I 

111TH CONGRESS 

1ST SESSION H. R. 472 

To reform the Troubled Assets Relief Program of the Secretary of the 

Treasury by establishing the Family Foreclosure Rescue Corporation 

modeled on the successful Home Owner’s Loan Corporation, and to 

purchase and insure home mortgage loans for the purposes of providing 

relief to homeowners, restoring stability to the financial system, preventing further harm to the economy, and protecting taxpayers. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 13, 2009 

Mr. BACA introduced the following bill; which was referred to the Committee 

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

Means, for a period to be subsequently determined by the Speaker, in 

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To reform the Troubled Assets Relief Program of the Secretary of the Treasury by establishing the Family Foreclosure Rescue Corporation modeled on the successful 

Home Owner’s Loan Corporation, and to purchase and 

insure home mortgage loans for the purposes of providing relief to homeowners, restoring stability to the 

financial system, preventing further harm to the economy, and protecting taxpayers. 

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. 

2 This Act may be cited as the ‘‘Family Foreclosure 

3 Rescue Corporation Act of 2009’’. 

4 SEC. 2. PURPOSES. 

5 The purposes of this Act are— 

6 (1) to provide immediate authority and facilities 

7 that the Secretary of the Treasury can use to assist 

8 struggling homeowners in order to restore liquidity 

9 and stability to the financial system of the United 

10 States; and 

11 (2) to ensure that such authority and such fa12 cilities are used in a manner that— 

13 (A) protects America’s family equity in14 cluding home values, college funds, retirement 

15 accounts, and life savings; 

16 (B) preserves homeownership and pro17 motes jobs and economic growth; 

18 (C) maximizes overall returns to the tax19 payers of the United States; and 

20 (D) provides public accountability for the 

21 exercise of such authority. 

22 SEC. 3. AMENDMENTS TO TARP. 

23 (a) FAMILY FORECLOSURE RESCUE CORPORATION

24 PROGRAM UNDER TARP.—Title I of the Emergency Eco25 nomic Stabilization Act of 2008 (12 U.S.C. 5211) is 

26 amended— 


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1 (1) by inserting after the title designation and 

2 heading the following: 

3 ‘‘Subtitle A—Program for 

4 Purchases of Troubled Assets’’; and 

5 (2) by adding at the end the following new sub6 title: 

7 ‘‘Subtitle B—Family Foreclosure 

8 Rescue Corporation Program 

9 ‘‘SEC. 150. AUTHORITY UNDER TARP PROGRAM. 

10 ‘‘The authority of the Secretary to take any action 

11 under this title includes the authority to take the actions 

12 authorized under this subtitle and to use amounts made 

13 available under subtitle A under the provisions of this sub14 title. 

15 ‘‘SEC. 151. PURCHASES OF HOME MORTGAGES. 

16 ‘‘(a) OFFICES; AUTHORITY.— 

17 ‘‘(1) AUTHORITY.—The Secretary is authorized 

18 to establish a Family Foreclosure Rescue Corpora19 tion program (or ‘FFRC program’) to purchase, and 

20 to make and fund commitments to purchase, home 

21 mortgage loans from any financial institution, on 

22 such terms and conditions as are determined by the 

23 Secretary, and in accordance with this subtitle and 

24 the policies and procedures developed and published 

25 by the Secretary. 


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1 ‘‘(2) COMMENCEMENT OF PROGRAM.—Estab2 lishment of the policies and procedures and other 

3 similar administrative requirements imposed on the 

4 Secretary by this subtitle are not intended to delay 

5 the commencement of the FFRC program. 

6 ‘‘(3) ESTABLISHMENT OF THE FAMILY FORE7 CLOSURE RESCUE CORPORATION.—The Family 

8 Foreclosure Rescue Corporation is hereby estab9 lished as an independent office within the Treasury, 

10 which office shall be headed by Chairman, who shall 

11 report to the Secretary, and shall be appointed by 

12 the President, by and with the advice and consent 

13 of the Senate, except that an interim Chairman may 

14 serve pending confirmation by the Senate. 

15 ‘‘(b) CONSULTATION.—In exercising the authority 

16 under this section, the Secretary shall consult with the 

17 Board of Governors of the Federal Reserve System, the 

18 Corporation, the Comptroller of the Currency, the Direc19 tor of the Office of Thrift Supervision, and the Secretary 

20 of Housing and Urban Development. 

21 ‘‘(c) NECESSARY ACTIONS.—The Secretary is author22 ized to take such actions as the Secretary deems necessary 

23 to carry out the authorities in this subtitle, including, 

24 without limitation, the following: 


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1 ‘‘(1) The Secretary shall have direct hiring au2 thority with respect to the appointment of employees 

3 to administer this subtitle. 

4 ‘‘(2) Entering into contracts, including con5 tracts for services authorized by section 3109 of title 

6 5, United States Code. 

7 ‘‘(3) Designating financial institutions, the Cor8 poration, the Board, the Federal Housing Adminis9 tration, the Federal National Mortgage Association, 

10 and the Federal Home Loan Mortgage Corporation, 

11 as financial agents of the Federal Government for 

12 purposes of implementing the provisions of this sub13 title, and such institutions shall perform all such 

14 reasonable duties related to this subtitle as financial 

15 agents of the Federal Government as may be re16 quired 

17 ‘‘(4) In order to provide the Secretary with the 

18 flexibility to manage home mortgages in a manner 

19 designed to minimize cost to the taxpayers, estab20 lishing vehicles that are authorized, subject to super21 vision by the Secretary, to purchase, hold, guarantee 

22 and sell home mortgages and to issue obligations. 

23 ‘‘(5) Issuing such regulations and other guid24 ance as may be necessary or appropriate to define 


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1 terms or carry out the authorities or purposes of 

2 this subtitle. 

3 ‘‘(6) Entering into indemnity agreements with 

4 servicers or trustees that would indemnify the 

5 servicer or trustees for legal liability to investors 

6 arising from sale, disposition or modification of 

7 home mortgages if— 

8 ‘‘(A) the servicer or trustee has acted rea9 sonably in selling, disposing of or modifying the 

10 mortgage; and 

11 ‘‘(B) the servicer or trustee has acted in 

12 accordance with a request for sale, modification 

13 or disposition from the Secretary or his des14 ignee under the FFRC program established by 

15 this subtitle. 

16 ‘‘(7) Developing a program, with respect to 

17 first-lien home mortgage loans purchased by the 

18 Secretary, through which the security interests of 

19 second lien-holders with respect to the residential 

20 property securing the first-lien home mortgage loan 

21 purchased by the Secretary, are extinguished in ex22 change for partial payment. 

23 ‘‘(d) PROGRAM GUIDELINES.—Before the earlier of 

24 the end of the 2-business-day period beginning on the date 

25 of the first purchase of home mortgages pursuant to the 


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1 authority under this section or the end of the 45-day pe2 riod beginning on the date of enactment of this subtitle, 

3 the Secretary shall publish program guidelines, including 

4 the following: 

5 ‘‘(1) Mechanisms for purchasing home mort6 gages in exchange for cash, Treasury securities or 

7 other assets. 

8 ‘‘(2) Methods for pricing and valuing home 

9 mortgages. 

10 ‘‘(3) Procedures for selecting home mortgage 

11 asset managers. 

12 ‘‘(4) Criteria for identifying home mortgages 

13 for purchase. Such criteria shall include (A) loan-to14 value ratio, (B) debt-to-income ratio; and (C) such 

15 other criteria as the Secretary may prescribe. 

16 ‘‘(e) PREVENTING UNJUST ENRICHMENT.—In mak17 ing purchases under the authority of this subtitle, the Sec18 retary shall take such steps as may be necessary to pre19 vent unjust enrichment of financial institutions and home 

20 owners participating in a program established under this 

21 subtitle. 

22 ‘‘SEC. 152. INSURANCE OF HOME MORTGAGES. 

23 ‘‘(a) AUTHORITY.— 

24 ‘‘(1) IN GENERAL.—The Secretary shall estab25 lish a program to guarantee home mortgages conVerDate Nov 24 2008 03:13 Jan 15, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H472.IH H472

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1 sistent with section 159(b) and the purposes of this 

2 subtitle. 

3 ‘‘(2) GUARANTEES.—In establishing any pro4 gram under this subsection, the Secretary shall de5 velop guarantees of home mortgages and the associ6 ated premiums for such guarantees. Such guaran7 tees and premiums may be determined by category 

8 or class of the home mortgages to be guaranteed. 

9 ‘‘(3) EXTENT OF GUARANTEE.—The Secretary 

10 may guarantee the timely payment of principal of, 

11 and interest on, home mortgages in amounts not to 

12 exceed 100 percent of such payments. Such guar13 antee may be on such terms and conditions as are 

14 determined by the Secretary, provided that such 

15 terms and conditions are consistent with section 

16 159(b) and the purposes of this subtitle. 

17 ‘‘(b) REPORTS.—Not later than 90 days after the 

18 date of enactment of this subtitle, the Secretary shall re19 port to the appropriate committees of Congress on the 

20 program established under subsection (a). 

21 ‘‘(c) PREMIUMS.— 

22 ‘‘(1) IN GENERAL.—The Secretary shall collect 

23 premiums from any financial institution and any 

24 borrower participating in the program established 

25 under subsection (a). Such premiums shall be in an 


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1 amount that the Secretary determines necessary to 

2 meet the purposes of this subtitle and to provide suf3 ficient reserves pursuant to paragraph (3). 

4 ‘‘(2) AUTHORITY TO BASE PREMIUMS ON PROD5 UCT RISK.—In establishing any premium under 

6 paragraph (1), the Secretary may provide for vari7 ations in such rates according to the credit risks and 

8 other risks associated with the particular home 

9 mortgage that is being guaranteed. The Secretary 

10 shall publish the methodology for setting the pre11 mium for a class of home mortgages together with 

12 an explanation of the appropriateness of the class of 

13 home mortgages for participation the program estab14 lished under this section. The methodology shall en15 sure that the premium is consistent with paragraph 

16 (3). 

17 ‘‘(3) MINIMUM LEVEL.—The premiums referred 

18 to in paragraph (1) shall be set by the Secretary at 

19 a level necessary to create reserves sufficient to meet 

20 anticipated claims, based on an actuarial analysis, 

21 and to ensure that taxpayers are fully protected, un22 less the Secretary determines that a lower premium 

23 combined with other protections for taxpayers, in24 cluding but not limited to provisions for shared eqVerDate Nov 24 2008 03:13 Jan 15, 2009 Jkt 079200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H472.IH H472

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1 uity mortgages would more fully meet the purposes 

2 of this subtitle. 

3 ‘‘(d) HOME MORTGAGE INSURANCE FINANCING

4 FUND.— 

5 ‘‘(1) DEPOSITS.—The Secretary shall deposit 

6 fees collected under this section into the Fund estab7 lished under paragraph (2) 

8 ‘‘(2) ESTABLISHMENT.—There is established a 

9 Home Mortgage Insurance Financing Fund within 

10 the Family Foreclosure Rescue Corporation that 

11 shall consist of the amounts collected pursuant to 

12 paragraph (1), and any balance in such fund shall 

13 be invested by the Secretary in United States Treas14 ury securities, or kept in cash on hand or on deposit, 

15 as necessary. 

16 ‘‘(3) PAYMENTS FROM FUND.—The Secretary 

17 shall make payments from amounts deposited in the 

18 Fund and from other sums authorized by this sub19 title to fulfill obligations of the guarantees provided 

20 to financial institutions under subsection (a). 

21 ‘‘(4) TERMINATION OF FUND.—The Fund shall 

22 be terminated by the period ending one year after 

23 the repayment of the last home mortgage loan in24 sured or guaranteed by the Secretary and any 


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1 amounts remaining in the Fund shall be deposited 

2 as provided in section 156(e). 

3 ‘‘SEC. 153. CONSIDERATIONS. 

4 ‘‘In exercising the authorities granted in this subtitle, 

5 the Secretary shall take into consideration— 

6 ‘‘(1) providing mechanisms for families to keep 

7 their homes and to stabilize communities; 

8 ‘‘(2) ensuring stability and preventing disrup9 tion to financial market in order to limit the impact 

10 of the financial crisis on the economy and protect 

11 American jobs, savings, and retirement security; 

12 ‘‘(3) protecting the interests of taxpayers by 

13 maximizing overall returns and minimizing the im14 pact on the national debt; 

15 ‘‘(4) determining the most efficient use of funds 

16 under this subtitle; 

17 ‘‘(5) ensuring that all financial institutions are 

18 eligible to participate in the program, without dis19 crimination based on size, geography, form of orga20 nization, or the size, type, and number of assets eli21 gible for purchase under this subtitle; 

22 ‘‘(6) paying due attention to financial institu23 tions, including those serving low- and moderate-in24 come populations and other underserved commuVerDate Nov 24 2008 03:13 Jan 15, 2009 Jkt 079200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H472.IH H472

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1 nities, and that have assets less than 

2 $1,000,000,000; 

3 ‘‘(7) stabilizing United States public instrumen4 talities, such as counties and cities, which may have 

5 suffered significant increased costs or losses in the 

6 current market turmoil; 

7 ‘‘(8) protecting the retirement security of Amer8 icans by purchasing home mortgages by or on behalf 

9 of an eligible retirement plan described in clause 

10 (iii), (iv), (v), or (vi) of section 402(c)(8)(B) of the 

11 Internal Revenue Code of 1986, except that such au12 thority shall not extend to any compensation ar13 rangements subject to section 409A of such Code; 

14 and 

15 ‘‘(9) purchasing home mortgage loans, residen16 tial other real estate owned by financial institutions 

17 and mortgages on multifamily properties. 

18 ‘‘SEC. 154. FFRC OVERSIGHT BOARD. 

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

20 Family Foreclosure Rescue Corporation Oversight Board, 

21 which shall be responsible for— 

22 ‘‘(1) reviewing the exercise of authority under a 

23 program developed in accordance with this subtitle, 

24 including 


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1 ‘‘(A) policies implemented by the Secretary 

2 and the Family Foreclosure Rescue Corporation 

3 created under sections 151 and 152, including 

4 the appointment of financial agents, the des5 ignation of asset classes to be purchased, and 

6 plans for the structure of vehicles used to pur7 chase home mortgages; and 

8 ‘‘(B) the effect of such actions in assisting 

9 American families in preserving home owner10 ship, stabilizing financial markets, and pro11 tecting taxpayers; 

12 ‘‘(2) making recommendations, as appropriate, 

13 to the Secretary regarding use of the authority 

14 under this subtitle; and 

15 ‘‘(3) reporting any suspected fraud, misrepre16 sentation, or malfeasance to the Special Inspector 

17 General for the FFRC Program or the Attorney 

18 General of the United States, consistent with section 

19 535(b) of title 28, United States Code. 

20 ‘‘(b) MEMBERSHIP.—The Oversight Board shall be 

21 comprised of— 

22 ‘‘(1) the Chairman of the Board of Governors 

23 of the Federal Reserve System; 

24 ‘‘(2) the Secretary; 


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1 ‘‘(3) the Director of the Federal Home Finance 

2 Agency; 

3 ‘‘(4) the Chairman of the Securities Exchange 

4 Commission; 

5 ‘‘(5) the Chairman of the Corporation; and 

6 ‘‘(6) the Secretary of Housing and Urban De7 velopment. 

8 ‘‘(c) CHAIRPERSON.—The chairperson of the Over9 sight Board shall be the Chairman of the Corporation. 

10 ‘‘(d) MEETINGS.—The Oversight Board shall meet 2 

11 weeks after the first exercise of the purchase authority of 

12 the Secretary under this subtitle, and at least monthly 

13 thereafter. 

14 ‘‘(e) ADDITIONAL AUTHORITIES.—In addition to re15 sponsibilities described in subsection (a), the Oversight 

16 Board shall have the authority to ensure that the policies 

17 implemented the Secretary are— 

18 ‘‘(1) in accordance with the purposes of this 

19 subtitle; 

20 ‘‘(2) in the economic interests of the United 

21 States; and 

22 ‘‘(3) consistent with protecting taxpayers, in ac23 cordance with section 161(a). 

24 ‘‘(f) CREDIT REVIEW COMMITTEE.—The Oversight 

25 Board may appoint a credit review committee for the purVerDate Nov 24 2008 03:13 Jan 15, 2009 Jkt 079200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H472.IH H472

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1 pose of evaluating the exercise of the purchase authority 

2 provided under this subtitle and the assets acquired 

3 through the exercise of such authority, as the Oversight 

4 Board determines appropriate. 

5 ‘‘(g) REPORTS.—The Oversight Board shall report to 

6 the appropriate committees of Congress and the Congres7 sional Oversight Panel established under section 125, 

8 semiannually, on the matters described under subsection 

9 (a)(1). 

10 ‘‘(h) TERMINATION.—The Oversight Board, and the 

11 authority of the Oversight Board under this section, shall 

12 terminate on the expiration of the 15-day period beginning 

13 upon the later of— 

14 ‘‘(1) the date that the last home mortgage loan 

15 acquired by the Secretary under section 151 has 

16 been sold or transferred out of the ownership or con17 trol of the Federal Government; or 

18 ‘‘(2) the date of expiration of the last insurance 

19 contract issued under section 152. 

20 ‘‘SEC. 155. REPORTS. 

21 ‘‘(a) IN GENERAL.—Before the expiration of the 60- 

22 day period beginning on the date of the first exercise of 

23 the authority granted in section 151(a), or of the first ex24 ercise of the authority granted in section 152, whichever 

25 occurs first, and every 30-day period thereafter, the SecVerDate Nov 24 2008 03:13 Jan 15, 2009 Jkt 079200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H472.IH H472

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1 retary shall report to the appropriate committees of Con2 gress, with respect to each such period— 

3 ‘‘(1) an overview of actions taken by the Sec4 retary, including the factors to be taken in consider5 ation in section 153; 

6 ‘‘(2) the actual obligation and expenditure of 

7 the funds provided for administrative expenses by 

8 section 164 during such period and the expected ex9 penditure of such funds in the subsequent period; 

10 and 

11 ‘‘(3) a detailed financial statement with respect 

12 to the exercise of authority under this subtitle, in13 cluding— 

14 ‘‘(A) all agreements made or renewed; 

15 ‘‘(B) all insurance contracts entered into 

16 pursuant to section 152; 

17 ‘‘(C) all transactions occurring during such 

18 period, including the types of parties involved; 

19 ‘‘(D) the nature of the assets purchased; 

20 ‘‘(E) all projected costs and liabilities; 

21 ‘‘(F) operating expenses, including com22 pensation for financial agents; 

23 ‘‘(G) the valuation or pricing method used 

24 for each transaction; and 


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1 ‘‘(H) a description of the vehicles estab2 lished to exercise such authority. 

3 ‘‘(b) TRANCHE REPORTS TO CONGRESS.— 

4 ‘‘(1) REPORTS.—The Secretary shall provide to 

5 the appropriate committees of Congress, at the times 

6 specified in paragraph (2), a written report, includ7 ing— 

8 ‘‘(A) a description of all of the transactions 

9 made during the reporting period; 

10 ‘‘(B) a description of the pricing mecha11 nism for the transactions; 

12 ‘‘(C) a justification of the price paid for 

13 and other financial terms associated with the 

14 transactions; 

15 ‘‘(D) a description of the impact of the ex16 ercise of such authority on the financial system, 

17 supported to the extent possible, by specific 

18 data; 

19 ‘‘(E) a description of challenges that re20 main in the financial system, including any 

21 benchmarks yet to be achieved; and 

22 ‘‘(F) an estimate of additional actions 

23 under the authority provided under this subtitle 

24 that may be necessary to address such chal25 lenges. 


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1 ‘‘(2) TIMING.—The report required by this sub2 section shall be submitted not later than 7 days 

3 after the date on which commitments to purchase 

4 home mortgages under the authorities provided in 

5 this subtitle first reach an aggregate of 

6 $50,000,000,000 and not later than 7 days after 

7 each $50,000,000,000 interval of such commitments 

8 is reached thereafter. 

9 ‘‘(c) SHARING OF INFORMATION.—Any report re10 quired under this section shall also be submitted to the 

11 Congressional Oversight Panel established under section 

12 125. 

13 ‘‘(d) SUNSET.—The reporting requirements under 

14 this section shall terminate on the later of— 

15 ‘‘(1) the date that the last home mortgage ac16 quired by the Secretary under section101 has been 

17 sold or transferred out of the ownership or control 

18 of the Federal Government; or 

19 ‘‘(2) the date of expiration of the last insurance 

20 contract issued under section 152. 

21 ‘‘SEC. 156. RIGHTS; MANAGEMENT; SALE OF HOME MORT22 GAGES; REVENUES AND SALE PROCEEDS. 

23 ‘‘(a) EXERCISE OF RIGHTS.—The Secretary may, at 

24 any time, exercise any rights received in connection with 

25 home mortgages purchased under this subtitle 


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1 ‘‘(b) MANAGEMENT OF HOME MORTGAGES.— 

2 ‘‘(1) IN GENERAL.—The Secretary shall have 

3 authority to manage home mortgages purchased 

4 under this subtitle, including revenues and portfolio 

5 risks therefrom. 

6 ‘‘(2) In managing home mortgages purchased 

7 under the authorities of this subtitle, the Secretary 

8 shall implement a systematic plan to maximize loan 

9 modifications in order to minimize foreclosures, in10 cluding by reducing interest rates, writing down 

11 principal sums owed, providing guarantees, and 

12 other measures. 

13 ‘‘(3) With respect to loans not eligible for modi14 fication, and with respect to loans that enter into de15 fault, the Secretary shall implement a plan to mini16 mize foreclosures, through short sales or by other 

17 means, and to reduce negative impacts on commu18 nities from foreclosures, short sales or other disposi19 tions, consistent with the purposes of this subtitle. 

20 ‘‘(4) With respect to loans modified by the Sec21 retary, the Secretary shall implement a program of 

22 shared equity mortgages such that upon any sale or 

23 disposition within five years from the date of loan 

24 modification any increases in the equity of any home 

25 securing a loan modified by the Secretary are shared 


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1 between the home owner and the Family Foreclosure 

2 Rescue Corporation, based upon a schedule to be 

3 issued by the Secretary, such schedule to provide for 

4 an increasingly smaller share of such equity increase 

5 to be payable to the Secretary over that five-year pe6 riod. 

7 ‘‘(c) SALE OF HOME MORTGAGES.—The Secretary 

8 may, at any time, upon terms and conditions and at a 

9 price determined by the Secretary, guarantee, sell, or enter 

10 into securities loans, repurchase transactions, or other fi11 nancial transactions in regard to, any home mortgages 

12 purchased under this subtitle. 

13 ‘‘(d) PROCEEDS OF SALES AND OTHER REVE14 NUES.—Revenues of, and proceeds from the sale of home 

15 mortgages purchased under this subtitle, or from any 

16 shared equity home mortgage program established by the 

17 Secretary under this subtitle, or from the sale, exercise, 

18 or surrender of warrants or senior debt instruments ac19 quired under section 161, and any amounts remaining in 

20 the Fund upon its termination, shall be paid into the gen21 eral fund of the Treasury for reduction of the public debt 

22 except as provided in section (e). 

23 ‘‘(e) TRANSFER OF A PERCENTAGE OF PROFITS.— 

24 ‘‘(1) DEPOSITS.—Not less than 20 percent of 

25 any revenues of, and proceeds from the sale of home 


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1 mortgages purchased under this subtitle, or from 

2 any shared equity home mortgage program estab3 lished by the Secretary under this subtitle, or from 

4 the sale, exercise, or surrender of warrants or senior 

5 debt instruments acquired under section 161, and 

6 not less than 20 percent of any amounts remaining 

7 in the Fund upon its termination, shall be deposited 

8 as provided in paragraph (2). 

9 ‘‘(2) USE OF DEPOSITS.—Of the amount re10 ferred to in paragraph (1)— 

11 ‘‘(A) 65 percent shall be deposited into the 

12 Housing Trust Fund established under section 

13 1338 of the Federal Housing Enterprises Fi14 nancial Safety and Soundness Act of 1992 (12 

15 U.S.C. 4568); 

16 ‘‘(B) 35 percent shall be deposited into the 

17 Capital Magnet Fund established under section 

18 1339 of that Act (12 U.S.C. 4569). 

19 ‘‘(3) REMAINDER DEPOSITED IN THE TREAS20 URY.—All amounts remaining after payments under 

21 paragraph (1) shall be paid into the General Fund 

22 of the Treasury for reduction of the public debt. 

23 ‘‘(f) APPLICATION OF SUNSET TO HOME MORT24 GAGES.—The authority of the Secretary to hold, guar25 antee, sell or dispose of any home mortgage purchased 


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1 under this subtitle before the termination date in section 

2 165, or to purchase or fund the purchase of a home mort3 gage under a commitment entered into before the termi4 nation date in section 165, is not subject to the provisions 

5 of section 165. 

6 ‘‘SEC. 157. CONTRACTING PROCEDURES. 

7 ‘‘(a) STREAMLINED PROCESS.—For purposes of this 

8 subtitle, the Secretary may waive specific provisions of the 

9 Federal Acquisition Regulation upon a determination that 

10 urgent and compelling circumstances make compliance 

11 with such provisions contrary to the public interest. Any 

12 such determination, and the justification for such deter13 mination, shall be submitted to the Committees on Over14 sight and Government Reform and Financial Services of 

15 the House of Representatives and the Committees on 

16 Homeland Security and Governmental Affairs and Bank17 ing, Housing, and Urban Affairs of the Senate within 7 

18 days. 

19 ‘‘(b) ADDITIONAL CONTRACTING REQUIREMENTS.— 

20 In any solicitation or contract where the Secretary has, 

21 pursuant to subsection (a), waived any provision of the 

22 Federal Acquisition Regulation pertaining to minority con23 tracting, the Secretary shall develop and implement stand24 ards and procedures to ensure, to the maximum extent 

25 practicable, the inclusion and utilization of minorities (as 


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1 such term is defined in section 1204(c) of the Financial 

2 Institutions Reform, Recovery, and Enforcement Act of 

3 1989 (12 U.S.C. 1811 note)) and women, and minority 

4 and women-owned businesses (as such terms are defined 

5 in section 21A(r)(4) of the Federal Home Loan Bank Act 

6 (12 U.S.C. 1441a(r)(4)), in that solicitation or contract, 

7 including contracts to asset managers, servicers, property 

8 managers, and other service providers or expert consult9 ants. 

10 ‘‘(c) ELIGIBILITY OF FDIC, BOARD, FEDERAL

11 HOUSING ADMINISTRATION, FEDERAL NATIONAL MORT12 GAGE ASSOCIATION AND THE FEDERAL HOME LOAN

13 MORTGAGE CORPORATION.—Notwithstanding subsections 

14 (a) and (b), the Corporation, Board, Federal Housing Ad15 ministration, Federal National Mortgage Association and 

16 the Federal Home Loan Mortgage Corporation— 

17 ‘‘(1) shall be eligible for, and shall be consid18 ered in, the selection of financial agents to perform 

19 any duty assigned to the Secretary by this subtitle; 

20 ‘‘(2) in performing such duties shall report to 

21 the Chairman of the Family Foreclosure Rescue 

22 Corporation; and 

23 ‘‘(3) shall be reimbursed by the Secretary for 

24 any services provided. 


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1 ‘‘SEC. 158. CONFLICTS OF INTEREST. 

2 ‘‘(a) STANDARDS REQUIRED.—The Secretary shall 

3 issue regulations or guidelines necessary to address and 

4 manage or to prohibit conflicts of interest that may arise 

5 in connection with the administration and execution of the 

6 authorities provided under this subtitle, including conflicts 

7 arising in— 

8 ‘‘(1) the selection or hiring of contractors or ad9 visors, including asset managers; 

10 ‘‘(2) the purchase of home mortgages; 

11 ‘‘(3) the management of the assets held; 

12 ‘‘(4) post-employment restrictions on employees; 

13 and 

14 ‘‘(5) any other potential conflict of interest, as 

15 the Secretary deems necessary or appropriate in the 

16 public interest. 

17 ‘‘(b) TIMING.—Regulations or guidelines required by 

18 this section shall be issued as soon as practicable after 

19 the date of enactment of this subtitle. 

20 ‘‘SEC. 159. FORECLOSURE MITIGATION EFFORTS. 

21 ‘‘(a) RESIDENTIAL MORTGAGE LOAN SERVICING

22 STANDARDS.—To the extent that the Secretary acquires 

23 home mortgages, including mortgages securing loans for 

24 multifamily housing, the Secretary shall implement a plan 

25 within 60 days of enactment of this subtitle that seeks 


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1 to maximize loan restructuring on a sustainable basis and 

2 to minimize foreclosures. 

3 ‘‘(b) LOAN GUARANTEES.— 

4 ‘‘(1) IN GENERAL.—The Secretary may use 

5 loan guarantees and other credit enhancements to 

6 facilitate loan modifications, to prevent avoidable 

7 foreclosures, and to provide necessary liquidity to 

8 home mortgage markets. 

9 ‘‘(2) Such loan guarantee authority may be 

10 used by the Secretary with respect to any and all 

11 classes of home mortgage loans the Secretary has 

12 acquired and wishes to sell. 

13 ‘‘(3) Such loan guarantee authority may be 

14 used by the Secretary with respect to other home 

15 mortgage loans not acquired by the Secretary pro16 vided that the holder, servicer, or trustee with re17 spect to such home mortgage loan to be guaranteed 

18 by the Secretary shall through modification, refi19 nancing, or otherwise write down the principal 

20 amount owed and reduce the interest rate charged 

21 such that the new loan amount does not exceed 90 

22 percent of the home’s currently and independently 

23 appraised value and loan payments to be made by 

24 the borrower do not exceed 38 percent of the bor25 rower’s currently documented and verified income. 


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1 ‘‘(4) The percentage requirements with respect 

2 to the result of loan modifications specified in the 

3 immediately preceding sentence of paragraph (3) 

4 may be altered upon request of the Secretary by 

5 unanimous vote of the Oversight Board and upon 60 

6 days notice to the appropriate Committees of Con7 gress. 

8 ‘‘(c) COORDINATION.—The Secretary shall coordinate 

9 with the Corporation, the Board, the Federal Housing Fi10 nance Agency, the Secretary of Housing and Urban Devel11 opment, and other Federal Government entities that hold 

12 assets to attempt to identify opportunities for the acquisi13 tion of classes of home mortgages that will improve the 

14 ability of the Secretary to improve the loan modification 

15 and restructuring process. 

16 ‘‘(d) TENANTS.—The Secretary shall, where permis17 sible, permit bona fide tenants who are current on their 

18 rent to remain in their homes under the terms of the lease. 

19 In the case of a mortgage on a residential rental property, 

20 the plan required under this section shall include pro21 tecting Federal, State, and local rental subsidies and pro22 tections, and ensuring any modification takes into account 

23 the need for operating funds to maintain decent and safe 

24 conditions at the property. 


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1 ‘‘(e) CONSENT TO REASONABLE LOAN MODIFICA2 TION REQUESTS.—The Secretary shall consent, where ap3 propriate, and considering net present value to the tax4 payer, to reasonable requests for loss mitigation measures, 

5 including term extensions, rate reductions, principal write 

6 downs, increases in the proportion of loans within a trust 

7 or other structure allowed to be modified, or removal of 

8 other limitations on modifications. 

9 ‘‘SEC. 160. ASSISTANCE TO HOMEOWNERS. 

10 ‘‘(a) DEFINITIONS.—As used in this section— 

11 ‘‘(1) the term ‘Federal property manager’ 

12 means— 

13 ‘‘(A) the Federal Housing Finance Agency, 

14 in its capacity as conservator of the Federal 

15 National Mortgage Association and the Federal 

16 Home Loan Mortgage Corporation; 

17 ‘‘(B) the Corporation, with respect to resi18 dential mortgage loans and mortgage-backed se19 curities held by any bridge depository institu20 tion pursuant to section 11(n) of the Federal 

21 Deposit Insurance Act (12 U.S.C. 1821(n)); 

22 and 

23 ‘‘(C) the Board, with respect to any mort24 gage or mortgage-backed securities or pool of 

25 securities held, owned, or controlled by or on 


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1 behalf of a Federal reserve bank, other than 

2 mortgages or securities held, owned, or con3 trolled in connection with open market oper4 ations under section 14 of the Federal Reserve 

5 Act (12 U.S.C. 353), or as collateral for an ad6 vance or discount that is not in default; 

7 ‘‘(2) the term ‘consumer’ has the same meaning 

8 as in section 103 of the Truth in Lending Act (15 

9 U.S.C. 1602); 

10 ‘‘(3) the term ‘insured depository institution’ 

11 has the same meaning as in section 3 of the Federal 

12 Deposit Insurance Act (12 U.S.C. 1813); and 

13 ‘‘(4) the term ‘servicer’ has the same meaning 

14 as in section 6(i)(2) of the Real Estate Settlement 

15 Procedures Act of 1974 (12 U.S.C. 2605(i)(2)). 

16 ‘‘(b) HOMEOWNER ASSISTANCE BY AGENCIES.— 

17 ‘‘(1) IN GENERAL.—To the extent that the Fed18 eral property manager holds, owns, or controls mort19 gages, mortgage backed securities, and other assets 

20 secured by residential real estate, including multi21 family housing, the Federal property manager shall 

22 implement a systematic plan that seeks to maximize 

23 assistance for homeowners and minimize fore24 closures, to use its authority to modify mortgage 

25 loans held by the Federal property manager, and to 


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1 provide incentives to the servicers of other mortgage 

2 loans to take advantage of the HOPE for Home3 owners Program under section 257 of the National 

4 Housing Act, the authorities provided under this 

5 subtitle, and other available programs to minimize 

6 foreclosures. 

7 ‘‘(2) MODIFICATIONS.—In the case of a resi8 dential mortgage loan, modifications made under 

9 paragraph (1) may include— 

10 ‘‘(A) reduction in interest rates; 

11 ‘‘(B) reduction of loan principal; and 

12 ‘‘(C) other similar modifications. 

13 ‘‘(3) TENANT PROTECTIONS.—In the case of 

14 mortgages on residential rental properties, modifica15 tions made under paragraph (1) shall ensure— 

16 ‘‘(A) the continuation of any existing Fed17 eral, State, and local rental subsidies and pro18 tections; and 

19 ‘‘(B) that modifications take into account 

20 the need for operating funds to maintain decent 

21 and safe conditions at the property. 

22 ‘‘(4) TIMING.—Each Federal property manager 

23 shall develop and begin implementation of the plan 

24 required by this subsection not later than 60 days 

25 after the date of enactment of this subtitle. 


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1 ‘‘(5) REPORTS TO CONGRESS.—Each Federal 

2 property manager shall, 60 days after the date of 

3 enactment of this subtitle and every 30 days there4 after, report to Congress specific information on the 

5 number and types of loan modifications made and 

6 the number of actual foreclosures occurring during 

7 the reporting period in accordance with this section. 

8 ‘‘(6) CONSULTATION.—In developing the plan 

9 required by this subsection, the Federal property 

10 managers shall consult with one another and, to the 

11 extent possible, utilize consistent approaches to the 

12 requirements of this subsection. 

13 ‘‘(c) ACTIONS WITH RESPECT TO SERVICERS.—In 

14 any case in which a Federal property manager is not the 

15 owner of a residential mortgage loan, but holds an interest 

16 in obligations or pools of obligations secured by residential 

17 mortgage loans, the Federal property manager shall— 

18 ‘‘(1) encourage implementation by the loan 

19 servicers of loan modifications developed under sub20 section (b); 

21 ‘‘(2) assist in facilitating any such modifica22 tions, to the extent possible; and 

23 ‘‘(3) encourage loan servicers to make fore24 closed properties available for sale to State and local 

25 governments at a discount. 


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1 ‘‘(d) AVAILABILITY OF FORECLOSED PROPERTIES TO

2 STATE AND LOCALITIES.— 

3 ‘‘(1) IN GENERAL.—Each Federal property 

4 manager shall make available to any State or local 

5 government that is receiving emergency assistance 

6 under section 2301 of the Foreclosure Prevention 

7 Act of 2008 (Division B of Public Law 110–289) for 

8 purchase, at a discount, residential properties that it 

9 owns through foreclosure in that State or locality, in 

10 order to facilitate the sale of such properties and to 

11 stabilize neighborhoods affected by foreclosures. 

12 ‘‘(2) INFORMATION CLEARINGHOUSE.— 

13 ‘‘(A) PROVISION OF INFORMATION TO THE

14 SECRETARY.—Each Federal property manager 

15 shall make available to the Secretary of Hous16 ing and Urban Development information on 

17 properties available for purchase under this 

18 subsection. 

19 ‘‘(B) CLEARINGHOUSE.—The Secretary of 

20 Housing and Urban Development and the Fed21 eral property managers shall develop a clearing22 house for the information compiled under this 

23 paragraph, and make such clearinghouse easily 

24 accessible by States and local governments de25 scribed in paragraph (1). 


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1 ‘‘(e) LIMITATION.—The requirements of this section 

2 shall be in addition to any other duty or requirement im3 posed on the Federal property managers under otherwise 

4 applicable law. 

5 ‘‘SEC. 161. MINIMIZATION OF LONG-TERM COSTS AND MAXI6 MIZATION OF BENEFITS FOR TAXPAYERS. 

7 ‘‘(a) LONG-TERM COSTS AND BENEFITS.— 

8 ‘‘(1) MINIMIZING NEGATIVE IMPACT.—The Sec9 retary shall use the authority under this subtitle in 

10 a manner that will minimize any potential long-term 

11 negative impact on the taxpayer, taking into account 

12 the direct outlays, potential long-term returns on as13 sets purchased, and the overall economic benefits of 

14 the program, including economic benefits due to re15 duced foreclosures and defaults, reduced bank16 ruptcies, neighborhood impacts, improvements in 

17 economic activity and the availability of credit, the 

18 impact on the savings and pensions of individuals, 

19 reductions in losses to the Federal Government, and 

20 other factors. 

21 ‘‘(2) AUTHORITY.—In carrying out paragraph 

22 (1), the Secretary shall— 

23 ‘‘(A) hold the assets to maturity or for re24 sale for and until such time as the Secretary 

25 determines that the market is appropriate for 


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1 selling such assets, in order to maximize the 

2 value for taxpayers; 

3 ‘‘(B) issue loan guarantees or credit en4 hancements on loans to be sold, where appro5 priate; and 

6 ‘‘(C) sell such assets at a price that the 

7 Secretary determines, based on available finan8 cial analysis, will maximize return on invest9 ment for the Federal Government. 

10 ‘‘(3) PRIVATE SECTOR PARTICIPATION.—The 

11 Secretary shall encourage the private sector to par12 ticipate in purchases of home mortgage loans con13 sistent with the provisions of this subtitle. 

14 ‘‘(b) USE OF MARKET MECHANISMS.—In making 

15 purchases under this subtitle, the Secretary shall— 

16 ‘‘(1) make such purchases at the lowest price 

17 that the Secretary determines to be consistent with 

18 the purposes of this subtitle; 

19 ‘‘(2) maximize the efficiency of the use of tax20 payer resources by using market mechanisms, in21 cluding auctions or reverse auctions, where appro22 priate; and 

23 ‘‘(3) encourage private sector participation in 

24 purchases of home mortgage loans through auctions, 


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1 reverse auctions and direct purchases as authorized 

2 by this subtitle. 

3 ‘‘(c) DIRECT PURCHASES.—If the Secretary deter4 mines that use of a market mechanism under subsection 

5 (b) is not feasible or appropriate, and the purposes of the 

6 subtitle are best met through direct purchases by the Sec7 retary from an individual financial institution, the Sec8 retary shall pursue additional measures to ensure that 

9 prices paid for assets are reasonable and reflect the under10 lying value of the asset. 

11 ‘‘(d) PURCHASE AUTHORITY FOR WARRANTS AND

12 DEBT INSTRUMENTS.— 

13 ‘‘(1) IN GENERAL.—In exchange for asset pur14 chases, guarantees or capital infusions, the Sec15 retary may receive from any financial institution— 

16 ‘‘(A) in the case of a financial institution 

17 that is registered (or approved for registration) 

18 and traded on a national securities exchange or 

19 a national securities association registered pur20 suant to section 15A of the Securities Exchange 

21 Act of 1934 (15 U.S.C. 78o–3), a warrant giv22 ing the right to the Secretary to receive non23 voting common stock or preferred stock in such 

24 financial institution, as the Secretary deter25 mines appropriate; or 


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1 ‘‘(B) in the case of any financial institu2 tion other than one described in subparagraph 

3 (A), a senior debt instrument from such finan4 cial institution, as described in paragraph 

5 (2)(C). 

6 ‘‘(2) TERMS AND CONDITIONS.—The terms and 

7 conditions of any warrant or senior debt instrument 

8 acquired under paragraph (1) shall meet the fol9 lowing requirements: 

10 ‘‘(A) PURPOSES.—Such terms and condi11 tions shall, at a minimum, be designed— 

12 ‘‘(i) to provide for reasonable partici13 pation by the Secretary, for the benefit of 

14 taxpayers, in equity appreciation in the 

15 case of a warrant, or a reasonable interest 

16 rate premium, in the case of a debt instru17 ment; and 

18 ‘‘(ii) to provide additional protection 

19 for the taxpayer and stability to the finan20 cial system. 

21 ‘‘(B) AUTHORITY TO SELL, EXERCISE, 

22 SURRENDER.—The Secretary may sell, exercise, 

23 or surrender a warrant or any senior debt in24 strument received under this subsection, based 


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1 on the conditions established under subpara2 graph (A). 

3 ‘‘(C) CONVERSION.—The warrant shall 

4 provide that if, after the warrant is received by 

5 the Secretary under this subsection, the finan6 cial institution that issued the warrant is no 

7 longer listed or traded on a national securities 

8 exchange or securities association, as described 

9 in paragraph (1)(A), such warrants shall con10 vert to senior debt, in an amount determined by 

11 the Secretary and subject to such other condi12 tions as are determined by the Secretary. 

13 ‘‘(D) PROTECTIONS.—Any warrant rep14 resenting securities to be received by the Sec15 retary under this subsection shall contain 

16 antidilution provisions of the type employed in 

17 capital market transactions, as determined by 

18 the Secretary. Such provisions shall protect the 

19 value of the securities from market transactions 

20 such as stock splits, stock distributions, divi21 dends, and other distributions, mergers, and 

22 other forms of reorganization or recapitaliza23 tion. 

24 ‘‘(E) EXERCISE PRICE.—The exercise price 

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1 section shall be set by the Secretary, in the in2 terest of the taxpayers. 

3 ‘‘(F) SUFFICIENCY.—The financial institu4 tion shall guarantee to the Secretary that it has 

5 authorized shares of nonvoting stock available 

6 to fulfill its obligations under this subsection. 

7 Should the financial institution not have suffi8 cient authorized shares, including preferred 

9 shares that may carry dividend rights equal to 

10 a multiple number of common shares, the Sec11 retary may, to the extent necessary, accept a 

12 senior debt note in an amount, and on such 

13 terms, as will compensate the Secretary equiva14 lently, in the event that a sufficient shareholder 

15 vote to authorize the necessary additional 

16 shares cannot be obtained. 

17 ‘‘SEC. 162. MARKET TRANSPARENCY. 

18 ‘‘(a) PRICING.—To facilitate market transparency, 

19 the Secretary shall make available to the public, in elec20 tronic form, a description, the amounts, and the pricing 

21 of assets acquired under this subtitle, within 2 business 

22 days of purchase, trade, or other disposition. 

23 ‘‘(b) DISCLOSURE.—For each type of financial insti24 tutions that sells home mortgages to the Secretary under 

25 this subtitle, the Secretary shall determine whether the 


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1 public disclosure required for such financial institutions 

2 with respect to off-balance sheet transactions, derivatives 

3 instruments, contingent liabilities, and similar sources of 

4 potential exposure is adequate to provide to the public suf5 ficient information as to the true financial position of the 

6 institutions. If such disclosure is not adequate for that 

7 purpose, the Secretary shall make recommendations for 

8 additional disclosure requirements to the relevant regu9 lators. 

10 ‘‘SEC. 163. OVERSIGHT AND AUDITS. 

11 ‘‘(a) COMPTROLLER GENERAL OVERSIGHT.— 

12 ‘‘(1) SCOPE OF OVERSIGHT.—The Comptroller 

13 General of the United States shall, upon enactment 

14 of this subtitle, commence ongoing oversight of the 

15 activities and performance of the Secretary and of 

16 any agents and representatives the Secretary (as re17 lated to the agent or representative’s activities on 

18 behalf of or under the authority of the Secretary), 

19 including vehicles established by the Secretary under 

20 this subtitle. The subjects of oversight shall include 

21 the following: 

22 ‘‘(A) The performance of the Secretary in 

23 meeting the purposes of this subtitle, particu24 larly those involving— 

25 ‘‘(i) foreclosure mitigation; 


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1 ‘‘(ii) cost reduction; 

2 ‘‘(iii) financial market stability; 

3 ‘‘(iv) neighborhood stabilization; and 

4 ‘‘(v) taxpayer protection. 

5 ‘‘(B) The financial condition and internal 

6 controls of the Secretary’s programs, represent7 atives and agents. 

8 ‘‘(C) Characteristics of transactions and 

9 commitments entered into, including trans10 action type, frequency, size, price paid, and all 

11 other relevant terms and conditions, and the 

12 timing, duration and terms of any future com13 mitments to purchase assets. 

14 ‘‘(D) Characteristics and disposition of ac15 quired assets, including type, acquisition price, 

16 current market value, sale prices and terms, 

17 and use of proceeds from sales. 

18 ‘‘(E) Efficiency of the operations of the 

19 Secretary in the use of appropriated funds. 

20 ‘‘(F) Compliance with all applicable laws 

21 and regulation by the Secretary, its agents and 

22 representatives. 

23 ‘‘(G) The efforts of the Secretary to pre24 vent, identify, and minimize conflicts of interest 

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1 forming activities on behalf of or under the au2 thority of the Secretary. 

3 ‘‘(H) The efficacy of contracting proce4 dures pursuant to section 157(b), including, as 

5 applicable, the efforts of the Secretary in evalu6 ating proposals for inclusion and contracting to 

7 the maximum extent possible of minorities (as 

8 such term is defined in 1204(c) of the Financial 

9 Institutions Reform, Recovery, and Enhance10 ment Act of 1989 (12 U.S.C. 1811 note), 

11 women, and minority- and women-owned busi12 nesses, including ascertaining and reporting the 

13 total amount of fees paid and other value deliv14 ered by the Secretary to all of his agents and 

15 representatives, and such amounts paid or de16 livered to such firms that are minority- and 

17 women-owned businesses (as such terms are de18 fined in section 21A of the Federal Home Loan 

19 Bank Act (12 U.S.C. 1441a)). 

20 ‘‘(2) CONDUCT AND ADMINISTRATION OF OVER21 SIGHT.— 

22 ‘‘(A) GAO PRESENCE.—The Secretary 

23 shall provide the Comptroller General with ap24 propriate space and facilities in the Department 

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1 sight until the termination date established in 

2 section 165. 

3 ‘‘(B) ACCESS TO RECORDS.—To the extent 

4 otherwise consistent with law, the Comptroller 

5 General shall have access, upon request, to any 

6 information, data, schedules, books, accounts, 

7 financial records, reports, files, electronic com8 munications, or other papers, things or property 

9 belonging to or in use by the Secretary, or any 

10 vehicles established by the Secretary under this 

11 subtitle, and to the officers, directors, employ12 ees, independent public accountants, financial 

13 advisors, and other agents and representatives 

14 of the Secretary (as related to the agent or rep15 resentative’s activities on behalf of or under the 

16 authority of the Secretary) or any such vehicle 

17 at such reasonable time as the Comptroller 

18 General may request. The Comptroller General 

19 shall be shall be afforded full facilities for 

20 verifying transactions with the balances or secu21 rities held transactions with the balances or se22 curities held by depositaries, fiscal agents, and 

23 custodians. The Comptroller General may make 

24 and retain copies of such books, accounts, and 


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1 other records as the Comptroller General appro2 priate. 

3 ‘‘(C) REIMBURSEMENT OF COSTS.—The 

4 Treasury shall reimburse the Government Ac5 countability Office for the full cost of any such 

6 oversight activities as billed therefore by the 

7 Comptroller General of the United States. Such 

8 reimbursements shall be credited to the appro9 priation account ‘Salaries and Expenses’, Gov10 ernment received and remain available until ex11 pended. 

12 ‘‘(3) REPORTING.—The Comptroller General 

13 shall submit reports of findings under this section, 

14 regularly and no less frequently than once every 60 

15 days, to the appropriate committees of Congress, 

16 and the Special Inspector General for the Home 

17 Mortgage Program established under this subtitle on 

18 activities and performance of the Secretary. The 

19 Comptroller may also submit special reports under 

20 may also submit special reports under this sub21 section as warranted by the findings of its oversight 

22 activities. 

23 ‘‘(b) COMPTROLLER GENERAL AUDITS.— 

24 ‘‘(1) ANNUAL AUDIT.—The Secretary shall an25 nually prepare and issue to the appropriate commitVerDate Nov 24 2008 03:13 Jan 15, 2009 Jkt 079200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\H472.IH H472

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1 tees of Congress and the public audited financial 

2 statements prepared in accordance with generally ac3 cepted accounting principles, and the Comptroller 

4 General shall annually audit such statements in ac5 cordance with generally accepted auditing standards. 

6 The Treasury shall reimburse the Government Ac7 countability Office for the full cost of any such audit 

8 as billed therefore by the Comptroller General. Such 

9 reimbursements shall be credited to the appropria10 tion account ‘Salaries and Expenses, Government 

11 Accountability Office’ current when payment is re12 ceived and remain available until expended. The fi13 nancial statements under this paragraph shall be on 

14 the fiscal year basis prescribed under section 1102 

15 of title 31, United States Code. 

16 ‘‘(2) AUTHORITY.—The Comptroller General 

17 may audit the programs, activities, receipts, expendi18 tures, and financial transactions of the Secretary 

19 and any agents and representatives of the Secretary 

20 (as related to the agent or representative’s activities 

21 on behalf of or under the authority of the Sec22 retary), including vehicles established by the Sec23 retary under this subtitle. 

24 ‘‘(3) CORRECTIVE RESPONSES TO AUDIT PROB25 LEMS.—The Secretary shall— 


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1 ‘‘(A) take action to address deficiencies 

2 identified by the Comptroller General or other 

3 auditor engaged by the Secretary; or 

4 ‘‘(B) certify to appropriate committees of 

5 Congress that no action is necessary or appro6 priate. 

7 ‘‘(c) INTERNAL CONTROL.— 

8 ‘‘(1) ESTABLISHMENT.—The Secretary shall es9 tablish and maintain an effective system of internal 

10 control, consistent with the standards prescribed 

11 under section 3512(c) of title 31, United States 

12 Code, that provides reasonable assurance of— 

13 ‘‘(A) the effectiveness and efficiency of op14 erations, including the use of the resources of 

15 the Secretary; 

16 ‘‘(B) the reliability of financial reporting, 

17 including financial statements and other reports 

18 for internal and external use; and 

19 ‘‘(C) compliance with applicable laws and 

20 regulations. 

21 ‘‘(2) REPORTING.—In conjunction with each 

22 annual financial statement issued under this section, 

23 the Secretary shall— 


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1 ‘‘(A) state the responsibility of manage2 ment for establishing and maintaining adequate 

3 internal control over financial reporting; and 

4 ‘‘(B) state its assessment, as of the end of 

5 the most recent year covered by such financial 

6 statement of the Secretary, of the effectiveness 

7 of the internal control over financial reporting. 

8 ‘‘(d) SHARING OF INFORMATION.—Any report or 

9 audit required under this section shall also be submitted 

10 to the Congressional Oversight Panel established under 

11 section 125. 

12 ‘‘(e) TERMINATION.—Any oversight, reporting, or 

13 audit requirement under this section shall terminate on 

14 the later of— 

15 ‘‘(1) the date that the last asset acquired by the 

16 Secretary under section; or 

17 ‘‘(2) the date of expiration of the last insurance 

18 contract issued under section 152. 

19 ‘‘SEC. 164. JUDICIAL REVIEW AND RELATED MATTERS. 

20 ‘‘(a) JUDICIAL REVIEW.— 

21 ‘‘(1) STANDARD.—Actions by the Secretary 

22 pursuant to the authority of this subtitle shall be 

23 subject to chapter 7 of title 5, United States Code, 

24 including that such final actions shall be held unlaw25 ful and set aside if found to be arbitrary, capricious, 


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1 an abuse of discretion, or not in accordance with 

2 law. 

3 ‘‘(2) LIMITATIONS ON EQUITABLE RELIEF.— 

4 ‘‘(A) INJUNCTION.—No injunction or other 

5 form of equitable relief shall be issued against 

6 the Secretary for actions pursuant to section 

7 151, 152, 156, and 159, other than to remedy 

8 a violation of the Constitution. 

9 ‘‘(B) TEMPORARY RESTRAINING ORDER.— 

10 Any request for a temporary restraining order 

11 against the Secretary for actions pursuant to 

12 this subtitle shall be considered and granted or 

13 denied by the court within 3 days of the date 

14 of the request. 

15 ‘‘(C) PRELIMINARY INJUNCTION.—Any re16 quest for a preliminary injunction against the 

17 Secretary for actions pursuant to this subtitle 

18 shall be considered and granted or denied by 

19 the court on an expedited basis consistent with 

20 the provisions of rule 65(b)(3) of the Federal 

21 Rules of Civil Procedure, or any successor 

22 thereto. 

23 ‘‘(D) PERMANENT INJUNCTION.—Any re24 quest for a permanent injunction against the 

25 Secretary for actions pursuant to this subtitle 


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1 shall be considered and granted or denied by 

2 the court on an expedited basis. Whenever pos3 sible, the court shall consolidate trial on the 

4 merits with any hearing on a request for a pre5 liminary injunction, consistent with the provi6 sions of rule 65(a)(2) of the Federal Rules of 

7 Civil Procedure, or any successor thereto. 

8 ‘‘(3) LIMITATION ON ACTIONS BY PARTICI9 PATING COMPANIES.—Unless expressly provided in a 

10 written contract with the Secretary, no action or 

11 claim, other than one brought under chapter 7 of 

12 Title 5, United States Code, may be brought against 

13 the Secretary by any person that divests its assets 

14 under a program under this subtitle. 

15 ‘‘(4) STAYS.—Any injunction or other form of 

16 equitable relief issued against the Secretary for ac17 tions pursuant to section 151, 152, 156, and 159, 

18 shall be automatically stayed. The stay shall be lift19 ed unless the Secretary seeks a stay from a higher 

20 court within 3 calendar days after the date on which 

21 the relief is issued. 

22 ‘‘(b) RELATED MATTERS.— 

23 ‘‘(1) TREATMENT OF HOMEOWNERS’ RIGHTS.— 

24 The terms of any residential mortgage loan that is 

25 part of any purchase by the Secretary under this 


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1 subtitle shall remain subject to all claims and de2 fenses that would otherwise apply, notwithstanding 

3 the exercise of authority by the Secretary under this 

4 subtitle. 

5 ‘‘(2) SAVINGS CLAUSE.—Any exercise of the au6 thority of the Secretary pursuant to this subtitle 

7 shall not impair the claims or defenses that would 

8 otherwise apply with respect to persons other than 

9 the Secretary. 

10 ‘‘(3) TREATMENT OF INVESTORS’ RIGHTS.—(A) 

11 Under existing standard industry practice, if a 

12 servicer of pooled residential mortgages owes a duty 

13 to determine whether the net present value of the 

14 payments on a mortgage loan, as modified, sold, re15 financed or otherwise disposed of, is likely to be 

16 greater than the anticipated net recovery that would 

17 result from default or foreclosure, such servicer owes 

18 such duty to all investors and holders of beneficial 

19 interests in such loan, but not to any individual or 

20 group of investors or beneficial interest holders. 

21 ‘‘(B) Any servicer of pooled residential mort22 gages shall be deemed to have satisfied the duty 

23 specified in subsection (A) if the servicer agrees to 

24 or implements a modification, sale, refinancing, or 

25 other disposition, including acceptance of partial 


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1 payments, interest rate reductions, principal write 

2 downs, short sales, and other measures to mitigate 

3 loss, so long as the servicer reasonably determines 

4 that the net present value of the payments on a 

5 mortgage loan, as modified, sold, refinanced or oth6 erwise disposed of, is likely to be greater than the 

7 anticipated net recovery that would result from de8 fault or foreclosure. 

9 ‘‘SEC. 165. TERMINATION OF AUTHORITY. 

10 ‘‘(a) TERMINATION.—The authorities provided under 

11 sections 151(a) and 152 shall terminate on December 31, 

12 2009. 

13 ‘‘(b) EXTENSION UPON CERTIFICATION.—The Sec14 retary, upon submission of a written certification to Con15 gress, may extend the authority provided under this sub16 title to expire not later than 2 years from the date of en17 actment of this subtitle. Such certification shall include 

18 a justification of why the extension is necessary to assist 

19 American families and stabilize financial markets, as well 

20 as the expected cost to the taxpayers for such an exten21 sion. 

22 ‘‘SEC. 166. CREDIT REFORM. 

23 ‘‘(a) IN GENERAL.—Subject to subsection (b), the 

24 costs of purchases of assets made under section 151(a) 

25 and guarantees of assets under section 152, and any cash 


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1 flows associated with the activities authorized in section 

2 102 and subsections (a), (b), and (c) of section 156 shall 

3 be determined as provided under the Federal Credit Re4 form Act of 1990 (2 U.S.C. 661 et seq.), as applicable. 

5 ‘‘(b) COSTS.—For the purposes of section 502(5) of 

6 the Federal Credit Reform Act of 1990 (2 U.S.C. 

7 661a(5))— 

8 ‘‘(1) the cost of assets and guarantees of assets 

9 shall be calculated by adjusting the discount rate in 

10 section 502(5)(E) (2 U.S.C. 661a(5)(E)) for market 

11 risks; and 

12 ‘‘(2) the cost of a modification of a asset or 

13 guarantee of a asset shall be the difference between 

14 the current estimate consistent with paragraph (1) 

15 under the terms of the asset or guarantee of the 

16 asset and the current estimate consistent with para17 graph (1) under the terms of the asset or guarantee 

18 of the asset, as modified. 

19 ‘‘SEC. 167. PRESERVATION OF QUALIFIED SPECIAL PUR20 POSE ENTITY STATUS. 

21 ‘‘Notwithstanding Statement Number 140 of the Fi22 nancial Accounting Standards Board or and any other 

23 provision of law, a Qualified Special Purpose Entity (in 

24 this section referred to as a ‘QSPE’) may participate in 

25 a program established by the Secretary under this subtitle, 


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1 in the discretion of the servicer or trustee of the QSPE, 

2 by selling, disposing of or modifying any home mortgage 

3 loan from the assets of the QSPE, as provided by the Sec4 retary, and such participation shall not alter the status 

5 of the entity selling, modifying or disposing of such loans 

6 as a QSPE for purposes of Statement 140 or any other 

7 provision of law. 

8 ‘‘SEC. 168. DEFINITIONS. 

9 ‘‘For purposes of this subtitle, the following defini10 tions shall apply: 

11 ‘‘(1) APPROPRIATE COMMITTEES OF CON12 GRESS.—The term ‘appropriate committees of Con13 gress’ means— 

14 ‘‘(A) the Committee on Banking, Housing, 

15 and Urban Affairs, the Committee on Finance, 

16 the Committee on the Budget, and the Com17 mittee on Appropriations of the Senate; and 

18 ‘‘(B) the Committee on Financial Services, 

19 the Committee on Ways and Means, the Com20 mittee on the Budget, and the Committee on 

21 Appropriations of the House of Representatives. 

22 ‘‘(2) BOARD.—The term ‘Board’ means the 

23 Board of Governors of the Federal Reserve System. 

24 ‘‘(3) CONGRESSIONAL SUPPORT AGENCIES.— 

25 The term ‘congressional support agencies’ means the 


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1 Congressional Budget Office and the Joint Com2 mittee on Taxation. 

3 ‘‘(4) CORPORATION.—The term ‘Corporation’ 

4 means the Federal Deposit Insurance Corporation. 

5 ‘‘(5) FAMILY FORECLOSURE RESCUE CORPORA6 TION.—The term ‘Family Foreclosure Rescue Cor7 poration’ mean the entity established by the Sec8 retary under section 151. 

9 ‘‘(6) FINANCIAL INSTITUTION.—The term ‘fi10 nancial institution’ means any institution, trust, 

11 partnership, incorporated entity or other legal form, 

12 including but not limited to, any bank, savings asso13 ciation, credit union, security broker or dealer, in14 surance company, or securitization trust. 

15 ‘‘(7) FUND.—The term ‘Fund’ means the 

16 Home Mortgage Insurance Financing Fund estab17 lished under section 102. 

18 ‘‘(8) HOME MORTGAGES.—The term ‘home 

19 mortgages’ means residential mortgages originated 

20 on or before the date of enactment of this subtitle, 

21 including residential mortgages held in securitization 

22 trusts, residential mortgages held by financial insti23 tutions, mortgages supporting multifamily housing, 

24 servicing rights with respect to home mortgages, 

25 other real estate owned by financial institutions, and 


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1 residential mortgage-backed securities, the purchase, 

2 guarantee, modification or disposition of which the 

3 Secretary determines promotes financial market sta4 bility. 

5 ‘‘(9) SECRETARY.—The term ‘Secretary’ means 

6 the Secretary of the Treasury. 

7 ‘‘(10) FFRC PROGRAM.—The term ‘FFRC pro8 gram’ means the home mortgage relief program es9 tablished under section 151(a)(3). 

10 ‘‘(11) SHARED EQUITY MORTGAGE.—The term 

11 ‘shared equity mortgage’ means a mortgage product 

12 through which increases in the equity in a home re13 alized upon sale or disposition are shared among the 

14 homeowner, the Secretary, or other parties. 

15 ‘‘SEC. 169. PRESERVATION OF AUTHORITY. 

16 ‘‘Nothing in this subtitle may be construed to limit 

17 the authority of the Secretary under any other provision 

18 of law.’’. 

19 (b) CLERICAL AMENDMENTS.— 

20 (1) TITLE 5.—Section 5314 of title 5, United 

21 States Code, is amended by adding at the end the 

22 following new item: 

23 ‘‘Chairman, Family Foreclosure Rescue Cor24 poration.’’. 


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1 (2) TITLE 31.—Section 301 of title 31, United 

2 States Code, is amended by adding at the end the 

3 following new subsection: 

4 ‘‘(h) The Department has one Chairman of the Fam5 ily Foreclosure Rescue Corporation, appointed by the 

6 President, by and with the advice and consent of the Sen7 ate, who reports to the Secretary .’’. 

8 (3) TABLE OF CONTENTS AMENDMENT.—The 

9 table of contents in section (1)(b) of the Emergency 

10 Economic Stabilization Act of 2008 (Public Law 

11 110–343; 122 Stat. 3765) is amended— 

12 (A) by adding after the item relating to 

13 title I the following: 

‘‘Subtitle A—Program for Purchases of Troubled Assets’’; 

14 and 

15 (B) by adding after the item relating to 

16 section 136 the following: 

‘‘Subtitle B—Family Foreclosure Rescue Corporation Program 

‘‘Sec. 150. Authority under TARP Program. 

‘‘Sec. 151. Purchases of home mortgages. 

‘‘Sec. 152. Insurance of home mortgages. 

‘‘Sec. 153. Considerations. 

‘‘Sec. 154. FFRC Oversight Board. 

‘‘Sec. 155. Reports. 

‘‘Sec. 156. Rights; management; sale of home mortgages; revenues and sale 

proceeds. 

‘‘Sec. 157. Contracting procedures. 

‘‘Sec. 158. Conflicts of interest. 

‘‘Sec. 159. Foreclosure mitigation efforts. 

‘‘Sec. 160. Assistance to homeowners. 

‘‘Sec. 161. Minimization of long-term costs and maximization of benefits for 

taxpayers. 

‘‘Sec. 162. Market transparency. 

‘‘Sec. 163. Oversight and audits. 

‘‘Sec. 164. Judicial review and related matters. 


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‘‘Sec. 167. Preservation of qualified special purpose entity status. 

‘‘Sec. 168. Definitions. 

‘‘Sec. 169. Preservation of authority.’’. 

1 SEC. 4. TAX PROVISIONS. 

2 (a) PRESERVATION OF STATUS AS REAL ESTATE

3 MORTGAGE INVESTMENT CONDUIT.—If a REMIC (as de4 fined in section 860D(a) of the Internal Revenue Code of 

5 1986) sells, modifies or otherwise disposes of a home 

6 mortgage loan under a program established by the Sec7 retary of the Treasury under this Act— 

8 (1) such sale, modification or disposition shall 

9 not be treated as a prohibited transaction under sec10 tion 860F(a)(2) of such Code, and 

11 (2) for purposes of part IV of subchapter M of 

12 chapter 1 of such Code— 

13 (A) an interest in the REMIC shall not fail 

14 to be treated as a regular interest (as defined 

15 in section 860G(a)(1) of such Code) solely be16 cause of such sale, modification or disposition, 

17 and 

18 (B) any proceeds of such sale, modification 

19 or disposition shall be treated as amounts re20 ceived under qualified mortgages. 

21 (b) CONTINUED REMIC STATUS.— 

22 (1) Any REMIC shall cease to be a REMIC if, 

23 after the period ending three months from the date 

24 of enactment of this Act, instruments governing the 


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1 conduct of servicers or trustees with respect to home 

2 mortgage loans underlying the REMIC have the ef3 fect of prohibiting servicers or trustees from exer4 cising discretion to sell, modify or dispose of a home 

5 mortgage loan in order to participate in a program 

6 established by the Secretary of the Treasury under 

7 section 101 of this Act. 

8 (2) Any REMIC shall cease to be a REMIC if, 

9 after the period ending three months from the date 

10 of enactment of this Act, instruments governing the 

11 conduct of servicers or trustees with respect to home 

12 mortgage loans underlying the REMIC either— 

13 (A) commit to a party, other than the 

14 servicer or trustee, any discretion regarding 

15 loan modifications for loans that are in default 

16 or whose default is reasonably foreseeable; or 

17 (B) have the effect of restricting servicers’ 

18 or trustees’ exercise of their discretion to mod19 ify, sell or dispose of any and all home mort20 gage loans as part of a program established by 

21 the Secretary of the Treasury under section 

22 101 of this Act, including, without limitation, 

23 by— 

24 (i) restricting in any way the type of 

25 modification, sale or disposition a servicer 


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1 or trustee may engage in for loans that are 

2 in default or whose default is reasonably 

3 foreseeable; 

4 (ii) restricting in any way the percent5 age, absolute amount, or number of loans 

6 held by the REMIC that may be modified, 

7 sold or disposed of; 

8 (iii) restricting in any way the fre9 quency of modifications, sales or disposi10 tions of loans that are in default or whose 

11 default is reasonably foreseeable; or 

12 (iv) requiring servicers or trustees to 

13 purchase modified loans from the REMIC. 

14 (c) EFFECTIVE DATE.—Subsection (a) shall apply to 

15 sales, dispositions or modifications made after the date of 

16 the enactment of this Act, in taxable years ending on or 

17 after such date, and subsections (b) and (c) shall be effec18 tive on the date of enactment of this Act. 

Æ 


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