interest and the protection of investors for pur5 poses of this subsection; and 

6 ‘‘(B) the Director may, by such regulations 

7 as the Director deems necessary or appropriate 

8 in the public interest, define the terms officer 

9 and controlling person. 

10 ‘‘(3) PUBLIC AVAILABILITY.—The Director 

11 shall make the information submitted pursuant to 

12 this subsection publicly available.’’. 

13 SEC. 106. ASSESSMENTS. 

14 Section 1316 of the Housing and Community Devel15 opment Act of 1992 (12 U.S.C. 4516) is amended— 

16 (1) by striking subsection (a) and inserting the 

17 following new subsection: 

18 ‘‘(a) ANNUAL ASSESSMENTS.—The Director shall es19 tablish and collect from the regulated entities annual as20 sessments in an amount not exceeding the amount suffi21 cient to provide for reasonable costs and expenses of the 

22 Agency, including— 

23 ‘‘(1) the expenses of any examinations under 

24 section 1317 of this Act and under section 20 of the 

25 Federal Home Loan Bank Act; 
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1 ‘‘(2) the expenses of obtaining any reviews and 

2 credit assessments under section 1319; and 

3 ‘‘(3) such amounts in excess of actual expenses 

4 for any given year as deemed necessary by the Di5 rector to maintain a working capital fund in accord6 ance with subsection (e).’’; 

7 (2) in subsection (b)— 

8 (A) in the subsection heading, by striking 

9 ‘‘ENTERPRISES’’ and inserting ‘‘REGULATED

10 ENTITIES’’ ; 

11 (B) by realigning paragraph (2) two ems 

12 from the left margin, so as to align the left 

13 margin of such paragraph with the left margins 

14 of paragraph (1); 

15 (C) in paragraph (1)— 

16 (i) by striking ‘‘Each enterprise’’ and 

17 inserting ‘‘Each regulated entity’’; 

18 (ii) by striking ‘‘each enterprise’’ and 

19 inserting ‘‘each regulated entity’’; and 

20 (iii) by striking ‘‘both enterprises’’ 

21 and inserting ‘‘all of the regulated enti22 ties’’; and 

23 (D) in paragraph (3)— 
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1 (i) in subparagraph (B), by striking 

2 ‘‘subparagraph (A)’’ and inserting ‘‘clause 

3 (i)’’; 

4 (ii) by redesignating subparagraphs 

5 (A), (B), and (C) as clauses (i), (ii) and 

6 (ii), respectively, and realigning such 

7 clauses, as so redesignated, so as to be in8 dented 6 ems from the left margin; 

9 (iii) by striking the matter that pre10 cedes clause (i), as so redesignated, and in11 serting the following: 

12 ‘‘(3) DEFINITION OF TOTAL ASSETS.—For pur13 poses of this section, the term ‘total assets’ means 

14 as follows: 

15 ‘‘(A) ENTERPRISES.—With respect to an 

16 enterprise, the sum of—’’; and 

17 (iv) by adding at the end the following 

18 new subparagraph: 

19 ‘‘(B) FEDERAL HOME LOAN BANKS.—With 

20 respect to a Federal home loan bank, the total 

21 assets of the Bank, as determined by the Direc22 tor in accordance with generally accepted ac23 counting principles.’’; 

24 (3) by striking subsection (c) and inserting the 

25 following new subsection: 
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1 ‘‘(c) INCREASED COSTS OF REGULATION.— 

2 ‘‘(1) INCREASE FOR INADEQUATE CAPITALIZA3 TION.—The semiannual payments made pursuant to 

4 subsection (b) by any regulated entity that is not 

5 classified (for purposes of subtitle B) as adequately 

6 capitalized may be increased, as necessary, in the 

7 discretion of the Director to pay additional esti8 mated costs of regulation of the regulated entity. 

9 ‘‘(2) ADJUSTMENT FOR ENFORCEMENT ACTIVI10 TIES.—The Director may adjust the amounts of any 

11 semiannual assessments for an assessment under 

12 subsection (a) that are to be paid pursuant to sub13 section (b) by a regulated entity, as necessary in the 

14 discretion of the Director, to ensure that the costs 

15 of enforcement activities under subtitle B and C for 

16 a regulated entity are borne only by such regulated 

17 entity. 

18 ‘‘(3) ADDITIONAL ASSESSMENT FOR DEFI19 CIENCIES.—If at any time, as a result of increased 

20 costs of regulation of a regulated entity that is not 

21 classified (for purposes of subtitle B) as adequately 

22 capitalized or as the result of supervisory or enforce23 ment activities under subtitle B or C for a regulated 

24 entity, the amount available from any semiannual 

25 payment made by such regulated entity pursuant to 
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1 subsection (b) is insufficient to cover the costs of the 

2 Agency with respect to such entity, the Director may 

3 make and collect from such regulated entity an im4 mediate assessment to cover the amount of such de5 ficiency for the semiannual period. If, at the end of 

6 any semiannual period during which such an assess7 ment is made, any amount remains from such as8 sessment, such remaining amount shall be deducted 

9 from the assessment for such regulated entity for 

10 the following semiannual period.’’; 

11 (4) in subsection (d), by striking ‘‘If’’ and in12 serting ‘‘Except with respect to amounts collected 

13 pursuant to subsection (a)(3), if’’; and 

14 (5) by striking subsections (e) through (g) and 

15 inserting the following new subsections: 

16 ‘‘(e) WORKING CAPITAL FUND.—At the end of each 

17 year for which an assessment under this section is made, 

18 the Director shall remit to each regulated entity any 

19 amount of assessment collected from such regulated entity 

20 that is attributable to subsection (a)(3) and is in excess 

21 of the amount the Director deems necessary to maintain 

22 a working capital fund. 

23 ‘‘(f) TREATMENT OF ASSESSMENTS.— 

24 ‘‘(1) DEPOSIT.—Amounts received by the Di25 rector from assessments under this section may be 
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1 deposited by the Director in the manner provided in 

2 section 5234 of the Revised Statutes (12 U.S.C. 

3 192) for monies deposited by the Comptroller of the 

4 Currency. 

5 ‘‘(2) NOT GOVERNMENT FUNDS.—The amounts 

6 received by the Director from any assessment under 

7 this section shall not be construed to be Government 

8 or public funds or appropriated money. 

9 ‘‘(3) NO APPORTIONMENT OF FUNDS.—Not10 withstanding any other provision of law, the 

11 amounts received by the Director from any assess12 ment under this section shall not be subject to ap13 portionment for the purpose of chapter 15 of title 

14 31, United States Code, or under any other author15 ity. 

16 ‘‘(4) USE OF FUNDS.—The Director may use 

17 any amounts received by the Director from assess18 ments under this section for compensation of the Di19 rector and other employees of the Agency and for all 

20 other expenses of the Director and the Agency. 

21 ‘‘(5) AVAILABILITY OF OVERSIGHT FUND

22 AMOUNTS.—Notwithstanding any other provision of 

23 law, any amounts remaining in the Federal Housing 

24 Enterprises Oversight Fund established under this 

25 section (as in effect before the effective date under 
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1 section 185 of the Federal Housing Finance Reform 

2 Act of 2005), and any amounts remaining from as3 sessments on the Federal Home Loan banks pursu4 ant to section 18(b) of the Federal Home Loan 

5 Bank Act (12 U.S.C. 1438(b)), shall, upon such ef6 fective date, be treated for purposes of this sub7 section as amounts received from assessments under 

8 this section. 

9 ‘‘(g) BUDGET AND FINANCIAL MANAGEMENT.— 

10 ‘‘(1) FINANCIAL OPERATING PLANS AND FORE11 CASTS.—The Director shall provide to the Director 

12 of the Office of Management and Budget copies of 

13 the Director’s financial operating plans and fore14 casts as prepared by the Director in the ordinary 

15 course of the Agency’s operations, and copies of the 

16 quarterly reports of the Agency’s financial condition 

17 and results of operations as prepared by the Direc18 tor in the ordinary course of the Agency’s oper19 ations. 

20 ‘‘(2) FINANCIAL STATEMENTS.—The Agency 

21 shall prepare annually a statement of assets and li22 abilities and surplus or deficit; a statement of in23 come and expenses; and a statement of sources and 

24 application of funds. 
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1 ‘‘(3) FINANCIAL MANAGEMENT SYSTEMS.—The 

2 Agency shall implement and maintain financial man3 agement systems that comply substantially with 

4 Federal financial management systems require5 ments, applicable Federal accounting standards, and 

6 that uses a general ledger system that accounts for 

7 activity at the transaction level. 

8 ‘‘(4) ASSERTION OF INTERNAL CONTROLS.— 

9 The Director shall provide to the Comptroller Gen10 eral an assertion as to the effectiveness of the inter11 nal controls that apply to financial reporting by the 

12 Agency, using the standards established in section 

13 3512 (c) of title 31, United States Code. 

14 ‘‘(5) RULE OF CONSTRUCTION.—This sub15 section may not be construed as implying any obliga16 tion on the part of the Director to consult with or 

17 obtain the consent or approval of the Director of the 

18 Office of Management and Budget with respect to 

19 any reports, plans, forecasts, or other information 

20 referred to in paragraph (1) or any jurisdiction or 

21 oversight over the affairs or operations of the Agen22 cy. 

23 ‘‘(h) AUDIT OF AGENCY.— 

24 ‘‘(1) IN GENERAL.—The Comptroller General 

25 shall annually audit the financial transactions of the 
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1 Agency in accordance with the U.S. generally accept2 ed government auditing standards as may be pre3 scribed by the Comptroller General of the United 

4 States. The audit shall be conducted at the place or 

5 places where accounts of the Agency are normally 

6 kept. The representatives of the Government Ac7 countability Office shall have access to the personnel 

8 and to all books, accounts, documents, papers, 

9 records (including electronic records), reports, files, 

10 and all other papers, automated data, things, or 

11 property belonging to or under the control of or used 

12 or employed by the Agency pertaining to its financial 

13 transactions and necessary to facilitate the audit, 

14 and such representatives shall be afforded full facili15 ties for verifying transactions with the balances or 

16 securities held by depositaries, fiscal agents, and 

17 custodians. All such books, accounts, documents, 

18 records, reports, files, papers, and property of the 

19 Agency shall remain in possession and custody of 

20 the Agency. The Comptroller General may obtain 

21 and duplicate any such books, accounts, documents, 

22 records, working papers, automated data and files, 

23 or other information relevant to such audit without 

24 cost to the Comptroller General and the Comptroller 

25 General’s right of access to such information shall 
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1 be enforceable pursuant to section 716(c) of title 31, 

2 United States Code. 

3 ‘‘(2) REPORT.—The Comptroller General shall 

4 submit to the Congress a report of each annual 

5 audit conducted under this subsection. The report to 

6 the Congress shall set forth the scope of the audit 

7 and shall include the statement of assets and liabil8 ities and surplus or deficit, the statement of income 

9 and expenses, the statement of sources and applica10 tion of funds, and such comments and information 

11 as may be deemed necessary to inform Congress of 

12 the financial operations and condition of the Agency, 

13 together with such recommendations with respect 

14 thereto as the Comptroller General may deem advis15 able. A copy of each report shall be furnished to the 

16 President and to the Agency at the time submitted 

17 to the Congress. 

18 ‘‘(3) ASSISTANCE AND COSTS.—For the purpose 

19 of conducting an audit under this subsection, the 

20 Comptroller General may, in the discretion of the 

21 Comptroller General, employ by contract, without re22 gard to section 5 of title 41, United States Code, 

23 professional services of firms and organizations of 

24 certified public accountants for temporary periods or 

25 for special purposes. Upon the request of the Comp-
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1 troller General, the Director of the Agency shall 

2 transfer to the Government Accountability Office 

3 from funds available, the amount requested by the 

4 Comptroller General to cover the full costs of any 

5 audit and report conducted by the Comptroller Gen6 eral. The Comptroller General shall credit funds 

7 transferred to the account established for salaries 

8 and expenses of the Government Accountability Of9 fice, and such amount shall be available upon receipt 

10 and without fiscal year limitation to cover the full 

11 costs of the audit and report.’’. 

12 SEC. 107. EXAMINERS AND ACCOUNTANTS. 

13 (a) EXAMINATIONS.—Section 1317 of the Housing 

14 and Community Development Act of 1992 (12 U.S.C. 

15 4517) is amended— 

16 (1) in subsection (a), by adding after the period 

17 at the end the following: ‘‘Each examination under 

18 this subsection of a regulated entity shall include a 

19 review of the procedures required to be established 

20 and maintained by the regulated entity pursuant to 

21 section 1314(c) (relating to fraudulent financial 

22 transactions) and the report regarding each such ex23 amination shall describe any problems with such 

24 procedures maintained by the regulated entity.’’; 

25 (2) in subsection (b)— 
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1 (A) by inserting ‘‘of a regulated entity’’ 

2 after ‘‘under this section’’; and 

3 (B) by striking ‘‘to determine the condition 

4 of an enterprise for the purpose of ensuring its 

5 financial safety and soundness’’ and inserting 

6 ‘‘or appropriate’’; and 

7 (3) in subsection (c)— 

8 (A) in the second sentence, by inserting 

9 ‘‘to conduct examinations under this section’’ 

10 before the period; and 

11 (B) in the third sentence, by striking 

12 ‘‘from amounts available in the Federal Hous13 ing Enterprises Oversight Fund’’. 

14 (b) ENHANCED AUTHORITY TO HIRE EXAMINERS

15 AND ACCOUNTANTS.—Section 1317 of the Housing and 

16 Community Development Act of 1992 (12 U.S.C. 4517) 

17 is amended by adding at the end the following new sub18 section: 

19 ‘‘(g) APPOINTMENT OF ACCOUNTANTS, ECONOMISTS, 

20 SPECIALISTS, AND EXAMINERS.— 

21 ‘‘(1) APPLICABILITY.—This section applies with 

22 respect to any position of examiner, accountant, spe23 cialist in financial markets, specialist in technology, 

24 and economist at the Agency, with respect to super-
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1 vision and regulation of the regulated entities, that 

2 is in the competitive service. 

3 ‘‘(2) APPOINTMENT AUTHORITY.—The Director 

4 may appoint candidates to any position described in 

5 paragraph (1)— 

6 ‘‘(A) in accordance with the statutes, rules, 

7 and regulations governing appointments in the 

8 excepted service; and 

9 ‘‘(B) notwithstanding any statutes, rules, 

10 and regulations governing appointments in the 

11 competitive service.’’. 

12 (c) REPEAL.—Section 20 of the Federal Home Loan 

13 Bank Act (12 U.S.C. 1440) is amended— 

14 (1) in the section heading, by striking ‘‘RE15 PORTS’’ and inserting ‘‘GAO AUDITS’’; 

16 (2) in the third sentence, by striking ‘‘the 

17 Board and’’ each place such term appears; and 

18 (3) by striking the first two sentences and in19 serting the following: ‘‘The Federal home loan banks 

20 shall be subject to examinations by the Director to 

21 the extent provided in section 1317 of the Federal 

22 Housing Enterprises Financial Safety and Sound23 ness Act of 1992 (12 U.S.C. 4517).’’. 
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1 SEC. 108. PROHIBITION AND WITHHOLDING OF EXECUTIVE 

2 COMPENSATION. 

3 (a) IN GENERAL.—Section 1318 of the Housing and 

4 Community Development Act of 1992 (12 U.S.C. 4518) 

5 is amended— 

6 (1) in the section heading, by striking ‘‘OF EX7 CESSIVE’’ and inserting ‘‘AND WITHHOLDING OF

8 EXECUTIVE’’; 

9 (2) by redesignating subsection (b) as sub10 section (d); and 

11 (3) by inserting after subsection (a) the fol12 lowing new subsections: 

13 ‘‘(b) FACTORS.—In making any determination under 

14 subsection (a), the Director may take into consideration 

15 any factors the Director considers relevant, including any 

16 wrongdoing on the part of the executive officer, and such 

17 wrongdoing shall include any fraudulent act or omission, 

18 breach of trust or fiduciary duty, violation of law, rule, 

19 regulation, order, or written agreement, and insider abuse 

20 with respect to the regulated entity. The approval of an 

21 agreement or contract pursuant to section 309(d)(3)(B) 

22 of the Federal National Mortgage Association Charter Act 

23 (12 U.S.C. 1723a(d)(3)(B)) or section 303(h)(2) of the 

24 Federal Home Loan Mortgage Corporation Act (12 U.S.C. 

25 1452(h)(2)) shall not preclude the Director from making 

26 any subsequent determination under subsection (a). 
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1 ‘‘(c) WITHHOLDING OF COMPENSATION.—In car2 rying out subsection (a), the Director may require a regu3 lated entity to withhold any payment, transfer, or dis4 bursement of compensation to an executive officer, or to 

5 place such compensation in an escrow account, during the 

6 review of the reasonableness and comparability of com7 pensation.’’. 

8 (b) CONFORMING AMENDMENTS.— 

9 (1) FANNIE MAE.—Section 309(d) of the Fed10 eral National Mortgage Association Charter Act (12 

11 U.S.C. 1723a(d)) is amended by adding at the end 

12 the following new paragraph: 

13 ‘‘(4) Notwithstanding any other provision of this sec14 tion, the corporation shall not transfer, disburse, or pay 

15 compensation to any executive officer, or enter into an 

16 agreement with such executive officer, without the ap17 proval of the Director, for matters being reviewed under 

18 section 1318 of the Federal Housing Enterprises Finan19 cial Safety and Soundness Act of 1992 (12 U.S.C. 

20 4518).’’. 

21 (2) FREDDIE MAC.—Section 303(h) of the Fed22 eral Home Loan Mortgage Corporation Act (12 

23 U.S.C. 1452(h)) is amended by adding at the end 

24 the following new paragraph: 
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1 ‘‘(4) Notwithstanding any other provision of this sec2 tion, the Corporation shall not transfer, disburse, or pay 

3 compensation to any executive officer, or enter into an 

4 agreement with such executive officer, without the ap5 proval of the Director, for matters being reviewed under 

6 section 1318 of the Federal Housing Enterprises Finan7 cial Safety and Soundness Act of 1992 (12 U.S.C. 

8 4518).’’. 

9 (3) FEDERAL HOME LOAN BANKS.—Section 7 

10 of the Federal Home Loan Bank Act (12 U.S.C. 

11 1427) is amended by adding at the end the following 

12 new subsection: 

13 ‘‘(l) WITHHOLDING OF COMPENSATION.—Notwith14 standing any other provision of this section, a Federal 

15 home loan bank shall not transfer, disburse, or pay com16 pensation to any executive officer, or enter into an agree17 ment with such executive officer, without the approval of 

18 the Director, for matters being reviewed under section 

19 1318 of the Federal Housing Enterprises Financial Safety 

20 and Soundness Act of 1992 (12 U.S.C. 4518).’’. 

21 SEC. 109. REVIEWS OF REGULATED ENTITIES. 

22 Section 1319 of the Housing and Community Devel23 opment Act of 1992 (12 U.S.C. 4519) is amended— 

24 (1) by striking the section designation and 

25 heading and inserting the following: 
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1 ‘‘SEC. 1319. REVIEWS OF REGULATED ENTITIES.’’; 

2 and 

3 (2) by inserting after ‘‘any entity’’ the fol4 lowing: ‘‘that the Director considers appropriate, in5 cluding an entity’’. 

6 SEC. 110. REGULATIONS AND ORDERS. 

7 Section 1319G of the Housing and Community De8 velopment Act of 1992 (12 U.S.C. 4526) is amended— 

9 (1) by striking subsection (a) and inserting the 

10 following new subsection: 

11 ‘‘(a) AUTHORITY.—The Director shall issue any reg12 ulations, guidelines, and orders necessary to carry out the 

13 duties of the Director under this title and each of the au14 thorizing statutes to ensure that the purposes of this title 

15 and such Acts are accomplished.’’; 

16 (2) in subsection (b), by inserting ‘‘, this title, 

17 or any of the authorizing statutes’’ after ‘‘under this 

18 section’’; and 

19 (3) by striking subsection (c). 

20 SEC. 111. RISK-BASED CAPITAL REQUIREMENTS. 

21 (a) IN GENERAL.—Section 1361 of the Housing and 

22 Community Development Act of 1992 (12 U.S.C. 4611) 

23 is amended to read as follows: 

24 ‘‘SEC. 1361. RISK-BASED CAPITAL LEVELS FOR REGULATED 

25 ENTITIES. 

26 ‘‘(a) IN GENERAL.— 
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1 ‘‘(1) ENTERPRISES.—The Director shall, by 

2 regulation, establish risk-based capital requirements 

3 for the enterprises to ensure that the enterprises op4 erate in a safe and sound manner, maintaining suffi5 cient capital and reserves to support the risks that 

6 arise in the operations and management of the en7 terprises. 

8 ‘‘(2) FEDERAL HOME LOAN BANKS.—The Di9 rector shall establish risk-based capital standards 

10 under section 6 of the Federal Home Loan Bank 

11 Act for the Federal home loan banks. 

12 ‘‘(b) CONFIDENTIALITY OF INFORMATION.—Any per13 son that receives any book, record, or information from 

14 the Director or a regulated entity to enable the risk-based 

15 capital requirements established under this section to be 

16 applied shall— 

17 ‘‘(1) maintain the confidentiality of the book, 

18 record, or information in a manner that is generally 

19 consistent with the level of confidentiality established 

20 for the material by the Director or the regulated en21 tity; and 

22 ‘‘(2) be exempt from section 552 of title 5, 

23 United States Code, with respect to the book, 

24 record, or information. 
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1 ‘‘(c) NO LIMITATION.—Nothing in this section shall 

2 limit the authority of the Director to require other reports 

3 or undertakings, or take other action, in furtherance of 

4 the responsibilities of the Director under this Act.’’. 

5 (b) FEDERAL HOME LOAN BANKS RISK-BASED CAP6 ITAL.—Section 6(a)(3) of the Federal Home Loan Bank 

7 Act (12 U.S.C. 1426(a)(3)) is amended— 

8 (1) by striking subparagraph (A) and inserting 

9 the following new subparagraph: 

10 ‘‘(A) RISK-BASED CAPITAL STANDARDS.— 

11 The Director shall, by regulation, establish risk12 based capital standards for the Federal home 

13 loan banks to ensure that the Federal home 

14 loan banks operate in a safe and sound manner, 

15 with sufficient permanent capital and reserves 

16 to support the risks that arise in the operations 

17 and management of the Federal home loans 

18 banks.’’; and 

19 (2) in subparagraph (B), by striking ‘‘(A)(ii)’’ 

20 and inserting ‘‘(A)’’. 

21 SEC. 112. MINIMUM AND CRITICAL CAPITAL LEVELS. 

22 (a) MINIMUM CAPITAL LEVEL.—Section 1362 of the 

23 Housing and Community Development Act of 1992 (12 

24 U.S.C. 4612) is amended— 
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1 (1) in subsection (a), by striking ‘‘IN GEN2 ERAL’’ and inserting ‘‘ENTERPRISES’’; and 

3 (2) by striking subsection (b) and inserting the 

4 following new subsections: 

5 ‘‘(b) FEDERAL HOME LOAN BANKS.—For purposes 

6 of this subtitle, the minimum capital level for each Federal 

7 home loan bank shall be the minimum capital required to 

8 be maintained to comply with the leverage requirement for 

9 the bank established under section 6(a)(2) of the Federal 

10 Home Loan Bank Act (12 U.S.C. 1426(a)(2)). 

11 ‘‘(c) ESTABLISHMENT OF REVISED MINIMUM CAP12 ITAL LEVELS.—Notwithstanding subsections (a) and (b) 

13 and notwithstanding the capital classifications of the regu14 lated entities, the Director may, by regulations issued 

15 under section 1319G(b), establish a minimum capital level 

16 for the enterprises, for the Federal home loan banks, or 

17 for both the enterprises and the banks, that is higher than 

18 the level specified in subsection (a) for the enterprises or 

19 the level specified in subsection (b) for the Federal home 

20 loan banks, to the extent needed to ensure that the regu21 lated entities operate in a safe and sound manner. 

22 ‘‘(d) AUTHORITY TO REQUIRE TEMPORARY IN23 CREASE.—Notwithstanding subsections (a) and (b) and 

24 any minimum capital level established pursuant to sub25 section (c), the Director may, by order, increase the min-
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1 imum capital level for a regulated entity for such period 

2 as the Director may provide if the Director— 

3 ‘‘(1) makes any of the determinations specified 

4 in subparagraphs (A) through (C) of section 

5 1364(c)(1); or 

6 ‘‘(2) determines that the regulated entity has 

7 violated any of the prudential management and op8 erations standards established pursuant to section 

9 1313A and, as a result of such violation, is oper10 ating in an unsafe and unsound manner. 

11 ‘‘(e) AUTHORITY TO ESTABLISH ADDITIONAL CAP12 ITAL AND RESERVE REQUIREMENTS FOR PARTICULAR

13 PROGRAMS.—The Director may, at any time by order or 

14 regulation, establish such capital or reserve requirements 

15 with respect to any program or activity of a regulated enti16 ty as the Director considers appropriate to ensure that 

17 the regulated entity operates in a safe and sound manner, 

18 with sufficient capital and reserves to support the risks 

19 that arise in the operations and management of the regu20 lated entity. 

21 ‘‘(f) PERIODIC REVIEW.—The Director shall periodi22 cally review the amount of core capital maintained by the 

23 enterprises, the amount of capital retained by the Federal 

24 home loan banks, and the minimum capital levels estab25 lished for such regulated entities pursuant to this section. 
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1 The Director may, by regulations issued under section 

2 1319G(b), adjust the minimum capital levels as necessary, 

3 based on the Director’s review.’’. 

4 (b) CRITICAL CAPITAL LEVELS.— 

5 (1) IN GENERAL.—Section 1363 of the Housing 

6 and Community Development Act of 1992 (12 

7 U.S.C. 4613) is amended— 

8 (A) by striking ‘‘For’’ and inserting ‘‘(a) 

9 Enterprises.—For’’; and 

10 (B) by adding at the end the following new 

11 subsection: 

12 ‘‘(b) FEDERAL HOME LOAN BANKS.— 

13 ‘‘(1) IN GENERAL.—For purposes of this sub14 title, the critical capital level for each Federal home 

15 loan bank shall be such amount of capital as the Di16 rector shall, by regulation require. 

17 ‘‘(2) CONSIDERATION OF OTHER CRITICAL CAP18 ITAL LEVELS.—In establishing the critical capital 

19 level under paragraph (1) for the Federal home loan 

20 banks, the Director shall take due consideration of 

21 the critical capital level established under subsection 

22 (a) for the enterprises, with such modifications as 

23 the Director determines to be appropriate to reflect 

24 the difference in operations between the banks and 

25 the enterprises.’’. 
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1 (2) REGULATIONS.—Not later than the expira2 tion of the 180-day period beginning on the effective 

3 date under section 185, the Director of the Federal 

4 Housing Finance Agency shall issue regulations pur5 suant to section 1363(b) of the Housing and Com6 munity Development Act of 1992 (as added by para7 graph (1) of this subsection) establishing the critical 

8 capital level under such section. 

9 SEC. 113. REVIEW OF AND AUTHORITY OVER ENTERPRISE 

10 ASSETS AND LIABILITIES. 

11 Subtitle B of title XIII of the Housing and Commu12 nity Development Act of 1992 (12 U.S.C. 4611 et seq.) 

13 is amended— 

14 (1) by striking the subtitle designation and 

15 heading and inserting the following: 

16 ‘‘Subtitle B—Required Capital Lev17 els for Regulated Entities, Spe18 cial Enforcement Powers, and 

19 Reviews of Assets and Liabil20 ities’’

; 

21 and 

22 (2) by adding at the end the following new sec23 tion: 
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1 ‘‘SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND LIABIL2 ITIES. 

3 ‘‘(a) IN GENERAL.—The Director shall conduct, on 

4 a periodic basis, a review of the on-balance sheet and off5 balance sheet assets and liabilities of each enterprise. 

6 ‘‘(b) AUTHORITY TO REQUIRE DISPOSITION OR AC7 QUISITION.—Pursuant to such a review and notwith8 standing the capital classifications of the enterprises, the 

9 Director may by order require an enterprise, under such 

10 terms and conditions as the Director determines to be ap11 propriate, to dispose of or acquire any asset or liability, 

12 if the Director determines that such action is consistent 

13 with the safe and sound operation of the enterprise or with 

14 the purposes of this Act or any of the authorizing stat15 utes.’’. 

16 SEC. 114. CORPORATE GOVERNANCE OF ENTERPRISES. 

17 The Housing and Community Development Act of 

18 1992 is amended by inserting before section 1323 (12 

19 U.S.C. 4543) the following new section: 

20 ‘‘SEC. 1322A. CORPORATE GOVERNANCE OF ENTERPRISES. 

21 ‘‘(a) BOARD OF DIRECTORS.— 

22 ‘‘(1) INDEPENDENCE.—A majority of seated 

23 members of the board of directors of each enterprise 

24 shall be independent board members, as defined 

25 under rules set forth by the New York Stock Ex-
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1 change, as such rules may be amended from time to 

2 time. 

3 ‘‘(2) FREQUENCY OF MEETINGS.—To carry out 

4 its obligations and duties under applicable laws, 

5 rules, regulations, and guidelines, the board of direc6 tors of an enterprise shall meet at least eight times 

7 a year and not less than once a calendar quarter. 

8 ‘‘(3) NON-MANAGEMENT BOARD MEMBER

9 MEETINGS.—The non-management directors of an 

10 enterprise shall meet at regularly scheduled execu11 tive sessions without management participation. 

12 ‘‘(4) QUORUM; PROHIBITION ON PROXIES.—For 

13 the transaction of business, a quorum of the board 

14 of directors of an enterprise shall be at least a ma15 jority of the seated board of directors and a board 

16 member may not vote by proxy. 

17 ‘‘(5) INFORMATION.—The management of an 

18 enterprise shall provide a board member of the en19 terprise with such adequate and appropriate infor20 mation that a reasonable board member would find 

21 important to the fulfillment of his or her fiduciary 

22 duties and obligations. 

23 ‘‘(6) ANNUAL REVIEW.—At least annually, the 

24 board of directors of each enterprise shall review, 

25 with appropriate professional assistance, the require-
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1 ments of laws, rules, regulations, and guidelines that 

2 are applicable to its activities and duties. 

3 ‘‘(b) COMMITTEES OF BOARDS OF DIRECTORS.— 

4 ‘‘(1) FREQUENCY OF MEETINGS.—Any com5 mittee of the board of directors of an enterprise 

6 shall meet with sufficient frequency to carry out its 

7 obligations and duties under applicable laws, rules, 

8 regulations, and guidelines. 

9 ‘‘(2) REQUIRED COMMITTEES.—Each enterprise 

10 shall provide for the establishment, however styled, 

11 of the following committees of the board of directors: 

12 ‘‘(A) Audit committee. 

13 ‘‘(B) Compensation committee. 

14 ‘‘(C) Nominating/corporate governance 

15 committee. 

16 Such committees shall be in compliance with the 

17 charter, independence, composition, expertise, duties, 

18 responsibilities, and other requirements set forth 

19 under section 10A(m) of the Securities Exchange 

20 Act of 1934 (15 U.S.C. 78j–1(m)), with respect to 

21 the audit committee, and under rules issued by the 

22 New York Stock Exchange, as such rules may be 

23 amended from time to time. 

24 ‘‘(c) COMPENSATION.— 
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1 ‘‘(1) IN GENERAL.—The compensation of board 

2 members, executive officers, and employees of an en3 terprise— 

4 ‘‘(A) shall not be in excess of that which 

5 is reasonable and appropriate; 

6 ‘‘(B) shall be commensurate with the du7 ties and responsibilities of such persons; 

8 ‘‘(C) shall be consistent with the long-term 

9 goals of the enterprise; 

10 ‘‘(D) shall not focus solely on earnings per11 formance, but shall take into account risk man12 agement, operational stability and legal and 

13 regulatory compliance as well; and 

14 ‘‘(E) shall be undertaken in a manner that 

15 complies with applicable laws, rules, and regula16 tions. 

17 ‘‘(2) REIMBURSEMENT.—If an enterprise is re18 quired to prepare an accounting restatement due to 

19 the material noncompliance of the enterprise, as a 

20 result of misconduct, with any financial reporting re21 quirement under the securities laws, the chief execu22 tive officer and chief financial officer of the enter23 prise shall reimburse the enterprise as provided 

24 under section 304 of the Sarbanes-Oxley Act of 

25 2002 (15 U.S.C. 7243). This provision does not oth-
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1 erwise limit the authority of the Agency to employ 

2 remedies available to it under its enforcement au3 thorities. 

4 ‘‘(d) CODE OF CONDUCT AND ETHICS.— 

5 ‘‘(1) IN GENERAL.—An enterprise shall estab6 lish and administer a written code of conduct and 

7 ethics that is reasonably designed to assure the abil8 ity of board members, executive officers, and em9 ployees of the enterprise to discharge their duties 

10 and responsibilities, on behalf of the enterprise, in 

11 an objective and impartial manner, and that includes 

12 standards required under section 406 of the Sar13 banes-Oxley Act of 2002 (15 U.S.C. 7264) and 

14 other applicable laws, rules, and regulations. 

15 ‘‘(2) REVIEW.—Not less than once every three 

16 years, an enterprise shall review the adequacy of its 

17 code of conduct and ethics for consistency with prac18 tices appropriate to the enterprise and make any ap19 propriate revisions to such code. 

20 ‘‘(e) CONDUCT AND RESPONSIBILITIES OF BOARD OF

21 DIRECTORS.—The board of directors of an enterprise shall 

22 be responsible for directing the conduct and affairs of the 

23 enterprise in furtherance of the safe and sound operation 

24 of the enterprise and shall remain reasonably informed of 

25 the condition, activities, and operations of the enterprise. 
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1 The responsibilities of the board of directors shall include 

2 having in place adequate policies and procedures to assure 

3 its oversight of, among other matters, the following: 

4 ‘‘(1) Corporate strategy, major plans of action, 

5 risk policy, programs for legal and regulatory com6 pliance and corporate performance, including pru7 dent plans for growth and allocation of adequate re8 sources to manage operations risk. 

9 ‘‘(2) Hiring and retention of qualified executive 

10 officers and succession planning for such executive 

11 officers. 

12 ‘‘(3) Compensation programs of the enterprise. 

13 ‘‘(4) Integrity of accounting and financial re14 porting systems of the enterprise, including inde15 pendent audits and systems of internal control. 

16 ‘‘(5) Process and adequacy of reporting, disclo17 sures, and communications to shareholders, inves18 tors, and potential investors. 

19 ‘‘(6) Extensions of credit to board members and 

20 executive officers. 

21 ‘‘(7) Responsiveness of executive officers in pro22 viding accurate and timely reports to Federal regu23 lators and in addressing the supervisory concerns of 

24 Federal regulators in a timely and appropriate man25 ner. 
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1 ‘‘(f) PROHIBITION OF EXTENSIONS OF CREDIT.—An 

2 enterprise may not directly or indirectly, including 

3 through any subsidiary, extend or maintain credit, arrange 

4 for the extension of credit, or renew an extension of credit, 

5 in the form of a personal loan to or for any board member 

6 or executive officer of the enterprise, as provided by sec7 tion 13(k) of the Securities Exchange Act of 1934 (15 

8 U.S.C. 78m(k)). 

9 ‘‘(g) CERTIFICATION OF DISCLOSURES.—The chief 

10 executive officer and the chief financial officer of an enter11 prise shall review each quarterly report and annual report 

12 issued by the enterprise and such reports shall include cer13 tifications by such officers as required by section 302 of 

14 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241). 

15 ‘‘(h) CHANGE OF AUDIT PARTNER.—An enterprise 

16 may not accept audit services from an external auditing 

17 firm if the lead or coordinating audit partner who has pri18 mary responsibility for the external audit of the enterprise, 

19 or the external audit partner who has responsibility for 

20 reviewing the external audit has performed audit services 

21 for the enterprise in each of the five previous fiscal years. 

22 ‘‘(i) COMPLIANCE PROGRAM.— 

23 ‘‘(1) REQUIREMENT.—Each enterprise shall es24 tablish and maintain a compliance program that is 

25 reasonably designed to assure that the enterprise 
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1 complies with applicable laws, rules, regulations, and 

2 internal controls. 

3 ‘‘(2) COMPLIANCE OFFICER.—The compliance 

4 program of an enterprise shall be headed by a com5 pliance officer, however styled, who reports directly 

6 to the chief executive officer of the enterprise. The 

7 compliance officer shall report regularly to the board 

8 of directors or an appropriate committee of the 

9 board of directors on compliance with and the ade10 quacy of current compliance policies and procedures 

11 of the enterprise, and shall recommend any adjust12 ments to such policies and procedures that the com13 pliance officer considers necessary and appropriate. 

14 ‘‘(j) RISK MANAGEMENT PROGRAM.— 

15 ‘‘(1) REQUIREMENT.—Each enterprise shall es16 tablish and maintain a risk management program 

17 that is reasonably designed to manage the risks of 

18 the operations of the enterprise. 

19 ‘‘(2) RISK MANAGEMENT OFFICER.—The risk 

20 management program of an enterprise shall be head21 ed by a risk management officer, however styled, 

22 who reports directly to the chief executive officer of 

23 the enterprise. The risk management officer shall re24 port regularly to the board of directors or an appro25 priate committee of the board of directors on compli-
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1 ance with and the adequacy of current risk manage2 ment policies and procedures of the enterprise, and 

3 shall recommend any adjustments to such policies 

4 and procedures that the risk management officer 

5 considers necessary and appropriate. 

6 ‘‘(k) COMPLIANCE WITH OTHER LAWS.— 

7 ‘‘(1) DEREGISTERED OR UNREGISTERED COM8 MON STOCK.—If an enterprise deregisters or has not 

9 registered its common stock with the Securities and 

10 Exchange Commission under the Securities Ex11 change Act of 1934, the enterprise shall comply or 

12 continue to comply with sections 10A(m) and 13(k) 

13 of the Securities Exchange Act of 1934 (15 U.S.C. 

14 78j-1(m), 78m(k)) and sections 302, 304, and 406 

15 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 

16 7243, 7264), subject to such requirements as pro17 vided by subsection (l) of this section. 

18 ‘‘(2) REGISTERED COMMON STOCK.—An enter19 prise that has its common stock registered with the 

20 Securities and Exchange Commission shall maintain 

21 such registered status, unless it provides 60 days 

22 prior written notice to the Director stating its intent 

23 to deregister and its understanding that it will re24 main subject to the requirements of the sections of 

25 the Securities Exchange Act of 1934 and the Sar-
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1 banes-Oxley Act of 2002, subject to such require2 ments as provided by subsection (l) of this section. 

3 ‘‘(l) OTHER MATTERS.—The Director may from time 

4 to time establish standards, by regulation, order, or guide5 line, regarding such other corporate governance matters 

6 of the enterprises as the Director considers appropriate. 

7 ‘‘(m) MODIFICATION OF STANDARDS.—In connection 

8 with standards of Federal or State law (including the Re9 vised Model Corporation Act) or New York Stock Ex10 change rules that are made applicable to an enterprise by 

11 section 1710.10 of the Director’s rules (12 C.F.R. 

12 1710.10) and by subsections (a), (b), (g), (i), (j), and (k) 

13 of this section, the Director, in the Director’s sole discre14 tion, may modify the standards contained in this section 

15 or in part 1710 of the Director’s rules (12 U.S.C. Part 

16 1710) in accordance with section 553 of title 5, United 

17 States Code, and upon written notice to the enterprise.’’. 

18 SEC. 115. REQUIRED REGISTRATION UNDER SECURITIES 

19 EXCHANGE ACT OF 1934. 

20 The Housing and Community Development Act of 

21 1992 is amended by adding after section 1322A, as added 

22 by the preceding provisions of this Act, the following new 

23 section: 
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1 ‘‘SEC. 1322B. REQUIRED REGISTRATION UNDER SECURI2 TIES EXCHANGE ACT OF 1934. 

3 ‘‘(a) IN GENERAL.—Each regulated entity shall reg4 ister at least one class of the capital stock of such regu5 lated entity, and maintain such registration with the Secu6 rities and Exchange Commission, under the Securities Ex7 change Act of 1934. 

8 ‘‘(b) ENTERPRISES.—Each enterprise shall comply 

9 with sections 14 and 16 of the Securities Exchange Act 

10 of 1934.’’. 

11 SEC. 116. FINANCIAL INSTITUTIONS EXAMINATION COUN12 CIL. 

13 The Federal Financial Institutions Examination 

14 Council Act of 1978 is amended— 

15 (1) in section 1003 (12 U.S.C. 3302)— 

16 (A) in paragraph (1), by inserting ‘‘Direc17 tor of the Federal Housing Finance Agency,’’ 

18 after ‘‘Supervision,’’; and 

19 (B) in paragraph (3), by striking ‘‘or a 

20 credit union;’’ and inserting ‘‘a credit union, or 

21 a regulated entity (as such term is defined in 

22 section 1303 of the Housing and Community 

23 Development Act of 1992 (12 U.S.C. 4502)).’’; 

24 (2) in section 1004 (12 U.S.C. 3303)— 

25 (A) in paragraph (4), by inserting a semi26 colon at the end; 
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1 (B) by redesignating paragraph (5) as 

2 paragraph (6); and 

3 (C) by inserting after paragraph (4) the 

4 following new paragraph: 

5 ‘‘(5) the Director of the Federal Housing Fi6 nance Agency; and’’; and 

7 (3) in section 1006(d) (12 U.S.C. 3305(d)), by 

8 striking ‘‘and employees of the Federal Housing Fi9 nance Board’’. 

10 SEC. 117. GUARANTEE FEE STUDY. 

11 (a) IN GENERAL.—The Comptroller General of the 

12 United States, in consultation with the heads of the fed13 eral banking agencies and the Director of the Office of 

14 Federal Housing Enterprise Oversight of the Department 

15 of Housing and Urban Development, shall, not later than 

16 one year after the date of the enactment of this Act, sub17 mit to the Congress a study concerning the pricing, trans18 parency and reporting of the Federal National Mortgage 

19 Association, the Federal Home Loan Mortgage Corpora20 tion, and the Federal home loan banks with regard to 

21 guarantee fees and concerning analogous practices, trans22 parency and reporting requirements (including advances 

23 pricing practices by the Federal Home Loan Banks) of 

24 other participants in the business of mortgage purchases 

25 and securitization. 
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1 (b) FACTORS.—The study required by this section 

2 shall examine various factors such as credit risk, 

3 counterparty risk considerations, economic value consider4 ations, and volume considerations used by the regulated 

5 entities (as such term is defined in section 1303 of the 

6 Housing and Community Development Act of 1992) in7 cluded in the study in setting the amount of fees they 

8 charge. 

9 (c) CONTENTS OF REPORT.—The report required 

10 under subsection (a) shall identify and analyze— 

11 (1) the factors used by each enterprise (as such 

12 term is defined in section 1303 of the Housing and 

13 Community Development Act of 1992) in deter14 mining the amount of the guarantee fees it charges; 

15 (2) the total revenue the enterprises earn from 

16 guarantee fees; 

17 (3) the total costs incurred by the enterprises 

18 for providing guarantees; 

19 (4) the average guarantee fee charged by the 

20 enterprises; 

21 (5) an analysis of how and why the guarantee 

22 fees charged differ from such fees charged during 

23 the previous year; 
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1 (6) a breakdown of the revenue and costs asso2 ciated with providing guarantees, based on product 

3 type and risk classifications; and 

4 (7) other relevant information on guarantee 

5 fees with other participants in the mortgage and 

6 securitization business. 

7 (d) PROTECTION OF INFORMATION.—Nothing in this 

8 section may be construed to require or authorize the Gov9 ernment Accounting Office, in connection with the study 

10 mandated by this section, to disclose information of the 

11 enterprises or other organization that is confidential or 

12 proprietary. 

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

14 on the date of the enactment of this Act. 

15 SEC. 118. CONFORMING AMENDMENTS. 

16 (a) 1992 ACT.—Part 1 of subtitle A of title XIII of 

17 the Housing and Community Development Act of 1992 

18 (12 U.S.C. 4511 et seq.), as amended by the preceding 

19 provisions of this Act, is further amended— 

20 (1) by striking ‘‘an enterprise’’ each place such 

21 term appears in such part (except in sections 

22 1313(a)(2)(A), 1313A(b)(2)(B)(ii)(I), and 

23 1316(b)(3)) and inserting ‘‘a regulated entity’’; 
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1 (2) by striking ‘‘the enterprise’’ each place such 

2 term appears in such part (except in section 

3 1316(b)(3)) and inserting ‘‘the regulated entity’’; 

4 (3) by striking ‘‘the enterprises’’ each place 

5 such term appears in such part (except in sections 

6 1312(c)(2), 1312(e)(2), and 1319B(a)(4)(D)) and 

7 inserting ‘‘the regulated entities’’; 

8 (4) by striking ‘‘each enterprise’’ each place 

9 such term appears in such part and inserting ‘‘each 

10 regulated entity’’; 

11 (5) by striking ‘‘Office’’ each place such term 

12 appears in such part (except in sections 1312(b)(5), 

13 1315(b), and 1316(g), and section 1317(c)) and in14 serting ‘‘Agency’’; 

15 (6) in section 1315 (12 U.S.C. 4515)— 

16 (A) in subsection (a)— 

17 (i) in the subsection heading, by strik18 ing ‘‘Office Personnel’’ and inserting ‘‘In 

19 General’’; and 

20 (ii) by striking ‘‘The’’ and inserting 

21 ‘‘Subject to titles III and IV of the Federal 

22 Housing Finance Reform Act of 2005, 

23 the’’; 

24 (B) by striking subsections (d) and (f); 

25 and 
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1 (C) by redesignating subsection (e) as sub2 section (d); 

3 (7) in section 1319A (12 U.S.C. 4520)— 

4 (A) by striking ‘‘(a) In General.—Each en5 terprise’’ and inserting ‘‘Each regulated enti6 ty’’; and 

7 (B) by striking subsection (b); 

8 (8) in section 1319B (12 U.S.C. 4521), by 

9 striking ‘‘Committee on Banking, Finance and 

10 Urban Affairs’’ each place such term appears and 

11 inserting ‘‘Committee on Financial Services’’; and 

12 (9) in section 1319F (12 U.S.C. 4525), striking 

13 all that follows ‘‘United States Code’’ and inserting 

14 ‘‘, the Agency shall be considered an agency respon15 sible for the regulation or supervision of financial in16 stitutions.’’. 

17 (b) AMENDMENTS TO FANNIE MAE CHARTER ACT.— 

18 The Federal National Mortgage Association Charter Act 

19 (12 U.S.C. 1716 et seq.) is amended— 

20 (1) by striking ‘‘Director of the Office of Fed21 eral Housing Enterprise Oversight of the Depart22 ment of Housing and Urban Development’’ each 

23 place such term appears, and inserting ‘‘Director of 

24 the Federal Housing Finance Agency’’, in— 
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1 (A) section 303(c)(2) (12 U.S.C. 

2 1718(c)(2)); 

3 (B) section 309(d)(3)(B) (12 U.S.C. 

4 1723a(d)(3)(B)); and 

5 (C) section 309(k)(1); and 

6 (2) in section 309— 

7 (A) in subsections (d)(3)(A) and (n)(1), by 

8 striking ‘‘Banking, Finance and Urban Affairs’’ 

9 each place such term appears and inserting 

10 ‘‘Financial Services’’; and 

11 (B) in subsection (m)— 

12 (i) in paragraph (1), by striking ‘‘Sec13 retary’’ the second place such term ap14 pears and inserting ‘‘Director’’; 

15 (ii) in paragraph (2), by striking 

16 ‘‘Secretary’’ the second place such term 

17 appears and inserting ‘‘Director’’; and 

18 (iii) by striking ‘‘Secretary’’ each 

19 other place such term appears and insert20 ing ‘‘Director of the Federal Housing Fi21 nance Agency’’; and 

22 (C) in subsection (n), by striking ‘‘Sec23 retary’’ each place such term appears and in24 serting ‘‘Director of the Federal Housing Fi25 nance Agency’’. 
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1 (c) AMENDMENTS TO FREDDIE MAC ACT.—The Fed2 eral Home Loan Mortgage Corporation Act is amended— 

3 (1) by striking ‘‘Director of the Office of Fed4 eral Housing Enterprise Oversight of the Depart5 ment of Housing and Urban Development’’ each 

6 place such term appears, and inserting ‘‘Director of 

7 the Federal Housing Finance Agency’’, in— 

8 (A) section 303(b)(2) (12 U.S.C. 

9 1452(b)(2)); 

10 (B) section 303(h)(2) (12 U.S.C. 

11 1452(h)(2)); and 

12 (C) section 307(c)(1) (12 U.S.C. 

13 1456(c)(1)); 

14 (2) in sections 303(h)(1) and 307(f)(1) (12 

15 U.S.C. 1452(h)(1), 1456(f)(1)), by striking ‘‘Bank16 ing, Finance and Urban Affairs’’ each place such 

17 term appears and inserting ‘‘Financial Services’’; 

18 (3) in section 306(i) (12 U.S.C. 1455(i))— 

19 (A) by striking ‘‘1316(c)’’ and inserting 

20 ‘‘306(c)’’; and 

21 (B) by striking ‘‘section 106’’ and insert22 ing ‘‘section 1316’’; and 

23 (4) in section 307 (12 U.S.C. 1456))— 

24 (A) in subsection (e)— 
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1 (i) in paragraph (1), by striking ‘‘Sec2 retary’’ the second place such term ap3 pears and inserting ‘‘Director’’; 

4 (ii) in paragraph (2), by striking 

5 ‘‘Secretary’’ the second place such term 

6 appears and inserting ‘‘Director’’; and 

7 (iii) by striking ‘‘Secretary’’ each 

8 other place such term appears and insert9 ing ‘‘Director of the Federal Housing Fi10 nance Agency’’; and 

11 (B) in subsection (f), by striking ‘‘Sec12 retary’’ each place such term appears and in13 serting ‘‘Director of the Federal Housing Fi14 nance Agency’’. 

15 Subtitle B—Improvement of 

16 Mission Supervision 

17 SEC. 121. TRANSFER OF PROGRAM AND ACTIVITIES AP18 PROVAL AND HOUSING GOAL OVERSIGHT. 

19 Part 2 of subtitle A of title XIII of the Housing and 

20 Community Development Act of 1992 (12 U.S.C. 4541 et 

21 seq.) is amended— 

22 (1) by striking the designation and heading for 

23 the part and inserting the following: 
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1 ‘‘PART 2—PROGRAM AND ACTIVITIES APPROVAL 

2 BY DIRECTOR, CORPORATE GOVERNANCE, 

3 AND ESTABLISHMENT OF HOUSING GOALS’’; 

4 and 

5 (2) by striking sections 1321 and 1322. 

6 SEC. 122. REVIEW BY DIRECTOR OF NEW PROGRAMS AND 

7 ACTIVITIES OF ENTERPRISES. 

8 (a) IN GENERAL.—Part 2 of subtitle A of title XIII 

9 of the Housing and Community Development Act of 1992 

10 is amended by inserting before section 1323 (12 U.S.C. 

11 4543) the following new section: 

12 ‘‘SEC. 1321. REVIEW AND APPROVAL BY DIRECTOR OF NEW 

13 PROGRAMS AND BUSINESS ACTIVITIES OF 

14 ENTERPRISES. 

15 ‘‘(a) LIMITATION ON AUTHORITY TO UNDERTAKE

16 PROGRAMS AND ACTIVITIES.—An enterprise may not un17 dertake any new program, including a pilot program, or 

18 any new business activity except in accordance with the 

19 procedures set forth in this section and orders and regula20 tions issued under this section. 

21 ‘‘(b) NEW PROGRAMS.— 

22 ‘‘(1) PRIOR APPROVAL REQUIREMENT.—An en23 terprise may not commence any new program before 

24 it has obtained the approval of the Director, pursu25 ant to this subsection, for the new program. 
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1 ‘‘(2) APPLICATION.—The Director shall, by 

2 order or regulation, require that an enterprise shall, 

3 to obtain a determination by the Director regarding 

4 approval of a new program by the enterprise, submit 

5 to the Director a written application for the new 

6 program in a format as prescribed by the Director. 

7 ‘‘(3) NOTICE.—Immediately upon receipt of a 

8 complete application for a new program, the Direc9 tor shall cause to be published in the Federal Reg10 ister notice of the receipt of such application and of 

11 the period for public comment pursuant to para12 graph (4) regarding such new program, and a de13 scription of the new program proposed by the appli14 cation. 

15 ‘‘(4) PUBLIC COMMENT PERIOD.—During the 

16 30-day period beginning upon publication pursuant 

17 to paragraph (3) of a notice regarding such an ap18 plication, the Director shall receive public comments 

19 regarding the new program. 

20 ‘‘(5) DETERMINATION.—Not less than 15 days 

21 after the conclusion of the public comment period 

22 pursuant to paragraph (4) regarding an application 

23 but not more than 30 days after the conclusion of 

24 such comment period, the Director shall approve, 
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1 conditionally approve, or reject such program, in 

2 writing. 

3 ‘‘(6) STANDARD FOR APPROVAL.—The Director 

4 may approve, or conditionally approve, a new pro5 gram of an enterprise only if the Director deter6 mines, taking into consideration any relevant infor7 mation and comments received during the public 

8 comment period, that such new program— 

9 ‘‘(A) does not contravene and is not incon10 sistent with the purposes of this title, the Fed11 eral National Mortgage Association Charter 

12 Act, or the Federal Home Loan Mortgage Cor13 poration Act, as such purposes are determined 

14 taking into consideration the definitions of the 

15 terms ‘mortgage loan origination’ and ‘sec16 ondary mortgage market’ pursuant to section 

17 1303; 

18 ‘‘(B) is not otherwise inconsistent with the 

19 safety and soundness of the enterprise; and 

20 ‘‘(C) is in the public interest. 

21 ‘‘(7) LIMITATION.—The Director, in imple22 menting this subsection, may not prevent an enter23 prise from continuing to offer the automated loan 

24 underwriting system in existence on the date of the 

25 enactment of the Federal Housing Finance Reform 
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1 Act of 2005 or continuing to engage in counseling 

2 and education activities. 

3 ‘‘(c) NEW BUSINESS ACTIVITIES.— 

4 ‘‘(1) AUTHORITY OF DIRECTOR TO PROHIBIT

5 NEW BUSINESS ACTIVITIES.—The Director shall 

6 have authority to prohibit any new business activity 

7 by an enterprise if the Director determines, in writ8 ing, that such activity— 

9 ‘‘(A) contravenes or is inconsistent with 

10 the purposes of this title, the Federal National 

11 Mortgage Association Charter Act, or the Fed12 eral Home Loan Mortgage Corporation Act; 

13 ‘‘(B) is otherwise inconsistent with the 

14 safety and soundness of the enterprise; or 

15 ‘‘(C) is not in the public interest. 

16 ‘‘(2) NOTIFICATION OF NEW BUSINESS ACTIVI17 TIES.—An enterprise that undertakes any new busi18 ness activity shall provide written notice of the activ19 ity to the Director and may commence the new busi20 ness activity only in accordance with paragraph (4). 

21 ‘‘(3) DIRECTOR DETERMINATION OF APPLICA22 BLE PROCEDURE.— 

23 ‘‘(A) TIMING.—Immediately upon receipt 

24 of any notice under paragraph (2) regarding a 

25 new business activity, the Director shall under-
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1 take a determination under subparagraph (B) 

2 of this paragraph regarding the new business 

3 activity. 

4 ‘‘(B) DETERMINATION AND TREATMENT

5 AS NEW PROGRAM.—If the Director determines 

6 that any new business activity consists of, re7 lates to, or involves any new program— 

8 ‘‘(i) the Director shall notify the en9 terprise of the determination; 

10 ‘‘(ii) the new business activity de11 scribed in the notice shall be considered a 

12 new program for purposes of this section; 

13 and 

14 ‘‘(iii) the Director shall prohibit the 

15 enterprise from carrying out the activity 

16 except to the extent that approval for the 

17 activity is obtained pursuant to subsection 

18 (b). 

19 ‘‘(4) COMMENCEMENT.—An enterprise may 

20 commence a new business activity— 

21 ‘‘(A) if the Director issues a written ap22 proval regarding such new business activity, im23 mediately upon such issuance or at such other 

24 time as provided by the Director in such letter; 

25 or 
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1 ‘‘(B) if, during the 30-day period begin2 ning upon receipt by the Director of notice pur3 suant to paragraph (2) regarding a new busi4 ness activity, the Director has not issued to the 

5 enterprise a written approval or denial of the 

6 new business activity, upon the expiration of 

7 such 30-day period. 

8 ‘‘(d) APPROVAL AND CONDITIONAL APPROVAL.—The 

9 Director may at any time conditionally approve the under10 taking of a particular new program or new business activ11 ity by an enterprise and set forth the terms and conditions 

12 that apply to the program or activity with which the enter13 prise shall comply if it undertakes the new program or 

14 activity. Such approval may, in the discretion of the Direc15 tor, be in the form of a written agreement between the 

16 enterprise and the Director and shall be subject to such 

17 terms and conditions therein. Such a written agreement 

18 or conditional approval shall be enforceable under subtitle 

19 C. 

20 ‘‘(e) DETERMINATION AND TREATMENT OF ACTIVITY

21 AS NEW BUSINESS ACTIVITY.—If the Director determines 

22 that any activity of an enterprise consists of, relates to, 

23 or involves any new business activity— 

24 ‘‘(1) the Director shall notify the enterprise of 

25 the determination; 
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1 ‘‘(2) such activity shall be considered a new 

2 business activity for purposes of this section; and 

3 ‘‘(3) the Director shall prohibit the enterprise 

4 from carrying out the activity except to the extent 

5 that approval for the activity is obtained pursuant to 

6 subsection (c). 

7 ‘‘(f) EFFECT ON OTHER AUTHORITIES.— 

8 ‘‘(1) EXAMINATIONS.—Nothing in this section 

9 may be construed to limit, in any manner, any other 

10 authority or right the Director may have under 

11 other provisions of law to conduct an examination of 

12 an enterprise. 

13 ‘‘(2) REQUESTS FOR INFORMATION.—Nothing 

14 in this section may be construed to limit the right 

15 of the Director at any time to request additional in16 formation from an enterprise concerning any busi17 ness activity. 

18 ‘‘(3) NO IMPLIED RIGHT OF ACTION.—This sec19 tion shall not create any private right of action 

20 against an enterprise or any director or executive of21 ficer of an enterprise, or impair any private right of 

22 action under other applicable law. 

23 ‘‘(4) NO LIMITATION.—Nothing in this section 

24 may be construed to restrict the general supervisory 

25 and regulatory authority of the Director over all pro-
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1 grams, products, activities, or business operations of 

2 any kind. 

3 ‘‘(g) REPORT ON PROGRAMS AND BUSINESS ACTIVI4 TIES.—Not later than the expiration of the 180-day period 

5 beginning on the effective date under section 185 of the 

6 Federal Housing Finance Reform Act of 2005, each enter7 prise shall submit to the Director a report identifying and 

8 describing each program and business activity of the en9 terprise engaged in or existing as of the submission of the 

10 report. 

11 ‘‘(h) REGULATIONS.—The Director shall by order or 

12 regulation issue rules and procedures to implement this 

13 section, including in the discretion of the Director, such 

14 definitions, interpretations, forms, and other guidances as 

15 the Director considers appropriate.’’. 

16 (b) DEFINITIONS.—Section 1303 of the Housing and 

17 Community Development Act of 1992 (12 U.S.C. 4502), 

18 as amended by section 2 of this Act, is further amended— 

19 (1) by redesignating paragraphs (17) through 

20 (23) as paragraphs (20) through (26), respectively; 

21 (2) by inserting after paragraph (16) the fol22 lowing new paragraph: 

23 ‘‘(19) NEW BUSINESS ACTIVITY.—The term 

24 ‘new business activity’ means, with respect to an en25 terprise, a business activity that— 
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1 ‘‘(A) is materially changed or materially 

2 different from any of the business activities 

3 that the enterprise was engaging in on the ef4 fective date under section 185 of the Federal 

5 Housing Finance Reform Act of 2005; and 

6 ‘‘(B) the enterprise has not previously ob7 tained authorization, pursuant to the provisions 

8 of section 1321(c), to offer, undertake, trans9 act, conduct, or engage in.’’; 

10 (3) by redesignating paragraphs (15) and (16) 

11 as paragraphs (17) and (18), respectively; 

12 (4) by inserting after paragraph (14) the fol13 lowing new paragraph: 

14 ‘‘(16) MORTGAGE MARKETS.—The terms ‘mort15 gage loan origination’ and ‘secondary mortgage mar16 ket’ shall have such meanings as the Director shall, 

17 by regulation, prescribe consistent with the Federal 

18 National Mortgage Association Charter Act and the 

19 Federal Home Loan Mortgage Corporation Act. The 

20 Director shall issue such regulations not later than 

21 the expiration of the 12-month period beginning on 

22 the effective date under section 185 of the Federal 

23 Housing Finance Reform Act of 2005, and the Di24 rector shall review such regulations on a periodic 

25 basis.’’; 
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1 (5) by redesignating paragraphs (5) through 

2 (14) as paragraphs (6) through (15), respectively; 

3 and 

4 (6) by inserting after paragraph (4) the fol5 lowing new paragraph: 

6 ‘‘(5) BUSINESS ACTIVITY.—The term ‘business 

7 activity’ means, with respect to an enterprise, any 

8 offering, undertaking, transacting, conducting, or 

9 engaging in any conduct, activity, or product by the 

10 enterprise, as the Director shall provide.’’. 

11 (c) CONFORMING AMENDMENTS.— 

12 (1) FANNIE MAE.—Section 302(b)(6) of the 

13 Federal National Mortgage Association Charter Act 

14 (12 U.S.C. 1717(b)(6)) is amended— 

15 (A) by striking ‘‘new program (as such 

16 term is’’ and inserting ‘‘new program or new 

17 business activity (as such terms are’’; and 

18 (B) by striking ‘‘before obtaining the ap19 proval of the Secretary under section 1322’’ 

20 and inserting ‘‘except in accordance with sec21 tion 1321’’. 

22 (2) FREDDIE MAC.—Section 305(c) of the Fed23 eral Home Loan Mortgage Corporation Act (12 

24 U.S.C. 1454(c)) is amended— 
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1 (A) by striking ‘‘new program (as such 

2 term is’’ and inserting ‘‘new program or new 

3 business activity (as such terms are’’; and 

4 (B) by striking ‘‘before obtaining the ap5 proval of the Secretary under section 1322’’ 

6 and inserting ‘‘except in accordance with sec7 tion 1321’’. 

8 SEC. 123. CONFORMING LOAN LIMITS. 

9 (a) FANNIE MAE.— 

10 (1) GENERAL LIMIT.—Section 302(b)(2) of the 

11 Federal National Mortgage Association Charter Act 

12 (12 U.S.C. 1717(b)(2)) is amended by striking the 

13 7th and 8th sentences and inserting the following 

14 new sentences: ‘‘Such limitations shall not exceed 

15 $359,650 for a mortgage secured by a single-family 

16 residence, $460,400 for a mortgage secured by a 2- 

17 family residence, $556,500 for a mortgage secured 

18 by a 3-family residence, and $691,600 for a mort19 gage secured by a 4-family residence, except that 

20 such maximum limitations shall be adjusted effective 

21 January 1 of each year beginning after the effective 

22 date under section 185 of the Federal Housing Fi23 nance Reform Act of 2005, subject to the limitations 

24 in this paragraph. Each adjustment shall be made 

25 by adding to or subtracting from each such amount 
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1 (as it may have been previously adjusted) a percent2 age thereof equal to the percentage increase or de3 crease, during the most recent 12-month or fourth4 quarter period ending before the time of determining 

5 such annual adjustment, in the housing price index 

6 maintained by the Director of the Federal Housing 

7 Finance Agency (pursuant to section 1322 of the 

8 Housing and Community Development Act of 1992 

9 (12 U.S.C. 4541)).’’. 

10 (2) HIGH-COST AREA LIMIT.—Section 302(b)(2) 

11 of the Federal National Mortgage Association Char12 ter Act is (12 U.S.C. 1717(b)(2)) is amended by 

13 adding after the period at the end the following: 

14 ‘‘Such foregoing limitations shall also be increased 

15 with respect to properties of a particular size located 

16 in any area for which the median price for such size 

17 residence exceeds the foregoing limitation for such 

18 size residence, to the lesser of 150 percent of such 

19 foregoing limitation for such size residence or the 

20 amount that is equal to the median price in such 

21 area for such size residence, except that, subject to 

22 the order, if any, issued by the Director of the Fed23 eral Housing Finance Agency pursuant to section 

24 123(d)(3) of the Federal Housing Finance Reform 

25 Act of 2005, such increase shall apply only with re-
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1 spect to mortgages on which are based securities 

2 issued and sold by the corporation.’’. 

3 (b) FREDDIE MAC.— 

4 (1) GENERAL LIMIT.— Section 305(a)(2) of the 

5 Federal Home Loan Mortgage Corporation Act (12 

6 U.S.C. 1454(a)(2)) is amended by striking the 6th 

7 and 7th sentences and inserting the following new 

8 sentences: ‘‘Such limitations shall not exceed 

9 $359,650 for a mortgage secured by a single-family 

10 residence, $460,400 for a mortgage secured by a 2- 

11 family residence, $556,500 for a mortgage secured 

12 by a 3-family residence, and $691,600 for a mort13 gage secured by a 4-family residence, except that 

14 such maximum limitations shall be adjusted effective 

15 January 1 of each year beginning after the effective 

16 date under section 185 of the Federal Housing Fi17 nance Reform Act of 2005, subject to the limitations 

18 in this paragraph. Each adjustment shall be made 

19 by adding to or subtracting from each such amount 

20 (as it may have been previously adjusted) a percent21 age thereof equal to the percentage increase or de22 crease, during the most recent 12-month or fourth23 quarter period ending before the time of determining 

24 such annual adjustment, in the housing price index 

25 maintained by the Director of the Federal Housing 
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1 Finance Agency (pursuant to section 1322 of the 

2 Housing and Community Development Act of 1992 

3 (12 U.S.C. 4541)).’’. 

4 (2) HIGH-COST AREA LIMIT.—Section 305(a)(2) 

5 of the Federal Home Loan Mortgage Corporation 

6 Act is amended by adding after the period at the 

7 end the following: ‘‘Such foregoing limitations shall 

8 also be increased with respect to properties of a par9 ticular size located in any area for which the median 

10 price for such size residence exceeds the foregoing 

11 limitation for such size residence, to the lesser of 

12 150 percent of such foregoing limitation for such 

13 size residence or the amount that is equal to the me14 dian price in such area for such size residence, ex15 cept that, subject to the order, if any, issued by the 

16 Director of the Federal Housing Finance Agency 

17 pursuant to section 123(d)(3) of the Federal Hous18 ing Finance Reform Act of 2005, such increase shall 

19 apply only with respect to mortgages on which are 

20 based securities issued and sold by the Corpora21 tion.’’. 

22 (c) HOUSING PRICE INDEX.—Subpart A of part 2 of 

23 subtitle A of title XIII of the Housing and Community 

24 Development Act of 1992 (as amended by the preceding 

25 provisions of this Act) is amended by inserting after sec-
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1 tion 1321 (as added by section 122 of this Act) the fol2 lowing new section: 

3 ‘‘SEC. 1322. HOUSING PRICE INDEX. 

4 ‘‘(a) IN GENERAL.—The Director shall establish and 

5 maintain a method of assessing the national average 1- 

6 family house price for use for adjusting the conforming 

7 loan limitations of the enterprises. In establishing such 

8 method, the Director shall take into consideration the 

9 monthly survey of all major lenders conducted by the Fed10 eral Housing Finance Agency to determine the national 

11 average 1-family house price, the House Price Index main12 tained by the Office of Federal Housing Enterprise Over13 sight of the Department of Housing and Urban Develop14 ment before the effective date under section 185 of the 

15 Federal Housing Finance Reform Act of 2005, any appro16 priate house price indexes of the Bureau of the Census 

17 of the Department of Commerce, and any other indexes 

18 or measures that the Director considers appropriate. 

19 ‘‘(b) GAO AUDIT.— 

20 ‘‘(1) IN GENERAL.—At such times as are re21 quired under paragraph (2), the Comptroller Gen22 eral of the United States shall conduct an audit of 

23 the methodology established by the Director under 

24 subsection (a) to determine whether the methodology 

25 established is an accurate and appropriate means of 
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1 measuring changes to the national average 1-family 

2 house price. 

3 ‘‘(2) TIMING.—An audit referred to in para4 graph (1) shall be conducted and completed not later 

5 than the expiration of the 180-day period that be6 gins upon each of the following dates: 

7 ‘‘(A) ESTABLISHMENT.—The date upon 

8 which such methodology is initially established 

9 under subsection (a) in final form by the Direc10 tor. 

11 ‘‘(B) MODIFICATION OR AMENDMENT.— 

12 Each date upon which any modification or 

13 amendment to such methodology is adopted in 

14 final form by the Director. 

15 ‘‘(3) REPORT.—Within 30 days of the comple16 tion of any audit conducted under this subsection, 

17 the Comptroller General shall submit a report detail18 ing the results and conclusions of the audit to the 

19 Director, the Committee on Financial Services of the 

20 House of Representatives, and the Committee on 

21 Banking, Housing, and Urban Affairs of the Sen22 ate.’’. 

23 (d) CONDITIONS ON CONFORMING LOAN LIMIT FOR

24 HIGH-COST AREAS.— 
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1 (1) STUDY.—The Director of the Federal 

2 Housing Finance Agency shall conduct a study 

3 under this subsection during the six-month period 

4 beginning on the effective date under section 185 of 

5 this Act. 

6 (2) ISSUES.—The study under this subsection 

7 shall determine— 

8 (A) the effect that restricting the con9 forming loan limits for high-cost areas only to 

10 mortgages on which are based securities issued 

11 and sold by the Federal National Mortgage As12 sociation and the Federal Home Loan Mortgage 

13 Corporation (as provided in the last sentence of 

14 section 302(b)(2) of the Federal National Mort15 gage Association Charter Act and the last sen16 tence of section 305(a)(2) of the Federal Home 

17 Loan Mortgage Corporation Act, pursuant to 

18 the amendments made by subsections (a)(2) 

19 and (b)(2) of this section) would have on the 

20 cost to borrowers for mortgages on housing in 

21 such high-cost areas; 

22 (B) the effects that such restrictions would 

23 have on the availability of mortgages for hous24 ing in such high-cost areas; and 
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1 (C) the extent to which the Federal Na2 tional Mortgage Association and the Federal 

3 Home Loan Mortgage Corporation will be able 

4 to issue and sell securities based on mortgages 

5 for housing located in such high-cost areas. 

6 (3) DETERMINATION.— 

7 (A) IN GENERAL.—Not later than the ex8 piration of the six-month period specified in 

9 paragraph (1), the Director of the Federal 

10 Housing Finance Agency shall make a deter11 mination, based on the results of the study 

12 under this subsection, of whether the restriction 

13 of conforming loan limits for high-cost areas 

14 only to mortgages on which are based securities 

15 issued and sold by the Federal National Mort16 gage Association and the Federal Home Loan 

17 Mortgage Corporation (as provided in the 

18 amendments made by subsections (a)(2) and 

19 (b)(2) of this section) will result in an increase 

20 in the cost to borrowers for mortgages on hous21 ing in such high-cost areas. 

22 (B) ORDER.— If such determination is 

23 that costs to borrowers on housing in such 

24 high-cost areas will be increased by such re-
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1 strictions, the Director may issue an order ter2 minating such restrictions, in whole or in part. 

3 (4) PUBLICATION.— Not later than the expira4 tion of the six-month period specified in paragraph 

5 (1), the Director of the Federal Housing Finance 

6 Agency shall cause to be published in the Federal 

7 Register— 

8 (A) a report that— 

9 (i) describes the study under this sub10 section; and 

11 (ii) sets forth the conclusions of the 

12 study regarding the issues to be deter13 mined under paragraph (2); and 

14 (B) notice of the determination of the Di15 rector under paragraph (3); and 

16 (C) the order of the Director under para17 graph (3). 

18 (5) DEFINITION.—For purposes of this sub19 section, the term ‘‘conforming loan limits for high20 cost areas’’ means the dollar amount limitations ap21 plicable under the section 302(b)(2) of the Federal 

22 National Mortgage Association Charter Act and sec23 tion 305(a)(2) of the Federal Home Loan Mortgage 

24 Corporation Act (as amended by subsections (a) and 
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1 (b) of this section) for areas described in the last 

2 sentence of such sections (as so amended). 

3 (e) REGULAR ADJUSTMENT OF CONFORMING LOAN

4 LIMITS.— 

5 (1) ADJUSTMENT FOR YEAR INTERVENING BE6 FORE EFFECTIVE DATE.—Notwithstanding section 

7 302(b)(2) of the Federal National Mortgage Asso8 ciation Charter Act and section 305(a)(2) of the 

9 Federal Home Loan Mortgage Corporation Act, as 

10 amended by this section, the maximum dollar 

11 amount limitations in such sections shall be adjusted 

12 on the effective date under section 185 of this Act, 

13 and the limitations as so adjusted shall be imme14 diately effective, so that the limitations under such 

15 sections applicable to the year in which such effec16 tive date occurs are equal to the limitations in effect 

17 under such sections immediately before such effec18 tive date. 

19 (2) FURTHER ADJUSTMENTS.—After such ef20 fective date, the dollar amount limitations as ad21 justed pursuant to paragraph (1) shall be considered 

22 ‘‘such amount (as it may have been previously ad23 justed’’ for purposes of section 302(b)(2) of the Fed24 eral National Mortgage Association Charter Act and 
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1 section 305(a)(2) of the Federal Home Loan Mort2 gage Corporation Act. 

3 SEC. 124. ANNUAL HOUSING REPORT REGARDING REGU4 LATED ENTITIES. 

5 (a) IN GENERAL.—The Housing and Community De6 velopment Act of 1992 is amended by striking section 

7 1324 (12 U.S.C. 4544) and inserting the following new 

8 section: 

9 ‘‘SEC. 1324. ANNUAL HOUSING REPORT REGARDING REGU10 LATED ENTITIES. 

11 ‘‘(a) IN GENERAL.—After reviewing and analyzing 

12 the reports submitted under section 309(n) of the Federal 

13 National Mortgage Association Charter Act, section 

14 307(f) of the Federal Home Loan Mortgage Corporation 

15 Act, and section 10(j)(11) of the Federal Home Loan 

16 Bank Act (12 U.S.C. 1430(j)(11)), the Director shall sub17 mit a report, not later than October 30 of each year, to 

18 the Committee on Financial Services of the House of Rep19 resentatives and the Committee on Banking, Housing, and 

20 Urban Affairs of the Senate, on the activities of each regu21 lated entity. 

22 ‘‘(b) CONTENTS.—The report shall— 

23 ‘‘(1) discuss the extent to which— 
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1 ‘‘(A) each enterprise is achieving the an2 nual housing goals established under subpart B 

3 of this part; 

4 ‘‘(B) each enterprise is complying with sec5 tion 1337; 

6 ‘‘(C) each Federal home loan bank is com7 plying with section 10(j) of the Federal Home 

8 Loan Bank Act; and 

9 ‘‘(D) each regulated entity is achieving the 

10 purposes of the regulated entity established by 

11 law; 

12 ‘‘(2) aggregate and analyze relevant data on in13 come to assess the compliance by each enterprise 

14 with the housing goals established under subpart B; 

15 ‘‘(3) aggregate and analyze data on income, 

16 race, and gender by census tract and other relevant 

17 classifications, and compare such data with larger 

18 demographic, housing, and economic trends; 

19 ‘‘(4) examine actions that— 

20 ‘‘(A) each enterprise has undertaken or 

21 could undertake to promote and expand the an22 nual goals established under subpart B and the 

23 purposes of the enterprise established by law; 

24 and 
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1 ‘‘(B) each Federal home loan bank has 

2 taken or could undertake to promote and ex3 pand the community investment program and 

4 affordable housing program of the bank estab5 lished under section subsections (i) and (j) of 

6 section 10 of the Federal Home Loan Bank 

7 Act; 

8 ‘‘(5) examine the primary and secondary multi9 family housing mortgage markets and describe— 

10 ‘‘(A) the availability and liquidity of mort11 gage credit; 

12 ‘‘(B) the status of efforts to provide stand13 ard credit terms and underwriting guidelines 

14 for multifamily housing and to securitize such 

15 mortgage products; and 

16 ‘‘(C) any factors inhibiting such standard17 ization and securitization; 

18 ‘‘(6) examine actions each regulated entity has 

19 undertaken and could undertake to promote and ex20 pand opportunities for first-time homebuyers, includ21 ing the use of alternative credit scoring; 

22 ‘‘(7) describe any actions taken under section 

23 1325(5) with respect to originators found to violate 

24 fair lending procedures; 
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1 ‘‘(8) discuss and analyze existing conditions and 

2 trends, including conditions and trends relating to 

3 pricing, in the housing markets and mortgage mar4 kets; and 

5 ‘‘(9) identify the extent to which each enter6 prise is involved in mortgage purchases and sec7 ondary market activities involving subprime loans 

8 (as identified in accordance with the regulations 

9 issued pursuant to section 124(b) of the Federal 

10 Housing Finance Reform Act of 2005) and compare 

11 the characteristics of subprime loans purchased and 

12 securitized by the enterprises to other loans pur13 chased and securitized by the enterprises. 

14 ‘‘(c) DATA COLLECTION AND REPORTING.— 

15 ‘‘(1) IN GENERAL.—To assist the Director in 

16 analyzing the matters described in subsection (b) 

17 and establishing the methodology described in sec18 tion 1322, the Director shall conduct, on a monthly 

19 basis, a survey of mortgage markets in accordance 

20 with this subsection. 

21 ‘‘(2) DATA POINTS.—Each monthly survey con22 ducted by the Director under paragraph (1) shall 

23 collect data on— 

24 ‘‘(A) the characteristics of individual mort25 gages that are eligible for purchase by the en-
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1 terprises and the characteristics of individual 

2 mortgages that are not eligible for purchase by 

3 the enterprises including, in both cases, infor4 mation concerning— 

5 ‘‘(i) the price of the house that se6 cures the mortgage; 

7 ‘‘(ii) the loan-to-value ratio of the 

8 mortgage, which shall reflect any sec9 ondary liens on the relevant property; 

10 ‘‘(iii) the terms of the mortgage; 

11 ‘‘(iv) the creditworthiness of the bor12 rower or borrowers; and 

13 ‘‘(v) whether the mortgage, in the 

14 case of a conforming mortgage, was pur15 chased by an enterprise; and 

16 ‘‘(B) such other matters as the Director 

17 determines to be appropriate. 

18 ‘‘(3) PUBLIC AVAILABILITY.—The Director 

19 shall make any data collected by the Director in con20 nection with the conduct of a monthly survey avail21 able to the public in a timely manner, provided that 

22 the Director may modify the data released to the 

23 public to ensure that the data is not released in an 

24 identifiable form. 
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1 ‘‘(4) DEFINITION.—For purposes of this sub2 section, the term ‘identifiable form’ means any rep3 resentation of information that permits the identity 

4 of a borrower to which the information relates to be 

5 reasonably inferred by either direct or indirect 

6 means.’’. 

7 (b) STANDARDS FOR SUBPRIME LOANS.—The Direc8 tor shall, not later than one year after the effective date 

9 under section 185, by regulations issued under section 

10 1316G of the Housing and Community Development Act 

11 of 1992, establish standards by which mortgages pur12 chased and mortgages purchased and securitized shall be 

13 characterized as subprime for the purpose of, and only for 

14 the purpose of, complying with the reporting requirement 

15 under section 1324(b)(9) of such Act. 

16 SEC. 125. REVISION OF HOUSING GOALS. 

17 (a) HOUSING GOALS.—The Housing and Community 

18 Development Act of 1992 is amended by striking sections 

19 1331 through 1334 (12 U.S.C. 4561–4) and inserting the 

20 following new sections: 

21 ‘‘SEC. 1331. ESTABLISHMENT OF HOUSING GOALS. 

22 ‘‘(a) IN GENERAL.—The Director shall establish, ef23 fective for the first year that begins after the effective date 

24 under section 185 of the Federal Housing Finance Reform 

25 Act of 2005 and each year thereafter, annual housing 
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1 goals, with respect to the mortgage purchases by the en2 terprises, as follows: 

3 ‘‘(1) SINGLE FAMILY HOUSING GOALS.—Three 

4 single-family housing goals under section 1332. 

5 ‘‘(2) MULTIFAMILY SPECIAL AFFORDABLE

6 HOUSING GOALS.—A multifamily special affordable 

7 housing goal under section 1333. 

8 ‘‘(b) ELIMINATING INTEREST RATE DISPARITIES.— 

9 ‘‘(1) IN GENERAL.—In establishing and imple10 menting the housing goals under this subpart, the 

11 Director shall require the enterprises to disclose ap12 propriate information to allow the Director to assess 

13 if there are any disparities in interest rates charged 

14 on mortgages to borrowers who are minorities as 

15 compared with borrowers of similar creditworthiness 

16 who are not minorities, as evidenced in reports pur17 suant to the Home Mortgage Disclosure Act of 

18 1975. 

19 ‘‘(2) REPORT AND REMEDY.—Upon a finding 

20 by the Director, pursuant to the information pro21 vided by an enterprise in paragraph (1), that a pat22 tern of disparities in interest rates exists, the Direc23 tor shall— 

24 ‘‘(A) submit to the Committee on Finan25 cial Services of the House of Representatives 
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1 and the Committee on Banking, Housing, and 

2 Urban Affairs of the Senate a report detailing 

3 the disparities; and 

4 ‘‘(B) require the enterprise to take such 

5 action as the Director deems appropriate pursu6 ant to this Act to remedy the interest rate dis7 parities identified. 

8 ‘‘(3) PROTECTION OF IDENTITY.—In carrying 

9 out this subsection, the Director shall ensure that no 

10 information is made public that would reasonably 

11 allow identification, directly or indirectly, of an indi12 vidual borrower. 

13 ‘‘(c) TIMING.—The Director shall establish an annual 

14 deadline by which the Director shall establish the annual 

15 housing goals under this subpart for each year, taking into 

16 consideration the need for the enterprises to reasonably 

17 and sufficiently plan their operations and activities in ad18 vance, including operations and activities necessary to 

19 meet such annual goals. 

20 ‘‘SEC. 1332. SINGLE-FAMILY HOUSING GOALS. 

21 ‘‘(a) IN GENERAL.—The Director shall establish an 

22 annual goal for the purchase by each enterprise of conven23 tional, conforming, single-family, owner-occupied, pur24 chase money mortgages financing housing for each of the 

25 following categories of families: 
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1 ‘‘(1) Low-income families. 

2 ‘‘(2) Families that reside in low-income areas. 

3 ‘‘(3) Very low-income families. 

4 ‘‘(b) DETERMINATION OF COMPLIANCE.—The Direc5 tor shall determine, for each year that the housing goal 

6 under this section is in effect pursuant to section 1331(a), 

7 whether each enterprise has complied with the single-fam8 ily housing goal established under this section for such 

9 year. An enterprise shall be considered to be in compliance 

10 with such a goal for a year only if— 

11 ‘‘(1) for each of the types of families described 

12 in subsection (a), the percentage of the number of 

13 conventional, conforming, single-family, owner-occu14 pied, purchase money mortgages purchased by each 

15 enterprise in such year that serve such families, 

16 meets or exceeds 

17 ‘‘(2) the target for the year for such type of 

18 family that is established under subsection (c). 

19 ‘‘(c) ANNUAL TARGETS.— 

20 ‘‘(1) IN GENERAL.—Except as provided in para21 graph (2), for each of the types of families described 

22 in subsection (a), the target under this subsection 

23 for a year shall be the average percentage, for the 

24 three years that most recently precede such year and 

25 for which information under the Home Mortgage 
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1 Disclosure Act of 1975 is publicly available, of the 

2 number of conventional, conforming, single-family, 

3 owner-occupied, purchase money mortgages origi4 nated in such year that serves such type of family, 

5 as determined by the Director using the information 

6 obtained and determined pursuant to paragraphs (3) 

7 and (4). 

8 ‘‘(2) AUTHORITY TO INCREASE TARGETS.— 

9 ‘‘(A) IN GENERAL.—The Director may, for 

10 any year, establish by regulation, for any or all 

11 of the types of families described in subsection 

12 (a), percentage targets that are higher than the 

13 percentages for such year determined pursuant 

14 to paragraph (1), to reflect expected changes in 

15 market performance related to such information 

16 under the Home Mortgage Disclosure Act of 

17 1975. 

18 ‘‘(B) FACTORS.—In establishing any tar19 gets pursuant to subparagraph (A), the Direc20 tor shall consider the following factors: 

21 ‘‘(i) National housing needs. 

22 ‘‘(ii) Economic, housing, and demo23 graphic conditions. 

24 ‘‘(iii) The performance and effort of 

25 the enterprises toward achieving the hous-
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1 ing goals under this section in previous 

2 years. 

3 ‘‘(iv) The size of the conventional 

4 mortgage market serving each of the types 

5 of families described in subsection (a) rel6 ative to the size of the overall conventional 

7 mortgage market. 

8 ‘‘(v) The need to maintain the sound 

9 financial condition of the enterprises. 

10 ‘‘(3) HMDA INFORMATION.—The Director 

11 shall annually obtain information submitted in com12 pliance with the Home Mortgage Disclosure Act of 

13 1975 regarding conventional, conforming, single14 family, owner-occupied, purchase money mortgages 

15 originated and purchased for the previous year. 

16 ‘‘(4) CONFORMING MORTGAGES.—In deter17 mining whether a mortgage is a conforming mort18 gage for purposes of this paragraph, the Director 

19 shall consider the original principal balance of the 

20 mortgage loan to be the principal balance as re21 ported in the information referred to in paragraph 

22 (3), as rounded to the nearest thousand dollars. 

23 ‘‘(d) NOTICE OF DETERMINATION AND ENTERPRISE

24 COMMENT.— 
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1 ‘‘(1) NOTICE.—Within 30 days of making a de2 termination under subsection (b) regarding a compli3 ance of an enterprise for a year with the housing 

4 goal established under this section and before any 

5 public disclosure thereof, the Director shall provide 

6 notice of the determination to the enterprise, which 

7 shall include an analysis and comparison, by the Di8 rector, of the performance of the enterprise for the 

9 year and the targets for the year under subsection 

10 (c). 

11 ‘‘(2) COMMENT PERIOD.—The Director shall 

12 provide each enterprise an opportunity to comment 

13 on the determination during the 30-day period be14 ginning upon receipt by the enterprise of the notice. 

15 ‘‘(e) USE OF BORROWER INCOME.—In monitoring 

16 the performance of each enterprise pursuant to the hous17 ing goals under this section and evaluating such perform18 ance (for purposes of section 1336), the Director shall 

19 consider a mortgagor’s income to be such income at the 

20 time of origination of the mortgage. 

21 ‘‘SEC. 1333. MULTIFAMILY SPECIAL AFFORDABLE GOAL. 

22 ‘‘(a) ESTABLISHMENT.— 

23 ‘‘(1) IN GENERAL.—The Director shall estab24 lish, by regulation, an annual goal for the purchase 
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1 by each enterprise of each of the following types of 

2 mortgages on multifamily housing: 

3 ‘‘(A) Mortgages that finance dwelling units 

4 for low-income families. 

5 ‘‘(B) Mortgages that finance dwelling units 

6 for very low-income families. 

7 ‘‘(C) Mortgages that finance dwelling units 

8 assisted by the low-income housing tax credit 

9 under section 42 of the Internal Revenue Code 

10 of 1986. 

11 ‘‘(2) ADDITIONAL REQUIREMENTS FOR SMALL12 ER PROJECTS.—The Director shall establish, within 

13 the goal under this section, additional requirements 

14 for the purchase by each enterprise of mortgages de15 scribed in paragraph (1) for multifamily housing 

16 projects of a smaller or limited size, which may be 

17 based on the number of dwelling units in the project 

18 or the amount of the mortgage, or both, and shall 

19 include multifamily housing projects of such smaller 

20 sizes as are typical among such projects that serve 

21 rural areas. 

22 ‘‘(3) FACTORS.—In establishing the goal under 

23 this section relating to mortgages on multifamily 

24 housing for an enterprise, the Director shall con25 sider— 
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1 ‘‘(A) national multifamily mortgage credit 

2 needs; 

3 ‘‘(B) the performance and effort of the en4 terprise in making mortgage credit available for 

5 multifamily housing in previous years; 

6 ‘‘(C) the size of the multifamily mortgage 

7 market; 

8 ‘‘(D) the ability of the enterprise to lead 

9 the industry in making mortgage credit avail10 able, especially for underserved markets, such 

11 as for small multifamily projects of 5 to 50 

12 units, multifamily properties in need of rehabili13 tation, and multifamily properties located in 

14 rural areas; and 

15 ‘‘(E) the need to maintain the sound finan16 cial condition of the enterprise. 

17 ‘‘(b) UNITS FINANCED BY HOUSING FINANCE AGEN18 CY BONDS.—The Director shall give full credit toward the 

19 achievement of the multifamily special affordable housing 

20 goal under this section (for purposes of section 1336) to 

21 dwelling units in multifamily housing that otherwise quali22 fies under such goal and that is financed by tax-exempt 

23 or taxable bonds issued by a State or local housing finance 

24 agency, but only if— 
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1 ‘‘(1) such bonds are secured by a guarantee of 

2 the enterprise; or 

3 ‘‘(2) are not investment grade and are pur4 chased by the enterprise. 

5 ‘‘(c) USE OF TENANT INCOME OR RENT.—The Di6 rector shall monitor the performance of each enterprise 

7 in meeting the goals established under this section and 

8 shall evaluate such performance (for purposes of section 

9 1336) based on— 

10 ‘‘(1) the income of the prospective or actual 

11 tenants of the property, where such data are avail12 able; or 

13 ‘‘(2) where the data referred to in paragraph 

14 (1) are not available, rent levels affordable to low15 income and very low-income families. 

16 A rent level shall be considered to be affordable for pur17 poses of this subsection for an income category referred 

18 to in this subsection if it does not exceed 30 percent of 

19 the maximum income level of such income category, with 

20 appropriate adjustments for unit size as measured by the 

21 number of bedrooms. 

22 ‘‘(d) DETERMINATION OF COMPLIANCE.—The Direc23 tor shall, for each year that the housing goal under this 

24 section is in effect pursuant to section 1331(a), determine 
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1 whether each enterprise has complied with such goal and 

2 the additional requirements under subsection (a)(2). 

3 ‘‘SEC. 1334. DISCRETIONARY ADJUSTMENT OF HOUSING 

4 GOALS. 

5 ‘‘(a) AUTHORITY.—An enterprise may petition the 

6 Director in writing at any time during a year to reduce 

7 the level of any goal for such year established pursuant 

8 to this subpart. 

9 ‘‘(b) STANDARD FOR REDUCTION.—The Director 

10 may reduce the level for a goal pursuant to such a petition 

11 only if— 

12 ‘‘(1) market and economic conditions or the fi13 nancial condition of the enterprise require such ac14 tion; or 

15 ‘‘(2) efforts to meet the goal would result in the 

16 constraint of liquidity, over-investment in certain 

17 market segments, or other consequences contrary to 

18 the intent of this subpart, or section 301(3) of the 

19 Federal National Mortgage Association Charter Act 

20 (12 U.S.C. 1716(3)) or section 301(3) of the Fed21 eral Home Loan Mortgage Corporation Act (12 

22 U.S.C. 1451 note), as applicable. 

23 ‘‘(c) DETERMINATION.—The Director shall make a 

24 determination regarding any proposed reduction within 30 

25 days of receipt of the petition regarding the reduction. The 
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1 Director may extend such period for a single additional 

2 15-day period, but only if the Director requests additional 

3 information from the enterprise. A denial by the Director 

4 to reduce the level of any goal under this section may be 

5 appealed to the United States District Court for the Dis6 trict of Columbia or the United States district court in 

7 the jurisdiction in which the headquarters of an enterprise 

8 is located.’’. 

9 (b) CONFORMING AMENDMENTS.—The Housing and 

10 Community Development Act of 1992 is amended— 

11 (1) in section 1335(a) (12 U.S.C. 4565(a)), in 

12 the matter preceding paragraph (1), by striking 

13 ‘‘low- and moderate-income housing goal’’ and all 

14 that follows through ‘‘section 1334’’ and inserting 

15 ‘‘housing goals established under this subpart’’; and 

16 (2) in section 1336(a)(1) (12 U.S.C. 

17 4566(a)(1)), by striking ‘‘sections 1332, 1333, and 

18 1334,’’ and inserting ‘‘this subpart’’. 

19 (c) DEFINITIONS.—Section 1303 of the Housing and 

20 Community Development Act of 1992 (12 U.S.C. 4502), 

21 as amended by the preceding provisions of this Act, is fur22 ther amended— 

23 (1) in paragraph (26), by striking ‘‘60 percent’’ 

24 each place such term appears and inserting ‘‘50 per25 cent’’; 
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1 (2) by redesignating paragraphs (23) through 

2 (26) as paragraphs (27) through (30), respectively; 

3 (3) by inserting after paragraph (22) the fol4 lowing new paragraph: 

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

6 the meaning given such term in section 520 of the 

7 Housing Act of 1949 (42 U.S.C. 1490), except that 

8 such term includes micropolitan areas and tribal 

9 trust lands.’’. 

10 (4) by redesignating paragraphs (14) through 

11 (22) as paragraphs (17) through (25), respectively; 

12 and 

13 (5) by inserting after paragraph (13) the fol14 lowing new paragraph: 

15 ‘‘(16) LOW-INCOME AREA.—The term ‘low in16 come area’ means a census tract or block numbering 

17 area in which the median income does not exceed 80 

18 percent of the median income for the area in which 

19 such census tract or block numbering area is lo20 cated, and, for the purposes of section 1332(a)(2), 

21 shall include families having incomes not greater 

22 than 100 percent of the area median income who re23 side in minority census tracts.’’; 

24 (6) by redesignating paragraphs (12) and (13) 

25 as paragraphs (14) and (15), respectively; 
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1 (7) by inserting after paragraph (11) the fol2 lowing new paragraph: 

3 ‘‘(13) EXTREMELY LOW-INCOME.—The term 

4 ‘extremely low-income’ means— 

5 ‘‘(A) in the case of owner-occupied units, 

6 income not in excess of 30 percent of the area 

7 median income; and 

8 ‘‘(B) in the case of rental units, income 

9 not in excess of 30 percent of the area median 

10 income, with adjustments for smaller and larger 

11 families, as determined by the Secretary.’’; 

12 (8) by redesignating paragraphs (8) through 

13 (11) as paragraphs (9) through (12), respectively; 

14 and 

15 (9) by inserting after paragraph (7) the fol16 lowing new paragraph: 

17 ‘‘(8) CONFORMING MORTGAGE.—The term ‘con18 forming mortgage’ means, with respect to an enter19 prise, a conventional mortgage having an original 

20 principal obligation that does not exceed the dollar 

21 limitation, in effect at the time of such origination, 

22 under, as applicable— 

23 ‘‘(A) section 302(b)(2) of the Federal Na24 tional Mortgage Association Charter Act; or 
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1 ‘‘(B) section 305(a)(2) of the Federal 

2 Home Loan Mortgage Corporation Act.’’. 

3 SEC. 126. DUTY TO SERVE UNDERSERVED MARKETS. 

4 (a) ESTABLISHMENT AND EVALUATION OF PER5 FORMANCE.—Section 1335 of the Housing and Commu6 nity Development Act of 1992 (12 U.S.C. 4565) is amend7 ed— 

8 (1) in the section heading, by inserting ‘‘DUTY

9 TO SERVE UNDERSERVED MARKETS AND’’ be10 fore ‘‘OTHER’’; 

11 (2) by striking subsection (b); 

12 (3) in subsection (a)— 

13 (A) in the matter preceding paragraph (1), 

14 by inserting ‘‘and to carry out the duty under 

15 subsection (a) of this section’’ before ‘‘, each 

16 enterprise shall’’; 

17 (B) in paragraph (3), by inserting ‘‘and’’ 

18 after the semicolon at the end; 

19 (C) in paragraph (4), by striking ‘‘; and’’ 

20 and inserting a period; 

21 (D) by striking paragraph (5); and 

22 (E) by redesignating such subsection as 

23 subsection (b); 
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1 (4) by inserting before subsection (b) (as so re2 designated by paragraph (3)(E) of this subsection) 

3 the following new subsection: 

4 ‘‘(a) DUTY TO SERVE UNDERSERVED MARKETS.— 

5 ‘‘(1) DUTY.—In accordance with the purpose of 

6 the enterprises under section 301(3) of the Federal 

7 National Mortgage Association Charter Act (12 

8 U.S.C. 1716) and section 301(b)(3) of the Federal 

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

10 1451 note) to undertake activities relating to mort11 gages on housing for very low-, low-, and moderate12 income families involving a reasonable economic re13 turn that may be less than the return earned on 

14 other activities, each enterprise shall have the duty 

15 to increase the liquidity of mortgage investments 

16 and improve the distribution of investment capital 

17 available for mortgage financing for underserved 

18 markets. 

19 ‘‘(2) UNDERSERVED MARKETS.—To meet its 

20 duty under paragraph (1), each enterprise shall com21 ply with the following requirements with respect to 

22 the following underserved markets: 

23 ‘‘(A) MANUFACTURED HOUSING.—The en24 terprise shall lead the industry in developing 

25 loan products and flexible underwriting guide-
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1 lines to facilitate a secondary market for mort2 gages on manufactured homes for very low-, 

3 low-, and moderate-income families. 

4 ‘‘(B) AFFORDABLE HOUSING PRESERVA5 TION.—The enterprise shall lead the industry in 

6 developing loan products and flexible under7 writing guidelines to facilitate a secondary mar8 ket to preserve housing affordable to very low9 , low-, and moderate-income families, including 

10 housing projects subsidized under— 

11 ‘‘(i) the project-based and tenant12 based rental assistance programs under 

13 section 8 of the United States Housing Act 

14 of 1937; 

15 ‘‘(ii) the program under section 236 

16 of the National Housing Act; 

17 ‘‘(iii) the below-market interest rate 

18 mortgage program under section 221(d)(4) 

19 of the National Housing Act; 

20 ‘‘(iv) the supportive housing for the 

21 elderly program under section 202 of the 

22 Housing Act of 1959; 

23 ‘‘(v) the supportive housing program 

24 for persons with disabilities under section 
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1 811 of the Cranston-Gonzalez National Af2 fordable Housing Act; and 

3 ‘‘(vi) the rural rental housing program 

4 under section 515 of the Housing Act of 

5 1949. 

6 ‘‘(C) RURAL AND OTHER UNDERSERVED

7 MARKETS.—The enterprise shall lead the indus8 try in developing loan products and flexible un9 derwriting guidelines to facilitate a secondary 

10 market for mortgages on housing for very low11 , low-, and moderate-income families in rural 

12 areas, and for mortgages for housing for any 

13 other underserved market for very low-, low-, 

14 and moderate-income families that the Sec15 retary identifies as lacking adequate credit 

16 through conventional lending sources. Such un17 derserved markets may be identified by bor18 rower type, market segment, or geographic 

19 area.’’; and 

20 (5) by adding at the end the following new sub21 section: 

22 ‘‘(c) EVALUATION AND REPORTING OF COMPLI23 ANCE.— 

24 ‘‘(1) IN GENERAL.—Not later than 6 months 

25 after the effective date under section 185 of the 
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1 Federal Housing Finance Reform Act of 2005, the 

2 Director shall establish a manner for evaluating 

3 whether, and the extent to which, the enterprises 

4 have complied with the duty under subsection (a) to 

5 serve underserved markets and for rating the extent 

6 of such compliance. Using such method, the Director 

7 shall, for each year, evaluate such compliance and 

8 rate the performance of each enterprise as to extent 

9 of compliance. The Director shall include such eval10 uation and rating for each enterprise for a year in 

11 the report for that year submitted pursuant to sec12 tion 1319B(a). 

13 ‘‘(2) SEPARATE EVALUATIONS.—In determining 

14 whether an enterprise has complied with the duty re15 ferred to in paragraph (1), the Director shall sepa16 rately evaluate whether the enterprise has complied 

17 with such duty with respect to each of the under18 served markets identified in subsection (a), taking 

19 into consideration— 

20 ‘‘(A) the development of loan products and 

21 more flexible underwriting guidelines; 

22 ‘‘(B) the extent of outreach to qualified 

23 loan sellers in each of such underserved mar24 kets; and 
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1 ‘‘(C) the volume of loans purchased in each 

2 of such underserved markets. 

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

4 determining whether an enterprise has complied with 

5 the duty under subparagraph (A) of subsection 

6 (a)(2), the Director may consider loans secured by 

7 both real and personal property.’’. 

8 (b) ENFORCEMENT.—Subsection (a) of section 1336 

9 of the Housing and Community Development Act of 1992 

10 (12 U.S.C. 4566(a)) is amended— 

11 (1) in paragraph (1), by inserting ‘‘and with 

12 the duty under section 1335A of each enterprise 

13 with respect to underserved markets,’’ before ‘‘as 

14 provided in this section,’’; and 

15 (2) by adding at the end of such subsection, as 

16 amended by the preceding provisions of this title, the 

17 following new paragraph: 

18 ‘‘(4) ENFORCEMENT OF DUTY TO PROVIDE

19 MORTGAGE CREDIT TO UNDERSERVED MARKETS.— 

20 The duty under section 1335(a) of each enterprise 

21 to serve underserved markets (as determined in ac22 cordance with section 1335(c)) shall be enforceable 

23 under this section to the same extent and under the 

24 same provisions that the housing goals established 

25 under sections 1332, 1333, and 1334 are enforce-
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1 able. Such duty shall not be enforceable under any 

2 other provision of this title (including subpart C of 

3 this part) other than this section or under any provi4 sion of the Federal National Mortgage Association 

5 Charter Act or the Federal Home Loan Mortgage 

6 Corporation Act.’’. 

7 SEC. 127. MONITORING AND ENFORCING COMPLIANCE 

8 WITH HOUSING GOALS. 

9 Section 1336 of the Housing and Community Devel10 opment Act of 1992 (12 U.S.C. 4566) is amended— 

11 (1) in subsection (b)— 

12 (A) in the subsection heading, by inserting 

13 ‘‘Preliminary’’ before ‘‘Determination’’; 

14 (B) by striking paragraph (1) and insert15 ing the following new paragraph: 

16 ‘‘(1) NOTICE.—If the Director preliminarily de17 termines that an enterprise has failed, or that there 

18 is a substantial probability that an enterprise will 

19 fail, to meet any housing goal established under this 

20 subpart, the Director shall provide written notice to 

21 the enterprise of such a preliminary determination, 

22 the reasons for such determination, and the informa23 tion on which the Director based the determina24 tion.’’; 

25 (C) in paragraph (2)— 
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1 (i) in subparagraph (A), by inserting 

2 ‘‘finally’’ before ‘‘determining’’; 

3 (ii) by striking subparagraphs (B) and 

4 (C) and inserting the following new sub5 paragraph: 

6 ‘‘(B) EXTENSION OR SHORTENING OF PE7 RIOD.—The Director may— 

8 ‘‘(i) extend the period under subpara9 graph (A) for good cause for not more 

10 than 30 additional days; and 

11 ‘‘(ii) shorten the period under sub12 paragraph (A) for good cause.’’; and 

13 (iii) by redesignating subparagraph 

14 (D) as subparagraph (C); and 

15 (D) in paragraph (3)— 

16 (i) in subparagraph (A), by striking 

17 ‘‘determine’’ and inserting ‘‘issue a final 

18 determination of’’; 

19 (ii) in subparagraph (B), by inserting 

20 ‘‘final’’ before ‘‘determinations’’; and 

21 (iii) in subparagraph (C)— 

22 (I) by striking ‘‘Committee on 

23 Banking, Finance and Urban Affairs’’ 

24 and inserting ‘‘Committee on Finan25 cial Services’’; and 
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1 (II) by inserting ‘‘final’’ before 

2 ‘‘determination’’ each place such term 

3 appears; and 

4 (2) in subsection (c)— 

5 (A) by striking the subsection designation 

6 and heading and all that follows through the 

7 end of paragraph (1) and inserting the fol8 lowing: 

9 ‘‘(c) CEASE AND DESIST ORDERS, CIVIL MONEY

10 PENALTIES, AND REMEDIES INCLUDING HOUSING

11 PLANS.— 

12 ‘‘(1) REQUIREMENT.—If the Director finds, 

13 pursuant to subsection (b), that there is a substan14 tial probability that an enterprise will fail, or has ac15 tually failed, to meet any housing goal under this 

16 subpart and that the achievement of the housing 

17 goal was or is feasible, the Director may require that 

18 the enterprise submit a housing plan under this sub19 section. If the Director makes such a finding and 

20 the enterprise refuses to submit such a plan, sub21 mits an unacceptable plan, fails to comply with the 

22 plan or the Director finds that the enterprise has 

23 failed to meet any housing goal under this subpart, 

24 in addition to requiring an enterprise to submit a 

25 housing plan, the Director may issue a cease and de-
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1 sist order in accordance with section 1341, impose 

2 civil money penalties in accordance with section 

3 1345, or order other remedies as set forth in para4 graph (7) of this subsection.’’; 

5 (B) in paragraph (2)— 

6 (i) by striking ‘‘CONTENTS.—Each 

7 housing plan’’ and inserting ‘‘HOUSING

8 PLAN.—If the Director requires a housing 

9 plan under this section, such a plan’’; and 

10 (ii) in subparagraph (B), by inserting 

11 ‘‘and changes in its operations’’ after ‘‘im12 provements’’; 

13 (C) in paragraph (3)— 

14 (i) by inserting ‘‘comply with any re15 medial action or’’ before ‘‘submit a housing 

16 plan’’; and 

17 (ii) by striking ‘‘under subsection 

18 (b)(3) that a housing plan is required’’; 

19 (D) in paragraph (4), by striking the first 

20 two sentences and inserting the following: ‘‘The 

21 Director shall review each submission by an en22 terprise, including a housing plan submitted 

23 under this subsection, and not later than 30 

24 days after submission, approve or disapprove 

25 the plan or other action. The Director may ex-
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1 tend the period for approval or disapproval for 

2 a single additional 30-day period if the Director 

3 determines such extension necessary.’’; and 

4 (E) by adding at the end the following new 

5 paragraph: 

6 ‘‘(7) ADDITIONAL REMEDIES FOR FAILURE TO

7 MEET GOALS.—In addition to ordering a housing 

8 plan under this section, issuing cease and desist or9 ders under section 1341, and ordering civil money 

10 penalties under section 1345, the Director may seek 

11 other actions when an enterprise fails to meet a 

12 goal, and exercise appropriate enforcement authority 

13 available to the Director under this Act to prohibit 

14 the enterprise from entering into new programs and 

15 new business activities and to order the enterprise to 

16 suspend programs and business activities pending its 

17 achievement of the goal.’’. 

18 SEC. 128. AFFORDABLE HOUSING FUND. 

19 (a) IN GENERAL.—The Housing and Community De20 velopment Act of 1992 is amended by striking sections 

21 1337 and 1338 (12 U.S.C. 4562 note) and inserting the 

22 following new section: 

23 ‘‘SEC. 1337. AFFORDABLE HOUSING FUND. 

24 ‘‘(a) ESTABLISHMENT AND PURPOSE.—Each enter25 prise shall establish and manage an affordable housing 
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1 fund in accordance with this section. The purpose of the 

2 affordable housing fund shall be— 

3 ‘‘(1) to increase homeownership for extremely 

4 low-and very low-income families; 

5 ‘‘(2) to increase investment in housing in low6 income areas, and areas designated as qualified cen7 sus tracts or an area of chronic economic distress 

8 pursuant to section 143(j) of the Internal Revenue 

9 Code of 1986 (26 U.S.C. 143(j)); 

10 ‘‘(3) to increase and preserve the supply of 

11 rental and owner-occupied housing for extremely 

12 low- and very low-income families; 

13 ‘‘(4) to increase investment in public infrastruc14 ture development in connection with housing assisted 

15 under this section; and 

16 ‘‘(5) to leverage investments from other sources 

17 in affordable housing and in public infrastructure 

18 development in connection with housing assisted 

19 under this section. 

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

21 ‘‘(1) IN GENERAL.—In accordance with regula22 tions issued by the Director under subsection (k) 

23 and subject to paragraphs (2) and (3) of this sub24 section and subsection (f)(5), each enterprise shall 
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1 allocate to the affordable housing fund established 

2 under subsection (a) by the enterprise— 

3 ‘‘(A) in the year in which the effective date 

4 under section 185 of the Federal Housing Fi5 nance Reform Act of 2005 occurs, 3.5 percent 

6 of the after-tax income of the enterprise for the 

7 preceding year; 

8 ‘‘(B) in the year after the year referred to 

9 in subparagraph (A), 3.5 percent of the after10 tax income of the enterprise for the preceding 

11 year; and 

12 ‘‘(C) in each of the first three years after 

13 the year referred to in subparagraph (B), 5 per14 cent of the after-tax income of the enterprise 

15 for the preceding year. 

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

17 required to make an allocation for a year to the af18 fordable housing fund of the enterprise established 

19 under subsection (a) unless the enterprise generated 

20 after-tax income for the preceding year. 

21 ‘‘(3) SUSPENSION OF CONTRIBUTIONS.—The 

22 Director shall temporarily suspend the allocation 

23 under paragraph (1) by an enterprise to the afford24 able housing fund of the enterprise upon a finding 

25 by the Director that such allocations— 
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1 ‘‘(A) are contributing, or would contribute, 

2 to the financial instability of the enterprise; 

3 ‘‘(B) are causing, or would cause, the en4 terprise to be classified as undercapitalized; or 

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

6 enterprise from successfully completing a cap7 ital restoration plan under section 1369C. 

8 ‘‘(4) 5-YEAR SUNSET AND REPORT.— 

9 ‘‘(A) SUNSET.—The enterprises shall not 

10 be required to make allocations to the afford11 able housing funds in the 5th year after the 

12 year in which the effective date under section 

13 185 of the Federal Housing Finance Reform 

14 Act of 2005 occurs or in any year thereafter. 

15 ‘‘(B) REPORT ON PROGRAM CONTINU16 ANCE.—Not later 6 months before the end of 

17 the last year in which the allocations are re18 quired under paragraph (1), the Director shall 

19 submit to the Committee on Financial Services 

20 of the House of Representatives and the Com21 mittee on Banking, Housing, and Urban Affairs 

22 of the Senate a report making recommendations 

23 on whether the program under this section, in24 cluding the requirement for the enterprises to 

25 make allocations to the affordable housing 
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1 funds, should be extended and on any modifica2 tions for the program. 

3 ‘‘(5) DETERMINATION OF AFTER-TAX IN4 COME.—For purposes of this section, the term 

5 ‘after-tax income’ means, with respect to an enter6 prise for a year, the amount reported by the enter7 prise for such year in the enterprise’s annual report 

8 for such year that is filed with the Securities and 

9 Exchange Commission, except that for any year in 

10 which no such filing is made by an enterprise or 

11 such filing is not timely made, such term means the 

12 amount determined by the Director based on the in13 come tax return filings of the enterprise. 

14 ‘‘(c) SELECTION OF ACTIVITIES FUNDED USING AF15 FORDABLE HOUSING FUND AMOUNTS.—Amounts from 

16 the affordable housing fund of the enterprise may be used, 

17 or committed for use, only for activities that— 

18 ‘‘(1) are eligible under subsection (d) for such 

19 use; and 

20 ‘‘(2) are selected for funding by the enterprise 

21 in accordance with the process and criteria for such 

22 selection established pursuant to subsection 

23 (k)(2)(C). 
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1 ‘‘(d) ELIGIBLE ACTIVITIES.—Amounts from the af2 fordable housing fund of an enterprise shall be eligible for 

3 use, or for commitment for use, only for assistance for— 

4 ‘‘(1) the production, preservation, and rehabili5 tation of rental housing, including housing under the 

6 programs identified in section 1335(a)(2)(B), except 

7 that amounts provided from the Fund may be used 

8 for the benefit only of extremely low- and very low9 income families; 

10 ‘‘(2) the production, preservation, and rehabili11 tation of housing for homeownership, including such 

12 forms as downpayment assistance, closing cost as13 sistance, and assistance for interest-rate buy-downs, 

14 that— 

15 ‘‘(A) is available for purchase only for use 

16 as a principal residence by families that qualify 

17 both as— 

18 ‘‘(i) extremely low- and very-low in19 come families at the times described in 

20 subparagraphs (A) through (C) of section 

21 215(b)(2) of the Cranston-Gonzalez Na22 tional Affordable Housing Act (42 U.S.C. 

23 12745(b)(2)); and 

24 ‘‘(ii) first-time homebuyers, as such 

25 term is defined in section 104 of the Cran-
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1 ston-Gonzalez National Affordable Housing 

2 Act (42 U.S.C. 12704), except that any 

3 reference in such section to assistance 

4 under title II of such Act shall for pur5 poses of this section be considered to refer 

6 to assistance from the affordable housing 

7 fund of the enterprise; 

8 ‘‘(B) has an initial purchase price that 

9 meets the requirements of section 215(b)(1) of 

10 the Cranston-Gonzalez National Affordable 

11 Housing Act; and 

12 ‘‘(C) is subject to the same resale restric13 tions established under section 215(b)(3) of the 

14 Cranston-Gonzalez National Affordable Hous15 ing Act and applicable to the participating ju16 risdiction that is the State in which such hous17 ing is located; and 

18 ‘‘(3) public infrastructure development activities 

19 in connection with housing activities funded under 

20 paragraph (1) or (2). 

21 ‘‘(e) ELIGIBLE RECIPIENTS.— 

22 ‘‘(1) IN GENERAL.—Amounts from the afford23 able housing fund of an enterprise may be provided 

24 only to a recipient that is an organization, agency, 

25 or other entity (including a for-profit entity, a non-
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1 profit entity, a federally recognized tribe, an Alaskan 

2 Native village, and a faith-based organization) 

3 that— 

4 ‘‘(A) has a demonstrated capacity for car5 rying out activities of the type that are to be 

6 funded with such affordable housing fund 

7 amounts; and 

8 ‘‘(B) makes such assurances to the enter9 prise as the Director shall, by regulation, re10 quire to ensure that the recipient will comply 

11 with the requirements of this section (including, 

12 in the case of any organization, agency, or enti13 ty subject to paragraph (2), all of the require14 ments specified under such paragraph) during 

15 the entire period that begins upon selection of 

16 the recipient to receive amounts from the af17 fordable housing fund of the enterprise and 

18 ending upon the conclusion of all activities 

19 under subsection (d) that are engaged in by the 

20 recipient and funded with such affordable hous21 ing fund amounts; and 

22 ‘‘(C) in the case of any recipient who is not 

23 a for-profit entity or a government agency or 

24 authority, complies with all of the requirements 

25 under paragraph (2). 
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1 ‘‘(2) ADDITIONAL REQUIREMENTS FOR RECIPI2 ENTS OTHER THAN FOR-PROFIT ENTITIES.—The re3 quirements under this paragraph with respect to any 

4 organization, agency, or entity that is not a for-prof5 it entity or a government agency or authority are 

6 that the organization, agency, or entity— 

7 ‘‘(A) shall have as its primary purpose the 

8 provision of affordable housing, as defined by 

9 the Director; 

10 ‘‘(B) shall make such assurances to the en11 terprise as the Director shall, by regulation, re12 quire to ensure that such affordable housing 

13 fund amounts— 

14 ‘‘(i) are used only to supplement, and 

15 to the extent practical, to increase the level 

16 of funds that would, in the absence of 

17 amounts made available from the afford18 able housing fund, be made available from 

19 other sources for the recipient to carry out 

20 activities of the type that are eligible under 

21 subsection (d) for funding with affordable 

22 housing fund amounts; and 

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

24 supplant any funds from other sources 
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1 that are made available for such activities 

2 of the recipient; and 

3 ‘‘(C) does not, at the time during the pe4 riod that begins 12 months before submission 

5 of an application for funding from the afford6 able housing fund of the enterprise and ending 

7 upon the expiration of the period referred to in 

8 paragraph (1)(B)— 

9 ‘‘(i) engage in any Federal election ac10 tivity, as such term is defined in paragraph 

11 (20) of section 301 of the Federal Election 

12 Campaign Act of 1971 (2 U.S.C. 431(20)), 

13 except that, notwithstanding the 120-day 

14 limitation in subparagraph (A)(i) of such 

15 paragraph, such term shall include voter 

16 registration activity during any period; 

17 ‘‘(ii) make any expenditure for any 

18 electioneering communication (as such 

19 term is defined in section 304(f)(3) of the 

20 Federal Election Campaign Act of 1971 (2 

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

22 ‘‘(iii) make any lobbying expenditure, 

23 (as such term is defined in such section 

24 501(h)(2)), except that this clause shall 

25 not apply to any such expenditure by an 
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1 organization described in section 501(c)(3) 

2 of the Internal Revenue Code of 1986 that 

3 is exempt from taxation under subsection 

4 (a) of such section 501, to the extent that 

5 such expenditure does not exceed the 

6 amount under such Code for which such 

7 exemption may be denied; or 

8 ‘‘(iv) maintain any affiliation with any 

9 organization, agency, or other entity that 

10 does not comply with clauses (i), (ii), and 

11 (iii) of this subparagraph. 

12 ‘‘(3) AFFILIATION.— 

13 ‘‘(A) IN GENERAL.—A recipient organiza14 tion, agency, or entity shall be considered to be 

15 affiliated with another entity, for purposes of 

16 paragraph (2), if such recipient entity controls, 

17 is controlled by, or is under common control 

18 with such other entity. 

19 ‘‘(B) CONTROL.—The existence of any of 

20 the following relationships between a recipient 

21 entity and another entity shall indicate that 

22 control exists for purposes of subparagraph (A): 

23 ‘‘(i) OVERLAPPING BOARD MEMBER24 SHIP.—Individuals serve in a similar ca25 pacity as officers, executives, or staff of 
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1 both the recipient entity and the other en2 tity. 

3 ‘‘(ii) SHARED RESOURCES.—The re4 cipient entity and the other entity share of5 fice space, staff members, supplies, re6 sources, or marketing materials, including 

7 Internet and other forms of public commu8 nication. 

9 ‘‘(iii) FUNDING.—The recipient entity 

10 receives more than 20 percent of its total 

11 funding from such other entity or provides 

12 more than 20 percent of the total funding 

13 of such other entity. 

14 ‘‘(iv) OTHER.—The recipient entity or 

15 such other entity exhibits any other indicia 

16 of substantial overlap or common control 

17 as may be set forth in regulation by the 

18 Director. 

19 ‘‘(4) FOR PROFIT.—For purposes of this sub20 section, the term ‘for-profit entity’ means any entity 

21 any part of the net earnings of which inure to the 

22 benefit of any private shareholder, member, founder, 

23 contributor, or individual. 

24 ‘‘(f) LIMITATIONS ON USE.— 
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1 ‘‘(1) REQUIRED AMOUNT FOR REFCORP.—Of 

2 any amounts allocated pursuant to subsection (b) in 

3 each year to the affordable housing fund of an enter4 prise, 25 percent shall be used as provided in section 

5 21B(f)(2)(E) of the Federal Home Loan Bank Act 

6 (12 U.S.C. 1441b(f)(2)(E)). 

7 ‘‘(2) REQUIRED AMOUNT FOR HOMEOWNERSHIP

8 ACTIVITIES.—Of any amounts allocated pursuant to 

9 subsection (b) in each year to the affordable housing 

10 fund of an enterprise, not less than 10 percent shall 

11 be used for activities under paragraph (2) of sub12 section (d). 

13 ‘‘(3) MAXIMUM AMOUNT FOR PUBLIC INFRA14 STRUCTURE DEVELOPMENT ACTIVITIES IN CONNEC15 TION WITH AFFORDABLE HOUSING ACTIVITIES.—Of 

16 any amounts allocated pursuant to subsection (b) in 

17 each year to the affordable housing fund of an enter18 prise, not more than 12.5 percent may be used for 

19 activities under paragraph (3) of subsection (d). 

20 ‘‘(4) DEADLINE FOR COMMITMENT OR USE.— 

21 Any amounts allocated to the affordable housing 

22 fund of an enterprise shall be used or committed for 

23 use within two years of the date of such allocation. 

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

25 regulation— 
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1 ‘‘(A) provide that any return on a loan or 

2 other investment of any amounts allocated pur3 suant to subsection (b) to the affordable hous4 ing fund of an enterprise shall count against 

5 the allocation required under subsection (b) to 

6 be made by the enterprise for the year following 

7 such return; and 

8 ‘‘(B) establish such limitations as may be 

9 necessary to ensure that the amount or likeli10 hood of return is not the primary consideration 

11 of awarding of allocated amounts to recipients. 

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

13 ‘‘(A) by regulation, set forth prohibited 

14 uses of amounts from the affordable housing 

15 funds of the enterprises, which shall include use 

16 for— 

17 ‘‘(i) political activities; 

18 ‘‘(ii) advocacy; 

19 ‘‘(iii) lobbying, whether directly or 

20 through other parties; 

21 ‘‘(iv) counseling services; 

22 ‘‘(v) travel expenses; and 

23 ‘‘(vi) preparing or providing advice on 

24 tax returns; 
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1 ‘‘(B) by regulation, provide that, except as 

2 provided in subparagraph (C), amounts allo3 cated to the affordable housing fund of an en4 terprise may not be used for administrative, 

5 outreach, or other costs of— 

6 ‘‘(i) the enterprise; or 

7 ‘‘(ii) any recipient of amounts from 

8 the affordable housing fund; and 

9 ‘‘(C) by regulation, limit the amount of 

10 any such contributions that may be used for ad11 ministrative costs of the enterprise of maintain12 ing the affordable housing fund and carrying 

13 out the program under this section. 

14 ‘‘(7) PROHIBITION OF CONSIDERATION OF USE

15 FOR MEETING HOUSING GOALS.—In determining 

16 compliance with the housing goals under this sub17 part, the Director may not consider amounts used 

18 under this section for eligible activities under sub19 section (d). The Director shall give credit toward the 

20 achievement of such housing goals to purchases of 

21 mortgages for housing that receives funding under 

22 this section, but only to the extent that such pur23 chases are funded other than under this section. 

24 ‘‘(8) PROHIBITION ON CERTAIN REDISTRIBU25 TION OF AMOUNTS.—The Director shall, by regula-
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1 tion, ensure that amounts from the affordable hous2 ing fund of an enterprise awarded under this section 

3 to a national nonprofit housing intermediary are not 

4 redistributed to other nonprofit entities. 

5 ‘‘(g) ACCOUNTABILITY OF RECIPIENTS AND ENTER6 PRISES.— 

7 ‘‘(1) RECIPIENTS.— 

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

9 shall— 

10 ‘‘(i) require each enterprise to develop 

11 and maintain a system to ensure that each 

12 recipient of amounts from the affordable 

13 housing fund of the enterprise uses such 

14 amounts in accordance with this section, 

15 the regulations issued under this section, 

16 and any requirements or conditions under 

17 which such amounts were provided; and 

18 ‘‘(ii) establish minimum requirements 

19 for agreements, between the enterprises 

20 and recipients, regarding grants from the 

21 affordable housing funds of the enter22 prises, which shall include— 

23 ‘‘(I) appropriate continuing fi24 nancial and project reporting, record 

25 retention, and audit requirements for 
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1 the duration of the grant to ensure 

2 compliance with the limitations and 

3 requirements of this section and the 

4 regulation under this section; and 

5 ‘‘(II) any other requirements that 

6 the Director determines are necessary 

7 to ensure appropriate grant adminis8 tration and compliance. 

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

10 determines that any recipient of amounts from 

11 the affordable housing fund of the enterprise 

12 has used any such amounts in a manner that 

13 is materially in violation of this section, the reg14 ulations issued under this section, or any re15 quirements or conditions under which such 

16 amounts were provided— 

17 ‘‘(i) the enterprise shall notify the Di18 rector of such misuse of amounts and the 

19 actions taken under this subparagraph 

20 with respect to the recipient; 

21 ‘‘(ii) such recipient shall be ineligible 

22 in perpetuity to receive of any further 

23 amounts from the affordable housing fund 

24 of such enterprise; and 
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1 ‘‘(iii) the enterprise shall require the 

2 recipient to reimburse the enterprise for 

3 such misused amounts and return to the 

4 enterprise any amounts from the afford5 able housing fund of the enterprise that re6 main unused or uncommitted for use. 

7 The remedies under this subparagraph are in 

8 addition to any other remedies that may be 

9 available under law. 

10 ‘‘(2) ENTERPRISES.— 

11 ‘‘(A) QUARTERLY REPORTS.—The Director 

12 shall require each enterprise to submit a report, 

13 on a quarterly basis, to the Director and the af14 fordable housing board established under sub15 section (j) describing the activities funded 

16 under this section during such quarter with 

17 amounts from the affordable housing fund of 

18 the enterprise established under this section. 

19 The Director shall make such reports publicly 

20 available. The affordable housing board shall 

21 review each report by an enterprise to deter22 mine the consistency of such activities funded 

23 with the criteria for selection of such activities 

24 established pursuant to subsection (k)(2)(C). 
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1 ‘‘(B) REPLENISHMENT.—If the Director 

2 determines that an activity funded by an enter3 prise with amounts from the affordable housing 

4 fund of the enterprise is not consistent with the 

5 criteria established pursuant to subsection 

6 (k)(2)(C), the Director shall require the enter7 prise to allocate to such affordable housing 

8 fund (in addition to amounts allocated in com9 pliance with subsection (b)) an amount equal to 

10 the sum of the amounts from the affordable 

11 housing fund used and further committed for 

12 use for such activity. 

13 ‘‘(h) CAPITAL REQUIREMENTS.—The utilization or 

14 commitment of amounts from the affordable housing fund 

15 of an enterprise shall not be subject to the risk-based cap16 ital requirements established pursuant to section 1361(a). 

17 ‘‘(i) REPORTING REQUIREMENT.—Each enterprise 

18 shall include, in the report required under section 309(m) 

19 of the Federal National Mortgage Association Charter Act 

20 or section 307(f) of the Federal Home Loan Mortgage 

21 Corporation Act, as applicable, a description of the actions 

22 taken by the enterprise to utilize or commit amounts allo23 cated under this section to the affordable housing fund 

24 of the enterprise established under this section. 

25 ‘‘(j) AFFORDABLE HOUSING BOARD.— 
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1 ‘‘(1) APPOINTMENT.—The Director shall ap2 point an affordable housing board of 7, 9, or 11 per3 sons, who shall include— 

4 ‘‘(A) the Director, or the Director’s des5 ignee; 

6 ‘‘(B) the Secretary of Housing and Urban 

7 Development, or the Secretary’s designee; 

8 ‘‘(C) the Secretary of Agriculture, or the 

9 Secretary’s designee; 

10 ‘‘(D) 2 persons from for-profit organiza11 tions or businesses actively involved in pro12 viding or promoting affordable housing for ex13 tremely low- and very low-income households; 

14 and 

15 ‘‘(E) 2 persons from nonprofit organiza16 tions actively involved in providing or promoting 

17 affordable housing for extremely low- and very 

18 low-income households. 

19 ‘‘(2) TERMS.— 

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

21 subparagraph (B), the term of each member of 

22 the affordable housing board appointed pursu23 ant to paragraph (1) (but not including mem24 bers appointed pursuant to subparagraphs (A), 

25 (B), and (C)) shall be 3 years. 
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HR 1461 RFS 

1 ‘‘(B) INITIAL APPOINTEES.—The Director 

2 shall appoint the initial members of the afford3 able housing board not later than the expiration 

4 of the 60-day period beginning on the effective 

5 date under section 185 of the Federal Housing 

6 Finance Reform Act of 2005. As designated by 

7 the Director at the time of appointment, of the 

8 members of the affordable housing board first 

9 appointed pursuant to paragraph (1) (but not 

10 including members appointed pursuant to sub11 paragraphs (A), (B), and (C))— 

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

13 members— 

14 ‘‘(I) one shall be appointed for a 

15 term of one year; and 

16 ‘‘(II) one shall be appointed for a 

17 term of two years; 

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

19 members— 

20 ‘‘(I) two shall be appointed for a 

21 term of one year; and 

22 ‘‘(II) two shall be appointed for a 

23 term of two years; and 

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

25 members— 
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1 ‘‘(I) two shall be appointed for a 

2 term of one year; and 

3 ‘‘(II) three shall be appointed for 

4 a term of two years; 

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

6 housing board shall be— 

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

8 low-income housing needs; 

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

10 to— 

11 ‘‘(i) establishment of the selection cri12 teria under subsection (k)(2)(C) that pro13 vide for appropriate use of amounts from 

14 the affordable housing funds of the enter15 prises to meet such needs; and 

16 ‘‘(ii) operation of, and changes to, the 

17 program under this section appropriate to 

18 meet such needs; and 

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

20 the enterprises pursuant to subsection (g)(1) to 

21 determine whether the activities funded using 

22 amounts from the affordable housing funds of 

23 the enterprises comply with the regulations 

24 issued pursuant to subsection (k)(2)(C) and in-
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HR 1461 RFS 

1 form the Director of such determinations, for 

2 purposes of subsection (g)(2). 

3 ‘‘(4) MEETINGS.—The board shall meet not less 

4 than quarterly, except that during the 2-year period 

5 referred to in paragraph (7), the board shall meet 

6 only as the Director determines necessary. 

7 ‘‘(5) EXPENSES AND PER DIEM.—Members of 

8 the board shall receive travel expenses, including per 

9 diem in lieu of subsistence, in accordance with sec10 tions 5702 and 5703 of title 5, United States Code. 

11 ‘‘(6) ADVISORY COMMITTEE.—The board shall 

12 be considered an advisory committee for purposes of 

13 the Federal Advisory Committee Act (5 U.S.C. 

14 App.). 

15 ‘‘(7) TERMINATION.— The board shall termi16 nate upon the expiration of the 2-year period that 

17 begins upon the conclusion of the last year referred 

18 to in subsection (b)(1)(C). 

19 ‘‘(k) REGULATIONS.— 

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

21 regulations to carry out this section. 

22 ‘‘(2) REQUIRED CONTENTS.—The regulations 

23 issued under this subsection shall include— 

24 ‘‘(A) authority for the Director to audit, 

25 provide for an audit, or otherwise verify an en-
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1 terprise’s activities, to ensure compliance with 

2 this section; 

3 ‘‘(B) a requirement that the Director en4 sure that the affordable housing fund of each 

5 enterprise is audited not less than annually to 

6 ensure compliance with this section; 

7 ‘‘(C) requirements for a process for appli8 cation to, and selection by, an enterprise for ac9 tivities to be funded with amounts from the af10 fordable housing fund, which shall provide 

11 that— 

12 ‘‘(i) selection shall be based upon spe13 cific criteria, which shall provide that— 

14 ‘‘(I) in any selection of activities 

15 occurring during the 2-year period be16 ginning on the effective date under 

17 section 185 of the Federal Housing 

18 Finance Reform Act of 2005, addi19 tional weight shall be given to applica20 tions for eligible activities under sub21 section (d) that— 

22 ‘‘(aa) are to be carried out 

23 in any area that was declared by 

24 the President as a major disaster 

25 area pursuant to the Robert T. 
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HR 1461 RFS 

1 Stafford Disaster Relief and 

2 Emergency Assistance Act as re3 sult of Hurricane Katrina or 

4 Hurricane Rita in 2005; or 

5 ‘‘(bb) the enterprise deter6 mines, in accordance with regula7 tions issued by the Director, 

8 serve persons significantly af9 fected by the occurrence of Hur10 ricane Katrina or Hurricane Rita 

11 in 2005 (including persons dis12 placed as a result of such hurri13 canes and persons whose afford14 able housing opportunities are 

15 significantly affected by the pres16 ence of persons displaced as a re17 sult of such hurricanes); and 

18 ‘‘(II) taking into consideration 

19 any additional weight afforded appli20 cations pursuant to subclause (I), pri21 ority in funding shall be based upon— 

22 ‘‘(aa) whether activities are 

23 to be carried out in any area 

24 that, not more than 2 years be25 fore such selection, was declared 
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1 by the President as a major dis2 aster area pursuant to the Rob3 ert T. Stafford Disaster Relief 

4 and Emergency Assistance Act; 

5 ‘‘(bb) greatest impact; 

6 ‘‘(cc) geographic diversity; 

7 ‘‘(dd) ability to obligate 

8 amounts and undertake activities 

9 so funded in a timely manner; 

10 ‘‘(ee) in the case of rental 

11 housing projects under subsection 

12 (d)(1), the extent to which rents 

13 for units in the project funded 

14 are affordable, especially for ex15 tremely low-income families; and 

16 ‘‘(ff) in the case of rental 

17 housing projects under subsection 

18 (d)(1), the extent of the duration 

19 for which such rents will remain 

20 affordable; and 

21 ‘‘(ii) an enterprise may not require for 

22 such selection that an activity involve fi23 nancing or underwriting of any kind by the 

24 enterprise (other than funding through the 

25 affordable housing fund of the enterprise) 
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1 and may not give preference in such selec2 tion to activities that involve such financ3 ing; 

4 ‘‘(D) requirements to ensure that amounts 

5 from the affordable housing funds of the enter6 prises used for rental housing under subsection 

7 (d)(1) are used only for the benefit of extremely 

8 low- and very-low income families; and 

9 ‘‘(E) limitations on public infrastructure 

10 development activities that are eligible pursuant 

11 to subsection (d)(3) for funding with amounts 

12 from the affordable housing funds of the enter13 prises and requirements for the connection be14 tween such activities and housing activities 

15 funded under paragraph (1) or (2) of sub16 section (d). 

17 ‘‘(l) ENFORCEMENT.—Compliance by the enterprises 

18 with the requirements under this section shall be enforce19 able under subpart C. Any reference in such subpart to 

20 this part or to an order, rule, or regulation under this part 

21 specifically includes this section and any order, rule, or 

22 regulation under this section.’’. 

23 (b) CONTRIBUTIONS FOR TRANSITION PERIOD.— 

24 (1) RESERVATION AND CONTRIBUTION; PROHI25 BITION OF DOUBLE CONTRIBUTIONS.—If the date of 
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1 the enactment of this Act does not occur in the same 

2 calendar year as the effective date under section 185 

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

4 in section 1303 of the Housing and Community De5 velopment Act of 1992) shall, in the year that such 

6 date of enactment occurs, reserve for contribution to 

7 the affordable housing fund to be established by the 

8 enterprise pursuant to section 1337 of such Act (as 

9 amended by subsection (a) of this section) an 

10 amount equal to 3.5 percent of the after-tax income 

11 of the enterprise for the preceding year. Upon the 

12 establishment of such affordable housing fund, each 

13 enterprise shall allocate to such fund the amounts 

14 reserved under this paragraph by the enterprise. 

15 (2) EXCEPTION TO DEADLINE FOR COMMIT16 MENT.—Section 1337(f)(4) of the Housing and 

17 Community Development Act of 1992 (as amended 

18 by subsection (a) of this section) shall not apply to 

19 any amounts allocated to the affordable housing 

20 fund of an enterprise pursuant to paragraph (1) of 

21 this subsection. 

22 (3) AFTER-TAX INCOME.—For purposes of this 

23 subsection, the term ‘‘after-tax income’’ has the 

24 meaning provided in subsection (b)(5) of the new 
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HR 1461 RFS 

1 section 1337 to be inserted by the amendment made 

2 by subsection (a) of this section. 

3 (4) EFFECTIVE DATE.—This subsection shall 

4 take effect on the date of the enactment of this Act. 

5 (c) REFCORP PAYMENTS.—Section 21B(f)(2) of 

6 the Federal Home Loan Bank Act (12 U.S.C. 

7 1441b(f)(2)) is amended— 

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

9 and inserting ‘‘(D), and (E)’’; 

10 (2) by redesignating subparagraph (E) as sub11 paragraph (F); and 

12 (3) by inserting after subparagraph (D) the fol13 lowing new subparagraph: 

14 ‘‘(E) PAYMENTS BY FANNIE MAE AND

15 FREDDIE MAC.—To the extent that the 

16 amounts available pursuant to subparagraphs 

17 (A), (B), (C), and (D) are insufficient to cover 

18 the amount of interest payments, each enter19 prise (as such term is defined in section 1303 

20 of the Housing and Community Development 

21 Act of 1992 (42 U.S.C. 4502)) shall transfer to 

22 the Funding Corporation in each calendar year 

23 the amounts allocated for use under this sub24 paragraph pursuant to section 1337(f)(1) of 

25 such Act.’’. 
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1 SEC. 129. CONSISTENCY WITH MISSION. 

2 Subpart B of part 2 of subtitle A of title XIII of the 

3 Housing and Community Development Act of 1992 (12 

4 U.S.C. 4561 et seq.) is amended by adding after section 

5 1337, as added by section 127 of this Act, the following 

6 new section: 

7 ‘‘SEC. 1338. CONSISTENCY WITH MISSION. 

8 ‘‘This subpart may not be construed to authorize an 

9 enterprise to engage in any program or activity that con10 travenes or is inconsistent with the Federal National 

11 Mortgage Association Charter Act or the Federal Home 

12 Loan Mortgage Corporation Act.’’. 

13 SEC. 130. ENFORCEMENT. 

14 (a) CEASE-AND-DESIST PROCEEDINGS.—Section 

15 1341 of the Housing and Community Development Act 

16 of 1992 (12 U.S.C. 4581) is amended— 

17 (1) by striking subsection (a) and inserting the 

18 following new subsection: 

19 ‘‘(a) GROUNDS FOR ISSUANCE.—The Director may 

20 issue and serve a notice of charges under this section upon 

21 an enterprise if the Director determines— 

22 ‘‘(1) the enterprise has failed to meet any hous23 ing goal established under subpart B, following a 

24 written notice and determination of such failure in 

25 accordance with section 1336; 
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1 ‘‘(2) the enterprise has failed to submit a report 

2 under section 1314, following a notice of such fail3 ure, an opportunity for comment by the enterprise, 

4 and a final determination by the Director; 

5 ‘‘(3) the enterprise has failed to submit the in6 formation required under subsection (m) or (n) of 

7 section 309 of the Federal National Mortgage Asso8 ciation Charter Act, or subsection (e) or (f) of sec9 tion 307 of the Federal Home Loan Mortgage Cor10 poration Act; 

11 ‘‘(4) the enterprise has violated any provision of 

12 this part or any order, rule or regulation under this 

13 part; 

14 ‘‘(5) the enterprise has failed to submit a hous15 ing plan that complies with section 1336(c) within 

16 the applicable period; or 

17 ‘‘(6) the enterprise has failed to comply with a 

18 housing plan under section 1336(c).’’; 

19 (2) in subsection (b)(2), by striking ‘‘requiring 

20 the enterprise to’’ and all that follows through the 

21 end of the paragraph and inserting the following: 

22 ‘‘requiring the enterprise to— 

23 ‘‘(A) comply with the goal or goals; 

24 ‘‘(B) submit a report under section 1314; 
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1 ‘‘(C) comply with any provision this part 

2 or any order, rule or regulation under such 

3 part; 

4 ‘‘(D) submit a housing plan in compliance 

5 with section 1336(c); 

6 ‘‘(E) comply with a housing plan submitted 

7 under section 1336(c); or 

8 ‘‘(F) provide the information required 

9 under subsection (m) or (n) of section 309 of 

10 the Federal National Mortgage Association 

11 Charter Act or subsection (e) or (f) of section 

12 307 of the Federal Home Loan Mortgage Cor13 poration Act, as applicable.’’; 

14 (3) in subsection (c), by inserting ‘‘date of the’’ 

15 before ‘‘service of the order’’; and 

16 (4) by striking subsection (d). 

17 (b) AUTHORITY OF DIRECTOR TO ENFORCE NOTICES

18 AND ORDERS.—Section 1344 of the Housing and Commu19 nity Development Act of 1992 (12 U.S.C. 4584) is amend20 ed by striking subsection (a) and inserting the following 

21 new subsection: 

22 ‘‘(a) ENFORCEMENT.—The Director may, in the dis23 cretion of the Director, apply to the United States District 

24 Court for the District of Columbia, or the United States 

25 district court within the jurisdiction of which the head-
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1 quarters of the enterprise is located, for the enforcement 

2 of any effective and outstanding notice or order issued 

3 under section 1341 or 1345, or request that the Attorney 

4 General of the United States bring such an action. Such 

5 court shall have jurisdiction and power to order and re6 quire compliance with such notice or order.’’. 

7 (c) CIVIL MONEY PENALTIES.—Section 1345 of the 

8 Housing and Community Development Act of 1992 (12 

9 U.S.C. 4585) is amended— 

10 (1) by striking subsections (a) and (b) and in11 serting the following new subsections: 

12 ‘‘(a) AUTHORITY.—The Director may impose a civil 

13 money penalty, in accordance with the provisions of this 

14 section, on any enterprise that has failed to— 

15 ‘‘(1) meet any housing goal established under 

16 subpart B, following a written notice and determina17 tion of such failure in accordance with section 

18 1336(b); 

19 ‘‘(2) submit a report under section 1314, fol20 lowing a notice of such failure, an opportunity for 

21 comment by the enterprise, and a final determina22 tion by the Director; 

23 ‘‘(3) submit the information required under 

24 subsection (m) or (n) of section 309 of the Federal 

25 National Mortgage Association Charter Act, or sub-
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1 section (e) or (f) of section 307 of the Federal Home 

2 Loan Mortgage Corporation Act; 

3 ‘‘(4) comply with any provision of this part or 

4 any order, rule or regulation under this part; 

5 ‘‘(5) submit a housing plan pursuant to section 

6 1336(c) within the required period; or 

7 ‘‘(6) comply with a housing plan for the enter8 prise under section 1336(c). 

9 ‘‘(b) AMOUNT OF PENALTY.—The amount of the 

10 penalty, as determined by the Director, may not exceed— 

11 ‘‘(1) for any failure described in paragraph (1), 

12 (5), or (6) of subsection (a), $50,000 for each day 

13 that the failure occurs; and 

14 ‘‘(2) for any failure described in paragraph (2), 

15 (3), or (4) of subsection (a), $20,000 for each day 

16 that the failure occurs.’’; 

17 (2) in subsection (c)— 

18 (A) in paragraph (1)— 

19 (i) in subparagraph (A), by inserting 

20 ‘‘and’’ after the semicolon at the end; 

21 (ii) in subparagraph (B), by striking 

22 ‘‘; and’’ and inserting a period; and 

23 (iii) by striking subparagraph (C); 

24 and 
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1 (B) in paragraph (2), by inserting after 

2 the period at the end the following: ‘‘In deter3 mining the penalty under subsection (a)(1), the 

4 Director shall give consideration to the length 

5 of time the enterprise should reasonably take to 

6 achieve the goal.’’; 

7 (3) in the first sentence of subsection (d)— 

8 (A) by striking ‘‘request the Attorney Gen9 eral of the United States to’’ and inserting ‘‘, 

10 in the discretion of the Director,’’; and 

11 (B) by inserting ‘‘, or request that the At12 torney General of the United States bring such 

13 an action’’ before the period at the end; 

14 (4) by striking subsection (f); and 

15 (5) by redesignating subsection (g) as sub16 section (f). 

17 (d) ENFORCEMENT OF SUBPOENAS.—Section 

18 1348(c) of the Housing and Community Development Act 

19 of 1992 (12 U.S.C. 4588(c)) is amended— 

20 (1) by striking ‘‘request the Attorney General 

21 of the United States to’’ and inserting ‘‘, in the dis22 cretion of the Director,’’; and 

23 (2) by inserting ‘‘or request that the Attorney 

24 General of the United States bring such an action,’’ 

25 after ‘‘District of Columbia,’’ 
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1 (e) CONFORMING AMENDMENT.—The heading for 

2 subpart C of part 2 of subtitle A of the Housing and Com3 munity Development Act of 1992 is amended to read as 

4 follows: 

5 ‘‘Subpart C—Enforcement’’. 

6 SEC. 131. CONFORMING AMENDMENTS. 

7 Part 2 of subtitle A of title XIII of the Housing and 

8 Community Development Act of 1992 (12 U.S.C. 4541 et 

9 seq.) is amended— 

10 (1) by striking ‘‘Secretary’’ each place such 

11 term appears in such part and inserting ‘‘Director’’; 

12 (2) in the section heading for section 1323 (12 

13 U.S.C. 4543), by inserting ‘‘OF ENTERPRISES’’ be14 fore the period at the end; 

15 (3) by striking section 1327 (12 U.S.C. 4547); 

16 (4) by striking section 1328 (12 U.S.C. 4548); 

17 (5) in sections 1345(c)(1)(A) and 1346(b) (12 

18 U.S.C. 4585(c)(1)(A), 4586(b)), by striking ‘‘Sec19 retary’s’’ each place such term appears and inserting 

20 ‘‘Director’s’’; and 

21 (6) by striking section 1349 (12 U.S.C. 4589). 
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1 Subtitle C—Prompt Corrective 

2 Action 

3 SEC. 141. CAPITAL CLASSIFICATIONS. 

4 (a) IN GENERAL.—Section 1364 of the Housing and 

5 Community Development Act of 1992 (12 U.S.C. 4614) 

6 is amended— 

7 (1) in the heading for subsection (a) by striking 

8 ‘‘In General’’ and inserting ‘‘Enterprises’’; 

9 (2) in subsection (c)— 

10 (A) by striking ‘‘subsection (b)’’ and in11 serting ‘‘subsection (c)’’; 

12 (B) by striking ‘‘enterprises’’ and inserting 

13 ‘‘regulated entities’’; and 

14 (C) by striking the last sentence; 

15 (3) by redesignating subsections (c) (as so 

16 amended by paragraph (2) of this subsection) and 

17 (d) as subsections (d) and (f), respectively; 

18 (4) by striking subsection (b) and inserting the 

19 following new subsections: 

20 ‘‘(b) FEDERAL HOME LOAN BANKS.— 

21 ‘‘(1) ESTABLISHMENT AND CRITERIA.—For 

22 purposes of this subtitle, the Director shall, by regu23 lation— 
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1 ‘‘(A) establish the capital classifications 

2 specified under paragraph (2) for the Federal 

3 home loan banks; 

4 ‘‘(B) establish criteria for each such cap5 ital classification based on the amount and 

6 types of capital held by a bank and the risk7 based, minimum, and critical capital levels for 

8 the banks and taking due consideration of the 

9 capital classifications established under sub10 section (a) for the enterprises, with such modi11 fications as the Director determines to be ap12 propriate to reflect the difference in operations 

13 between the banks and the enterprises; and 

14 ‘‘(C) shall classify the Federal home loan 

15 banks according to such capital classifications. 

16 ‘‘(2) CLASSIFICATIONS.—The capital classifica17 tions specified under this paragraph are— 

18 ‘‘(A) adequately capitalized; 

19 ‘‘(B) undercapitalized; 

20 ‘‘(C) significantly undercapitalized; and 

21 ‘‘(D) critically undercapitalized. 

22 ‘‘(c) DISCRETIONARY CLASSIFICATION.— 

23 ‘‘(1) GROUNDS FOR RECLASSIFICATION.—The 

24 Director may reclassify a regulated entity under 

25 paragraph (2) if— 
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1 ‘‘(A) at any time, the Director determines 

2 in writing that the regulated entity is engaging 

3 in conduct that could result in a rapid depletion 

4 of core or total capital or, in the case of an en5 terprise, that the value of the property subject 

6 to mortgages held or securitized by the enter7 prise has decreased significantly; 

8 ‘‘(B) after notice and an opportunity for 

9 hearing, the Director determines that the regu10 lated entity is in an unsafe or unsound condi11 tion; or 

12 ‘‘(C) pursuant to section 1371(b), the Di13 rector deems the regulated entity to be engag14 ing in an unsafe or unsound practice. 

15 ‘‘(2) RECLASSIFICATION.—In addition to any 

16 other action authorized under this title, including 

17 the reclassification of a regulated entity for any rea18 son not specified in this subsection, if the Director 

19 takes any action described in paragraph (1) the Di20 rector may classify a regulated entity— 

21 ‘‘(A) as undercapitalized, if the regulated 

22 entity is otherwise classified as adequately cap23 italized; 
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1 ‘‘(B) as significantly undercapitalized, if 

2 the regulated entity is otherwise classified as 

3 undercapitalized; and 

4 ‘‘(C) as critically undercapitalized, if the 

5 regulated entity is otherwise classified as sig6 nificantly undercapitalized.’’; and 

7 (5) by inserting after subsection (d) (as so re8 designated by paragraph (3) of this subsection), the 

9 following new subsection: 

10 ‘‘(e) RESTRICTION ON CAPITAL DISTRIBUTIONS.— 

11 ‘‘(1) IN GENERAL.—A regulated entity shall 

12 make no capital distribution if, after making the dis13 tribution, the regulated entity would be under14 capitalized. 

15 ‘‘(2) EXCEPTION.—Notwithstanding paragraph 

16 (1), the Director may permit a regulated entity, to 

17 the extent appropriate or applicable, to repurchase, 

18 redeem, retire, or otherwise acquire shares or owner19 ship interests if the repurchase, redemption, retire20 ment, or other acquisition— 

21 ‘‘(A) is made in connection with the 

22 issuance of additional shares or obligations of 

23 the regulated entity in at least an equivalent 

24 amount; and 
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1 ‘‘(B) will reduce the financial obligations of 

2 the regulated entity or otherwise improve the fi3 nancial condition of the entity.’’. 

4 (b) REGULATIONS.—Not later than the expiration of 

5 the 180-day period beginning on the effective date under 

6 section 185, the Director of the Federal Housing Finance 

7 Agency shall issue regulations to carry out section 1364(b) 

8 of the Housing and Community Development Act of 1992 

9 (as added by paragraph (4) of this subsection), relating 

10 to capital classifications for the Federal home loan banks. 

11 SEC. 142. SUPERVISORY ACTIONS APPLICABLE TO UNDER12 CAPITALIZED REGULATED ENTITIES. 

13 Section 1365 of the Housing and Community Devel14 opment Act of 1992 (12 U.S.C. 4615) is amended— 

15 (1) in the section heading, by striking ‘‘ENTER16 PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 

17 (2) in subsection (a)— 

18 (A) by redesignating paragraphs (1) and 

19 (2) as paragraphs (2) and (3), respectively; 

20 (B) by inserting before paragraph (2) the 

21 following paragraph: 

22 ‘‘(1) REQUIRED MONITORING.—The Director 

23 shall— 
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1 ‘‘(A) closely monitor the condition of any 

2 regulated entity that is classified as under3 capitalized; 

4 ‘‘(B) closely monitor compliance with the 

5 capital restoration plan, restrictions, and re6 quirements imposed under this section; and 

7 ‘‘(C) periodically review the plan, restric8 tions, and requirements applicable to the under9 capitalized regulated entity to determine wheth10 er the plan, restrictions, and requirements are 

11 achieving the purpose of this section.’’; and 

12 (C) by inserting at the end the following 

13 new paragraphs: 

14 ‘‘(4) RESTRICTION OF ASSET GROWTH.—A reg15 ulated entity that is classified as undercapitalized 

16 shall not permit its average total assets (as such 

17 term is defined in section 1316(b) during any cal18 endar quarter to exceed its average total assets dur19 ing the preceding calendar quarter unless— 

20 ‘‘(A) the Director has accepted the capital 

21 restoration plan of the regulated entity; 

22 ‘‘(B) any increase in total assets is con23 sistent with the plan; and 

24 ‘‘(C) the ratio of total capital to assets for 

25 the regulated entity increases during the cal-
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1 endar quarter at a rate sufficient to enable the 

2 entity to become adequately capitalized within a 

3 reasonable time. 

4 ‘‘(5) PRIOR APPROVAL OF ACQUISITIONS, NEW

5 PROGRAMS, AND NEW BUSINESS ACTIVITIES.—A reg6 ulated entity that is classified as undercapitalized 

7 shall not, directly or indirectly, acquire any interest 

8 in any entity or engage in any new program or new 

9 business activity unless— 

10 ‘‘(A) the Director has accepted the capital 

11 restoration plan of the regulated entity, the en12 tity is implementing the plan, and the Director 

13 determines that the proposed action is con14 sistent with and will further the achievement of 

15 the plan; or 

16 ‘‘(B) the Director determines that the pro17 posed action will further the purpose of this 

18 section.’’; 

19 (3) in the subsection heading for subsection (b), 

20 by striking ‘‘FROM UNDERCAPITALIZED TO SIGNIFI21 CANTLY UNDERCAPITALIZED’’; and 

22 (4) by striking subsection (c) and inserting the 

23 following new subsection: 

24 ‘‘(c) OTHER DISCRETIONARY SAFEGUARDS.—The 

25 Director may take, with respect to a regulated entity that 
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1 is classified as undercapitalized, any of the actions author2 ized to be taken under section 1366 with respect to a regu3 lated entity that is classified as significantly undercapital4 ized, if the Director determines that such actions are nec5 essary to carry out the purpose of this subtitle.’’. 

6 SEC. 143. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI7 CANTLY UNDERCAPITALIZED REGULATED 

8 ENTITIES. 

9 Section 1366 of the Housing and Community Devel10 opment Act of 1992 (12 U.S.C. 4616) is amended— 

11 (1) in the section heading, by striking ‘‘ENTER12 PRISES’’ and inserting ‘‘ENTITIES’’; 

13 (2) in subsection (a)(2)(A), by striking ‘‘enter14 prise’’ the last place such term appears; 

15 (3) in subsection (b)— 

16 (A) in the subsection heading, by striking 

17 ‘‘Discretionary Supervisory Actions’’ and insert18 ing ‘‘Specific Actions’’; 

19 (B) in the matter preceding paragraph (1), 

20 by striking ‘‘may, at any time, take any’’ and 

21 inserting ‘‘shall carry out this section by taking, 

22 at any time, one or more’’; 

23 (C) by redesignating paragraphs (5) and 

24 (6) as paragraphs (6) and (7), respectively; 
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1 (D) by inserting after paragraph (4) the 

2 following new paragraph: 

3 ‘‘(5) IMPROVEMENT OF MANAGEMENT.—Take 

4 one or more of the following actions: 

5 ‘‘(A) NEW ELECTION OF BOARD.—Order a 

6 new election for the board of directors of the 

7 regulated entity. 

8 ‘‘(B) DISMISSAL OF DIRECTORS OR EXECU9 TIVE OFFICERS.—Require the regulated entity 

10 to dismiss from office any director or executive 

11 officer who had held office for more than 180 

12 days immediately before the entity became 

13 undercapitalized. Dismissal under this subpara14 graph shall not be construed to be a removal 

15 pursuant to the Director’s enforcement powers 

16 provided in section 1377. 

17 ‘‘(C) EMPLOY QUALIFIED EXECUTIVE OF18 FICERS.—Require the regulated entity to em19 ploy qualified executive officers (who, if the Di20 rector so specifies, shall be subject to approval 

21 by the Director).’’; and 

22 (E) by inserting at the end the following 

23 new paragraph: 

24 ‘‘(8) OTHER ACTION.—Require the regulated 

25 entity to take any other action that the Director de-
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1 termines will better carry out the purpose of this 

2 section than any of the actions specified in this 

3 paragraph.’’; 

4 (4) by redesignating subsection (c) as sub5 section (d); and 

6 (5) by inserting after subsection (b) the fol7 lowing new subsection: 

8 ‘‘(c) RESTRICTION ON COMPENSATION OF EXECU9 TIVE OFFICERS.—A regulated entity that is classified as 

10 significantly undercapitalized may not, without prior writ11 ten approval by the Director— 

12 ‘‘(1) pay any bonus to any executive officer; or 

13 ‘‘(2) provide compensation to any executive offi14 cer at a rate exceeding that officer’s average rate of 

15 compensation (excluding bonuses, stock options, and 

16 profit sharing) during the 12 calendar months pre17 ceding the calendar month in which the regulated 

18 entity became undercapitalized.’’. 

19 SEC. 144. AUTHORITY OVER CRITICALLY UNDERCAPITAL20 IZED REGULATED ENTITIES. 

21 (a) IN GENERAL.—Section 1367 of the Housing and 

22 Community Development Act of 1992 (12 U.S.C. 4617) 

23 is amended to read as follows: 
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1 ‘‘SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITAL2 IZED REGULATED ENTITIES. 

3 ‘‘(a) APPOINTMENT OF AGENCY AS CONSERVATOR

4 OR RECEIVER.— 

5 ‘‘(1) IN GENERAL.—Notwithstanding any other 

6 provision of Federal or State law, if any of the 

7 grounds under paragraph (3) exist, at the discretion 

8 of the Director, the Director may establish a con9 servatorship or receivership, as appropriate, for the 

10 purpose of reorganizing, rehabilitating, or winding 

11 up the affairs of a regulated entity. 

12 ‘‘(2) APPOINTMENT.—In any conservatorship or 

13 receivership established under this section, the Di14 rector shall appoint the Agency as conservator or re15 ceiver. 

16 ‘‘(3) GROUNDS FOR APPOINTMENT.—The 

17 grounds for appointing a conservator or receiver for 

18 a regulated entity are as follows: 

19 ‘‘(A) ASSETS INSUFFICIENT FOR OBLIGA20 TIONS.—The assets of the regulated entity are 

21 less than the obligations of the regulated entity 

22 to its creditors and others. 

23 ‘‘(B) SUBSTANTIAL DISSIPATION.—Sub24 stantial dissipation of assets or earnings due 

25 to— 
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1 ‘‘(i) any violation of any provision of 

2 Federal or State law; or 

3 ‘‘(ii) any unsafe or unsound practice. 

4 ‘‘(C) UNSAFE OR UNSOUND CONDITION.— 

5 An unsafe or unsound condition to transact 

6 business. 

7 ‘‘(D) CEASE-AND-DESIST ORDERS.—Any 

8 willful violation of a cease-and-desist order that 

9 has become final. 

10 ‘‘(E) CONCEALMENT.—Any concealment of 

11 the books, papers, records, or assets of the reg12 ulated entity, or any refusal to submit the 

13 books, papers, records, or affairs of the regu14 lated entity, for inspection to any examiner or 

15 to any lawful agent of the Director. 

16 ‘‘(F) INABILITY TO MEET OBLIGATIONS.— 

17 The regulated entity is likely to be unable to 

18 pay its obligations or meet the demands of its 

19 creditors in the normal course of business. 

20 ‘‘(G) LOSSES.—The regulated entity has 

21 incurred or is likely to incur losses that will de22 plete all or substantially all of its capital, and 

23 there is no reasonable prospect for the regu24 lated entity to become adequately capitalized 

25 (as defined in section 1364(a)(1)). 
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1 ‘‘(H) VIOLATIONS OF LAW.—Any violation 

2 of any law or regulation, or any unsafe or un3 sound practice or condition that is likely to— 

4 ‘‘(i) cause insolvency or substantial 

5 dissipation of assets or earnings; or 

6 ‘‘(ii) weaken the condition of the regu7 lated entity. 

8 ‘‘(I) CONSENT.—The regulated entity, by 

9 resolution of its board of directors or its share10 holders or members, consents to the appoint11 ment. 

12 ‘‘(J) UNDERCAPITALIZATION.—The regu13 lated entity is undercapitalized or significantly 

14 undercapitalized (as defined in section 

15 1364(a)(3) or in regulations issued pursuant to 

16 section 1364(b), as applicable), and— 

17 ‘‘(i) has no reasonable prospect of be18 coming adequately capitalized; 

19 ‘‘(ii) fails to become adequately cap20 italized, as required by— 

21 ‘‘(I) section 1365(a)(1) with re22 spect to an undercapitalized regulated 

23 entity; or 
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1 ‘‘(II) section 1366(a)(1) with re2 spect to a significantly undercapital3 ized regulated entity; 

4 ‘‘(iii) fails to submit a capital restora5 tion plan acceptable to the Agency within 

6 the time prescribed under section 1369C; 

7 or 

8 ‘‘(iv) materially fails to implement a 

9 capital restoration plan submitted and ac10 cepted under section 1369C. 

11 ‘‘(K) CRITICAL UNDERCAPITALIZATION.— 

12 The regulated entity is critically undercapital13 ized, as defined in section 1364(a)(4) or in reg14 ulations issued pursuant to section 1364(b), as 

15 applicable. 

16 ‘‘(L) MONEY LAUNDERING.—The Attorney 

17 General notifies the Director in writing that the 

18 regulated entity has been found guilty of a 

19 criminal offense under section 1956 or 1957 of 

20 title 18, United States Code, or section 5322 or 

21 5324 of title 31, United States Code. 

22 ‘‘(4) JUDICIAL REVIEW.— 

23 ‘‘(A) IN GENERAL.—If the Agency is ap24 pointed conservator or receiver under this sec25 tion, the regulated entity may, within 30 days 
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1 of such appointment, bring an action in the 

2 United States District Court for the judicial 

3 district in which the principal place of business 

4 of such regulated entity is located, or in the 

5 United States District Court for the District of 

6 Columbia, for an order requiring the Agency to 

7 remove itself as conservator or receiver. 

8 ‘‘(B) REVIEW.—Upon the filing of an ac9 tion under subparagraph (A), the court shall, 

10 upon the merits, dismiss such action or direct 

11 the Agency to remove itself as such conservator 

12 or receiver. 

13 ‘‘(5) DIRECTORS NOT LIABLE FOR ACQUI14 ESCING IN APPOINTMENT OF CONSERVATOR OR RE15 CEIVER.—The members of the board of directors of 

16 a regulated entity shall not be liable to the share17 holders or creditors of the regulated entity for acqui18 escing in or consenting in good faith to the appoint19 ment of the Agency as conservator or receiver for 

20 that regulated entity. 

21 ‘‘(6) AGENCY NOT SUBJECT TO ANY OTHER

22 FEDERAL AGENCY.—When acting as conservator or 

23 receiver, the Agency shall not be subject to the di24 rection or supervision of any other agency of the 
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1 United States or any State in the exercise of the 

2 rights, powers, and privileges of the Agency. 

3 ‘‘(b) POWERS AND DUTIES OF THE AGENCY AS CON4 SERVATOR OR RECEIVER.— 

5 ‘‘(1) RULEMAKING AUTHORITY OF THE AGEN6 CY.—The Agency may prescribe such regulations as 

7 the Agency determines to be appropriate regarding 

8 the conduct of conservatorships or receiverships. 

9 ‘‘(2) GENERAL POWERS.— 

10 ‘‘(A) SUCCESSOR TO REGULATED ENTI11 TY.—The Agency shall, as conservator or re12 ceiver, and by operation of law, immediately 

13 succeed to— 

14 ‘‘(i) all rights, titles, powers, and 

15 privileges of the regulated entity, and of 

16 any stockholder, officer, or director of such 

17 regulated entity with respect to the regu18 lated entity and the assets of the regulated 

19 entity; and 

20 ‘‘(ii) title to the books, records, and 

21 assets of any other legal custodian of such 

22 regulated entity. 

23 ‘‘(B) OPERATE THE REGULATED ENTI24 TY.—The Agency may, as conservator or re25 ceiver— 
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1 ‘‘(i) take over the assets of and oper2 ate the regulated entity with all the powers 

3 of the shareholders, the directors, and the 

4 officers of the regulated entity and conduct 

5 all business of the regulated entity; 

6 ‘‘(ii) collect all obligations and money 

7 due the regulated entity; 

8 ‘‘(iii) perform all functions of the reg9 ulated entity in the name of the regulated 

10 entity which are consistent with the ap11 pointment as conservator or receiver; and 

12 ‘‘(iv) preserve and conserve the assets 

13 and property of such regulated entity. 

14 ‘‘(C) FUNCTIONS OF OFFICERS, DIREC15 TORS, AND SHAREHOLDERS OF A REGULATED

16 ENTITY.—The Agency may, by regulation or 

17 order, provide for the exercise of any function 

18 by any stockholder, director, or officer of any 

19 regulated entity for which the Agency has been 

20 named conservator or receiver. 

21 ‘‘(D) POWERS AS CONSERVATOR.—The 

22 Agency may, as conservator, take such action 

23 as may be— 

24 ‘‘(i) necessary to put the regulated en25 tity in a sound and solvent condition; and 
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1 ‘‘(ii) appropriate to carry on the busi2 ness of the regulated entity and preserve 

3 and conserve the assets and property of 

4 the regulated entity. 

5 ‘‘(E) ADDITIONAL POWERS AS RE6 CEIVER.—The Agency may, as receiver, place 

7 the regulated entity in liquidation and proceed 

8 to realize upon the assets of the regulated enti9 ty, having due regard to the conditions of the 

10 housing finance market. 

11 ‘‘(F) ORGANIZATION OF NEW REGULATED

12 ENTITIES.—The Agency may, as receiver, orga13 nize a successor regulated entity that will oper14 ate pursuant to subsection (i). 

15 ‘‘(G) TRANSFER OF ASSETS AND LIABIL16 ITIES.—The Agency may, as conservator or re17 ceiver, transfer any asset or liability of the reg18 ulated entity in default without any approval, 

19 assignment, or consent with respect to such 

20 transfer. Any Federal home loan bank may, 

21 with the approval of the Agency, acquire the as22 sets of any Bank in conservatorship or receiver23 ship, and assume the liabilities of such Bank. 

24 ‘‘(H) PAYMENT OF VALID OBLIGATIONS.— 

25 The Agency, as conservator or receiver, shall, to 
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1 the extent of proceeds realized from the per2 formance of contracts or sale of the assets of a 

3 regulated entity, pay all valid obligations of the 

4 regulated entity in accordance with the pre5 scriptions and limitations of this section. 

6 ‘‘(I) SUBPOENA AUTHORITY.— 

7 ‘‘(i) IN GENERAL.— 

8 ‘‘(I) IN GENERAL.—The Agency 

9 may, as conservator or receiver, and 

10 for purposes of carrying out any 

11 power, authority, or duty with respect 

12 to a regulated entity (including deter13 mining any claim against the regu14 lated entity and determining and real15 izing upon any asset of any person in 

16 the course of collecting money due the 

17 regulated entity), exercise any power 

18 established under section 1348. 

19 ‘‘(II) APPLICABILITY OF LAW.— 

20 The provisions of section 1348 shall 

21 apply with respect to the exercise of 

22 any power exercised under this sub23 paragraph in the same manner as 

24 such provisions apply under that sec25 tion. 
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1 ‘‘(ii) AUTHORITY OF DIRECTOR.—A 

2 subpoena or subpoena duces tecum may be 

3 issued under clause (i) only by, or with the 

4 written approval of, the Director, or the 

5 designee of the Director. 

6 ‘‘(iii) RULE OF CONSTRUCTION.—This 

7 subsection shall not be construed to limit 

8 any rights that the Agency, in any capac9 ity, might otherwise have under section 

10 1317 or 1379D. 

11 ‘‘(J) CONTRACTING FOR SERVICES.—The 

12 Agency may, as conservator or receiver, provide 

13 by contract for the carrying out of any of its 

14 functions, activities, actions, or duties as con15 servator or receiver. 

16 ‘‘(K) INCIDENTAL POWERS.—The Agency 

17 may, as conservator or receiver— 

18 ‘‘(i) exercise all powers and authori19 ties specifically granted to conservators or 

20 receivers, respectively, under this section, 

21 and such incidental powers as shall be nec22 essary to carry out such powers; and 

23 ‘‘(ii) take any action authorized by 

24 this section, which the Agency determines 
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1 is in the best interests of the regulated en2 tity or the Agency. 

3 ‘‘(3) AUTHORITY OF RECEIVER TO DETERMINE

4 CLAIMS.— 

5 ‘‘(A) IN GENERAL.—The Agency may, as 

6 receiver, determine claims in accordance with 

7 the requirements of this subsection and any 

8 regulations prescribed under paragraph (4). 

9 ‘‘(B) NOTICE REQUIREMENTS.—The re10 ceiver, in any case involving the liquidation or 

11 winding up of the affairs of a closed regulated 

12 entity, shall— 

13 ‘‘(i) promptly publish a notice to the 

14 creditors of the regulated entity to present 

15 their claims, together with proof, to the re16 ceiver by a date specified in the notice 

17 which shall be not less than 90 days after 

18 the publication of such notice; and 

19 ‘‘(ii) republish such notice approxi20 mately 1 month and 2 months, respec21 tively, after the publication under clause 

22 (i). 

23 ‘‘(C) MAILING REQUIRED.—The receiver 

24 shall mail a notice similar to the notice pub25 lished under subparagraph (B)(i) at the time of 
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1 such publication to any creditor shown on the 

2 books of the regulated entity— 

3 ‘‘(i) at the last address of the creditor 

4 appearing in such books; or 

5 ‘‘(ii) upon discovery of the name and 

6 address of a claimant not appearing on the 

7 books of the regulated entity within 30 

8 days after the discovery of such name and 

9 address. 

10 ‘‘(4) RULEMAKING AUTHORITY RELATING TO

11 DETERMINATION OF CLAIMS.—Subject to subsection 

12 (c), the Director may prescribe regulations regarding 

13 the allowance or disallowance of claims by the re14 ceiver and providing for administrative determina15 tion of claims and review of such determination. 

16 ‘‘(5) PROCEDURES FOR DETERMINATION OF

17 CLAIMS.— 

18 ‘‘(A) DETERMINATION PERIOD.— 

19 ‘‘(i) IN GENERAL.—Before the end of 

20 the 180-day period beginning on the date 

21 on which any claim against a regulated en22 tity is filed with the Agency as receiver, 

23 the Agency shall determine whether to 

24 allow or disallow the claim and shall notify 
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1 the claimant of any determination with re2 spect to such claim. 

3 ‘‘(ii) EXTENSION OF TIME.—The pe4 riod described in clause (i) may be ex5 tended by a written agreement between the 

6 claimant and the Agency. 

7 ‘‘(iii) MAILING OF NOTICE SUFFI8 CIENT.—The notification requirements of 

9 clause (i) shall be deemed to be satisfied if 

10 the notice of any determination with re11 spect to any claim is mailed to the last ad12 dress of the claimant which appears— 

13 ‘‘(I) on the books of the regu14 lated entity; 

15 ‘‘(II) in the claim filed by the 

16 claimant; or 

17 ‘‘(III) in documents submitted in 

18 proof of the claim. 

19 ‘‘(iv) CONTENTS OF NOTICE OF DIS20 ALLOWANCE.—If any claim filed under 

21 clause (i) is disallowed, the notice to the 

22 claimant shall contain— 

23 ‘‘(I) a statement of each reason 

24 for the disallowance; and 
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1 ‘‘(II) the procedures available for 

2 obtaining agency review of the deter3 mination to disallow the claim or judi4 cial determination of the claim. 

5 ‘‘(B) ALLOWANCE OF PROVEN CLAIM.— 

6 The receiver shall allow any claim received on 

7 or before the date specified in the notice pub8 lished under paragraph (3)(B)(i), or the date 

9 specified in the notice required under paragraph 

10 (3)(C), which is proved to the satisfaction of 

11 the receiver. 

12 ‘‘(C) DISALLOWANCE OF CLAIMS FILED

13 AFTER END OF FILING PERIOD.—Claims filed 

14 after the date specified in the notice published 

15 under paragraph (3)(B)(i), or the date specified 

16 under paragraph (3)(C), shall be disallowed and 

17 such disallowance shall be final. 

18 ‘‘(D) AUTHORITY TO DISALLOW CLAIMS.— 

19 ‘‘(i) IN GENERAL.—The receiver may 

20 disallow any portion of any claim by a 

21 creditor or claim of security, preference, or 

22 priority which is not proved to the satisfac23 tion of the receiver. 

24 ‘‘(ii) PAYMENTS TO LESS THAN

25 FULLY SECURED CREDITORS.—In the case 
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1 of a claim of a creditor against a regulated 

2 entity which is secured by any property or 

3 other asset of such regulated entity, the re4 ceiver— 

5 ‘‘(I) may treat the portion of 

6 such claim which exceeds an amount 

7 equal to the fair market value of such 

8 property or other asset as an unse9 cured claim against the regulated en10 tity; and 

11 ‘‘(II) may not make any payment 

12 with respect to such unsecured por13 tion of the claim other than in connec14 tion with the disposition of all claims 

15 of unsecured creditors of the regu16 lated entity. 

17 ‘‘(iii) EXCEPTIONS.—No provision of 

18 this paragraph shall apply with respect to 

19 any extension of credit from any Federal 

20 Reserve Bank, Federal home loan bank, or 

21 the Treasury of the United States. 

22 ‘‘(E) NO JUDICIAL REVIEW OF DETER23 MINATION PURSUANT TO SUBPARAGRAPH (D).— 

24 No court may review the determination of the 

25 Agency under subparagraph (D) to disallow a 
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1 claim. This subparagraph shall not effect the 

2 authority of a claimant to obtain de novo judi3 cial review of a claim pursuant to paragraph 

4 (6). 

5 ‘‘(F) LEGAL EFFECT OF FILING.— 

6 ‘‘(i) STATUTE OF LIMITATION

7 TOLLED.—For purposes of any applicable 

8 statute of limitations, the filing of a claim 

9 with the receiver shall constitute a com10 mencement of an action. 

11 ‘‘(ii) NO PREJUDICE TO OTHER AC12 TIONS.—Subject to paragraph (10), the fil13 ing of a claim with the receiver shall not 

14 prejudice any right of the claimant to con15 tinue any action which was filed before the 

16 date of the appointment of the receiver, 

17 subject to the determination of claims by 

18 the receiver. 

19 ‘‘(6) PROVISION FOR JUDICIAL DETERMINATION

20 OF CLAIMS.— 

21 ‘‘(A) IN GENERAL.—The claimant may file 

22 suit on a claim (or continue an action com23 menced before the appointment of the receiver) 

24 in the district or territorial court of the United 

25 States for the district within which the prin-
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1 cipal place of business of the regulated entity is 

2 located or the United States District Court for 

3 the District of Columbia (and such court shall 

4 have jurisdiction to hear such claim), before the 

5 end of the 60-day period beginning on the ear6 lier of— 

7 ‘‘(i) the end of the period described in 

8 paragraph (5)(A)(i) with respect to any 

9 claim against a regulated entity for which 

10 the Agency is receiver; or 

11 ‘‘(ii) the date of any notice of dis12 allowance of such claim pursuant to para13 graph (5)(A)(i). 

14 ‘‘(B) STATUTE OF LIMITATIONS.—A claim 

15 shall be deemed to be disallowed (other than 

16 any portion of such claim which was allowed by 

17 the receiver), and such disallowance shall be 

18 final, and the claimant shall have no further 

19 rights or remedies with respect to such claim, 

20 if the claimant fails, before the end of the 60- 

21 day period described under subparagraph (A), 

22 to file suit on such claim (or continue an action 

23 commenced before the appointment of the re24 ceiver). 

25 ‘‘(7) REVIEW OF CLAIMS.— 
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1 ‘‘(A) OTHER REVIEW PROCEDURES.— 

2 ‘‘(i) IN GENERAL.—The Agency shall 

3 establish such alternative dispute resolu4 tion processes as may be appropriate for 

5 the resolution of claims filed under para6 graph (5)(A)(i). 

7 ‘‘(ii) CRITERIA.—In establishing alter8 native dispute resolution processes, the 

9 Agency shall strive for procedures which 

10 are expeditious, fair, independent, and low 

11 cost. 

12 ‘‘(iii) VOLUNTARY BINDING OR NON13 BINDING PROCEDURES.—The Agency may 

14 establish both binding and nonbinding 

15 processes, which may be conducted by any 

16 government or private party. All parties, 

17 including the claimant and the Agency, 

18 must agree to the use of the process in a 

19 particular case. 

20 ‘‘(B) CONSIDERATION OF INCENTIVES.— 

21 The Agency shall seek to develop incentives for 

22 claimants to participate in the alternative dis23 pute resolution process. 

24 ‘‘(8) EXPEDITED DETERMINATION OF

25 CLAIMS.— 
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1 ‘‘(A) ESTABLISHMENT REQUIRED.—The 

2 Agency shall establish a procedure for expedited 

3 relief outside of the routine claims process es4 tablished under paragraph (5) for claimants 

5 who— 

6 ‘‘(i) allege the existence of legally 

7 valid and enforceable or perfected security 

8 interests in assets of any regulated entity 

9 for which the Agency has been appointed 

10 receiver; and 

11 ‘‘(ii) allege that irreparable injury will 

12 occur if the routine claims procedure is fol13 lowed. 

14 ‘‘(B) DETERMINATION PERIOD.—Before 

15 the end of the 90-day period beginning on the 

16 date any claim is filed in accordance with the 

17 procedures established under subparagraph (A), 

18 the Director shall— 

19 ‘‘(i) determine— 

20 ‘‘(I) whether to allow or disallow 

21 such claim; or 

22 ‘‘(II) whether such claim should 

23 be determined pursuant to the proce24 dures established under paragraph 

25 (5); and 
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1 ‘‘(ii) notify the claimant of the deter2 mination, and if the claim is disallowed, 

3 provide a statement of each reason for the 

4 disallowance and the procedure for obtain5 ing agency review or judicial determina6 tion. 

7 ‘‘(C) PERIOD FOR FILING OR RENEWING

8 SUIT.—Any claimant who files a request for ex9 pedited relief shall be permitted to file a suit, 

10 or to continue a suit filed before the appoint11 ment of the receiver, seeking a determination of 

12 the rights of the claimant with respect to such 

13 security interest after the earlier of— 

14 ‘‘(i) the end of the 90-day period be15 ginning on the date of the filing of a re16 quest for expedited relief; or 

17 ‘‘(ii) the date the Agency denies the 

18 claim. 

19 ‘‘(D) STATUTE OF LIMITATIONS.—If an 

20 action described under subparagraph (C) is not 

21 filed, or the motion to renew a previously filed 

22 suit is not made, before the end of the 30-day 

23 period beginning on the date on which such ac24 tion or motion may be filed under subparagraph 

25 (B), the claim shall be deemed to be disallowed 
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1 as of the end of such period (other than any 

2 portion of such claim which was allowed by the 

3 receiver), such disallowance shall be final, and 

4 the claimant shall have no further rights or 

5 remedies with respect to such claim. 

6 ‘‘(E) LEGAL EFFECT OF FILING.— 

7 ‘‘(i) STATUTE OF LIMITATION

8 TOLLED.—For purposes of any applicable 

9 statute of limitations, the filing of a claim 

10 with the receiver shall constitute a com11 mencement of an action. 

12 ‘‘(ii) NO PREJUDICE TO OTHER AC13 TIONS.—Subject to paragraph (10), the fil14 ing of a claim with the receiver shall not 

15 prejudice any right of the claimant to con16 tinue any action that was filed before the 

17 appointment of the receiver, subject to the 

18 determination of claims by the receiver. 

19 ‘‘(9) PAYMENT OF CLAIMS.— 

20 ‘‘(A) IN GENERAL.—The receiver may, in 

21 the discretion of the receiver, and to the extent 

22 funds are available from the assets of the regu23 lated entity, pay creditor claims, in such man24 ner and amounts as are authorized under this 

25 section, which are— 
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1 ‘‘(i) allowed by the receiver; 

2 ‘‘(ii) approved by the Agency pursuant 

3 to a final determination pursuant to para4 graph (7) or (8); or 

5 ‘‘(iii) determined by the final judg6 ment of any court of competent jurisdic7 tion. 

8 ‘‘(B) AGREEMENTS AGAINST THE INTER9 EST OF THE AGENCY.—No agreement that 

10 tends to diminish or defeat the interest of the 

11 Agency in any asset acquired by the Agency as 

12 receiver under this section shall be valid against 

13 the Agency unless such agreement is in writing, 

14 and executed by an authorized official of the 

15 regulated entity, except that such requirements 

16 for qualified financial contracts shall be applied 

17 in a manner consistent with reasonable business 

18 trading practices in the financial contracts mar19 ket. 

20 ‘‘(C) PAYMENT OF DIVIDENDS ON

21 CLAIMS.—The receiver may, in the sole discre22 tion of the receiver, pay from the assets of the 

23 regulated entity dividends on proved claims at 

24 any time, and no liability shall attach to the 

25 Agency, by reason of any such payment, for 
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1 failure to pay dividends to a claimant whose 

2 claim is not proved at the time of any such pay3 ment. 

4 ‘‘(D) RULEMAKING AUTHORITY OF THE

5 DIRECTOR.—The Director may prescribe such 

6 rules, including definitions of terms, as the Di7 rector deems appropriate to establish a single 

8 uniform interest rate for, or to make payments 

9 of post-insolvency interest to creditors holding 

10 proven claims against the receivership estates of 

11 regulated entities following satisfaction by the 

12 receiver of the principal amount of all creditor 

13 claims. 

14 ‘‘(10) SUSPENSION OF LEGAL ACTIONS.— 

15 ‘‘(A) IN GENERAL.—After the appointment 

16 of a conservator or receiver for a regulated enti17 ty, the conservator or receiver may, in any judi18 cial action or proceeding to which such regu19 lated entity is or becomes a party, request a 

20 stay for a period not to exceed— 

21 ‘‘(i) 45 days, in the case of any con22 servator; and 

23 ‘‘(ii) 90 days, in the case of any re24 ceiver. 
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1 ‘‘(B) GRANT OF STAY BY ALL COURTS RE2 QUIRED.—Upon receipt of a request by any 

3 conservator or receiver under subparagraph (A) 

4 for a stay of any judicial action or proceeding 

5 in any court with jurisdiction of such action or 

6 proceeding, the court shall grant such stay as 

7 to all parties. 

8 ‘‘(11) ADDITIONAL RIGHTS AND DUTIES.— 

9 ‘‘(A) PRIOR FINAL ADJUDICATION.—The 

10 Agency shall abide by any final unappealable 

11 judgment of any court of competent jurisdiction 

12 which was rendered before the appointment of 

13 the Agency as conservator or receiver. 

14 ‘‘(B) RIGHTS AND REMEDIES OF CONSER15 VATOR OR RECEIVER.—In the event of any ap16 pealable judgment, the Agency as conservator 

17 or receiver shall— 

18 ‘‘(i) have all the rights and remedies 

19 available to the regulated entity (before the 

20 appointment of such conservator or re21 ceiver) and the Agency, including removal 

22 to Federal court and all appellate rights; 

23 and 

24 ‘‘(ii) not be required to post any bond 

25 in order to pursue such remedies. 
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1 ‘‘(C) NO ATTACHMENT OR EXECUTION.— 

2 No attachment or execution may issue by any 

3 court upon assets in the possession of the re4 ceiver. 

5 ‘‘(D) LIMITATION ON JUDICIAL REVIEW.— 

6 Except as otherwise provided in this subsection, 

7 no court shall have jurisdiction over— 

8 ‘‘(i) any claim or action for payment 

9 from, or any action seeking a determina10 tion of rights with respect to, the assets of 

11 any regulated entity for which the Agency 

12 has been appointed receiver; or 

13 ‘‘(ii) any claim relating to any act or 

14 omission of such regulated entity or the 

15 Agency as receiver. 

16 ‘‘(E) DISPOSITION OF ASSETS.—In exer17 cising any right, power, privilege, or authority 

18 as conservator or receiver in connection with 

19 any sale or disposition of assets of a regulated 

20 entity for which the Agency has been appointed 

21 conservator or receiver, the Agency shall con22 duct its operations in a manner which main23 tains stability in the housing finance markets 

24 and, to the extent consistent with that goal— 
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1 ‘‘(i) maximizes the net present value 

2 return from the sale or disposition of such 

3 assets; 

4 ‘‘(ii) minimizes the amount of any loss 

5 realized in the resolution of cases; and 

6 ‘‘(iii) ensures adequate competition 

7 and fair and consistent treatment of 

8 offerors. 

9 ‘‘(12) STATUTE OF LIMITATIONS FOR ACTIONS

10 BROUGHT BY CONSERVATOR OR RECEIVER.— 

11 ‘‘(A) IN GENERAL.—Notwithstanding any 

12 provision of any contract, the applicable statute 

13 of limitations with regard to any action brought 

14 by the Agency as conservator or receiver shall 

15 be— 

16 ‘‘(i) in the case of any contract claim, 

17 the longer of— 

18 ‘‘(I) the 6-year period beginning 

19 on the date the claim accrues; or 

20 ‘‘(II) the period applicable under 

21 State law; and 

22 ‘‘(ii) in the case of any tort claim, the 

23 longer of— 

24 ‘‘(I) the 3-year period beginning 

25 on the date the claim accrues; or 
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1 ‘‘(II) the period applicable under 

2 State law. 

3 ‘‘(B) DETERMINATION OF THE DATE ON

4 WHICH A CLAIM ACCRUES.—For purposes of 

5 subparagraph (A), the date on which the stat6 ute of limitations begins to run on any claim 

7 described in such subparagraph shall be the 

8 later of— 

9 ‘‘(i) the date of the appointment of 

10 the Agency as conservator or receiver; or 

11 ‘‘(ii) the date on which the cause of 

12 action accrues. 

13 ‘‘(13) REVIVAL OF EXPIRED STATE CAUSES OF

14 ACTION.— 

15 ‘‘(A) IN GENERAL.—In the case of any tort 

16 claim described under subparagraph (B) for 

17 which the statute of limitations applicable 

18 under State law with respect to such claim has 

19 expired not more than 5 years before the ap20 pointment of the Agency as conservator or re21 ceiver, the Agency may bring an action as con22 servator or receiver on such claim without re23 gard to the expiration of the statute of limita24 tion applicable under State law. 
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1 ‘‘(B) CLAIMS DESCRIBED.—A tort claim 

2 referred to under subparagraph (A) is a claim 

3 arising from fraud, intentional misconduct re4 sulting in unjust enrichment, or intentional mis5 conduct resulting in substantial loss to the reg6 ulated entity. 

7 ‘‘(14) ACCOUNTING AND RECORDKEEPING RE8 QUIREMENTS.— 

9 ‘‘(A) IN GENERAL.—The Agency as conser10 vator or receiver shall, consistent with the ac11 counting and reporting practices and proce12 dures established by the Agency, maintain a full 

13 accounting of each conservatorship and receiv14 ership or other disposition of a regulated entity 

15 in default. 

16 ‘‘(B) ANNUAL ACCOUNTING OR REPORT.— 

17 With respect to each conservatorship or receiv18 ership, the Agency shall make an annual ac19 counting or report available to the Board, the 

20 Comptroller General of the United States, the 

21 Committee on Banking, Housing, and Urban 

22 Affairs of the Senate, and the Committee on 

23 Financial Services of the House of Representa24 tives. 
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1 ‘‘(C) AVAILABILITY OF REPORTS.—Any re2 port prepared under subparagraph (B) shall be 

3 made available by the Agency upon request to 

4 any shareholder of a regulated entity or any 

5 member of the public. 

6 ‘‘(D) RECORDKEEPING REQUIREMENT.— 

7 After the end of the 6-year period beginning on 

8 the date that the conservatorship or receiver9 ship is terminated by the Director, the Agency 

10 may destroy any records of such regulated enti11 ty which the Agency, in the discretion of the 

12 Agency, determines to be unnecessary unless di13 rected not to do so by a court of competent ju14 risdiction or governmental agency, or prohibited 

15 by law. 

16 ‘‘(15) FRAUDULENT TRANSFERS.— 

17 ‘‘(A) IN GENERAL.—The Agency, as con18 servator or receiver, may avoid a transfer of 

19 any interest of a regulated entity-affiliated 

20 party, or any person who the conservator or re21 ceiver determines is a debtor of the regulated 

22 entity, in property, or any obligation incurred 

23 by such party or person, that was made within 

24 5 years of the date on which the Agency was 

25 appointed conservator or receiver, if such party 
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1 or person voluntarily or involuntarily made such 

2 transfer or incurred such liability with the in3 tent to hinder, delay, or defraud the regulated 

4 entity, the Agency, the conservator, or receiver. 

5 ‘‘(B) RIGHT OF RECOVERY.—To the extent 

6 a transfer is avoided under subparagraph (A), 

7 the conservator or receiver may recover, for the 

8 benefit of the regulated entity, the property 

9 transferred, or, if a court so orders, the value 

10 of such property (at the time of such transfer) 

11 from— 

12 ‘‘(i) the initial transferee of such 

13 transfer or the regulated entity-affiliated 

14 party or person for whose benefit such 

15 transfer was made; or 

16 ‘‘(ii) any immediate or mediate trans17 feree of any such initial transferee. 

18 ‘‘(C) RIGHTS OF TRANSFEREE OR OBLI19 GEE.—The conservator or receiver may not re20 cover under subparagraph (B) from— 

21 ‘‘(i) any transferee that takes for 

22 value, including satisfaction or securing of 

23 a present or antecedent debt, in good faith; 

24 or 
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1 ‘‘(ii) any immediate or mediate good 

2 faith transferee of such transferee. 

3 ‘‘(D) RIGHTS UNDER THIS PARAGRAPH.— 

4 The rights under this paragraph of the conser5 vator or receiver described under subparagraph 

6 (A) shall be superior to any rights of a trustee 

7 or any other party (other than any party which 

8 is a Federal agency) under title 11, United 

9 States Code. 

10 ‘‘(16) ATTACHMENT OF ASSETS AND OTHER IN11 JUNCTIVE RELIEF.—Subject to paragraph (17), any 

12 court of competent jurisdiction may, at the request 

13 of the conservator or receiver, issue an order in ac14 cordance with Rule 65 of the Federal Rules of Civil 

15 Procedure, including an order placing the assets of 

16 any person designated by the Agency or such conser17 vator under the control of the court, and appointing 

18 a trustee to hold such assets. 

19 ‘‘(17) STANDARDS OF PROOF.—Rule 65 of the 

20 Federal Rules of Civil Procedure shall apply with re21 spect to any proceeding under paragraph (16) with22 out regard to the requirement of such rule that the 

23 applicant show that the injury, loss, or damage is ir24 reparable and immediate. 
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1 ‘‘(18) TREATMENT OF CLAIMS ARISING FROM

2 BREACH OF CONTRACTS EXECUTED BY THE RE3 CEIVER OR CONSERVATOR.— 

4 ‘‘(A) IN GENERAL.—Notwithstanding any 

5 other provision of this subsection, any final and 

6 unappealable judgment for monetary damages 

7 entered against a receiver or conservator for the 

8 breach of an agreement executed or approved in 

9 writing by such receiver or conservator after the 

10 date of its appointment, shall be paid as an ad11 ministrative expense of the receiver or conser12 vator. 

13 ‘‘(B) NO LIMITATION OF POWER.—Nothing 

14 in this paragraph shall be construed to limit the 

15 power of a receiver or conservator to exercise 

16 any rights under contract or law, including to 

17 terminate, breach, cancel, or otherwise dis18 continue such agreement. 

19 ‘‘(19) GENERAL EXCEPTIONS.— 

20 ‘‘(A) LIMITATIONS.—The rights of a con21 servator or receiver appointed under this section 

22 shall be subject to the limitations on the powers 

23 of a receiver under sections 402 through 407 of 

24 the Federal Deposit Insurance Corporation Im-
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1 provement Act of 1991 (12 U.S.C. 4402 

2 through 4407). 

3 ‘‘(B) MORTGAGES HELD IN TRUST.— 

4 ‘‘(i) IN GENERAL.—Any mortgage, 

5 pool of mortgages, or interest in a pool of 

6 mortgages, held in trust, custodial, or 

7 agency capacity by a regulated entity for 

8 the benefit of persons other than the regu9 lated entity shall not be available to satisfy 

10 the claims of creditors generally. 

11 ‘‘(ii) HOLDING OF MORTGAGES.—Any 

12 mortgage, pool of mortgages, or interest in 

13 a pool of mortgages, described under 

14 clause (i) shall be held by the conservator 

15 or receiver appointed under this section for 

16 the beneficial owners of such mortgage, 

17 pool of mortgages, or interest in a pool of 

18 mortgages in accordance with the terms of 

19 the agreement creating such trust, custo20 dial, or other agency arrangement. 

21 ‘‘(iii) LIABILITY OF RECEIVER.—The 

22 liability of a receiver appointed under this 

23 section for damages shall, in the case of 

24 any contingent or unliquidated claim relat25 ing to the mortgages held in trust, be esti-
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1 mated in accordance set forth in the regu2 lations of the Director. 

3 ‘‘(c) PRIORITY OF EXPENSES AND UNSECURED

4 CLAIMS.— 

5 ‘‘(1) IN GENERAL.—Unsecured claims against a 

6 regulated entity, or a receiver, that are proven to the 

7 satisfaction of the receiver shall have priority in the 

8 following order: 

9 ‘‘(A) Administrative expenses of the re10 ceiver. 

11 ‘‘(B) Any other general or senior liability 

12 of the regulated entity and claims of other Fed13 eral home loan banks arising from their pay14 ment obligations (including joint and several 

15 payment obligations). 

16 ‘‘(C) Any obligation subordinated to gen17 eral creditors. 

18 ‘‘(D) Any obligation to shareholders or 

19 members arising as a result of their status as 

20 shareholder or members. 

21 ‘‘(2) CREDITORS SIMILARLY SITUATED.—All 

22 creditors that are similarly situated under paragraph 

23 (1) shall be treated in a similar manner, except that 

24 the Agency may make such other payments to credi25 tors necessary to maximize the present value return 
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1 from the sale or disposition or such regulated enti2 ty’s assets or to minimize the amount of any loss re3 alized in the resolution of cases so long as all credi4 tors similarly situated receive not less than the 

5 amount provided under subsection (e)(2). 

6 ‘‘(3) DEFINITION.—The term ‘administrative 

7 expenses of the receiver’ shall include the actual, 

8 necessary costs and expenses incurred by the re9 ceiver in preserving the assets of the regulated entity 

10 or liquidating or otherwise resolving the affairs of 

11 the regulated entity. Such expenses shall include ob12 ligations that are incurred by the receiver after ap13 pointment as receiver that the Director determines 

14 are necessary and appropriate to facilitate the 

15 smooth and orderly liquidation or other resolution of 

16 the regulated entity. 

17 ‘‘(d) PROVISIONS RELATING TO CONTRACTS EN18 TERED INTO BEFORE APPOINTMENT OF CONSERVATOR

19 OR RECEIVER.— 

20 ‘‘(1) AUTHORITY TO REPUDIATE CONTRACTS.— 

21 In addition to any other rights a conservator or re22 ceiver may have, the conservator or receiver for any 

23 regulated entity may disaffirm or repudiate any con24 tract or lease— 
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1 ‘‘(A) to which such regulated entity is a 

2 party; 

3 ‘‘(B) the performance of which the conser4 vator or receiver, in its sole discretion, deter5 mines to be burdensome; and 

6 ‘‘(C) the disaffirmance or repudiation of 

7 which the conservator or receiver determines, in 

8 its sole discretion, will promote the orderly ad9 ministration of the affairs of the regulated enti10 ty. 

11 ‘‘(2) TIMING OF REPUDIATION.—The conser12 vator or receiver shall determine whether or not to 

13 exercise the rights of repudiation under this sub14 section within a reasonable period following such ap15 pointment. 

16 ‘‘(3) CLAIMS FOR DAMAGES FOR REPUDI17 ATION.— 

18 ‘‘(A) IN GENERAL.—Except as otherwise 

19 provided under subparagraph (C) and para20 graphs (4), (5), and (6), the liability of the con21 servator or receiver for the disaffirmance or re22 pudiation of any contract pursuant to para23 graph (1) shall be— 

24 ‘‘(i) limited to actual direct compen25 satory damages; and 
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1 ‘‘(ii) determined as of— 

2 ‘‘(I) the date of the appointment 

3 of the conservator or receiver; or 

4 ‘‘(II) in the case of any contract 

5 or agreement referred to in paragraph 

6 (8), the date of the disaffirmance or 

7 repudiation of such contract or agree8 ment. 

9 ‘‘(B) NO LIABILITY FOR OTHER DAM10 AGES.—For purposes of subparagraph (A), the 

11 term ‘actual direct compensatory damages’ shall 

12 not include— 

13 ‘‘(i) punitive or exemplary damages; 

14 ‘‘(ii) damages for lost profits or op15 portunity; or 

16 ‘‘(iii) damages for pain and suffering. 

17 ‘‘(C) MEASURE OF DAMAGES FOR REPUDI18 ATION OF FINANCIAL CONTRACTS.—In the case 

19 of any qualified financial contract or agreement 

20 to which paragraph (8) applies, compensatory 

21 damages shall be— 

22 ‘‘(i) deemed to include normal and 

23 reasonable costs of cover or other reason24 able measures of damages utilized in the 
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1 industries for such contract and agreement 

2 claims; and 

3 ‘‘(ii) paid in accordance with this sub4 section and subsection (e), except as other5 wise specifically provided in this section. 

6 ‘‘(4) LEASES UNDER WHICH THE REGULATED

7 ENTITY IS THE LESSEE.— 

8 ‘‘(A) IN GENERAL.—If the conservator or 

9 receiver disaffirms or repudiates a lease under 

10 which the regulated entity was the lessee, the 

11 conservator or receiver shall not be liable for 

12 any damages (other than damages determined 

13 under subparagraph (B)) for the disaffirmance 

14 or repudiation of such lease. 

15 ‘‘(B) PAYMENTS OF RENT.—Notwith16 standing subparagraph (A), the lessor under a 

17 lease to which that subparagraph applies 

18 shall— 

19 ‘‘(i) be entitled to the contractual rent 

20 accruing before the later of the date— 

21 ‘‘(I) the notice of disaffirmance 

22 or repudiation is mailed; or 

23 ‘‘(II) the disaffirmance or repudi24 ation becomes effective, unless the les-
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1 sor is in default or breach of the 

2 terms of the lease; 

3 ‘‘(ii) have no claim for damages under 

4 any acceleration clause or other penalty 

5 provision in the lease; and 

6 ‘‘(iii) have a claim for any unpaid 

7 rent, subject to all appropriate offsets and 

8 defenses, due as of the date of the appoint9 ment, which shall be paid in accordance 

10 with this subsection and subsection (e). 

11 ‘‘(5) LEASES UNDER WHICH THE REGULATED

12 ENTITY IS THE LESSOR.— 

13 ‘‘(A) IN GENERAL.—If the conservator or 

14 receiver repudiates an unexpired written lease 

15 of real property of the regulated entity under 

16 which the regulated entity is the lessor and the 

17 lessee is not, as of the date of such repudiation, 

18 in default, the lessee under such lease may ei19 ther— 

20 ‘‘(i) treat the lease as terminated by 

21 such repudiation; or 

22 ‘‘(ii) remain in possession of the lease23 hold interest for the balance of the term of 

24 the lease, unless the lessee defaults under 
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1 the terms of the lease after the date of 

2 such repudiation. 

3 ‘‘(B) PROVISIONS APPLICABLE TO LESSEE

4 REMAINING IN POSSESSION.—If any lessee 

5 under a lease described under subparagraph (A) 

6 remains in possession of a leasehold interest 

7 under clause (ii) of such subparagraph— 

8 ‘‘(i) the lessee— 

9 ‘‘(I) shall continue to pay the 

10 contractual rent pursuant to the 

11 terms of the lease after the date of 

12 the repudiation of such lease; and 

13 ‘‘(II) may offset against any rent 

14 payment which accrues after the date 

15 of the repudiation of the lease, and 

16 any damages which accrue after such 

17 date due to the nonperformance of 

18 any obligation of the regulated entity 

19 under the lease after such date; and 

20 ‘‘(ii) the conservator or receiver shall 

21 not be liable to the lessee for any damages 

22 arising after such date as a result of the 

23 repudiation other than the amount of any 

24 offset allowed under clause (i)(II). 
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1 ‘‘(6) CONTRACTS FOR THE SALE OF REAL

2 PROPERTY.— 

3 ‘‘(A) IN GENERAL.—If the conservator or 

4 receiver repudiates any contract for the sale of 

5 real property and the purchaser of such real 

6 property under such contract is in possession, 

7 and is not, as of the date of such repudiation, 

8 in default, such purchaser may either— 

9 ‘‘(i) treat the contract as terminated 

10 by such repudiation; or 

11 ‘‘(ii) remain in possession of such real 

12 property. 

13 ‘‘(B) PROVISIONS APPLICABLE TO PUR14 CHASER REMAINING IN POSSESSION.—If any 

15 purchaser of real property under any contract 

16 described under subparagraph (A) remains in 

17 possession of such property under clause (ii) of 

18 such subparagraph— 

19 ‘‘(i) the purchaser— 

20 ‘‘(I) shall continue to make all 

21 payments due under the contract after 

22 the date of the repudiation of the con23 tract; and 

24 ‘‘(II) may offset against any such 

25 payments any damages which accrue 
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1 after such date due to the non2 performance (after such date) of any 

3 obligation of the regulated entity 

4 under the contract; and 

5 ‘‘(ii) the conservator or receiver 

6 shall— 

7 ‘‘(I) not be liable to the pur8 chaser for any damages arising after 

9 such date as a result of the repudi10 ation other than the amount of any 

11 offset allowed under clause (i)(II); 

12 ‘‘(II) deliver title to the pur13 chaser in accordance with the provi14 sions of the contract; and 

15 ‘‘(III) have no obligation under 

16 the contract other than the perform17 ance required under subclause (II). 

18 ‘‘(C) ASSIGNMENT AND SALE ALLOWED.— 

19 ‘‘(i) IN GENERAL.—No provision of 

20 this paragraph shall be construed as lim21 iting the right of the conservator or re22 ceiver to assign the contract described 

23 under subparagraph (A), and sell the prop24 erty subject to the contract and the provi25 sions of this paragraph. 
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1 ‘‘(ii) NO LIABILITY AFTER ASSIGN2 MENT AND SALE.—If an assignment and 

3 sale described under clause (i) is con4 summated, the conservator or receiver 

5 shall have no further liability under the 

6 contract described under subparagraph 

7 (A), or with respect to the real property 

8 which was the subject of such contract. 

9 ‘‘(7) PROVISIONS APPLICABLE TO SERVICE CON10 TRACTS.— 

11 ‘‘(A) SERVICES PERFORMED BEFORE AP12 POINTMENT.—In the case of any contract for 

13 services between any person and any regulated 

14 entity for which the Agency has been appointed 

15 conservator or receiver, any claim of such per16 son for services performed before the appoint17 ment of the conservator or the receiver shall 

18 be— 

19 ‘‘(i) a claim to be paid in accordance 

20 with subsections (b) and (e); and 

21 ‘‘(ii) deemed to have arisen as of the 

22 date the conservator or receiver was ap23 pointed. 

24 ‘‘(B) SERVICES PERFORMED AFTER AP25 POINTMENT AND PRIOR TO REPUDIATION.—If, 
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1 in the case of any contract for services de2 scribed under subparagraph (A), the conser3 vator or receiver accepts performance by the 

4 other person before the conservator or receiver 

5 makes any determination to exercise the right 

6 of repudiation of such contract under this sec7 tion— 

8 ‘‘(i) the other party shall be paid 

9 under the terms of the contract for the 

10 services performed; and 

11 ‘‘(ii) the amount of such payment 

12 shall be treated as an administrative ex13 pense of the conservatorship or receiver14 ship. 

15 ‘‘(C) ACCEPTANCE OF PERFORMANCE NO

16 BAR TO SUBSEQUENT REPUDIATION.—The ac17 ceptance by any conservator or receiver of serv18 ices referred to under subparagraph (B) in con19 nection with a contract described in such sub20 paragraph shall not affect the right of the con21 servator or receiver to repudiate such contract 

22 under this section at any time after such per23 formance. 

24 ‘‘(8) CERTAIN QUALIFIED FINANCIAL CON25 TRACTS.— 
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1 ‘‘(A) RIGHTS OF PARTIES TO CON2 TRACTS.—Subject to paragraphs (9) and (10) 

3 and notwithstanding any other provision of this 

4 Act, any other Federal law, or the law of any 

5 State, no person shall be stayed or prohibited 

6 from exercising— 

7 ‘‘(i) any right such person has to 

8 cause the termination, liquidation, or accel9 eration of any qualified financial contract 

10 with a regulated entity that arises upon 

11 the appointment of the Agency as receiver 

12 for such regulated entity at any time after 

13 such appointment; 

14 ‘‘(ii) any right under any security 

15 agreement or arrangement or other credit 

16 enhancement relating to one or more quali17 fied financial contracts described in clause 

18 (i); or 

19 ‘‘(iii) any right to offset or net out 

20 any termination value, payment amount, or 

21 other transfer obligation arising under or 

22 in connection with 1 or more contracts and 

23 agreements described in clause (i), includ24 ing any master agreement for such con25 tracts or agreements. 
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1 ‘‘(B) APPLICABILITY OF OTHER PROVI2 SIONS.—Paragraph (10) of subsection (b) shall 

3 apply in the case of any judicial action or pro4 ceeding brought against any receiver referred to 

5 under subparagraph (A), or the regulated entity 

6 for which such receiver was appointed, by any 

7 party to a contract or agreement described 

8 under subparagraph (A)(i) with such regulated 

9 entity. 

10 ‘‘(C) CERTAIN TRANSFERS NOT AVOID11 ABLE.— 

12 ‘‘(i) IN GENERAL.—Notwithstanding 

13 paragraph (11) or any other Federal or 

14 State laws relating to the avoidance of 

15 preferential or fraudulent transfers, the 

16 Agency, whether acting as such or as con17 servator or receiver of a regulated entity, 

18 may not avoid any transfer of money or 

19 other property in connection with any 

20 qualified financial contract with a regu21 lated entity. 

22 ‘‘(ii) EXCEPTION FOR CERTAIN

23 TRANSFERS.—Clause (i) shall not apply to 

24 any transfer of money or other property in 

25 connection with any qualified financial con-
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1 tract with a regulated entity if the Agency 

2 determines that the transferee had actual 

3 intent to hinder, delay, or defraud such 

4 regulated entity, the creditors of such reg5 ulated entity, or any conservator or re6 ceiver appointed for such regulated entity. 

7 ‘‘(D) CERTAIN CONTRACTS AND AGREE8 MENTS DEFINED.—In this subsection: 

9 ‘‘(i) QUALIFIED FINANCIAL CON10 TRACT.—The term ‘qualified financial con11 tract’ means any securities contract, com12 modity contract, forward contract, repur13 chase agreement, swap agreement, and any 

14 similar agreement that the Agency deter15 mines by regulation, resolution, or order to 

16 be a qualified financial contract for pur17 poses of this paragraph. 

18 ‘‘(ii) SECURITIES CONTRACT.—The 

19 term ‘securities contract’— 

20 ‘‘(I) means a contract for the 

21 purchase, sale, or loan of a security, a 

22 certificate of deposit, a mortgage loan, 

23 or any interest in a mortgage loan, a 

24 group or index of securities, certifi25 cates of deposit, or mortgage loans or 
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1 interests therein (including any inter2 est therein or based on the value 

3 thereof) or any option on any of the 

4 foregoing, including any option to 

5 purchase or sell any such security, 

6 certificate of deposit, mortgage loan, 

7 interest, group or index, or option, 

8 and including any repurchase or re9 verse repurchase transaction on any 

10 such security, certificate of deposit, 

11 mortgage loan, interest, group or 

12 index, or option; 

13 ‘‘(II) does not include any pur14 chase, sale, or repurchase obligation 

15 under a participation in a commercial 

16 mortgage loan unless the Agency de17 termines by regulation, resolution, or 

18 order to include any such agreement 

19 within the meaning of such term; 

20 ‘‘(III) means any option entered 

21 into on a national securities exchange 

22 relating to foreign currencies; 

23 ‘‘(IV) means the guarantee by or 

24 to any securities clearing agency of 

25 any settlement of cash, securities, cer-
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1 tificates of deposit, mortgage loans or 

2 interests therein, group or index of se3 curities, certificates of deposit, or 

4 mortgage loans or interests therein 

5 (including any interest therein or 

6 based on the value thereof) or option 

7 on any of the foregoing, including any 

8 option to purchase or sell any such se9 curity, certificate of deposit, mortgage 

10 loan, interest, group or index, or op11 tion; 

12 ‘‘(V) means any margin loan; 

13 ‘‘(VI) means any other agree14 ment or transaction that is similar to 

15 any agreement or transaction referred 

16 to in this clause; 

17 ‘‘(VII) means any combination of 

18 the agreements or transactions re19 ferred to in this clause; 

20 ‘‘(VIII) means any option to 

21 enter into any agreement or trans22 action referred to in this clause; 

23 ‘‘(IX) means a master agreement 

24 that provides for an agreement or 

25 transaction referred to in subclause 
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1 (I), (III), (IV), (V), (VI), (VII), or 

2 (VIII), together with all supplements 

3 to any such master agreement, with4 out regard to whether the master 

5 agreement provides for an agreement 

6 or transaction that is not a securities 

7 contract under this clause, except that 

8 the master agreement shall be consid9 ered to be a securities contract under 

10 this clause only with respect to each 

11 agreement or transaction under the 

12 master agreement that is referred to 

13 in subclause (I), (III), (IV), (V), (VI), 

14 (VII), or (VIII); and 

15 ‘‘(X) means any security agree16 ment or arrangement or other credit 

17 enhancement related to any agree18 ment or transaction referred to in this 

19 clause, including any guarantee or re20 imbursement obligation in connection 

21 with any agreement or transaction re22 ferred to in this clause. 

23 ‘‘(iii) COMMODITY CONTRACT.—The 

24 term ‘commodity contract’ means— 
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1 ‘‘(I) with respect to a futures 

2 commission merchant, a contract for 

3 the purchase or sale of a commodity 

4 for future delivery on, or subject to 

5 the rules of, a contract market or 

6 board of trade; 

7 ‘‘(II) with respect to a foreign fu8 tures commission merchant, a foreign 

9 future; 

10 ‘‘(III) with respect to a leverage 

11 transaction merchant, a leverage 

12 transaction; 

13 ‘‘(IV) with respect to a clearing 

14 organization, a contract for the pur15 chase or sale of a commodity for fu16 ture delivery on, or subject to the 

17 rules of, a contract market or board 

18 of trade that is cleared by such clear19 ing organization, or commodity option 

20 traded on, or subject to the rules of, 

21 a contract market or board of trade 

22 that is cleared by such clearing orga23 nization; 

24 ‘‘(V) with respect to a commodity 

25 options dealer, a commodity option; 
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1 ‘‘(VI) any other agreement or 

2 transaction that is similar to any 

3 agreement or transaction referred to 

4 in this clause; 

5 ‘‘(VII) any combination of the 

6 agreements or transactions referred to 

7 in this clause; 

8 ‘‘(VIII) any option to enter into 

9 any agreement or transaction referred 

10 to in this clause; 

11 ‘‘(IX) a master agreement that 

12 provides for an agreement or trans13 action referred to in subclause (I), 

14 (II), (III), (IV), (V), (VI), (VII), or 

15 (VIII), together with all supplements 

16 to any such master agreement, with17 out regard to whether the master 

18 agreement provides for an agreement 

19 or transaction that is not a com20 modity contract under this clause, ex21 cept that the master agreement shall 

22 be considered to be a commodity con23 tract under this clause only with re24 spect to each agreement or trans25 action under the master agreement 
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1 that is referred to in subclause (I), 

2 (II), (III), (IV), (V), (VI), (VII), or 

3 (VIII); or 

4 ‘‘(X) any security agreement or 

5 arrangement or other credit enhance6 ment related to any agreement or 

7 transaction referred to in this clause, 

8 including any guarantee or reimburse9 ment obligation in connection with 

10 any agreement or transaction referred 

11 to in this clause. 

12 ‘‘(iv) FORWARD CONTRACT.—The 

13 term ‘forward contract’ means— 

14 ‘‘(I) a contract (other than a 

15 commodity contract) for the purchase, 

16 sale, or transfer of a commodity or 

17 any similar good, article, service, 

18 right, or interest which is presently or 

19 in the future becomes the subject of 

20 dealing in the forward contract trade, 

21 or product or byproduct thereof, with 

22 a maturity date more than 2 days 

23 after the date the contract is entered 

24 into, including, a repurchase trans25 action, reverse repurchase transaction, 
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1 consignment, lease, swap, hedge 

2 transaction, deposit, loan, option, allo3 cated transaction, unallocated trans4 action, or any other similar agree5 ment; 

6 ‘‘(II) any combination of agree7 ments or transactions referred to in 

8 subclauses (I) and (III); 

9 ‘‘(III) any option to enter into 

10 any agreement or transaction referred 

11 to in subclause (I) or (II); 

12 ‘‘(IV) a master agreement that 

13 provides for an agreement or trans14 action referred to in subclauses (I), 

15 (II), or (III), together with all supple16 ments to any such master agreement, 

17 without regard to whether the master 

18 agreement provides for an agreement 

19 or transaction that is not a forward 

20 contract under this clause, except that 

21 the master agreement shall be consid22 ered to be a forward contract under 

23 this clause only with respect to each 

24 agreement or transaction under the 
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1 master agreement that is referred to 

2 in subclause (I), (II), or (III); or 

3 ‘‘(V) any security agreement or 

4 arrangement or other credit enhance5 ment related to any agreement or 

6 transaction referred to in subclause 

7 (I), (II), (III), or (IV), including any 

8 guarantee or reimbursement obliga9 tion in connection with any agreement 

10 or transaction referred to in any such 

11 subclause. 

12 ‘‘(v) REPURCHASE AGREEMENT.—The 

13 term ‘repurchase agreement’ (which defini14 tion also applies to a reverse repurchase 

15 agreement)— 

16 ‘‘(I) means an agreement, includ17 ing related terms, which provides for 

18 the transfer of one or more certifi19 cates of deposit, mortgage-related se20 curities (as such term is defined in 

21 the Securities Exchange Act of 1934), 

22 mortgage loans, interests in mortgage23 related securities or mortgage loans, 

24 eligible bankers’ acceptances, qualified 

25 foreign government securities or secu-
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1 rities that are direct obligations of, or 

2 that are fully guaranteed by, the 

3 United States or any agency of the 

4 United States against the transfer of 

5 funds by the transferee of such certifi6 cates of deposit, eligible bankers’ ac7 ceptances, securities, mortgage loans, 

8 or interests with a simultaneous 

9 agreement by such transferee to 

10 transfer to the transferor thereof cer11 tificates of deposit, eligible bankers’ 

12 acceptances, securities, mortgage 

13 loans, or interests as described above, 

14 at a date certain not later than 1 year 

15 after such transfers or on demand, 

16 against the transfer of funds, or any 

17 other similar agreement; 

18 ‘‘(II) does not include any repur19 chase obligation under a participation 

20 in a commercial mortgage loan unless 

21 the Agency determines by regulation, 

22 resolution, or order to include any 

23 such participation within the meaning 

24 of such term; 
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1 ‘‘(III) means any combination of 

2 agreements or transactions referred to 

3 in subclauses (I) and (IV); 

4 ‘‘(IV) means any option to enter 

5 into any agreement or transaction re6 ferred to in subclause (I) or (III); 

7 ‘‘(V) means a master agreement 

8 that provides for an agreement or 

9 transaction referred to in subclause 

10 (I), (III), or (IV), together with all 

11 supplements to any such master 

12 agreement, without regard to whether 

13 the master agreement provides for an 

14 agreement or transaction that is not a 

15 repurchase agreement under this 

16 clause, except that the master agree17 ment shall be considered to be a re18 purchase agreement under this sub19 clause only with respect to each agree20 ment or transaction under the master 

21 agreement that is referred to in sub22 clause (I), (III), or (IV); and 

23 ‘‘(VI) means any security agree24 ment or arrangement or other credit 

25 enhancement related to any agree-
227 

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1 ment or transaction referred to in 

2 subclause (I), (III), (IV), or (V), in3 cluding any guarantee or reimburse4 ment obligation in connection with 

5 any agreement or transaction referred 

6 to in any such subclause. 

7 For purposes of this clause, the term 

8 ‘qualified foreign government security’ 

9 means a security that is a direct obligation 

10 of, or that is fully guaranteed by, the cen11 tral government of a member of the Orga12 nization for Economic Cooperation and 

13 Development (as determined by regulation 

14 or order adopted by the appropriate Fed15 eral banking authority). 

16 ‘‘(vi) SWAP AGREEMENT.—The term 

17 ‘swap agreement’ means— 

18 ‘‘(I) any agreement, including the 

19 terms and conditions incorporated by 

20 reference in any such agreement, 

21 which is an interest rate swap, option, 

22 future, or forward agreement, includ23 ing a rate floor, rate cap, rate collar, 

24 cross-currency rate swap, and basis 

25 swap; a spot, same day-tomorrow, to-
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1 morrow-next, forward, or other for2 eign exchange or precious metals 

3 agreement; a currency swap, option, 

4 future, or forward agreement; an eq5 uity index or equity swap, option, fu6 ture, or forward agreement; a debt 

7 index or debt swap, option, future, or 

8 forward agreement; a total return, 

9 credit spread or credit swap, option, 

10 future, or forward agreement; a com11 modity index or commodity swap, op12 tion, future, or forward agreement; or 

13 a weather swap, weather derivative, or 

14 weather option; 

15 ‘‘(II) any agreement or trans16 action that is similar to any other 

17 agreement or transaction referred to 

18 in this clause and that is of a type 

19 that has been, is presently, or in the 

20 future becomes, the subject of recur21 rent dealings in the swap markets (in22 cluding terms and conditions incor23 porated by reference in such agree24 ment) and that is a forward, swap, fu25 ture, or option on one or more rates, 
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1 currencies, commodities, equity securi2 ties or other equity instruments, debt 

3 securities or other debt instruments, 

4 quantitative measures associated with 

5 an occurrence, extent of an occur6 rence, or contingency associated with 

7 a financial, commercial, or economic 

8 consequence, or economic or financial 

9 indices or measures of economic or fi10 nancial risk or value; 

11 ‘‘(III) any combination of agree12 ments or transactions referred to in 

13 this clause; 

14 ‘‘(IV) any option to enter into 

15 any agreement or transaction referred 

16 to in this clause; 

17 ‘‘(V) a master agreement that 

18 provides for an agreement or trans19 action referred to in subclause (I), 

20 (II), (III), or (IV), together with all 

21 supplements to any such master 

22 agreement, without regard to whether 

23 the master agreement contains an 

24 agreement or transaction that is not a 

25 swap agreement under this clause, ex-
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1 cept that the master agreement shall 

2 be considered to be a swap agreement 

3 under this clause only with respect to 

4 each agreement or transaction under 

5 the master agreement that is referred 

6 to in subclause (I), (II), (III), or (IV); 

7 and 

8 ‘‘(VI) any security agreement or 

9 arrangement or other credit enhance10 ment related to any agreements or 

11 transactions referred to in subclause 

12 (I), (II), (III), (IV), or (V), including 

13 any guarantee or reimbursement obli14 gation in connection with any agree15 ment or transaction referred to in any 

16 such subclause. 

17 Such term is applicable for purposes of 

18 this subsection only and shall not be con19 strued or applied so as to challenge or af20 fect the characterization, definition, or 

21 treatment of any swap agreement under 

22 any other statute, regulation, or rule, in23 cluding the Securities Act of 1933, the Se24 curities Exchange Act of 1934, the Public 

25 Utility Holding Company Act of 1935, the 
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1 Trust Indenture Act of 1939, the Invest2 ment Company Act of 1940, the Invest3 ment Advisers Act of 1940, the Securities 

4 Investor Protection Act of 1970, the Com5 modity Exchange Act, the Gramm-Leach6 Bliley Act, and the Legal Certainty for 

7 Bank Products Act of 2000. 

8 ‘‘(vii) TREATMENT OF MASTER

9 AGREEMENT AS ONE AGREEMENT.—Any 

10 master agreement for any contract or 

11 agreement described in any preceding 

12 clause of this subparagraph (or any master 

13 agreement for such master agreement or 

14 agreements), together with all supplements 

15 to such master agreement, shall be treated 

16 as a single agreement and a single quali17 fied financial contract. If a master agree18 ment contains provisions relating to agree19 ments or transactions that are not them20 selves qualified financial contracts, the 

21 master agreement shall be deemed to be a 

22 qualified financial contract only with re23 spect to those transactions that are them24 selves qualified financial contracts. 
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1 ‘‘(viii) TRANSFER.—The term ‘trans2 fer’ means every mode, direct or indirect, 

3 absolute or conditional, voluntary or invol4 untary, of disposing of or parting with 

5 property or with an interest in property, 

6 including retention of title as a security in7 terest and foreclosure of the regulated en8 tity’s equity of redemption. 

9 ‘‘(E) CERTAIN PROTECTIONS IN EVENT OF

10 APPOINTMENT OF CONSERVATOR.—Notwith11 standing any other provision of this Act (other 

12 than paragraph (13) of this subsection), any 

13 other Federal law, or the law of any State, no 

14 person shall be stayed or prohibited from exer15 cising— 

16 ‘‘(i) any right such person has to 

17 cause the termination, liquidation, or accel18 eration of any qualified financial contract 

19 with a regulated entity in a conservator20 ship based upon a default under such fi21 nancial contract which is enforceable under 

22 applicable noninsolvency law; 

23 ‘‘(ii) any right under any security 

24 agreement or arrangement or other credit 
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1 enhancement relating to one or more such 

2 qualified financial contracts; or 

3 ‘‘(iii) any right to offset or net out 

4 any termination values, payment amounts, 

5 or other transfer obligations arising under 

6 or in connection with such qualified finan7 cial contracts. 

8 ‘‘(F) CLARIFICATION.—No provision of law 

9 shall be construed as limiting the right or 

10 power of the Agency, or authorizing any court 

11 or agency to limit or delay, in any manner, the 

12 right or power of the Agency to transfer any 

13 qualified financial contract in accordance with 

14 paragraphs (9) and (10) of this subsection or to 

15 disaffirm or repudiate any such contract in ac16 cordance with subsection (d)(1) of this section. 

17 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC18 TIVE.— 

19 ‘‘(i) IN GENERAL.—Notwithstanding 

20 the provisions of subparagraphs (A) and 

21 (E), and sections 403 and 404 of the Fed22 eral Deposit Insurance Corporation Im23 provement Act of 1991, no walkaway 

24 clause shall be enforceable in a qualified fi-
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1 nancial contract of a regulated entity in 

2 default. 

3 ‘‘(ii) WALKAWAY CLAUSE DEFINED.— 

4 For purposes of this subparagraph, the 

5 term ‘walkaway clause’ means a provision 

6 in a qualified financial contract that, after 

7 calculation of a value of a party’s position 

8 or an amount due to or from 1 of the par9 ties in accordance with its terms upon ter10 mination, liquidation, or acceleration of the 

11 qualified financial contract, either does not 

12 create a payment obligation of a party or 

13 extinguishes a payment obligation of a 

14 party in whole or in part solely because of 

15 such party’s status as a nondefaulting 

16 party. 

17 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON18 TRACTS.—In making any transfer of assets or liabil19 ities of a regulated entity in default which includes 

20 any qualified financial contract, the conservator or 

21 receiver for such regulated entity shall either— 

22 ‘‘(A) transfer to 1 person— 

23 ‘‘(i) all qualified financial contracts 

24 between any person (or any affiliate of 
235 

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1 such person) and the regulated entity in 

2 default; 

3 ‘‘(ii) all claims of such person (or any 

4 affiliate of such person) against such regu5 lated entity under any such contract (other 

6 than any claim which, under the terms of 

7 any such contract, is subordinated to the 

8 claims of general unsecured creditors of 

9 such regulated entity); 

10 ‘‘(iii) all claims of such regulated enti11 ty against such person (or any affiliate of 

12 such person) under any such contract; and 

13 ‘‘(iv) all property securing or any 

14 other credit enhancement for any contract 

15 described in clause (i) or any claim de16 scribed in clause (ii) or (iii) under any 

17 such contract; or 

18 ‘‘(B) transfer none of the financial con19 tracts, claims, or property referred to under 

20 subparagraph (A) (with respect to such person 

21 and any affiliate of such person). 

22 ‘‘(10) NOTIFICATION OF TRANSFER.— 

23 ‘‘(A) IN GENERAL.—If— 

24 ‘‘(i) the conservator or receiver for a 

25 regulated entity in default makes any 
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1 transfer of the assets and liabilities of such 

2 regulated entity, and 

3 ‘‘(ii) the transfer includes any quali4 fied financial contract, 

5 the conservator or receiver shall notify any per6 son who is a party to any such contract of such 

7 transfer by 5:00 p.m. (eastern time) on the 

8 business day following the date of the appoint9 ment of the receiver in the case of a receiver10 ship, or the business day following such trans11 fer in the case of a conservatorship. 

12 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE13 ABLE.— 

14 ‘‘(i) RECEIVERSHIP.—A person who is 

15 a party to a qualified financial contract 

16 with a regulated entity may not exercise 

17 any right that such person has to termi18 nate, liquidate, or net such contract under 

19 paragraph (8)(A) of this subsection or sec20 tion 403 or 404 of the Federal Deposit In21 surance Corporation Improvement Act of 

22 1991, solely by reason of or incidental to 

23 the appointment of a receiver for the regu24 lated entity (or the insolvency or financial 
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1 condition of the regulated entity for which 

2 the receiver has been appointed)— 

3 ‘‘(I) until 5:00 p.m. (eastern 

4 time) on the business day following 

5 the date of the appointment of the re6 ceiver; or 

7 ‘‘(II) after the person has re8 ceived notice that the contract has 

9 been transferred pursuant to para10 graph (9)(A). 

11 ‘‘(ii) CONSERVATORSHIP.—A person 

12 who is a party to a qualified financial con13 tract with a regulated entity may not exer14 cise any right that such person has to ter15 minate, liquidate, or net such contract 

16 under paragraph (8)(E) of this subsection 

17 or section 403 or 404 of the Federal De18 posit Insurance Corporation Improvement 

19 Act of 1991, solely by reason of or inci20 dental to the appointment of a conservator 

21 for the regulated entity (or the insolvency 

22 or financial condition of the regulated enti23 ty for which the conservator has been ap24 pointed). 
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1 ‘‘(iii) NOTICE.—For purposes of this 

2 paragraph, the Agency as receiver or con3 servator of a regulated entity shall be 

4 deemed to have notified a person who is a 

5 party to a qualified financial contract with 

6 such regulated entity if the Agency has 

7 taken steps reasonably calculated to pro8 vide notice to such person by the time 

9 specified in subparagraph (A). 

10 ‘‘(C) BUSINESS DAY DEFINED.—For pur11 poses of this paragraph, the term ‘business day’ 

12 means any day other than any Saturday, Sun13 day, or any day on which either the New York 

14 Stock Exchange or the Federal Reserve Bank 

15 of New York is closed. 

16 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

17 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

18 the rights of disaffirmance or repudiation of a con19 servator or receiver with respect to any qualified fi20 nancial contract to which a regulated entity is a 

21 party, the conservator or receiver for such institution 

22 shall either— 

23 ‘‘(A) disaffirm or repudiate all qualified fi24 nancial contracts between— 
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1 ‘‘(i) any person or any affiliate of 

2 such person; and 

3 ‘‘(ii) the regulated entity in default; or 

4 ‘‘(B) disaffirm or repudiate none of the 

5 qualified financial contracts referred to in sub6 paragraph (A) (with respect to such person or 

7 any affiliate of such person). 

8 ‘‘(12) CERTAIN SECURITY INTERESTS NOT

9 AVOIDABLE.—No provision of this subsection shall 

10 be construed as permitting the avoidance of any le11 gally enforceable or perfected security interest in any 

12 of the assets of any regulated entity, except where 

13 such an interest is taken in contemplation of the in14 solvency of the regulated entity, or with the intent 

15 to hinder, delay, or defraud the regulated entity or 

16 the creditors of such regulated entity. 

17 ‘‘(13) AUTHORITY TO ENFORCE CONTRACTS.— 

18 ‘‘(A) IN GENERAL.—Notwithstanding any 

19 provision of a contract providing for termi20 nation, default, acceleration, or exercise of 

21 rights upon, or solely by reason of, insolvency 

22 or the appointment of a conservator or receiver, 

23 the conservator or receiver may enforce any 

24 contract or regulated entity bond entered into 

25 by the regulated entity. 
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1 ‘‘(B) CERTAIN RIGHTS NOT AFFECTED.— 

2 No provision of this paragraph may be con3 strued as impairing or affecting any right of the 

4 conservator or receiver to enforce or recover 

5 under a director’s or officer’s liability insurance 

6 contract or surety bond under other applicable 

7 law. 

8 ‘‘(C) CONSENT REQUIREMENT.— 

9 ‘‘(i) IN GENERAL.—Except as other10 wise provided under this section, no person 

11 may exercise any right or power to termi12 nate, accelerate, or declare a default under 

13 any contract to which a regulated entity is 

14 a party, or to obtain possession of or exer15 cise control over any property of the regu16 lated entity, or affect any contractual 

17 rights of the regulated entity, without the 

18 consent of the conservator or receiver, as 

19 appropriate, for a period of— 

20 ‘‘(I) 45 days after the date of ap21 pointment of a conservator; or 

22 ‘‘(II) 90 days after the date of 

23 appointment of a receiver. 

24 ‘‘(ii) EXCEPTIONS.—This paragraph 

25 shall— 
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1 ‘‘(I) not apply to a director’s or 

2 officer’s liability insurance contract; 

3 ‘‘(II) not apply to the rights of 

4 parties to any qualified financial con5 tracts under subsection (d)(8); and 

6 ‘‘(III) not be construed as per7 mitting the conservator or receiver to 

8 fail to comply with otherwise enforce9 able provisions of such contracts. 

10 ‘‘(14) SAVINGS CLAUSE.—The meanings of 

11 terms used in this subsection are applicable for pur12 poses of this subsection only, and shall not be con13 strued or applied so as to challenge or affect the 

14 characterization, definition, or treatment of any 

15 similar terms under any other statute, regulation, or 

16 rule, including the Gramm-Leach-Bliley Act, the 

17 Legal Certainty for Bank Products Act of 2000, the 

18 securities laws (as that term is defined in section 

19 3(a)(47) of the Securities Exchange Act of 1934), 

20 and the Commodity Exchange Act. 

21 ‘‘(15) EXCEPTION FOR FEDERAL RESERVE AND

22 FEDERAL HOME LOAN BANKS.—No provision of this 

23 subsection shall apply with respect to— 
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1 ‘‘(A) any extension of credit from any Fed2 eral home loan bank or Federal Reserve Bank 

3 to any regulated entity; or 

4 ‘‘(B) any security interest in the assets of 

5 the regulated entity securing any such extension 

6 of credit. 

7 ‘‘(e) VALUATION OF CLAIMS IN DEFAULT.— 

8 ‘‘(1) IN GENERAL.—Notwithstanding any other 

9 provision of Federal law or the law of any State, and 

10 regardless of the method which the Agency deter11 mines to utilize with respect to a regulated entity in 

12 default or in danger of default, including trans13 actions authorized under subsection (i), this sub14 section shall govern the rights of the creditors of 

15 such regulated entity. 

16 ‘‘(2) MAXIMUM LIABILITY.—The maximum li17 ability of the Agency, acting as receiver or in any 

18 other capacity, to any person having a claim against 

19 the receiver or the regulated entity for which such 

20 receiver is appointed shall equal the lesser of— 

21 ‘‘(A) the amount such claimant would have 

22 received if the Agency had liquidated the assets 

23 and liabilities of such regulated entity without 

24 exercising the authority of the Agency under 

25 subsection (i) of this section; or 
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1 ‘‘(B) the amount of proceeds realized from 

2 the performance of contracts or sale of the as3 sets of the regulated entity. 

4 ‘‘(f) LIMITATION ON COURT ACTION.—Except as 

5 provided in this section or at the request of the Director, 

6 no court may take any action to restrain or affect the exer7 cise of powers or functions of the Agency as a conservator 

8 or a receiver. 

9 ‘‘(g) LIABILITY OF DIRECTORS AND OFFICERS.— 

10 ‘‘(1) IN GENERAL.—A director or officer of a 

11 regulated entity may be held personally liable for 

12 monetary damages in any civil action by, on behalf 

13 of, or at the request or direction of the Agency, 

14 which action is prosecuted wholly or partially for the 

15 benefit of the Agency— 

16 ‘‘(A) acting as conservator or receiver of 

17 such regulated entity, or 

18 ‘‘(B) acting based upon a suit, claim, or 

19 cause of action purchased from, assigned by, or 

20 otherwise conveyed by such receiver or conser21 vator, 

22 for gross negligence, including any similar conduct 

23 or conduct that demonstrates a greater disregard of 

24 a duty of care (than gross negligence) including in-
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1 tentional tortious conduct, as such terms are defined 

2 and determined under applicable State law. 

3 ‘‘(2) NO LIMITATION.—Nothing in this para4 graph shall impair or affect any right of the Agency 

5 under other applicable law. 

6 ‘‘(h) DAMAGES.—In any proceeding related to any 

7 claim against a director, officer, employee, agent, attorney, 

8 accountant, appraiser, or any other party employed by or 

9 providing services to a regulated entity, recoverable dam10 ages determined to result from the improvident or other11 wise improper use or investment of any assets of the regu12 lated entity shall include principal losses and appropriate 

13 interest. 

14 ‘‘(i) LIMITED-LIFE REGULATED ENTITIES.— 

15 ‘‘(1) ORGANIZATION.— 

16 ‘‘(A) PURPOSE.—If a regulated entity is in 

17 default, or if the Agency anticipates that a reg18 ulated entity will default, the Agency may orga19 nize a limited-life regulated entity with those 

20 powers and attributes of the regulated entity in 

21 default or in danger of default that the Director 

22 determines necessary, subject to the provisions 

23 of this subsection. The Director shall grant a 

24 temporary charter to the limited-life regulated 
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1 entity, and the limited-life regulated entity shall 

2 operate subject to that charter. 

3 ‘‘(B) AUTHORITIES.—Upon the creation of 

4 a limited-life regulated entity under subpara5 graph (A), the limited-life regulated entity 

6 may— 

7 ‘‘(i) assume such liabilities of the reg8 ulated entity that is in default or in danger 

9 of default as the Agency may, in its discre10 tion, determine to be appropriate, provided 

11 that the liabilities assumed shall not exceed 

12 the amount of assets of the limited-life reg13 ulated entity; 

14 ‘‘(ii) purchase such assets of the regu15 lated entity that is in default, or in danger 

16 of default, as the Agency may, in its dis17 cretion, determine to be appropriate; and 

18 ‘‘(iii) perform any other temporary 

19 function which the Agency may, in its dis20 cretion, prescribe in accordance with this 

21 section. 

22 ‘‘(2) CHARTER.— 

23 ‘‘(A) CONDITIONS.—The Agency may 

24 grant a temporary charter if the Agency deter25 mines that the continued operation of the regu-
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1 lated entity in default or in danger of default 

2 is in the best interest of the national economy 

3 and the housing markets. 

4 ‘‘(B) TREATMENT AS BEING IN DEFAULT

5 FOR CERTAIN PURPOSES.—A limited-life regu6 lated entity shall be treated as a regulated enti7 ty in default at such times and for such pur8 poses as the Agency may, in its discretion, de9 termine. 

10 ‘‘(C) MANAGEMENT.—A limited-life regu11 lated entity, upon the granting of its charter, 

12 shall be under the management of a board of 

13 directors consisting of not fewer than 5 nor 

14 more than 10 members appointed by the Agen15 cy. 

16 ‘‘(D) BYLAWS.—The board of directors of 

17 a limited-life regulated entity shall adopt such 

18 bylaws as may be approved by the Agency. 

19 ‘‘(3) CAPITAL STOCK.—No capital stock need 

20 be paid into a limited-life regulated entity by the 

21 Agency. 

22 ‘‘(4) INVESTMENTS.—Funds of a limited-life 

23 regulated entity shall be kept on hand in cash, in24 vested in obligations of the United States or obliga25 tions guaranteed as to principal and interest by the 
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1 United States, or deposited with the Agency, or any 

2 Federal Reserve bank. 

3 ‘‘(5) EXEMPT STATUS.—Notwithstanding any 

4 other provision of Federal or State law, the limited5 life regulated entity, its franchise, property, and in6 come shall be exempt from all taxation now or here7 after imposed by the United States, by any territory, 

8 dependency, or possession thereof, or by any State, 

9 county, municipality, or local taxing authority. 

10 ‘‘(6) WINDING UP.— 

11 ‘‘(A) IN GENERAL.—Subject to subpara12 graph (B), unless Congress authorizes the sale 

13 of the capital stock of the limited-life regulated 

14 entity, not later than 2 years after the date of 

15 its organization, the Agency shall wind up the 

16 affairs of the limited-life regulated entity. 

17 ‘‘(B) EXTENSION.—The Director may, in 

18 the discretion of the Director, extend the status 

19 of the limited-life regulated entity for 3 addi20 tional 1-year periods. 

21 ‘‘(7) TRANSFER OF ASSETS AND LIABILITIES.— 

22 ‘‘(A) IN GENERAL.— 

23 ‘‘(i) TRANSFER OF ASSETS AND LI24 ABILITIES.—The Agency, as receiver, may 

25 transfer any assets and liabilities of a reg-
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1 ulated entity in default, or in danger of de2 fault, to the limited-life regulated entity in 

3 accordance with paragraph (1). 

4 ‘‘(ii) SUBSEQUENT TRANSFERS.—At 

5 any time after a charter is transferred to 

6 a limited-life regulated entity, the Agency, 

7 as receiver, may transfer any assets and li8 abilities of such regulated entity in default, 

9 or in danger in default, as the Agency 

10 may, in its discretion, determine to be ap11 propriate in accordance with paragraph 

12 (1). 

13 ‘‘(iii) EFFECTIVE WITHOUT AP14 PROVAL.—The transfer of any assets or li15 abilities of a regulated entity in default, or 

16 in danger of default, transferred to a lim17 ited-life regulated entity shall be effective 

18 without any further approval under Fed19 eral or State law, assignment, or consent 

20 with respect thereto. 

21 ‘‘(8) PROCEEDS.—To the extent that available 

22 proceeds from the limited-life regulated entity exceed 

23 amounts required to pay obligations, such proceeds 

24 may be paid to the regulated entity in default, or in 

25 danger of default. 
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1 ‘‘(9) POWERS.— 

2 ‘‘(A) IN GENERAL.—Each limited-life regu3 lated entity created under this subsection shall 

4 have all corporate powers of, and be subject to 

5 the same provisions of law as, the regulated en6 tity in default or in danger of default to which 

7 it relates, except that— 

8 ‘‘(i) the Agency may— 

9 ‘‘(I) remove the directors of a 

10 limited-life regulated entity; and 

11 ‘‘(II) fix the compensation of 

12 members of the board of directors and 

13 senior management, as determined by 

14 the Agency in its discretion, of a lim15 ited-life regulated entity; 

16 ‘‘(ii) the Agency may indemnify the 

17 representatives for purposes of paragraph 

18 (1)(B), and the directors, officers, employ19 ees, and agents of a limited-life regulated 

20 entity on such terms as the Agency deter21 mines to be appropriate; and 

22 ‘‘(iii) the board of directors of a lim23 ited-life regulated entity— 

24 ‘‘(I) shall elect a chairperson who 

25 may also serve in the position of chief 
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1 executive officer, except that such per2 son shall not serve either as chair3 person or as chief executive officer 

4 without the prior approval of the 

5 Agency; and 

6 ‘‘(II) may appoint a chief execu7 tive officer who is not also the chair8 person, except that such person shall 

9 not serve as chief executive officer 

10 without the prior approval of the 

11 Agency. 

12 ‘‘(B) STAY OF JUDICIAL ACTION.—Any ju13 dicial action to which a limited-life regulated 

14 entity becomes a party by virtue of its acquisi15 tion of any assets or assumption of any liabil16 ities of a regulated entity in default shall be 

17 stayed from further proceedings for a period of 

18 up to 45 days at the request of the limited-life 

19 regulated entity. Such period may be modified 

20 upon the consent of all parties. 

21 ‘‘(10) OBTAINING OF CREDIT AND INCURRING

22 OF DEBT.— 

23 ‘‘(A) IN GENERAL.—The limited-life regu24 lated entity may obtain unsecured credit and 
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1 incur unsecured debt in the ordinary course of 

2 business. 

3 ‘‘(B) INABILITY TO OBTAIN CREDIT.—If 

4 the limited-life regulated entity is unable to ob5 tain unsecured credit the Director may author6 ize the obtaining of credit or the incurring of 

7 debt— 

8 ‘‘(i) with priority over any or all ad9 ministrative expenses; 

10 ‘‘(ii) secured by a lien on property 

11 that is not otherwise subject to a lien; or 

12 ‘‘(iii) secured by a junior lien on prop13 erty that is subject to a lien. 

14 ‘‘(C) LIMITATIONS.— 

15 ‘‘(i) IN GENERAL.—The Director, 

16 after notice and a hearing, may authorize 

17 the obtaining of credit or the incurring of 

18 debt secured by a senior or equal lien on 

19 property that is subject to a lien (other 

20 than mortgages that collateralize the mort21 gage-backed securities issued or guaran22 teed by the regulated entity) only if— 

23 ‘‘(I) the limited-life regulated en24 tity is unable to obtain such credit 

25 otherwise; and 
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1 ‘‘(II) there is adequate protection 

2 of the interest of the holder of the lien 

3 on the property which such senior or 

4 equal lien is proposed to be granted. 

5 ‘‘(ii) BURDEN OF PROOF.—In any 

6 hearing under this subsection, the Director 

7 has the burden of proof on the issue of 

8 adequate protection. 

9 ‘‘(D) AFFECT ON DEBTS AND LIENS.—The 

10 reversal or modification on appeal of an author11 ization under this paragraph to obtain credit or 

12 incur debt, or of a grant under this section of 

13 a priority or a lien, does not affect the validity 

14 of any debt so incurred, or any priority or lien 

15 so granted, to an entity that extended such 

16 credit in good faith, whether or not such entity 

17 knew of the pendency of the appeal, unless such 

18 authorization and the incurring of such debt, or 

19 the granting of such priority or lien, were 

20 stayed pending appeal. 

21 ‘‘(11) ISSUANCE OF PREFERRED DEBT.—A lim22 ited-life regulated entity may, subject to the ap23 proval of the Director and subject to such terms and 

24 conditions as the Director may prescribe, issue 

25 notes, bonds, or other debt obligations of a class to 
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1 which all other debt obligations of the limited-life 

2 regulated entity shall be subordinate in right and 

3 payment. 

4 ‘‘(12) NO FEDERAL STATUS.— 

5 ‘‘(A) AGENCY STATUS.—A limited-life reg6 ulated entity is not an agency, establishment, or 

7 instrumentality of the United States. 

8 ‘‘(B) EMPLOYEE STATUS.—Representa9 tives for purposes of paragraph (1)(B), interim 

10 directors, directors, officers, employees, or 

11 agents of a limited-life regulated entity are not, 

12 solely by virtue of service in any such capacity, 

13 officers or employees of the United States. Any 

14 employee of the Agency or of any Federal in15 strumentality who serves at the request of the 

16 Agency as a representative for purposes of 

17 paragraph (1)(B), interim director, director, of18 ficer, employee, or agent of a limited-life regu19 lated entity shall not— 

20 ‘‘(i) solely by virtue of service in any 

21 such capacity lose any existing status as 

22 an officer or employee of the United States 

23 for purposes of title 5, United States Code, 

24 or any other provision of law; or 
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1 ‘‘(ii) receive any salary or benefits for 

2 service in any such capacity with respect to 

3 a limited-life regulated entity in addition to 

4 such salary or benefits as are obtained 

5 through employment with the Agency or 

6 such Federal instrumentality. 

7 ‘‘(13) ADDITIONAL POWERS.—In addition to 

8 any other powers granted under this subsection, a 

9 limited-life regulated entity may— 

10 ‘‘(A) extend a maturity date or change in 

11 an interest rate or other term of outstanding 

12 securities; 

13 ‘‘(B) issue securities of the limited-life reg14 ulated entity, for cash, for property, for existing 

15 securities, or in exchange for claims or inter16 ests, or for any other appropriate purposes; and 

17 ‘‘(C) take any other action not inconsistent 

18 with this section. 

19 ‘‘(j) OTHER EXEMPTIONS.—When acting as a re20 ceiver, the following provisions shall apply with respect to 

21 the Agency: 

22 ‘‘(1) EXEMPTION FROM TAXATION.—The Agen23 cy, including its franchise, its capital, reserves, and 

24 surplus, and its income, shall be exempt from all 

25 taxation imposed by any State, country, munici-
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1 pality, or local taxing authority, except that any real 

2 property of the Agency shall be subject to State, ter3 ritorial, county, municipal, or local taxation to the 

4 same extent according to its value as other real 

5 property is taxed, except that, notwithstanding the 

6 failure of any person to challenge an assessment 

7 under State law of the value of such property, and 

8 the tax thereon, shall be determined as of the period 

9 for which such tax is imposed. 

10 ‘‘(2) EXEMPTION FROM ATTACHMENT AND

11 LIENS.—No property of the Agency shall be subject 

12 to levy, attachment, garnishment, foreclosure, or sale 

13 without the consent of the Agency, nor shall any in14 voluntary lien attach to the property of the Agency. 

15 ‘‘(3) EXEMPTION FROM PENALTIES AND

16 FINES.—The Agency shall not be liable for any 

17 amounts in the nature of penalties or fines, includ18 ing those arising from the failure of any person to 

19 pay any real property, personal property, probate, or 

20 recording tax or any recording or filing fees when 

21 due. 

22 ‘‘(k) PROHIBITION OF CHARTER REVOCATION.—In 

23 no case may a receiver appointed pursuant to this section 

24 revoke, annul, or terminate the charter of a regulated enti25 ty.’’. 
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1 (b) CONFORMING AMENDMENTS.— 

2 (1) HOUSING AND COMMUNITY DEVELOPMENT

3 ACT OF 1992.—Subtitle B of title XIII of the Hous4 ing and Community Development Act of 1992 is 

5 amended by striking sections 1369 (12 U.S.C. 

6 4619), 1369A (12 U.S.C. 4620), and 1369B (12 

7 U.S.C. 4621). 

8 (2) FEDERAL HOME LOAN BANKS.—Section 25 

9 of the Federal Home Loan Bank Act (12 U.S.C. 

10 1445) is amended by striking ‘‘Board under this 

11 Act’’ and inserting ‘‘Director under section 1367 of 

12 the Housing and Community Development Act of 

13 1992’’. 

14 SEC. 145. CONFORMING AMENDMENTS. 

15 Title XIII of the Housing and Community Develop16 ment Act of 1992, as amended by the preceding provisions 

17 of this Act, is further amended— 

18 (1) in sections 1365 (12 U.S.C. 4615) through 

19 1369D (12 U.S.C. 4623), but not including section 

20 1367 (12 U.S.C. 4617) as added by section 144 of 

21 this Act— 

22 (A) by striking ‘‘An enterprise’’ each place 

23 such term appears and inserting ‘‘A regulated 

24 entity’’; 
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1 (B) by striking ‘‘an enterprise’’ each place 

2 such term appears and inserting ‘‘a regulated 

3 entity’’; and 

4 (C) by striking ‘‘the enterprise’’ each place 

5 such term appears and inserting ‘‘the regulated 

6 entity’’; 

7 (2) in section 1366 (12 U.S.C. 4616)— 

8 (A) in subsection (b)(7), by striking ‘‘sec9 tion 1369 (excluding subsection (a)(1) and 

10 (2))’’ and inserting ‘‘section 1367’’; and 

11 (B) in subsection (d), by striking ‘‘the en12 terprises’’ and inserting ‘‘the regulated enti13 ties’’; 

14 (3) in section 1368(d) (12 U.S.C. 4618(d)), by 

15 striking ‘‘Committee on Banking, Finance and 

16 Urban Affairs’’ and inserting ‘‘Committee on Finan17 cial Services’’; 

18 (4) in section 1369C(c) (12 U.S.C. 4622(c)), by 

19 striking ‘‘any enterprise’’ and inserting ‘‘any regu20 lated entity’’; and 

21 (5) in subsections (a) and (d) of section 1369D, 

22 by striking ‘‘section 1366 or 1367 or action under 

23 section 1369)’’ each place such phrase appears and 

24 inserting ‘‘section 1367)’’. 
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1 Subtitle D—Enforcement Actions 

2 SEC. 161. CEASE-AND-DESIST PROCEEDINGS. 

3 Section 1371 of the Housing and Community Devel4 opment Act of 1992 (12 U.S.C. 4631) is amended— 

5 (1) by striking subsections (a) and (b) and in6 serting the following new subsections: 

7 ‘‘(a) ISSUANCE FOR UNSAFE OR UNSOUND PRAC8 TICES AND VIOLATIONS OF RULES OR LAWS.—If, in the 

9 opinion of the Director, a regulated entity or any regulated 

10 entity-affiliated party is engaging or has engaged, or the 

11 Director has reasonable cause to believe that the regulated 

12 entity or any regulated entity-affiliated party is about to 

13 engage, in an unsafe or unsound practice in conducting 

14 the business of the regulated entity or is violating or has 

15 violated, or the Director has reasonable cause to believe 

16 that the regulated entity or any regulated entity-affiliated 

17 party is about to violate, a law, rule, or regulation, or any 

18 condition imposed in writing by the Director in connection 

19 with the granting of any application or other request by 

20 the regulated entity or any written agreement entered into 

21 with the Director, the Director may issue and serve upon 

22 the regulated entity or such party a notice of charges in 

23 respect thereof. The Director may not, pursuant to this 

24 section, enforce compliance with any housing goal estab25 lished under subpart B of part 2 of subtitle A of this title, 
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1 with section 1336 or 1337 of this title, with subsection 

2 (m) or (n) of section 309 of the Federal National Mort3 gage Association Charter Act (12 U.S.C. 1723a(m), (n)), 

4 with subsection (e) or (f) of section 307 of the Federal 

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

6 1456(e), (f)), or with paragraph (5) of section 10(j) of 

7 the Federal Home Loan Bank Act (12 U.S.C. 1430(j)). 

8 ‘‘(b) ISSUANCE FOR UNSATISFACTORY RATING.—If a 

9 regulated entity receives, in its most recent report of ex10 amination, a less-than-satisfactory rating for asset quality, 

11 management, earnings, or liquidity, the Director may (if 

12 the deficiency is not corrected) deem the regulated entity 

13 to be engaging in an unsafe or unsound practice for pur14 poses of this subsection.’’; 

15 (2) in subsection (c)(2), by striking ‘‘enterprise, 

16 executive officer, or director’’ and inserting ‘‘regu17 lated entity or regulated entity-affiliated party’’; and 

18 (3) in subsection (d)— 

19 (A) in the matter preceding paragraph (1), 

20 by striking ‘‘enterprise, executive officer, or di21 rector’’ and inserting ‘‘regulated entity or regu22 lated entity-affiliated party’’; 

23 (B) in paragraph (1)— 
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1 (i) by striking ‘‘an executive officer or 

2 director’’ and inserting ‘‘a regulated entity 

3 affiliated party’’; and 

4 (ii) by inserting ‘‘(including reim5 bursement of compensation under section 

6 1318)’’ after ‘‘reimbursement’’; 

7 (C) in paragraph (6), by striking ‘‘and’’ at 

8 the end; 

9 (D) by redesignating paragraph (7) as 

10 paragraph (8); and 

11 (E) by inserting after paragraph (6) the 

12 following new paragraph: 

13 ‘‘(7) to effect an attachment on a regulated en14 tity or regulated entity-affiliated party subject to an 

15 order under this section or section 1372; and’’. 

16 SEC. 162. TEMPORARY CEASE-AND-DESIST PROCEEDINGS. 

17 Section 1372 of the Housing and Community Devel18 opment Act of 1992 (12 U.S.C. 4632) is amended— 

19 (1) by striking subsection (a) and inserting the 

20 following new subsection: 

21 ‘‘(a) GROUNDS FOR ISSUANCE.—Whenever the Direc22 tor determines that the violation or threatened violation 

23 or the unsafe or unsound practice or practices specified 

24 in the notice of charges served upon the regulated entity 

25 or any regulated entity-affiliated party pursuant to section 
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1 1371(a), or the continuation thereof, is likely to cause in2 solvency or significant dissipation of assets or earnings of 

3 the regulated entity, or is likely to weaken the condition 

4 of the regulated entity prior to the completion of the pro5 ceedings conducted pursuant to sections 1371 and 1373, 

6 the Director may issue a temporary order requiring the 

7 regulated entity or such party to cease and desist from 

8 any such violation or practice and to take affirmative ac9 tion to prevent or remedy such insolvency, dissipation, 

10 condition, or prejudice pending completion of such pro11 ceedings. Such order may include any requirement author12 ized under section 1371(d).’’; 

13 (2) in subsection (b), by striking ‘‘enterprise, 

14 executive officer, or director’’ and inserting ‘‘regu15 lated entity or regulated entity-affiliated party’’; 

16 (3) in subsection (d)— 

17 (A) by striking ‘‘An enterprise, executive 

18 officer, or director’’ and inserting ‘‘A regulated 

19 entity or regulated entity-affiliated party’’; and 

20 (B) by striking ‘‘the enterprise, executive 

21 officer, or director’’ and inserting ‘‘the regu22 lated entity or regulated entity-affiliated party’’; 

23 and 

24 (4) by striking subsection (e) and in inserting 

25 the following new subsection: 
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1 ‘‘(e) ENFORCEMENT.—In the case of violation or 

2 threatened violation of, or failure to obey, a temporary 

3 cease-and-desist order issued pursuant to this section, the 

4 Director may apply to the United States District Court 

5 for the District of Columbia or the United States district 

6 court within the jurisdiction of which the headquarters of 

7 the regulated entity is located, for an injunction to enforce 

8 such order, and, if the court determines that there has 

9 been such violation or threatened violation or failure to 

10 obey, it shall be the duty of the court to issue such injunc11 tion.’’. 

12 SEC. 163. PREJUDGMENT ATTACHMENT. 

13 The Housing and Community Development Act of 

14 1992 is amended by inserting after section 1375 (12 

15 U.S.C. 4635) the following new section: 

16 ‘‘SEC. 1375A. PREJUDGMENT ATTACHMENT. 

17 ‘‘(a) IN GENERAL.—In any action brought pursuant 

18 to this title, or in actions brought in aid of, or to enforce 

19 an order in, any administrative or other civil action for 

20 money damages, restitution, or civil money penalties 

21 brought pursuant to this title, the court may, upon appli22 cation of the Director or Attorney General, as applicable, 

23 issue a restraining order that— 

24 ‘‘(1) prohibits any person subject to the pro25 ceeding from withdrawing, transferring, removing, 
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1 dissipating, or disposing of any funds, assets or 

2 other property; and 

3 ‘‘(2) appoints a person on a temporary basis to 

4 administer the restraining order. 

5 ‘‘(b) STANDARD.— 

6 ‘‘(1) SHOWING.—Rule 65 of the Federal Rules 

7 of Civil Procedure shall apply with respect to any 

8 proceeding under subsection (a) without regard to 

9 the requirement of such rule that the applicant show 

10 that the injury, loss, or damage is irreparable and 

11 immediate. 

12 ‘‘(2) STATE PROCEEDING.—If, in the case of 

13 any proceeding in a State court, the court deter14 mines that rules of civil procedure available under 

15 the laws of such State provide substantially similar 

16 protections to a party’s right to due process as Rule 

17 65 (as modified with respect to such proceeding by 

18 paragraph (1)), the relief sought under subsection 

19 (a) may be requested under the laws of such State.’’. 

20 SEC. 164. ENFORCEMENT AND JURISDICTION. 

21 Section 1375 of the Housing and Community Devel22 opment Act of 1992 (12 U.S.C. 4635) is amended— 

23 (1) by striking subsection (a) and inserting the 

24 following new subsection: 
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1 ‘‘(a) ENFORCEMENT.—The Director may, in the dis2 cretion of the Director, apply to the United States District 

3 Court for the District of Columbia, or the United States 

4 district court within the jurisdiction of which the head5 quarters of the regulated entity is located, for the enforce6 ment of any effective and outstanding notice or order 

7 issued under this subtitle or subtitle B, or request that 

8 the Attorney General of the United States bring such an 

9 action. Such court shall have jurisdiction and power to 

10 order and require compliance with such notice or order.’’; 

11 and 

12 (2) in subsection (b), by striking ‘‘or 1376’’ and 

13 inserting ‘‘1376, or 1377’’. 

14 SEC. 165. CIVIL MONEY PENALTIES. 

15 Section 1376 of the Housing and Community Devel16 opment Act of 1992 (12 U.S.C. 4636) is amended— 

17 (1) in subsection (a)— 

18 (A) in the matter preceding paragraph (1), 

19 by striking ‘‘or any executive officer or’’ and in20 serting ‘‘any executive officer of a regulated en21 tity, any regulated entity-affiliated party, or 

22 any’’; and 

23 (B) in paragraph (1)— 

24 (i) by striking ‘‘the Federal National 

25 Mortgage Association Charter Act, the 
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1 Federal Home Loan Mortgage Corporation 

2 Act’’ and inserting ‘‘any provision of any 

3 of the authorizing statutes’’; 

4 (ii) by striking ‘‘or Act’’ and inserting 

5 ‘‘or statute’’; 

6 (iii) by striking ‘‘or subsection’’ and 

7 inserting ‘‘, subsection’’; and 

8 (iv) by inserting ‘‘, or paragraph (5) 

9 or (12) of section 10(j) of the Federal 

10 Home Loan Bank Act’’ before the semi11 colon at the end; 

12 (2) by striking subsection (b) and inserting the 

13 following new subsection: 

14 ‘‘(b) AMOUNT OF PENALTY.— 

15 ‘‘(1) FIRST TIER.—Any regulated entity which, 

16 or any regulated entity-affiliated party who— 

17 ‘‘(A) violates any provision of this title, 

18 any provision of any of the authorizing statutes, 

19 or any order, condition, rule, or regulation 

20 under any such title or statute, except that the 

21 Director may not, pursuant to this section, en22 force compliance with any housing goal estab23 lished under subpart B of part 2 of subtitle A 

24 of this title, with section 1336 or 1337 of this 

25 title, with subsection (m) or (n) of section 309 
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1 of the Federal National Mortgage Association 

2 Charter Act (12 U.S.C. 1723a(m), (n)), with 

3 subsection (e) or (f) of section 307 of the Fed4 eral Home Loan Mortgage Corporation Act (12 

5 U.S.C. 1456(e), (f)), or with paragraph (5) or 

6 (12) of section 10(j) of the Federal Home Loan 

7 Bank Act; 

8 ‘‘(B) violates any final or temporary order 

9 or notice issued pursuant to this title; 

10 ‘‘(C) violates any condition imposed in 

11 writing by the Director in connection with the 

12 grant of any application or other request by 

13 such regulated entity; or 

14 ‘‘(D) violates any written agreement be15 tween the regulated entity and the Director, 

16 shall forfeit and pay a civil money penalty of not 

17 more than $10,000 for each day during which such 

18 violation continues. 

19 ‘‘(2) SECOND TIER.—Notwithstanding para20 graph (1)— 

21 ‘‘(A) if a regulated entity, or a regulated 

22 entity-affiliated party— 

23 ‘‘(i) commits any violation described 

24 in any subparagraph of paragraph (1); 
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1 ‘‘(ii) recklessly engages in an unsafe 

2 or unsound practice in conducting the af3 fairs of such regulated entity; or 

4 ‘‘(iii) breaches any fiduciary duty; and 

5 ‘‘(B) the violation, practice, or breach— 

6 ‘‘(i) is part of a pattern of mis7 conduct; 

8 ‘‘(ii) causes or is likely to cause more 

9 than a minimal loss to such regulated enti10 ty; or 

11 ‘‘(iii) results in pecuniary gain or 

12 other benefit to such party, 

13 the regulated entity or regulated entity-affiliated 

14 party shall forfeit and pay a civil penalty of not 

15 more than $50,000 for each day during which such 

16 violation, practice, or breach continues. 

17 ‘‘(3) THIRD TIER.—Notwithstanding para18 graphs (1) and (2), any regulated entity which, or 

19 any regulated entity-affiliated party who— 

20 ‘‘(A) knowingly— 

21 ‘‘(i) commits any violation or engages 

22 in any conduct described in any subpara23 graph of paragraph (1); 
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1 ‘‘(ii) engages in any unsafe or un2 sound practice in conducting the affairs of 

3 such regulated entity; or 

4 ‘‘(iii) breaches any fiduciary duty; and 

5 ‘‘(B) knowingly or recklessly causes a sub6 stantial loss to such regulated entity or a sub7 stantial pecuniary gain or other benefit to such 

8 party by reason of such violation, practice, or 

9 breach, 

10 shall forfeit and pay a civil penalty in an amount not 

11 to exceed the applicable maximum amount deter12 mined under paragraph (4) for each day during 

13 which such violation, practice, or breach continues. 

14 ‘‘(4) MAXIMUM AMOUNTS OF PENALTIES FOR

15 ANY VIOLATION DESCRIBED IN PARAGRAPH (3).— 

16 The maximum daily amount of any civil penalty 

17 which may be assessed pursuant to paragraph (3) 

18 for any violation, practice, or breach described in 

19 such paragraph is— 

20 ‘‘(A) in the case of any person other than 

21 a regulated entity, an amount not to exceed 

22 $2,000,000; and 

23 ‘‘(B) in the case of any regulated entity, 

24 $2,000,000.’’; 
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1 (3) in subsection (c)(1)(B), by striking ‘‘enter2 prise, executive officer, or director’’ and inserting 

3 ‘‘regulated entity or regulated entity-affiliated 

4 party’’; 

5 (4) in subsection (d), by striking the first sen6 tence and inserting the following: ‘‘If a regulated en7 tity or regulated entity-affiliated party fails to com8 ply with an order of the Director imposing a civil 

9 money penalty under this section, after the order is 

10 no longer subject to review as provided under sub11 section (c)(1) and section 1374, the Director may, in 

12 the discretion of the Director, bring an action in the 

13 United States District Court for the District of Co14 lumbia, or the United States district court within 

15 the jurisdiction of which the headquarters of the reg16 ulated entity is located, to obtain a monetary judg17 ment against the regulated entity or regulated entity 

18 affiliated party and such other relief as may be 

19 available, or request that the Attorney General of 

20 the United States bring such an action.’’; and 

21 (5) in subsection (g), by striking ‘‘subsection 

22 (b)(3)’’ and inserting ‘‘this section, unless author23 ized by the Director by rule, regulation, or order’’. 
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1 SEC. 166. REMOVAL AND PROHIBITION AUTHORITY. 

2 (a) IN GENERAL.—Subtitle C of title XIII of the 

3 Housing and Community Development Act of 1992 is 

4 amended— 

5 (1) by redesignating sections 1377, 1378, 1379, 

6 1379A, and 1379B (12 U.S.C. 4637–41) as sections 

7 1379, 1379A, 1379B, 1379C, and 1379D, respec8 tively; and 

9 (2) by inserting after section 1376 (12 U.S.C. 

10 4636) the following new section: 

11 ‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY. 

12 ‘‘(a) AUTHORITY TO ISSUE ORDER.—Whenever the 

13 Director determines that— 

14 ‘‘(1) any regulated entity-affiliated party has, 

15 directly or indirectly— 

16 ‘‘(A) violated— 

17 ‘‘(i) any law or regulation; 

18 ‘‘(ii) any cease-and-desist order which 

19 has become final; 

20 ‘‘(iii) any condition imposed in writing 

21 by the Director in connection with the 

22 grant of any application or other request 

23 by such regulated entity; or 

24 ‘‘(iv) any written agreement between 

25 such regulated entity and the Director; 
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1 ‘‘(B) engaged or participated in any unsafe 

2 or unsound practice in connection with any reg3 ulated entity; or 

4 ‘‘(C) committed or engaged in any act, 

5 omission, or practice which constitutes a breach 

6 of such party’s fiduciary duty; 

7 ‘‘(2) by reason of the violation, practice, or 

8 breach described in any subparagraph of paragraph 

9 (1)— 

10 ‘‘(A) such regulated entity has suffered or 

11 will probably suffer financial loss or other dam12 age; or 

13 ‘‘(B) such party has received financial gain 

14 or other benefit by reason of such violation, 

15 practice, or breach; and 

16 ‘‘(3) such violation, practice, or breach— 

17 ‘‘(A) involves personal dishonesty on the 

18 part of such party; or 

19 ‘‘(B) demonstrates willful or continuing 

20 disregard by such party for the safety or sound21 ness of such regulated entity, the Director may 

22 serve upon such party a written notice of the 

23 Director’s intention to remove such party from 

24 office or to prohibit any further participation by 
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1 such party, in any manner, in the conduct of 

2 the affairs of any regulated entity. 

3 ‘‘(b) SUSPENSION ORDER.— 

4 ‘‘(1) SUSPENSION OR PROHIBITION AUTHOR5 ITY.—If the Director serves written notice under 

6 subsection (a) to any regulated entity-affiliated party 

7 of the Director’s intention to issue an order under 

8 such subsection, the Director may— 

9 ‘‘(A) suspend such party from office or 

10 prohibit such party from further participation 

11 in any manner in the conduct of the affairs of 

12 the regulated entity, if the Director— 

13 ‘‘(i) determines that such action is 

14 necessary for the protection of the regu15 lated entity; and 

16 ‘‘(ii) serves such party with written 

17 notice of the suspension order; and 

18 ‘‘(B) prohibit the regulated entity from re19 leasing to or on behalf of the regulated entity20 affiliated party any compensation or other pay21 ment of money or other thing of current or po22 tential value in connection with any resignation, 

23 removal, retirement, or other termination of 

24 employment or office of the party. 
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1 ‘‘(2) EFFECTIVE PERIOD.—Any suspension 

2 order issued under this subsection— 

3 ‘‘(A) shall become effective upon service; 

4 and 

5 ‘‘(B) unless a court issues a stay of such 

6 order under subsection (g) of this section, shall 

7 remain in effect and enforceable until— 

8 ‘‘(i) the date the Director dismisses 

9 the charges contained in the notice served 

10 under subsection (a) with respect to such 

11 party; or 

12 ‘‘(ii) the effective date of an order 

13 issued by the Director to such party under 

14 subsection (a). 

15 ‘‘(3) COPY OF ORDER.—If the Director issues a 

16 suspension order under this subsection to any regu17 lated entity-affiliated party, the Director shall serve 

18 a copy of such order on any regulated entity with 

19 which such party is affiliated at the time such order 

20 is issued. 

21 ‘‘(c) NOTICE, HEARING, AND ORDER.—A notice of 

22 intention to remove a regulated entity-affiliated party 

23 from office or to prohibit such party from participating 

24 in the conduct of the affairs of a regulated entity shall 

25 contain a statement of the facts constituting grounds for 
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1 such action, and shall fix a time and place at which a hear2 ing will be held on such action. Such hearing shall be fixed 

3 for a date not earlier than 30 days nor later than 60 days 

4 after the date of service of such notice, unless an earlier 

5 or a later date is set by the Director at the request of 

6 (1) such party, and for good cause shown, or (2) the At7 torney General of the United States. Unless such party 

8 shall appear at the hearing in person or by a duly author9 ized representative, such party shall be deemed to have 

10 consented to the issuance of an order of such removal or 

11 prohibition. In the event of such consent, or if upon the 

12 record made at any such hearing the Director shall find 

13 that any of the grounds specified in such notice have been 

14 established, the Director may issue such orders of suspen15 sion or removal from office, or prohibition from participa16 tion in the conduct of the affairs of the regulated entity, 

17 as it may deem appropriate, together with an order pro18 hibiting compensation described in subsection (b)(1)(B). 

19 Any such order shall become effective at the expiration 

20 of 30 days after service upon such regulated entity and 

21 such party (except in the case of an order issued upon 

22 consent, which shall become effective at the time specified 

23 therein). Such order shall remain effective and enforceable 

24 except to such extent as it is stayed, modified, terminated, 

25 or set aside by action of the Director or a reviewing court. 
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1 ‘‘(d) PROHIBITION OF CERTAIN SPECIFIC ACTIVI2 TIES.—Any person subject to an order issued under this 

3 section shall not— 

4 ‘‘(1) participate in any manner in the conduct 

5 of the affairs of any regulated entity; 

6 ‘‘(2) solicit, procure, transfer, attempt to trans7 fer, vote, or attempt to vote any proxy, consent, or 

8 authorization with respect to any voting rights in 

9 any regulated entity; 

10 ‘‘(3) violate any voting agreement previously 

11 approved by the Director; or 

12 ‘‘(4) vote for a director, or serve or act as a 

13 regulated entity-affiliated party. 

14 ‘‘(e) INDUSTRY-WIDE PROHIBITION.— 

15 ‘‘(1) IN GENERAL.—Except as provided in para16 graph (2), any person who, pursuant to an order 

17 issued under this section, has been removed or sus18 pended from office in a regulated entity or prohib19 ited from participating in the conduct of the affairs 

20 of a regulated entity may not, while such order is in 

21 effect, continue or commence to hold any office in, 

22 or participate in any manner in the conduct of the 

23 affairs of, any regulated entity. 

24 ‘‘(2) EXCEPTION IF DIRECTOR PROVIDES WRIT25 TEN CONSENT.—If, on or after the date an order is 
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1 issued under this section which removes or suspends 

2 from office any regulated entity-affiliated party or 

3 prohibits such party from participating in the con4 duct of the affairs of a regulated entity, such party 

5 receives the written consent of the Director, the 

6 order shall, to the extent of such consent, cease to 

7 apply to such party with respect to the regulated en8 tity described in the written consent. If the Director 

9 grants such a written consent, it shall publicly dis10 close such consent. 

11 ‘‘(3) VIOLATION OF PARAGRAPH (1) TREATED

12 AS VIOLATION OF ORDER.—Any violation of para13 graph (1) by any person who is subject to an order 

14 described in such subsection shall be treated as a 

15 violation of the order. 

16 ‘‘(f) APPLICABILITY.—This section shall only apply 

17 to a person who is an individual, unless the Director spe18 cifically finds that it should apply to a corporation, firm, 

19 or other business enterprise. 

20 ‘‘(g) STAY OF SUSPENSION AND PROHIBITION OF

21 REGULATED ENTITY-AFFILIATED PARTY.—Within 10 

22 days after any regulated entity-affiliated party has been 

23 suspended from office and/or prohibited from participation 

24 in the conduct of the affairs of a regulated entity under 

25 this section, such party may apply to the United States 
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1 District Court for the District of Columbia, or the United 

2 States district court for the judicial district in which the 

3 headquarters of the regulated entity is located, for a stay 

4 of such suspension and/or prohibition and any prohibition 

5 under subsection (b)(1)(B) pending the completion of the 

6 administrative proceedings pursuant to the notice served 

7 upon such party under this section, and such court shall 

8 have jurisdiction to stay such suspension and/or prohibi9 tion. 

10 ‘‘(h) SUSPENSION OR REMOVAL OF REGULATED EN11 TITY-AFFILIATED PARTY CHARGED WITH FELONY.— 

12 ‘‘(1) SUSPENSION OR PROHIBITION.— 

13 ‘‘(A) IN GENERAL.—Whenever any regu14 lated entity-affiliated party is charged in any 

15 information, indictment, or complaint, with the 

16 commission of or participation in a crime in17 volving dishonesty or breach of trust which is 

18 punishable by imprisonment for a term exceed19 ing one year under State or Federal law, the 

20 Director may, if continued service or participa21 tion by such party may pose a threat to the 

22 regulated entity or impair public confidence in 

23 the regulated entity, by written notice served 

24 upon such party— 
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1 ‘‘(i) suspend such party from office or 

2 prohibit such party from further participa3 tion in any manner in the conduct of the 

4 affairs of any regulated entity; and 

5 ‘‘(ii) prohibit the regulated entity 

6 from releasing to or on behalf of the regu7 lated entity-affiliated party any compensa8 tion or other payment of money or other 

9 thing of current or potential value in con10 nection with the period of any such sus11 pension or with any resignation, removal, 

12 retirement, or other termination of employ13 ment or office of the party. 

14 ‘‘(B) PROVISIONS APPLICABLE TO NO15 TICE.— 

16 ‘‘(i) COPY.—A copy of any notice 

17 under paragraph (1)(A) shall also be 

18 served upon the regulated entity. 

19 ‘‘(ii) EFFECTIVE PERIOD.—A suspen20 sion or prohibition under subparagraph (A) 

21 shall remain in effect until the informa22 tion, indictment, or complaint referred to 

23 in such subparagraph is finally disposed of 

24 or until terminated by the Director. 

25 ‘‘(2) REMOVAL OR PROHIBITION.— 
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1 ‘‘(A) IN GENERAL.—If a judgment of con2 viction or an agreement to enter a pretrial di3 version or other similar program is entered 

4 against a regulated entity-affiliated party in 

5 connection with a crime described in paragraph 

6 (1)(A), at such time as such judgment is not 

7 subject to further appellate review, the Director 

8 may, if continued service or participation by 

9 such party may pose a threat to the regulated 

10 entity or impair public confidence in the regu11 lated entity, issue and serve upon such party an 

12 order that— 

13 ‘‘(i) removes such party from office or 

14 prohibits such party from further partici15 pation in any manner in the conduct of the 

16 affairs of the regulated entity without the 

17 prior written consent of the Director; and 

18 ‘‘(ii) prohibits the regulated entity 

19 from releasing to or on behalf of the regu20 lated entity-affiliated party any compensa21 tion or other payment of money or other 

22 thing of current or potential value in con23 nection with the termination of employ24 ment or office of the party. 
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1 ‘‘(B) PROVISIONS APPLICABLE TO

2 ORDER.— 

3 ‘‘(i) COPY.—A copy of any order 

4 under paragraph (2)(A) shall also be 

5 served upon the regulated entity, where6 upon the regulated entity-affiliated party 

7 who is subject to the order (if a director or 

8 an officer) shall cease to be a director or 

9 officer of such regulated entity. 

10 ‘‘(ii) EFFECT OF ACQUITTAL.—A find11 ing of not guilty or other disposition of the 

12 charge shall not preclude the Director from 

13 instituting proceedings after such finding 

14 or disposition to remove such party from 

15 office or to prohibit further participation in 

16 regulated entity affairs, and to prohibit 

17 compensation or other payment of money 

18 or other thing of current or potential value 

19 in connection with any resignation, re20 moval, retirement, or other termination of 

21 employment or office of the party, pursu22 ant to subsections (a), (d), or (e) of this 

23 section. 

24 ‘‘(iii) EFFECTIVE PERIOD.—Any no25 tice of suspension or order of removal 
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1 issued under this subsection shall remain 

2 effective and outstanding until the comple3 tion of any hearing or appeal authorized 

4 under paragraph (4) unless terminated by 

5 the Director. 

6 ‘‘(3) AUTHORITY OF REMAINING BOARD MEM7 BERS.—If at any time, because of the suspension of 

8 one or more directors pursuant to this section, there 

9 shall be on the board of directors of a regulated enti10 ty less than a quorum of directors not so suspended, 

11 all powers and functions vested in or exercisable by 

12 such board shall vest in and be exercisable by the di13 rector or directors on the board not so suspended, 

14 until such time as there shall be a quorum of the 

15 board of directors. In the event all of the directors 

16 of a regulated entity are suspended pursuant to this 

17 section, the Director shall appoint persons to serve 

18 temporarily as directors in their place and stead 

19 pending the termination of such suspensions, or 

20 until such time as those who have been suspended 

21 cease to be directors of the regulated entity and 

22 their respective successors take office. 

23 ‘‘(4) HEARING REGARDING CONTINUED PAR24 TICIPATION.—Within 30 days from service of any 

25 notice of suspension or order of removal issued pur-
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1 suant to paragraph (1) or (2) of this subsection, the 

2 regulated entity-affiliated party concerned may re3 quest in writing an opportunity to appear before the 

4 Director to show that the continued service to or 

5 participation in the conduct of the affairs of the reg6 ulated entity by such party does not, or is not likely 

7 to, pose a threat to the interests of the regulated en8 tity or threaten to impair public confidence in the 

9 regulated entity. Upon receipt of any such request, 

10 the Director shall fix a time (not more than 30 days 

11 after receipt of such request, unless extended at the 

12 request of such party) and place at which such party 

13 may appear, personally or through counsel, before 

14 one or more members of the Director or designated 

15 employees of the Director to submit written mate16 rials (or, at the discretion of the Director, oral testi17 mony) and oral argument. Within 60 days of such 

18 hearing, the Director shall notify such party whether 

19 the suspension or prohibition from participation in 

20 any manner in the conduct of the affairs of the reg21 ulated entity will be continued, terminated, or other22 wise modified, or whether the order removing such 

23 party from office or prohibiting such party from fur24 ther participation in any manner in the conduct of 

25 the affairs of the regulated entity, and prohibiting 
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1 compensation in connection with termination will be 

2 rescinded or otherwise modified. Such notification 

3 shall contain a statement of the basis for the Direc4 tor’s decision, if adverse to such party. The Director 

5 is authorized to prescribe such rules as may be nec6 essary to effectuate the purposes of this subsection. 

7 ‘‘(i) HEARINGS AND JUDICIAL REVIEW.— 

8 ‘‘(1) VENUE AND PROCEDURE.—Any hearing 

9 provided for in this section shall be held in the Dis10 trict of Columbia or in the Federal judicial district 

11 in which the headquarters of the regulated entity is 

12 located, unless the party afforded the hearing con13 sents to another place, and shall be conducted in ac14 cordance with the provisions of chapter 5 of title 5, 

15 United States Code. After such hearing, and within 

16 90 days after the Director has notified the parties 

17 that the case has been submitted to it for final deci18 sion, it shall render its decision (which shall include 

19 findings of fact upon which its decision is predi20 cated) and shall issue and serve upon each party to 

21 the proceeding an order or orders consistent with 

22 the provisions of this section. Judicial review of any 

23 such order shall be exclusively as provided in this 

24 subsection. Unless a petition for review is timely 

25 filed in a court of appeals of the United States, as 
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1 provided in paragraph (2), and thereafter until the 

2 record in the proceeding has been filed as so pro3 vided, the Director may at any time, upon such no4 tice and in such manner as it shall deem proper, 

5 modify, terminate, or set aside any such order. Upon 

6 such filing of the record, the Director may modify, 

7 terminate, or set aside any such order with permis8 sion of the court. 

9 ‘‘(2) REVIEW OF ORDER.—Any party to any 

10 proceeding under paragraph (1) may obtain a review 

11 of any order served pursuant to paragraph (1) 

12 (other than an order issued with the consent of the 

13 regulated entity or the regulated entity-affiliated 

14 party concerned, or an order issued under subsection 

15 (h) of this section) by the filing in the United States 

16 Court of Appeals for the District of Columbia Cir17 cuit or court of appeals of the United States for the 

18 circuit in which the headquarters of the regulated 

19 entity is located, within 30 days after the date of 

20 service of such order, a written petition praying that 

21 the order of the Director be modified, terminated, or 

22 set aside. A copy of such petition shall be forthwith 

23 transmitted by the clerk of the court to the Director, 

24 and thereupon the Director shall file in the court the 

25 record in the proceeding, as provided in section 2112 
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1 of title 28, United States Code. Upon the filing of 

2 such petition, such court shall have jurisdiction, 

3 which upon the filing of the record shall (except as 

4 provided in the last sentence of paragraph (1)) be 

5 exclusive, to affirm, modify, terminate, or set aside, 

6 in whole or in part, the order of the Director. Re7 view of such proceedings shall be had as provided in 

8 chapter 7 of title 5, United States Code. The judg9 ment and decree of the court shall be final, except 

10 that the same shall be subject to review by the Su11 preme Court upon certiorari, as provided in section 

12 1254 of title 28, United States Code. 

13 ‘‘(3) PROCEEDINGS NOT TREATED AS STAY.— 

14 The commencement of proceedings for judicial re15 view under paragraph (2) shall not, unless specifi16 cally ordered by the court, operate as a stay of any 

17 order issued by the Director.’’. 

18 (b) CONFORMING AMENDMENTS.— 

19 (1) 1992 ACT.—Section 1317(f) of the Housing 

20 and Community Development Act of 1992 (12 

21 U.S.C. 4517(f)) is amended by striking ‘‘section 

22 1379B’’ and inserting ‘‘section 1379D’’. 

23 (2) FANNIE MAE CHARTER ACT.—The second 

24 sentence of subsection (b) of section 308 of the Fed25 eral National Mortgage Association Charter Act (12 
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1 U.S.C. 1723(b)) is amended by striking ‘‘The’’ and 

2 inserting ‘‘Except to the extent that action under 

3 section 1377 of the Housing and Community Devel4 opment Act of 1992 temporarily results in a lesser 

5 number, the’’. 

6 (3) FREDDIE MAC ACT.—The second sentence 

7 of subparagraph (A) of section 303(a)(2) of the 

8 Federal Home Loan Mortgage Corporation Act (12 

9 U.S.C. 1452(a)(2)(A)) is amended by striking 

10 ‘‘The’’ and inserting ‘‘Except to the extent that ac11 tion under section 1377 of the Housing and Commu12 nity Development Act of 1992 temporarily results in 

13 a lesser number, the’’. 

14 SEC. 167. CRIMINAL PENALTY. 

15 Subtitle C of title XIII of the Housing and Commu16 nity Development Act of 1992 (12 U.S.C. 4631 et seq.) 

17 is amended by inserting after section 1377 (as added by 

18 the preceding provisions of this Act) the following new sec19 tion: 

20 ‘‘SEC. 1378. CRIMINAL PENALTY. 

21 ‘‘Whoever, being subject to an order in effect under 

22 section 1377, without the prior written approval of the Di23 rector, knowingly participates, directly or indirectly, in any 

24 manner (including by engaging in an activity specifically 

25 prohibited in such an order) in the conduct of the affairs 
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1 of any regulated entity shall, notwithstanding section 

2 3571 of title 18, be fined not more than $1,000,000, im3 prisoned for not more than 5 years, or both.’’. 

4 SEC. 168. SUBPOENA AUTHORITY. 

5 Section 1379D(c) of the Housing and Community 

6 Development Act of 1992 (12 U.S.C. 4641(c)), as so re7 designated by section 165(a)(1) of this Act, is further 

8 amended— 

9 (1) by striking ‘‘request the Attorney General 

10 of the United States to’’ and inserting ‘‘, in the dis11 cretion of the Director,’’; 

12 (2) by inserting ‘‘or request that the Attorney 

13 General of the United States bring such an action,’’ 

14 after ‘‘District of Columbia,’’; and 

15 (3) by striking ‘‘or may, under the direction 

16 and control of the Attorney General, bring such an 

17 action’’. 

18 SEC. 169. CONFORMING AMENDMENTS. 

19 Subtitle C of title XIII of the Housing and Commu20 nity Development Act of 1992 is amended— 

21 (1) in section 1372(c)(1) (12 U.S.C. 4632(c)), 

22 by striking ‘‘that enterprise’’ and inserting ‘‘that 

23 regulated entity’’; 

24 (2) in section 1379 (12 U.S.C. 4637), as so re25 designated by section 165(a)(1) of this Act— 
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1 (A) by inserting ‘‘, or of a regulated entity2 affiliated party,’’ before ‘‘shall not affect’’; and 

3 (B) by striking ‘‘such director or executive 

4 officer’’ each place such term appears and in5 serting ‘‘such director, executive officer, or reg6 ulated entity-affiliated party’’; 

7 (3) in section 1379A (12 U.S.C. 4638), as so 

8 redesignated by section 165(a)(1) of this Act, by in9 serting ‘‘or against a regulated entity-affiliated 

10 party,’’ before ‘‘or impair’’; 

11 (4) by striking ‘‘An enterprise’’ each place such 

12 term appears in such subtitle and inserting ‘‘A regu13 lated entity’’; 

14 (5) by striking ‘‘an enterprise’’ each place such 

15 term appears in such subtitle and inserting ‘‘a regu16 lated entity’’; 

17 (6) by striking ‘‘the enterprise’’ each place such 

18 term appears in such subtitle and inserting ‘‘the reg19 ulated entity’’; and 

20 (7) by striking ‘‘any enterprise’’ each place such 

21 term appears in such subtitle and inserting ‘‘any 

22 regulated entity’’. 

23 Subtitle E—General Provisions 

24 SEC. 181. BOARDS OF ENTERPRISES. 

25 (a) FANNIE MAE.— 
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1 (1) IN GENERAL.—Subsection (b) of section 

2 308 of the Federal National Mortgage Association 

3 Charter Act (12 U.S.C. 1723(b)) is amended in the 

4 first sentence by striking ‘‘eighteen persons,’’ and 

5 inserting ‘‘not less than 7 and not more than 15 

6 persons,’’. 

7 (2) TRANSITIONAL PROVISION.—The amend8 ments made by paragraph (1) shall not apply to any 

9 appointed position of the board of directors of the 

10 Federal National Mortgage Association until the ex11 piration of the annual term for such position during 

12 which the effective date under section 185 occurs. 

13 (b) FREDDIE MAC.— 

14 (1) IN GENERAL.—Paragraph (2) of section 

15 303(a) of the Federal Home Loan Mortgage Cor16 poration Act (12 U.S.C. 1452(a)(2) is amended in 

17 subparagraph (A) by striking ‘‘eighteen persons,’’ 

18 and inserting ‘‘not less than 7 and not more than 

19 15 persons,’’. 

20 (2) TRANSITIONAL PROVISION.—The amend21 ments made by paragraph (1) shall not apply to any 

22 appointed position of the Board of Directors of the 

23 Federal Home Loan Mortgage Corporation until the 

24 expiration of the annual term for such position dur-
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1 ing which the effective date under section 185 oc2 curs. 

3 SEC. 182. REPORT ON PORTFOLIO OPERATIONS, SAFETY 

4 AND SOUNDNESS, AND MISSION OF ENTER5 PRISES. 

6 Not later than the expiration of the 12-month period 

7 beginning on the effective date under section 185, the Di8 rector of the Federal Housing Finance Agency shall sub9 mit a report to the Congress which shall include— 

10 (1) a description of the portfolio holdings of the 

11 enterprises (as such term is defined in section 1303 

12 of the Housing and Community Development Act of 

13 1992 (12 U.S.C. 4502) in mortgages (including 

14 whole loans and mortgage-backed securities), non15 mortgages, and other assets; 

16 (2) a description of the risk implications for the 

17 enterprises of such holdings and the consequent risk 

18 management undertaken by the enterprises (includ19 ing the use of derivatives for hedging purposes), 

20 compared with off-balance sheet liabilities of the en21 terprises (including mortgage-backed securities guar22 anteed by the enterprises); 

23 (3) an analysis of portfolio holdings for safety 

24 and soundness purposes; 
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1 (4) an assessment of whether portfolio holdings 

2 fulfill the mission purposes of the enterprises under 

3 the Federal National Mortgage Association Charter 

4 Act and the Federal Home Loan Mortgage Corpora5 tion Act; and 

6 (5) an analysis of the potential systemic risk 

7 implications for the enterprises, the housing and 

8 capital markets, and the financial system of portfolio 

9 holdings, and whether such holdings should be lim10 ited or reduced over time. 

11 SEC. 183. CONFORMING AND TECHNICAL AMENDMENTS. 

12 (a) 1992 ACT.—Title XIII of the Housing and Com13 munity Development Act of 1992 is amended by striking 

14 section 1383 (12 U.S.C. 1451 note). 

15 (b) TITLE 18, UNITED STATES CODE.—Section 1905 

16 of title 18, United States Code, is amended by striking 

17 ‘‘Office of Federal Housing Enterprise Oversight’’ and in18 serting ‘‘Federal Housing Finance Agency’’. 

19 (c) FLOOD DISASTER PROTECTION ACT OF 1973.— 

20 Section 102(f)(3)(A) of the Flood Disaster Protection Act 

21 of 1973 (42 U.S.C. 4012a(f)(3)(A)) is amended by strik22 ing ‘‘Director of the Office of Federal Housing Enterprise 

23 Oversight of the Department of Housing and Urban De24 velopment’’ and inserting ‘‘Director of the Federal Hous25 ing Finance Agency’’. 
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1 (d) DEPARTMENT OF HOUSING AND URBAN DEVEL2 OPMENT ACT.—Section 5 of the Department of Housing 

3 and Urban Development Act (42 U.S.C. 3534) is amended 

4 by striking subsection (d). 

5 (e) TITLE 5, UNITED STATES CODE.— 

6 (1) DIRECTOR’S PAY RATE.—Section 5313 of 

7 title 5, United States Code, is amended by striking 

8 the item relating to the Director of the Office of 

9 Federal Housing Enterprise Oversight, Department 

10 of Housing and Urban Development and inserting 

11 the following new item: 

12 ‘‘Director of the Federal Housing Finance Agency.’’. 

13 (2) DEPUTY DIRECTORS’ PAY RATE.—Section 

14 5314 of title 5, United States Code, is amended by 

15 adding at the end the following new item: 

16 ‘‘Deputy Directors, Federal Housing Finance Agency 

17 (3).’’. 

18 (3) PAY RATE FOR MEMBERS OF HOUSING FI19 NANCE OVERSIGHT BOARD.—Section 5315 of title 5, 

20 United States Code, is amended by adding at the 

21 end the following new item: 

22 ‘‘Members, Housing Finance Oversight Board.’’. 

23 (4) EXCLUSION FROM SENIOR EXECUTIVE

24 SERVICE.—Section 3132(a)(1)(D) of title 5, United 

25 States Code, is amended by striking ‘‘the Office of 
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1 Federal Housing Enterprise Oversight of the De2 partment of Housing and Urban Development’’ and 

3 inserting ‘‘the Federal Housing Finance Agency’’. 

4 (f) INSPECTOR GENERAL ACT OF 1978.—Section 

5 8G(a)(2) of the Inspector General Act of 1978 (5 U.S.C. 

6 App.) is amended by striking ‘‘Federal Housing Finance 

7 Board’’ and inserting ‘‘Federal Housing Finance Agency’’. 

8 (g) FEDERAL DEPOSIT INSURANCE ACT.—Section 

9 11(t)(2)(A) of the Federal Deposit Insurance Act (12 

10 U.S.C.1821(t)(2)(A)) is amended by adding at the end the 

11 following new clause: 

12 ‘‘(vii) The Federal Housing Finance 

13 Agency.’’. 

14 (h) 1997 EMERGENCY SUPPLEMENTAL APPROPRIA15 TIONS ACT.—Section 10001 of the 1997 Emergency Sup16 plemental Appropriations Act for Recovery From Natural 

17 Disasters, and for Overseas Peacekeeping Efforts, Includ18 ing Those In Bosnia (42 U.S.C. 3548) is amended— 

19 (1) by striking ‘‘the Government National Mort20 gage Association, and the Office of Federal Housing 

21 Enterprise Oversight’’ and inserting ‘‘and the Gov22 ernment National Mortgage Association’’; and 

23 (2) by striking ‘‘, the Government National 

24 Mortgage Association, or the Office of Federal 
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1 Housing Enterprise Oversight’’ and inserting ‘‘or 

2 the Government National Mortgage Association’’. 

3 (i) NATIONAL HOMEOWNERSHIP TRUST ACT .—Sec4 tion 302(b)(4) of the Cranston-Gonzalez National Afford5 able Housing Act (42 U.S.C. 12851(b)(4)) is amended by 

6 striking ‘‘the chairperson of the Federal Housing Finance 

7 Board’’ and inserting ‘‘the Director of the Federal Hous8 ing Finance Agency’’. 

9 SEC. 184. STUDY OF ALTERNATIVE SECONDARY MARKET 

10 SYSTEMS. 

11 (a) IN GENERAL.—The Director of the Federal 

12 Housing Finance Agency, in consultation with the Board 

13 of Governors of the Federal Reserve System, the Secretary 

14 of the Treasury, and the Secretary of Housing and Urban 

15 Development, shall conduct a comprehensive study of the 

16 effects on financial and housing finance markets of alter17 natives to the current secondary market system for hous18 ing finance, taking into consideration changes in the struc19 ture of financial and housing finance markets and institu20 tions since the creation of the Federal National Mortgage 

21 Association and the Federal Home Loan Mortgage Cor22 poration. 

23 (b) CONTENTS.—The study under this section 

24 shall— 
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1 (1) include, among the alternatives to the cur2 rent secondary market system analyzed— 

3 (A) repeal of the chartering Acts for the 

4 Federal National Mortgage Association and the 

5 Federal Home Loan Mortgage Corporation; 

6 (B) establishing bank-like mechanisms for 

7 granting new charters for limited purposed 

8 mortgage securitization entities; 

9 (C) permitting the Director of the Federal 

10 Housing Finance Agency to grant new charters 

11 for limited purpose mortgage securitization en12 tities, which shall include analyzing the terms 

13 on which such charters should be granted, in14 cluding whether such charters should be sold, 

15 or whether such charters and the charters for 

16 the Federal National Mortgage Association and 

17 the Federal Home Loan Mortgage Corporation 

18 should be taxed or otherwise assessed a mone19 tary price; and 

20 (D) such other alternatives as the Director 

21 considers appropriate; 

22 (2) examine all of the issues involved in making 

23 the transition to a completely private secondary 

24 mortgage market system; 
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1 (3) examine the technological advancements the 

2 private sector has made in providing liquidity in the 

3 secondary mortgage market and how such advance4 ments have affected liquidity in the secondary mort5 gage market; and 

6 (4) examine how taxpayers would be impacted 

7 by each alternative system, including the complete 

8 privatization of the Federal National Mortgage As9 sociation and the Federal Home Loan Mortgage 

10 Corporation. 

11 (c) REPORT.—The Director of the Federal Housing 

12 Finance Agency shall submit a report to the Congress on 

13 the study not later than the expiration of the 12-month 

14 period beginning on the effective date under section 185. 

15 SEC. 185. EFFECTIVE DATE. 

16 Except as specifically provided otherwise in this title, 

17 this title shall take effect on and the amendments made 

18 by this title shall take effect on, and shall apply beginning 

19 on, the expiration of the 6-month period beginning on the 

20 date of the enactment of this Act. 

21 TITLE II—FEDERAL HOME LOAN 

22 BANKS 

23 SEC. 201. DEFINITIONS. 

24 Section 2 of the Federal Home Loan Bank Act (12 

25 U.S.C. 1422) is amended— 
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1 (1) by striking paragraphs (1), (10), and (11); 

2 (2) by redesignating paragraphs (2) through 

3 (9) as paragraphs (1) through (8), respectively; 

4 (3) by redesignating paragraphs (12) and (13) 

5 as paragraphs (9) and (10), respectively; and 

6 (4) by adding at the end the following: 

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

8 the Director of the Federal Housing Finance Agen9 cy. 

10 ‘‘(12) AGENCY.—The term ‘Agency’ means the 

11 Federal Housing Finance Agency.’’. 

12 SEC. 202. DIRECTORS. 

13 (a) ELECTION.—Section 7 of the Federal Home Loan 

14 Bank Act (12 U.S.C. 1427) is amended— 

15 (1) by striking subsection (a) and inserting the 

16 following: 

17 ‘‘(a) NUMBER; ELECTION; QUALIFICATIONS; CON18 FLICTS OF INTEREST.— 

19 ‘‘(1) IN GENERAL.—The management of each 

20 Federal Home Loan Bank shall be vested in a board 

21 of 13 directors, or such other number as the Direc22 tor determines appropriate, each of whom shall be a 

23 citizen of the United States. All directors of a Bank 

24 who are not independent members pursuant to para25 graph (3) shall be elected by the members. 
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1 ‘‘(2) MEMBER DIRECTORS.—A majority of the 

2 directors of each Bank shall be officers or directors 

3 of a member of such Bank that is located in the dis4 trict in which such Bank is located. 

5 ‘‘(3) INDEPENDENT DIRECTORS.—At least two6 fifths of the directors of each Bank shall be inde7 pendent directors, who shall be appointed by the Di8 rector of the Federal Housing Finance Agency from 

9 a list of individuals recommended made by the 

10 Housing Finance Oversight Board, and shall meet 

11 the following criteria: 

12 ‘‘(A) IN GENERAL.—Each independent di13 rector shall be a bona fide resident of the dis14 trict in which such Bank is located. 

15 ‘‘(B) PUBLIC INTEREST DIRECTORS.—At 

16 least 2 of the independent directors under this 

17 paragraph of each Bank shall be representatives 

18 chosen from organizations with more than a 2- 

19 year history of representing consumer or com20 munity interests on banking services, credit 

21 needs, housing, community development, eco22 nomic development, or financial consumer pro23 tections. 

24 ‘‘(C) OTHER DIRECTORS.—Each inde25 pendent director that is not a public interest di-
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1 rector under subparagraph (B) shall have dem2 onstrated knowledge of, or experience in, finan3 cial management, auditing and accounting, risk 

4 management practices, derivatives, project de5 velopment, or organizational management, or 

6 such other knowledge or expertise as the Direc7 tor may provide by regulation. 

8 ‘‘(D) CONFLICTS OF INTEREST.—Notwith9 standing subsection (f)(2), an independent di10 rector under this paragraph of a Bank may not, 

11 during such director’s term of office, serve as 

12 an officer of any Federal Home Loan Bank or 

13 as a director or officer of any member of a 

14 Bank.’’; 

15 (2) in the first sentence of subsection (b), by 

16 striking ‘‘directorship’’ and inserting ‘‘member direc17 torship pursuant to subsection (a)(2)’’; 

18 (3) in subsection (c), by striking the second, 

19 third, and fifth sentences; and 

20 (4) by striking ‘‘elective’’ each place such term 

21 appears (except in subsections (e) and (f)). 

22 (b) TERMS.— 

23 (1) IN GENERAL.—Section 7(d) of the Federal 

24 Home Loan Bank Act (12 U.S.C. 1427(i)) is 

25 amended— 
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1 (A) in the first sentence, by striking ‘‘3 

2 years’’ and inserting ‘‘4 years’’; and 

3 (B) in the second sentence— 

4 (i) by striking ‘‘Federal Home Loan 

5 Bank System Modernization Act of 1999’’ 

6 and inserting ‘‘Federal Housing Finance 

7 Reform Act of 2005’’; and 

8 (ii) by striking ‘‘1/3’’ and inserting 

9 ‘‘1/4’’. 

10 (2) SAVINGS PROVISION.—The amendments 

11 made by paragraph (1) shall not apply to the term 

12 of office of any director of a Federal home loan bank 

13 who is serving as of the effective date of this Act 

14 under section 211, including any director elected to 

15 fill a vacancy in any such office. 

16 (c) CONTINUED SERVICE OF INDEPENDENT DIREC17 TORS AFTER EXPIRATION OF TERM.—Section 7(f)(2) of 

18 the Federal Home Loan Bank Act (12 U.S.C. 1427(f)(2)) 

19 is amended— 

20 (1) in the second sentence, by striking ‘‘or the 

21 term of such office expires, whichever comes first’’; 

22 and 

23 (2) by adding at the end the following new sen24 tence: ‘‘An appointive Bank director may continue to 
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1 serve as a director after the expiration of the term 

2 of such director until a successor is appointed.’’. 

3 (d) COMPENSATION.—Subsection (i) of section 7 of 

4 the Federal Home Loan Bank Act (12 U.S.C. 1427(i)) 

5 is amended to read as follows: 

6 ‘‘(i) DIRECTORS’ COMPENSATION.— 

7 ‘‘(1) IN GENERAL.—Each Federal home loan 

8 bank may pay the directors on the board of directors 

9 for the bank reasonable and appropriate compensa10 tion for the time required of such directors, and rea11 sonable and appropriate expenses incurred by such 

12 directors, in connection with service on the board of 

13 directors, in accordance with resolutions adopted by 

14 the board of directors and subject to the approval of 

15 the Director. 

16 ‘‘(2) ANNUAL REPORT BY THE BOARD.—The 

17 Director shall include, in the annual report sub18 mitted to the Congress pursuant to section 1319B of 

19 the Federal Housing Enterprises Financial Safety 

20 and Soundness Act of 1992, information regarding 

21 the compensation and expenses paid by the Federal 

22 home loan banks to the directors on the boards of 

23 directors of the banks.’’. 

24 (e) TRANSITION RULE.—Any member of the board 

25 of directors of a Federal Home Loan Bank serving as of 
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1 the effective date under section 211 may continue to serve 

2 as a member of such board of directors for the remainder 

3 of the term of such office as provided in section 7 of the 

4 Federal Home Loan Bank Act, as in effect before such 

5 effective date. 

6 SEC. 203. FEDERAL HOUSING FINANCE AGENCY OVER7 SIGHT OF FEDERAL HOME LOAN BANKS. 

8 The Federal Home Loan Bank Act (12 U.S.C. 1421 

9 et seq.), other than in provisions of that Act added or 

10 amended otherwise by this Act, is amended— 

11 (1) by striking sections 2A and 2B (12 U.S.C. 

12 1422a, 1422b); 

13 (2) in section 6 (12 U.S.C. 1426(b)(1))— 

14 (A) in subsection (b)(1), in the matter pre15 ceding subparagraph (A), by striking ‘‘Finance 

16 Board approval’’ and inserting ‘‘approval by the 

17 Director’’; and 

18 (B) in each of subsections (c)(4)(B) and 

19 (d)(2), by striking ‘‘Finance Board regulations’’ 

20 each place that term appears and inserting 

21 ‘‘regulations of the Director’’; 

22 (3) in section 8 (12 U.S.C. 1428), in the sec23 tion heading, by striking ‘‘BY THE BOARD’’; 

24 (4) in section 10(b) (12 U.S.C. 1430), by strik25 ing ‘‘by formal resolution’’; 
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1 (5) in section 11 (12 U.S.C. 1431)— 

2 (A) in subsection (b)— 

3 (i) in the first sentence— 

4 (I) by striking ‘‘The Board’’ and 

5 inserting ‘‘The Office of Finance, as 

6 agent for the Banks,’’; and 

7 (II) by striking ‘‘the Board’’ and 

8 inserting ‘‘such Office’’; and 

9 (ii) in the second and fourth sen10 tences, by striking ‘‘the Board’’ each place 

11 such term appears and inserting ‘‘the Of12 fice of Finance’’; 

13 (B) in subsection (c)— 

14 (i) by striking ‘‘the Board’’ the first 

15 place such term appears and inserting ‘‘the 

16 Office of Finance, as agent for the 

17 Banks,’’; and 

18 (ii) by striking ‘‘the Board’’ the sec19 ond place such term appears and inserting 

20 ‘‘such Office’’; and 

21 (C) in subsection (f)— 

22 (i) by striking the two commas after 

23 ‘‘permit’’ and inserting ‘‘or’’; and 

24 (ii) by striking the comma after ‘‘re25 quire’’; 
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1 (6) in section 15 (12 U.S.C. 1435), by inserting 

2 ‘‘or the Director’’ after ‘‘the Board’’; 

3 (7) in section 18 (12 U.S.C. 1438), by striking 

4 subsection (b); 

5 (8) in section 21 (12 U.S.C. 1441)— 

6 (A) in subsection (b)— 

7 (i) in paragraph (5), by striking 

8 ‘‘Chairperson of the Federal Housing Fi9 nance Board’’ and inserting ‘‘Director’’; 

10 and 

11 (ii) in the heading for paragraph (8), 

12 by striking ‘‘FEDERAL HOUSING FINANCE

13 BOARD’’ and inserting ‘‘DIRECTOR’’; and 

14 (B) in subsection (i), in the heading for 

15 paragraph (2), by striking ‘‘FEDERAL HOUSING

16 FINANCE BOARD’’ and inserting ‘‘DIRECTOR’’; 

17 (9) in section 23 (12 U.S.C. 1443), by striking 

18 ‘‘Board of Directors of the Federal Housing Finance 

19 Board’’ and inserting ‘‘Director’’; 

20 (10) by striking ‘‘the Board’’ each place such 

21 term appears in such Act (except in section 15 (12 

22 U.S.C. 1435), section 21(f)(2) (12 U.S.C. 

23 1441(f)(2)), subsections (a), (k)(2)(B)(i), and 

24 (n)(6)(C)(ii) of section 21A (12 U.S.C. 1441a), sub25 sections (e)(7), (f)(2)(C), and (k)(7)(B)(ii) of section 
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1 21B (12 U.S.C. 1441b), and the first two places 

2 such term appears in section 22 (12 U.S.C. 1442)) 

3 and inserting ‘‘the Director’’; 

4 (11) by striking ‘‘The Board’’ each place such 

5 term appears in such Act (except in sections 7(e) 

6 (12 U.S.C. 1427(e)), and 11(b) (12 U.S.C. 1431(b)) 

7 and inserting ‘‘The Director’’; 

8 (12) by striking ‘‘the Board’s’’ each place such 

9 term appears in such Act and inserting ‘‘the Direc10 tor’s’’; 

11 (13) by striking ‘‘The Board’s’’ each place such 

12 term appears in such Act and inserting ‘‘The Direc13 tor’s’’; 

14 (14) by striking ‘‘The Finance Board’’ each 

15 place such term appears in such Act and inserting 

16 ‘‘The Director’’; 

17 (15) by striking ‘‘the Finance Board’’ each 

18 place such term appears in such Act and inserting 

19 ‘‘the Director’’; 

20 (16) by striking ‘‘Federal Housing Finance 

21 Board’’ each place such term appears and inserting 

22 ‘‘Director’’; 

23 (17) in section 11(i) (12 U.S.C. 1431(i), by 

24 striking ‘‘the Chairperson of’’; and 
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1 (18) in section 21(e)(9) (12 U.S.C. 1441(e)(9)), 

2 by striking ‘‘Chairperson of the’’. 

3 SEC. 204. JOINT ACTIVITIES OF BANKS. 

4 Section 11 of the Federal Home Loan Bank Act (12 

5 U.S.C. 1431) is amended by adding at the end the fol6 lowing new subsection: 

7 ‘‘(l) JOINT ACTIVITIES.—Subject to the regulation of 

8 the Director, any two or more Federal Home Loan Banks 

9 may establish a joint office for the purpose of performing 

10 functions for, or providing services to, the Banks on a 

11 common or collective basis, or may require that the Office 

12 of Finance perform such functions or services, but only 

13 if the Banks are otherwise authorized to perform such 

14 functions or services individually.’’. 

15 SEC. 205. SHARING OF INFORMATION BETWEEN FEDERAL 

16 HOME LOAN BANKS. 

17 (a) IN GENERAL.— The Federal Home Loan Bank 

18 Act is amended by inserting after section 20 (12 U.S.C. 

19 1440) the following new section: 

20 ‘‘SEC. 20A. SHARING OF INFORMATION BETWEEN FEDERAL 

21 HOME LOAN BANKS. 

22 ‘‘(a) REGULATORY AUTHORITY.—The Director shall 

23 prescribe such regulations as may be necessary to ensure 

24 that each Federal Home Loan Bank has access to infor-
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1 mation that the Bank needs to determine the nature and 

2 extent of its joint and several liability. 

3 ‘‘(b) NO WAIVER OF PRIVILEGE.—The Director shall 

4 not be deemed to have waived any privilege applicable to 

5 any information concerning a Federal Home Loan Bank 

6 by transferring, or permitting the transfer of, that infor7 mation to any other Federal Home Loan Bank for the 

8 purpose of enabling the recipient to evaluate the nature 

9 and extent of its joint and several liability.’’. 

10 (b) REGULATIONS.—The regulations required under 

11 the amendment made by subsection (a) shall be issued in 

12 final form not later than 6 months after the effective date 

13 under section 211 of this Act. 

14 SEC. 206. REORGANIZATION OF BANKS AND VOLUNTARY 

15 MERGER. 

16 Section 26 of the Federal Home Loan Bank Act (12 

17 U.S.C. 1446) is amended— 

18 (1) by inserting ‘‘(a) REORGANIZATION.—’’ be19 fore ‘‘Whenever’’; and 

20 (2) by striking ‘‘liquidated or’’ each place such 

21 phrase appears; 

22 (3) by striking ‘‘liquidation or’’; and 

23 (4) by adding at the end the following new sub24 section: 
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1 ‘‘(b) VOLUNTARY MERGERS.—Any Bank may, with 

2 the approval of the Director, and the approval of the 

3 boards of directors of the Banks involved, merge with an4 other Bank. The Director shall promulgate regulations es5 tablishing the conditions and procedures for the consider6 ation and approval of any such voluntary merger, includ7 ing the procedures for Bank member approval.’’. 

8 SEC. 207. SECURITIES AND EXCHANGE COMMISSION DIS9 CLOSURE. 

10 (a) IN GENERAL.—The Federal Home Loan Banks 

11 shall be exempt from compliance with— 

12 (1) sections 13(e), 14(a), 14(c), and 17A of the 

13 Securities Exchange Act of 1934 and related Com14 mission regulations; and 

15 (2) section 15 of that Act and related Securities 

16 and Exchange Commission regulations with respect 

17 to transactions in capital stock of the Banks. 

18 (b) MEMBER EXEMPTION.—The members of the 

19 Federal Home Loan Banks shall be exempt from compli20 ance with sections 13(d), 13(f), 13(g), 14(d), and 16 of 

21 the Securities Exchange Act of 1934 and related Securi22 ties and Exchange Commission regulations with respect 

23 to their ownership of, or transactions in, capital stock of 

24 the Federal Home Loan Banks. 

25 (c) EXEMPTED AND GOVERNMENT SECURITIES.— 
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1 (1) CAPITAL STOCK.—The capital stock issued 

2 by each of the Federal Home Loan Banks under 

3 section 6 of the Federal Home Loan Bank Act are— 

4 (A) exempted securities within the mean5 ing of section 3(a)(2) of the Securities Act of 

6 1933; and 

7 (B) ‘‘exempted securities’’ within the 

8 meaning of section 3(a)(12)(A) of the Securities 

9 Exchange Act of 1934. 

10 (2) OTHER OBLIGATIONS.—The debentures, 

11 bonds, and other obligations issued under section 11 

12 of the Federal Home Loan Bank Act are— 

13 (A) exempted securities within the mean14 ing of section 3(a)(2) of the Securities Act of 

15 1933; 

16 (B) ‘‘government securities’’ within the 

17 meaning of section 3(a)(42) of the Securities 

18 Exchange Act of 1934; 

19 (C) excluded from the definition of ‘‘gov20 ernment securities broker’’ within section 

21 3(a)(43) of the Securities Exchange Act of 

22 1934; 

23 (D) excluded from the definition of ‘‘gov24 ernment securities dealer’’ within section 
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1 3(a)(44) of the Securities Exchange Act of 

2 1934; and 

3 (E) ‘‘government securities’’ within the 

4 meaning of section 2(a)(16) of the Investment 

5 Company Act of 1940. 

6 (d) EXEMPTION FROM REPORTING REQUIRE7 MENTS.—The Federal Home Loan Banks shall be exempt 

8 from periodic reporting requirements pertaining to— 

9 (1) the disclosure of related party transactions 

10 that occur in the ordinary course of business of the 

11 Banks with their members; and 

12 (2) the disclosure of unregistered sales of equity 

13 securities. 

14 (e) TENDER OFFERS.—The Securities and Exchange 

15 Commission’s rules relating to tender offers shall not 

16 apply in connection with transactions in capital stock of 

17 the Federal Home Loan Banks. 

18 (f) REGULATIONS.—In issuing final regulations to 

19 implement provisions of this section, the Securities and 

20 Exchange Commission shall consider the distinctive char21 acteristics of the Federal Home Loan Banks when evalu22 ating the accounting treatment with respect to the pay23 ment to Resolution Funding Corporation, the role of the 

24 combined financial statements of the twelve Banks, the ac25 counting classification of redeemable capital stock, and the 
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1 accounting treatment related to the joint and several na2 ture of the obligations of the Banks. 

3 SEC. 208. COMMUNITY FINANCIAL INSTITUTION MEMBERS. 

4 (a) TOTAL ASSET REQUIREMENT.—Paragraph (10) 

5 of section 2 of the Federal Home Loan Bank Act (12 

6 U.S.C. 1422(10)), as so redesignated by section 201(3) 

7 of this Act, is amended by striking ‘‘$500,000,000’’ each 

8 place such term appears and inserting ‘‘$1,000,000,000’’. 

9 (b) USE OF ADVANCES FOR COMMUNITY DEVELOP10 MENT ACTIVITIES.—Section 10(a) of the Federal Home 

11 Loan Bank Act (12 U.S.C. 1430(a)) is amended— 

12 (1) in paragraph (2)(B)— 

13 (A) by striking ‘‘and’’; and 

14 (B) by inserting ‘‘, and community devel15 opment activities’’ before the period at the end; 

16 (2) in paragraph (3)(E), by inserting ‘‘or com17 munity development activities’’ after ‘‘agriculture,’’; 

18 and 

19 (3) in paragraph (6)— 

20 (A) by striking ‘‘and’’; and 

21 (B) by inserting ‘‘, and ‘community devel22 opment activities’ ’’ before ‘‘shall’’. 
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1 SEC. 209. TECHNICAL AND CONFORMING AMENDMENTS. 

2 (a) RIGHT TO FINANCIAL PRIVACY ACT OF 1978.— 

3 Section 1113(o) of the Right to Financial Privacy Act of 

4 1978 (12 U.S.C. 3413(o)) is amended— 

5 (1) by striking ‘‘Federal Housing Finance 

6 Board’’ and inserting ‘‘Federal Housing Finance 

7 Agency’’; and 

8 (2) by striking ‘‘Federal Housing Finance 

9 Board’s’’ and inserting ‘‘Federal Housing Finance 

10 Agency’s’’. 

11 (b) RIEGLE COMMUNITY DEVELOPMENT AND REGU12 LATORY IMPROVEMENT ACT OF 1994.—Section 117(e) of 

13 the Riegle Community Development and Regulatory Im14 provement Act of 1994 (12 U.S.C. 4716(e)) is amended 

15 by striking ‘‘Federal Housing Finance Board’’ and insert16 ing ‘‘Federal Housing Finance Agency’’. 

17 (c) TITLE 18, UNITED STATES CODE.—Title 18, 

18 United States Code, is amended by striking ‘‘Federal 

19 Housing Finance Board’’ each place such term appears 

20 in each of sections 212, 657, 1006, 1014, and inserting 

21 ‘‘Federal Housing Finance Agency’’. 

22 (d) MAHRA ACT OF 1997.—Section 517(b)(4) of the 

23 Multifamily Assisted Housing Reform and Affordability 

24 Act of 1997 (42 U.S.C. 1437f note) is amended by strik25 ing ‘‘Federal Housing Finance Board’’ and inserting 

26 ‘‘Federal Housing Finance Agency’’. 
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1 (e) TITLE 44, UNITED STATES CODE.—Section 

2 3502(5) of title 44, United States Code, is amended by 

3 striking ‘‘Federal Housing Finance Board’’ and inserting 

4 ‘‘Federal Housing Finance Agency’’. 

5 (f) ACCESS TO LOCAL TV ACT OF 2000.—Section 

6 1004(d)(2)(D)(iii) of the Launching Our Communities’ 

7 Access to Local Television Act of 2000 (47 U.S.C. 

8 1103(d)(2)(D)(iii)) is amended by striking ‘‘Office of Fed9 eral Housing Enterprise Oversight, the Federal Housing 

10 Finance Board’’ and inserting ‘‘Federal Housing Finance 

11 Agency’’. 

12 SEC. 210. STUDY OF AFFORDABLE HOUSING PROGRAM USE 

13 FOR LONG-TERM CARE FACILITIES. 

14 The Comptroller General shall conduct a study of the 

15 use of affordable housing programs of the Federal home 

16 loan banks under section 10(j) of the Federal Home Loan 

17 Bank Act to determine how and the extent to which such 

18 programs are used to assist long-term care facilities for 

19 low- and moderate-income individuals, and the effective20 ness and adequacy of such assistance in meeting the needs 

21 of affected communities. The study shall examine the ap22 plicability of such use to the affordable housing programs 

23 required to be established by the enterprises pursuant to 

24 the amendment made by section 128 of this Act. The 

25 Comptroller General shall submit a report to the Director 
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1 of the Federal Housing Finance Agency and the Congress 

2 regarding the results of the study not later than the expi3 ration of the 1-year period beginning on the date of the 

4 enactment of this Act. This section shall take effect on 

5 the date of the enactment of this Act. 

6 SEC. 211. EFFECTIVE DATE. 

7 Except as specifically provided otherwise in this title, 

8 this title shall take effect on and the amendments made 

9 by this title shall take effect on, and shall apply beginning 

10 on, the expiration of the 6-month period beginning on the 

11 date of the enactment of this Act. 

12 TITLE III—TRANSFER OF FUNC13 TIONS, PERSONNEL, AND 

14 PROPERTY OF OFFICE OF 

15 FEDERAL HOUSING ENTER16 PRISE OVERSIGHT, FEDERAL 

17 HOUSING FINANCE BOARD, 

18 AND DEPARTMENT OF HOUS19 ING AND URBAN DEVELOP20 MENT 

21 Subtitle A—Office of Federal 

22 Housing Enterprise Oversight 

23 SEC. 301. ABOLISHMENT OF OFHEO. 

24 (a) IN GENERAL.—Effective at the end of the 6- 

25 month period beginning on the date of the enactment of 
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1 this Act, the Office of Federal Housing Enterprise Over2 sight of the Department of Housing and Urban Develop3 ment and the positions of the Director and Deputy Direc4 tor of such Office are abolished. 

5 (b) DISPOSITION OF AFFAIRS.—During the 6-month 

6 period beginning on the date of the enactment of this Act, 

7 the Director of the Office of Federal Housing Enterprise 

8 Oversight shall, for the purpose of winding up the affairs 

9 of the Office of Federal Housing Enterprise Oversight and 

10 in addition to carrying out its other responsibilities under 

11 law— 

12 (1) manage the employees of such Office and 

13 provide for the payment of the compensation and 

14 benefits of any such employee which accrue before 

15 the effective date of the transfer of such employee 

16 pursuant to section 303; and 

17 (2) may take any other action necessary for the 

18 purpose of winding up the affairs of the Office. 

19 (c) STATUS OF EMPLOYEES BEFORE TRANSFER.— 

20 The amendments made by title I and the abolishment of 

21 the Office of Federal Housing Enterprise Oversight under 

22 subsection (a) of this section may not be construed to af23 fect the status of any employee of such Office as employ24 ees of an agency of the United States for purposes of any 
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1 other provision of law before the effective date of the 

2 transfer of any such employee pursuant to section 303. 

3 (d) USE OF PROPERTY AND SERVICES.— 

4 (1) PROPERTY.—The Director of the Federal 

5 Housing Finance Agency may use the property of 

6 the Office of Federal Housing Enterprise Oversight 

7 to perform functions which have been transferred to 

8 the Director of the Federal Housing Finance Agency 

9 for such time as is reasonable to facilitate the or10 derly transfer of functions transferred pursuant to 

11 any other provision of this Act or any amendment 

12 made by this Act to any other provision of law. 

13 (2) AGENCY SERVICES.—Any agency, depart14 ment, or other instrumentality of the United States, 

15 and any successor to any such agency, department, 

16 or instrumentality, which was providing supporting 

17 services to the Office of Federal Housing Enterprise 

18 Oversight before the expiration of the period under 

19 subsection (a) in connection with functions that are 

20 transferred to the Director of the Federal Housing 

21 Finance Agency shall— 

22 (A) continue to provide such services, on a 

23 reimbursable basis, until the transfer of such 

24 functions is complete; and 
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1 (B) consult with any such agency to co2 ordinate and facilitate a prompt and reasonable 

3 transition. 

4 (e) SAVINGS PROVISIONS.— 

5 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA6 TIONS NOT AFFECTED.—Subsection (a) shall not af7 fect the validity of any right, duty, or obligation of 

8 the United States, the Director of the Office of Fed9 eral Housing Enterprise Oversight, or any other per10 son, which— 

11 (A) arises under or pursuant to the title 

12 XIII of the Housing and Community Develop13 ment Act of 1992, the Federal National Mort14 gage Association Charter Act, the Federal 

15 Home Loan Mortgage Corporation Act, or any 

16 other provision of law applicable with respect to 

17 such Office; and 

18 (B) existed on the day before the abolish19 ment under subsection (a) of this section. 

20 (2) CONTINUATION OF SUITS.—No action or 

21 other proceeding commenced by or against the Di22 rector of the Office of Federal Housing Enterprise 

23 Oversight in connection with functions that are 

24 transferred to the Director of the Federal Housing 

25 Finance Agency shall abate by reason of the enact-
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1 ment of this Act, except that the Director of the 

2 Federal Housing Finance Agency shall be sub3 stituted for the Director of the Office of Federal 

4 Housing Enterprise Oversight as a party to any 

5 such action or proceeding. 

6 SEC. 302. CONTINUATION AND COORDINATION OF CERTAIN 

7 REGULATIONS. 

8 All regulations, orders, determinations, and resolu9 tions that— 

10 (1) were issued, made, prescribed, or allowed to 

11 become effective by— 

12 (A) the Office of Federal Housing Enter13 prise Oversight; or 

14 (B) a court of competent jurisdiction and 

15 that relate to functions transferred by this sub16 title; and 

17 (2) are in effect on the date of the abolishment 

18 under section 301(a) of this Act, shall remain in ef19 fect according to the terms of such regulations, or20 ders, determinations, and resolutions, and shall be 

21 enforceable by or against the Director of the Federal 

22 Housing Finance Agency until modified, terminated, 

23 set aside, or superseded in accordance with applica24 ble law by such Director, as the case may be, any 

25 court of competent jurisdiction, or operation of law. 
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1 SEC. 303. TRANSFER AND RIGHTS OF EMPLOYEES OF 

2 OFHEO. 

3 (a) TRANSFER.—Each employee of the Office of Fed4 eral Housing Enterprise Oversight shall be transferred to 

5 the Federal Housing Finance Agency for employment no 

6 later than the date of the abolishment under section 

7 301(a) of this Act and such transfer shall be deemed a 

8 transfer of function for purposes of section 3503 of title 

9 5, United States Code. 

10 (b) GUARANTEED POSITIONS.—Each employee trans11 ferred under subsection (a) shall be guaranteed a position 

12 with the same status, tenure, grade, and pay as that held 

13 on the day immediately preceding the transfer. Each such 

14 employee holding a permanent position shall not be invol15 untarily separated or reduced in grade or compensation 

16 for 12 months after the date of transfer, except for cause 

17 or, if the employee is a temporary employee, separated in 

18 accordance with the terms of the appointment. 

19 (c) APPOINTMENT AUTHORITY FOR EXCEPTED

20 SERVICE EMPLOYEES.— 

21 (1) IN GENERAL.—In the case of employees oc22 cupying positions in the excepted service, any ap23 pointment authority established pursuant to law or 

24 regulations of the Office of Personnel Management 

25 for filling such positions shall be transferred, subject 

26 to paragraph (2). 
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1 (2) DECLINE OF TRANSFER.—The Director of 

2 the Federal Housing Finance Agency may decline a 

3 transfer of authority under paragraph (1) (and the 

4 employees appointed pursuant thereto) to the extent 

5 that such authority relates to positions excepted 

6 from the competitive service because of their con7 fidential, policy-making, policy-determining, or pol8 icy-advocating character. 

9 (d) REORGANIZATION.—If the Director of the Fed10 eral Housing Finance Agency determines, after the end 

11 of the 1-year period beginning on the date of the abolish12 ment under section 301(a), that a reorganization of the 

13 combined work force is required, that reorganization shall 

14 be deemed a major reorganization for purposes of afford15 ing affected employees retirement under section 

16 8336(d)(2) or 8414(b)(1)(B) of title 5, United States 

17 Code. 

18 (e) EMPLOYEE BENEFIT PROGRAMS.—Any employee 

19 of the Office of Federal Housing Enterprise Oversight ac20 cepting employment with the Director of the Federal 

21 Housing Finance Agency as a result of a transfer under 

22 subsection (a) may retain for 12 months after the date 

23 such transfer occurs membership in any employee benefit 

24 program of the Federal Housing Finance Agency or the 

25 Office of Federal Housing Enterprise Oversight, as appli-
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1 cable, including insurance, to which such employee belongs 

2 on the date of the abolishment under section 301(a) if— 

3 (1) the employee does not elect to give up the 

4 benefit or membership in the program; and 

5 (2) the benefit or program is continued by the 

6 Director of the Federal Housing Finance Agency, 

7 The difference in the costs between the benefits which 

8 would have been provided by such agency and those pro9 vided by this section shall be paid by the Director of the 

10 Federal Housing Finance Agency. If any employee elects 

11 to give up membership in a health insurance program or 

12 the health insurance program is not continued by such Di13 rector, the employee shall be permitted to select an alter14 nate Federal health insurance program within 30 days of 

15 such election or notice, without regard to any other regu16 larly scheduled open season. 

17 SEC. 304. TRANSFER OF PROPERTY AND FACILITIES. 

18 Upon the abolishment under section 301(a), all prop19 erty of the Office of Federal Housing Enterprise Oversight 

20 shall transfer to the Director of the Federal Housing Fi21 nance Agency. 
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1 Subtitle B—Federal Housing 

2 Finance Board 

3 SEC. 321. ABOLISHMENT OF THE FEDERAL HOUSING FI4 NANCE BOARD. 

5 (a) IN GENERAL.—Effective at the end of the 6- 

6 month period beginning on the date of enactment of this 

7 Act, the Federal Housing Finance Board (in this title re8 ferred to as the ‘‘Board’’) is abolished. 

9 (b) DISPOSITION OF AFFAIRS.—During the 6-month 

10 period beginning on the date of enactment of this Act, the 

11 Board, for the purpose of winding up the affairs of the 

12 Board and in addition to carrying out its other responsibil13 ities under law— 

14 (1) shall manage the employees of such Board 

15 and provide for the payment of the compensation 

16 and benefits of any such employee which accrue be17 fore the effective date of the transfer of such em18 ployee under section 323; and 

19 (2) may take any other action necessary for the 

20 purpose of winding up the affairs of the Board. 

21 (c) STATUS OF EMPLOYEES BEFORE TRANSFER.— 

22 The amendments made by titles I and II and the abolish23 ment of the Board under subsection (a) may not be con24 strued to affect the status of any employee of such Board 

25 as employees of an agency of the United States for pur-
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1 poses of any other provision of law before the effective 

2 date of the transfer of any such employee under section 

3 323. 

4 (d) USE OF PROPERTY AND SERVICES.— 

5 (1) PROPERTY.—The Director of the Federal 

6 Housing Finance Agency may use the property of 

7 the Board to perform functions which have been 

8 transferred to the Director of the Federal Housing 

9 Finance Agency for such time as is reasonable to fa10 cilitate the orderly transfer of functions transferred 

11 under any other provision of this Act or any amend12 ment made by this Act to any other provision of law. 

13 (2) AGENCY SERVICES.—Any agency, depart14 ment, or other instrumentality of the United States, 

15 and any successor to any such agency, department, 

16 or instrumentality, which was providing supporting 

17 services to the Board before the expiration of the pe18 riod under subsection (a) in connection with func19 tions that are transferred to the Director of the 

20 Federal Housing Finance Agency shall— 

21 (A) continue to provide such services, on a 

22 reimbursable basis, until the transfer of such 

23 functions is complete; and 
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1 (B) consult with any such agency to co2 ordinate and facilitate a prompt and reasonable 

3 transition. 

4 (e) SAVINGS PROVISIONS.— 

5 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA6 TIONS NOT AFFECTED.—Subsection (a) shall not af7 fect the validity of any right, duty, or obligation of 

8 the United States, a member of the Board, or any 

9 other person, which— 

10 (A) arises under the Federal Home Loan 

11 Bank Act or any other provision of law applica12 ble with respect to such Board; and 

13 (B) existed on the day before the effective 

14 date of the abolishment under subsection (a). 

15 (2) CONTINUATION OF SUITS.—No action or 

16 other proceeding commenced by or against the 

17 Board in connection with functions that are trans18 ferred to the Director of the Federal Housing Fi19 nance Agency shall abate by reason of the enactment 

20 of this Act, except that the Director of the Federal 

21 Housing Finance Agency shall be substituted for the 

22 Board or any member thereof as a party to any such 

23 action or proceeding. 
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1 SEC. 322. CONTINUATION AND COORDINATION OF CERTAIN 

2 REGULATIONS. 

3 (a) IN GENERAL.—All regulations, orders, and deter4 minations described under subsection (b) shall remain in 

5 effect according to the terms of such regulations, orders, 

6 determinations, and resolutions, and shall be enforceable 

7 by or against the Director of the Federal Housing Finance 

8 Agency until modified, terminated, set aside, or super9 seded in accordance with applicable law by such Director, 

10 any court of competent jurisdiction, or operation of law. 

11 (b) APPLICABILITY.—A regulation, order, or deter12 mination is described under this subsection if it— 

13 (1) was issued, made, prescribed, or allowed to 

14 become effective by— 

15 (A) the Board; or 

16 (B) a court of competent jurisdiction and 

17 relates to functions transferred by this subtitle; 

18 and 

19 (2) is in effect on the effective date of the abol20 ishment under section 321(a). 

21 SEC. 323. TRANSFER AND RIGHTS OF EMPLOYEES OF THE 

22 FEDERAL HOUSING FINANCE BOARD. 

23 (a) TRANSFER.—Each employee of the Board shall 

24 be transferred to the Federal Housing Finance Agency for 

25 employment not later than the effective date of the abol26 ishment under section 321(a), and such transfer shall be 
326 

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1 deemed a transfer of function for purposes of section 3503 

2 of title 5, United States Code. 

3 (b) GUARANTEED POSITIONS.—Each employee trans4 ferred under subsection (a) shall be guaranteed a position 

5 with the same status, tenure, grade, and pay as that held 

6 on the day immediately preceding the transfer. Each such 

7 employee holding a permanent position shall not be invol8 untarily separated or reduced in grade or compensation 

9 for 12 months after the date of transfer, except for cause 

10 or, if the employee is a temporary employee, separated in 

11 accordance with the terms of the appointment. 

12 (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND

13 SENIOR EXECUTIVE SERVICE EMPLOYEES.— 

14 (1) IN GENERAL.—In the case of employees oc15 cupying positions in the excepted service or the Sen16 ior Executive Service, any appointment authority es17 tablished under law or by regulations of the Office 

18 of Personnel Management for filling such positions 

19 shall be transferred, subject to paragraph (2). 

20 (2) DECLINE OF TRANSFER.—The Director of 

21 the Federal Housing Finance Agency may decline a 

22 transfer of authority under paragraph (1) to the ex23 tent that such authority relates to positions excepted 

24 from the competitive service because of their con25 fidential, policymaking, policy-determining, or policy- 
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1 advocating character, and noncareer positions in the 

2 Senior Executive Service (within the meaning of sec3 tion 3132(a)(7) of title 5, United States Code). 

4 (d) REORGANIZATION.—If the Director of the Fed5 eral Housing Finance Agency determines, after the end 

6 of the 1-year period beginning on the effective date of the 

7 abolishment under section 321(a), that a reorganization 

8 of the combined workforce is required, that reorganization 

9 shall be deemed a major reorganization for purposes of 

10 affording affected employees retirement under section 

11 8336(d)(2) or 8414(b)(1)(B) of title 5, United States 

12 Code. 

13 (e) EMPLOYEE BENEFIT PROGRAMS.— 

14 (1) IN GENERAL.—Any employee of the Board 

15 accepting employment with the Federal Housing Fi16 nance Agency as a result of a transfer under sub17 section (a) may retain for 12 months after the date 

18 on which such transfer occurs membership in any 

19 employee benefit program of the Federal Housing 

20 Finance Agency or the Board, as applicable, includ21 ing insurance, to which such employee belongs on 

22 the effective date of the abolishment under section 

23 321(a) if— 

24 (A) the employee does not elect to give up 

25 the benefit or membership in the program; and 
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1 (B) the benefit or program is continued by 

2 the Director of the Federal Housing Finance 

3 Agency. 

4 (2) COST DIFFERENTIAL.—The difference in 

5 the costs between the benefits which would have 

6 been provided by the Board and those provided by 

7 this section shall be paid by the Director of the Fed8 eral Housing Finance Agency. If any employee elects 

9 to give up membership in a health insurance pro10 gram or the health insurance program is not contin11 ued by such Director, the employee shall be per12 mitted to select an alternate Federal health insur13 ance program within 30 days after such election or 

14 notice, without regard to any other regularly sched15 uled open season. 

16 SEC. 324. TRANSFER OF PROPERTY AND FACILITIES. 

17 Upon the effective date of the abolishment under sec18 tion 321(a), all property of the Board shall transfer to 

19 the Director of the Federal Housing Finance Agency. 
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1 Subtitle C—Department of Housing 

2 and Urban Development 

3 SEC. 341. TERMINATION OF ENTERPRISE-RELATED FUNC4 TIONS. 

5 (a) TERMINATION DATE.—For purposes of this sub6 title, the term ‘‘termination date’’ means the date that oc7 curs 6 months after the date of the enactment of this Act. 

8 (b) DETERMINATION OF TRANSFERRED FUNCTIONS

9 AND EMPLOYEES.— 

10 (1) IN GENERAL.—Not later than the expira11 tion of the 3-month period beginning on the date of 

12 the enactment of this Act, the Secretary, in con13 sultation with the Director of the Office of Federal 

14 Housing Enterprise Oversight, shall determine— 

15 (A) the functions, duties, and activities of 

16 the Secretary of Housing and Urban Develop17 ment regarding oversight or regulation of the 

18 enterprises under or pursuant to the author19 izing statutes, title XIII of the Housing and 

20 Community Development Act of 1992, and any 

21 other provisions of law, as in effect before the 

22 date of the enactment of this Act, but not in23 cluding any such functions, duties, and activi24 ties of the Director of the Office of Federal 

25 Housing Enterprise Oversight of the Depart-
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1 ment of Housing and Urban Development and 

2 such Office; and 

3 (B) the employees of the Department of 

4 Housing and Urban Development necessary to 

5 perform such functions, duties, and activities. 

6 (2) ENTERPRISE-RELATED FUNCTIONS.—For 

7 purposes of this subtitle, the term ‘‘enterprise-re8 lated functions of the Department’’ means the func9 tions, duties, and activities of the Department of 

10 Housing and Urban Development determined under 

11 paragraph (1)(A). 

12 (3) ENTERPRISE-RELATED EMPLOYEES.—For 

13 purposes of this subtitle, the term ‘‘enterprise-re14 lated employees of the Department’’ means the em15 ployees of the Department of Housing and Urban 

16 Development determined under paragraph (1)(B). 

17 (c) DISPOSITION OF AFFAIRS.—During the 6-month 

18 period beginning on the date of enactment of this Act, the 

19 Secretary of Housing and Urban Development (in this 

20 title referred to as the ‘‘Secretary’’), for the purpose of 

21 winding up the affairs of the Secretary regarding the en22 terprise-related functions of the Department of Housing 

23 and Urban Development (in this title referred to as the 

24 ‘‘Department’’) and in addition to carrying out the Sec-
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1 retary’s other responsibilities under law regarding such 

2 functions— 

3 (1) shall manage the enterprise-related employ4 ees of the Department and provide for the payment 

5 of the compensation and benefits of any such em6 ployee which accrue before the effective date of the 

7 transfer of any such employee under section 343; 

8 and 

9 (2) may take any other action necessary for the 

10 purpose of winding up the enterprise-related func11 tions of the Department. 

12 (d) STATUS OF EMPLOYEES BEFORE TRANSFER.— 

13 The amendments made by titles I and II and the termi14 nation of the enterprise-related functions of the Depart15 ment under subsection (b) may not be construed to affect 

16 the status of any employee of the Department as employ17 ees of an agency of the United States for purposes of any 

18 other provision of law before the effective date of the 

19 transfer of any such employee under section 343. 

20 (e) USE OF PROPERTY AND SERVICES.— 

21 (1) PROPERTY.—The Director of the Federal 

22 Housing Finance Agency may use the property of 

23 the Secretary to perform functions which have been 

24 transferred to the Director of the Federal Housing 

25 Finance Agency for such time as is reasonable to fa-
332 

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1 cilitate the orderly transfer of functions transferred 

2 under any other provision of this Act or any amend3 ment made by this Act to any other provision of law. 

4 (2) AGENCY SERVICES.—Any agency, depart5 ment, or other instrumentality of the United States, 

6 and any successor to any such agency, department, 

7 or instrumentality, which was providing supporting 

8 services to the Secretary regarding enterprise-related 

9 functions of the Department before the termination 

10 date under subsection (a) in connection with such 

11 functions that are transferred to the Director of the 

12 Federal Housing Finance Agency shall— 

13 (A) continue to provide such services, on a 

14 reimbursable basis, until the transfer of such 

15 functions is complete; and 

16 (B) consult with any such agency to co17 ordinate and facilitate a prompt and reasonable 

18 transition. 

19 (f) SAVINGS PROVISIONS.— 

20 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA21 TIONS NOT AFFECTED.—Subsection (a) shall not af22 fect the validity of any right, duty, or obligation of 

23 the United States, the Secretary, or any other per24 son, which— 
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1 (A) arises under the authorizing statutes, 

2 title XIII of the Housing and Community De3 velopment Act of 1992, or any other provision 

4 of law applicable with respect to the Secretary, 

5 in connection with the enterprise-related func6 tions of the Department; and 

7 (B) existed on the day before the termi8 nation date under subsection (a). 

9 (2) CONTINUATION OF SUITS.—No action or 

10 other proceeding commenced by or against the Sec11 retary in connection with the enterprise-related func12 tions of the Department shall abate by reason of the 

13 enactment of this Act, except that the Director of 

14 the Federal Housing Finance Agency shall be sub15 stituted for the Secretary or any member thereof as 

16 a party to any such action or proceeding. 

17 SEC. 342. CONTINUATION AND COORDINATION OF CERTAIN 

18 REGULATIONS. 

19 (a) IN GENERAL.—All regulations, orders, and deter20 minations described in subsection (b) shall remain in ef21 fect according to the terms of such regulations, orders, 

22 determinations, and resolutions, and shall be enforceable 

23 by or against the Director of the Federal Housing Finance 

24 Agency until modified, terminated, set aside, or super-
334 

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1 seded in accordance with applicable law by such Director, 

2 any court of competent jurisdiction, or operation of law. 

3 (b) APPLICABILITY.—A regulation, order, or deter4 mination is described under this subsection if it— 

5 (1) was issued, made, prescribed, or allowed to 

6 become effective by— 

7 (A) the Secretary; or 

8 (B) a court of competent jurisdiction and 

9 that relate to the enterprise-related functions of 

10 the Department; and 

11 (2) is in effect on the termination date under 

12 section 341(a). 

13 SEC. 343. TRANSFER AND RIGHTS OF EMPLOYEES. 

14 (a) TRANSFER.— 

15 (1) IN GENERAL.—Except as provided in para16 graph (2), each enterprise-related employee of the 

17 Department shall be transferred to the Federal 

18 Housing Finance Agency for employment not later 

19 than the termination date under section 341(a) and 

20 such transfer shall be deemed a transfer of function 

21 for purposes of section 3503 of title 5, United States 

22 Code. 

23 (2) AUTHORITY TO DECLINE.—An enterprise24 related employee of the Department may, in the dis25 cretion of the employee, decline transfer under para-
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1 graph (1) to a position in the Federal Housing Fi2 nance Agency and shall be guaranteed a position in 

3 the Department with the same status, tenure, grade, 

4 and pay as that held on the day immediately pre5 ceding the date that such declination was made. 

6 Each such employee holding a permanent position 

7 shall not be involuntarily separated or reduced in 

8 grade or compensation for 12 months after the date 

9 that the transfer would otherwise have occurred, ex10 cept for cause or, if the employee is a temporary em11 ployee, separated in accordance with the terms of 

12 the appointment. 

13 (b) GUARANTEED POSITIONS.—Each enterprise-re14 lated employee of the Department transferred under sub15 section (a) shall be guaranteed a position with the same 

16 status, tenure, grade, and pay as that held on the day 

17 immediately preceding the transfer. Each such employee 

18 holding a permanent position shall not be involuntarily 

19 separated or reduced in grade or compensation for 12 

20 months after the date of transfer, except for cause or, if 

21 the employee is a temporary employee, separated in ac22 cordance with the terms of the appointment. 

23 (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND

24 SENIOR EXECUTIVE SERVICE EMPLOYEES.— 
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1 (1) IN GENERAL.—In the case of employees oc2 cupying positions in the excepted service or the Sen3 ior Executive Service, any appointment authority es4 tablished under law or by regulations of the Office 

5 of Personnel Management for filling such positions 

6 shall be transferred, subject to paragraph (2). 

7 (2) DECLINE OF TRANSFER.—The Director of 

8 the Federal Housing Finance Agency may decline a 

9 transfer of authority under paragraph (1) to the ex10 tent that such authority relates to positions excepted 

11 from the competitive service because of their con12 fidential, policymaking, policy-determining, or policy13 advocating character, and noncareer positions in the 

14 Senior Executive Service (within the meaning of sec15 tion 3132(a)(7) of title 5, United States Code). 

16 (d) REORGANIZATION.—If the Director of the Fed17 eral Housing Finance Agency determines, after the end 

18 of the 1-year period beginning on the termination date 

19 under section 341(a), that a reorganization of the com20 bined workforce is required, that reorganization shall be 

21 deemed a major reorganization for purposes of affording 

22 affected employees retirement under section 8336(d)(2) or 

23 8414(b)(1)(B) of title 5, United States Code. 

24 (e) EMPLOYEE BENEFIT PROGRAMS.— 
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1 (1) IN GENERAL.—Any enterprise-related em2 ployee of the Department accepting employment 

3 with the Federal Housing Finance Agency as a re4 sult of a transfer under subsection (a) may retain 

5 for 12 months after the date on which such transfer 

6 occurs membership in any employee benefit program 

7 of the Federal Housing Finance Agency or the De8 partment, as applicable, including insurance, to 

9 which such employee belongs on the termination 

10 date under section 341(a) if— 

11 (A) the employee does not elect to give up 

12 the benefit or membership in the program; and 

13 (B) the benefit or program is continued by 

14 the Director of the Federal Housing Finance 

15 Agency. 

16 (2) COST DIFFERENTIAL.—The difference in 

17 the costs between the benefits which would have 

18 been provided by the Department and those provided 

19 by this section shall be paid by the Director of the 

20 Federal Housing Finance Agency. If any employee 

21 elects to give up membership in a health insurance 

22 program or the health insurance program is not con23 tinued by such Director, the employee shall be per24 mitted to select an alternate Federal health insur25 ance program within 30 days after such election or 
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1 notice, without regard to any other regularly sched2 uled open season. 

3 SEC. 344. TRANSFER OF APPROPRIATIONS, PROPERTY, AND 

4 FACILITIES. 

5 Upon the termination date under section 341(a), all 

6 assets, liabilities, contracts, property, records, and unex7 pended balances of appropriations, authorizations, alloca8 tions, and other funds employed, held, used, arising from, 

9 available to, or to be made available to the Department 

10 in connection with enterprise-related functions of the De11 partment shall transfer to the Director of the Federal 

12 Housing Finance Agency. Unexpended funds transferred 

13 by this section shall be used only for the purposes for 

14 which the funds were originally authorized and appro15 priated. 

Passed the House of Representatives October 26, 

2005. 

Attest: JEFF TRANDAHL, 

Clerk.