IB 

Union Calendar No. 84 

110TH CONGRESS 

1ST SESSION H. R. 1427 

[Report No. 110–142] 

To reform the regulation of certain housing-related Government-sponsored 

enterprises, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 9, 2007 

Mr. FRANK of Massachusetts (for himself, Mr. WATT, Mr. BAKER, and Mr. 

GARY G. MILLER of California) introduced the following bill; which was 

referred to the Committee on Financial Services 

MAY 9, 2007 

Additional sponsors: Mrs. MALONEY of New York and Mr. TERRY

MAY 9, 2007 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on March 9, 2007] 

A BILL 

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 2007’’. 

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. Federal Housing Enterprise Board. 

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

Sec. 105. Disclosure of income and 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. Inclusion of minorities and women; diversity in Agency workforce. 

Sec. 111. Regulations and orders. 

Sec. 112. Non-waiver of privileges. 

Sec. 113. Risk-Based capital requirements. 

Sec. 114. Minimum and critical capital levels. 

Sec. 115. Review of and authority over enterprise assets and liabilities. 

Sec. 116. Corporate governance of enterprises. 

Sec. 117. Required registration under Securities Exchange Act of 1934. 

Sec. 118. Liaison with Financial Institutions Examination Council. 

Sec. 119. Guarantee fee study. 

Sec. 120. Conforming amendments. 

Subtitle B—Improvement of Mission Supervision 

Sec. 131. Transfer of product approval and housing goal oversight. 

Sec. 132. Review of enterprise products. 

Sec. 133. Conforming loan limits. 

Sec. 134. Annual housing report regarding regulated entities. 

Sec. 135. Annual reports by regulated entities on affordable housing stock. 

Sec. 136. Revision of housing goals. 

Sec. 137. Duty to serve underserved markets. 

Sec. 138. Monitoring and enforcing compliance with housing goals. 

Sec. 139. Affordable Housing Fund. 

Sec. 140. Consistency with mission. 

Sec. 141. Enforcement. 

Sec. 142. Conforming amendments. 


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Subtitle C—Prompt Corrective Action 

Sec. 151. Capital classifications. 

Sec. 152. Supervisory actions applicable to undercapitalized regulated entities. 

Sec. 153. Supervisory actions applicable to significantly undercapitalized regulated entities. 

Sec. 154. Authority over critically undercapitalized regulated entities. 

Sec. 155. 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. 

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. 


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Subtitle B—Federal Housing Finance Board 

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

Sec. 322. Continuation and coordination of certain regulations. 

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 of Department of Housing and Urban 

Development. 

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

1 SEC. 2. DEFINITIONS. 

2 Section 1303 of the Housing and Community Develop3 ment 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 Fed10 eral Housing Enterprise Oversight of the Department 

11 of Housing and Urban Development’’ and inserting 

12 ‘‘Federal Housing Finance Agency’’; 

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

14 (19), by striking ‘‘Secretary’’ each place that term ap15 pears 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; 


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

2 inserting the following new paragraphs: 

3 ‘‘(18) REGULATED ENTITY.—The term ‘regulated 

4 entity’ means— 

5 ‘‘(A) the Federal National Mortgage Asso6 ciation and any affiliate thereof; 

7 ‘‘(B) the Federal Home Loan Mortgage Cor8 poration and any affiliate thereof; and 

9 ‘‘(C) each Federal home loan bank. 

10 ‘‘(19) REGULATED ENTITY-AFFILIATED PARTY.— 

11 The term ‘regulated entity-affiliated party’ means— 

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

13 agent for, a regulated entity, or controlling 

14 shareholder of an enterprise; 

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

16 or joint venture partner of a regulated entity, 

17 and any other person, as determined by the Di18 rector (by regulation or on a case-by-case basis) 

19 that participates in the conduct of the affairs of 

20 a regulated entity, except that a shareholder of a 

21 regulated entity shall not be considered to have 

22 participated in the affairs of that regulated enti23 ty solely by reason of being a member or cus24 tomer of the regulated entity; 


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1 ‘‘(C) any independent contractor for a regu2 lated entity (including any attorney, appraiser, 

3 or accountant), if— 

4 ‘‘(i) the independent contractor know5 ingly or recklessly participates in— 

6 ‘‘(I) any violation of any law or 

7 regulation; 

8 ‘‘(II) any breach of fiduciary 

9 duty; or 

10 ‘‘(III) any unsafe or unsound 

11 practice; and 

12 ‘‘(ii) such violation, breach, or practice 

13 caused, or is likely to cause, more than a 

14 minimal financial loss to, or a significant 

15 adverse effect on, the regulated entity; and 

16 ‘‘(D) any not-for-profit corporation that re17 ceives its principal funding, on an ongoing 

18 basis, from any regulated entity.’’. 

19 (8) by redesignating paragraphs (8) through (13) 

20 as paragraphs (12) through (17), respectively; and 

21 (9) by inserting after paragraph (7) the fol22 lowing new paragraph: 

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

24 ‘Federal home loan bank’ means a bank established 


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1 under the authority of the Federal Home Loan Bank 

2 Act.’’; 

3 (10) by redesignating paragraphs (2) through (7) 

4 as paragraphs (5) through (10), respectively; and 

5 (11) by inserting after paragraph (1) the fol6 lowing new paragraphs: 

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

8 Federal Housing Finance Agency. 

9 ‘‘(3) AUTHORIZING STATUTES.—The term ‘au10 thorizing statutes’ means— 

11 ‘‘(A) the Federal National Mortgage Asso12 ciation Charter Act; 

13 ‘‘(B) the Federal Home Loan Mortgage Cor14 poration Act; and 

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

16 ‘‘(4) BOARD.—The term ‘Board’ means the Fed17 eral Housing Enterprise Board established under sec18 tion 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 amended 

10 by striking sections 1311 and 1312 and inserting the fol11 lowing: 

12 ‘‘SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING FI13 NANCE AGENCY. 

14 ‘‘(a) ESTABLISHMENT.—There is established the Fed15 eral 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 Direc24 tor of the Federal Housing Finance Agency shall have 

25 general supervisory and regulatory authority over 


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1 each regulated entity and shall exercise such general 

2 regulatory and supervisory authority, including such 

3 duties and authorities set forth under section 1313 of 

4 this Act, to ensure that the purposes of this Act, the 

5 authorizing statutes, and any other applicable law 

6 are carried out. The Director shall have the same su7 pervisory and regulatory authority over any joint of8 fice of the Federal home loan banks, including the Of9 fice of Finance of the Federal Home Loan Banks, as 

10 the Director has over the individual Federal home 

11 loan banks. 

12 ‘‘(c) SAVINGS PROVISION.—The authority of the Direc13 tor to take actions under subtitles B and C shall not in 

14 any way limit the general supervisory and regulatory au15 thority granted to the Director. 

16 ‘‘SEC. 1312. DIRECTOR. 

17 ‘‘(a) ESTABLISHMENT OF POSITION.—There is estab18 lished the position of the Director of the Federal Housing 

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

20 ‘‘(b) APPOINTMENT; TERM.— 

21 ‘‘(1) APPOINTMENT.—The Director shall be ap22 pointed by the President, by and with the advice and 

23 consent of the Senate, from among individuals who 

24 are citizens of the United States, have a demonstrated 

25 understanding of financial management or oversight, 


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1 and have a demonstrated understanding of capital 

2 markets, including the mortgage securities markets 

3 and housing finance. 

4 ‘‘(2) TERM AND REMOVAL.—The Director shall 

5 be appointed for a term of 5 years and may be re6 moved by the President only for cause. 

7 ‘‘(3) VACANCY.—A vacancy in the position of Di8 rector that occurs before the expiration of the term for 

9 which a Director was appointed shall be filled in the 

10 manner established under paragraph (1), and the Di11 rector appointed to fill such vacancy shall be ap12 pointed only for the remainder of such term. 

13 ‘‘(4) SERVICE AFTER END OF TERM.—An indi14 vidual may serve as the Director after the expiration 

15 of the term for which appointed until a successor has 

16 been appointed. 

17 ‘‘(5) TRANSITIONAL PROVISION.—Notwith18 standing paragraphs (1) and (2), the Director of the 

19 Office of Federal Housing Enterprise Oversight of the 

20 Department of Housing and Urban Development shall 

21 serve as the Director until a successor has been ap22 pointed under paragraph (1). 

23 ‘‘(c) DEPUTY DIRECTOR OF THE DIVISION OF ENTER24 PRISE REGULATION.— 


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

2 Deputy Director of the Division of Enterprise Regula3 tion, who shall be appointed by the Director from 

4 among individuals who are citizens of the United 

5 States, and have a demonstrated understanding of fi6 nancial management or oversight and of mortgage se7 curities markets and housing finance. 

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

9 Division of Enterprise Regulation shall have such 

10 functions, powers, and duties with respect to the over11 sight of the enterprises as the Director shall prescribe. 

12 ‘‘(d) DEPUTY DIRECTOR OF THE DIVISION OF FED13 ERAL HOME LOAN BANK REGULATION.— 

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

15 Deputy Director of the Division of Federal Home 

16 Loan Bank Regulation, who shall be appointed by the 

17 Director from among individuals who are citizens of 

18 the United States, have a demonstrated under19 standing of financial management or oversight and of 

20 the Federal Home Loan Bank System and housing fi21 nance. 

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

23 Division of Federal Home Loan Bank Regulation 

24 shall have such functions, powers, and duties with reVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 spect to the oversight of the Federal home loan banks 

2 as the Director shall prescribe. 

3 ‘‘(e) DEPUTY DIRECTOR FOR HOUSING.— 

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

5 Deputy Director for Housing, who shall be appointed 

6 by the Director from among individuals who are citi7 zens of the United States, and have a demonstrated 

8 understanding of the housing markets and housing fi9 nance and of community and economic development. 

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

11 Housing shall have such functions, powers, and duties 

12 with respect to the oversight of the housing mission 

13 and goals of the enterprises, and with respect to over14 sight of the housing finance and community and eco15 nomic development mission of the Federal home loan 

16 banks, as the Director shall prescribe. 

17 ‘‘(f) LIMITATIONS.—The Director and each of the Dep18 uty Directors may not— 

19 ‘‘(1) have any direct or indirect financial inter20 est in any regulated entity or regulated entity-affili21 ated party; 

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

23 any regulated entity or regulated entity-affiliated 

24 party; or 


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1 ‘‘(3) have served as an executive officer or direc2 tor of any regulated entity, or regulated entity-affili3 ated party, at any time during the 3-year period end4 ing on the date of appointment of such individual as 

5 Director or Deputy Director. 

6 ‘‘(g) OMBUDSMAN.—The Director shall establish the 

7 position of the Ombudsman in the Agency. The Director 

8 shall provide that the Ombudsman will consider complaints 

9 and appeals from any regulated entity and any person that 

10 has a business relationship with a regulated entity and 

11 shall specify the duties and authority of the Ombudsman.’’. 

12 (b) APPOINTMENT OF DIRECTOR.—Notwithstanding 

13 any other provision of law or of this Act, the President may, 

14 any time after the date of the enactment of this Act, appoint 

15 an individual to serve as the Director of the Federal Hous16 ing Finance Agency, as such office is established by the 

17 amendment made by subsection (a). This subsection shall 

18 take effect on the date of the enactment of this Act. 

19 SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR. 

20 (a) IN GENERAL.—The Housing and Community De21 velopment Act of 1992 (12 U.S.C. 4513) is amended by 

22 striking section 1313 and inserting the following new sec23 tions: 

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

25 ‘‘(a) DUTIES.— 


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

2 of the Director shall be— 

3 ‘‘(A) to oversee the operations of each regu4 lated entity and any joint office of the Federal 

5 Home Loan Banks; and 

6 ‘‘(B) to ensure that— 

7 ‘‘(i) each regulated entity operates in a 

8 safe and sound manner, including mainte9 nance of adequate capital and internal con10 trols; 

11 ‘‘(ii) the operations and activities of 

12 each regulated entity foster liquid, efficient, 

13 competitive, and resilient national housing 

14 finance markets that minimize the cost of 

15 housing finance (including activities relat16 ing to mortgages on housing for low- and 

17 moderate- income families involving a rea18 sonable economic return that may be less 

19 than the return earned on other activities); 

20 ‘‘(iii) each regulated entity complies 

21 with this title and the rules, regulations, 

22 guidelines, and orders issued under this title 

23 and the authorizing statutes; and 

24 ‘‘(iv) each regulated entity carries out 

25 its statutory mission only through activities 


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1 that are consistent with this title and the 

2 authorizing statutes. 

3 ‘‘(2) SCOPE OF AUTHORITY.—The authority of 

4 the Director shall include the authority— 

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

6 the principal duties described in paragraph (1), 

7 reject any acquisition or transfer of a controlling 

8 interest in an enterprise; and 

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

10 may be necessary or appropriate to fulfill the 

11 duties and responsibilities of the Director in the 

12 supervision and regulation of each regulated en13 tity. 

14 ‘‘(b) DELEGATION OF AUTHORITY.—The Director may 

15 delegate to officers or employees of the Agency, including 

16 each of the Deputy Directors, any of the functions, powers, 

17 or duties of the Director, as the Director considers appro18 priate. 

19 ‘‘(c) LITIGATION AUTHORITY.— 

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

21 of this title, any regulation or order prescribed under 

22 this title, or any other provision of law, rule, regula23 tion, or order, or in any other action, suit, or pro24 ceeding to which the Director is a party or in which 

25 the Director is interested, and in the administration 


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1 of conservatorships and receiverships, the Director 

2 may act in the Director’s own name and through the 

3 Director’s own attorneys, or request that the Attorney 

4 General of the United States act on behalf of the Di5 rector. 

6 ‘‘(2) CONSULTATION WITH ATTORNEY GEN7 ERAL.—The Director shall provide notice to, and con8 sult with, the Attorney General of the United States 

9 before taking an action under paragraph (1) of this 

10 subsection or under section 1344(a), 1345(d), 1348(c), 

11 1372(e), 1375(a), 1376(d), or 1379D(c), except that, if 

12 the Director determines that any delay caused by such 

13 prior notice and consultation may adversely affect the 

14 safety and soundness responsibilities of the Director 

15 under this title, the Director shall notify the Attorney 

16 General as soon as reasonably possible after taking 

17 such action. 

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

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

20 (other than suits on claims for money damages) by a 

21 regulated entity or director or officer thereof with re22 spect to any matter under this title or any other ap23 plicable provision of law, rule, order, or regulation 

24 under this title, in the United States district court for 

25 the judicial district in which the regulated entity has 


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1 its principal place of business, or in the United 

2 States District Court for the District of Columbia, 

3 and the Director may be served with process in the 

4 manner prescribed by the Federal Rules of Civil Pro5 cedure. 

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

7 STANDARDS. 

8 ‘‘(a) STANDARDS.—The Director shall establish stand9 ards, by regulation, guideline, or order, for each regulated 

10 entity relating to— 

11 ‘‘(1) adequacy of internal controls and informa12 tion systems, including information security and pri13 vacy policies and practices, taking into account the 

14 nature and scale of business operations; 

15 ‘‘(2) independence and adequacy of internal 

16 audit systems; 

17 ‘‘(3) management of credit and counterparty 

18 risk, including systems to identify concentrations of 

19 credit risk and prudential limits to restrict exposure 

20 of the regulated entity to a single counterparty or 

21 groups of related counterparties; 

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

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

24 standards that provide for systems that accurately 


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

2 warranted, that establish limitations on market risk; 

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

4 reserves; 

5 ‘‘(7) management of any asset and investment 

6 portfolio; 

7 ‘‘(8) investments and acquisitions by a regulated 

8 entity, to ensure that they are consistent with the 

9 purposes of this Act and the authorizing statutes; 

10 ‘‘(9) maintenance of adequate records, in accord11 ance with consistent accounting policies and practices 

12 that enable the Director to evaluate the financial con13 dition of the regulated entity; 

14 ‘‘(10) issuance of subordinated debt by that par15 ticular regulated entity, as the Director considers nec16 essary; 

17 ‘‘(11) overall risk management processes, includ18 ing adequacy of oversight by senior management and 

19 the board of directors and of processes and policies to 

20 identify, measure, monitor, and control material 

21 risks, including reputational risks, and for adequate, 

22 well-tested business resumption plans for all major 

23 systems with remote site facilities to protect against 

24 disruptive events; and 


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1 ‘‘(12) such other operational and management 

2 standards as the Director determines to be appro3 priate. 

4 ‘‘(b) FAILURE TO MEET STANDARDS.— 

5 ‘‘(1) PLAN REQUIREMENT.— 

6 ‘‘(A) IN GENERAL.—If the Director deter7 mines that a regulated entity fails to meet any 

8 standard established under subsection (a)— 

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

10 regulation, the Director shall require the 

11 regulated entity to submit an acceptable 

12 plan to the Director within the time allowed 

13 under subparagraph (C); and 

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

15 guideline, the Director may require the reg16 ulated entity to submit a plan described in 

17 clause (i). 

18 ‘‘(B) CONTENTS.—Any plan required under 

19 subparagraph (A) shall specify the actions that 

20 the regulated entity will take to correct the defi21 ciency. If the regulated entity is undercapital22 ized, the plan may be a part of the capital res23 toration plan for the regulated entity under sec24 tion 1369C. 


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1 ‘‘(C) DEADLINES FOR SUBMISSION AND RE2 VIEW.—The Director shall by regulation establish 

3 deadlines that— 

4 ‘‘(i) provide the regulated entities with 

5 reasonable time to submit plans required 

6 under subparagraph (A), and generally re7 quire a regulated entity to submit a plan 

8 not later than 30 days after the Director de9 termines that the entity fails to meet any 

10 standard established under subsection (a); 

11 and 

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

13 plans expeditiously, and generally not later 

14 than 30 days after the plan is submitted. 

15 ‘‘(2) REQUIRED ORDER UPON FAILURE TO SUB16 MIT OR IMPLEMENT PLAN.—If a regulated entity fails 

17 to submit an acceptable plan within the time allowed 

18 under paragraph (1)(C), or fails in any material re19 spect to implement a plan accepted by the Director, 

20 the following shall apply: 

21 ‘‘(A) REQUIRED CORRECTION OF DEFI22 CIENCY.—The Director shall, by order, require 

23 the regulated entity to correct the deficiency. 


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

2 may, by order, take one or more of the following 

3 actions until the deficiency is corrected: 

4 ‘‘(i) Prohibit the regulated entity from 

5 permitting its average total assets (as such 

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

7 any calendar quarter to exceed its average 

8 total assets during the preceding calendar 

9 quarter, or restrict the rate at which the av10 erage total assets of the entity may increase 

11 from one calendar quarter to another. 

12 ‘‘(ii) Require the regulated entity— 

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

14 to increase its ratio of core capital to 

15 assets. 

16 ‘‘(II) in the case of a Federal 

17 home loan bank, to increase its ratio of 

18 total capital (as such term is defined 

19 in section 6(a)(5) of the Federal Home 

20 Loan Bank Act (12 U.S.C. 1426(a)(5)) 

21 to assets. 

22 ‘‘(iii) Require the regulated entity to 

23 take any other action that the Director de24 termines will better carry out the purposes 


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1 of this section than any of the actions de2 scribed in this subparagraph. 

3 ‘‘(3) MANDATORY RESTRICTIONS.—In complying 

4 with paragraph (2), the Director shall take one or 

5 more of the actions described in clauses (i) through 

6 (iii) of paragraph (2)(B) if— 

7 ‘‘(A) the Director determines that the regu8 lated entity fails to meet any standard pre9 scribed under subsection (a); 

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

11 the deficiency; and 

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

13 date on which the regulated entity first failed to 

14 meet the standard, the entity underwent extraor15 dinary growth, as defined by the Director. 

16 ‘‘(c) OTHER ENFORCEMENT AUTHORITY NOT AF17 FECTED.—The authority of the Director under this section 

18 is in addition to any other authority of the Director.’’. 

19 (b) INDEPENDENCE IN CONGRESSIONAL TESTIMONY

20 AND RECOMMENDATIONS.—Section 111 of Public Law 93– 

21 495 (12 U.S.C. 250) is amended by striking ‘‘the Federal 

22 Housing Finance Board’’ and inserting ‘‘the Director of the 

23 Federal Housing Finance Agency’’. 


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1 SEC. 103. FEDERAL HOUSING ENTERPRISE BOARD. 

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

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

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

5 by section 102 of this Act, the following new section: 

6 ‘‘SEC. 1313B. FEDERAL HOUSING ENTERPRISE BOARD. 

7 ‘‘(a) IN GENERAL.—There is established the Federal 

8 Housing Enterprise Board, which shall advise the Director 

9 with respect to overall strategies and policies in carrying 

10 out the duties of the Director under this title. 

11 ‘‘(b) LIMITATIONS.—The Board may not exercise any 

12 executive authority, and the Director may not delegate to 

13 the Board any of the functions, powers, or duties of the Di14 rector. 

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

16 5 members, of whom— 

17 ‘‘(1) one member shall be the Secretary of the 

18 Treasury; 

19 ‘‘(2) one member shall be the Secretary of Hous20 ing and Urban Development; 

21 ‘‘(3) one member shall be the Director, who shall 

22 serve as the Chairperson of the Board; and 

23 ‘‘(4) two members, who shall be appointed by the 

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

25 Senate, who are experts or experienced in the field of 


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1 financial services, housing finance, affordable hous2 ing, or mortgage lending. 

3 The members pursuant to paragraph (4) shall be appointed 

4 for a term of four years. The Board may not, at any time, 

5 have more than three members of the same political party. 

6 ‘‘(d) MEETINGS.— 

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

8 notice by the Director, but in no event shall the Board 

9 meet less frequently than once every 3 months. 

10 ‘‘(2) SPECIAL MEETINGS.—Either the Secretary 

11 of the Treasury or the Secretary of Housing and 

12 Urban Development may, upon giving written notice 

13 to the Director, require a special meeting of the 

14 Board. 

15 ‘‘(e) TESTIMONY.—On an annual basis, the Board 

16 shall testify before Congress regarding— 

17 ‘‘(1) the safety and soundness of the regulated en18 tities; 

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

20 the operations of the regulated entities; 

21 ‘‘(3) the overall operational status of the regu22 lated entities; 

23 ‘‘(4) an evaluation of the performance of the reg24 ulated entities in carrying out their respective mis25 sions; 


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

2 the Agency; and 

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

4 and its fulfillment of its mission, as the Board deter5 mines appropriate.’’. 

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

7 1319B(a) of the Housing and Community Development Act 

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

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

10 end; and 

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

12 following new paragraphs: 

13 ‘‘(4) an assessment of the Board or any of its 

14 members with respect to— 

15 ‘‘(A) the safety and soundness of the regu16 lated entities; 

17 ‘‘(B) any material deficiencies in the con18 duct of the operations of the regulated entities; 

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

20 regulated entities; and 

21 ‘‘(D) an evaluation of the performance of 

22 the regulated entities in carrying out their mis23 sions; 

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

25 the Agency; 


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1 ‘‘(6) a description of the demographic makeup of 

2 the workforce of the Agency and the actions taken 

3 pursuant to section 1319A(b) to provide for diversity 

4 in the workforce; and 

5 ‘‘(7) such other matters relating to the Agency 

6 and its fulfillment of its mission.’’. 

7 SEC. 104. AUTHORITY TO REQUIRE REPORTS BY REGU8 LATED ENTITIES. 

9 Section 1314 of the Housing and Community Develop10 ment Act of 1992 (12 U.S.C. 4514) is amended— 

11 (1) in the section heading, by striking ‘‘ENTER12 PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 

13 (2) in subsection (a)— 

14 (A) in the subsection heading, by striking 

15 ‘‘SPECIAL REPORTS AND REPORTS OF FINAN16 CIAL CONDITION’’ and inserting ‘‘REGULAR AND

17 SPECIAL REPORTS’’; 

18 (B) in paragraph (1)— 

19 (i) in the paragraph heading, by strik20 ing ‘‘FINANCIAL CONDITION’’ and inserting 

21 ‘‘REGULAR REPORTS’’; and 

22 (ii) by striking ‘‘reports of financial 

23 condition and operations’’ and inserting 

24 ‘‘regular reports on the condition (including 

25 financial condition), management, activiVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 ties, or operations of the regulated entity, as 

2 the Director considers appropriate’’; and 

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

4 reports’’ insert ‘‘on any of the topics specified in 

5 paragraph (1) or such other topics’’; and 

6 (3) by adding at the end the following new sub7 section: 

8 ‘‘(c) REPORTS OF FRAUDULENT FINANCIAL TRANS9 ACTIONS.— 

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

11 shall require a regulated entity to submit to the Di12 rector a timely report upon discovery by the regulated 

13 entity that it has purchased or sold a fraudulent loan 

14 or financial instrument or suspects a possible fraud 

15 relating to a purchase or sale of any loan or financial 

16 instrument. The Director shall require the regulated 

17 entities to establish and maintain procedures designed 

18 to discover any such transactions. 

19 ‘‘(2) PROTECTION FROM LIABILITY FOR RE20 PORTS.— 

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

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

23 regulated entity-affiliated party makes, or re24 quires another to make, such a report, and such 

25 report is made in a good faith effort to comply 


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1 with the requirements of paragraph (1), such 

2 regulated entity or regulated entity-affiliated 

3 party shall not be liable to any person under 

4 any law or regulation of the United States, any 

5 constitution, law, or regulation of any State or 

6 political subdivision of any State, or under any 

7 contract or other legally enforceable agreement 

8 (including any arbitration agreement), for such 

9 report or for any failure to provide notice of 

10 such report to the person who is the subject of 

11 such report or any other person identified in the 

12 report. 

13 ‘‘(B) RULE OF CONSTRUCTION.—Subpara14 graph (A) shall not be construed as creating— 

15 ‘‘(i) any inference that the term ‘per16 son’, as used in such subparagraph, may be 

17 construed more broadly than its ordinary 

18 usage so as to include any government or 

19 agency of government; or 

20 ‘‘(ii) any immunity against, or other21 wise affecting, any civil or criminal action 

22 brought by any government or agency of 

23 government to enforce any constitution, law, 

24 or regulation of such government or agen25 cy.’’. 


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1 SEC. 105. DISCLOSURE OF INCOME AND CHARITABLE CON2 TRIBUTIONS BY ENTERPRISES. 

3 Section 1314 of the Housing and Community Develop4 ment Act of 1992 (12 U.S.C. 4514), as amended by the pre5 ceding provisions of this Act, is further amended by adding 

6 at the end the following new subsections: 

7 ‘‘(d) DISCLOSURE OF CHARITABLE CONTRIBUTIONS BY

8 ENTERPRISES.— 

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

10 shall, by regulation, require each enterprise to submit 

11 a report annually, in a format designated by the Di12 rector, containing the following information: 

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

14 contributions made by the enterprise to nonprofit 

15 organizations during its previous fiscal year. 

16 ‘‘(B) SUBSTANTIAL CONTRIBUTIONS.—If the 

17 value of contributions made by the enterprise to 

18 any nonprofit organization during its previous 

19 fiscal year exceeds the designated amount, the 

20 name of that organization and the value of con21 tributions. 

22 ‘‘(C) SUBSTANTIAL CONTRIBUTIONS TO IN23 SIDER-AFFILIATED CHARITIES.—Identification of 

24 each contribution whose value exceeds the des25 ignated amount that were made by the enterprise 

26 during the enterprise’s previous fiscal year to 


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1 any nonprofit organization of which a director, 

2 officer, or controlling person of the enterprise, or 

3 a spouse thereof, was a director or trustee, the 

4 name of such nonprofit organization, and the 

5 value of the contribution. 

6 ‘‘(2) DEFINITIONS.—For purposes of this sub7 section— 

8 ‘‘(A) the term ‘designated amount’ means 

9 such amount as may be designated by the Direc10 tor by regulation, consistent with the public in11 terest and the protection of investors for purposes 

12 of this subsection; and 

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

14 as the Director deems necessary or appropriate 

15 in the public interest, define the terms officer 

16 and controlling person. 

17 ‘‘(3) PUBLIC AVAILABILITY.—The Director shall 

18 make the information submitted pursuant to this sub19 section publicly available. 

20 ‘‘(e) DISCLOSURE OF INCOME.—Each enterprise shall 

21 include, in each annual report filed under section 13 of the 

22 Securities Exchange Act of 1934 (15 U.S.C. 78m), the in23 come reported by the issuer to the Internal Revenue Service 

24 for the most recent taxable year. Such income shall— 


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1 ‘‘(1) be presented in a prominent location in 

2 each such report and in a manner that permits a 

3 ready comparison of such income to income otherwise 

4 required to be included in such reports under regula5 tions issued under such section; and 

6 ‘‘(2) be submitted to the Securities and Exchange 

7 Commission in a form and manner suitable for entry 

8 into the EDGAR system of such Commission for pub9 lic availability under such system.’’. 

10 SEC. 106. ASSESSMENTS. 

11 Section 1316 of the Housing and Community Develop12 ment Act of 1992 (12 U.S.C. 4516) is amended— 

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

14 following new subsection: 

15 ‘‘(a) ANNUAL ASSESSMENTS.—The Director shall es16 tablish and collect from the regulated entities annual assess17 ments in an amount not exceeding the amount sufficient 

18 to provide for reasonable costs and expenses of the Agency, 

19 including— 

20 ‘‘(1) the expenses of any examinations under sec21 tion 1317 of this Act and under section 20 of the Fed22 eral Home Loan Bank Act; 

23 ‘‘(2) the expenses of obtaining any reviews and 

24 credit assessments under section 1319; 


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

2 for any given year as deemed necessary by the Direc3 tor to maintain a working capital fund in accordance 

4 with subsection (e); and 

5 ‘‘(4) the wind up of the affairs of the Office of 

6 Federal Housing Enterprise Oversight and the Fed7 eral Housing Finance Board under title III of the 

8 Federal Housing Finance Reform Act of 2007.’’; 

9 (2) in subsection (b)— 

10 (A) in the subsection heading, by striking 

11 ‘‘ENTERPRISES’’ and inserting ‘‘REGULATED

12 ENTITIES’’ ; 

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

14 from the left margin, so as to align the left mar15 gin of such paragraph with the left margins of 

16 paragraph (1); 

17 (C) in paragraph (1)— 

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

19 inserting ‘‘Each regulated entity’’; 

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

21 inserting ‘‘each regulated entity’’; and 

22 (iii) by striking ‘‘both enterprises’’ and 

23 inserting ‘‘all of the regulated entities’’; and 

24 (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 as 

14 follows: 

15 ‘‘(A) ENTERPRISES.—With respect to an en16 terprise, 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 Director 

22 in accordance with generally accepted accounting 

23 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 dis7 cretion of the Director to pay additional estimated 

8 costs of regulation of the regulated entity. 

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

11 semiannual payments for an assessment under sub12 section (a) that are to be paid pursuant to subsection 

13 (b) by a regulated entity, as necessary in the discre14 tion of the Director, to ensure that the costs of enforce15 ment activities under this Act for a regulated entity 

16 are borne only by such regulated entity. 

17 ‘‘(3) ADDITIONAL ASSESSMENT FOR DEFI18 CIENCIES.—If at any time, as a result of increased 

19 costs of regulation of a regulated entity that is not 

20 classified (for purposes of subtitle B) as adequately 

21 capitalized or as the result of supervisory or enforce22 ment activities under this Act for a regulated entity, 

23 the amount available from any semiannual payment 

24 made by such regulated entity pursuant to subsection 

25 (b) is insufficient to cover the costs of the Agency with 


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1 respect to such entity, the Director may make and 

2 collect from such regulated entity an immediate as3 sessment to cover the amount of such deficiency for 

4 the semiannual period. If, at the end of any semi5 annual period during which such an assessment is 

6 made, any amount remains from such assessment, 

7 such remaining amount shall be deducted from the as8 sessment for such regulated entity for the following 

9 semiannual period.’’; 

10 (4) in subsection (d), by striking ‘‘If’’ and insert11 ing ‘‘Except with respect to amounts collected pursu12 ant to subsection (a)(3), if’’; and 

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

14 inserting the following new subsections: 

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

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

17 the Director shall remit to each regulated entity any 

18 amount of assessment collected from such regulated entity 

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

20 the amount the Director deems necessary to maintain a 

21 working capital fund. 

22 ‘‘(f) TREATMENT OF ASSESSMENTS.— 

23 ‘‘(1) DEPOSIT.—Amounts received by the Direc24 tor from assessments under this section may be depos25 ited by the Director in the manner provided in secVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 tion 5234 of the Revised Statutes (12 U.S.C. 192) for 

2 monies deposited by the Comptroller of the Currency. 

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

4 received by the Director from any assessment under 

5 this section shall not be construed to be Government 

6 or public funds or appropriated money. 

7 ‘‘(3) NO APPORTIONMENT OF FUNDS.—Notwith8 standing any other provision of law, the amounts re9 ceived by the Director from any assessment under this 

10 section shall not be subject to apportionment for the 

11 purpose of chapter 15 of title 31, United States Code, 

12 or under any other authority. 

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

14 amounts received by the Director from assessments 

15 under this section for compensation of the Director 

16 and other employees of the Agency and for all other 

17 expenses of the Director and the Agency. 

18 ‘‘(5) AVAILABILITY OF OVERSIGHT FUND

19 AMOUNTS.—Notwithstanding any other provision of 

20 law, any amounts remaining in the Federal Housing 

21 Enterprises Oversight Fund established under this 

22 section (as in effect before the effective date under sec23 tion 185 of the Federal Housing Finance Reform Act 

24 of 2007), and any amounts remaining from assess25 ments on the Federal Home Loan banks pursuant to 


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1 section 18(b) of the Federal Home Loan Bank Act (12 

2 U.S.C. 1438(b)), shall, upon such effective date, be 

3 treated for purposes of this subsection as amounts re4 ceived from assessments under this section. 

5 ‘‘(6) TREASURY INVESTMENTS.— 

6 ‘‘(A) AUTHORITY.—The Director may re7 quest the Secretary of the Treasury to invest such 

8 portions of amount received by the Director from 

9 assessments paid under this section that, in the 

10 Director’s discretion, are not required to meet the 

11 current working needs of the Agency. 

12 ‘‘(B) GOVERNMENT OBLIGATIONS.—Pursu13 ant to a request under subparagraph (A), the 

14 Secretary of the Treasury shall invest such 

15 amounts in government obligations guaranteed 

16 as to principal and interest by the United States 

17 with maturities suitable to the needs of Agency 

18 and bearing interest at a rate determined by the 

19 Secretary of the Treasury taking into consider20 ation current market yields on outstanding mar21 ketable obligations of the United States of com22 parable maturity. 

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

24 ‘‘(1) FINANCIAL OPERATING PLANS AND FORE25 CASTS.—The Director shall provide to the Director of 


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1 the Office of Management and Budget copies of the 

2 Director’s financial operating plans and forecasts as 

3 prepared by the Director in the ordinary course of the 

4 Agency’s operations, and copies of the quarterly re5 ports of the Agency’s financial condition and results 

6 of operations as prepared by the Director in the ordi7 nary course of the Agency’s operations. 

8 ‘‘(2) FINANCIAL STATEMENTS.—The Agency shall 

9 prepare annually a statement of assets and liabilities 

10 and surplus or deficit; a statement of income and ex11 penses; and a statement of sources and application of 

12 funds. 

13 ‘‘(3) FINANCIAL MANAGEMENT SYSTEMS.—The 

14 Agency shall implement and maintain financial 

15 management systems that comply substantially with 

16 Federal financial management systems requirements, 

17 applicable Federal accounting standards, and that 

18 uses a general ledger system that accounts for activity 

19 at the transaction level. 

20 ‘‘(4) ASSERTION OF INTERNAL CONTROLS.—The 

21 Director shall provide to the Comptroller General an 

22 assertion as to the effectiveness of the internal controls 

23 that apply to financial reporting by the Agency, 

24 using the standards established in section 3512(c) of 

25 title 31, United States Code. 


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1 ‘‘(5) RULE OF CONSTRUCTION.—This subsection 

2 may not be construed as implying any obligation on 

3 the part of the Director to consult with or obtain the 

4 consent or approval of the Director of the Office of 

5 Management and Budget with respect to any reports, 

6 plans, forecasts, or other information referred to in 

7 paragraph (1) or any jurisdiction or oversight over 

8 the affairs or operations of the Agency. 

9 ‘‘(h) AUDIT OF AGENCY.— 

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

11 shall annually audit the financial transactions of the 

12 Agency in accordance with the U.S. generally accept13 ed government auditing standards as may be pre14 scribed by the Comptroller General of the United 

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

16 places where accounts of the Agency are normally 

17 kept. The representatives of the Government Account18 ability Office shall have access to the personnel and 

19 to all books, accounts, documents, papers, records (in20 cluding electronic records), reports, files, and all other 

21 papers, automated data, things, or property belonging 

22 to or under the control of or used or employed by the 

23 Agency pertaining to its financial transactions and 

24 necessary to facilitate the audit, and such representa25 tives shall be afforded full facilities for verifying 


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1 transactions with the balances or securities held by 

2 depositories, fiscal agents, and custodians. All such 

3 books, accounts, documents, records, reports, files, pa4 pers, and property of the Agency shall remain in pos5 session and custody of the Agency. The Comptroller 

6 General may obtain and duplicate any such books, 

7 accounts, documents, records, working papers, auto8 mated data and files, or other information relevant to 

9 such audit without cost to the Comptroller General 

10 and the Comptroller General’s right of access to such 

11 information shall be enforceable pursuant to section 

12 716(c) of title 31, United States Code. 

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

14 submit to the Congress a report of each annual audit 

15 conducted under this subsection. The report to the 

16 Congress shall set forth the scope of the audit and 

17 shall include the statement of assets and liabilities 

18 and surplus or deficit, the statement of income and 

19 expenses, the statement of sources and application of 

20 funds, and such comments and information as may 

21 be deemed necessary to inform Congress of the finan22 cial operations and condition of the Agency, together 

23 with such recommendations with respect thereto as the 

24 Comptroller General may deem advisable. A copy of 


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1 each report shall be furnished to the President and to 

2 the Agency at the time submitted to the Congress. 

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

4 of conducting an audit under this subsection, the 

5 Comptroller General may, in the discretion of the 

6 Comptroller General, employ by contract, without re7 gard to section 5 of title 41, United States Code, pro8 fessional services of firms and organizations of cer9 tified public accountants for temporary periods or for 

10 special purposes. Upon the request of the Comptroller 

11 General, the Director of the Agency shall transfer to 

12 the Government Accountability Office from funds 

13 available, the amount requested by the Comptroller 

14 General to cover the full costs of any audit and report 

15 conducted by the Comptroller General. The Comp16 troller General shall credit funds transferred to the 

17 account established for salaries and expenses of the 

18 Government Accountability Office, and such amount 

19 shall be available upon receipt and without fiscal 

20 year limitation to cover the full costs of the audit and 

21 report.’’. 

22 SEC. 107. EXAMINERS AND ACCOUNTANTS. 

23 (a) EXAMINATIONS.—Section 1317 of the Housing and 

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

25 amended— 


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

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

3 this subsection of a regulated entity shall include a 

4 review of the procedures required to be established and 

5 maintained by the regulated entity pursuant to sec6 tion 1314(c) (relating to fraudulent financial trans7 actions) and the report regarding each such examina8 tion shall describe any problems with such procedures 

9 maintained by the regulated entity.’’; 

10 (2) in subsection (b)— 

11 (A) by inserting ‘‘of a regulated entity’’ 

12 after ‘‘under this section’’; and 

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

14 of an enterprise for the purpose of ensuring its 

15 financial safety and soundness’’ and inserting 

16 ‘‘or appropriate’’; and 

17 (3) in subsection (c)— 

18 (A) in the second sentence, by inserting ‘‘to 

19 conduct examinations under this section’’ before 

20 the period; and 

21 (B) in the third sentence, by striking ‘‘from 

22 amounts available in the Federal Housing En23 terprises Oversight Fund’’. 

24 (b) ENHANCED AUTHORITY TO HIRE EXAMINERS AND

25 ACCOUNTANTS.—Section 1317 of the Housing and CommuVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 nity Development Act of 1992 (12 U.S.C. 4517) is amended 

2 by adding at the end the following new subsection: 

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

4 SPECIALISTS, AND EXAMINERS.— 

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

6 respect to any position of examiner, accountant, spe7 cialist in financial markets, specialist in information 

8 technology, and economist at the Agency, with respect 

9 to supervision and regulation of the regulated entities, 

10 that is in the competitive service. 

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

12 may appoint candidates to any position described in 

13 paragraph (1)— 

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

15 and regulations governing appointments in the 

16 excepted service; and 

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

18 and regulations governing appointments in the 

19 competitive service. 

20 ‘‘(3) RULE OF CONSTRUCTION.—The appoint21 ment of a candidate to a position under the authority 

22 of this subsection shall not be considered to cause such 

23 position to be converted from the competitive service 

24 to the excepted service.’’. 


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

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

3 (1) by striking the section heading and inserting 

4 the following: ‘‘EXAMINATIONS AND GAO AUDITS’’; 

5 (2) in the third sentence, by striking ‘‘the Board 

6 and’’ each place such term appears; and 

7 (3) by striking the first two sentences and insert8 ing the following: ‘‘The Federal home loan banks shall 

9 be subject to examinations by the Director to the ex10 tent provided in section 1317 of the Federal Housing 

11 Enterprises Financial Safety and Soundness Act of 

12 1992 (12 U.S.C. 4517).’’. 

13 SEC. 108. PROHIBITION AND WITHHOLDING OF EXECUTIVE 

14 COMPENSATION. 

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

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

17 amended— 

18 (1) in the section heading, by striking ‘‘OF EX19 CESSIVE’’ and inserting ‘‘AND WITHHOLDING OF

20 EXECUTIVE’’; 

21 (2) by redesignating subsection (b) as subsection 

22 (d); and 

23 (3) by inserting after subsection (a) the following 

24 new subsections: 


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

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

3 any factors the Director considers relevant, including any 

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

5 wrongdoing shall include any fraudulent act or omission, 

6 breach of trust or fiduciary duty, violation of law, rule, reg7 ulation, order, or written agreement, and insider abuse with 

8 respect to the regulated entity. The approval of an agree9 ment or contract pursuant to section 309(d)(3)(B) of the 

10 Federal National Mortgage Association Charter Act (12 

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

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

13 1452(h)(2)) shall not preclude the Director from making 

14 any subsequent determination under subsection (a). 

15 ‘‘(c) WITHHOLDING OF COMPENSATION.—In carrying 

16 out subsection (a), the Director may require a regulated en17 tity to withhold any payment, transfer, or disbursement of 

18 compensation to an executive officer, or to place such com19 pensation in an escrow account, during the review of the 

20 reasonableness and comparability of compensation.’’. 

21 (b) CONFORMING AMENDMENTS.— 

22 (1) FANNIE MAE.—Section 309(d) of the Federal 

23 National Mortgage Association Charter Act (12 

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

25 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 approval 

5 of the Director, for matters being reviewed under section 

6 1318 of the Federal Housing Enterprises Financial Safety 

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

8 (2) FREDDIE MAC.—Section 303(h) of the Fed9 eral Home Loan Mortgage Corporation Act (12 

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

11 following new paragraph: 

12 ‘‘(4) Notwithstanding any other provision of this sec13 tion, the Corporation shall not transfer, disburse, or pay 

14 compensation to any executive officer, or enter into an 

15 agreement with such executive officer, without the approval 

16 of the Director, for matters being reviewed under section 

17 1318 of the Federal Housing Enterprises Financial Safety 

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

19 (3) FEDERAL HOME LOAN BANKS.—Section 7 of 

20 the Federal Home Loan Bank Act (12 U.S.C. 1427) 

21 is amended by adding at the end the following new 

22 subsection: 

23 ‘‘(l) WITHHOLDING OF COMPENSATION.—Notwith24 standing any other provision of this section, a Federal home 

25 loan bank shall not transfer, disburse, or pay compensation 


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1 to any executive officer, or enter into an agreement with 

2 such executive officer, without the approval of the Director, 

3 for matters being reviewed under section 1318 of the Federal 

4 Housing Enterprises Financial Safety and Soundness Act 

5 of 1992 (12 U.S.C. 4518).’’. 

6 SEC. 109. REVIEWS OF REGULATED ENTITIES. 

7 Section 1319 of the Housing and Community Develop8 ment Act of 1992 (12 U.S.C. 4519) is amended— 

9 (1) by striking the section designation and head10 ing and inserting the following: 

11 ‘‘SEC. 1319. REVIEWS OF REGULATED ENTITIES.’’; 

12 and 

13 (2) by striking ‘‘is a nationally recognized’’ and 

14 all that follows through ‘‘1934’’ and inserting the fol15 lowing: ‘‘the Director considers appropriate, includ16 ing an entity that is registered under section 15 of the 

17 Securities Exchange Act of 1934 (15 U.S.C. 78a) as 

18 a nationally registered statistical rating organiza19 tion’’. 

20 SEC. 110. INCLUSION OF MINORITIES AND WOMEN; DIVER21 SITY IN AGENCY WORKFORCE. 

22 Section 1319A of the Housing and Community Devel23 opment Act of 1992 (12 U.S.C. 4520) is amended— 

24 (1) in the section heading, by striking ‘‘EQUAL

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1 TRACTS’’ and inserting ‘‘MINORITY AND WOMEN

2 INCLUSION; DIVERSITY REQUIREMENTS’’; 

3 (2) in subsection (a), by striking ‘‘(a) IN GEN4 ERAL.—Each enterprise’’ and inserting ‘‘(e) OUT5 REACH.—Each regulated entity’’; and 

6 (3) by striking subsection (b); 

7 (4) by inserting before subsection (e), as so redes8 ignated by paragraph (2) of this section, the following 

9 new subsections: 

10 ‘‘(a) OFFICE OF MINORITY AND WOMEN INCLUSION.— 

11 Each regulated entity shall establish an Office of Minority 

12 and Women Inclusion, or designate an office of the entity, 

13 that shall be responsible for carrying out this section and 

14 all matters of the entity relating to diversity in manage15 ment, employment, and business activities in accordance 

16 with such standards and requirements as the Director shall 

17 establish. 

18 ‘‘(b) INCLUSION IN ALL LEVELS OF BUSINESS ACTIVI19 TIES.—Each regulated entity shall develop and implement 

20 standards and procedures to ensure, to the maximum extent 

21 possible, the inclusion and utilization of minorities (as such 

22 term is defined in section 1204(c) of the Financial Institu23 tions Reform, Recovery, and Enforcement Act of 1989 (12 

24 U.S.C. 1811 note)) and women, and minority- and women25 owned businesses (as such terms are defined in section 


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1 21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C. 

2 1441a(r)(4)) (including financial institutions, investment 

3 banking firms, mortgage banking firms, asset management 

4 firms, broker-dealers, financial services firms, underwriters, 

5 accountants, brokers, investment consultants, and providers 

6 of legal services) in all business and activities of the regu7 lated entity at all levels, including in procurement, insur8 ance, and all types of contracts (including contracts for the 

9 issuance or guarantee of any debt, equity, or mortgage-re10 lated securities, the management of its mortgage and securi11 ties portfolios, the making of its equity investments, the 

12 purchase, sale and servicing of single- and multi-family 

13 mortgage loans, and the implementation of its affordable 

14 housing program and initiatives). The processes established 

15 by each regulated entity for review and evaluation for con16 tract proposals and to hire service providers shall include 

17 a component that gives consideration to the diversity of the 

18 applicant. 

19 ‘‘(c) APPLICABILITY.—This section shall apply to all 

20 contracts of a regulated entity for services of any kind, in21 cluding services that require the services of investment bank22 ing, asset management entities, broker-dealers, financial 

23 services entities, underwriters, accountants, investment con24 sultants, and providers of legal services. 


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1 ‘‘(d) INCLUSION IN ANNUAL REPORTS.—Each regu2 lated entity shall include, in the annual report submitted 

3 by the entity to the Director pursuant to section 309(k) of 

4 the Federal National Mortgage Association Charter Act (12 

5 U.S.C. 1723a(k)), section 307(c) of the Federal Home Loan 

6 Mortgage Corporation Act (12 U.S.C. 1456(c)), and section 

7 20 of the Federal Home Loan Bank Act (12 U.S.C. 1440), 

8 as applicable, detailed information describing the actions 

9 taken by the entity pursuant to this section, which shall 

10 include a statement of the total amounts paid by the entity 

11 to third party contractors since the last such report and 

12 the percentage of such amounts paid to businesses described 

13 in subsection (b) of this section.’’; and 

14 (5) by adding at the end the following new sub15 section: 

16 ‘‘(f) DIVERSITY IN AGENCY WORKFORCE.—The Agency 

17 shall take affirmative steps to seek diversity in its workforce 

18 at all levels of the agency consistent with the demographic 

19 diversity of the United States, which shall include— 

20 ‘‘(1) heavily recruiting at historically Black col21 leges and universities, Hispanic-serving institutions, 

22 women’s colleges, and colleges that typically serve ma23 jority minority populations; 

24 ‘‘(2) sponsoring and recruiting at job fairs in 

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1 tisements in newspapers and magazines oriented to2 ward women and people of color; 

3 ‘‘(3) partnering with organizations that are fo4 cused on developing opportunities for minorities and 

5 women to place talented young minorities and women 

6 in industry internships, summer employment, and 

7 full-time positions; and 

8 ‘‘(4) where feasible, partnering with inner-city 

9 high schools, girls’ high schools, and high schools with 

10 majority minority populations to establish or enhance 

11 financial literacy programs and provide mentoring.’’. 

12 SEC. 111. REGULATIONS AND ORDERS. 

13 Section 1319G of the Housing and Community Devel14 opment Act of 1992 (12 U.S.C. 4526) is amended— 

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

16 following new subsection: 

17 ‘‘(a) AUTHORITY.—The Director shall issue any regu18 lations, guidelines, and orders necessary to carry out the 

19 duties of the Director under this title and each of the au20 thorizing statutes to ensure that the purposes of this title 

21 and such statutes are accomplished.’’; 

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

23 any of the authorizing statutes’’ after ‘‘under this sec24 tion’’; and 

25 (3) by striking subsection (c). 


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1 SEC. 112. NON-WAIVER OF PRIVILEGES. 

2 Part 1 of subtitle A of title XIII of the Housing and 

3 Community Development Act of 1992 (12 U.S.C. 4511) is 

4 amended by adding at the end the following new section: 

5 ‘‘SEC. 1319H. PRIVILEGES NOT AFFECTED BY DISCLOSURE. 

6 ‘‘(a) IN GENERAL.—The submission by any person of 

7 any information to the Agency for any purpose in the 

8 course of any supervisory or regulatory process of the Agen9 cy shall not be construed as waiving, destroying, or other10 wise affecting any privilege such person may claim with 

11 respect to such information under Federal or State law as 

12 to any person or entity other than the Agency. 

13 ‘‘(b) RULE OF CONSTRUCTION.—No provision of sub14 section (a) may be construed as implying or establishing 

15 that— 

16 ‘‘(1) any person waives any privilege applicable 

17 to information that is submitted or transferred under 

18 any circumstance to which subsection (a) does not 

19 apply; or 

20 ‘‘(2) any person would waive any privilege ap21 plicable to any information by submitting the infor22 mation to the Agency, but for this subsection.’’. 

23 SEC. 113. RISK-BASED CAPITAL REQUIREMENTS. 

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

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

26 amended to read as follows: 


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

2 ENTITIES. 

3 ‘‘(a) IN GENERAL.— 

4 ‘‘(1) ENTERPRISES.—The Director shall, by reg5 ulation, establish risk-based capital requirements for 

6 the enterprises to ensure that the enterprises operate 

7 in a safe and sound manner, maintaining sufficient 

8 capital and reserves to support the risks that arise in 

9 the operations and management of the enterprises. 

10 ‘‘(2) FEDERAL HOME LOAN BANKS.—The Direc11 tor shall establish risk-based capital standards under 

12 section 6 of the Federal Home Loan Bank Act for the 

13 Federal home loan banks. 

14 ‘‘(b) CONFIDENTIALITY OF INFORMATION.—Any person 

15 that receives any book, record, or information from the Di16 rector or a regulated entity to enable the risk-based capital 

17 requirements established under this section to be applied 

18 shall— 

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

20 record, or information in a manner that is generally 

21 consistent with the level of confidentiality established 

22 for the material by the Director or the regulated enti23 ty; and 

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

25 United States Code, with respect to the book, record, 

26 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 the 

4 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 Act 

7 (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 loan 

14 banks operate in a safe and sound manner, with 

15 sufficient permanent capital and reserves to sup16 port the risks that arise in the operations and 

17 management of the Federal home loans banks.’’; 

18 and 

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

20 and inserting ‘‘(A)’’. 

21 SEC. 114. 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 GENERAL’’ 

2 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 of 

6 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 CAPITAL

12 LEVELS.—Notwithstanding subsections (a) and (b) and 

13 notwithstanding the capital classifications of the regulated 

14 entities, the Director may, by regulations issued under sec15 tion 1319G, establish a minimum capital level for the enter16 prises, for the Federal home loan banks, or for both the en17 terprises and the banks, that is higher than the level speci18 fied in subsection (a) for the enterprises or the level specified 

19 in subsection (b) for the Federal home loan banks, to the 

20 extent needed to ensure that the regulated entities operate 

21 in a safe and sound manner. 

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

24 minimum capital level established pursuant to subsection 

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1 ital level for a regulated entity on a temporary basis for 

2 such period as the Director may provide if the Director— 

3 ‘‘(1) makes any determination specified in sub4 paragraphs (A) through (C) of section 1364(c)(1); 

5 ‘‘(2) determines that the regulated entity has vio6 lated any of the prudential standards established pur7 suant to section 1313A and, as a result of such viola8 tion, determines that an unsafe and unsound condi9 tion exists; or 

10 ‘‘(3) determines that an unsafe and unsound 

11 condition exists, except that a temporary increase in 

12 minimum capital imposed on a regulated entity pur13 suant to this paragraph shall not remain in place for 

14 a period of more than 6 months unless the Director 

15 makes a renewed determination of the existence of an 

16 unsafe and unsound condition. 

17 ‘‘(e) AUTHORITY TO ESTABLISH ADDITIONAL CAPITAL

18 AND RESERVE REQUIREMENTS FOR PARTICULAR PRO19 GRAMS.—The Director may, at any time by order or regula20 tion, establish such capital or reserve requirements with re21 spect to any program or activity of a regulated entity as 

22 the Director considers appropriate to ensure that the regu23 lated entity operates in a safe and sound manner, with suf24 ficient capital and reserves to support the risks that arise 

25 in the operations and management of the regulated entity. 


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1 ‘‘(f) PERIODIC REVIEW.—The Director shall periodi2 cally review the amount of core capital maintained by the 

3 enterprises, the amount of capital retained by the Federal 

4 home loan banks, and the minimum capital levels estab5 lished for such regulated entities pursuant to this section. 

6 The Director shall rescind any temporary minimum capital 

7 level increase if the Director determines that the cir8 cumstances or facts justifying the temporary increase are 

9 no longer present.’’. 

10 (b) CRITICAL CAPITAL LEVELS.— 

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

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

13 4613) is amended— 

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

15 ENTERPRISES.—FOR’’; and 

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

17 subsection: 

18 ‘‘(b) FEDERAL HOME LOAN BANKS.— 

19 ‘‘(1) IN GENERAL.—For purposes of this subtitle, 

20 the critical capital level for each Federal home loan 

21 bank shall be such amount of capital as the Director 

22 shall, by regulation require. 

23 ‘‘(2) CONSIDERATION OF OTHER CRITICAL CAP24 ITAL LEVELS.—In establishing the critical capital 

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


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1 banks, the Director shall take due consideration of the 

2 critical capital level established under subsection (a) 

3 for the enterprises, with such modifications as the Di4 rector determines to be appropriate to reflect the dif5 ference in operations between the banks and the enter6 prises.’’. 

7 (2) REGULATIONS.—Not later than the expira8 tion of the 180-day period beginning on the effective 

9 date under section 185, the Director of the Federal 

10 Housing Finance Agency shall issue regulations pur11 suant to section 1363(b) of the Housing and Commu12 nity Development Act of 1992 (as added by para13 graph (1) of this subsection) establishing the critical 

14 capital level under such section. 

15 SEC. 115. REVIEW OF AND AUTHORITY OVER ENTERPRISE 

16 ASSETS AND LIABILITIES. 

17 (a) IN GENERAL.—Subtitle B of title XIII of the Hous18 ing and Community Development Act of 1992 (12 U.S.C. 

19 4611 et seq.) is amended— 

20 (1) by striking the subtitle designation and head21 ing and inserting the following: 


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1 ‘‘Subtitle B—Required Capital Lev2 els for Regulated Entities, Spe3 cial Enforcement Powers, and 

4 Reviews of Assets and Liabil5 ities’’; 

6 and 

7 (2) by adding at the end the following new sec8 tion: 

9 ‘‘SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND LIABIL10 ITIES. 

11 ‘‘(a) IN GENERAL.—The Director shall, by regulation, 

12 establish standards by which the portfolio holdings, or rate 

13 of growth of the portfolio holdings, of the enterprises will 

14 be deemed to be consistent with the mission and the safe 

15 and sound operations of the enterprises. In developing such 

16 standards, the Director shall consider— 

17 ‘‘(1) the size or growth of the mortgage market; 

18 ‘‘(2) the need for the portfolio in maintaining li19 quidity or stability of the secondary mortgage market 

20 (including the market for the mortgage-backed securi21 ties the enterprises issue); 

22 ‘‘(3) the need for an inventory of mortgages in 

23 connection with securitizations; 

24 ‘‘(4) the need for the portfolio to directly support 

25 the affordable housing mission of the enterprises; 


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1 ‘‘(5) the liquidity needs of the enterprises; 

2 ‘‘(6) any potential risks posed by the nature of 

3 the portfolio holdings; and 

4 ‘‘(7) any additional factors that the Director de5 termines to be necessary to carry out the purpose 

6 under the first sentence of this subsection to establish 

7 standards for assessing whether the portfolio holdings 

8 are consistent with the mission and safe and sound 

9 operations of the enterprises. 

10 ‘‘(b) TEMPORARY ADJUSTMENTS.—The Director may, 

11 by order, make temporary adjustments to the established 

12 standards for an enterprise or both enterprises, such as dur13 ing times of economic distress or market disruption. 

14 ‘‘(c) AUTHORITY TO REQUIRE DISPOSITION OR ACQUI15 SITION.—The Director shall monitor the portfolio of each 

16 enterprise. Pursuant to subsection (a) and notwithstanding 

17 the capital classifications of the enterprises, the Director 

18 may, by order, require an enterprise, under such terms and 

19 conditions as the Director determines to be appropriate, to 

20 dispose of or acquire any asset, if the Director determines 

21 that such action is consistent with the purposes of this Act 

22 or any of the authorizing statutes.’’. 

23 (b) REGULATIONS.—Not later than the expiration of 

24 the 180-day period beginning on the effective date under 

25 section 185, the Director of the Federal Housing Finance 


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1 Agency shall issue regulations pursuant to section 1369E(a) 

2 of the Housing and Community Development Act of 1992 

3 (as added by subsection (a) of this section) establishing the 

4 portfolio holdings standards under such section. 

5 SEC. 116. CORPORATE GOVERNANCE OF ENTERPRISES. 

6 The Housing and Community Development Act of 

7 1992 is amended by inserting before section 1323 (12 U.S.C. 

8 4543) the following new section: 

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

10 ‘‘(a) BOARD OF DIRECTORS.— 

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

12 members of the board of directors of each enterprise 

13 shall be independent board members, as defined under 

14 rules set forth by the New York Stock Exchange, as 

15 such rules may be amended from time to time. 

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

17 its obligations and duties under applicable laws, 

18 rules, regulations, and guidelines, the board of direc19 tors of an enterprise shall meet at least eight times a 

20 year and not less than once a calendar quarter. 

21 ‘‘(3) NON-MANAGEMENT BOARD MEMBER MEET22 INGS.—The non-management directors of an enter23 prise shall meet at regularly scheduled executive ses24 sions without management participation. 


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

2 the transaction of business, a quorum of the board of 

3 directors of an enterprise shall be at least a majority 

4 of the seated board of directors and a board member 

5 may not vote by proxy. 

6 ‘‘(5) INFORMATION.—The management of an en7 terprise shall provide a board member of the enter8 prise with such adequate and appropriate informa9 tion that a reasonable board member would find im10 portant to the fulfillment of his or her fiduciary du11 ties and obligations. 

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

13 board of directors of each enterprise shall review, with 

14 appropriate professional assistance, the requirements 

15 of laws, rules, regulations, and guidelines that are ap16 plicable to its activities and duties. 

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

18 ‘‘(1) FREQUENCY OF MEETINGS.—Any committee 

19 of the board of directors of an enterprise shall meet 

20 with sufficient frequency to carry out its obligations 

21 and duties under applicable laws, rules, regulations, 

22 and guidelines. 

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

24 shall provide for the establishment, however styled, of 

25 the following committees of the board of directors: 


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1 ‘‘(A) Audit committee. 

2 ‘‘(B) Compensation committee. 

3 ‘‘(C) Nominating/corporate governance com4 mittee. 

5 Such committees shall be in compliance with the 

6 charter, independence, composition, expertise, duties, 

7 responsibilities, and other requirements set forth 

8 under section 10A(m) of the Securities Exchange Act 

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

10 audit committee, and under rules issued by the New 

11 York Stock Exchange, as such rules may be amended 

12 from time to time. 

13 ‘‘(c) COMPENSATION.— 

14 ‘‘(1) IN GENERAL.—The compensation of board 

15 members, executive officers, and employees of an en16 terprise— 

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

18 reasonable and appropriate; 

19 ‘‘(B) shall be commensurate with the duties 

20 and responsibilities of such persons; 

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

22 goals of the enterprise; 

23 ‘‘(D) shall not focus solely on earnings per24 formance, but shall take into account risk manVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00063 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 agement, operational stability and legal and reg2 ulatory compliance as well; and 

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

4 complies with applicable laws, rules, and regula5 tions. 

6 ‘‘(2) REIMBURSEMENT.—If an enterprise is re7 quired to prepare an accounting restatement due to 

8 the material noncompliance of the enterprise, as a re9 sult of misconduct, with any financial reporting re10 quirement under the securities laws, the chief execu11 tive officer and chief financial officer of the enterprise 

12 shall reimburse the enterprise as provided under sec13 tion 304 of the Sarbanes-Oxley Act of 2002 (15 

14 U.S.C. 7243). This provision does not otherwise limit 

15 the authority of the Agency to employ remedies avail16 able to it under its enforcement authorities. 

17 ‘‘(d) CODE OF CONDUCT AND ETHICS.— 

18 ‘‘(1) IN GENERAL.—An enterprise shall establish 

19 and administer a written code of conduct and ethics 

20 that is reasonably designed to assure the ability of 

21 board members, executive officers, and employees of 

22 the enterprise to discharge their duties and respon23 sibilities, on behalf of the enterprise, in an objective 

24 and impartial manner, and that includes standards 

25 required under section 406 of the Sarbanes-Oxley Act 


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1 of 2002 (15 U.S.C. 7264) and other applicable laws, 

2 rules, and regulations. 

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

4 years, an enterprise shall review the adequacy of its 

5 code of conduct and ethics for consistency with prac6 tices appropriate to the enterprise and make any ap7 propriate revisions to such code. 

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

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

10 be responsible for directing the conduct and affairs of the 

11 enterprise in furtherance of the safe and sound operation 

12 of the enterprise and shall remain reasonably informed of 

13 the condition, activities, and operations of the enterprise. 

14 The responsibilities of the board of directors shall include 

15 having in place adequate policies and procedures to assure 

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

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

18 risk policy, programs for legal and regulatory compli19 ance and corporate performance, including prudent 

20 plans for growth and allocation of adequate resources 

21 to manage operations risk. 

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

23 officers and succession planning for such executive of24 ficers. 

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


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1 ‘‘(4) Integrity of accounting and financial re2 porting systems of the enterprise, including inde3 pendent audits and systems of internal control. 

4 ‘‘(5) Process and adequacy of reporting, disclo5 sures, and communications to shareholders, investors, 

6 and potential investors. 

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

8 executive officers. 

9 ‘‘(7) Responsiveness of executive officers in pro10 viding accurate and timely reports to Federal regu11 lators and in addressing the supervisory concerns of 

12 Federal regulators in a timely and appropriate man13 ner. 

14 ‘‘(f) PROHIBITION OF EXTENSIONS OF CREDIT.—An 

15 enterprise may not directly or indirectly, including through 

16 any subsidiary, extend or maintain credit, arrange for the 

17 extension of credit, or renew an extension of credit, in the 

18 form of a personal loan to or for any board member or exec19 utive officer of the enterprise, as provided by section 13(k) 

20 of the Securities Exchange Act of 1934 (15 U.S.C. 78m(k)). 

21 ‘‘(g) CERTIFICATION OF DISCLOSURES.—The chief ex22 ecutive officer and the chief financial officer of an enterprise 

23 shall review each quarterly report and annual report issued 

24 by the enterprise and such reports shall include certifiVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00066 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 cations by such officers as required by section 302 of the 

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

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

4 may not accept audit services from an external auditing 

5 firm if the lead or coordinating audit partner who has pri6 mary responsibility for the external audit of the enterprise, 

7 or the external audit partner who has responsibility for re8 viewing the external audit has performed audit services for 

9 the enterprise in each of the five previous fiscal years. 

10 ‘‘(i) COMPLIANCE PROGRAM.— 

11 ‘‘(1) REQUIREMENT.—Each enterprise shall es12 tablish and maintain a compliance program that is 

13 reasonably designed to assure that the enterprise com14 plies with applicable laws, rules, regulations, and in15 ternal controls. 

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

17 program of an enterprise shall be headed by a compli18 ance officer, however styled, who reports directly to 

19 the chief executive officer of the enterprise. The com20 pliance officer shall report regularly to the board of 

21 directors or an appropriate committee of the board of 

22 directors on compliance with and the adequacy of 

23 current compliance policies and procedures of the en24 terprise, and shall recommend any adjustments to 


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1 such policies and procedures that the compliance offi2 cer considers necessary and appropriate. 

3 ‘‘(j) RISK MANAGEMENT PROGRAM.— 

4 ‘‘(1) REQUIREMENT.—Each enterprise shall es5 tablish and maintain a risk management program 

6 that is reasonably designed to manage the risks of the 

7 operations of the enterprise. 

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

9 management program of an enterprise shall be headed 

10 by a risk management officer, however styled, who re11 ports directly to the chief executive officer of the enter12 prise. The risk management officer shall report regu13 larly to the board of directors or an appropriate com14 mittee of the board of directors on compliance with 

15 and the adequacy of current risk management policies 

16 and procedures of the enterprise, and shall rec17 ommend any adjustments to such policies and proce18 dures that the risk management officer considers nec19 essary and appropriate. 

20 ‘‘(k) COMPLIANCE WITH OTHER LAWS.— 

21 ‘‘(1) DEREGISTERED OR UNREGISTERED COM22 MON STOCK.—If an enterprise deregisters or has not 

23 registered its common stock with the Securities and 

24 Exchange Commission under the Securities Exchange 

25 Act of 1934, the enterprise shall comply or continue 


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1 to comply with sections 10A(m) and 13(k) of the Se2 curities Exchange Act of 1934 (15 U.S.C. 78j–1(m), 

3 78m(k)) and sections 302, 304, and 406 of the Sar4 banes-Oxley Act of 2002 (15 U.S.C. 7241, 7243, 

5 7264), subject to such requirements as provided by 

6 subsection (l) of this section. 

7 ‘‘(2) REGISTERED COMMON STOCK.—An enter8 prise that has its common stock registered with the 

9 Securities and Exchange Commission shall maintain 

10 such registered status, unless it provides 60 days 

11 prior written notice to the Director stating its intent 

12 to deregister and its understanding that it will re13 main subject to the requirements of the sections of the 

14 Securities Exchange Act of 1934 and the Sarbanes15 Oxley Act of 2002, subject to such requirements as 

16 provided by subsection (l) of this section. 

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

18 to time establish standards, by regulation, order, or guide19 line, regarding such other corporate governance matters of 

20 the enterprises as the Director considers appropriate. 

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

22 with standards of Federal or State law (including the Re23 vised Model Corporation Act) or New York Stock Exchange 

24 rules that are made applicable to an enterprise by section 

25 1710.10 of the Director’s rules (12 C.F.R. 1710.10) and by 


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1 subsections (a), (b), (g), (i), (j), and (k) of this section, the 

2 Director, in the Director’s sole discretion, may modify the 

3 standards contained in this section or in part 1710 of the 

4 Director’s rules (12 C.F.R. Part 1710) in accordance with 

5 section 553 of title 5, United States Code, and upon written 

6 notice to the enterprise.’’. 

7 SEC. 117. REQUIRED REGISTRATION UNDER SECURITIES 

8 EXCHANGE ACT OF 1934. 

9 The Housing and Community Development Act of 

10 1992 is amended by adding after section 1322A, as added 

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

12 section: 

13 ‘‘SEC. 1322B. REQUIRED REGISTRATION UNDER SECURITIES 

14 EXCHANGE ACT OF 1934. 

15 ‘‘(a) IN GENERAL.—Each regulated entity shall reg16 ister at least one class of the capital stock of such regulated 

17 entity, and maintain such registration with the Securities 

18 and Exchange Commission, under the Securities Exchange 

19 Act of 1934. 

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

21 with sections 14 and 16 of the Securities Exchange Act of 

22 1934.’’. 


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1 SEC. 118. LIAISON WITH FINANCIAL INSTITUTIONS EXAM2 INATION COUNCIL. 

3 Section 1007 of the Federal Financial Institutions Ex4 amination Council Act of 1978 (12 U.S.C. 3306) is amend5 ed— 

6 (1) in the section heading, by inserting after 

7 ‘‘STATE’’ the following: ‘‘AND FEDERAL HOUSING FI8 NANCE AGENCY’’; and 

9 (2) by inserting after ‘‘financial institutions’’ the 

10 following: ‘‘, and one representative of the Federal 

11 Housing Finance Agency,’’. 

12 SEC. 119. GUARANTEE FEE STUDY. 

13 (a) IN GENERAL.—The Director of the Federal Hous14 ing Finance Agency, in consultation with the heads of the 

15 federal banking agencies, shall, not later than 18 months 

16 after the date of the enactment of this Act, submit to the 

17 Congress a study concerning the pricing, transparency and 

18 reporting of the Federal National Mortgage Association, the 

19 Federal Home Loan Mortgage Corporation, and the Federal 

20 home loan banks with regard to guarantee fees and con21 cerning analogous practices, transparency and reporting 

22 requirements (including advances pricing practices by the 

23 Federal Home Loan Banks) of other participants in the 

24 business of mortgage purchases and securitization. 

25 (b) FACTORS.—The study required by this section shall 

26 examine various factors such as credit risk, counterparty 


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1 risk considerations, economic value considerations, and vol2 ume considerations used by the regulated entities (as such 

3 term is defined in section 1303 of the Housing and Commu4 nity Development Act of 1992) included in the study in 

5 setting the amount of fees they charge. 

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

7 under subsection (a) shall identify and analyze— 

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

9 term is defined in section 1303 of the Housing and 

10 Community Development Act of 1992) in determining 

11 the amount of the guarantee fees it charges; 

12 (2) the total revenue the enterprises earn from 

13 guarantee fees; 

14 (3) the total costs incurred by the enterprises for 

15 providing guarantees; 

16 (4) the average guarantee fee charged by the en17 terprises; 

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

19 fees charged differ from such fees charged during the 

20 previous year; 

21 (6) a breakdown of the revenue and costs associ22 ated with providing guarantees, based on product 

23 type and risk classifications; and 


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1 (7) other relevant information on guarantee fees 

2 with other participants in the mortgage and 

3 securitization business. 

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

5 section may be construed to require or authorize the Direc6 tor of the Federal Housing Finance Agency, in connection 

7 with the study mandated by this section, to disclose infor8 mation of the enterprises or other organization that is con9 fidential or proprietary. 

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

11 the date of the enactment of this Act. 

12 SEC. 120. CONFORMING AMENDMENTS. 

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

14 the Housing and Community Development Act of 1992 (12 

15 U.S.C. 4511 et seq.), as amended by the preceding provi16 sions of this Act, is further amended— 

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

18 term appears in such part (except in sections 

19 1313(a)(2)(A), 1313A(b)(2)(B)(ii)(I), and 1316(b)(3)) 

20 and inserting ‘‘a regulated entity’’; 

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

22 term appears in such part (except in section 

23 1316(b)(3)) and inserting ‘‘the regulated entity’’; 

24 (3) by striking ‘‘the enterprises’’ each place such 

25 term appears in such part (except in sections 


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1 1312(c)(2), and 1312(e)(2)) and inserting ‘‘the regu2 lated entities’’; 

3 (4) by striking ‘‘each enterprise’’ each place such 

4 term appears in such part and inserting ‘‘each regu5 lated entity’’; 

6 (5) by striking ‘‘Office’’ each place such term ap7 pears in such part (except in sections 1311(b)(2), 

8 1312(b)(5), 1315(b), and 1316(a)(4), (g), and (h), 

9 1317(c), and 1319A(a)) and inserting ‘‘Agency’’; 

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

11 (A) in subsection (a)— 

12 (i) in the subsection heading, by strik13 ing ‘‘OFFICE PERSONNEL’’ and inserting 

14 ‘‘IN GENERAL’’; and 

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

16 ‘‘Subject to title III of the Federal Housing 

17 Finance Reform Act of 2007, the’’; 

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

19 (C) by redesignating subsection (e) as sub20 section (d); 

21 (7) in section 1319B (12 U.S.C. 4521), by strik22 ing ‘‘Committee on Banking, Finance and Urban Af23 fairs’’ each place such term appears and inserting 

24 ‘‘Committee on Financial Services’’; and 


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

2 all that follows ‘‘United States Code’’ and inserting ‘‘, 

3 the Agency shall be considered an agency responsible 

4 for the regulation or supervision of financial institu5 tions.’’. 

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

7 The Federal National Mortgage Association Charter Act (12 

8 U.S.C. 1716 et seq.) is amended— 

9 (1) by striking ‘‘Director of the Office of Federal 

10 Housing Enterprise Oversight of the Department of 

11 Housing and Urban Development’’ each place such 

12 term appears, and inserting ‘‘Director of the Federal 

13 Housing Finance Agency’’, in— 

14 (A) section 303(c)(2) (12 U.S.C. 

15 1718(c)(2)); 

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

17 1723a(d)(3)(B)); and 

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

19 (2) in section 309— 

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

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

22 each place such term appears and inserting ‘‘Fi23 nancial Services’’; and 

24 (B) in subsection (m)— 


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1 (i) in paragraph (1), by striking ‘‘Sec2 retary’’ the second place such term appears 

3 and inserting ‘‘Director’’; 

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

5 ‘‘Secretary’’ the second place such term ap6 pears and inserting ‘‘Director’’; and 

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

8 place such term appears and inserting ‘‘Di9 rector of the Federal Housing Finance 

10 Agency’’; and 

11 (C) in subsection (n), by striking ‘‘Sec12 retary’’ each place such term appears and insert13 ing ‘‘Director of the Federal Housing Finance 

14 Agency’’. 

15 (c) AMENDMENTS TO FREDDIE MAC ACT.—The Fed16 eral Home Loan Mortgage Corporation Act is amended— 

17 (1) by striking ‘‘Director of the Office of Federal 

18 Housing Enterprise Oversight of the Department of 

19 Housing and Urban Development’’ each place such 

20 term appears, and inserting ‘‘Director of the Federal 

21 Housing Finance Agency’’, in— 

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

23 1452(b)(2)); 

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

25 1452(h)(2)); and 


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

2 1456(c)(1)); 

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

4 U.S.C. 1452(h)(1), 1456(f)(1)), by striking ‘‘Banking, 

5 Finance and Urban Affairs’’ each place such term ap6 pears and inserting ‘‘Financial Services’’; 

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

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

9 ‘‘306(c)’’; and 

10 (B) by striking ‘‘section 106’’ and inserting 

11 ‘‘section 1316’’; and 

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

13 (A) in subsection (e)— 

14 (i) in paragraph (1), by striking ‘‘Sec15 retary’’ the second place such term appears 

16 and inserting ‘‘Director’’; 

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

18 ‘‘Secretary’’ the second place such term ap19 pears and inserting ‘‘Director’’; and 

20 (iii) by striking ‘‘Secretary’’ each other 

21 place such term appears and inserting ‘‘Di22 rector of the Federal Housing Finance 

23 Agency’’; and 

24 (B) in subsection (f), by striking ‘‘Sec25 retary’’ each place such term appears and insertVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00077 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 ing ‘‘Director of the Federal Housing Finance 

2 Agency’’. 

3 Subtitle B—Improvement of Mission 

4 Supervision 

5 SEC. 131. TRANSFER OF PRODUCT APPROVAL AND HOUS6 ING GOAL OVERSIGHT. 

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 the designation and heading for 

11 the part and inserting the following: 

12 ‘‘PART 2—PRODUCT APPROVAL BY DIRECTOR, 

13 CORPORATE GOVERNANCE, AND ESTABLISH14 MENT OF HOUSING GOALS’’; 

15 and 

16 (2) by striking sections 1321 and 1322. 

17 SEC. 132. REVIEW OF ENTERPRISE PRODUCTS. 

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

19 of the Housing and Community Development Act of 1992 

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

21 4543) the following new section: 

22 ‘‘SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS 

23 OF ENTERPRISES. 

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

25 enterprise to obtain the approval of the Director for any 


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1 product of the enterprise before initially offering the prod2 uct. 

3 ‘‘(b) STANDARD FOR APPROVAL.—In considering any 

4 request for approval of a product pursuant to subsection 

5 (a), the Director shall make a determination that— 

6 ‘‘(1) in the case of a product of the Federal Na7 tional Mortgage Association, the Director determines 

8 that the product is authorized under paragraph (2), 

9 (3), (4), or (5) of section 302(b) or section 304 of the 

10 Federal National Mortgage Association Charter Act, 

11 (12 U.S.C. 1717(b), 1719); 

12 ‘‘(2) in the case of a product of the Federal 

13 Home Loan Mortgage Corporation, the Director deter14 mines that the product is authorized under paragraph 

15 (1), (4), or (5) of section 305(a) of the Federal Home 

16 Loan Mortgage Corporation Act (12 U.S.C. 1454(a)); 

17 ‘‘(3) the product is in the public interest; 

18 ‘‘(4) the product is consistent with the safety and 

19 soundness of the enterprise or the mortgage finance 

20 system; and 

21 ‘‘(5) the product does not materially impair the 

22 efficiency of the mortgage finance system. 

23 ‘‘(c) PROCEDURE FOR APPROVAL.— 

24 ‘‘(1) SUBMISSION OF REQUEST.—An enterprise 

25 shall submit to the Director a written request for apVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00079 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 proval of a product that describes the product in such 

2 form as prescribed by order or regulation of the Di3 rector. 

4 ‘‘(2) REQUEST FOR PUBLIC COMMENT.—Imme5 diately upon receipt of a request for approval of a 

6 product, as required under paragraph (1), the Direc7 tor shall publish notice of such request and of the pe8 riod for public comment pursuant to paragraph (3) 

9 regarding the product, and a description of the prod10 uct proposed by the request. The Director shall give 

11 interested parties the opportunity to respond in writ12 ing to the proposed product. 

13 ‘‘(3) PUBLIC COMMENT PERIOD.—During the 30- 

14 day period beginning on the date of publication pur15 suant to paragraph (2) of a request for approval of 

16 a product, the Director shall receive public comments 

17 regarding the proposed product. 

18 ‘‘(4) OFFERING OF PRODUCT.— 

19 ‘‘(A) IN GENERAL.—Not later than 30 days 

20 after the close of the public comment period de21 scribed in paragraph (3), the Director shall ap22 prove or deny the product, specifying the 

23 grounds for such decision in writing. 

24 ‘‘(B) FAILURE TO ACT.—If the Director 

25 fails to act within the 30-day period described in 


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1 subparagraph (A), the enterprise may offer the 

2 product. 

3 ‘‘(d) EXPEDITED REVIEW.— 

4 ‘‘(1) DETERMINATION AND NOTICE.—If an enter5 prise determines that any new activity, service, un6 dertaking, or offering is not a product, as defined in 

7 subsection (f), the enterprise shall provide written no8 tice to the Director prior to the commencement of such 

9 activity, service, undertaking, or offering. 

10 ‘‘(2) DIRECTOR DETERMINATION OF APPLICABLE

11 PROCEDURE.—Immediately upon receipt of any no12 tice pursuant to paragraph (1), the Director shall 

13 make a determination under paragraph (3). 

14 ‘‘(3) DETERMINATION AND TREATMENT AS PROD15 UCT.—If the Director determines that any new activ16 ity, service, undertaking, or offering consists of, re17 lates to, or involves a product— 

18 ‘‘(A) the Director shall notify the enterprise 

19 of the determination; 

20 ‘‘(B) the new activity, service, undertaking, 

21 or offering described in the notice under para22 graph (1) shall be considered a product for pur23 poses of this section; and 


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1 ‘‘(C) the enterprise shall withdraw its re2 quest or submit a written request for approval of 

3 the product pursuant to subsection (c). 

4 ‘‘(e) CONDITIONAL APPROVAL.—The Director may con5 ditionally approve the offering of any product by an enter6 prise, and may establish terms, conditions, or limitations 

7 with respect to such product with which the enterprise must 

8 comply in order to offer such product. 

9 ‘‘(f) DEFINITION OF PRODUCT.—For purposes of this 

10 section, the term ‘product’ does not include— 

11 ‘‘(1) the automated loan underwriting system of 

12 an enterprise in existence as of the date of the enact13 ment of the Federal Housing Finance Reform Act of 

14 2007, including any upgrade to the technology, oper15 ating system, or software to operate the underwriting 

16 system; or 

17 ‘‘(2) any modification to the mortgage terms and 

18 conditions or mortgage underwriting criteria relating 

19 to the mortgages that are purchased or guaranteed by 

20 an enterprise: Provided, That such modifications do 

21 not alter the underlying transaction so as to include 

22 services or financing, other than residential mortgage 

23 financing, or create significant new exposure to risk 

24 for the enterprise or the holder of the mortgage. 


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1 ‘‘(g) NO LIMITATION.—Nothing in this section shall be 

2 deemed to restrict— 

3 ‘‘(1) the safety and soundness authority of the 

4 Director over all new and existing products or activi5 ties; or 

6 ‘‘(2) the authority of the Director to review all 

7 new and existing products or activities to determine 

8 that such products or activities are consistent with 

9 the statutory mission of the enterprise.’’. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) FANNIE MAE.—Section 302(b)(6) of the Fed12 eral National Mortgage Association Charter Act (12 

13 U.S.C. 1717(b)(6)) is amended— 

14 (A) by striking ‘‘implement any new pro15 gram’’ and inserting ‘‘initially offer any prod16 uct’’; 

17 (B) by striking ‘‘section 1303’’ and insert18 ing ‘‘section 1321(f)’’; and 

19 (C) by striking ‘‘before obtaining the ap20 proval of the Secretary under section 1322’’ and 

21 inserting ‘‘except in accordance with section 

22 1321’’. 

23 (2) FREDDIE MAC.—Section 305(c) of the Fed24 eral Home Loan Mortgage Corporation Act (12 

25 U.S.C. 1454(c)) is amended— 


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1 (A) by striking ‘‘implement any new pro2 gram’’ and inserting ‘‘initially offer any prod3 uct’’; 

4 (B) by striking ‘‘section 1303’’ and insert5 ing ‘‘section 1321(f)’’; and 

6 (C) by striking ‘‘before obtaining the ap7 proval of the Secretary under section 1322’’ and 

8 inserting ‘‘except in accordance with section 

9 1321’’. 

10 (3) 1992 ACT.—Section 1303 of the Housing and 

11 Community Development Act of 1992 (12 U.S.C. 

12 4502), as amended by section 2 of this Act, is further 

13 amended— 

14 (A) by striking paragraph (17) (relating to 

15 the definition of ‘‘new program’’) ; and 

16 (B) by redesignating paragraphs (18) 

17 through (23) as paragraphs (17) through (22), 

18 respectively. 

19 SEC. 133. CONFORMING LOAN LIMITS. 

20 (a) FANNIE MAE.— 

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

22 Federal National Mortgage Association Charter Act 

23 (12 U.S.C. 1717(b)(2)) is amended— 

24 (A) in the 4th sentence, by striking ‘‘the 

25 Resolution Trust Corporation,’’; and 


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1 (B) by striking the 7th and 8th sentences 

2 and inserting the following new sentences: ‘‘For 

3 2007, such limitations shall not exceed $417,000 

4 for a mortgage secured by a single-family resi5 dence, $533,850 for a mortgage secured by a 2- 

6 family residence, $645,300 for a mortgage se7 cured by a 3-family residence, and $801,950 for 

8 a mortgage secured by a 4-family residence, ex9 cept that such maximum limitations shall be ad10 justed effective January 1 of each year beginning 

11 with 2008, subject to the limitations in this 

12 paragraph. Each adjustment shall be made by 

13 adding to or subtracting from each such amount 

14 (as it may have been previously adjusted) a per15 centage thereof equal to the percentage increase 

16 or decrease, during the most recent 12-month or 

17 four-quarter period ending before the time of de18 termining such annual adjustment, in the hous19 ing price index maintained by the Director of 

20 the Federal Housing Finance Agency (pursuant 

21 to section 1322 of the Housing and Community 

22 Development Act of 1992 (12 U.S.C. 4541)).’’. 

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

24 of the Federal National Mortgage Association Charter 

25 Act is (12 U.S.C. 1717(b)(2)) is amended by adding 


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1 after the period at the end the following: ‘‘Such fore2 going limitations shall also be increased with respect 

3 to properties of a particular size located in any area 

4 for which the median price for such size residence ex5 ceeds the foregoing limitation for such size residence, 

6 to the lesser of 150 percent of such foregoing limita7 tion for such size residence or the amount that is 

8 equal to the median price in such area for such size 

9 residence, except that, subject to the order, if any, 

10 issued by the Director of the Federal Housing Fi11 nance Agency pursuant to section 133(d)(3) of the 

12 Federal Housing Finance Reform Act of 2007, such 

13 increase shall apply only with respect to mortgages on 

14 which are based securities issued and sold by the cor15 poration.’’. 

16 (b) FREDDIE MAC.— 

17 (1) GENERAL LIMIT.—Section 305(a)(2) of the 

18 Federal Home Loan Mortgage Corporation Act (12 

19 U.S.C. 1454(a)(2)) is amended— 

20 (A) in the 3rd sentence, by striking ‘‘the 

21 Resolution Trust Corporation,’’; and 

22 (B) by striking the 6th and 7th sentences 

23 and inserting the following new sentences: ‘‘For 

24 2007, such limitations shall not exceed $417,000 

25 for a mortgage secured by a single-family resiVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00086 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 dence, $533,850 for a mortgage secured by a 2- 

2 family residence, $645,300 for a mortgage se3 cured by a 3-family residence, and $801,950 for 

4 a mortgage secured by a 4-family residence, ex5 cept that such maximum limitations shall be ad6 justed effective January 1 of each year beginning 

7 with 2008, subject to the limitations in this 

8 paragraph. Each adjustment shall be made by 

9 adding to or subtracting from each such amount 

10 (as it may have been previously adjusted) a per11 centage thereof equal to the percentage increase 

12 or decrease, during the most recent 12-month or 

13 four-quarter period ending before the time of de14 termining such annual adjustment, in the hous15 ing price index maintained by the Director of 

16 the Federal Housing Finance Agency (pursuant 

17 to section 1322 of the Housing and Community 

18 Development Act of 1992 (12 U.S.C. 4541)).’’ 

19 (2) HIGH-COST AREA LIMIT.—Section 305(a)(2) 

20 of the Federal Home Loan Mortgage Corporation Act 

21 is amended by adding after the period at the end the 

22 following: ‘‘Such foregoing limitations shall also be 

23 increased with respect to properties of a particular 

24 size located in any area for which the median price 

25 for such size residence exceeds the foregoing limitation 


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1 for such size residence, to the lesser of 150 percent of 

2 such foregoing limitation for such size residence or the 

3 amount that is equal to the median price in such 

4 area for such size residence, except that, subject to the 

5 order, if any, issued by the Director of the Federal 

6 Housing Finance Agency pursuant to section 

7 133(d)(3) of the Federal Housing Finance Reform Act 

8 of 2007, such increase shall apply only with respect 

9 to mortgages on which are based securities issued and 

10 sold by the Corporation.’’. 

11 (c) HOUSING PRICE INDEX.—Subpart A of part 2 of 

12 subtitle A of title XIII of the Housing and Community De13 velopment Act of 1992 (as amended by the preceding provi14 sions of this Act) is amended by inserting after section 1321 

15 (as added by section 132 of this Act) the following new sec16 tion: 

17 ‘‘SEC. 1322. HOUSING PRICE INDEX. 

18 ‘‘(a) IN GENERAL.—The Director shall establish and 

19 maintain a method of assessing the national average 1-fam20 ily house price for use for adjusting the conforming loan 

21 limitations of the enterprises. In establishing such method, 

22 the Director shall take into consideration the monthly sur23 vey of all major lenders conducted by the Federal Housing 

24 Finance Agency to determine the national average 1-family 

25 house price, the House Price Index maintained by the Office 


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1 of Federal Housing Enterprise Oversight of the Department 

2 of Housing and Urban Development before the effective date 

3 under section 185 of the Federal Housing Finance Reform 

4 Act of 2007, any appropriate house price indexes of the Bu5 reau of the Census of the Department of Commerce, and 

6 any other indexes or measures that the Director considers 

7 appropriate. 

8 ‘‘(b) GAO AUDIT.— 

9 ‘‘(1) IN GENERAL.—At such times as are re10 quired under paragraph (2), the Comptroller General 

11 of the United States shall conduct an audit of the 

12 methodology established by the Director under sub13 section (a) to determine whether the methodology es14 tablished is an accurate and appropriate means of 

15 measuring changes to the national average 1-family 

16 house price. 

17 ‘‘(2) TIMING.—An audit referred to in para18 graph (1) shall be conducted and completed not later 

19 than the expiration of the 180-day period that begins 

20 upon each of the following dates: 

21 ‘‘(A) ESTABLISHMENT.—The date upon 

22 which such methodology is initially established 

23 under subsection (a) in final form by the Direc24 tor. 


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1 ‘‘(B) MODIFICATION OR AMENDMENT.— 

2 Each date upon which any modification or 

3 amendment to such methodology is adopted in 

4 final form by the Director. 

5 ‘‘(3) REPORT.—Within 30 days of the comple6 tion of any audit conducted under this subsection, the 

7 Comptroller General shall submit a report detailing 

8 the results and conclusions of the audit to the Direc9 tor, the Committee on Financial Services of the House 

10 of Representatives, and the Committee on Banking, 

11 Housing, and Urban Affairs of the Senate.’’. 

12 (d) CONDITIONS ON CONFORMING LOAN LIMIT FOR

13 HIGH-COST AREAS.— 

14 (1) STUDY.—The Director of the Federal Hous15 ing Finance Agency shall conduct a study under this 

16 subsection during the six-month period beginning on 

17 the effective date under section 185 of this Act. 

18 (2) ISSUES.—The study under this subsection 

19 shall determine— 

20 (A) the effect that restricting the conforming 

21 loan limits for high-cost areas only to mortgages 

22 on which are based securities issued and sold by 

23 the Federal National Mortgage Association and 

24 the Federal Home Loan Mortgage Corporation 

25 (as provided in the last sentence of section 


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1 302(b)(2) of the Federal National Mortgage Asso2 ciation Charter Act and the last sentence of sec3 tion 305(a)(2) of the Federal Home Loan Mort4 gage Corporation Act, pursuant to the amend5 ments made by subsections (a)(2) and (b)(2) of 

6 this section) would have on the cost to borrowers 

7 for mortgages on housing in such high-cost areas; 

8 (B) the effects that such restrictions would 

9 have on the availability of mortgages for housing 

10 in such high-cost areas; and 

11 (C) the extent to which the Federal National 

12 Mortgage Association and the Federal Home 

13 Loan Mortgage Corporation will be able to issue 

14 and sell securities based on mortgages for hous15 ing located in such high-cost areas. 

16 (3) DETERMINATION.— 

17 (A) IN GENERAL.—Not later than the expi18 ration of the six-month period specified in para19 graph (1), the Director of the Federal Housing 

20 Finance Agency shall make a determination, 

21 based on the results of the study under this sub22 section, of whether the restriction of conforming 

23 loan limits for high-cost areas only to mortgages 

24 on which are based securities issued and sold by 

25 the Federal National Mortgage Association and 


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1 the Federal Home Loan Mortgage Corporation 

2 (as provided in the amendments made by sub3 sections (a)(2) and (b)(2) of this section) will re4 sult in an increase in the cost to borrowers for 

5 mortgages on housing in such high-cost areas. 

6 (B) ORDER.—If such determination is that 

7 costs to borrowers on housing in such high-cost 

8 areas will be increased by such restrictions, the 

9 Director may issue an order terminating such 

10 restrictions, in whole or in part. 

11 (4) PUBLICATION.—Not later than the expiration 

12 of the six-month period specified in paragraph (1), 

13 the Director of the Federal Housing Finance Agency 

14 shall cause to be published in the Federal Register— 

15 (A) a report that— 

16 (i) describes the study under this sub17 section; and 

18 (ii) sets forth the conclusions of the 

19 study regarding the issues to be determined 

20 under paragraph (2); and 

21 (B) notice of the determination of the Direc22 tor under paragraph (3); and 

23 (C) the order of the Director under para24 graph (3). 


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1 (5) DEFINITION.—For purposes of this sub2 section, the term ‘‘conforming loan limits for high-cost 

3 areas’’ means the dollar amount limitations applica4 ble under the section 302(b)(2) of the Federal Na5 tional Mortgage Association Charter Act and section 

6 305(a)(2) of the Federal Home Loan Mortgage Cor7 poration Act (as amended by subsections (a) and (b) 

8 of this section) for areas described in the last sentence 

9 of such sections (as so amended). 

10 SEC. 134. ANNUAL HOUSING REPORT REGARDING REGU11 LATED ENTITIES. 

12 (a) IN GENERAL.—The Housing and Community De13 velopment Act of 1992 is amended by striking section 1324 

14 (12 U.S.C. 4544) and inserting the following new section: 

15 ‘‘SEC. 1324. ANNUAL HOUSING REPORT REGARDING REGU16 LATED ENTITIES. 

17 ‘‘(a) IN GENERAL.—After reviewing and analyzing the 

18 reports submitted under section 309(n) of the Federal Na19 tional Mortgage Association Charter Act, section 307(f) of 

20 the Federal Home Loan Mortgage Corporation Act, and sec21 tion 10(j)(11) of the Federal Home Loan Bank Act (12 

22 U.S.C. 1430(j)(11)), the Director shall submit a report, not 

23 later than October 30 of each year, to the Committee on 

24 Financial Services of the House of Representatives and the 


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1 Committee on Banking, Housing, and Urban Affairs of the 

2 Senate, on the activities of each regulated entity. 

3 ‘‘(b) CONTENTS.—The report shall— 

4 ‘‘(1) discuss the extent to which— 

5 ‘‘(A) each enterprise is achieving the annual 

6 housing goals established under subpart B of this 

7 part; 

8 ‘‘(B) each enterprise is complying with sec9 tion 1337; 

10 ‘‘(C) each Federal home loan bank is com11 plying with section 10(j) of the Federal Home 

12 Loan Bank Act; and 

13 ‘‘(D) each regulated entity is achieving the 

14 purposes of the regulated entity established by 

15 law; 

16 ‘‘(2) aggregate and analyze relevant data on in17 come to assess the compliance by each enterprise with 

18 the housing goals established under subpart B; 

19 ‘‘(3) aggregate and analyze data on income, race, 

20 and gender by census tract and other relevant classi21 fications, and compare such data with larger demo22 graphic, housing, and economic trends; 

23 ‘‘(4) examine actions that— 

24 ‘‘(A) each enterprise has undertaken or 

25 could undertake to promote and expand the anVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00094 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 nual goals established under subpart B and the 

2 purposes of the enterprise established by law; and 

3 ‘‘(B) each Federal home loan bank has 

4 taken or could undertake to promote and expand 

5 the community investment program and afford6 able housing program of the bank established 

7 under section subsections (i) and (j) of section 10 

8 of the Federal Home Loan Bank Act; 

9 ‘‘(5) examine the primary and secondary multi10 family housing mortgage markets and describe— 

11 ‘‘(A) the availability and liquidity of mort12 gage credit; 

13 ‘‘(B) the status of efforts to provide stand14 ard credit terms and underwriting guidelines for 

15 multifamily housing and to securitize such mort16 gage products; and 

17 ‘‘(C) any factors inhibiting such standard18 ization and securitization; 

19 ‘‘(6) examine actions each regulated entity has 

20 undertaken and could undertake to promote and ex21 pand opportunities for first-time homebuyers, includ22 ing the use of alternative credit scoring; 

23 ‘‘(7) describe any actions taken under section 

24 1325(5) with respect to originators found to violate 

25 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 enterprise 

6 is involved in mortgage purchases and secondary 

7 market activities involving subprime loans (as identi8 fied in accordance with the regulations issued pursu9 ant to section 134(b) of the Federal Housing Finance 

10 Reform Act of 2007) and compare the characteristics 

11 of subprime loans purchased and securitized by the 

12 enterprises to other loans purchased and securitized 

13 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) and 

17 establishing the methodology described in section 

18 1322, the Director shall conduct, on a monthly basis, 

19 a survey of mortgage markets in accordance with this 

20 subsection. 

21 ‘‘(2) DATA POINTS.—Each monthly survey con22 ducted by the Director under paragraph (1) shall col23 lect data on— 

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1 prises and the characteristics of individual mort2 gages that are not eligible for purchase by the en3 terprises including, in both cases, information 

4 concerning— 

5 ‘‘(i) the price of the house that secures 

6 the mortgage; 

7 ‘‘(ii) the loan-to-value ratio of the 

8 mortgage, which shall reflect any secondary 

9 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 case 

14 of a conforming mortgage, was purchased 

15 by an enterprise; and 

16 ‘‘(B) such other matters as the Director de17 termines to be appropriate. 

18 ‘‘(3) PUBLIC AVAILABILITY.—The Director shall 

19 make any data collected by the Director in connection 

20 with the conduct of a monthly survey available to the 

21 public in a timely manner, provided that the Director 

22 may modify the data released to the public to ensure 

23 that the data is not released in an identifiable form. 

24 ‘‘(4) DEFINITION.—For purposes of this sub25 section, the term ‘identifiable form’ means any repVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00097 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 resentation of information that permits the identity of 

2 a borrower to which the information relates to be rea3 sonably inferred by either direct or indirect means.’’. 

4 (b) STANDARDS FOR SUBPRIME LOANS.—The Director 

5 shall, not later than one year after the effective date under 

6 section 185, by regulations issued under section 1316G of 

7 the Housing and Community Development Act of 1992, es8 tablish standards by which mortgages purchased and mort9 gages purchased and securitized shall be characterized as 

10 subprime for the purpose of, and only for the purpose of, 

11 complying with the reporting requirement under section 

12 1324(b)(9) of such Act. 

13 SEC. 135. ANNUAL REPORTS BY REGULATED ENTITIES ON 

14 AFFORDABLE HOUSING STOCK. 

15 The Housing and Community Development Act of 

16 1992 is amended by inserting after section 1328 (12 U.S.C. 

17 4548) the following new section: 

18 ‘‘SEC. 1329. ANNUAL REPORTS ON AFFORDABLE HOUSING 

19 STOCK. 

20 ‘‘(a) IN GENERAL.—To obtain information helpful in 

21 applying the formula under section 1337(c)(2) for the af22 fordable housing program under such section and for other 

23 appropriate uses, the regulated entities shall conduct, or 

24 provide for the conducting of, a study on an annual basis 

25 to determine the levels of affordable housing inventory, and 


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1 the changes in such levels, in communities throughout the 

2 United States. 

3 ‘‘(b) CONTENTS.—The annual study under this section 

4 shall determine, for the United States, each State, and each 

5 community within each State— 

6 ‘‘(1) the level of affordable housing inventory, in7 cluding affordable rental dwelling units and afford8 able homeownership dwelling units; 

9 ‘‘(2) any changes to the level of such inventory 

10 during the 12-month period of the study under this 

11 section, including— 

12 ‘‘(A) any additions to such inventory, 

13 disaggregated by the category of such additions 

14 (including new construction or housing conver15 sion); 

16 ‘‘(B) any subtractions from such inventory, 

17 disaggregated by the category of such subtrac18 tions (including abandonment, demolition, or 

19 upgrade to market-rate housing); 

20 ‘‘(C) the number of new affordable dwelling 

21 units placed in service; and 

22 ‘‘(D) the number of affordable housing 

23 dwelling units withdrawn from service; 

24 ‘‘(3) the types of financing used to build any 

25 dwelling units added to such inventory level and the 


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1 period during which such units are required to re2 main affordable; 

3 ‘‘(4) any excess demand for affordable housing, 

4 including the number of households on rental housing 

5 waiting lists and the tenure of the wait on such lists; 

6 and 

7 ‘‘(5) such other information as the Director may 

8 require. 

9 ‘‘(c) REPORT.—For each annual study conducted pur10 suant to this section, the regulated entities shall submit to 

11 the Congress, and make publicly available, a report setting 

12 forth the findings of the study. 

13 ‘‘(d) REGULATIONS AND TIMING.—The Director shall, 

14 by regulation, establish requirements for the studies and re15 ports under this section, including deadlines for the submis16 sion of such annual reports and standards for determining 

17 affordable housing.’’. 

18 SEC. 136. REVISION OF HOUSING GOALS. 

19 (a) HOUSING GOALS.—The Housing and Community 

20 Development Act of 1992 is amended by striking sections 

21 1331 through 1334 (12 U.S.C. 4561–4) and inserting the 

22 following new sections: 

23 ‘‘SEC. 1331. ESTABLISHMENT OF HOUSING GOALS. 

24 ‘‘(a) IN GENERAL.—The Director shall establish, effec25 tive for the first year that begins after the effective date 


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1 under section 185 of the Federal Housing Finance Reform 

2 Act of 2007 and each year thereafter, annual housing goals, 

3 with respect to the mortgage purchases by the enterprises, 

4 as follows: 

5 ‘‘(1) SINGLE FAMILY HOUSING GOALS.—Three 

6 single-family housing goals under section 1332. 

7 ‘‘(2) MULTIFAMILY SPECIAL AFFORDABLE HOUS8 ING GOALS.—A multifamily special affordable hous9 ing goal under section 1333. 

10 ‘‘(b) ELIMINATING INTEREST RATE DISPARITIES.— 

11 ‘‘(1) IN GENERAL.—Upon request by the Direc12 tor, an enterprise shall provide to the Director, in a 

13 form determined by the Director, data the Director 

14 may review to determine whether there exist dispari15 ties in interest rates charged on mortgages to bor16 rowers who are minorities as compared with com17 parable mortgages to borrowers of similar credit18 worthiness who are not minorities. 

19 ‘‘(2) REMEDIAL ACTIONS UPON PRELIMINARY

20 FINDING.—Upon a preliminary finding by the Direc21 tor that a pattern of disparities in interest rates with 

22 respect to any lender or lenders exists pursuant to the 

23 data provided by an enterprise in paragraph (1), the 

24 Director shall— 


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1 ‘‘(A) refer the preliminary finding to the 

2 appropriate regulatory or enforcement agency for 

3 further review; 

4 ‘‘(B) require the enterprise to submit addi5 tional data with respect to any lender or lenders, 

6 as appropriate and to the extent practicable, to 

7 the Director who shall submit any such addi8 tional data to the regulatory or enforcement 

9 agency for appropriate action; and 

10 ‘‘(C) require the enterprise to undertake re11 medial actions, as appropriate, pursuant to sec12 tion 1325(5) (12 U.S.C. 4545(5)). 

13 ‘‘(3) ANNUAL REPORT TO CONGRESS.—The Di14 rector shall submit to the Committee on Financial 

15 Services of the House of Representatives and the Com16 mittee on Banking, Housing, and Urban Affairs of 

17 the Senate a report describing the actions taken, and 

18 being taken, by the Director to carry out this sub19 section. No such report shall identify any lender or 

20 lenders who have not been found to have engaged in 

21 discriminatory lending practices pursuant to a final 

22 adjudication on the record, and after opportunity for 

23 an administrative hearing, in accordance with sub24 chapter II of chapter 5 of title 5, United States Code. 


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1 ‘‘(4) PROTECTION OF IDENTITY OF INDIVID2 UALS.—In carrying out this subsection, the Director 

3 shall ensure that no property-related or financial in4 formation that would enable a borrower to be identi5 fied shall be made public. 

6 ‘‘(c) TIMING.—The Director shall establish an annual 

7 deadline by which the Director shall establish the annual 

8 housing goals under this subpart for each year, taking into 

9 consideration the need for the enterprises to reasonably and 

10 sufficiently plan their operations and activities in advance, 

11 including operations and activities necessary to meet such 

12 annual goals. 

13 ‘‘SEC. 1332. SINGLE-FAMILY HOUSING GOALS. 

14 ‘‘(a) IN GENERAL.—The Director shall establish an15 nual goals for the purchase by each enterprise of conven16 tional, conforming, single-family, purchase money mort17 gages financing owner-occupied and rental housing for each 

18 of the following categories of families: 

19 ‘‘(1) Low-income families. 

20 ‘‘(2) Families that reside in low-income areas. 

21 ‘‘(3) Very low-income families. 

22 ‘‘(b) REFINANCE SUBGOAL.— 

23 ‘‘(1) IN GENERAL.—The Director shall establish 

24 a separate subgoal within each goal under subsection 

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1 gages for low-income families on single family hous2 ing given to pay off or prepay an existing loan se3 cured by the same property. The Director shall, for 

4 each year, determine whether each enterprise has com5 plied with the subgoal under this subsection in the 

6 same manner provided under this section for deter7 mining compliance with the housing goals. 

8 ‘‘(2) ENFORCEMENT.—For purposes of section 

9 1336, the subgoal established under paragraph (1) of 

10 this subsection shall be considered to be a housing 

11 goal established under this section. Such subgoal shall 

12 not be enforceable under any other provision of this 

13 title (including subpart C of this part) other than sec14 tion 1336 or under any provision of the Federal Na15 tional Mortgage Association Charter Act or the Fed16 eral Home Loan Mortgage Corporation Act. 

17 ‘‘(c) DETERMINATION OF COMPLIANCE.—The Director 

18 shall determine, for each year that the housing goals under 

19 this section are in effect pursuant to section 1331(a), wheth20 er each enterprise has complied with the single-family hous21 ing goals established under this section for such year. An 

22 enterprise shall be considered to be in compliance with such 

23 a goal for a year only if, for each of the types of families 

24 described in subsection (a), the percentage of the number 

25 of conventional, conforming, single-family, owner-occupied 


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1 or rental, as applicable, purchase money mortgages pur2 chased by each enterprise in such year that serve such fami3 lies, meets or exceeds the target for the year for such type 

4 of family that is established under subsection (d). 

5 ‘‘(d) ANNUAL TARGETS.— 

6 ‘‘(1) IN GENERAL.—Except as provided in para7 graph (2), for each of the types of families described 

8 in subsection (a), the target under this subsection for 

9 a year shall be the average percentage, for the three 

10 years that most recently precede such year and for 

11 which information under the Home Mortgage Disclo12 sure Act of 1975 is publicly available, of the number 

13 of conventional, conforming, single-family, owner-oc14 cupied or rental, as applicable, purchase money mort15 gages originated in such year that serves such type of 

16 family, as determined by the Director using the infor17 mation obtained and determined pursuant to para18 graphs (3) and (4). 

19 ‘‘(2) AUTHORITY TO INCREASE TARGETS.— 

20 ‘‘(A) IN GENERAL.—The Director may, for 

21 any year, establish by regulation, for any or all 

22 of the types of families described in subsection 

23 (a), percentage targets that are higher than the 

24 percentages for such year determined pursuant to 

25 paragraph (1), to reflect expected changes in 


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1 market performance related to such information 

2 under the Home Mortgage Disclosure Act of 

3 1975. 

4 ‘‘(B) FACTORS.—In establishing any targets 

5 pursuant to subparagraph (A), the Director shall 

6 consider the following factors: 

7 ‘‘(i) National housing needs. 

8 ‘‘(ii) Economic, housing, and demo9 graphic conditions. 

10 ‘‘(iii) The performance and effort of the 

11 enterprises toward achieving the housing 

12 goals under this section in previous years. 

13 ‘‘(iv) The size of the conventional mort14 gage market serving each of the types of 

15 families described in subsection (a) relative 

16 to the size of the overall conventional mort17 gage market. 

18 ‘‘(v) The ability of the enterprise to 

19 lead the industry in making mortgage cred20 it available. 

21 ‘‘(vi) The need to maintain the sound 

22 financial condition of the enterprises. 

23 ‘‘(3) HMDA INFORMATION.—The Director shall 

24 annually obtain information submitted in compliance 

25 with the Home Mortgage Disclosure Act of 1975 reVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00106 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 garding conventional, conforming, single-family, 

2 owner-occupied or rental, as applicable, purchase 

3 money mortgages originated and purchased for the 

4 previous year. 

5 ‘‘(4) CONFORMING MORTGAGES.—In determining 

6 whether a mortgage is a conforming mortgage for 

7 purposes of this paragraph, the Director shall con8 sider the original principal balance of the mortgage 

9 loan to be the principal balance as reported in the in10 formation referred to in paragraph (3), as rounded to 

11 the nearest thousand dollars. 

12 ‘‘(e) NOTICE OF DETERMINATION AND ENTERPRISE

13 COMMENT.— 

14 ‘‘(1) NOTICE.—Within 30 days of making a de15 termination under subsection (c) regarding a compli16 ance of an enterprise for a year with a housing goal 

17 established under this section and before any public 

18 disclosure thereof, the Director shall provide notice of 

19 the determination to the enterprise, which shall in20 clude an analysis and comparison, by the Director, of 

21 the performance of the enterprise for the year and the 

22 targets for the year under subsection (d). 

23 ‘‘(2) COMMENT PERIOD.—The Director shall pro24 vide each enterprise an opportunity to comment on 


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1 the determination during the 30-day period beginning 

2 upon receipt by the enterprise of the notice. 

3 ‘‘(f) USE OF BORROWER INCOME.—In monitoring the 

4 performance of each enterprise pursuant to the housing 

5 goals under this section and evaluating such performance 

6 (for purposes of section 1336), the Director shall consider 

7 a mortgagor’s income to be such income at the time of origi8 nation of the mortgage. 

9 ‘‘(g) CONSIDERATION OF UNITS IN SINGLE-FAMILY

10 RENTAL HOUSING.—In establishing any goal under this 

11 subpart, the Director may take into consideration the num12 ber of housing units financed by any mortgage on single13 family rental housing purchased by an enterprise 

14 ‘‘SEC. 1333. MULTIFAMILY SPECIAL AFFORDABLE HOUSING 

15 GOAL. 

16 ‘‘(a) ESTABLISHMENT.— 

17 ‘‘(1) IN GENERAL.—The Director shall establish, 

18 by regulation, an annual goal for the purchase by 

19 each enterprise of each of the following types of mort20 gages on multifamily housing: 

21 ‘‘(A) Mortgages that finance dwelling units 

22 for low-income families. 

23 ‘‘(B) Mortgages that finance dwelling units 

24 for very low-income families. 


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1 ‘‘(C) Mortgages that finance dwelling units 

2 assisted by the low-income housing tax credit 

3 under section 42 of the Internal Revenue Code of 

4 1986. 

5 ‘‘(2) ADDITIONAL REQUIREMENTS FOR SMALLER

6 PROJECTS.—The Director shall establish, within the 

7 goal under this section, additional requirements for 

8 the purchase by each enterprise of mortgages described 

9 in paragraph (1) for multifamily housing projects of 

10 a smaller or limited size, which may be based on the 

11 number of dwelling units in the project or the amount 

12 of the mortgage, or both, and shall include multi13 family housing projects of such smaller sizes as are 

14 typical among such projects that serve rural areas. 

15 ‘‘(3) FACTORS.—In establishing the goal under 

16 this section relating to mortgages on multifamily 

17 housing for an enterprise for a year, the Director 

18 shall consider— 

19 ‘‘(A) national multifamily mortgage credit 

20 needs; 

21 ‘‘(B) the performance and effort of the en22 terprise in making mortgage credit available for 

23 multifamily housing in previous years; 

24 ‘‘(C) the size of the multifamily mortgage 

25 market; 


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1 ‘‘(D) the ability of the enterprise to lead the 

2 industry in making mortgage credit available, 

3 especially for underserved markets, such as for 

4 small multifamily projects of 5 to 50 units, mul5 tifamily properties in need of rehabilitation, and 

6 multifamily properties located in rural areas; 

7 and 

8 ‘‘(E) the need to maintain the sound finan9 cial condition of the enterprise. 

10 ‘‘(b) UNITS FINANCED BY HOUSING FINANCE AGENCY

11 BONDS.—The Director shall give credit toward the achieve12 ment of the multifamily special affordable housing goal 

13 under this section (for purposes of section 1336) to dwelling 

14 units in multifamily housing that otherwise qualifies under 

15 such goal and that is financed by tax-exempt or taxable 

16 bonds issued by a State or local housing finance agency, 

17 but only if such bonds— 

18 ‘‘(1) are secured by a guarantee of the enterprise; 

19 or 

20 ‘‘(2) are not investment grade and are purchased 

21 by the enterprise. 

22 ‘‘(c) USE OF TENANT INCOME OR RENT.—The Director 

23 shall monitor the performance of each enterprise in meeting 

24 the goals established under this section and shall evaluate 

25 such performance (for purposes of section 1336) based on— 


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1 ‘‘(1) the income of the prospective or actual ten2 ants of the property, where such data are available; 

3 or 

4 ‘‘(2) where the data referred to in paragraph (1) 

5 are not available, rent levels affordable to low-income 

6 and very low-income families. 

7 A rent level shall be considered to be affordable for purposes 

8 of this subsection for an income category referred to in this 

9 subsection if it does not exceed 30 percent of the maximum 

10 income level of such income category, with appropriate ad11 justments for unit size as measured by the number of bed12 rooms. 

13 ‘‘(d) DETERMINATION OF COMPLIANCE.—The Director 

14 shall, for each year that the housing goal under this section 

15 is in effect pursuant to section 1331(a), determine whether 

16 each enterprise has complied with such goal and the addi17 tional requirements under subsection (a)(2). 

18 ‘‘SEC. 1334. DISCRETIONARY ADJUSTMENT OF HOUSING 

19 GOALS. 

20 ‘‘(a) AUTHORITY.—An enterprise may petition the Di21 rector in writing at any time during a year to reduce the 

22 level of any goal for such year established pursuant to this 

23 subpart. 


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1 ‘‘(b) STANDARD FOR REDUCTION.—The Director may 

2 reduce the level for a goal pursuant to such a petition only 

3 if— 

4 ‘‘(1) market and economic conditions or the fi5 nancial condition of the enterprise require such ac6 tion; or 

7 ‘‘(2) efforts to meet the goal would result in the 

8 constraint of liquidity, over-investment in certain 

9 market segments, or other consequences contrary to 

10 the intent of this subpart, or section 301(3) of the 

11 Federal National Mortgage Association Charter Act 

12 (12 U.S.C. 1716(3)) or section 301(3) of the Federal 

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

14 1451 note), as applicable. 

15 ‘‘(c) DETERMINATION.—The Director shall make a de16 termination regarding any proposed reduction within 30 

17 days of receipt of the petition regarding the reduction. The 

18 Director may extend such period for a single additional 15- 

19 day period, but only if the Director requests additional in20 formation from the enterprise. A denial by the Director to 

21 reduce the level of any goal under this section may be ap22 pealed to the United States District Court for the District 

23 of Columbia or the United States district court in the juris24 diction in which the headquarters of an enterprise is lo25 cated.’’. 


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1 (b) CONFORMING AMENDMENTS.—The Housing and 

2 Community Development Act of 1992 is amended— 

3 (1) in section 1335(a) (12 U.S.C. 4565(a)), in 

4 the matter preceding paragraph (1), by striking ‘‘low5 and moderate-income housing goal’’ and all that fol6 lows through ‘‘section 1334’’ and inserting ‘‘housing 

7 goals established under this subpart’’; and 

8 (2) in section 1336(a)(1) (12 U.S.C. 4566(a)(1)), 

9 by striking ‘‘sections 1332, 1333, and 1334,’’ and in10 serting ‘‘this subpart’’. 

11 (c) DEFINITIONS.—Section 1303 of the Housing and 

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

13 amended by the preceding provisions of this Act, is further 

14 amended— 

15 (1) in paragraph (22) (relating to the definition 

16 of ‘‘very low-income’’), by striking ‘‘60 percent’’ each 

17 place such term appears and inserting ‘‘50 percent’’; 

18 (2) by redesignating paragraphs (19) through 

19 (22) as paragraphs (23) through (26), respectively; 

20 (3) by inserting after paragraph (18) the fol21 lowing new paragraph: 

22 ‘‘(22) RURAL AREA.—The term ‘rural area’ has 

23 the meaning given such term in section 520 of the 

24 Housing Act of 1949 (42 U.S.C. 1490), except that 


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1 such term includes micropolitan areas and tribal 

2 trust lands.’’. 

3 (4) by redesignating paragraphs (13) through 

4 (18) as paragraphs (16) through (21), respectively; 

5 (5) by inserting after paragraph (12) the fol6 lowing new paragraph: 

7 ‘‘(15) LOW-INCOME AREA.—The term ‘low in8 come area’ means a census tract or block numbering 

9 area in which the median income does not exceed 80 

10 percent of the median income for the area in which 

11 such census tract or block numbering area is located, 

12 and, for the purposes of section 1332(a)(2), shall in13 clude families having incomes not greater than 100 

14 percent of the area median income who reside in mi15 nority census tracts.’’; 

16 (6) by redesignating paragraphs (11) and (12) 

17 as paragraphs (13) and (14), respectively; 

18 (7) by inserting after paragraph (10) the fol19 lowing new paragraph: 

20 ‘‘(12) EXTREMELY LOW-INCOME.—The term ‘ex21 tremely low-income’ means— 

22 ‘‘(A) in the case of owner-occupied units, 

23 income not in excess of 30 percent of the area 

24 median income; and 


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1 ‘‘(B) in the case of rental units, income not 

2 in excess of 30 percent of the area median in3 come, with adjustments for smaller and larger 

4 families, as determined by the Secretary.’’; 

5 (8) by redesignating paragraphs (7) through (10) 

6 as paragraphs (8) through (11), respectively; and 

7 (9) by inserting after paragraph (6) the fol8 lowing new paragraph: 

9 ‘‘(7) CONFORMING MORTGAGE.—The term ‘con10 forming mortgage’ means, with respect to an enter11 prise, a conventional mortgage having an original 

12 principal obligation that does not exceed the dollar 

13 limitation, in effect at the time of such origination, 

14 under, as applicable— 

15 ‘‘(A) section 302(b)(2) of the Federal Na16 tional Mortgage Association Charter Act; or 

17 ‘‘(B) section 305(a)(2) of the Federal Home 

18 Loan Mortgage Corporation Act.’’. 

19 SEC. 137. DUTY TO SERVE UNDERSERVED MARKETS. 

20 (a) ESTABLISHMENT AND EVALUATION OF PERFORM21 ANCE.—Section 1335 of the Housing and Community De22 velopment Act of 1992 (12 U.S.C. 4565) is amended— 

23 (1) in the section heading, by inserting ‘‘DUTY

24 TO SERVE UNDERSERVED MARKETS AND’’ before 

25 ‘‘OTHER’’; 


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1 (2) by striking subsection (b); 

2 (3) in subsection (a)— 

3 (A) in the matter preceding paragraph (1), 

4 by inserting ‘‘and to carry out the duty under 

5 subsection (a) of this section’’ before ‘‘, each en6 terprise shall’’; 

7 (B) in paragraph (3), by inserting ‘‘and’’ 

8 after the semicolon at the end; 

9 (C) in paragraph (4), by striking ‘‘; and’’ 

10 and inserting a period; 

11 (D) by striking paragraph (5); and 

12 (E) by redesignating such subsection as sub13 section (b); 

14 (4) by inserting before subsection (b) (as so re15 designated by paragraph (3)(E) of this subsection) the 

16 following new subsection: 

17 ‘‘(a) DUTY TO SERVE UNDERSERVED MARKETS.— 

18 ‘‘(1) DUTY.—In accordance with the purpose of 

19 the enterprises under section 301(3) of the Federal 

20 National Mortgage Association Charter Act (12 

21 U.S.C. 1716) and section 301(b)(3) of the Federal 

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

23 1451 note) to undertake activities relating to mort24 gages on housing for very low-, low-, and moderate25 income families involving a reasonable economic reVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00116 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 turn that may be less than the return earned on other 

2 activities, each enterprise shall have the duty to in3 crease the liquidity of mortgage investments and im4 prove the distribution of investment capital available 

5 for mortgage financing for underserved markets. 

6 ‘‘(2) UNDERSERVED MARKETS.—To meet its 

7 duty under paragraph (1), each enterprise shall com8 ply with the following requirements with respect to 

9 the following underserved markets: 

10 ‘‘(A) MANUFACTURED HOUSING.—The en11 terprise shall lead the industry in developing 

12 loan products and flexible underwriting guide13 lines to facilitate a secondary market for mort14 gages on manufactured homes for very low-, low15 , and moderate-income families. 

16 ‘‘(B) AFFORDABLE HOUSING PRESERVA17 TION.—The enterprise shall lead the industry in 

18 developing loan products and flexible under19 writing guidelines to facilitate a secondary mar20 ket to preserve housing affordable to very 

21 low-, low-, and moderate-income families, in22 cluding housing projects subsidized under— 

23 ‘‘(i) the project-based and tenant-based 

24 rental assistance programs under section 8 

25 of the United States Housing Act of 1937; 


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1 ‘‘(ii) the program under section 236 of 

2 the National Housing Act; 

3 ‘‘(iii) the below-market interest rate 

4 mortgage program under section 221(d)(4) 

5 of the National Housing Act; 

6 ‘‘(iv) the supportive housing for the el7 derly program under section 202 of the 

8 Housing Act of 1959; 

9 ‘‘(v) the supportive housing program 

10 for persons with disabilities under section 

11 811 of the Cranston-Gonzalez National Af12 fordable Housing Act; 

13 ‘‘(vi) the programs under title IV of the 

14 McKinney-Vento Homeless Assistance Act 

15 (42 U.S.C. 11361 et seq.), but only perma16 nent supportive housing projects subsidized 

17 under such programs; and 

18 ‘‘(vii) the rural rental housing pro19 gram under section 515 of the Housing Act 

20 of 1949. 

21 ‘‘(C) RURAL AND OTHER UNDERSERVED

22 MARKETS.—The enterprise shall lead the indus23 try in developing loan products and flexible un24 derwriting guidelines to facilitate a secondary 

25 market for mortgages on housing for very 


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1 low-, low-, and moderate-income families in 

2 rural areas, and for mortgages for housing for 

3 any other underserved market for very low-, low4 , and moderate-income families that the Sec5 retary identifies as lacking adequate credit 

6 through conventional lending sources. Such un7 derserved markets may be identified by borrower 

8 type, market segment, or geographic area.’’; and 

9 (5) by adding at the end the following new sub10 section: 

11 ‘‘(c) EVALUATION AND REPORTING OF COMPLIANCE.— 

12 ‘‘(1) IN GENERAL.—Not later than 6 months 

13 after the effective date under section 185 of the Fed14 eral Housing Finance Reform Act of 2007, the Direc15 tor shall establish a manner for evaluating whether, 

16 and the extent to which, the enterprises have complied 

17 with the duty under subsection (a) to serve under18 served markets and for rating the extent of such com19 pliance. Using such method, the Director shall, for 

20 each year, evaluate such compliance and rate the per21 formance of each enterprise as to extent of compli22 ance. The Director shall include such evaluation and 

23 rating for each enterprise for a year in the report for 

24 that year submitted pursuant to section 1319B(a). 


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1 ‘‘(2) SEPARATE EVALUATIONS.—In determining 

2 whether an enterprise has complied with the duty re3 ferred to in paragraph (1), the Director shall sepa4 rately evaluate whether the enterprise has complied 

5 with such duty with respect to each of the underserved 

6 markets identified in subsection (a), taking into con7 sideration— 

8 ‘‘(A) the development of loan products and 

9 more flexible underwriting guidelines; 

10 ‘‘(B) the extent of outreach to qualified loan 

11 sellers in each of such underserved markets; and 

12 ‘‘(C) the volume of loans purchased in each 

13 of such underserved markets. 

14 ‘‘(3) MANUFACTURED HOUSING MARKET.—In de15 termining whether an enterprise has complied with 

16 the duty under subparagraph (A) of subsection (a)(2), 

17 the Director may consider loans secured by both real 

18 and personal property.’’. 

19 (b) ENFORCEMENT.—Subsection (a) of section 1336 of 

20 the Housing and Community Development Act of 1992 (12 

21 U.S.C. 4566(a)) is amended— 

22 (1) in paragraph (1), by inserting ‘‘and with the 

23 duty under section 1335(a) of each enterprise with re24 spect to underserved markets,’’ before ‘‘as provided in 

25 this section’’; and 


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1 (2) by adding at the end of such subsection, as 

2 amended by the preceding provisions of this title, the 

3 following new paragraph: 

4 ‘‘(4) ENFORCEMENT OF DUTY TO PROVIDE MORT5 GAGE CREDIT TO UNDERSERVED MARKETS.—The duty 

6 under section 1335(a) of each enterprise to serve un7 derserved markets (as determined in accordance with 

8 section 1335(c)) shall be enforceable under this section 

9 to the same extent and under the same provisions that 

10 the housing goals established under this subpart are 

11 enforceable. Such duty shall not be enforceable under 

12 any other provision of this title (including subpart C 

13 of this part) other than this section or under any pro14 vision of the Federal National Mortgage Association 

15 Charter Act or the Federal Home Loan Mortgage Cor16 poration Act.’’. 

17 SEC. 138. MONITORING AND ENFORCING COMPLIANCE 

18 WITH HOUSING GOALS. 

19 (a) ADDITIONAL CREDIT FOR CERTAIN MORTGAGES.— 

20 Section 1336(a) of the Housing and Community Develop21 ment Act of 1992 (12 U.S.C. 4566(a)) is amended— 

22 (1) in paragraph (2), by inserting ‘‘, except as 

23 provided in paragraph (4),’’ after ‘‘which’’; and 

24 (2) by adding at the end the following new para25 graph: 


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1 ‘‘(5) ADDITIONAL CREDIT.—The Director shall 

2 assign more than 125 percent credit toward achieve3 ment, under this section, of the housing goals for 

4 mortgage purchase activities of the enterprises that 

5 comply with the requirements of such goals and sup6 port— 

7 ‘‘(A) housing that meets energy efficiency or 

8 other environmental standards that are estab9 lished by a Federal, State, or local governmental 

10 authority with respect to the geographic area 

11 where the housing is located or are otherwise 

12 widely recognized; or 

13 ‘‘(B) housing that includes a licensed 

14 childcare center. 

15 The availability of additional credit under this para16 graph shall not be used to increase any housing goal, 

17 subgoal, or target established under this subpart.’’. 

18 (b) MONITORING AND ENFORCEMENT.—Section 1336 

19 of the Housing and Community Development Act of 1992 

20 (12 U.S.C. 4566) is amended— 

21 (1) in subsection (b)— 

22 (A) in the subsection heading, by inserting 

23 ‘‘PRELIMINARY’’ before ‘‘DETERMINATION’’; 

24 (B) by striking paragraph (1) and inserting 

25 the following new paragraph: 


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1 ‘‘(1) NOTICE.—If the Director preliminarily de2 termines that an enterprise has failed, or that there 

3 is a substantial probability that an enterprise will 

4 fail, to meet any housing goal established under this 

5 subpart, the Director shall provide written notice to 

6 the enterprise of such a preliminary determination, 

7 the reasons for such determination, and the informa8 tion on which the Director based the determination.’’; 

9 (C) in paragraph (2)— 

10 (i) in subparagraph (A), by inserting 

11 ‘‘finally’’ before ‘‘determining’’; 

12 (ii) by striking subparagraphs (B) and 

13 (C) and inserting the following new sub14 paragraph: 

15 ‘‘(B) EXTENSION OR SHORTENING OF PE16 RIOD.—The Director may— 

17 ‘‘(i) extend the period under subpara18 graph (A) for good cause for not more than 

19 30 additional days; and 

20 ‘‘(ii) shorten the period under subpara21 graph (A) for good cause.’’; and 

22 (iii) by redesignating subparagraph 

23 (D) as subparagraph (C); and 

24 (D) in paragraph (3)— 


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1 (i) in subparagraph (A), by striking 

2 ‘‘determine’’ and inserting ‘‘issue a final de3 termination of’’; 

4 (ii) in subparagraph (B), by inserting 

5 ‘‘final’’ before ‘‘determinations’’; and 

6 (iii) in subparagraph (C)— 

7 (I) by striking ‘‘Committee on 

8 Banking, Finance and Urban Affairs’’ 

9 and inserting ‘‘Committee on Finan10 cial Services’’; and 

11 (II) by inserting ‘‘final’’ before 

12 ‘‘determination’’ each place such term 

13 appears; and 

14 (2) in subsection (c)— 

15 (A) by striking the subsection designation 

16 and heading and all that follows through the end 

17 of paragraph (1) and inserting the following: 

18 ‘‘(c) CEASE AND DESIST ORDERS, CIVIL MONEY PEN19 ALTIES, AND REMEDIES INCLUDING HOUSING PLANS.— 

20 ‘‘(1) REQUIREMENT.—If the Director finds, pur21 suant to subsection (b), that there is a substantial 

22 probability that an enterprise will fail, or has actu23 ally failed, to meet any housing goal under this sub24 part and that the achievement of the housing goal was 

25 or is feasible, the Director may require that the enterVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00124 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 prise submit a housing plan under this subsection. If 

2 the Director makes such a finding and the enterprise 

3 refuses to submit such a plan, submits an unaccept4 able plan, fails to comply with the plan or the Direc5 tor finds that the enterprise has failed to meet any 

6 housing goal under this subpart, in addition to re7 quiring an enterprise to submit a housing plan, the 

8 Director may issue a cease and desist order in accord9 ance with section 1341, impose civil money penalties 

10 in accordance with section 1345, or order other rem11 edies as set forth in paragraph (7) of this sub12 section.’’; 

13 (B) in paragraph (2)— 

14 (i) by striking ‘‘CONTENTS.—Each 

15 housing plan’’ and inserting ‘‘HOUSING

16 PLAN.—If the Director requires a housing 

17 plan under this section, such a plan’’; and 

18 (ii) in subparagraph (B), by inserting 

19 ‘‘and changes in its operations’’ after ‘‘im20 provements’’; 

21 (C) in paragraph (3)— 

22 (i) by inserting ‘‘comply with any re23 medial action or’’ before ‘‘submit a housing 

24 plan’’; and 


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1 (ii) by striking ‘‘under subsection 

2 (b)(3) that a housing plan is required’’; 

3 (D) in paragraph (4), by striking the first 

4 two sentences and inserting the following: ‘‘The 

5 Director shall review each submission by an en6 terprise, including a housing plan submitted 

7 under this subsection, and not later than 30 days 

8 after submission, approve or disapprove the plan 

9 or other action. The Director may extend the pe10 riod for approval or disapproval for a single ad11 ditional 30-day period if the Director determines 

12 such extension necessary.’’; and 

13 (E) by adding at the end the following new 

14 paragraph: 

15 ‘‘(7) ADDITIONAL REMEDIES FOR FAILURE TO

16 MEET GOALS.—In addition to ordering a housing 

17 plan under this section, issuing cease and desist or18 ders under section 1341, and ordering civil money 

19 penalties under section 1345, the Director may seek 

20 other actions when an enterprise fails to meet a goal, 

21 and exercise appropriate enforcement authority avail22 able to the Director under this Act to prohibit the en23 terprise from initially offering any product (as such 

24 term is defined in section 1321(f)) or engaging in any 

25 new activities, services, undertakings, and offerings 


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1 and to order the enterprise to suspend products and 

2 activities, services, undertakings, and offerings pend3 ing its achievement of the goal.’’. 

4 SEC. 139. AFFORDABLE HOUSING FUND. 

5 (a) IN GENERAL.—The Housing and Community De6 velopment Act of 1992 is amended by striking sections 1337 

7 and 1338 (12 U.S.C. 4562 note) and inserting the following 

8 new section: 

9 ‘‘SEC. 1337. AFFORDABLE HOUSING FUND. 

10 ‘‘(a) ESTABLISHMENT AND PURPOSE.—The Director, 

11 in consultation with the Secretary of Housing and Urban 

12 Development, shall establish and manage an affordable 

13 housing fund in accordance with this section, which shall 

14 be funded with amounts allocated by the enterprises under 

15 subsection (b). The purpose of the affordable housing fund 

16 shall be to provide formula grants to grantees for use— 

17 ‘‘(1) to increase homeownership for extremely 

18 low-and very low-income families; 

19 ‘‘(2) to increase investment in housing in low-in20 come areas, and areas designated as qualified census 

21 tracts or an area of chronic economic distress pursu22 ant to section 143(j) of the Internal Revenue Code of 

23 1986 (26 U.S.C. 143(j)); 


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1 ‘‘(3) to increase and preserve the supply of rental 

2 and owner-occupied housing for extremely low- and 

3 very low-income families; 

4 ‘‘(4) to increase investment in public infrastruc5 ture development in connection with housing assisted 

6 under this section; and 

7 ‘‘(5) to leverage investments from other sources 

8 in affordable housing and in public infrastructure de9 velopment in connection with housing assisted under 

10 this section. 

11 ‘‘(b) ALLOCATION OF AMOUNTS BY ENTERPRISES.— 

12 ‘‘(1) IN GENERAL.—In accordance with regula13 tions issued by the Director under subsection (m) and 

14 subject to paragraph (2) of this subsection and sub15 section (i)(5), each enterprise shall allocate to the af16 fordable housing fund established under subsection 

17 (a), in each of the years 2007 through 2011, an 

18 amount equal to 1.2 basis points for each dollar of the 

19 average total mortgage portfolio of the enterprise dur20 ing the preceding year. 

21 ‘‘(2) SUSPENSION OF CONTRIBUTIONS.—The Di22 rector shall temporarily suspend the allocation under 

23 paragraph (1) by an enterprise to the affordable hous24 ing fund upon a finding by the Director that such al25 locations— 


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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 enter4 prise to be classified as undercapitalized; or 

5 ‘‘(C) are preventing, or would prevent, the 

6 enterprise from successfully completing a capital 

7 restoration plan under section 1369C. 

8 ‘‘(3) 5-YEAR SUNSET AND REPORT.— 

9 ‘‘(A) SUNSET.—The enterprises shall not be 

10 required to make allocations to the affordable 

11 housing fund in 2012 or in any year thereafter. 

12 ‘‘(B) REPORT ON PROGRAM CONTINU13 ANCE.—Not later than June 30, 2011, the Direc14 tor shall submit to the Committee on Financial 

15 Services of the House of Representatives and the 

16 Committee on Banking, Housing, and Urban Af17 fairs of the Senate a report making recommenda18 tions on whether the program under this section, 

19 including the requirement for the enterprises to 

20 make allocations to the affordable housing fund, 

21 should be extended and on any modifications for 

22 the program. 

23 ‘‘(c) AFFORDABLE HOUSING NEEDS FORMULAS.— 

24 ‘‘(1) ALLOCATION FOR 2007.— 


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1 ‘‘(A) ALLOCATION PERCENTAGES FOR LOU2 ISIANA AND MISSISSIPPI.—For purposes of sub3 section (d)(1)(A), the allocation percentages for 

4 2007 for the grantees under this section for such 

5 year shall be as follows: 

6 ‘‘(i) The allocation percentage for the 

7 Louisiana Housing Finance Agency shall be 

8 75 percent. 

9 ‘‘(ii) The allocation percentage for the 

10 Mississippi Development Authority shall be 

11 25 percent. 

12 ‘‘(B) USE IN DISASTER AREAS.—Affordable 

13 housing grant amounts for 2007 shall be used 

14 only as provided in subsection (g) only for such 

15 eligible activities in areas that were subject to a 

16 declaration by the President of a major disaster 

17 or emergency under the Robert T. Stafford Dis18 aster Relief and Emergency Assistance Act (42 

19 U.S.C. 5121 et seq.) in connection with Hurri20 cane Katrina or Rita of 2005. 

21 ‘‘(2) ALLOCATION FORMULA FOR OTHER

22 YEARS.—The Secretary of Housing and Urban Devel23 opment shall, by regulation, establish a formula to al24 locate, among the States (as such term is defined in 

25 section 1303) and federally recognized Indian tribes, 


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1 the amounts provided by the enterprises in each year 

2 referred to subsection (b)(1), other than 2007, to the 

3 affordable housing fund established under this section. 

4 The formula shall be based on the following factors, 

5 with respect to each State and tribe: 

6 ‘‘(A) The ratio of the population of the 

7 State or federally recognized Indian tribe to the 

8 aggregate population of all the States and tribes. 

9 ‘‘(B) The percentage of families in the State 

10 or federally recognized Indian tribe that pay 

11 more than 50 percent of their annual income for 

12 housing costs. 

13 ‘‘(C) The percentage of persons in the State 

14 or federally recognized Indian tribe that are 

15 members of extremely low- or very low-income 

16 families. 

17 ‘‘(D) The cost of developing or carrying out 

18 rehabilitation of housing in the State or for the 

19 federally recognized Indian tribe. 

20 ‘‘(E) The percentage of families in the State 

21 or federally recognized Indian tribe that live in 

22 substandard housing. 

23 ‘‘(F) The percentage of housing stock in the 

24 State or for the federally recognized Indian tribe 

25 that is extremely old housing. 


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1 ‘‘(G) Any other factors that the Secretary 

2 determines to be appropriate. 

3 ‘‘(3) FAILURE TO ESTABLISH.—If, in any year 

4 referred to in subsection (b)(1), other than 2007, the 

5 regulations establishing the formula required under 

6 paragraph (2) of this subsection have not been issued 

7 by the date that the Director determines the amounts 

8 described in subsection (d)(1) to be available for af9 fordable housing fund grants in such year, for pur10 poses of such year any amounts for a State (as such 

11 term is defined in section 1303 of this Act) that 

12 would otherwise be determined under subsection (d) 

13 by applying the formula established pursuant to 

14 paragraph (2) of this subsection shall be determined 

15 instead by applying, for such State, the percentage 

16 that is equal to the percentage of the total amounts 

17 made available for such year for allocation under sub18 title A of title II of the Cranston-Gonzalez National 

19 Affordable Housing Act (42 U.S.C. 12741 et seq.) that 

20 are allocated in such year, pursuant to such subtitle, 

21 to such State (including any insular area or unit of 

22 general local government, as such terms are defined in 

23 section 104 of such Act (42 U.S.C. 12704), that is 

24 treated as a State under section 1303 of this Act) and 


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1 to participating jurisdictions and other eligible enti2 ties within such State. 

3 ‘‘(d) ALLOCATION OF FORMULA AMOUNT; GRANTS.— 

4 ‘‘(1) FORMULA AMOUNT.—For each year referred 

5 to in subsection (b)(1), the Director shall determine 

6 the formula amount under this section for each grant7 ee, which shall be the amount determined for such 

8 grantee— 

9 ‘‘(A) for 2007, by applying the allocation 

10 percentages under subparagraph (A) of sub11 section (c)(1) to the sum of the total amounts al12 located by the enterprises to the affordable hous13 ing fund for such year, less any amounts used 

14 pursuant to subsection (i)(1); and 

15 ‘‘(B) for any other year referred to in sub16 section (b)(1) (other than 2007), by applying the 

17 formula established pursuant to paragraph (2) of 

18 subsection (c) to the sum of the total amounts al19 located by the enterprises to the affordable hous20 ing fund for such year and any recaptured 

21 amounts available pursuant to subsection (i)(4), 

22 less any amounts used pursuant to subsection 

23 (i)(1). 

24 ‘‘(2) NOTICE.—In each year referred to in sub25 section (b)(1), not later than 60 days after the date 


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1 that the Director determines the amounts described in 

2 paragraph (1) to be available for affordable housing 

3 fund grants to grantees in such year, the Director 

4 shall cause to be published in the Federal Register a 

5 notice that such amounts shall be so available. 

6 ‘‘(3) GRANT AMOUNT.— 

7 ‘‘(A) IN GENERAL.—For each year referred 

8 to in subsection (b)(1), the Director shall make 

9 a grant from amounts in the affordable housing 

10 fund to each grantee in an amount that is, ex11 cept as provided in subparagraph (B), equal to 

12 the formula amount under this section for the 

13 grantee. A grantee may designate a State hous14 ing finance agency, housing and community de15 velopment entity, tribally designated housing en16 tity (as such term is defined in section 4 of the 

17 Native American Housing Assistance and Self18 Determination Act of 1997 (25 U.S.C. 4103)) or 

19 other qualified instrumentality of the grantee to 

20 receive such grant amounts. 

21 ‘‘(B) REDUCTION FOR FAILURE TO OBTAIN

22 RETURN OF MISUSED FUNDS.—If in any year a 

23 grantee fails to obtain reimbursement or return 

24 of the full amount required under subsection 


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1 (j)(1)(B) to be reimbursed or returned to the 

2 grantee during such year— 

3 ‘‘(i) except as provided in clause (ii)— 

4 ‘‘(I) the amount of the grant for 

5 the grantee for the succeeding year, as 

6 determined pursuant to subparagraph 

7 (A), shall be reduced by the amount by 

8 which such amounts required to be re9 imbursed or returned exceed the 

10 amount actually reimbursed or re11 turned; and 

12 ‘‘(II) the amount of the grant for 

13 the succeeding year for each other 

14 grantee whose grant is not reduced 

15 pursuant to subclause (I) shall be in16 creased by the amount determined by 

17 applying the formula established pur18 suant to subsection (c)(2) to the total 

19 amount of all reductions for all grant20 ees for such year pursuant to subclause 

21 (I); or 

22 ‘‘(ii) in any case in which such failure 

23 to obtain reimbursement or return occurs 

24 during a year immediately preceding a 

25 year in which grants under this subsection 


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1 will not be made, the grantee shall pay to 

2 the Director for reallocation among the 

3 other grantees an amount equal to the 

4 amount of the reduction for the grantee that 

5 would otherwise apply under clause (i)(I). 

6 ‘‘(e) GRANTEE ALLOCATION PLANS.— 

7 ‘‘(1) IN GENERAL.—For each year that a grantee 

8 receives affordable housing fund grant amounts, the 

9 grantee shall establish an allocation plan in accord10 ance with this subsection, which shall be a plan for 

11 the distribution of such grant amounts of the grantee 

12 for such year that— 

13 ‘‘(A) is based on priority housing needs, as 

14 determined by the grantee in accordance with the 

15 regulations established under subsection 

16 (m)(2)(C); 

17 ‘‘(B) complies with subsection (f); and 

18 ‘‘(C) includes performance goals, bench19 marks, and timetables for the grantee for the pro20 duction, preservation, and rehabilitation of af21 fordable rental and homeownership housing with 

22 such grant amounts that comply with the re23 quirements established by the Director pursuant 

24 to subsection (m)(2)(F). 


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1 ‘‘(2) ESTABLISHMENT.—In establishing an allo2 cation plan, a grantee shall notify the public of the 

3 establishment of the plan, provide an opportunity for 

4 public comments regarding the plan, consider any 

5 public comments received, and make the completed 

6 plan available to the public. 

7 ‘‘(3) CONTENTS.—An allocation plan of a grant8 ee shall set forth the requirements for eligible recipi9 ents under subsection (h) to apply to the grantee to 

10 receive assistance from affordable housing fund grant 

11 amounts, including a requirement that each such ap12 plication include— 

13 ‘‘(A) a description of the eligible activities 

14 to be conducted using such assistance; and 

15 ‘‘(B) a certification by the eligible recipient 

16 applying for such assistance that any housing 

17 units assisted with such assistance will comply 

18 with the requirements under this section. 

19 ‘‘(f) SELECTION OF ACTIVITIES FUNDED USING AF20 FORDABLE HOUSING FUND GRANT AMOUNTS.—Affordable 

21 housing fund grant amounts of a grantee may be used, or 

22 committed for use, only for activities that— 

23 ‘‘(1) are eligible under subsection (g) for such 

24 use; 


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1 ‘‘(2) comply with the applicable allocation plan 

2 under subsection (e) of the grantee; and 

3 ‘‘(3) are selected for funding by the grantee in 

4 accordance with the process and criteria for such se5 lection established pursuant to subsection (m)(2)(C). 

6 ‘‘(g) ELIGIBLE ACTIVITIES.—Affordable housing fund 

7 grant amounts of a grantee shall be eligible for use, or for 

8 commitment for use, only for assistance for— 

9 ‘‘(1) the production, preservation, and rehabili10 tation of rental housing, including housing under the 

11 programs identified in section 1335(a)(2)(B), except 

12 that such grant amounts may be used for the benefit 

13 only of extremely low- and very low-income families; 

14 ‘‘(2) the production, preservation, and rehabili15 tation of housing for homeownership, including such 

16 forms as downpayment assistance, closing cost assist17 ance, and assistance for interest-rate buy-downs, 

18 that— 

19 ‘‘(A) is available for purchase only for use 

20 as a principal residence by families that qualify 

21 both as— 

22 ‘‘(i) extremely low- and very-low in23 come families at the times described in sub24 paragraphs (A) through (C) of section 

25 215(b)(2) of the Cranston-Gonzalez National 


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1 Affordable Housing Act (42 U.S.C. 

2 12745(b)(2)); and 

3 ‘‘(ii) first-time homebuyers, as such 

4 term is defined in section 104 of the Cran5 ston-Gonzalez National Affordable Housing 

6 Act (42 U.S.C. 12704), except that any ref7 erence in such section to assistance under 

8 title II of such Act shall for purposes of this 

9 section be considered to refer to assistance 

10 from affordable housing fund grant 

11 amounts; 

12 ‘‘(B) has an initial purchase price that 

13 meets the requirements of section 215(b)(1) of the 

14 Cranston-Gonzalez National Affordable Housing 

15 Act; 

16 ‘‘(C) is subject to the same resale restric17 tions established under section 215(b)(3) of the 

18 Cranston-Gonzalez National Affordable Housing 

19 Act and applicable to the participating jurisdic20 tion that is the State in which such housing is 

21 located; and 

22 ‘‘(D) is made available for purchase only 

23 by, or in the case of assistance under this para24 graph, is made available only to, homebuyers 

25 who have, before purchase, completed a program 


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1 of counseling with respect to the responsibilities 

2 and financial management involved in home3 ownership that is approved by the Director; and 

4 ‘‘(3) public infrastructure development activities 

5 in connection with housing activities funded under 

6 paragraph (1) or (2). 

7 ‘‘(h) ELIGIBLE RECIPIENTS.—Affordable housing fund 

8 grant amounts of a grantee may be provided only to a re9 cipient that is an organization, agency, or other entity (in10 cluding a for-profit entity, a nonprofit entity, and a faith11 based organization) that— 

12 ‘‘(1) has demonstrated experience and capacity 

13 to conduct an eligible activity under (g), as evidenced 

14 by its ability to— 

15 ‘‘(A) own, construct or rehabilitate, manage, 

16 and operate an affordable multifamily rental 

17 housing development; 

18 ‘‘(B) design, construct or rehabilitate, and 

19 market affordable housing for homeownership; 

20 ‘‘(C) provide forms of assistance, such as 

21 downpayments, closing costs, or interest-rate 

22 buy-downs, for purchasers; or 

23 ‘‘(D) construct related public infrastructure 

24 development activities in connection with such 

25 housing activities; 


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1 ‘‘(2) demonstrates the ability and financial ca2 pacity to undertake, comply, and manage the eligible 

3 activity; 

4 ‘‘(3) demonstrates its familiarly with the re5 quirements of any other Federal, State or local hous6 ing program that will be used in conjunction with 

7 such grant amounts to ensure compliance with all ap8 plicable requirements and regulations of such pro9 grams; and 

10 ‘‘(4) makes such assurances to the grantee as the 

11 Director shall, by regulation, require to ensure that 

12 the recipient will comply with the requirements of 

13 this section during the entire period that begins upon 

14 selection of the recipient to receive such grant 

15 amounts and ending upon the conclusion of all activi16 ties under subsection (g) that are engaged in by the 

17 recipient and funded with such grant amounts. 

18 ‘‘(i) LIMITATIONS ON USE.— 

19 ‘‘(1) REQUIRED AMOUNT FOR REFCORP.—Of the 

20 aggregate amount allocated pursuant to subsection (b) 

21 in each year to the affordable housing fund, 25 per22 cent shall be used as provided in section 21B(f)(2)(E) 

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

24 1441b(f)(2)(E)). 


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1 ‘‘(2) REQUIRED AMOUNT FOR HOMEOWNERSHIP

2 ACTIVITIES.—Of the aggregate amount of affordable 

3 housing fund grant amounts provided in each year to 

4 a grantee, not less than 10 percent shall be used for 

5 activities under paragraph (2) of subsection (g). 

6 ‘‘(3) MAXIMUM AMOUNT FOR PUBLIC INFRA7 STRUCTURE DEVELOPMENT ACTIVITIES IN CONNEC8 TION WITH AFFORDABLE HOUSING ACTIVITIES.—Of 

9 the aggregate amount of affordable housing fund 

10 grant amounts provided in each year to a grantee, 

11 not more than 12.5 percent may be used for activities 

12 under paragraph (3) of subsection (g). 

13 ‘‘(4) DEADLINE FOR COMMITMENT OR USE.—Any 

14 affordable housing fund grant amounts of a grantee 

15 shall be used or committed for use within two years 

16 of the date of that such grant amounts are made 

17 available to the grantee. The Director shall recapture 

18 into the affordable housing fund any such amounts 

19 not so used or committed for use and allocate such 

20 amounts under subsection (d)(1) in the first year 

21 after such recapture. 

22 ‘‘(5) USE OF RETURNS.—The Director shall, by 

23 regulation provide that any return on a loan or other 

24 investment of any affordable housing fund grant 

25 amounts of a grantee shall be treated, for purposes of 


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1 availability to and use by the grantee, as affordable 

2 housing fund grant amounts. 

3 ‘‘(6) PROHIBITED USES.—The Director shall— 

4 ‘‘(A) by regulation, set forth prohibited uses 

5 of affordable housing fund grant amounts, which 

6 shall include use for— 

7 ‘‘(i) political activities; 

8 ‘‘(ii) advocacy; 

9 ‘‘(iii) lobbying, whether directly or 

10 through other parties; 

11 ‘‘(iv) counseling services; 

12 ‘‘(v) travel expenses; and 

13 ‘‘(vi) preparing or providing advice on 

14 tax returns; 

15 ‘‘(B) by regulation, provide that, except as 

16 provided in subparagraph (C), affordable hous17 ing fund grant amounts of a grantee may not be 

18 used for administrative, outreach, or other costs 

19 of— 

20 ‘‘(i) the grantee; or 

21 ‘‘(ii) any recipient of such grant 

22 amounts; and 

23 ‘‘(C) by regulation, limit the amount of any 

24 affordable housing fund grant amounts of the 

25 grantee for a year that may be used for adminisVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00143 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 trative costs of the grantee of carrying out the 

2 program required under this section to a per3 centage of such grant amounts of the grantee for 

4 such year, which may not exceed 10 percent. 

5 ‘‘(7) PROHIBITION OF CONSIDERATION OF USE

6 FOR MEETING HOUSING GOALS OR DUTY TO SERVE.— 

7 In determining compliance with the housing goals 

8 under this subpart and the duty to serve underserved 

9 markets under section 1335, the Director may not 

10 consider any affordable housing fund grant amounts 

11 used under this section for eligible activities under 

12 subsection (g). The Director shall give credit toward 

13 the achievement of such housing goals and such duty 

14 to serve underserved markets to purchases by the en15 terprises of mortgages for housing that receives fund16 ing from affordable housing fund grant amounts, but 

17 only to the extent that such purchases by the enter18 prises are funded other than with such grant 

19 amounts. 

20 ‘‘(j) ACCOUNTABILITY OF RECIPIENTS AND GRANT21 EES.— 

22 ‘‘(1) RECIPIENTS.— 

23 ‘‘(A) TRACKING OF FUNDS.—The Director 

24 shall— 


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1 ‘‘(i) require each grantee to develop 

2 and maintain a system to ensure that each 

3 recipient of assistance from affordable hous4 ing fund grant amounts of the grantee uses 

5 such amounts in accordance with this sec6 tion, the regulations issued under this sec7 tion, and any requirements or conditions 

8 under which such amounts were provided; 

9 and— 

10 ‘‘(ii) establish minimum requirements 

11 for agreements, between the grantee and re12 cipients, regarding assistance from the af13 fordable housing fund grant amounts of the 

14 grantee, which shall include— 

15 ‘‘(I) appropriate continuing fi16 nancial and project reporting, record 

17 retention, and audit requirements for 

18 the duration of the grant to the recipi19 ent to ensure compliance with the limi20 tations and requirements of this section 

21 and the regulations under this section; 

22 and 

23 ‘‘(II) any other requirements that 

24 the Director determines are necessary 


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1 to ensure appropriate grant adminis2 tration and compliance. 

3 ‘‘(B) MISUSE OF FUNDS.— 

4 ‘‘(i) REIMBURSEMENT REQUIRE5 MENT.—If any recipient of assistance from 

6 affordable housing fund grant amounts of a 

7 grantee is determined, in accordance with 

8 clause (ii), to have used any such amounts 

9 in a manner that is materially in violation 

10 of this section, the regulations issued under 

11 this section, or any requirements or condi12 tions under which such amounts were pro13 vided, the grantee shall require that, within 

14 12 months after the determination of such 

15 misuse, the recipient shall reimburse the 

16 grantee for such misused amounts and re17 turn to the grantee any amounts from the 

18 affordable housing fund grant amounts of 

19 the grantee that remain unused or uncom20 mitted for use. The remedies under this 

21 clause are in addition to any other remedies 

22 that may be available under law. 

23 ‘‘(ii) DETERMINATION.—A determina24 tion is made in accordance with this clause 

25 if the determination is— 


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1 ‘‘(I) made by the Director; or 

2 ‘‘(II)(aa) made by the grantee; 

3 ‘‘(bb) the grantee provides notifi4 cation of the determination to the Di5 rector for review, in the discretion of 

6 the Director, of the determination; and 

7 ‘‘(cc) the Director does not subse8 quently reverse the determination. 

9 ‘‘(2) GRANTEES.— 

10 ‘‘(A) REPORT.— 

11 ‘‘(i) IN GENERAL.—The Director shall 

12 require each grantee receiving affordable 

13 housing fund grant amounts for a year to 

14 submit a report, for such year, to the Direc15 tor that— 

16 ‘‘(I) describes the activities funded 

17 under this section during such year 

18 with the affordable housing fund grant 

19 amounts of the grantee; and 

20 ‘‘(II) the manner in which the 

21 grantee complied during such year 

22 with the allocation plan established 

23 pursuant to subsection (e) for the 

24 grantee. 


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1 ‘‘(ii) PUBLIC AVAILABILITY.—The Di2 rector shall make such reports pursuant to 

3 this subparagraph publicly available. 

4 ‘‘(B) MISUSE OF FUNDS.—If the Director 

5 determines, after reasonable notice and oppor6 tunity for hearing, that a grantee has failed to 

7 comply substantially with any provision of this 

8 section and until the Director is satisfied that 

9 there is no longer any such failure to comply, the 

10 Director shall— 

11 ‘‘(i) reduce the amount of assistance 

12 under this section to the grantee by an 

13 amount equal to the amount affordable 

14 housing fund grant amounts which were not 

15 used in accordance with this section; 

16 ‘‘(ii) require the grantee to repay the 

17 Director an amount equal to the amount of 

18 the amount affordable housing fund grant 

19 amounts which were not used in accordance 

20 with this section; 

21 ‘‘(iii) limit the availability of assist22 ance under this section to the grantee to ac23 tivities or recipients not affected by such 

24 failure to comply; or 


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1 ‘‘(iv) terminate any assistance under 

2 this section to the grantee. 

3 ‘‘(k) CAPITAL REQUIREMENTS.—The utilization or 

4 commitment of amounts from the affordable housing fund 

5 shall not be subject to the risk-based capital requirements 

6 established pursuant to section 1361(a). 

7 ‘‘(l) DEFINITIONS.—For purposes of this section, the 

8 following definitions shall apply: 

9 ‘‘(1) AFFORDABLE HOUSING FUND GRANT

10 AMOUNTS.—The term ‘affordable housing fund grant 

11 amounts’ means amounts from the affordable housing 

12 fund established under subsection (a) that are pro13 vided to a grantee pursuant to subsection (d)(3). 

14 ‘‘(2) GRANTEE.—The term ‘grantee’ means— 

15 ‘‘(A) with respect to 2007, the Louisiana 

16 Housing Finance Agency and the Mississippi 

17 Development Authority; and 

18 ‘‘(B) with respect to the years referred to in 

19 subsection (b)(1), other than 2007, each State (as 

20 such term is defined in section 1303) and each 

21 federally recognized Indian tribe. 

22 ‘‘(3) RECIPIENT.—The term ‘recipient’ means an 

23 entity meeting the requirements under subsection (h) 

24 that receives assistance from a grantee from affordable 

25 housing fund grant amounts of the grantee. 


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1 ‘‘(4) TOTAL MORTGAGE PORTFOLIO.—The term 

2 ‘total mortgage portfolio’ means, with respect to a 

3 year, the sum, for all mortgages outstanding during 

4 that year in any form, including whole loans, mort5 gage-backed securities, participation certificates, or 

6 other structured securities backed by mortgages, of the 

7 dollar amount of the unpaid outstanding principal 

8 balances under such mortgages. Such term includes 

9 all such mortgages or securitized obligations, whether 

10 retained in portfolio, or sold in any form. The Direc11 tor is authorized to promulgate rules further defining 

12 such term as necessary to implement this section and 

13 to address market developments. 

14 ‘‘(5) VERY-LOW INCOME FAMILY.—The term ‘very 

15 low-income family’ has the meaning given such term 

16 in section 1303, except that such term includes any 

17 family that resides in a rural area that has an in18 come that does not exceed the poverty line (as such 

19 term is defined in section 673(2) of the Omnibus 

20 Budget Reconciliation Act of 1981 (42 U.S.C. 

21 9902(2)), including any revision required by such sec22 tion) applicable to a family of the size involved. 

23 ‘‘(m) REGULATIONS.— 


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1 ‘‘(1) IN GENERAL.—The Director, in consultation 

2 with the Secretary of Housing and Urban Develop3 ment, shall issue regulations to carry out this section. 

4 ‘‘(2) REQUIRED CONTENTS.—The regulations 

5 issued under this subsection shall include— 

6 ‘‘(A) a requirement that the Director ensure 

7 that the program of each grantee for use of af8 fordable housing fund grant amounts of the 

9 grantee is audited not less than annually to en10 sure compliance with this section; 

11 ‘‘(B) authority for the Director to audit, 

12 provide for an audit, or otherwise verify a grant13 ee’s activities, to ensure compliance with this sec14 tion; 

15 ‘‘(C) requirements for a process for applica16 tion to, and selection by, each grantee for activi17 ties meeting the grantee’s priority housing needs 

18 to be funded with affordable housing fund grant 

19 amounts of the grantee, which shall provide for 

20 priority in funding to be based upon— 

21 ‘‘(i) greatest impact; 

22 ‘‘(ii) geographic diversity; 

23 ‘‘(iii) ability to obligate amounts and 

24 undertake activities so funded in a timely 

25 manner; 


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1 ‘‘(iv) in the case of rental housing 

2 projects under subsection (g)(1), the extent 

3 to which rents for units in the project fund4 ed are affordable, especially for extremely 

5 low-income families; 

6 ‘‘(v) in the case of rental housing 

7 projects under subsection (g)(1), the extent 

8 of the duration for which such rents will re9 main affordable; 

10 ‘‘(vi) the extent to which the applica11 tion makes use of other funding sources; and 

12 ‘‘(vii) the merits of an applicant’s pro13 posed eligible activity; 

14 ‘‘(D) requirements to ensure that amounts 

15 provided to a grantee from the affordable housing 

16 fund that are used for rental housing under sub17 section (g)(1) are used only for the benefit of ex18 tremely low- and very-low income families; 

19 ‘‘(E) limitations on public infrastructure 

20 development activities that are eligible pursuant 

21 to subsection (g)(3) for funding with affordable 

22 housing fund grant amounts and requirements 

23 for the connection between such activities and 

24 housing activities funded under paragraph (1) or 

25 (2) of subsection (g); and 


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1 ‘‘(F) requirements and standards for estab2 lishment, by grantees (including the grantees for 

3 2007 pursuant to subsection (l)(2)(A)), of per4 formance goals, benchmarks, and timetables for 

5 the production, preservation, and rehabilitation 

6 of affordable rental and homeownership housing 

7 with affordable housing fund grant amounts. 

8 ‘‘(n) ENFORCEMENT OF REQUIREMENTS ON ENTER9 PRISE.—Compliance by the enterprises with the require10 ments under this section shall be enforceable under subpart 

11 C. Any reference in such subpart to this part or to an order, 

12 rule, or regulation under this part specifically includes this 

13 section and any order, rule, or regulation under this sec14 tion. 

15 ‘‘(o) AFFORDABLE HOUSING TRUST FUND.—If, after 

16 the enactment of this Act, in any year, there is enacted any 

17 provision of Federal law establishing an affordable housing 

18 trust fund other than under this title for use only for grants 

19 to provide affordable rental housing and affordable home20 ownership opportunities, and the subsequent year is a year 

21 referred to in subsection (b)(1), the Director shall in such 

22 subsequent year and any remaining years referred to in 

23 subsection (b)(1) transfer to such affordable housing trust 

24 fund the aggregate amount allocated pursuant to subsection 

25 (b) in such year to the affordable housing fund under this 


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1 section, less any amounts used pursuant to subsection 

2 (i)(1). For such subsequent and remaining years, the provi3 sions of subsections (c) and (d) shall not apply. Nothing 

4 in this subsection shall be construed to alter the terms and 

5 conditions of the affordable housing fund under this section 

6 or to extend the life of such fund.’’. 

7 (b) TIMELY ESTABLISHMENT OF AFFORDABLE HOUS8 ING NEEDS FORMULA.— 

9 (1) IN GENERAL.—The Secretary of Housing and 

10 Urban Development shall, not later than the effective 

11 date under section 185 of this Act, issue the regula12 tions establishing the affordable housing needs for13 mulas in accordance with the provisions of section 

14 1337(c)(2) of the Housing and Community Develop15 ment Act of 1992, as such section is amended by sub16 section (a) of this section. 

17 (2) EFFECTIVE DATE.—This subsection shall take 

18 effect on the date of the enactment of this Act. 

19 (c) REFCORP PAYMENTS.—Section 21B(f)(2) of the 

20 Federal Home Loan Bank Act (12 U.S.C. 1441b(f)(2)) is 

21 amended— 

22 (1) in subparagraph (E), by striking ‘‘and (D)’’ 

23 and inserting ‘‘(D), and (E)’’; 

24 (2) by redesignating subparagraph (E) as sub25 paragraph (F); and 


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1 (3) by inserting after subparagraph (D) the fol2 lowing new subparagraph: 

3 ‘‘(E) PAYMENTS BY FANNIE MAE AND

4 FREDDIE MAC.—To the extent that the amounts 

5 available pursuant to subparagraphs (A), (B), 

6 (C), and (D) are insufficient to cover the amount 

7 of interest payments, each enterprise (as such 

8 term is defined in section 1303 of the Housing 

9 and Community Development Act of 1992 (42 

10 U.S.C. 4502)) shall transfer to the Funding Cor11 poration in each calendar year the amounts allo12 cated for use under this subparagraph pursuant 

13 to section 1337(i)(1) of such Act.’’. 

14 (d) GAO REPORT.—The Comptroller General shall 

15 conduct a study to determine the effects that the affordable 

16 housing fund established under section 1337 of the Housing 

17 and Community Development Act of 1992, as added by the 

18 amendment made by subsection (a) of this section, will have 

19 on the availability and affordability of credit for home20 buyers, including the effects on such credit of the require21 ment under such section 1337(b) that the Federal National 

22 Mortgage Association and Federal Home Loan Mortgage 

23 Corporation make allocations of amounts to such fund 

24 based on the average total mortgage portfolios, and the ex25 tent to which the costs of such allocation requirement will 


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1 be borne by such entities or will be passed on to homebuyers. 

2 Not later than the expiration of the 12-month period begin3 ning on the date of the enactment of this Act, the Comp4 troller General shall submit a report to the Congress setting 

5 forth the results and conclusions of such study. This sub6 section shall take effect on the date of the enactment of this 

7 Act. 

8 SEC. 140. CONSISTENCY WITH MISSION. 

9 Subpart B of part 2 of subtitle A of title XIII of the 

10 Housing and Community Development Act of 1992 (12 

11 U.S.C. 4561 et seq.) is amended by adding after section 

12 1337, as added by section 139 of this Act, the following new 

13 section: 

14 ‘‘SEC. 1338. CONSISTENCY WITH MISSION. 

15 ‘‘This subpart may not be construed to authorize an 

16 enterprise to engage in any program or activity that con17 travenes or is inconsistent with the Federal National Mort18 gage Association Charter Act or the Federal Home Loan 

19 Mortgage Corporation Act.’’. 

20 SEC. 141. ENFORCEMENT. 

21 (a) CEASE-AND-DESIST PROCEEDINGS.—Section 1341 

22 of the Housing and Community Development Act of 1992 

23 (12 U.S.C. 4581) is amended— 

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

25 following new subsection: 


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1 ‘‘(a) GROUNDS FOR ISSUANCE.—The Director may 

2 issue and serve a notice of charges under this section upon 

3 an enterprise if the Director determines— 

4 ‘‘(1) the enterprise has failed to meet any hous5 ing goal established under subpart B, following a 

6 written notice and determination of such failure in 

7 accordance with section 1336; 

8 ‘‘(2) the enterprise has failed to submit a report 

9 under section 1314, following a notice of such failure, 

10 an opportunity for comment by the enterprise, and a 

11 final determination by the Director; 

12 ‘‘(3) the enterprise has failed to submit the infor13 mation required under subsection (m) or (n) of sec14 tion 309 of the Federal National Mortgage Association 

15 Charter Act, or subsection (e) or (f) of section 307 of 

16 the Federal Home Loan Mortgage Corporation Act; 

17 ‘‘(4) the enterprise has violated any provision of 

18 this part or any order, rule or regulation under this 

19 part; 

20 ‘‘(5) the enterprise has failed to submit a hous21 ing plan that complies with section 1336(c) within 

22 the applicable period; or 

23 ‘‘(6) the enterprise has failed to comply with a 

24 housing plan under section 1336(c).’’; 


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1 (2) in subsection (b)(2), by striking ‘‘requiring 

2 the enterprise to’’ and all that follows through the end 

3 of the paragraph and inserting the following: ‘‘requir4 ing the enterprise to— 

5 ‘‘(A) comply with the goal or goals; 

6 ‘‘(B) submit a report under section 1314; 

7 ‘‘(C) comply with any provision this part 

8 or any order, rule or regulation under such part; 

9 ‘‘(D) submit a housing plan in compliance 

10 with section 1336(c); 

11 ‘‘(E) comply with a housing plan submitted 

12 under section 1336(c); or 

13 ‘‘(F) provide the information required 

14 under subsection (m) or (n) of section 309 of the 

15 Federal National Mortgage Association Charter 

16 Act or subsection (e) or (f) of section 307 of the 

17 Federal Home Loan Mortgage Corporation Act, 

18 as applicable.’’; 

19 (3) in subsection (c), by inserting ‘‘date of the’’ 

20 before ‘‘service of the order’’; and 

21 (4) by striking subsection (d). 

22 (b) AUTHORITY OF DIRECTOR TO ENFORCE NOTICES

23 AND ORDERS.—Section 1344 of the Housing and Commu24 nity Development Act of 1992 (12 U.S.C. 4584) is amended 


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1 by striking subsection (a) and inserting the following new 

2 subsection: 

3 ‘‘(a) ENFORCEMENT.—The Director may, in the dis4 cretion of the Director, apply to the United States District 

5 Court for the District of Columbia, or the United States 

6 district court within the jurisdiction of which the head7 quarters of the enterprise is located, for the enforcement of 

8 any effective and outstanding notice or order issued under 

9 section 1341 or 1345, or request that the Attorney General 

10 of the United States bring such an action. Such court shall 

11 have jurisdiction and power to order and require compli12 ance with such notice or order.’’. 

13 (c) CIVIL MONEY PENALTIES.—Section 1345 of the 

14 Housing and Community Development Act of 1992 (12 

15 U.S.C. 4585) is amended— 

16 (1) by striking subsections (a) and (b) and in17 serting the following new subsections: 

18 ‘‘(a) AUTHORITY.—The Director may impose a civil 

19 money penalty, in accordance with the provisions of this 

20 section, on any enterprise that has failed to— 

21 ‘‘(1) meet any housing goal established under 

22 subpart B, following a written notice and determina23 tion of such failure in accordance with section 

24 1336(b); 


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1 ‘‘(2) submit a report under section 1314, fol2 lowing a notice of such failure, an opportunity for 

3 comment by the enterprise, and a final determination 

4 by the Director; 

5 ‘‘(3) submit the information required under sub6 section (m) or (n) of section 309 of the Federal Na7 tional Mortgage Association Charter Act, or sub8 section (e) or (f) of section 307 of the Federal Home 

9 Loan Mortgage Corporation Act; 

10 ‘‘(4) comply with any provision of this part or 

11 any order, rule or regulation under this part; 

12 ‘‘(5) submit a housing plan pursuant to section 

13 1336(c) within the required period; or 

14 ‘‘(6) comply with a housing plan for the enter15 prise under section 1336(c). 

16 ‘‘(b) AMOUNT OF PENALTY.—The amount of the pen17 alty, as determined by the Director, may not exceed— 

18 ‘‘(1) for any failure described in paragraph (1), 

19 (5), or (6) of subsection (a), $50,000 for each day that 

20 the failure occurs; and 

21 ‘‘(2) for any failure described in paragraph (2), 

22 (3), or (4) of subsection (a), $20,000 for each day that 

23 the failure occurs.’’; 

24 (2) in subsection (c)— 

25 (A) in paragraph (1)— 


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1 (i) in subparagraph (A), by inserting 

2 ‘‘and’’ after the semicolon at the end; 

3 (ii) in subparagraph (B), by striking 

4 ‘‘; and’’ and inserting a period; and 

5 (iii) by striking subparagraph (C); 

6 and 

7 (B) in paragraph (2), by inserting after the 

8 period at the end the following: ‘‘In determining 

9 the penalty under subsection (a)(1), the Director 

10 shall give consideration to the length of time the 

11 enterprise should reasonably take to achieve the 

12 goal.’’; 

13 (3) in the first sentence of subsection (d)— 

14 (A) by striking ‘‘request the Attorney Gen15 eral of the United States to’’ and inserting ‘‘, in 

16 the discretion of the Director,’’; and 

17 (B) by inserting ‘‘, or request that the At18 torney General of the United States bring such 

19 an action’’ before the period at the end; 

20 (4) by striking subsection (f); and 

21 (5) by redesignating subsection (g) as subsection 

22 (f). 

23 (d) ENFORCEMENT OF SUBPOENAS.—Section 1348(c) 

24 of the Housing and Community Development Act of 1992 

25 (12 U.S.C. 4588(c)) is amended— 


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1 (1) by striking ‘‘request the Attorney General of 

2 the United States to’’ and inserting ‘‘, in the discre3 tion of the Director,’’; and 

4 (2) by inserting ‘‘or request that the Attorney 

5 General of the United States bring such an action,’’ 

6 after ‘‘District of Columbia,’’ 

7 (e) CONFORMING AMENDMENT.—The heading for sub8 part C of part 2 of subtitle A of title XIII of the Housing 

9 and Community Development Act of 1992 is amended to 

10 read as follows: 

11 ‘‘Subpart C—Enforcement’’. 

12 SEC. 142. CONFORMING AMENDMENTS. 

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

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

15 seq.) is amended— 

16 (1) by striking ‘‘Secretary’’ each place such term 

17 appears in such part and inserting ‘‘Director’’; 

18 (2) in the section heading for section 1323 (12 

19 U.S.C. 4543), by inserting ‘‘OF ENTERPRISES’’ be20 fore the period at the end; 

21 (3) by striking section 1327 (12 U.S.C. 4547); 

22 (4) by striking section 1328 (12 U.S.C. 4548); 

23 (5) by redesignating section 1329 (as amended 

24 by section 135) as section 1327; 


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1 (6) in sections 1345(c)(1)(A), 1346(a), and 

2 1346(b) (12 U.S.C. 4585(c)(1)(A), 4586(a), and 

3 4586(b)), by striking ‘‘Secretary’s’’ each place such 

4 term appears and inserting ‘‘Director’s’’; and 

5 (7) by striking section 1349 (12 U.S.C. 4589). 

6 Subtitle C—Prompt Corrective 

7 Action 

8 SEC. 151. CAPITAL CLASSIFICATIONS. 

9 (a) IN GENERAL.—Section 1364 of the Housing and 

10 Community Development Act of 1992 (12 U.S.C. 4614) is 

11 amended— 

12 (1) in the heading for subsection (a), by striking 

13 ‘‘IN GENERAL’’ and inserting ‘‘ENTERPRISES’’. 

14 (2) in subsection (c)— 

15 (A) by striking ‘‘subsection (b)’’ and insert16 ing ‘‘subsection (c)’’; 

17 (B) by striking ‘‘enterprises’’ and inserting 

18 ‘‘regulated entities’’; and 

19 (C) by striking the last sentence; 

20 (3) by redesignating subsections (c) (as so 

21 amended by paragraph (2) of this subsection) and (d) 

22 as subsections (d) and (f), respectively; 

23 (4) by striking subsection (b) and inserting the 

24 following new subsections: 

25 ‘‘(b) FEDERAL HOME LOAN BANKS.— 


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1 ‘‘(1) ESTABLISHMENT AND CRITERIA.—For pur2 poses of this subtitle, the Director shall, by regula3 tion— 

4 ‘‘(A) establish the capital classifications 

5 specified under paragraph (2) for the Federal 

6 home loan banks; 

7 ‘‘(B) establish criteria for each such capital 

8 classification based on the amount and types of 

9 capital held by a bank and the risk-based, min10 imum, and critical capital levels for the banks 

11 and taking due consideration of the capital clas12 sifications established under subsection (a) for 

13 the enterprises, with such modifications as the 

14 Director determines to be appropriate to reflect 

15 the difference in operations between the banks 

16 and the enterprises; and 

17 ‘‘(C) shall classify the Federal home loan 

18 banks according to such capital classifications. 

19 ‘‘(2) CLASSIFICATIONS.—The capital classifica20 tions specified under this paragraph are— 

21 ‘‘(A) adequately capitalized; 

22 ‘‘(B) undercapitalized; 

23 ‘‘(C) significantly undercapitalized; and 

24 ‘‘(D) critically undercapitalized. 

25 ‘‘(c) DISCRETIONARY CLASSIFICATION.— 


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1 ‘‘(1) GROUNDS FOR RECLASSIFICATION.—The 

2 Director may reclassify a regulated entity under 

3 paragraph (2) if— 

4 ‘‘(A) at any time, the Director determines 

5 in writing that the regulated entity is engaging 

6 in conduct that could result in a rapid depletion 

7 of core or total capital or, in the case of an en8 terprise, that the value of the property subject to 

9 mortgages held or securitized by the enterprise 

10 has decreased significantly; 

11 ‘‘(B) after notice and an opportunity for 

12 hearing, the Director determines that the regu13 lated entity is in an unsafe or unsound condi14 tion; or 

15 ‘‘(C) pursuant to section 1371(b), the Direc16 tor deems the regulated entity to be engaging in 

17 an unsafe or unsound practice. 

18 ‘‘(2) RECLASSIFICATION.—In addition to any 

19 other action authorized under this title, including the 

20 reclassification of a regulated entity for any reason 

21 not specified in this subsection, if the Director takes 

22 any action described in paragraph (1) the Director 

23 may classify a regulated entity— 


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1 ‘‘(A) as undercapitalized, if the regulated 

2 entity is otherwise classified as adequately cap3 italized; 

4 ‘‘(B) as significantly undercapitalized, if 

5 the regulated entity is otherwise classified as 

6 undercapitalized; and 

7 ‘‘(C) as critically undercapitalized, if the 

8 regulated entity is otherwise classified as signifi9 cantly undercapitalized.’’; and 

10 (5) by inserting after subsection (d) (as so redes11 ignated by paragraph (3) of this subsection), the fol12 lowing new subsection: 

13 ‘‘(e) RESTRICTION ON CAPITAL DISTRIBUTIONS.— 

14 ‘‘(1) IN GENERAL.—A regulated entity shall 

15 make no capital distribution if, after making the dis16 tribution, the regulated entity would be undercapital17 ized. 

18 ‘‘(2) EXCEPTION.—Notwithstanding paragraph 

19 (1), the Director may permit a regulated entity, to 

20 the extent appropriate or applicable, to repurchase, 

21 redeem, retire, or otherwise acquire shares or owner22 ship interests if the repurchase, redemption, retire23 ment, or other acquisition— 

24 ‘‘(A) is made in connection with the 

25 issuance of additional shares or obligations of the 


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1 regulated entity in at least an equivalent 

2 amount; and 

3 ‘‘(B) will reduce the financial obligations of 

4 the regulated entity or otherwise improve the fi5 nancial condition of the entity.’’. 

6 (b) REGULATIONS.—Not later than the expiration of 

7 the 180-day period beginning on the effective date under 

8 section 185, the Director of the Federal Housing Finance 

9 Agency shall issue regulations to carry out section 1364(b) 

10 of the Housing and Community Development Act of 1992 

11 (as added by paragraph (4) of this subsection), relating to 

12 capital classifications for the Federal home loan banks. 

13 SEC. 152. SUPERVISORY ACTIONS APPLICABLE TO UNDER14 CAPITALIZED REGULATED ENTITIES. 

15 Section 1365 of the Housing and Community Develop16 ment Act of 1992 (12 U.S.C. 4615) is amended— 

17 (1) in the section heading, by striking ‘‘ENTER18 PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 

19 (2) in subsection (a)— 

20 (A) by redesignating paragraphs (1) and 

21 (2) as paragraphs (2) and (3), respectively; 

22 (B) by inserting before paragraph (2), as so 

23 redesignated by subparagraph (A) of this para24 graph, the following paragraph: 


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1 ‘‘(1) REQUIRED MONITORING.—The Director 

2 shall— 

3 ‘‘(A) closely monitor the condition of any 

4 regulated entity that is classified as under5 capitalized; 

6 ‘‘(B) closely monitor compliance with the 

7 capital restoration plan, restrictions, and re8 quirements imposed under this section; and 

9 ‘‘(C) periodically review the plan, restric10 tions, and requirements applicable to the under11 capitalized regulated entity to determine whether 

12 the plan, restrictions, and requirements are 

13 achieving the purpose of this section.’’; and 

14 (C) by inserting at the end the following 

15 new paragraphs: 

16 ‘‘(4) RESTRICTION OF ASSET GROWTH.—A regu17 lated entity that is classified as undercapitalized shall 

18 not permit its average total assets (as such term is de19 fined in section 1316(b) during any calendar quarter 

20 to exceed its average total assets during the preceding 

21 calendar quarter unless— 

22 ‘‘(A) the Director has accepted the capital 

23 restoration plan of the regulated entity; 

24 ‘‘(B) any increase in total assets is con25 sistent with the plan; and 


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1 ‘‘(C) the ratio of total capital to assets for 

2 the regulated entity increases during the cal3 endar quarter at a rate sufficient to enable the 

4 entity to become adequately capitalized within a 

5 reasonable time. 

6 ‘‘(5) PRIOR APPROVAL OF ACQUISITIONS, NEW

7 PRODUCTS, AND NEW ACTIVITIES.—A regulated entity 

8 that is classified as undercapitalized shall not, di9 rectly or indirectly, acquire any interest in any enti10 ty or initially offer any new product (as such term 

11 is defined in section 1321(f)) or engage in any new 

12 activity, service, undertaking, or offering unless— 

13 ‘‘(A) the Director has accepted the capital 

14 restoration plan of the regulated entity, the enti15 ty is implementing the plan, and the Director 

16 determines that the proposed action is consistent 

17 with and will further the achievement of the 

18 plan; or 

19 ‘‘(B) the Director determines that the pro20 posed action will further the purpose of this sec21 tion.’’; 

22 (3) in the subsection heading for subsection (b), 

23 by striking ‘‘FROM UNDERCAPITALIZED TO SIGNIFI24 CANTLY UNDERCAPITALIZED’’; and 


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1 (4) by striking subsection (c) and inserting the 

2 following new subsection: 

3 ‘‘(c) OTHER DISCRETIONARY SAFEGUARDS.—The Di4 rector may take, with respect to a regulated entity that is 

5 classified as undercapitalized, any of the actions authorized 

6 to be taken under section 1366 with respect to a regulated 

7 entity that is classified as significantly undercapitalized, 

8 if the Director determines that such actions are necessary 

9 to carry out the purpose of this subtitle.’’. 

10 SEC. 153. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI11 CANTLY UNDERCAPITALIZED REGULATED EN12 TITIES. 

13 Section 1366 of the Housing and Community Develop14 ment Act of 1992 (12 U.S.C. 4616) is amended— 

15 (1) in the section heading, by striking ‘‘ENTER16 PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 

17 (2) in subsection (a)(2)(A), by striking ‘‘enter18 prise’’ the last place such term appears; 

19 (3) in subsection (b)— 

20 (A) in the subsection heading, by striking 

21 ‘‘DISCRETIONARY SUPERVISORY ACTIONS’’ and 

22 inserting ‘‘SPECIFIC ACTIONS’’. 

23 (B) in the matter preceding paragraph (1), 

24 by striking ‘‘may, at any time, take any’’ and 


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1 inserting ‘‘shall carry out this section by taking, 

2 at any time, one or more’’; 

3 (C) by redesignating paragraphs (5) and 

4 (6) as paragraphs (6) and (7), respectively; 

5 (D) by inserting after paragraph (4) the fol6 lowing new paragraph: 

7 ‘‘(5) IMPROVEMENT OF MANAGEMENT.—Take one 

8 or more of the following actions: 

9 ‘‘(A) NEW ELECTION OF BOARD.—Order a 

10 new election for the board of directors of the reg11 ulated entity. 

12 ‘‘(B) DISMISSAL OF DIRECTORS OR EXECU13 TIVE OFFICERS.—Require the regulated entity to 

14 dismiss from office any director or executive offi15 cer who had held office for more than 180 days 

16 immediately before the entity became under17 capitalized. Dismissal under this subparagraph 

18 shall not be construed to be a removal pursuant 

19 to the Director’s enforcement powers provided in 

20 section 1377. 

21 ‘‘(C) EMPLOY QUALIFIED EXECUTIVE OFFI22 CERS.—Require the regulated entity to employ 

23 qualified executive officers (who, if the Director 

24 so specifies, shall be subject to approval by the 

25 Director).’’; and 


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1 (E) by inserting at the end the following 

2 new paragraph: 

3 ‘‘(8) OTHER ACTION.—Require the regulated en4 tity to take any other action that the Director deter5 mines will better carry out the purpose of this section 

6 than any of the actions specified in this paragraph.’’; 

7 (4) by redesignating subsection (c) as subsection 

8 (d); and 

9 (5) by inserting after subsection (b) the following 

10 new subsection: 

11 ‘‘(c) RESTRICTION ON COMPENSATION OF EXECUTIVE

12 OFFICERS.—A regulated entity that is classified as signifi13 cantly undercapitalized may not, without prior written ap14 proval by the Director— 

15 ‘‘(1) pay any bonus to any executive officer; or 

16 ‘‘(2) provide compensation to any executive offi17 cer at a rate exceeding that officer’s average rate of 

18 compensation (excluding bonuses, stock options, and 

19 profit sharing) during the 12 calendar months pre20 ceding the calendar month in which the regulated en21 tity became undercapitalized.’’. 


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1 SEC. 154. AUTHORITY OVER CRITICALLY UNDERCAPITAL2 IZED REGULATED ENTITIES. 

3 (a) IN GENERAL.—Section 1367 of the Housing and 

4 Community Development Act of 1992 (12 U.S.C. 4617) is 

5 amended to read as follows: 

6 ‘‘SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITAL7 IZED REGULATED ENTITIES. 

8 ‘‘(a) APPOINTMENT OF AGENCY AS CONSERVATOR OR

9 RECEIVER.— 

10 ‘‘(1) IN GENERAL.—Notwithstanding any other 

11 provision of Federal or State law, if any of the 

12 grounds under paragraph (3) exist, at the discretion 

13 of the Director, the Director may establish a con14 servatorship or receivership, as appropriate, for the 

15 purpose of reorganizing, rehabilitating, or winding 

16 up the affairs of a regulated entity. 

17 ‘‘(2) APPOINTMENT.—In any conservatorship or 

18 receivership established under this section, the Direc19 tor shall appoint the Agency as conservator or re20 ceiver. 

21 ‘‘(3) GROUNDS FOR APPOINTMENT.—The grounds 

22 for appointing a conservator or receiver for a regu23 lated entity are as follows: 

24 ‘‘(A) ASSETS INSUFFICIENT FOR OBLIGA25 TIONS.—The assets of the regulated entity are 


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1 less than the obligations of the regulated entity 

2 to its creditors and others. 

3 ‘‘(B) SUBSTANTIAL DISSIPATION.—Substan4 tial dissipation of assets or earnings due to— 

5 ‘‘(i) any violation of any provision of 

6 Federal or State law; or 

7 ‘‘(ii) any unsafe or unsound practice. 

8 ‘‘(C) UNSAFE OR UNSOUND CONDITION.—An 

9 unsafe or unsound condition to transact busi10 ness. 

11 ‘‘(D) CEASE-AND-DESIST ORDERS.—Any 

12 willful violation of a cease-and-desist order that 

13 has become final. 

14 ‘‘(E) CONCEALMENT.—Any concealment of 

15 the books, papers, records, or assets of the regu16 lated entity, or any refusal to submit the books, 

17 papers, records, or affairs of the regulated entity, 

18 for inspection to any examiner or to any lawful 

19 agent of the Director. 

20 ‘‘(F) INABILITY TO MEET OBLIGATIONS.— 

21 The regulated entity is likely to be unable to pay 

22 its obligations or meet the demands of its credi23 tors in the normal course of business. 

24 ‘‘(G) LOSSES.—The regulated entity has in25 curred or is likely to incur losses that will deVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00174 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 plete all or substantially all of its capital, and 

2 there is no reasonable prospect for the regulated 

3 entity to become adequately capitalized (as de4 fined in section 1364(a)(1)). 

5 ‘‘(H) VIOLATIONS OF LAW.—Any violation 

6 of any law or regulation, or any unsafe or un7 sound practice or condition that is likely to— 

8 ‘‘(i) cause insolvency or substantial 

9 dissipation of assets or earnings; or 

10 ‘‘(ii) weaken the condition of the regu11 lated entity. 

12 ‘‘(I) CONSENT.—The regulated entity, by 

13 resolution of its board of directors or its share14 holders or members, consents to the appointment. 

15 ‘‘(J) UNDERCAPITALIZATION.—The regu16 lated entity is undercapitalized or significantly 

17 undercapitalized (as defined in section 

18 1364(a)(3) or in regulations issued pursuant to 

19 section 1364(b), as applicable), and— 

20 ‘‘(i) has no reasonable prospect of be21 coming adequately capitalized; 

22 ‘‘(ii) fails to become adequately cap23 italized, as required by— 


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1 ‘‘(I) section 1365(a)(1) with re2 spect to an undercapitalized regulated 

3 entity; or 

4 ‘‘(II) section 1366(a)(1) with re5 spect to a significantly undercapital6 ized regulated entity; 

7 ‘‘(iii) fails to submit a capital restora8 tion plan acceptable to the Agency within 

9 the time prescribed under section 1369C; or 

10 ‘‘(iv) materially fails to implement a 

11 capital restoration plan submitted and ac12 cepted under section 1369C. 

13 ‘‘(K) CRITICAL UNDERCAPITALIZATION.— 

14 The regulated entity is critically undercapital15 ized, as defined in section 1364(a)(4) or in regu16 lations issued pursuant to section 1364(b), as 

17 applicable. 

18 ‘‘(L) MONEY LAUNDERING.—The Attorney 

19 General notifies the Director in writing that the 

20 regulated entity has been found guilty of a 

21 criminal offense under section 1956 or 1957 of 

22 title 18, United States Code, or section 5322 or 

23 5324 of title 31, United States Code. 

24 ‘‘(4) MANDATORY RECEIVERSHIP.— 


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1 ‘‘(A) IN GENERAL.—The Director shall ap2 point the Agency as receiver for a regulated enti3 ty if the Director determines, in writing, that— 

4 ‘‘(i) the assets of the regulated entity 

5 are, and during the preceding 30 calendar 

6 days have been, less than the obligations of 

7 the regulated entity to its creditors and oth8 ers; or 

9 ‘‘(ii) the regulated entity is not, and 

10 during the preceding 30 calendar days has 

11 not been, generally paying the debts of the 

12 regulated entity (other than debts that are 

13 the subject of a bona fide dispute) as such 

14 debts become due. 

15 ‘‘(B) PERIODIC DETERMINATION REQUIRED

16 FOR CRITICALLY UNDER CAPITALIZED REGU17 LATED ENTITY.—If a regulated entity is criti18 cally undercapitalized, the Director shall make a 

19 determination, in writing, as to whether the reg20 ulated entity meets the criteria specified in 

21 clause (i) or (ii) of subparagraph (A)— 

22 ‘‘(i) not later than 30 calendar days 

23 after the regulated entity initially becomes 

24 critically undercapitalized; and 


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1 ‘‘(ii) at least once during each suc2 ceeding 30-calendar day period. 

3 ‘‘(C) DETERMINATION NOT REQUIRED IF

4 RECEIVERSHIP ALREADY IN PLACE.—Subpara5 graph (B) shall not apply with respect to a regu6 lated entity in any period during which the 

7 Agency serves as receiver for the regulated entity. 

8 ‘‘(D) RECEIVERSHIP TERMINATES CON9 SERVATORSHIP.—The appointment under this 

10 section of the Agency as receiver of a regulated 

11 entity shall immediately terminate any con12 servatorship established under this title for the 

13 regulated entity. 

14 ‘‘(5) JUDICIAL REVIEW.— 

15 ‘‘(A) IN GENERAL.—If the Agency is ap16 pointed conservator or receiver under this sec17 tion, the regulated entity may, within 30 days of 

18 such appointment, bring an action in the United 

19 States District Court for the judicial district in 

20 which the principal place of business of such reg21 ulated entity is located, or in the United States 

22 District Court for the District of Columbia, for 

23 an order requiring the Agency to remove itself as 

24 conservator or receiver. 


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1 ‘‘(B) REVIEW.—Upon the filing of an ac2 tion under subparagraph (A), the court shall, 

3 upon the merits, dismiss such action or direct 

4 the Agency to remove itself as such conservator 

5 or receiver. 

6 ‘‘(6) DIRECTORS NOT LIABLE FOR ACQUIESCING

7 IN APPOINTMENT OF CONSERVATOR OR RECEIVER.— 

8 The members of the board of directors of a regulated 

9 entity shall not be liable to the shareholders or credi10 tors of the regulated entity for acquiescing in or con11 senting in good faith to the appointment of the Agen12 cy as conservator or receiver for that regulated entity. 

13 ‘‘(7) AGENCY NOT SUBJECT TO ANY OTHER FED14 ERAL AGENCY.—When acting as conservator or re15 ceiver, the Agency shall not be subject to the direction 

16 or supervision of any other agency of the United 

17 States or any State in the exercise of the rights, pow18 ers, and privileges of the Agency. 

19 ‘‘(b) POWERS AND DUTIES OF THE AGENCY AS CON20 SERVATOR OR RECEIVER.— 

21 ‘‘(1) RULEMAKING AUTHORITY OF THE AGEN22 CY.—The Agency may prescribe such regulations as 

23 the Agency determines to be appropriate regarding 

24 the conduct of conservatorships or receiverships. 

25 ‘‘(2) GENERAL POWERS.— 


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1 ‘‘(A) SUCCESSOR TO REGULATED ENTITY.— 

2 The Agency shall, as conservator or receiver, and 

3 by operation of law, immediately succeed to— 

4 ‘‘(i) all rights, titles, powers, and 

5 privileges of the regulated entity, and of 

6 any stockholder, officer, or director of such 

7 regulated entity with respect to the regu8 lated entity and the assets of the regulated 

9 entity; and 

10 ‘‘(ii) title to the books, records, and as11 sets of any other legal custodian of such reg12 ulated entity. 

13 ‘‘(B) OPERATE THE REGULATED ENTITY.— 

14 The Agency may, as conservator or receiver— 

15 ‘‘(i) take over the assets of and operate 

16 the regulated entity with all the powers of 

17 the shareholders, the directors, and the offi18 cers of the regulated entity and conduct all 

19 business of the regulated entity; 

20 ‘‘(ii) collect all obligations and money 

21 due the regulated entity; 

22 ‘‘(iii) perform all functions of the regu23 lated entity in the name of the regulated en24 tity which are consistent with the appoint25 ment as conservator or receiver; and 


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1 ‘‘(iv) preserve and conserve the assets 

2 and property of such regulated entity. 

3 ‘‘(C) FUNCTIONS OF OFFICERS, DIRECTORS, 

4 AND SHAREHOLDERS OF A REGULATED ENTI5 TY.—The Agency may, by regulation or order, 

6 provide for the exercise of any function by any 

7 stockholder, director, or officer of any regulated 

8 entity for which the Agency has been named con9 servator or receiver. 

10 ‘‘(D) POWERS AS CONSERVATOR.—The 

11 Agency may, as conservator, take such action as 

12 may be— 

13 ‘‘(i) necessary to put the regulated en14 tity in a sound and solvent condition; and 

15 ‘‘(ii) appropriate to carry on the busi16 ness of the regulated entity and preserve 

17 and conserve the assets and property of the 

18 regulated entity, including, if two or more 

19 Federal home loan banks have been placed 

20 in conservatorship contemporaneously, 

21 merging two or more such banks into a sin22 gle Federal home loan bank. 

23 ‘‘(E) ADDITIONAL POWERS AS RECEIVER.— 

24 The Agency may, as receiver, place the regulated 

25 entity in liquidation and proceed to realize upon 


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1 the assets of the regulated entity, having due re2 gard to the conditions of the housing finance 

3 market. 

4 ‘‘(F) ORGANIZATION OF NEW REGULATED

5 ENTITIES.—The Agency may, as receiver, orga6 nize a successor regulated entity that will oper7 ate pursuant to subsection (i). 

8 ‘‘(G) TRANSFER OF ASSETS AND LIABIL9 ITIES.—The Agency may, as conservator or re10 ceiver, transfer any asset or liability of the regu11 lated entity in default without any approval, as12 signment, or consent with respect to such trans13 fer. Any Federal home loan bank may, with the 

14 approval of the Agency, acquire the assets of any 

15 Bank in conservatorship or receivership, and as16 sume the liabilities of such Bank. 

17 ‘‘(H) PAYMENT OF VALID OBLIGATIONS.— 

18 The Agency, as conservator or receiver, shall, to 

19 the extent of proceeds realized from the perform20 ance of contracts or sale of the assets of a regu21 lated entity, pay all valid obligations of the reg22 ulated entity in accordance with the prescrip23 tions and limitations of this section. 

24 ‘‘(I) SUBPOENA AUTHORITY.— 

25 ‘‘(i) IN GENERAL.— 


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1 ‘‘(I) IN GENERAL.—The Agency 

2 may, as conservator or receiver, and 

3 for purposes of carrying out any 

4 power, authority, or duty with respect 

5 to a regulated entity (including deter6 mining any claim against the regu7 lated entity and determining and real8 izing upon any asset of any person in 

9 the course of collecting money due the 

10 regulated entity), exercise any power 

11 established under section 1348. 

12 ‘‘(II) APPLICABILITY OF LAW.— 

13 The provisions of section 1348 shall 

14 apply with respect to the exercise of 

15 any power exercised under this sub16 paragraph in the same manner as such 

17 provisions apply under that section. 

18 ‘‘(ii) AUTHORITY OF DIRECTOR.—A 

19 subpoena or subpoena duces tecum may be 

20 issued under clause (i) only by, or with the 

21 written approval of, the Director, or the des22 ignee of the Director. 

23 ‘‘(iii) RULE OF CONSTRUCTION.—This 

24 subsection shall not be construed to limit 

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1 ity, might otherwise have under section 

2 1317 or 1379D. 

3 ‘‘(J) CONTRACTING FOR SERVICES.—The 

4 Agency may, as conservator or receiver, provide 

5 by contract for the carrying out of any of its 

6 functions, activities, actions, or duties as conser7 vator or receiver. 

8 ‘‘(K) INCIDENTAL POWERS.—The Agency 

9 may, as conservator or receiver— 

10 ‘‘(i) exercise all powers and authorities 

11 specifically granted to conservators or re12 ceivers, respectively, under this section, and 

13 such incidental powers as shall be necessary 

14 to carry out such powers; and 

15 ‘‘(ii) take any action authorized by 

16 this section, which the Agency determines is 

17 in the best interests of the regulated entity 

18 or the Agency. 

19 ‘‘(3) AUTHORITY OF RECEIVER TO DETERMINE

20 CLAIMS.— 

21 ‘‘(A) IN GENERAL.—The Agency may, as re22 ceiver, determine claims in accordance with the 

23 requirements of this subsection and any regula24 tions prescribed under paragraph (4). 


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1 ‘‘(B) NOTICE REQUIREMENTS.—The re2 ceiver, in any case involving the liquidation or 

3 winding up of the affairs of a closed regulated 

4 entity, shall— 

5 ‘‘(i) promptly publish a notice to the 

6 creditors of the regulated entity to present 

7 their claims, together with proof, to the re8 ceiver by a date specified in the notice 

9 which shall be not less than 90 days after 

10 the publication of such notice; and 

11 ‘‘(ii) republish such notice approxi12 mately 1 month and 2 months, respectively, 

13 after the publication under clause (i). 

14 ‘‘(C) MAILING REQUIRED.—The receiver 

15 shall mail a notice similar to the notice pub16 lished under subparagraph (B)(i) at the time of 

17 such publication to any creditor shown on the 

18 books of the regulated entity— 

19 ‘‘(i) at the last address of the creditor 

20 appearing in such books; or 

21 ‘‘(ii) upon discovery of the name and 

22 address of a claimant not appearing on the 

23 books of the regulated entity within 30 days 

24 after the discovery of such name and ad25 dress. 


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1 ‘‘(4) RULEMAKING AUTHORITY RELATING TO DE2 TERMINATION OF CLAIMS.—Subject to subsection (c), 

3 the Director may prescribe regulations regarding the 

4 allowance or disallowance of claims by the receiver 

5 and providing for administrative determination of 

6 claims and review of such determination. 

7 ‘‘(5) PROCEDURES FOR DETERMINATION OF

8 CLAIMS.— 

9 ‘‘(A) DETERMINATION PERIOD.— 

10 ‘‘(i) IN GENERAL.—Before the end of 

11 the 180-day period beginning on the date on 

12 which any claim against a regulated entity 

13 is filed with the Agency as receiver, the 

14 Agency shall determine whether to allow or 

15 disallow the claim and shall notify the 

16 claimant of any determination with respect 

17 to such claim. 

18 ‘‘(ii) EXTENSION OF TIME.—The pe19 riod described in clause (i) may be extended 

20 by a written agreement between the claim21 ant and the Agency. 

22 ‘‘(iii) MAILING OF NOTICE SUFFI23 CIENT.—The notification requirements of 

24 clause (i) shall be deemed to be satisfied if 

25 the notice of any determination with respect 


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1 to any claim is mailed to the last address 

2 of the claimant which appears— 

3 ‘‘(I) on the books of the regulated 

4 entity; 

5 ‘‘(II) in the claim filed by the 

6 claimant; or 

7 ‘‘(III) in documents submitted in 

8 proof of the claim. 

9 ‘‘(iv) CONTENTS OF NOTICE OF DIS10 ALLOWANCE.—If any claim filed under 

11 clause (i) is disallowed, the notice to the 

12 claimant shall contain— 

13 ‘‘(I) a statement of each reason for 

14 the disallowance; and 

15 ‘‘(II) the procedures available for 

16 obtaining agency review of the deter17 mination to disallow the claim or judi18 cial determination of the claim. 

19 ‘‘(B) ALLOWANCE OF PROVEN CLAIM.—The 

20 receiver shall allow any claim received on or be21 fore the date specified in the notice published 

22 under paragraph (3)(B)(i), or the date specified 

23 in the notice required under paragraph (3)(C), 

24 which is proved to the satisfaction of the receiver. 


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1 ‘‘(C) DISALLOWANCE OF CLAIMS FILED

2 AFTER END OF FILING PERIOD.—Claims filed 

3 after the date specified in the notice published 

4 under paragraph (3)(B)(i), or the date specified 

5 under paragraph (3)(C), shall be disallowed and 

6 such disallowance shall be final. 

7 ‘‘(D) AUTHORITY TO DISALLOW CLAIMS.— 

8 ‘‘(i) IN GENERAL.—The receiver may 

9 disallow any portion of any claim by a 

10 creditor or claim of security, preference, or 

11 priority which is not proved to the satisfac12 tion of the receiver. 

13 ‘‘(ii) PAYMENTS TO LESS THAN FULLY

14 SECURED CREDITORS.—In the case of a 

15 claim of a creditor against a regulated enti16 ty which is secured by any property or 

17 other asset of such regulated entity, the re18 ceiver— 

19 ‘‘(I) may treat the portion of such 

20 claim which exceeds an amount equal 

21 to the fair market value of such prop22 erty or other asset as an unsecured 

23 claim against the regulated entity; and 

24 ‘‘(II) may not make any payment 

25 with respect to such unsecured portion 


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1 of the claim other than in connection 

2 with the disposition of all claims of 

3 unsecured creditors of the regulated en4 tity. 

5 ‘‘(iii) EXCEPTIONS.—No provision of 

6 this paragraph shall apply with respect to 

7 any extension of credit from any Federal 

8 Reserve Bank, Federal home loan bank, or 

9 the Treasury of the United States. 

10 ‘‘(E) NO JUDICIAL REVIEW OF DETERMINA11 TION PURSUANT TO SUBPARAGRAPH (D).—No 

12 court may review the determination of the Agen13 cy under subparagraph (D) to disallow a claim. 

14 This subparagraph shall not affect the authority 

15 of a claimant to obtain de novo judicial review 

16 of a claim pursuant to paragraph (6). 

17 ‘‘(F) LEGAL EFFECT OF FILING.— 

18 ‘‘(i) STATUTE OF LIMITATION

19 TOLLED.—For purposes of any applicable 

20 statute of limitations, the filing of a claim 

21 with the receiver shall constitute a com22 mencement of an action. 

23 ‘‘(ii) NO PREJUDICE TO OTHER AC24 TIONS.—Subject to paragraph (10), the fil25 ing of a claim with the receiver shall not 


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1 prejudice any right of the claimant to con2 tinue any action which was filed before the 

3 date of the appointment of the receiver, sub4 ject to the determination of claims by the 

5 receiver. 

6 ‘‘(6) PROVISION FOR JUDICIAL DETERMINATION

7 OF CLAIMS.— 

8 ‘‘(A) IN GENERAL.—The claimant may file 

9 suit on a claim (or continue an action com10 menced before the appointment of the receiver) in 

11 the district or territorial court of the United 

12 States for the district within which the principal 

13 place of business of the regulated entity is located 

14 or the United States District Court for the Dis15 trict of Columbia (and such court shall have ju16 risdiction to hear such claim), before the end of 

17 the 60-day period beginning on the earlier of— 

18 ‘‘(i) the end of the period described in 

19 paragraph (5)(A)(i) with respect to any 

20 claim against a regulated entity for which 

21 the Agency is receiver; or 

22 ‘‘(ii) the date of any notice of disallow23 ance of such claim pursuant to paragraph 

24 (5)(A)(i). 


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1 ‘‘(B) STATUTE OF LIMITATIONS.—A claim 

2 shall be deemed to be disallowed (other than any 

3 portion of such claim which was allowed by the 

4 receiver), and such disallowance shall be final, 

5 and the claimant shall have no further rights or 

6 remedies with respect to such claim, if the claim7 ant fails, before the end of the 60-day period de8 scribed under subparagraph (A), to file suit on 

9 such claim (or continue an action commenced be10 fore the appointment of the receiver). 

11 ‘‘(7) REVIEW OF CLAIMS.— 

12 ‘‘(A) OTHER REVIEW PROCEDURES.— 

13 ‘‘(i) IN GENERAL.—The Agency shall 

14 establish such alternative dispute resolution 

15 processes as may be appropriate for the res16 olution of claims filed under paragraph 

17 (5)(A)(i). 

18 ‘‘(ii) CRITERIA.—In establishing alter19 native dispute resolution processes, the 

20 Agency shall strive for procedures which are 

21 expeditious, fair, independent, and low cost. 

22 ‘‘(iii) VOLUNTARY BINDING OR NON23 BINDING PROCEDURES.—The Agency may 

24 establish both binding and nonbinding proc25 esses, which may be conducted by any govVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00191 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 ernment or private party. All parties, in2 cluding the claimant and the Agency, must 

3 agree to the use of the process in a par4 ticular case. 

5 ‘‘(B) CONSIDERATION OF INCENTIVES.—The 

6 Agency shall seek to develop incentives for claim7 ants to participate in the alternative dispute res8 olution process. 

9 ‘‘(8) EXPEDITED DETERMINATION OF CLAIMS.— 

10 ‘‘(A) ESTABLISHMENT REQUIRED.—The 

11 Agency shall establish a procedure for expedited 

12 relief outside of the routine claims process estab13 lished under paragraph (5) for claimants who— 

14 ‘‘(i) allege the existence of legally valid 

15 and enforceable or perfected security inter16 ests in assets of any regulated entity for 

17 which the Agency has been appointed re18 ceiver; and 

19 ‘‘(ii) allege that irreparable injury will 

20 occur if the routine claims procedure is fol21 lowed. 

22 ‘‘(B) DETERMINATION PERIOD.—Before the 

23 end of the 90-day period beginning on the date 

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1 dures established under subparagraph (A), the 

2 Director shall— 

3 ‘‘(i) determine— 

4 ‘‘(I) whether to allow or disallow 

5 such claim; or 

6 ‘‘(II) whether such claim should 

7 be determined pursuant to the proce8 dures established under paragraph (5); 

9 and 

10 ‘‘(ii) notify the claimant of the deter11 mination, and if the claim is disallowed, 

12 provide a statement of each reason for the 

13 disallowance and the procedure for obtain14 ing agency review or judicial determina15 tion. 

16 ‘‘(C) PERIOD FOR FILING OR RENEWING

17 SUIT.—Any claimant who files a request for ex18 pedited relief shall be permitted to file a suit, or 

19 to continue a suit filed before the appointment of 

20 the receiver, seeking a determination of the rights 

21 of the claimant with respect to such security in22 terest after the earlier of— 

23 ‘‘(i) the end of the 90-day period begin24 ning on the date of the filing of a request 

25 for expedited relief; or 


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1 ‘‘(ii) the date the Agency denies the 

2 claim. 

3 ‘‘(D) STATUTE OF LIMITATIONS.—If an ac4 tion described under subparagraph (C) is not 

5 filed, or the motion to renew a previously filed 

6 suit is not made, before the end of the 30-day pe7 riod beginning on the date on which such action 

8 or motion may be filed under subparagraph (B), 

9 the claim shall be deemed to be disallowed as of 

10 the end of such period (other than any portion 

11 of such claim which was allowed by the receiver), 

12 such disallowance shall be final, and the claim13 ant shall have no further rights or remedies with 

14 respect to such claim. 

15 ‘‘(E) LEGAL EFFECT OF FILING.— 

16 ‘‘(i) STATUTE OF LIMITATION

17 TOLLED.—For purposes of any applicable 

18 statute of limitations, the filing of a claim 

19 with the receiver shall constitute a com20 mencement of an action. 

21 ‘‘(ii) NO PREJUDICE TO OTHER AC22 TIONS.—Subject to paragraph (10), the fil23 ing of a claim with the receiver shall not 

24 prejudice any right of the claimant to con25 tinue any action that was filed before the 


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1 appointment of the receiver, subject to the 

2 determination of claims by the receiver. 

3 ‘‘(9) PAYMENT OF CLAIMS.— 

4 ‘‘(A) IN GENERAL.—The receiver may, in 

5 the discretion of the receiver, and to the extent 

6 funds are available from the assets of the regu7 lated entity, pay creditor claims, in such man8 ner and amounts as are authorized under this 

9 section, which are— 

10 ‘‘(i) allowed by the receiver; 

11 ‘‘(ii) approved by the Agency pursuant 

12 to a final determination pursuant to para13 graph (7) or (8); or 

14 ‘‘(iii) determined by the final judgment 

15 of any court of competent jurisdiction. 

16 ‘‘(B) AGREEMENTS AGAINST THE INTEREST

17 OF THE AGENCY.—No agreement that tends to 

18 diminish or defeat the interest of the Agency in 

19 any asset acquired by the Agency as receiver 

20 under this section shall be valid against the 

21 Agency unless such agreement is in writing, and 

22 executed by an authorized official of the regu23 lated entity, except that such requirements for 

24 qualified financial contracts shall be applied in 

25 a manner consistent with reasonable business 


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1 trading practices in the financial contracts mar2 ket. 

3 ‘‘(C) PAYMENT OF DIVIDENDS ON CLAIMS.— 

4 The receiver may, in the sole discretion of the re5 ceiver, pay from the assets of the regulated entity 

6 dividends on proved claims at any time, and no 

7 liability shall attach to the Agency, by reason of 

8 any such payment, for failure to pay dividends 

9 to a claimant whose claim is not proved at the 

10 time of any such payment. 

11 ‘‘(D) RULEMAKING AUTHORITY OF THE DI12 RECTOR.—The Director may prescribe such 

13 rules, including definitions of terms, as the Di14 rector deems appropriate to establish a single 

15 uniform interest rate for, or to make payments 

16 of post-insolvency interest to creditors holding 

17 proven claims against the receivership estates of 

18 regulated entities following satisfaction by the re19 ceiver of the principal amount of all creditor 

20 claims. 

21 ‘‘(10) SUSPENSION OF LEGAL ACTIONS.— 

22 ‘‘(A) IN GENERAL.—After the appointment 

23 of a conservator or receiver for a regulated enti24 ty, the conservator or receiver may, in any judi25 cial action or proceeding to which such regulated 


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1 entity is or becomes a party, request a stay for 

2 a period not to exceed— 

3 ‘‘(i) 45 days, in the case of any conser4 vator; and 

5 ‘‘(ii) 90 days, in the case of any re6 ceiver. 

7 ‘‘(B) GRANT OF STAY BY ALL COURTS RE8 QUIRED.—Upon receipt of a request by any con9 servator or receiver under subparagraph (A) for 

10 a stay of any judicial action or proceeding in 

11 any court with jurisdiction of such action or 

12 proceeding, the court shall grant such stay as to 

13 all parties. 

14 ‘‘(11) ADDITIONAL RIGHTS AND DUTIES.— 

15 ‘‘(A) PRIOR FINAL ADJUDICATION.—The 

16 Agency shall abide by any final unappealable 

17 judgment of any court of competent jurisdiction 

18 which was rendered before the appointment of 

19 the Agency as conservator or receiver. 

20 ‘‘(B) RIGHTS AND REMEDIES OF CONSER21 VATOR OR RECEIVER.—In the event of any ap22 pealable judgment, the Agency as conservator or 

23 receiver shall— 

24 ‘‘(i) have all the rights and remedies 

25 available to the regulated entity (before the 


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1 appointment of such conservator or receiver) 

2 and the Agency, including removal to Fed3 eral court and all appellate rights; and 

4 ‘‘(ii) not be required to post any bond 

5 in order to pursue such remedies. 

6 ‘‘(C) NO ATTACHMENT OR EXECUTION.—No 

7 attachment or execution may issue by any court 

8 upon assets in the possession of the receiver. 

9 ‘‘(D) LIMITATION ON JUDICIAL REVIEW.— 

10 Except as otherwise provided in this subsection, 

11 no court shall have jurisdiction over— 

12 ‘‘(i) any claim or action for payment 

13 from, or any action seeking a determination 

14 of rights with respect to, the assets of any 

15 regulated entity for which the Agency has 

16 been appointed receiver; or 

17 ‘‘(ii) any claim relating to any act or 

18 omission of such regulated entity or the 

19 Agency as receiver. 

20 ‘‘(E) DISPOSITION OF ASSETS.—In exer21 cising any right, power, privilege, or authority 

22 as conservator or receiver in connection with any 

23 sale or disposition of assets of a regulated entity 

24 for which the Agency has been appointed conser25 vator or receiver, the Agency shall conduct its 


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1 operations in a manner which maintains sta2 bility in the housing finance markets and, to the 

3 extent consistent with that goal— 

4 ‘‘(i) maximizes the net present value 

5 return from the sale or disposition of such 

6 assets; 

7 ‘‘(ii) minimizes the amount of any loss 

8 realized in the resolution of cases; and 

9 ‘‘(iii) ensures adequate competition 

10 and fair and consistent treatment of 

11 offerors. 

12 ‘‘(12) STATUTE OF LIMITATIONS FOR ACTIONS

13 BROUGHT BY CONSERVATOR OR RECEIVER.— 

14 ‘‘(A) IN GENERAL.—Notwithstanding any 

15 provision of any contract, the applicable statute 

16 of limitations with regard to any action brought 

17 by the Agency as conservator or receiver shall 

18 be— 

19 ‘‘(i) in the case of any contract claim, 

20 the longer of— 

21 ‘‘(I) the 6-year period beginning 

22 on the date the claim accrues; or 

23 ‘‘(II) the period applicable under 

24 State law; and 


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1 ‘‘(ii) in the case of any tort claim, the 

2 longer of— 

3 ‘‘(I) the 3-year period beginning 

4 on the date the claim accrues; or 

5 ‘‘(II) the period applicable under 

6 State law. 

7 ‘‘(B) DETERMINATION OF THE DATE ON

8 WHICH A CLAIM ACCRUES.—For purposes of sub9 paragraph (A), the date on which the statute of 

10 limitations begins to run on any claim described 

11 in such subparagraph shall be the later of— 

12 ‘‘(i) the date of the appointment of the 

13 Agency as conservator or receiver; or 

14 ‘‘(ii) the date on which the cause of ac15 tion accrues. 

16 ‘‘(13) REVIVAL OF EXPIRED STATE CAUSES OF

17 ACTION.— 

18 ‘‘(A) IN GENERAL.—In the case of any tort 

19 claim described under subparagraph (B) for 

20 which the statute of limitations applicable under 

21 State law with respect to such claim has expired 

22 not more than 5 years before the appointment of 

23 the Agency as conservator or receiver, the Agency 

24 may bring an action as conservator or receiver 

25 on such claim without regard to the expiration 


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1 of the statute of limitation applicable under 

2 State law. 

3 ‘‘(B) CLAIMS DESCRIBED.—A tort claim re4 ferred to under subparagraph (A) is a claim 

5 arising from fraud, intentional misconduct re6 sulting in unjust enrichment, or intentional mis7 conduct resulting in substantial loss to the regu8 lated entity. 

9 ‘‘(14) ACCOUNTING AND RECORDKEEPING RE10 QUIREMENTS.— 

11 ‘‘(A) IN GENERAL.—The Agency as conser12 vator or receiver shall, consistent with the ac13 counting and reporting practices and procedures 

14 established by the Agency, maintain a full ac15 counting of each conservatorship and receiver16 ship or other disposition of a regulated entity in 

17 default. 

18 ‘‘(B) ANNUAL ACCOUNTING OR REPORT.— 

19 With respect to each conservatorship or receiver20 ship, the Agency shall make an annual account21 ing or report available to the Board, the Comp22 troller General of the United States, the Com23 mittee on Banking, Housing, and Urban Affairs 

24 of the Senate, and the Committee on Financial 

25 Services of the House of Representatives. 


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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 receivership 

9 is terminated by the Director, the Agency may 

10 destroy any records of such regulated entity 

11 which the Agency, in the discretion of the Agen12 cy, determines to be unnecessary unless directed 

13 not to do so by a court of competent jurisdiction 

14 or governmental agency, or prohibited by law. 

15 ‘‘(15) FRAUDULENT TRANSFERS.— 

16 ‘‘(A) IN GENERAL.—The Agency, as conser17 vator or receiver, may avoid a transfer of any 

18 interest of a regulated entity-affiliated party, or 

19 any person who the conservator or receiver deter20 mines is a debtor of the regulated entity, in 

21 property, or any obligation incurred by such 

22 party or person, that was made within 5 years 

23 of the date on which the Agency was appointed 

24 conservator or receiver, if such party or person 

25 voluntarily or involuntarily made such transfer 


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1 or incurred such liability with the intent to 

2 hinder, delay, or defraud the regulated entity, 

3 the Agency, the conservator, or receiver. 

4 ‘‘(B) RIGHT OF RECOVERY.—To the extent a 

5 transfer is avoided under subparagraph (A), the 

6 conservator or receiver may recover, for the ben7 efit of the regulated entity, the property trans8 ferred, or, if a court so orders, the value of such 

9 property (at the time of such transfer) from— 

10 ‘‘(i) the initial transferee of such trans11 fer or the regulated entity-affiliated party 

12 or person for whose benefit such transfer 

13 was made; or 

14 ‘‘(ii) any immediate or mediate trans15 feree of any such initial transferee. 

16 ‘‘(C) RIGHTS OF TRANSFEREE OR OBLI17 GEE.—The conservator or receiver may not re18 cover under subparagraph (B) from— 

19 ‘‘(i) any transferee that takes for value, 

20 including satisfaction or securing of a 

21 present or antecedent debt, in good faith; or 

22 ‘‘(ii) any immediate or mediate good 

23 faith transferee of such transferee. 

24 ‘‘(D) RIGHTS UNDER THIS PARAGRAPH.— 

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1 vator or receiver described under subparagraph 

2 (A) shall be superior to any rights of a trustee 

3 or any other party (other than any party which 

4 is a Federal agency) under title 11, United 

5 States Code. 

6 ‘‘(16) ATTACHMENT OF ASSETS AND OTHER IN7 JUNCTIVE RELIEF.—Subject to paragraph (17), any 

8 court of competent jurisdiction may, at the request of 

9 the conservator or receiver, issue an order in accord10 ance with Rule 65 of the Federal Rules of Civil Proce11 dure, including an order placing the assets of any 

12 person designated by the Agency or such conservator 

13 under the control of the court, and appointing a 

14 trustee to hold such assets. 

15 ‘‘(17) STANDARDS OF PROOF.—Rule 65 of the 

16 Federal Rules of Civil Procedure shall apply with re17 spect to any proceeding under paragraph (16) with18 out regard to the requirement of such rule that the ap19 plicant show that the injury, loss, or damage is irrep20 arable and immediate. 

21 ‘‘(18) TREATMENT OF CLAIMS ARISING FROM

22 BREACH OF CONTRACTS EXECUTED BY THE RECEIVER

23 OR CONSERVATOR.— 

24 ‘‘(A) IN GENERAL.—Notwithstanding any 

25 other provision of this subsection, any final and 


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1 unappealable judgment for monetary damages 

2 entered against a receiver or conservator for the 

3 breach of an agreement executed or approved in 

4 writing by such receiver or conservator after the 

5 date of its appointment, shall be paid as an ad6 ministrative expense of the receiver or conser7 vator. 

8 ‘‘(B) NO LIMITATION OF POWER.—Nothing 

9 in this paragraph shall be construed to limit the 

10 power of a receiver or conservator to exercise any 

11 rights under contract or law, including to termi12 nate, breach, cancel, or otherwise discontinue 

13 such agreement. 

14 ‘‘(19) GENERAL EXCEPTIONS.— 

15 ‘‘(A) LIMITATIONS.—The rights of a conser16 vator or receiver appointed under this section 

17 shall be subject to the limitations on the powers 

18 of a receiver under sections 402 through 407 of 

19 the Federal Deposit Insurance Corporation Im20 provement Act of 1991 (12 U.S.C. 4402 through 

21 4407). 

22 ‘‘(B) MORTGAGES HELD IN TRUST.— 

23 ‘‘(i) IN GENERAL.—Any mortgage, pool 

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1 pacity by a regulated entity for the benefit 

2 of persons other than the regulated entity 

3 shall not be available to satisfy the claims 

4 of creditors generally. 

5 ‘‘(ii) HOLDING OF MORTGAGES.—Any 

6 mortgage, pool of mortgages, or interest in 

7 a pool of mortgages, described under clause 

8 (i) shall be held by the conservator or re9 ceiver appointed under this section for the 

10 beneficial owners of such mortgage, pool of 

11 mortgages, or interest in a pool of mort12 gages in accordance with the terms of the 

13 agreement creating such trust, custodial, or 

14 other agency arrangement. 

15 ‘‘(iii) LIABILITY OF RECEIVER.—The 

16 liability of a receiver appointed under this 

17 section for damages shall, in the case of any 

18 contingent or unliquidated claim relating to 

19 the mortgages held in trust, be estimated in 

20 accordance set forth in the regulations of the 

21 Director. 

22 ‘‘(c) PRIORITY OF EXPENSES AND UNSECURED

23 CLAIMS.— 

24 ‘‘(1) IN GENERAL.—Unsecured claims against a 

25 regulated entity, or a receiver, that are proven to the 


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1 satisfaction of the receiver shall have priority in the 

2 following order: 

3 ‘‘(A) Administrative expenses of the re4 ceiver. 

5 ‘‘(B) Any other general or senior liability of 

6 the regulated entity and claims of other Federal 

7 home loan banks arising from their payment ob8 ligations (including joint and several payment 

9 obligations). 

10 ‘‘(C) Any obligation subordinated to general 

11 creditors. 

12 ‘‘(D) Any obligation to shareholders or 

13 members arising as a result of their status as 

14 shareholder or members. 

15 ‘‘(2) CREDITORS SIMILARLY SITUATED.—All 

16 creditors that are similarly situated under paragraph 

17 (1) shall be treated in a similar manner, except that 

18 the Agency may make such other payments to credi19 tors necessary to maximize the present value return 

20 from the sale or disposition or such regulated entity’s 

21 assets or to minimize the amount of any loss realized 

22 in the resolution of cases so long as all creditors simi23 larly situated receive not less than the amount pro24 vided under subsection (e)(2). 


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1 ‘‘(3) DEFINITION.—The term ‘administrative ex2 penses of the receiver’ shall include the actual, nec3 essary costs and expenses incurred by the receiver in 

4 preserving the assets of the regulated entity or liqui5 dating or otherwise resolving the affairs of the regu6 lated entity. Such expenses shall include obligations 

7 that are incurred by the receiver after appointment as 

8 receiver that the Director determines are necessary 

9 and appropriate to facilitate the smooth and orderly 

10 liquidation or other resolution of the regulated entity. 

11 ‘‘(d) PROVISIONS RELATING TO CONTRACTS ENTERED

12 INTO BEFORE APPOINTMENT OF CONSERVATOR OR RE13 CEIVER.— 

14 ‘‘(1) AUTHORITY TO REPUDIATE CONTRACTS.— 

15 In addition to any other rights a conservator or re16 ceiver may have, the conservator or receiver for any 

17 regulated entity may disaffirm or repudiate any con18 tract or lease— 

19 ‘‘(A) to which such regulated entity is a 

20 party; 

21 ‘‘(B) the performance of which the conser22 vator or receiver, in its sole discretion, deter23 mines to be burdensome; and 

24 ‘‘(C) the disaffirmance or repudiation of 

25 which the conservator or receiver determines, in 


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1 its sole discretion, will promote the orderly ad2 ministration of the affairs of the regulated enti3 ty. 

4 ‘‘(2) TIMING OF REPUDIATION.—The conservator 

5 or receiver shall determine whether or not to exercise 

6 the rights of repudiation under this subsection within 

7 a reasonable period following such appointment. 

8 ‘‘(3) CLAIMS FOR DAMAGES FOR REPUDIATION.— 

9 ‘‘(A) IN GENERAL.—Except as otherwise 

10 provided under subparagraph (C) and para11 graphs (4), (5), and (6), the liability of the con12 servator or receiver for the disaffirmance or re13 pudiation of any contract pursuant to para14 graph (1) shall be— 

15 ‘‘(i) limited to actual direct compen16 satory damages; and 

17 ‘‘(ii) determined as of— 

18 ‘‘(I) the date of the appointment 

19 of the conservator or receiver; or 

20 ‘‘(II) in the case of any contract 

21 or agreement referred to in paragraph 

22 (8), the date of the disaffirmance or re23 pudiation of such contract or agree24 ment. 


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1 ‘‘(B) NO LIABILITY FOR OTHER DAMAGES.— 

2 For purposes of subparagraph (A), the term ‘ac3 tual direct compensatory damages’ shall not in4 clude— 

5 ‘‘(i) punitive or exemplary damages; 

6 ‘‘(ii) damages for lost profits or oppor7 tunity; or 

8 ‘‘(iii) damages for pain and suffering. 

9 ‘‘(C) MEASURE OF DAMAGES FOR REPUDI10 ATION OF FINANCIAL CONTRACTS.—In the case of 

11 any qualified financial contract or agreement to 

12 which paragraph (8) applies, compensatory 

13 damages shall be— 

14 ‘‘(i) deemed to include normal and rea15 sonable costs of cover or other reasonable 

16 measures of damages utilized in the indus17 tries for such contract and agreement 

18 claims; and 

19 ‘‘(ii) paid in accordance with this sub20 section and subsection (e), except as other21 wise specifically provided in this section. 

22 ‘‘(4) LEASES UNDER WHICH THE REGULATED

23 ENTITY IS THE LESSEE.— 

24 ‘‘(A) IN GENERAL.—If the conservator or re25 ceiver disaffirms or repudiates a lease under 


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1 which the regulated entity was the lessee, the con2 servator or receiver shall not be liable for any 

3 damages (other than damages determined under 

4 subparagraph (B)) for the disaffirmance or repu5 diation of such lease. 

6 ‘‘(B) PAYMENTS OF RENT.—Notwith7 standing subparagraph (A), the lessor under a 

8 lease to which that subparagraph applies shall— 

9 ‘‘(i) be entitled to the contractual rent 

10 accruing before the later of the date— 

11 ‘‘(I) the notice of disaffirmance or 

12 repudiation is mailed; or 

13 ‘‘(II) the disaffirmance or repudi14 ation becomes effective, unless the lessor 

15 is in default or breach of the terms of 

16 the lease; 

17 ‘‘(ii) have no claim for damages under 

18 any acceleration clause or other penalty 

19 provision in the lease; and 

20 ‘‘(iii) have a claim for any unpaid 

21 rent, subject to all appropriate offsets and 

22 defenses, due as of the date of the appoint23 ment, which shall be paid in accordance 

24 with this subsection and subsection (e). 


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1 ‘‘(5) LEASES UNDER WHICH THE REGULATED

2 ENTITY IS THE LESSOR.— 

3 ‘‘(A) IN GENERAL.—If the conservator or re4 ceiver repudiates an unexpired written lease of 

5 real property of the regulated entity under which 

6 the regulated entity is the lessor and the lessee is 

7 not, as of the date of such repudiation, in de8 fault, the lessee under such lease may either— 

9 ‘‘(i) treat the lease as terminated by 

10 such repudiation; or 

11 ‘‘(ii) remain in possession of the lease12 hold interest for the balance of the term of 

13 the lease, unless the lessee defaults under the 

14 terms of the lease after the date of such re15 pudiation. 

16 ‘‘(B) PROVISIONS APPLICABLE TO LESSEE

17 REMAINING IN POSSESSION.—If any lessee under 

18 a lease described under subparagraph (A) re19 mains in possession of a leasehold interest under 

20 clause (ii) of such subparagraph— 

21 ‘‘(i) the lessee— 

22 ‘‘(I) shall continue to pay the con23 tractual rent pursuant to the terms of 

24 the lease after the date of the repudi25 ation of such lease; and 


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1 ‘‘(II) may offset against any rent 

2 payment which accrues after the date 

3 of the repudiation of the lease, and any 

4 damages which accrue after such date 

5 due to the nonperformance of any obli6 gation of the regulated entity under the 

7 lease after such date; and 

8 ‘‘(ii) the conservator or receiver shall 

9 not be liable to the lessee for any damages 

10 arising after such date as a result of the re11 pudiation other than the amount of any off12 set allowed under clause (i)(II). 

13 ‘‘(6) CONTRACTS FOR THE SALE OF REAL PROP14 ERTY.— 

15 ‘‘(A) IN GENERAL.—If the conservator or re16 ceiver repudiates any contract for the sale of real 

17 property and the purchaser of such real property 

18 under such contract is in possession, and is not, 

19 as of the date of such repudiation, in default, 

20 such purchaser may either— 

21 ‘‘(i) treat the contract as terminated by 

22 such repudiation; or 

23 ‘‘(ii) remain in possession of such real 

24 property. 


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1 ‘‘(B) PROVISIONS APPLICABLE TO PUR2 CHASER REMAINING IN POSSESSION.—If any 

3 purchaser of real property under any contract 

4 described under subparagraph (A) remains in 

5 possession of such property under clause (ii) of 

6 such subparagraph— 

7 ‘‘(i) the purchaser— 

8 ‘‘(I) shall continue to make all 

9 payments due under the contract after 

10 the date of the repudiation of the con11 tract; and 

12 ‘‘(II) may offset against any such 

13 payments any damages which accrue 

14 after such date due to the nonperform15 ance (after such date) of any obligation 

16 of the regulated entity under the con17 tract; and 

18 ‘‘(ii) the conservator or receiver shall— 

19 ‘‘(I) not be liable to the purchaser 

20 for any damages arising after such 

21 date as a result of the repudiation 

22 other than the amount of any offset al23 lowed under clause (i)(II); 


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1 ‘‘(II) deliver title to the purchaser 

2 in accordance with the provisions of 

3 the contract; and 

4 ‘‘(III) have no obligation under 

5 the contract other than the performance 

6 required under subclause (II). 

7 ‘‘(C) ASSIGNMENT AND SALE ALLOWED.— 

8 ‘‘(i) IN GENERAL.—No provision of 

9 this paragraph shall be construed as lim10 iting the right of the conservator or receiver 

11 to assign the contract described under sub12 paragraph (A), and sell the property subject 

13 to the contract and the provisions of this 

14 paragraph. 

15 ‘‘(ii) NO LIABILITY AFTER ASSIGNMENT

16 AND SALE.—If an assignment and sale de17 scribed under clause (i) is consummated, the 

18 conservator or receiver shall have no further 

19 liability under the contract described under 

20 subparagraph (A), or with respect to the 

21 real property which was the subject of such 

22 contract. 

23 ‘‘(7) PROVISIONS APPLICABLE TO SERVICE CON24 TRACTS.— 


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1 ‘‘(A) SERVICES PERFORMED BEFORE AP2 POINTMENT.—In the case of any contract for 

3 services between any person and any regulated 

4 entity for which the Agency has been appointed 

5 conservator or receiver, any claim of such person 

6 for services performed before the appointment of 

7 the conservator or the receiver shall be— 

8 ‘‘(i) a claim to be paid in accordance 

9 with subsections (b) and (e); and 

10 ‘‘(ii) deemed to have arisen as of the 

11 date the conservator or receiver was ap12 pointed. 

13 ‘‘(B) SERVICES PERFORMED AFTER AP14 POINTMENT AND PRIOR TO REPUDIATION.—If, in 

15 the case of any contract for services described 

16 under subparagraph (A), the conservator or re17 ceiver accepts performance by the other person 

18 before the conservator or receiver makes any de19 termination to exercise the right of repudiation 

20 of such contract under this section— 

21 ‘‘(i) the other party shall be paid 

22 under the terms of the contract for the serv23 ices performed; and 


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1 ‘‘(ii) the amount of such payment shall 

2 be treated as an administrative expense of 

3 the conservatorship or receivership. 

4 ‘‘(C) ACCEPTANCE OF PERFORMANCE NO

5 BAR TO SUBSEQUENT REPUDIATION.—The ac6 ceptance by any conservator or receiver of serv7 ices referred to under subparagraph (B) in con8 nection with a contract described in such sub9 paragraph shall not affect the right of the conser10 vator or receiver to repudiate such contract 

11 under this section at any time after such per12 formance. 

13 ‘‘(8) CERTAIN QUALIFIED FINANCIAL CON14 TRACTS.— 

15 ‘‘(A) RIGHTS OF PARTIES TO CONTRACTS.— 

16 Subject to paragraphs (9) and (10) and notwith17 standing any other provision of this Act, any 

18 other Federal law, or the law of any State, no 

19 person shall be stayed or prohibited from exer20 cising— 

21 ‘‘(i) any right such person has to cause 

22 the termination, liquidation, or acceleration 

23 of any qualified financial contract with a 

24 regulated entity that arises upon the ap25 pointment of the Agency as receiver for such 


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1 regulated entity at any time after such ap2 pointment; 

3 ‘‘(ii) any right under any security 

4 agreement or arrangement or other credit 

5 enhancement relating to one or more quali6 fied financial contracts described in clause 

7 (i); or 

8 ‘‘(iii) any right to offset or net out any 

9 termination value, payment amount, or 

10 other transfer obligation arising under or in 

11 connection with 1 or more contracts and 

12 agreements described in clause (i), includ13 ing any master agreement for such con14 tracts or agreements. 

15 ‘‘(B) APPLICABILITY OF OTHER PROVI16 SIONS.—Paragraph (10) of subsection (b) shall 

17 apply in the case of any judicial action or pro18 ceeding brought against any receiver referred to 

19 under subparagraph (A), or the regulated entity 

20 for which such receiver was appointed, by any 

21 party to a contract or agreement described under 

22 subparagraph (A)(i) with such regulated entity. 

23 ‘‘(C) CERTAIN TRANSFERS NOT AVOID24 ABLE.— 


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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 paragraph (11) or any other Federal or 

3 State laws relating to the avoidance of pref4 erential or fraudulent transfers, the Agency, 

5 whether acting as such or as conservator or 

6 receiver of a regulated entity, may not 

7 avoid any transfer of money or other prop8 erty in connection with any qualified finan9 cial contract with a regulated entity. 

10 ‘‘(ii) EXCEPTION FOR CERTAIN TRANS11 FERS.—Clause (i) shall not apply to any 

12 transfer of money or other property in con13 nection with any qualified financial con14 tract with a regulated entity if the Agency 

15 determines that the transferee had actual 

16 intent to hinder, delay, or defraud such reg17 ulated entity, the creditors of such regulated 

18 entity, or any conservator or receiver ap19 pointed for such regulated entity. 

20 ‘‘(D) CERTAIN CONTRACTS AND AGREE21 MENTS DEFINED.—In this subsection: 

22 ‘‘(i) QUALIFIED FINANCIAL CON23 TRACT.—The term ‘qualified financial con24 tract’ means any securities contract, com25 modity contract, forward contract, repurVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00219 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 chase agreement, swap agreement, and any 

2 similar agreement that the Agency deter3 mines by regulation, resolution, or order to 

4 be a qualified financial contract for pur5 poses of this paragraph. 

6 ‘‘(ii) SECURITIES CONTRACT.—The 

7 term ‘securities contract’— 

8 ‘‘(I) means a contract for the pur9 chase, sale, or loan of a security, a cer10 tificate of deposit, a mortgage loan, or 

11 any interest in a mortgage loan, a 

12 group or index of securities, certificates 

13 of deposit, or mortgage loans or inter14 ests therein (including any interest 

15 therein or based on the value thereof) 

16 or any option on any of the foregoing, 

17 including any option to purchase or 

18 sell any such security, certificate of de19 posit, mortgage loan, interest, group or 

20 index, or option, and including any re21 purchase or reverse repurchase trans22 action on any such security, certificate 

23 of deposit, mortgage loan, interest, 

24 group or index, or option; 


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1 ‘‘(II) does not include any pur2 chase, sale, or repurchase obligation 

3 under a participation in a commercial 

4 mortgage loan unless the Agency deter5 mines by regulation, resolution, or 

6 order to include any such agreement 

7 within the meaning of such term; 

8 ‘‘(III) means any option entered 

9 into on a national securities exchange 

10 relating to foreign currencies; 

11 ‘‘(IV) means the guarantee by or 

12 to any securities clearing agency of 

13 any settlement of cash, securities, cer14 tificates of deposit, mortgage loans or 

15 interests therein, group or index of se16 curities, certificates of deposit, or mort17 gage loans or interests therein (includ18 ing any interest therein or based on 

19 the value thereof) or option on any of 

20 the foregoing, including any option to 

21 purchase or sell any such security, cer22 tificate of deposit, mortgage loan, in23 terest, group or index, or option; 

24 ‘‘(V) means any margin loan; 


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1 ‘‘(VI) means any other agreement 

2 or transaction that is similar to any 

3 agreement or transaction referred to in 

4 this clause; 

5 ‘‘(VII) means any combination of 

6 the agreements or transactions referred 

7 to in this clause; 

8 ‘‘(VIII) means any option to enter 

9 into any agreement or transaction re10 ferred to in this clause; 

11 ‘‘(IX) means a master agreement 

12 that provides for an agreement or 

13 transaction referred to in subclause (I), 

14 (III), (IV), (V), (VI), (VII), or (VIII), 

15 together with all supplements to any 

16 such master agreement, without regard 

17 to whether the master agreement pro18 vides for an agreement or transaction 

19 that is not a securities contract under 

20 this clause, except that the master 

21 agreement shall be considered to be a 

22 securities contract under this clause 

23 only with respect to each agreement or 

24 transaction under the master agree25 ment that is referred to in subclause 


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1 (I), (III), (IV), (V), (VI), (VII), or 

2 (VIII); and 

3 ‘‘(X) means any security agree4 ment or arrangement or other credit 

5 enhancement related to any agreement 

6 or transaction referred to in this 

7 clause, including any guarantee or re8 imbursement obligation in connection 

9 with any agreement or transaction re10 ferred to in this clause. 

11 ‘‘(iii) COMMODITY CONTRACT.—The 

12 term ‘commodity contract’ means— 

13 ‘‘(I) with respect to a futures com14 mission merchant, a contract for the 

15 purchase or sale of a commodity for fu16 ture delivery on, or subject to the rules 

17 of, a contract market or board of trade; 

18 ‘‘(II) with respect to a foreign fu19 tures commission merchant, a foreign 

20 future; 

21 ‘‘(III) with respect to a leverage 

22 transaction merchant, a leverage trans23 action; 

24 ‘‘(IV) with respect to a clearing 

25 organization, a contract for the purVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00223 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 chase or sale of a commodity for future 

2 delivery on, or subject to the rules of, 

3 a contract market or board of trade 

4 that is cleared by such clearing organi5 zation, or commodity option traded on, 

6 or subject to the rules of, a contract 

7 market or board of trade that is 

8 cleared by such clearing organization; 

9 ‘‘(V) with respect to a commodity 

10 options dealer, a commodity option; 

11 ‘‘(VI) any other agreement or 

12 transaction that is similar to any 

13 agreement or transaction referred to in 

14 this clause; 

15 ‘‘(VII) any combination of the 

16 agreements or transactions referred to 

17 in this clause; 

18 ‘‘(VIII) any option to enter into 

19 any agreement or transaction referred 

20 to in this clause; 

21 ‘‘(IX) a master agreement that 

22 provides for an agreement or trans23 action referred to in subclause (I), (II), 

24 (III), (IV), (V), (VI), (VII), or (VIII), 

25 together with all supplements to any 


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1 such master agreement, without regard 

2 to whether the master agreement pro3 vides for an agreement or transaction 

4 that is not a commodity contract 

5 under this clause, except that the mas6 ter agreement shall be considered to be 

7 a commodity contract under this clause 

8 only with respect to each agreement or 

9 transaction under the master agree10 ment that is referred to in subclause 

11 (I), (II), (III), (IV), (V), (VI), (VII), or 

12 (VIII); or 

13 ‘‘(X) any security agreement or 

14 arrangement or other credit enhance15 ment related to any agreement or 

16 transaction referred to in this clause, 

17 including any guarantee or reimburse18 ment obligation in connection with 

19 any agreement or transaction referred 

20 to in this clause. 

21 ‘‘(iv) FORWARD CONTRACT.—The term 

22 ‘forward contract’ means— 

23 ‘‘(I) a contract (other than a com24 modity contract) for the purchase, sale, 

25 or transfer of a commodity or any 


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•HR 1427 RH

1 similar good, article, service, right, or 

2 interest which is presently or in the fu3 ture becomes the subject of dealing in 

4 the forward contract trade, or product 

5 or byproduct thereof, with a maturity 

6 date more than 2 days after the date 

7 the contract is entered into, including, 

8 a repurchase transaction, reverse re9 purchase transaction, consignment, 

10 lease, swap, hedge transaction, deposit, 

11 loan, option, allocated transaction, 

12 unallocated transaction, or any other 

13 similar agreement; 

14 ‘‘(II) any combination of agree15 ments or transactions referred to in 

16 subclauses (I) and (III); 

17 ‘‘(III) any option to enter into 

18 any agreement or transaction referred 

19 to in subclause (I) or (II); 

20 ‘‘(IV) a master agreement that 

21 provides for an agreement or trans22 action referred to in subclauses (I), 

23 (II), or (III), together with all supple24 ments to any such master agreement, 

25 without regard to whether the master 


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1 agreement provides for an agreement 

2 or transaction that is not a forward 

3 contract under this clause, except that 

4 the master agreement shall be consid5 ered to be a forward contract under 

6 this clause only with respect to each 

7 agreement or transaction under the 

8 master agreement that is referred to in 

9 subclause (I), (II), or (III); or 

10 ‘‘(V) any security agreement or 

11 arrangement or other credit enhance12 ment related to any agreement or 

13 transaction referred to in subclause (I), 

14 (II), (III), or (IV), including any 

15 guarantee or reimbursement obligation 

16 in connection with any agreement or 

17 transaction referred to in any such 

18 subclause. 

19 ‘‘(v) REPURCHASE AGREEMENT.—The 

20 term ‘repurchase agreement’ (which defini21 tion also applies to a reverse repurchase 

22 agreement)— 

23 ‘‘(I) means an agreement, includ24 ing related terms, which provides for 

25 the transfer of one or more certificates 


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1 of deposit, mortgage-related securities 

2 (as such term is defined in the Securi3 ties Exchange Act of 1934), mortgage 

4 loans, interests in mortgage-related se5 curities or mortgage loans, eligible 

6 bankers’ acceptances, qualified foreign 

7 government securities or securities that 

8 are direct obligations of, or that are 

9 fully guaranteed by, the United States 

10 or any agency of the United States 

11 against the transfer of funds by the 

12 transferee of such certificates of de13 posit, eligible bankers’ acceptances, se14 curities, mortgage loans, or interests 

15 with a simultaneous agreement by such 

16 transferee to transfer to the transferor 

17 thereof certificates of deposit, eligible 

18 bankers’ acceptances, securities, mort19 gage loans, or interests as described 

20 above, at a date certain not later than 

21 1 year after such transfers or on de22 mand, against the transfer of funds, or 

23 any other similar agreement; 

24 ‘‘(II) does not include any repur25 chase obligation under a participation 


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1 in a commercial mortgage loan unless 

2 the Agency determines by regulation, 

3 resolution, or order to include any such 

4 participation within the meaning of 

5 such term; 

6 ‘‘(III) means any combination of 

7 agreements or transactions referred to 

8 in subclauses (I) and (IV); 

9 ‘‘(IV) means any option to enter 

10 into any agreement or transaction re11 ferred to in subclause (I) or (III); 

12 ‘‘(V) means a master agreement 

13 that provides for an agreement or 

14 transaction referred to in subclause (I), 

15 (III), or (IV), 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 repurchase 

20 agreement under this clause, except 

21 that the master agreement shall be con22 sidered to be a repurchase agreement 

23 under this subclause only with respect 

24 to each agreement or transaction under 


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•HR 1427 RH

1 the master agreement that is referred to 

2 in subclause (I), (III), or (IV); and 

3 ‘‘(VI) means any security agree4 ment or arrangement or other credit 

5 enhancement related to any agreement 

6 or transaction referred to in subclause 

7 (I), (III), (IV), or (V), including any 

8 guarantee or reimbursement obligation 

9 in connection with any agreement or 

10 transaction referred to in any such 

11 subclause. 

12 For purposes of this clause, the term ‘quali13 fied foreign government security’ means a 

14 security that is a direct obligation of, or 

15 that is fully guaranteed by, the central gov16 ernment of a member of the Organization 

17 for Economic Cooperation and Development 

18 (as determined by regulation or order 

19 adopted by the appropriate Federal banking 

20 authority). 

21 ‘‘(vi) SWAP AGREEMENT.—The term 

22 ‘swap agreement’ means— 

23 ‘‘(I) any agreement, including the 

24 terms and conditions incorporated by 

25 reference in any such agreement, which 


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1 is an interest rate swap, option, future, 

2 or forward agreement, including a rate 

3 floor, rate cap, rate collar, cross-cur4 rency rate swap, and basis swap; a 

5 spot, same day-tomorrow, tomorrow6 next, forward, or other foreign ex7 change or precious metals agreement; a 

8 currency swap, option, future, or for9 ward agreement; an equity index or eq10 uity swap, option, future, or forward 

11 agreement; a debt index or debt swap, 

12 option, future, or forward agreement; a 

13 total return, credit spread or credit 

14 swap, option, future, or forward agree15 ment; a commodity index or com16 modity swap, option, future, or for17 ward agreement; or a weather swap, 

18 weather derivative, or weather option; 

19 ‘‘(II) any agreement or trans20 action that is similar to any other 

21 agreement or transaction referred to in 

22 this clause and that is of a type that 

23 has been, is presently, or in the future 

24 becomes, the subject of recurrent deal25 ings in the swap markets (including 


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1 terms and conditions incorporated by 

2 reference in such agreement) and that 

3 is a forward, swap, future, or option 

4 on one or more rates, currencies, com5 modities, equity securities or other eq6 uity instruments, debt securities or 

7 other debt instruments, quantitative 

8 measures associated with an occur9 rence, extent of an occurrence, or con10 tingency associated with a financial, 

11 commercial, or economic consequence, 

12 or economic or financial indices or 

13 measures of economic or financial risk 

14 or value; 

15 ‘‘(III) any combination of agree16 ments or transactions referred to in 

17 this clause; 

18 ‘‘(IV) any option to enter into 

19 any agreement or transaction referred 

20 to in this clause; 

21 ‘‘(V) a master agreement that pro22 vides for an agreement or transaction 

23 referred to in subclause (I), (II), (III), 

24 or (IV), together with all supplements 

25 to any such master agreement, without 


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1 regard to whether the master agreement 

2 contains an agreement or transaction 

3 that is not a swap agreement under 

4 this clause, except that the master 

5 agreement shall be considered to be a 

6 swap agreement under this clause only 

7 with respect to each agreement or 

8 transaction under the master agree9 ment that is referred to in subclause 

10 (I), (II), (III), or (IV); and 

11 ‘‘(VI) any security agreement or 

12 arrangement or other credit enhance13 ment related to any agreements or 

14 transactions referred to in subclause 

15 (I), (II), (III), (IV), or (V), including 

16 any guarantee or reimbursement obli17 gation in connection with any agree18 ment or transaction referred to in any 

19 such subclause. 

20 Such term is applicable for purposes of this 

21 subsection only and shall not be construed 

22 or applied so as to challenge or affect the 

23 characterization, definition, or treatment of 

24 any swap agreement under any other stat25 ute, regulation, or rule, including the SecuVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00233 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 rities Act of 1933, the Securities Exchange 

2 Act of 1934, the Public Utility Holding 

3 Company Act of 1935, the Trust Indenture 

4 Act of 1939, the Investment Company Act of 

5 1940, the Investment Advisers Act of 1940, 

6 the Securities Investor Protection Act of 

7 1970, the Commodity Exchange Act, the 

8 Gramm-Leach-Bliley Act, and the Legal 

9 Certainty for Bank Products Act of 2000. 

10 ‘‘(vii) TREATMENT OF MASTER AGREE11 MENT AS ONE AGREEMENT.—Any master 

12 agreement for any contract or agreement de13 scribed in any preceding clause of this sub14 paragraph (or any master agreement for 

15 such master agreement or agreements), to16 gether with all supplements to such master 

17 agreement, shall be treated as a single 

18 agreement and a single qualified financial 

19 contract. If a master agreement contains 

20 provisions relating to agreements or trans21 actions that are not themselves qualified fi22 nancial contracts, the master agreement 

23 shall be deemed to be a qualified financial 

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1 actions that are themselves qualified finan2 cial contracts. 

3 ‘‘(viii) TRANSFER.—The term ‘trans4 fer’ means every mode, direct or indirect, 

5 absolute or conditional, voluntary or invol6 untary, of disposing of or parting with 

7 property or with an interest in property, 

8 including retention of title as a security in9 terest and foreclosure of the regulated enti10 ty’s equity of redemption. 

11 ‘‘(E) CERTAIN PROTECTIONS IN EVENT OF

12 APPOINTMENT OF CONSERVATOR.—Notwith13 standing any other provision of this Act (other 

14 than paragraph (13) of this subsection), any 

15 other Federal law, or the law of any State, no 

16 person shall be stayed or prohibited from exer17 cising— 

18 ‘‘(i) any right such person has to cause 

19 the termination, liquidation, or acceleration 

20 of any qualified financial contract with a 

21 regulated entity in a conservatorship based 

22 upon a default under such financial con23 tract which is enforceable under applicable 

24 noninsolvency law; 


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1 ‘‘(ii) any right under any security 

2 agreement or arrangement or other credit 

3 enhancement relating to one or more such 

4 qualified financial contracts; or 

5 ‘‘(iii) any right to offset or net out any 

6 termination values, payment amounts, or 

7 other transfer obligations arising under or 

8 in connection with such qualified financial 

9 contracts. 

10 ‘‘(F) CLARIFICATION.—No provision of law 

11 shall be construed as limiting the right or power 

12 of the Agency, or authorizing any court or agen13 cy to limit or delay, in any manner, the right 

14 or power of the Agency to transfer any qualified 

15 financial contract in accordance with para16 graphs (9) and (10) of this subsection or to dis17 affirm or repudiate any such contract in accord18 ance with subsection (d)(1) of this section. 

19 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC20 TIVE.— 

21 ‘‘(i) IN GENERAL.—Notwithstanding 

22 the provisions of subparagraphs (A) and 

23 (E), and sections 403 and 404 of the Fed24 eral Deposit Insurance Corporation Im25 provement Act of 1991, no walkaway clause 


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1 shall be enforceable in a qualified financial 

2 contract of a regulated entity in default. 

3 ‘‘(ii) WALKAWAY CLAUSE DEFINED.— 

4 For purposes of this subparagraph, the term 

5 ‘walkaway clause’ means a provision in a 

6 qualified financial contract that, after cal7 culation of a value of a party’s position or 

8 an amount due to or from 1 of the parties 

9 in accordance with its terms upon termi10 nation, 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 such 

25 person) and the regulated entity in default; 


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1 ‘‘(ii) all claims of such person (or any 

2 affiliate of such person) against such regu3 lated entity under any such contract (other 

4 than any claim which, under the terms of 

5 any such contract, is subordinated to the 

6 claims of general unsecured creditors of such 

7 regulated entity); 

8 ‘‘(iii) all claims of such regulated enti9 ty against such person (or any affiliate of 

10 such person) under any such contract; and 

11 ‘‘(iv) all property securing or any 

12 other credit enhancement for any contract 

13 described in clause (i) or any claim de14 scribed in clause (ii) or (iii) under any 

15 such contract; or 

16 ‘‘(B) transfer none of the financial con17 tracts, claims, or property referred to under sub18 paragraph (A) (with respect to such person and 

19 any affiliate of such person). 

20 ‘‘(10) NOTIFICATION OF TRANSFER.— 

21 ‘‘(A) IN GENERAL.—If— 

22 ‘‘(i) the conservator or receiver for a 

23 regulated entity in default makes any trans24 fer of the assets and liabilities of such regu25 lated entity, and 


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1 ‘‘(ii) the transfer includes any quali2 fied financial contract, 

3 the conservator or receiver shall notify any per4 son who is a party to any such contract of such 

5 transfer by 5:00 p.m. (eastern time) on the busi6 ness day following the date of the appointment 

7 of the receiver in the case of a receivership, or the 

8 business day following such transfer in the case 

9 of a conservatorship. 

10 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE11 ABLE.— 

12 ‘‘(i) RECEIVERSHIP.—A person who is 

13 a party to a qualified financial contract 

14 with a regulated entity may not exercise 

15 any right that such person has to terminate, 

16 liquidate, or net such contract under para17 graph (8)(A) of this subsection or section 

18 403 or 404 of the Federal Deposit Insurance 

19 Corporation Improvement Act of 1991, sole20 ly by reason of or incidental to the appoint21 ment of a receiver for the regulated entity 

22 (or the insolvency or financial condition of 

23 the regulated entity for which the receiver 

24 has been appointed)— 


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1 ‘‘(I) until 5:00 p.m. (eastern time) 

2 on the business day following the date 

3 of the appointment of the receiver; or 

4 ‘‘(II) after the person has received 

5 notice that the contract has been trans6 ferred pursuant to paragraph (9)(A). 

7 ‘‘(ii) CONSERVATORSHIP.—A person 

8 who is a party to a qualified financial con9 tract with a regulated entity may not exer10 cise any right that such person has to ter11 minate, liquidate, or net such contract 

12 under paragraph (8)(E) of this subsection 

13 or section 403 or 404 of the Federal Deposit 

14 Insurance Corporation Improvement Act of 

15 1991, solely by reason of or incidental to the 

16 appointment of a conservator for the regu17 lated entity (or the insolvency or financial 

18 condition of the regulated entity for which 

19 the conservator has been appointed). 

20 ‘‘(iii) NOTICE.—For purposes of this 

21 paragraph, the Agency as receiver or conser22 vator of a regulated entity shall be deemed 

23 to have notified a person who is a party to 

24 a qualified financial contract with such reg25 ulated entity if the Agency has taken steps 


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1 reasonably calculated to provide notice to 

2 such person by the time specified in sub3 paragraph (A). 

4 ‘‘(C) BUSINESS DAY DEFINED.—For pur5 poses of this paragraph, the term ‘business day’ 

6 means any day other than any Saturday, Sun7 day, or any day on which either the New York 

8 Stock Exchange or the Federal Reserve Bank of 

9 New York is closed. 

10 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

11 QUALIFIED FINANCIAL CONTRACTS.—In exercising the 

12 rights of disaffirmance or repudiation of a conser13 vator or receiver with respect to any qualified finan14 cial contract to which a regulated entity is a party, 

15 the conservator or receiver for such institution shall 

16 either— 

17 ‘‘(A) disaffirm or repudiate all qualified fi18 nancial contracts between— 

19 ‘‘(i) any person or any affiliate of such 

20 person; and 

21 ‘‘(ii) the regulated entity in default; or 

22 ‘‘(B) disaffirm or repudiate none of the 

23 qualified financial contracts referred to in sub24 paragraph (A) (with respect to such person or 

25 any affiliate of such person). 


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1 ‘‘(12) CERTAIN SECURITY INTERESTS NOT AVOID2 ABLE.—No provision of this subsection shall be con3 strued as permitting the avoidance of any legally en4 forceable or perfected security interest in any of the 

5 assets of any regulated entity, except where such an 

6 interest is taken in contemplation of the insolvency of 

7 the regulated entity, or with the intent to hinder, 

8 delay, or defraud the regulated entity or the creditors 

9 of such regulated entity. 

10 ‘‘(13) AUTHORITY TO ENFORCE CONTRACTS.— 

11 ‘‘(A) IN GENERAL.—Notwithstanding any 

12 provision of a contract providing for termi13 nation, default, acceleration, or exercise of rights 

14 upon, or solely by reason of, insolvency or the 

15 appointment of a conservator or receiver, the 

16 conservator or receiver may enforce any contract 

17 or regulated entity bond entered into by the regu18 lated entity. 

19 ‘‘(B) CERTAIN RIGHTS NOT AFFECTED.—No 

20 provision of this paragraph may be construed as 

21 impairing or affecting any right of the conser22 vator or receiver to enforce or recover under a di23 rector’s or officer’s liability insurance contract or 

24 surety bond under other applicable law. 

25 ‘‘(C) CONSENT REQUIREMENT.— 


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1 ‘‘(i) IN GENERAL.—Except as otherwise 

2 provided under this section, no person may 

3 exercise any right or power to terminate, 

4 accelerate, or declare a default under any 

5 contract to which a regulated entity is a 

6 party, or to obtain possession of or exercise 

7 control over any property of the regulated 

8 entity, or affect any contractual rights of 

9 the regulated entity, without the consent of 

10 the conservator or receiver, as appropriate, 

11 for a period of— 

12 ‘‘(I) 45 days after the date of ap13 pointment of a conservator; or 

14 ‘‘(II) 90 days after the date of ap15 pointment of a receiver. 

16 ‘‘(ii) EXCEPTIONS.—This paragraph 

17 shall— 

18 ‘‘(I) not apply to a director’s or 

19 officer’s liability insurance contract; 

20 ‘‘(II) not apply to the rights of 

21 parties to any qualified financial con22 tracts under subsection (d)(8); and 

23 ‘‘(III) not be construed as permit24 ting the conservator or receiver to fail 


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1 to comply with otherwise enforceable 

2 provisions of such contracts. 

3 ‘‘(14) SAVINGS CLAUSE.—The meanings of terms 

4 used in this subsection are applicable for purposes of 

5 this subsection only, and shall not be construed or ap6 plied so as to challenge or affect the characterization, 

7 definition, or treatment of any similar terms under 

8 any other statute, regulation, or rule, including the 

9 Gramm-Leach-Bliley Act, the Legal Certainty for 

10 Bank Products Act of 2000, the securities laws (as 

11 that term is defined in section 3(a)(47) of the Securi12 ties Exchange Act of 1934), and the Commodity Ex13 change Act. 

14 ‘‘(15) EXCEPTION FOR FEDERAL RESERVE AND

15 FEDERAL HOME LOAN BANKS.—No provision of this 

16 subsection shall apply with respect to— 

17 ‘‘(A) any extension of credit from any Fed18 eral home loan bank or Federal Reserve Bank to 

19 any regulated entity; or 

20 ‘‘(B) any security interest in the assets of 

21 the regulated entity securing any such extension 

22 of credit. 

23 ‘‘(e) VALUATION OF CLAIMS IN DEFAULT.— 

24 ‘‘(1) IN GENERAL.—Notwithstanding any other 

25 provision of Federal law or the law of any State, and 


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1 regardless of the method which the Agency determines 

2 to utilize with respect to a regulated entity in default 

3 or in danger of default, including transactions au4 thorized under subsection (i), this subsection shall 

5 govern the rights of the creditors of such regulated en6 tity. 

7 ‘‘(2) MAXIMUM LIABILITY.—The maximum li8 ability of the Agency, acting as receiver or in any 

9 other capacity, to any person having a claim against 

10 the receiver or the regulated entity for which such re11 ceiver is appointed shall equal the lesser of— 

12 ‘‘(A) the amount such claimant would have 

13 received if the Agency had liquidated the assets 

14 and liabilities of such regulated entity without 

15 exercising the authority of the Agency under sub16 section (i) of this section; or 

17 ‘‘(B) the amount of proceeds realized from 

18 the performance of contracts or sale of the assets 

19 of the regulated entity. 

20 ‘‘(f) LIMITATION ON COURT ACTION.—Except as pro21 vided in this section or at the request of the Director, no 

22 court may take any action to restrain or affect the exercise 

23 of powers or functions of the Agency as a conservator or 

24 a receiver. 

25 ‘‘(g) LIABILITY OF DIRECTORS AND OFFICERS.— 


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1 ‘‘(1) IN GENERAL.—A director or officer of a reg2 ulated entity may be held personally liable for mone3 tary damages in any civil action by, on behalf of, or 

4 at the request or direction of the Agency, which action 

5 is prosecuted wholly or partially for the benefit of the 

6 Agency— 

7 ‘‘(A) acting as conservator or receiver of 

8 such regulated entity, or 

9 ‘‘(B) acting based upon a suit, claim, or 

10 cause of action purchased from, assigned by, or 

11 otherwise conveyed by such receiver or conser12 vator, 

13 for gross negligence, including any similar conduct or 

14 conduct that demonstrates a greater disregard of a 

15 duty of care (than gross negligence) including inten16 tional tortious conduct, as such terms are defined and 

17 determined under applicable State law. 

18 ‘‘(2) NO LIMITATION.—Nothing in this para19 graph shall impair or affect any right of the Agency 

20 under other applicable law. 

21 ‘‘(h) DAMAGES.—In any proceeding related to any 

22 claim against a director, officer, employee, agent, attorney, 

23 accountant, appraiser, or any other party employed by or 

24 providing services to a regulated entity, recoverable dam25 ages determined to result from the improvident or otherwise 


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1 improper use or investment of any assets of the regulated 

2 entity shall include principal losses and appropriate inter3 est. 

4 ‘‘(i) LIMITED-LIFE REGULATED ENTITIES.— 

5 ‘‘(1) ORGANIZATION.— 

6 ‘‘(A) PURPOSE.—If a regulated entity is in 

7 default, or if the Agency anticipates that a regu8 lated entity will default, the Agency may orga9 nize a limited-life regulated entity with those 

10 powers and attributes of the regulated entity in 

11 default or in danger of default that the Director 

12 determines necessary, subject to the provisions of 

13 this subsection. The Director shall grant a tem14 porary charter to the limited-life regulated enti15 ty, and the limited-life regulated entity shall op16 erate subject to that charter. 

17 ‘‘(B) AUTHORITIES.—Upon the creation of 

18 a limited-life regulated entity under subpara19 graph (A), the limited-life regulated entity 

20 may— 

21 ‘‘(i) assume such liabilities of the regu22 lated entity that is in default or in danger 

23 of default as the Agency may, in its discre24 tion, determine to be appropriate, provided 

25 that the liabilities assumed shall not exceed 


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1 the amount of assets of the limited-life regu2 lated entity; 

3 ‘‘(ii) purchase such assets of the regu4 lated entity that is in default, or in danger 

5 of default, as the Agency may, in its discre6 tion, determine to be appropriate; and 

7 ‘‘(iii) perform any other temporary 

8 function which the Agency may, in its dis9 cretion, prescribe in accordance with this 

10 section. 

11 ‘‘(2) CHARTER.— 

12 ‘‘(A) CONDITIONS.—The Agency may grant 

13 a temporary charter if the Agency determines 

14 that the continued operation of the regulated en15 tity in default or in danger of default is in the 

16 best interest of the national economy and the 

17 housing markets. 

18 ‘‘(B) TREATMENT AS BEING IN DEFAULT

19 FOR CERTAIN PURPOSES.—A limited-life regu20 lated entity shall be treated as a regulated entity 

21 in default at such times and for such purposes 

22 as the Agency may, in its discretion, determine. 

23 ‘‘(C) MANAGEMENT.—A limited-life regu24 lated entity, upon the granting of its charter, 

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1 rectors consisting of not fewer than 5 nor more 

2 than 10 members appointed by the Agency. 

3 ‘‘(D) BYLAWS.—The board of directors of a 

4 limited-life regulated entity shall adopt such by5 laws as may be approved by the Agency. 

6 ‘‘(3) CAPITAL STOCK.—No capital stock need be 

7 paid into a limited-life regulated entity by the Agen8 cy. 

9 ‘‘(4) INVESTMENTS.—Funds of a limited-life reg10 ulated entity shall be kept on hand in cash, invested 

11 in obligations of the United States or obligations 

12 guaranteed as to principal and interest by the United 

13 States, or deposited with the Agency, or any Federal 

14 Reserve bank. 

15 ‘‘(5) EXEMPT STATUS.—Notwithstanding any 

16 other provision of Federal or State law, the limited17 life regulated entity, its franchise, property, and in18 come shall be exempt from all taxation now or here19 after imposed by the United States, by any territory, 

20 dependency, or possession thereof, or by any State, 

21 county, municipality, or local taxing authority. 

22 ‘‘(6) WINDING UP.— 

23 ‘‘(A) IN GENERAL.—Subject to subpara24 graph (B), unless Congress authorizes the sale of 

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1 tity, not later than 2 years after the date of its 

2 organization, the Agency shall wind up the af3 fairs of the limited-life regulated entity. 

4 ‘‘(B) EXTENSION.—The Director may, in 

5 the discretion of the Director, extend the status 

6 of the limited-life regulated entity for 3 addi7 tional 1-year periods. 

8 ‘‘(7) TRANSFER OF ASSETS AND LIABILITIES.— 

9 ‘‘(A) IN GENERAL.— 

10 ‘‘(i) TRANSFER OF ASSETS AND LIABIL11 ITIES.—The Agency, as receiver, may trans12 fer any assets and liabilities of a regulated 

13 entity in default, or in danger of default, to 

14 the limited-life regulated entity in accord15 ance with paragraph (1). 

16 ‘‘(ii) SUBSEQUENT TRANSFERS.—At 

17 any time after a charter is transferred to a 

18 limited-life regulated entity, the Agency, as 

19 receiver, may transfer any assets and liabil20 ities of such regulated entity in default, or 

21 in danger in default, as the Agency may, in 

22 its discretion, determine to be appropriate 

23 in accordance with paragraph (1). 

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1 abilities of a regulated entity in default, or 

2 in danger of default, transferred to a lim3 ited-life regulated entity shall be effective 

4 without any further approval under Federal 

5 or State law, assignment, or consent with 

6 respect thereto. 

7 ‘‘(8) PROCEEDS.—To the extent that available 

8 proceeds from the limited-life regulated entity exceed 

9 amounts required to pay obligations, such proceeds 

10 may be paid to the regulated entity in default, or in 

11 danger of default. 

12 ‘‘(9) POWERS.— 

13 ‘‘(A) IN GENERAL.—Each limited-life regu14 lated entity created under this subsection shall 

15 have all corporate powers of, and be subject to 

16 the same provisions of law as, the regulated enti17 ty in default or in danger of default to which it 

18 relates, except that— 

19 ‘‘(i) the Agency may— 

20 ‘‘(I) remove the directors of a lim21 ited-life regulated entity; and 

22 ‘‘(II) fix the compensation of 

23 members of the board of directors and 

24 senior management, as determined by 


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1 the Agency in its discretion, of a lim2 ited-life regulated entity; 

3 ‘‘(ii) the Agency may indemnify the 

4 representatives for purposes of paragraph 

5 (1)(B), and the directors, officers, employ6 ees, and agents of a limited-life regulated 

7 entity on such terms as the Agency deter8 mines to be appropriate; and 

9 ‘‘(iii) the board of directors of a lim10 ited-life regulated entity— 

11 ‘‘(I) shall elect a chairperson who 

12 may also serve in the position of chief 

13 executive officer, except that such per14 son shall not serve either as chair15 person or as chief executive officer 

16 without the prior approval of the Agen17 cy; and 

18 ‘‘(II) may appoint a chief execu19 tive officer who is not also the chair20 person, except that such person shall 

21 not serve as chief executive officer with22 out the prior approval of the Agency. 

23 ‘‘(B) STAY OF JUDICIAL ACTION.—Any judi24 cial action to which a limited-life regulated enti25 ty becomes a party by virtue of its acquisition 


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1 of any assets or assumption of any liabilities of 

2 a regulated entity in default shall be stayed from 

3 further proceedings for a period of up to 45 days 

4 at the request of the limited-life regulated entity. 

5 Such period may be modified upon the consent 

6 of all parties. 

7 ‘‘(10) OBTAINING OF CREDIT AND INCURRING OF

8 DEBT.— 

9 ‘‘(A) IN GENERAL.—The limited-life regu10 lated entity may obtain unsecured credit and 

11 incur unsecured debt in the ordinary course of 

12 business. 

13 ‘‘(B) INABILITY TO OBTAIN CREDIT.—If the 

14 limited-life regulated entity is unable to obtain 

15 unsecured credit the Director may authorize the 

16 obtaining of credit or the incurring of debt— 

17 ‘‘(i) with priority over any or all ad18 ministrative expenses; 

19 ‘‘(ii) secured by a lien on property that 

20 is not otherwise subject to a lien; or 

21 ‘‘(iii) secured by a junior lien on prop22 erty that is subject to a lien. 

23 ‘‘(C) LIMITATIONS.— 

24 ‘‘(i) IN GENERAL.—The Director, after 

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1 taining of credit or the incurring of debt se2 cured by a senior or equal lien on property 

3 that is subject to a lien (other than mort4 gages that collateralize the mortgage-backed 

5 securities issued or guaranteed by the regu6 lated entity) only if— 

7 ‘‘(I) the limited-life regulated en8 tity is unable to obtain such credit oth9 erwise; and 

10 ‘‘(II) there is adequate protection 

11 of the interest of the holder of the lien 

12 on the property which such senior or 

13 equal lien is proposed to be granted. 

14 ‘‘(ii) BURDEN OF PROOF.—In any 

15 hearing under this subsection, the Director 

16 has the burden of proof on the issue of ade17 quate protection. 

18 ‘‘(D) EFFECT ON DEBTS AND LIENS.—The 

19 reversal or modification on appeal of an author20 ization under this paragraph to obtain credit or 

21 incur debt, or of a grant under this section of a 

22 priority or a lien, does not affect the validity of 

23 any debt so incurred, or any priority or lien so 

24 granted, to an entity that extended such credit in 

25 good faith, whether or not such entity knew of 


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1 the pendency of the appeal, unless such author2 ization and the incurring of such debt, or the 

3 granting of such priority or lien, were stayed 

4 pending appeal. 

5 ‘‘(11) ISSUANCE OF PREFERRED DEBT.—A lim6 ited-life regulated entity may, subject to the approval 

7 of the Director and subject to such terms and condi8 tions as the Director may prescribe, issue notes, 

9 bonds, or other debt obligations of a class to which all 

10 other debt obligations of the limited-life regulated en11 tity shall be subordinate in right and payment. 

12 ‘‘(12) NO FEDERAL STATUS.— 

13 ‘‘(A) AGENCY STATUS.—A limited-life regu14 lated entity is not an agency, establishment, or 

15 instrumentality of the United States. 

16 ‘‘(B) EMPLOYEE STATUS.—Representatives 

17 for purposes of paragraph (1)(B), interim direc18 tors, directors, officers, employees, or agents of a 

19 limited-life regulated entity are not, solely by 

20 virtue of service in any such capacity, officers or 

21 employees of the United States. Any employee of 

22 the Agency or of any Federal instrumentality 

23 who serves at the request of the Agency as a rep24 resentative for purposes of paragraph (1)(B), in25 terim director, director, officer, employee, or 


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1 agent of a limited-life regulated entity shall 

2 not— 

3 ‘‘(i) solely by virtue of service in any 

4 such capacity lose any existing status as an 

5 officer or employee of the United States for 

6 purposes of title 5, United States Code, or 

7 any other provision of law; or 

8 ‘‘(ii) receive any salary or benefits for 

9 service in any such capacity with respect to 

10 a limited-life regulated entity in addition to 

11 such salary or benefits as are obtained 

12 through employment with the Agency or 

13 such Federal instrumentality. 

14 ‘‘(13) ADDITIONAL POWERS.—In addition to any 

15 other powers granted under this subsection, a limited16 life regulated entity may— 

17 ‘‘(A) extend a maturity date or change in 

18 an interest rate or other term of outstanding se19 curities; 

20 ‘‘(B) issue securities of the limited-life regu21 lated entity, for cash, for property, for existing 

22 securities, or in exchange for claims or interests, 

23 or for any other appropriate purposes; and 

24 ‘‘(C) take any other action not inconsistent 

25 with this section. 


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1 ‘‘(j) OTHER EXEMPTIONS.—When acting as a receiver, 

2 the following provisions shall apply with respect to the 

3 Agency: 

4 ‘‘(1) EXEMPTION FROM TAXATION.—The Agency, 

5 including its franchise, its capital, reserves, and sur6 plus, and its income, shall be exempt from all tax7 ation imposed by any State, country, municipality, 

8 or local taxing authority, except that any real prop9 erty of the Agency shall be subject to State, territorial, 

10 county, municipal, or local taxation to the same ex11 tent according to its value as other real property is 

12 taxed, except that, notwithstanding the failure of any 

13 person to challenge an assessment under State law of 

14 the value of such property, and the tax thereon, shall 

15 be determined as of the period for which such tax is 

16 imposed. 

17 ‘‘(2) EXEMPTION FROM ATTACHMENT AND

18 LIENS.—No property of the Agency shall be subject to 

19 levy, attachment, garnishment, foreclosure, or sale 

20 without the consent of the Agency, nor shall any in21 voluntary lien attach to the property of the Agency. 

22 ‘‘(3) EXEMPTION FROM PENALTIES AND FINES.— 

23 The Agency shall not be liable for any amounts in the 

24 nature of penalties or fines, including those arising 

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1 erty, personal property, probate, or recording tax or 

2 any recording or filing fees when due. 

3 ‘‘(k) PROHIBITION OF CHARTER REVOCATION.—In no 

4 case may a receiver appointed pursuant to this section re5 voke, annul, or terminate the charter of a regulated entity.’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) HOUSING AND COMMUNITY DEVELOPMENT

8 ACT OF 1992.—Subtitle B of title XIII of the Housing 

9 and Community Development Act of 1992 is amended 

10 by striking sections 1369 (12 U.S.C. 4619), 1369A 

11 (12 U.S.C. 4620), and 1369B (12 U.S.C. 4621). 

12 (2) FEDERAL HOME LOAN BANKS.—Section 25 of 

13 the Federal Home Loan Bank Act (12 U.S.C. 1445) 

14 is amended to read as follows: 

15 ‘‘SEC. 25. SUCCESSION OF FEDERAL HOME LOAN BANKS. 

16 ‘‘Each Federal Home Loan Bank shall have succession 

17 until it is voluntarily merged with another Bank under this 

18 Act, or until it is merged, reorganized, rehabilitated, liq19 uidated, or otherwise wound up by the Director in accord20 ance with the provisions of section 1367 of the Housing and 

21 Community Development Act of 1992, or by further Act of 

22 Congress.’’. 


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1 SEC. 155. CONFORMING AMENDMENTS. 

2 Title XIII of the Housing and Community Develop3 ment Act of 1992, as amended by the preceding provisions 

4 of this Act, is further amended— 

5 (1) in sections 1365 (12 U.S.C. 4615) through 

6 1369D (12 U.S.C. 4623), but not including section 

7 1367 (12 U.S.C. 4617) as amended by section 154 of 

8 this Act— 

9 (A) by striking ‘‘An enterprise’’ each place 

10 such term appears and inserting ‘‘A regulated 

11 entity’’; 

12 (B) by striking ‘‘an enterprise’’ each place 

13 such term appears and inserting ‘‘a regulated 

14 entity’’; and 

15 (C) by striking ‘‘the enterprise’’ each place 

16 such term appears and inserting ‘‘the regulated 

17 entity’’; 

18 (2) in section 1366 (12 U.S.C. 4616)— 

19 (A) in subsection (b)(7), by striking ‘‘section 

20 1369 (excluding subsection (a)(1) and (2))’’ and 

21 inserting ‘‘section 1367’’; and 

22 (B) in subsection (d), by striking ‘‘the en23 terprises’’ and inserting ‘‘the regulated entities’’; 

24 (3) in section 1368(d) (12 U.S.C. 4618(d)), by 

25 striking ‘‘Committee on Banking, Finance and Urban 


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1 Affairs’’ and inserting ‘‘Committee on Financial 

2 Services’’; 

3 (4) in section 1369C (12 U.S.C. 4622)— 

4 (A) in subsection (a)(4), by striking ‘‘activi5 ties (including existing and new programs)’’ and 

6 inserting ‘‘activities, services, undertakings, and 

7 offerings (including existing and new products 

8 (as such term is defined in section 1321(f))’’; 

9 and 

10 (B) in subsection (c), by striking ‘‘any en11 terprise’’ and inserting ‘‘any regulated entity’’; 

12 and 

13 (5) in subsections (a) and (d) of section 1369D, 

14 by striking ‘‘section 1366 or 1367 or action under sec15 tion 1369)’’ each place such phrase appears and in16 serting ‘‘section 1367)’’. 

17 Subtitle D—Enforcement Actions 

18 SEC. 161. CEASE-AND-DESIST PROCEEDINGS. 

19 Section 1371 of the Housing and Community Develop20 ment Act of 1992 (12 U.S.C. 4631) is amended— 

21 (1) by striking subsections (a) and (b) and in22 serting the following new subsections: 

23 ‘‘(a) ISSUANCE FOR UNSAFE OR UNSOUND PRACTICES

24 AND VIOLATIONS OF RULES OR LAWS.—If, in the opinion 

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1 affiliated party is engaging or has engaged, or the Director 

2 has reasonable cause to believe that the regulated entity or 

3 any regulated entity-affiliated party is about to engage, in 

4 an unsafe or unsound practice in conducting the business 

5 of the regulated entity or is violating or has violated, or 

6 the Director has reasonable cause to believe that the regu7 lated entity or any regulated entity-affiliated party is about 

8 to violate, a law, rule, or regulation, or any condition im9 posed in writing by the Director in connection with the 

10 granting of any application or other request by the regu11 lated entity or any written agreement entered into with the 

12 Director, the Director may issue and serve upon the regu13 lated entity or such party a notice of charges in respect 

14 thereof. The Director may not, pursuant to this section, en15 force compliance with any housing goal established under 

16 subpart B of part 2 of subtitle A of this title, with section 

17 1336 or 1337 of this title, with subsection (m) or (n) of 

18 section 309 of the Federal National Mortgage Association 

19 Charter Act (12 U.S.C. 1723a(m), (n)), with subsection (e) 

20 or (f) of section 307 of the Federal Home Loan Mortgage 

21 Corporation Act (12 U.S.C. 1456(e), (f)), or with paragraph 

22 (5) of section 10(j) of the Federal Home Loan Bank Act 

23 (12 U.S.C. 1430(j)). 

24 ‘‘(b) ISSUANCE FOR UNSATISFACTORY RATING.—If a 

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1 ination, a less-than-satisfactory rating for asset quality, 

2 management, earnings, or liquidity, the Director may (if 

3 the deficiency is not corrected) deem the regulated entity 

4 to be engaging in an unsafe or unsound practice for pur5 poses of this subsection.’’; 

6 (2) in subsection (c)(2), by striking ‘‘enterprise, 

7 executive officer, or director’’ and inserting ‘‘regulated 

8 entity or regulated entity-affiliated party’’; and 

9 (3) in subsection (d)— 

10 (A) in the matter preceding paragraph (1), 

11 by striking ‘‘enterprise, executive officer, or di12 rector’’ and inserting ‘‘regulated entity or regu13 lated entity-affiliated party’’; 

14 (B) in paragraph (1)— 

15 (i) by striking ‘‘an executive officer or 

16 a director’’ and inserting ‘‘a regulated enti17 ty affiliated party’’; and 

18 (ii) by inserting ‘‘(including reim19 bursement of compensation under section 

20 1318)’’ after ‘‘reimbursement’’; 

21 (C) in paragraph (6), by striking ‘‘and’’ at 

22 the end; 

23 (D) by redesignating paragraph (7) as 

24 paragraph (8); and 


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1 (E) by inserting after paragraph (6) the fol2 lowing new paragraph: 

3 ‘‘(7) to effect an attachment on a regulated enti4 ty or regulated entity-affiliated party subject to an 

5 order under this section or section 1372; and’’. 

6 SEC. 162. TEMPORARY CEASE-AND-DESIST PROCEEDINGS. 

7 Section 1372 of the Housing and Community Develop8 ment Act of 1992 (12 U.S.C. 4632) is amended— 

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

10 following new subsection: 

11 ‘‘(a) GROUNDS FOR ISSUANCE.—Whenever the Direc12 tor determines that the violation or threatened violation or 

13 the unsafe or unsound practice or practices specified in the 

14 notice of charges served upon the regulated entity or any 

15 regulated entity-affiliated party pursuant to section 

16 1371(a), or the continuation thereof, is likely to cause insol17 vency or significant dissipation of assets or earnings of the 

18 regulated entity, or is likely to weaken the condition of the 

19 regulated entity prior to the completion of the proceedings 

20 conducted pursuant to sections 1371 and 1373, the Director 

21 may issue a temporary order requiring the regulated entity 

22 or such party to cease and desist from any such violation 

23 or practice and to take affirmative action to prevent or rem24 edy such insolvency, dissipation, condition, or prejudice 

25 pending completion of such proceedings. Such order may 


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1 include any requirement authorized under section 

2 1371(d).’’; 

3 (2) in subsection (b), by striking ‘‘enterprise, ex4 ecutive officer, or director’’ and inserting ‘‘regulated 

5 entity or regulated entity-affiliated party’’; 

6 (3) in subsection (d)— 

7 (A) by striking ‘‘An enterprise, executive of8 ficer, or director’’ and inserting ‘‘A regulated en9 tity or regulated entity-affiliated party’’; and 

10 (B) by striking ‘‘the enterprise, executive of11 ficer, or director’’ and inserting ‘‘the regulated 

12 entity or regulated entity-affiliated party’’; and 

13 (4) by striking subsection (e) and in inserting 

14 the following new subsection: 

15 ‘‘(e) ENFORCEMENT.—In the case of violation or 

16 threatened violation of, or failure to obey, a temporary 

17 cease-and-desist order issued pursuant to this section, the 

18 Director may apply to the United States District Court for 

19 the District of Columbia or the United States district court 

20 within the jurisdiction of which the headquarters of the reg21 ulated entity is located, for an injunction to enforce such 

22 order, and, if the court determines that there has been such 

23 violation or threatened violation or failure to obey, it shall 

24 be the duty of the court to issue such injunction.’’. 


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1 SEC. 163. PREJUDGMENT ATTACHMENT. 

2 The Housing and Community Development Act of 

3 1992 is amended by inserting after section 1375 (12 U.S.C. 

4 4635) the following new section: 

5 ‘‘SEC. 1375A. PREJUDGMENT ATTACHMENT. 

6 ‘‘(a) IN GENERAL.—In any action brought pursuant 

7 to this title, or in actions brought in aid of, or to enforce 

8 an order in, any administrative or other civil action for 

9 money damages, restitution, or civil money penalties 

10 brought pursuant to this title, the court may, upon applica11 tion of the Director or Attorney General, as applicable, 

12 issue a restraining order that— 

13 ‘‘(1) prohibits any person subject to the pro14 ceeding from withdrawing, transferring, removing, 

15 dissipating, or disposing of any funds, assets or other 

16 property; and 

17 ‘‘(2) appoints a person on a temporary basis to 

18 administer the restraining order. 

19 ‘‘(b) STANDARD.— 

20 ‘‘(1) SHOWING.—Rule 65 of the Federal Rules of 

21 Civil Procedure shall apply with respect to any pro22 ceeding under subsection (a) without regard to the re23 quirement of such rule that the applicant show that 

24 the injury, loss, or damage is irreparable and imme25 diate. 


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1 ‘‘(2) STATE PROCEEDING.—If, in the case of any 

2 proceeding in a State court, the court determines that 

3 rules of civil procedure available under the laws of 

4 such State provide substantially similar protections 

5 to a party’s right to due process as Rule 65 (as modi6 fied with respect to such proceeding by paragraph 

7 (1)), the relief sought under subsection (a) may be re8 quested under the laws of such State.’’. 

9 SEC. 164. ENFORCEMENT AND JURISDICTION. 

10 Section 1375 of the Housing and Community Develop11 ment Act of 1992 (12 U.S.C. 4635) is amended— 

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

13 following new subsection: 

14 ‘‘(a) ENFORCEMENT.—The Director may, in the dis15 cretion of the Director, apply to the United States District 

16 Court for the District of Columbia, or the United States 

17 district court within the jurisdiction of which the head18 quarters of the regulated entity is located, for the enforce19 ment of any effective and outstanding notice or order issued 

20 under this subtitle or subtitle B, or request that the Attorney 

21 General of the United States bring such an action. Such 

22 court shall have jurisdiction and power to order and require 

23 compliance with such notice or order.’’; and 

24 (2) in subsection (b), by striking ‘‘or 1376’’ and 

25 inserting ‘‘1376, or 1377’’. 


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1 SEC. 165. CIVIL MONEY PENALTIES. 

2 Section 1376 of the Housing and Community Develop3 ment Act of 1992 (12 U.S.C. 4636) is amended— 

4 (1) in subsection (a)— 

5 (A) in the matter preceding paragraph (1), 

6 by striking ‘‘, or any executive officer or direc7 tor’’ and inserting ‘‘or any regulated-entity af8 filiated party’’; and 

9 (B) in paragraph (1)— 

10 (i) by striking ‘‘the Federal National 

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

13 and inserting ‘‘any provision of any of the 

14 authorizing statutes’’; 

15 (ii) by striking ‘‘or Act’’ and inserting 

16 ‘‘or statute’’; 

17 (iii) by striking ‘‘or subsection’’ and 

18 inserting ‘‘, subsection’’; and 

19 (iv) by inserting ‘‘, or paragraph (5) 

20 or (12) of section 10(j) of the Federal Home 

21 Loan Bank Act’’ before the semicolon at the 

22 end; 

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

24 following new subsection: 

25 ‘‘(b) AMOUNT OF PENALTY.— 


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1 ‘‘(1) FIRST TIER.—Any regulated entity which, 

2 or any regulated entity-affiliated party who— 

3 ‘‘(A) violates any provision of this title, any 

4 provision of any of the authorizing statutes, or 

5 any order, condition, rule, or regulation under 

6 any such title or statute, except that the Director 

7 may not, pursuant to this section, enforce com8 pliance with any housing goal established under 

9 subpart B of part 2 of subtitle A of this title, 

10 with section 1336 or 1337 of this title, with sub11 section (m) or (n) of section 309 of the Federal 

12 National Mortgage Association Charter Act (12 

13 U.S.C. 1723a(m), (n)), with subsection (e) or (f) 

14 of section 307 of the Federal Home Loan Mort15 gage Corporation Act (12 U.S.C. 1456(e), (f)), or 

16 with paragraph (5) or (12) of section 10(j) of the 

17 Federal Home Loan Bank Act; 

18 ‘‘(B) violates any final or temporary order 

19 or notice issued pursuant to this title; 

20 ‘‘(C) violates any condition imposed in 

21 writing by the Director in connection with the 

22 grant of any application or other request by such 

23 regulated entity; or 

24 ‘‘(D) violates any written agreement be25 tween the regulated entity and the Director, 


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1 shall forfeit and pay a civil money penalty of not 

2 more than $10,000 for each day during which such 

3 violation continues. 

4 ‘‘(2) SECOND TIER.—Notwithstanding paragraph 

5 (1)— 

6 ‘‘(A) if a regulated entity, or a regulated 

7 entity-affiliated party— 

8 ‘‘(i) commits any violation described 

9 in any subparagraph of paragraph (1); 

10 ‘‘(ii) recklessly engages in an unsafe or 

11 unsound practice in conducting the affairs 

12 of such regulated entity; or 

13 ‘‘(iii) breaches any fiduciary duty; and 

14 ‘‘(B) the violation, practice, or breach— 

15 ‘‘(i) is part of a pattern of misconduct; 

16 ‘‘(ii) causes or is likely to cause more 

17 than a minimal loss to such regulated enti18 ty; or 

19 ‘‘(iii) results in pecuniary gain or 

20 other benefit to such party, 

21 the regulated entity or regulated entity-affiliated 

22 party shall forfeit and pay a civil penalty of not 

23 more than $50,000 for each day during which such 

24 violation, practice, or breach continues. 


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1 ‘‘(3) THIRD TIER.—Notwithstanding paragraphs 

2 (1) and (2), any regulated entity which, or any regu3 lated entity-affiliated party who— 

4 ‘‘(A) knowingly— 

5 ‘‘(i) commits any violation or engages 

6 in any conduct described in any subpara7 graph of paragraph (1); 

8 ‘‘(ii) engages in any unsafe or unsound 

9 practice in conducting the affairs of such 

10 regulated entity; or 

11 ‘‘(iii) breaches any fiduciary duty; and 

12 ‘‘(B) knowingly or recklessly causes a sub13 stantial loss to such regulated entity or a sub14 stantial pecuniary gain or other benefit to such 

15 party by reason of such violation, practice, or 

16 breach, 

17 shall forfeit and pay a civil penalty in an amount 

18 not to exceed the applicable maximum amount deter19 mined under paragraph (4) for each day during 

20 which such violation, practice, or breach continues. 

21 ‘‘(4) MAXIMUM AMOUNTS OF PENALTIES FOR ANY

22 VIOLATION DESCRIBED IN PARAGRAPH (3).—The max23 imum daily amount of any civil penalty which may 

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1 tion, practice, or breach described in such paragraph 

2 is— 

3 ‘‘(A) in the case of any person other than 

4 a regulated entity, an amount not to exceed 

5 $2,000,000; and 

6 ‘‘(B) in the case of any regulated entity, 

7 $2,000,000.’’; 

8 (3) in subsection (c)(1)(B), by striking ‘‘enter9 prise, executive officer, or director’’ and inserting 

10 ‘‘regulated entity or regulated entity-affiliated party’’; 

11 (4) in subsection (d), by striking the first sen12 tence and inserting the following: ‘‘If a regulated enti13 ty or regulated entity-affiliated party fails to comply 

14 with an order of the Director imposing a civil money 

15 penalty under this section, after the order is no longer 

16 subject to review as provided under subsection (c)(1) 

17 and section 1374, the Director may, in the discretion 

18 of the Director, bring an action in the United States 

19 District Court for the District of Columbia, or the 

20 United States district court within the jurisdiction of 

21 which the headquarters of the regulated entity is lo22 cated, to obtain a monetary judgment against the reg23 ulated entity or regulated entity affiliated party and 

24 such other relief as may be available, or request that 


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1 the Attorney General of the United States bring such 

2 an action.’’; and 

3 (5) in subsection (g), by striking ‘‘subsection 

4 (b)(3)’’ and inserting ‘‘this section, unless authorized 

5 by the Director by rule, regulation, or order’’. 

6 SEC. 166. REMOVAL AND PROHIBITION AUTHORITY. 

7 (a) IN GENERAL.—Subtitle C of title XIII of the Hous8 ing and Community Development Act of 1992 is amend9 ed— 

10 (1) by redesignating sections 1377, 1378, 1379, 

11 1379A, and 1379B (12 U.S.C. 4637–41) as sections 

12 1379, 1379A, 1379B, 1379C, and 1379D, respectively; 

13 and 

14 (2) by inserting after section 1376 (12 U.S.C. 

15 4636) the following new section: 

16 ‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY. 

17 ‘‘(a) AUTHORITY TO ISSUE ORDER.—Whenever the 

18 Director determines that— 

19 ‘‘(1) any regulated entity-affiliated party has, 

20 directly or indirectly— 

21 ‘‘(A) violated— 

22 ‘‘(i) any law or regulation; 

23 ‘‘(ii) any cease-and-desist order which 

24 has become final; 


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1 ‘‘(iii) any condition imposed in writ2 ing by the Director in connection with the 

3 grant of any application or other request by 

4 such regulated entity; or 

5 ‘‘(iv) any written agreement between 

6 such regulated entity and the Director; 

7 ‘‘(B) engaged or participated in any unsafe 

8 or unsound practice in connection with any reg9 ulated entity; or 

10 ‘‘(C) committed or engaged in any act, 

11 omission, or practice which constitutes a breach 

12 of such party’s fiduciary duty; 

13 ‘‘(2) by reason of the violation, practice, or 

14 breach described in any subparagraph of paragraph 

15 (1)— 

16 ‘‘(A) such regulated entity has suffered or 

17 will probably suffer financial loss or other dam18 age; or 

19 ‘‘(B) such party has received financial gain 

20 or other benefit by reason of such violation, prac21 tice, or breach; and 

22 ‘‘(3) such violation, practice, or breach— 

23 ‘‘(A) involves personal dishonesty on the 

24 part of such party; or 


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1 ‘‘(B) demonstrates willful or continuing dis2 regard by such party for the safety or soundness 

3 of such regulated entity, the Director may serve 

4 upon such party a written notice of the Direc5 tor’s intention to remove such party from office 

6 or to prohibit any further participation by such 

7 party, in any manner, in the conduct of the af8 fairs of any regulated entity. 

9 ‘‘(b) SUSPENSION ORDER.— 

10 ‘‘(1) SUSPENSION OR PROHIBITION AUTHOR11 ITY.—If the Director serves written notice under sub12 section (a) to any regulated entity-affiliated party of 

13 the Director’s intention to issue an order under such 

14 subsection, the Director may— 

15 ‘‘(A) suspend such party from office or pro16 hibit such party from further participation in 

17 any manner in the conduct of the affairs of the 

18 regulated entity, if the Director— 

19 ‘‘(i) determines that such action is nec20 essary for the protection of the regulated en21 tity; and 

22 ‘‘(ii) serves such party with written 

23 notice of the suspension order; and 

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1 filiated party any compensation or other pay2 ment of money or other thing of current or po3 tential value in connection with any resignation, 

4 removal, retirement, or other termination of em5 ployment or office of the party. 

6 ‘‘(2) EFFECTIVE PERIOD.—Any suspension order 

7 issued under this subsection— 

8 ‘‘(A) shall become effective upon service; and 

9 ‘‘(B) unless a court issues a stay of such 

10 order under subsection (g) of this section, shall 

11 remain in effect and enforceable until— 

12 ‘‘(i) the date the Director dismisses the 

13 charges contained in the notice served under 

14 subsection (a) with respect to such party; or 

15 ‘‘(ii) the effective date of an order 

16 issued by the Director to such party under 

17 subsection (a). 

18 ‘‘(3) COPY OF ORDER.—If the Director issues a 

19 suspension order under this subsection to any regu20 lated entity-affiliated party, the Director shall serve a 

21 copy of such order on any regulated entity with which 

22 such party is affiliated at the time such order is 

23 issued. 

24 ‘‘(c) NOTICE, HEARING, AND ORDER.—A notice of in25 tention to remove a regulated entity-affiliated party from 


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1 office or to prohibit such party from participating in the 

2 conduct of the affairs of a regulated entity shall contain 

3 a statement of the facts constituting grounds for such ac4 tion, and shall fix a time and place at which a hearing 

5 will be held on such action. Such hearing shall be fixed for 

6 a date not earlier than 30 days nor later than 60 days after 

7 the date of service of such notice, unless an earlier or a 

8 later date is set by the Director at the request of (1) such 

9 party, and for good cause shown, or (2) the Attorney Gen10 eral of the United States. Unless such party shall appear 

11 at the hearing in person or by a duly authorized representa12 tive, such party shall be deemed to have consented to the 

13 issuance of an order of such removal or prohibition. In the 

14 event of such consent, or if upon the record made at any 

15 such hearing the Director shall find that any of the grounds 

16 specified in such notice have been established, the Director 

17 may issue such orders of suspension or removal from office, 

18 or prohibition from participation in the conduct of the af19 fairs of the regulated entity, as it may deem appropriate, 

20 together with an order prohibiting compensation described 

21 in subsection (b)(1)(B). Any such order shall become effec22 tive at the expiration of 30 days after service upon such 

23 regulated entity and such party (except in the case of an 

24 order issued upon consent, which shall become effective at 

25 the time specified therein). Such order shall remain effective 


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1 and enforceable except to such extent as it is stayed, modi2 fied, terminated, or set aside by action of the Director or 

3 a reviewing court. 

4 ‘‘(d) PROHIBITION OF CERTAIN SPECIFIC ACTIVI5 TIES.—Any person subject to an order issued under this sec6 tion shall not— 

7 ‘‘(1) participate in any manner in the conduct 

8 of the affairs of any regulated entity; 

9 ‘‘(2) solicit, procure, transfer, attempt to trans10 fer, vote, or attempt to vote any proxy, consent, or au11 thorization with respect to any voting rights in any 

12 regulated entity; 

13 ‘‘(3) violate any voting agreement previously ap14 proved by the Director; or 

15 ‘‘(4) vote for a director, or serve or act as a regu16 lated entity-affiliated party. 

17 ‘‘(e) INDUSTRY-WIDE PROHIBITION.— 

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), any person who, pursuant to an order 

20 issued under this section, has been removed or sus21 pended from office in a regulated entity or prohibited 

22 from participating in the conduct of the affairs of a 

23 regulated entity may not, while such order is in effect, 

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1 ticipate in any manner in the conduct of the affairs 

2 of, any regulated entity. 

3 ‘‘(2) EXCEPTION IF DIRECTOR PROVIDES WRIT4 TEN CONSENT.—If, on or after the date an order is 

5 issued under this section which removes or suspends 

6 from office any regulated entity-affiliated party or 

7 prohibits such party from participating in the con8 duct of the affairs of a regulated entity, such party 

9 receives the written consent of the Director, the order 

10 shall, to the extent of such consent, cease to apply to 

11 such party with respect to the regulated entity de12 scribed in the written consent. If the Director grants 

13 such a written consent, it shall publicly disclose such 

14 consent. 

15 ‘‘(3) VIOLATION OF PARAGRAPH (1) TREATED AS

16 VIOLATION OF ORDER.—Any violation of paragraph 

17 (1) by any person who is subject to an order described 

18 in such subsection shall be treated as a violation of 

19 the order. 

20 ‘‘(f) APPLICABILITY.—This section shall only apply to 

21 a person who is an individual, unless the Director specifi22 cally finds that it should apply to a corporation, firm, or 

23 other business enterprise. 

24 ‘‘(g) STAY OF SUSPENSION AND PROHIBITION OF REG25 ULATED ENTITY-AFFILIATED PARTY.—Within 10 days 


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1 after any regulated entity-affiliated party has been sus2 pended from office and/or prohibited from participation in 

3 the conduct of the affairs of a regulated entity under this 

4 section, such party may apply to the United States District 

5 Court for the District of Columbia, or the United States 

6 district court for the judicial district in which the head7 quarters of the regulated entity is located, for a stay of such 

8 suspension and/or prohibition and any prohibition under 

9 subsection (b)(1)(B) pending the completion of the adminis10 trative proceedings pursuant to the notice served upon such 

11 party under this section, and such court shall have jurisdic12 tion to stay such suspension and/or prohibition. 

13 ‘‘(h) SUSPENSION OR REMOVAL OF REGULATED ENTI14 TY-AFFILIATED PARTY CHARGED WITH FELONY.— 

15 ‘‘(1) SUSPENSION OR PROHIBITION.— 

16 ‘‘(A) IN GENERAL.—Whenever any regu17 lated entity-affiliated party is charged in any 

18 information, indictment, or complaint, with the 

19 commission of or participation in a crime in20 volving dishonesty or breach of trust which is 

21 punishable by imprisonment for a term exceed22 ing one year under State or Federal law, the Di23 rector may, if continued service or participation 

24 by such party may pose a threat to the regulated 

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1 lated entity, by written notice served upon such 

2 party— 

3 ‘‘(i) suspend such party from office or 

4 prohibit such party from further participa5 tion in any manner in the conduct of the 

6 affairs of any regulated entity; and 

7 ‘‘(ii) prohibit the regulated entity from 

8 releasing to or on behalf of the regulated en9 tity-affiliated party any compensation or 

10 other payment of money or other thing of 

11 current or potential value in connection 

12 with the period of any such suspension or 

13 with any resignation, removal, retirement, 

14 or other termination of employment or of15 fice of the party. 

16 ‘‘(B) PROVISIONS APPLICABLE TO NO17 TICE.— 

18 ‘‘(i) COPY.—A copy of any notice 

19 under paragraph (1)(A) shall also be served 

20 upon the regulated entity. 

21 ‘‘(ii) EFFECTIVE PERIOD.—A suspen22 sion or prohibition under subparagraph (A) 

23 shall remain in effect until the information, 

24 indictment, or complaint referred to in such 


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1 subparagraph is finally disposed of or until 

2 terminated by the Director. 

3 ‘‘(2) REMOVAL OR PROHIBITION.— 

4 ‘‘(A) IN GENERAL.—If a judgment of con5 viction or an agreement to enter a pretrial diver6 sion or other similar program is entered against 

7 a regulated entity-affiliated party in connection 

8 with a crime described in paragraph (1)(A), at 

9 such time as such judgment is not subject to fur10 ther appellate review, the Director may, if con11 tinued service or participation by such party 

12 may pose a threat to the regulated entity or im13 pair public confidence in the regulated entity, 

14 issue and serve upon such party an order that— 

15 ‘‘(i) removes such party from office or 

16 prohibits such party from further participa17 tion in any manner in the conduct of the 

18 affairs of the regulated entity without the 

19 prior written consent of the Director; and 

20 ‘‘(ii) prohibits the regulated entity 

21 from releasing to or on behalf of the regu22 lated entity-affiliated party any compensa23 tion or other payment of money or other 

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1 nection with the termination of employment 

2 or office of the party. 

3 ‘‘(B) PROVISIONS APPLICABLE TO ORDER.— 

4 ‘‘(i) COPY.—A copy of any order under 

5 paragraph (2)(A) shall also be served upon 

6 the regulated entity, whereupon the regu7 lated entity-affiliated party who is subject 

8 to the order (if a director or an officer) 

9 shall cease to be a director or officer of such 

10 regulated entity. 

11 ‘‘(ii) EFFECT OF ACQUITTAL.—A find12 ing of not guilty or other disposition of the 

13 charge shall not preclude the Director from 

14 instituting proceedings after such finding or 

15 disposition to remove such party from office 

16 or to prohibit further participation in regu17 lated entity affairs, and to prohibit com18 pensation or other payment of money or 

19 other thing of current or potential value in 

20 connection with any resignation, removal, 

21 retirement, or other termination of employ22 ment or office of the party, pursuant to sub23 sections (a), (d), or (e) of this section. 

24 ‘‘(iii) EFFECTIVE PERIOD.—Any notice 

25 of suspension or order of removal issued 


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1 under this subsection shall remain effective 

2 and outstanding until the completion of any 

3 hearing or appeal authorized under para4 graph (4) unless terminated by the Director. 

5 ‘‘(3) AUTHORITY OF REMAINING BOARD MEM6 BERS.—If at any time, because of the suspension of 

7 one or more directors pursuant to this section, there 

8 shall be on the board of directors of a regulated entity 

9 less than a quorum of directors not so suspended, all 

10 powers and functions vested in or exercisable by such 

11 board shall vest in and be exercisable by the director 

12 or directors on the board not so suspended, until such 

13 time as there shall be a quorum of the board of direc14 tors. In the event all of the directors of a regulated 

15 entity are suspended pursuant to this section, the Di16 rector shall appoint persons to serve temporarily as 

17 directors in their place and stead pending the termi18 nation of such suspensions, or until such time as 

19 those who have been suspended cease to be directors of 

20 the regulated entity and their respective successors 

21 take office. 

22 ‘‘(4) HEARING REGARDING CONTINUED PARTICI23 PATION.—Within 30 days from service of any notice 

24 of suspension or order of removal issued pursuant to 

25 paragraph (1) or (2) of this subsection, the regulated 


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1 entity-affiliated party concerned may request in writ2 ing an opportunity to appear before the Director to 

3 show that the continued service to or participation in 

4 the conduct of the affairs of the regulated entity by 

5 such party does not, or is not likely to, pose a threat 

6 to the interests of the regulated entity or threaten to 

7 impair public confidence in the regulated entity. 

8 Upon receipt of any such request, the Director shall 

9 fix a time (not more than 30 days after receipt of 

10 such request, unless extended at the request of such 

11 party) and place at which such party may appear, 

12 personally or through counsel, before one or more 

13 members of the Director or designated employees of 

14 the Director to submit written materials (or, at the 

15 discretion of the Director, oral testimony) and oral 

16 argument. Within 60 days of such hearing, the Direc17 tor shall notify such party whether the suspension or 

18 prohibition from participation in any manner in the 

19 conduct of the affairs of the regulated entity will be 

20 continued, terminated, or otherwise modified, or 

21 whether the order removing such party from office or 

22 prohibiting such party from further participation in 

23 any manner in the conduct of the affairs of the regu24 lated entity, and prohibiting compensation in connec25 tion with termination will be rescinded or otherwise 


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1 modified. Such notification shall contain a statement 

2 of the basis for the Director’s decision, if adverse to 

3 such party. The Director is authorized to prescribe 

4 such rules as may be necessary to effectuate the pur5 poses of this subsection. 

6 ‘‘(i) HEARINGS AND JUDICIAL REVIEW.— 

7 ‘‘(1) VENUE AND PROCEDURE.—Any hearing 

8 provided for in this section shall be held in the Dis9 trict of Columbia or in the Federal judicial district 

10 in which the headquarters of the regulated entity is 

11 located, unless the party afforded the hearing consents 

12 to another place, and shall be conducted in accord13 ance with the provisions of chapter 5 of title 5, 

14 United States Code. After such hearing, and within 

15 90 days after the Director has notified the parties 

16 that the case has been submitted to it for final deci17 sion, it shall render its decision (which shall include 

18 findings of fact upon which its decision is predicated) 

19 and shall issue and serve upon each party to the pro20 ceeding an order or orders consistent with the provi21 sions of this section. Judicial review of any such 

22 order shall be exclusively as provided in this sub23 section. Unless a petition for review is timely filed in 

24 a court of appeals of the United States, as provided 

25 in paragraph (2), and thereafter until the record in 


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1 the proceeding has been filed as so provided, the Di2 rector may at any time, upon such notice and in such 

3 manner as it shall deem proper, modify, terminate, or 

4 set aside any such order. Upon such filing of the 

5 record, the Director may modify, terminate, or set 

6 aside any such order with permission of the court. 

7 ‘‘(2) REVIEW OF ORDER.—Any party to any 

8 proceeding under paragraph (1) may obtain a review 

9 of any order served pursuant to paragraph (1) (other 

10 than an order issued with the consent of the regulated 

11 entity or the regulated entity-affiliated party con12 cerned, or an order issued under subsection (h) of this 

13 section) by the filing in the United States Court of 

14 Appeals for the District of Columbia Circuit or court 

15 of appeals of the United States for the circuit in 

16 which the headquarters of the regulated entity is lo17 cated, within 30 days after the date of service of such 

18 order, a written petition praying that the order of the 

19 Director be modified, terminated, or set aside. A copy 

20 of such petition shall be forthwith transmitted by the 

21 clerk of the court to the Director, and thereupon the 

22 Director shall file in the court the record in the pro23 ceeding, as provided in section 2112 of title 28, 

24 United States Code. Upon the filing of such petition, 

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1 ing of the record shall (except as provided in the last 

2 sentence of paragraph (1)) be exclusive, to affirm, 

3 modify, terminate, or set aside, in whole or in part, 

4 the order of the Director. Review of such proceedings 

5 shall be had as provided in chapter 7 of title 5, 

6 United States Code. The judgment and decree of the 

7 court shall be final, except that the same shall be sub8 ject to review by the Supreme Court upon certiorari, 

9 as provided in section 1254 of title 28, United States 

10 Code. 

11 ‘‘(3) PROCEEDINGS NOT TREATED AS STAY.—The 

12 commencement of proceedings for judicial review 

13 under paragraph (2) shall not, unless specifically or14 dered by the court, operate as a stay of any order 

15 issued by the Director.’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) 1992 ACT.—Section 1317(f) of the Housing 

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

19 4517(f)) is amended by striking ‘‘section 1379B’’ and 

20 inserting ‘‘section 1379D’’. 

21 (2) FANNIE MAE CHARTER ACT.—The second sen22 tence of subsection (b) of section 308 of the Federal 

23 National Mortgage Association Charter Act (12 

24 U.S.C. 1723(b)) is amended by striking ‘‘The’’ and 

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1 tion 1377 of the Housing and Community Develop2 ment Act of 1992 temporarily results in a lesser num3 ber, the’’. 

4 (3) FREDDIE MAC ACT.—The second sentence of 

5 subparagraph (A) of section 303(a)(2) of the Federal 

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

7 1452(a)(2)(A)) is amended by striking ‘‘The’’ and in8 serting ‘‘Except to the extent that action under section 

9 1377 of the Housing and Community Development 

10 Act of 1992 temporarily results in a lesser number, 

11 the’’. 

12 SEC. 167. CRIMINAL PENALTY. 

13 Subtitle C of title XIII of the Housing and Community 

14 Development Act of 1992 (12 U.S.C. 4631 et seq.) is amend15 ed by inserting after section 1377 (as added by the pre16 ceding provisions of this Act) the following new section: 

17 ‘‘SEC. 1378. CRIMINAL PENALTY. 

18 ‘‘Whoever, being subject to an order in effect under sec19 tion 1377, without the prior written approval of the Direc20 tor, knowingly participates, directly or indirectly, in any 

21 manner (including by engaging in an activity specifically 

22 prohibited in such an order) in the conduct of the affairs 

23 of any regulated entity shall, notwithstanding section 3571 

24 of title 18, be fined not more than $1,000,000, imprisoned 

25 for not more than 5 years, or both.’’. 


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1 SEC. 168. SUBPOENA AUTHORITY. 

2 Section 1379D(c) of the Housing and Community De3 velopment Act of 1992 (12 U.S.C. 4641(c)), as so redesig4 nated by section 166(a)(1) of this Act, is further amended— 

5 (1) by striking ‘‘request the Attorney General of 

6 the United States to’’ and inserting ‘‘, in the discre7 tion of the Director,’’; 

8 (2) by inserting ‘‘or request that the Attorney 

9 General of the United States bring such an action,’’ 

10 after ‘‘District of Columbia,’’; and 

11 (3) by striking ‘‘or may, under the direction and 

12 control of the Attorney General, bring such an ac13 tion’’. 

14 SEC. 169. CONFORMING AMENDMENTS. 

15 Subtitle C of title XIII of the Housing and Community 

16 Development Act of 1992 (12 U.S.C. 4631 et seq.), as 

17 amended by the preceding provisions of this Act, is amend18 ed— 

19 (1) in section 1372(c)(1) (12 U.S.C. 4632(c)), by 

20 striking ‘‘that enterprise’’ and inserting ‘‘that regu21 lated entity’’; 

22 (2) in section 1379 (12 U.S.C. 4637), as so redes23 ignated by section 166(a)(1) of this Act— 

24 (A) by inserting ‘‘, or of a regulated entity25 affiliated party,’’ before ‘‘shall not affect’’; and 


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1 (B) by striking ‘‘such director or executive 

2 officer’’ each place such term appears and insert3 ing ‘‘such director, executive officer, or regulated 

4 entity-affiliated party’’; 

5 (3) in section 1379A (12 U.S.C. 4638), as so re6 designated by section 166(a)(1) of this Act, by insert7 ing ‘‘or against a regulated entity-affiliated party,’’ 

8 before ‘‘or impair’’; 

9 (4) by striking ‘‘An enterprise’’ each place such 

10 term appears in such subtitle and inserting ‘‘A regu11 lated entity’’; 

12 (5) by striking ‘‘an enterprise’’ each place such 

13 term appears in such subtitle and inserting ‘‘a regu14 lated entity’’; 

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

16 term appears in such subtitle and inserting ‘‘the regu17 lated entity’’; and 

18 (7) by striking ‘‘any enterprise’’ each place such 

19 term appears in such subtitle and inserting ‘‘any reg20 ulated entity’’. 

21 Subtitle E—General Provisions 

22 SEC. 181. BOARDS OF ENTERPRISES. 

23 (a) FANNIE MAE.— 


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1 (1) IN GENERAL.—Section 308(b) of the Federal 

2 National Mortgage Association Charter Act (12 

3 U.S.C. 1723(b)) is amended— 

4 (A) in the first sentence, by striking ‘‘eight5 een persons, five of whom shall be appointed an6 nually by the President of the United States, and 

7 the remainder of whom’’ and inserting ‘‘13 per8 sons, or such other number that the Director de9 termines appropriate, who’’; 

10 (B) in the second sentence, by striking ‘‘ap11 pointed by the President’’; 

12 (C) in the third sentence— 

13 (i) by striking ‘‘appointed or’’; and 

14 (ii) by striking ‘‘, except that any such 

15 appointed member may be removed from of16 fice by the President for good cause’’; 

17 (D) in the fourth sentence, by striking ‘‘elec18 tive’’; and 

19 (E) by striking the fifth sentence. 

20 (2) TRANSITIONAL PROVISION.—The amendments 

21 made by paragraph (1) shall not apply to any ap22 pointed position of the board of directors of the Fed23 eral National Mortgage Association until the expira24 tion of the annual term for such position during 

25 which the effective date under Section 185 occurs. 


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1 (b) FREDDIE MAC.— 

2 (1) IN GENERAL.—Section 303(a)(2) of the Fed3 eral Home Loan Mortgage Corporation Act (12 

4 U.S.C. 1452(a)(2)) is amended— 

5 (A) in subparagraph (A)— 

6 (i) in the first sentence, by striking 

7 ‘‘18 persons, 5 of whom shall be appointed 

8 annually by the President of the United 

9 States and the remainder of whom’’ and in10 serting ‘‘13 persons, or such other number 

11 as the Director determines appropriate, 

12 who’’; and 

13 (ii) in the second sentence, by striking 

14 ‘‘appointed by the President of the United 

15 States’’; 

16 (B) in subparagraph (B)— 

17 (i) by striking ‘‘such or’’; and 

18 (ii) by striking ‘‘, except that any ap19 pointed member may be removed from office 

20 by the President for good cause’’; and 

21 (C) in subparagraph (C)— 

22 (i) by striking the first sentence; and 

23 (ii) by striking ‘‘elective’’. 

24 (2) TRANSITIONAL PROVISION.—The amendments 

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1 pointed position of the board of directors of the Fed2 eral Home Loan Mortgage Corporation until the expi3 ration of the annual term for such position during 

4 which the effective date under Section 185 occurs. 

5 SEC. 182. REPORT ON PORTFOLIO OPERATIONS, SAFETY 

6 AND SOUNDNESS, AND MISSION OF ENTER7 PRISES. 

8 Not later than the expiration of the 12-month period 

9 beginning on the effective date under section 185, the Direc10 tor of the Federal Housing Finance Agency shall submit 

11 a report to the Congress which shall include— 

12 (1) a description of the portfolio holdings of the 

13 enterprises (as such term is defined in section 1303 

14 of the Housing and Community Development Act of 

15 1992 (12 U.S.C. 4502) in mortgages (including whole 

16 loans and mortgage-backed securities), non-mortgages, 

17 and other assets; 

18 (2) a description of the risk implications for the 

19 enterprises of such holdings and the consequent risk 

20 management undertaken by the enterprises (including 

21 the use of derivatives for hedging purposes), compared 

22 with off-balance sheet liabilities of the enterprises (in23 cluding mortgage-backed securities guaranteed by the 

24 enterprises); 


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1 (3) an analysis of portfolio holdings for safety 

2 and soundness purposes; 

3 (4) an assessment of whether portfolio holdings 

4 fulfill the mission purposes of the enterprises under 

5 the Federal National Mortgage Association Charter 

6 Act and the Federal Home Loan Mortgage Corpora7 tion Act; and 

8 (5) an analysis of the potential systemic risk im9 plications for the enterprises, the housing and capital 

10 markets, and the financial system of portfolio hold11 ings, and whether such holdings should be limited or 

12 reduced over time. 

13 SEC. 183. CONFORMING AND TECHNICAL AMENDMENTS. 

14 (a) 1992 ACT.—Title XIII of the Housing and Com15 munity Development Act of 1992 is amended by striking 

16 section 1383 (12 U.S.C. 1451 note). 

17 (b) TITLE 18, UNITED STATES CODE.—Section 1905 

18 of title 18, United States Code, is amended by striking ‘‘Of19 fice of Federal Housing Enterprise Oversight’’ and insert20 ing ‘‘Federal Housing Finance Agency’’. 

21 (c) FLOOD DISASTER PROTECTION ACT OF 1973.— 

22 Section 102(f)(3)(A) of the Flood Disaster Protection Act 

23 of 1973 (42 U.S.C. 4012a(f)(3)(A)) is amended by striking 

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1 ment’’ and inserting ‘‘Director of the Federal Housing Fi2 nance Agency’’. 

3 (d) DEPARTMENT OF HOUSING AND URBAN DEVELOP4 MENT ACT.—Section 5 of the Department of Housing and 

5 Urban Development Act (42 U.S.C. 3534) is amended by 

6 striking subsection (d). 

7 (e) TITLE 5, UNITED STATES CODE.— 

8 (1) DIRECTOR’S PAY RATE.—Section 5313 of 

9 title 5, United States Code, is amended by striking 

10 the item relating to the Director of the Office of Fed11 eral Housing Enterprise Oversight, Department of 

12 Housing and Urban Development and inserting the 

13 following new item: 

14 ‘‘Director of the Federal Housing Finance Agen15 cy.’’. 

16 (2) EXCLUSION FROM SENIOR EXECUTIVE SERV17 ICE.—Section 3132(a)(1)(D) of title 5, United States 

18 Code, is amended— 

19 (A) by striking ‘‘the Federal Housing Fi20 nance Board,’’; and 

21 (B) by striking ‘‘the Office of Federal Hous22 ing Enterprise Oversight of the Department of 

23 Housing and Urban Development’’ and inserting 

24 ‘‘the Federal Housing Finance Agency’’. 


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1 (f) INSPECTOR GENERAL ACT OF 1978.—Section 

2 8G(a)(2) of the Inspector General Act of 1978 (5 U.S.C. 

3 App.) is amended by striking ‘‘Federal Housing Finance 

4 Board’’ and inserting ‘‘Federal Housing Finance Agency’’. 

5 (g) FEDERAL DEPOSIT INSURANCE ACT.—Section 

6 11(t)(2)(A) of the Federal Deposit Insurance Act (12 

7 U.S.C.1821(t)(2)(A)) is amended by adding at the end the 

8 following new clause: 

9 ‘‘(vii) The Federal Housing Finance 

10 Agency.’’. 

11 (h) 1997 EMERGENCY SUPPLEMENTAL APPROPRIA12 TIONS ACT.—Section 10001 of the 1997 Emergency Supple13 mental Appropriations Act for Recovery From Natural Dis14 asters, and for Overseas Peacekeeping Efforts, Including 

15 Those In Bosnia (42 U.S.C. 3548) is amended— 

16 (1) by striking ‘‘the Government National Mort17 gage Association, and the Office of Federal Housing 

18 Enterprise Oversight’’ and inserting ‘‘and the Govern19 ment National Mortgage Association’’; and 

20 (2) by striking ‘‘, the Government National 

21 Mortgage Association, or the Office of Federal Hous22 ing Enterprise Oversight’’ and inserting ‘‘or the Gov23 ernment National Mortgage Association’’. 

24 (i) NATIONAL HOMEOWNERSHIP TRUST ACT.—Section 

25 302(b)(4) of the Cranston-Gonzalez National Affordable 


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1 Housing Act (42 U.S.C. 12851(b)(4)) is amended by strik2 ing ‘‘the chairperson of the Federal Housing Finance 

3 Board’’ and inserting ‘‘the Director of the Federal Housing 

4 Finance Agency’’. 

5 SEC. 184. STUDY OF ALTERNATIVE SECONDARY MARKET 

6 SYSTEMS. 

7 (a) IN GENERAL.—The Director of the Federal Hous8 ing Finance Agency, in consultation with the Board of Gov9 ernors of the Federal Reserve System, the Secretary of the 

10 Treasury, and the Secretary of Housing and Urban Devel11 opment, shall conduct a comprehensive study of the effects 

12 on financial and housing finance markets of alternatives 

13 to the current secondary market system for housing finance, 

14 taking into consideration changes in the structure of finan15 cial and housing finance markets and institutions since the 

16 creation of the Federal National Mortgage Association and 

17 the Federal Home Loan Mortgage Corporation. 

18 (b) CONTENTS.—The study under this section shall— 

19 (1) include, among the alternatives to the current 

20 secondary market system analyzed— 

21 (A) repeal of the chartering Acts for the 

22 Federal National Mortgage Association and the 

23 Federal Home Loan Mortgage Corporation; 


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1 (B) establishing bank-like mechanisms for 

2 granting new charters for limited purposed 

3 mortgage securitization entities; 

4 (C) permitting the Director of the Federal 

5 Housing Finance Agency to grant new charters 

6 for limited purpose mortgage securitization enti7 ties, which shall include analyzing the terms on 

8 which such charters should be granted, including 

9 whether such charters should be sold, or whether 

10 such charters and the charters for the Federal 

11 National Mortgage Association and the Federal 

12 Home Loan Mortgage Corporation should be 

13 taxed or otherwise assessed a monetary price; 

14 and 

15 (D) such other alternatives as the Director 

16 considers appropriate; 

17 (2) examine all of the issues involved in making 

18 the transition to a completely private secondary mort19 gage market system; 

20 (3) examine the technological advancements the 

21 private sector has made in providing liquidity in the 

22 secondary mortgage market and how such advance23 ments have affected liquidity in the secondary mort24 gage market; and 


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1 (4) examine how taxpayers would be impacted 

2 by each alternative system, including the complete 

3 privatization of the Federal National Mortgage Asso4 ciation and the Federal Home Loan Mortgage Cor5 poration. 

6 (c) REPORT.—The Director of the Federal Housing Fi7 nance Agency shall submit a report to the Congress on the 

8 study not later than the expiration of the 24-month period 

9 beginning on the effective date under section 185. 

10 TITLE II—FEDERAL HOME LOAN 

11 BANKS 

12 SEC. 201. DEFINITIONS. 

13 Section 2 of the Federal Home Loan Bank Act (12 

14 U.S.C. 1422) is amended— 

15 (1) by striking paragraphs (1), (10), and (11); 

16 (2) by redesignating paragraphs (2) through (9) 

17 as paragraphs (1) through (8), respectively; 

18 (3) by redesignating paragraphs (12) and (13) 

19 as paragraphs (9) and (10), respectively; and 

20 (4) by adding at the end the following: 

21 ‘‘(11) DIRECTOR.—The term ‘Director’ means 

22 the Director of the Federal Housing Finance Agency. 

23 ‘‘(12) AGENCY.—The term ‘Agency’ means the 

24 Federal Housing Finance Agency.’’. 


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1 SEC. 202. DIRECTORS. 

2 (a) ELECTION.—Section 7 of the Federal Home Loan 

3 Bank Act (12 U.S.C. 1427) is amended— 

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

5 following: 

6 ‘‘(a) NUMBER; ELECTION; QUALIFICATIONS; CON7 FLICTS OF INTEREST.— 

8 ‘‘(1) IN GENERAL.—The management of each 

9 Federal Home Loan Bank shall be vested in a board 

10 of 13 directors, or such other number as the Director 

11 determines appropriate, each of whom shall be a cit12 izen of the United States. All directors of a Bank who 

13 are not independent directors pursuant to paragraph 

14 (3) shall be elected by the members. 

15 ‘‘(2) MEMBER DIRECTORS.—A majority of the 

16 directors of each Bank shall be officers or directors of 

17 a member of such Bank that is located in the district 

18 in which such Bank is located. 

19 ‘‘(3) INDEPENDENT DIRECTORS.—At least two20 fifths of the directors of each Bank shall be inde21 pendent directors, who shall be appointed by the Di22 rector of the Federal Housing Finance Agency from 

23 a list of individuals recommended by the Federal 

24 Housing Enterprise Board, and shall meet the fol25 lowing criteria: 


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1 ‘‘(A) IN GENERAL.—Each independent di2 rector shall be a bona fide resident of the district 

3 in which such Bank is located. 

4 ‘‘(B) PUBLIC INTEREST DIRECTORS.—At 

5 least 2 of the independent directors under this 

6 paragraph of each Bank shall be representatives 

7 chosen from organizations with more than a 2- 

8 year history of representing consumer or commu9 nity interests on banking services, credit needs, 

10 housing, community development, economic de11 velopment, or financial consumer protections. 

12 ‘‘(C) OTHER DIRECTORS.— 

13 ‘‘(i) QUALIFICATIONS.—Each inde14 pendent director that is not a public inter15 est director under subparagraph (B) shall 

16 have demonstrated knowledge of, or experi17 ence in, financial management, auditing 

18 and accounting, risk management practices, 

19 derivatives, project development, or organi20 zational management, or such other knowl21 edge or expertise as the Director may pro22 vide by regulation. 

23 ‘‘(ii) CONSULTATION WITH BANKS.—In 

24 appointing other directors to serve on the 

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1 rector of the Federal Housing Finance 

2 Agency may consult with each Federal home 

3 loan bank about the knowledge, skills, and 

4 expertise needed to assist the board in better 

5 fulfilling its responsibilities. 

6 ‘‘(D) CONFLICTS OF INTEREST.—Notwith7 standing subsection (f)(2), an independent direc8 tor under this paragraph of a Bank may not, 

9 during such director’s term of office, serve as an 

10 officer of any Federal Home Loan Bank or as a 

11 director or officer of any member of a Bank. 

12 ‘‘(E) COMMUNITY DEMOGRAPHICS.—In ap13 pointing independent directors of a Bank pursu14 ant to this paragraph, the Director shall take 

15 into consideration the demographic makeup of 

16 the community most served by the Affordable 

17 Housing Program of the Bank pursuant to sec18 tion 10(j).’’; 

19 (2) in the first sentence of subsection (b), by 

20 striking ‘‘elective directorship’’ and inserting ‘‘mem21 ber directorship established pursuant to subsection 

22 (a)(2)’’; 

23 (3) in subsection (c)— 

24 (A) by striking ‘‘elective’’ each place such 

25 term appears and inserting ‘‘member’’, except— 


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1 (i) in the second sentence, the second 

2 place such term appears; and 

3 (ii) each place such term appears in 

4 the fifth sentence; and 

5 (B) in the second sentence— 

6 (i) by inserting ‘‘(A) except as pro7 vided in clause (B) of this sentence,’’ before 

8 ‘‘if at any time’’; and 

9 (ii) by inserting before the period at 

10 the end the following: ‘‘, and (B) clause (A) 

11 of this sentence shall not apply to the direc12 torships of any Federal home loan bank re13 sulting from the merger of any two or more 

14 such banks’’; and 

15 (4) by striking ‘‘elective’’ each place such term 

16 appears (except in subsections (c), (e), and (f)). 

17 (b) TERMS.— 

18 (1) IN GENERAL.—Section 7(d) of the Federal 

19 Home Loan Bank Act (12 U.S.C. 1427(d)) is amend20 ed— 

21 (A) in the first sentence, by striking ‘‘3 

22 years’’ and inserting ‘‘4 years’’; and 

23 (B) in the second sentence— 

24 (i) by striking ‘‘Federal Home Loan 

25 Bank System Modernization Act of 1999’’ 


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1 and inserting ‘‘Federal Housing Finance 

2 Reform Act of 2007’’; and 

3 (ii) by striking ‘‘1/3’’ and inserting ‘‘1/ 

4 4’’. 

5 (2) SAVINGS PROVISION.—The amendments made 

6 by paragraph (1) shall not apply to the term of office 

7 of any director of a Federal home loan bank who is 

8 serving as of the effective date of this title under sec9 tion 211, including any director elected to fill a va10 cancy in any such office. 

11 (c) CONTINUED SERVICE OF INDEPENDENT DIREC12 TORS AFTER EXPIRATION OF TERM.—Section 7(f)(2) of the 

13 Federal Home Loan Bank Act (12 U.S.C. 1427(f)(2)) is 

14 amended— 

15 (1) in the second sentence, by striking ‘‘or the 

16 term of such office expires, whichever occurs first’’; 

17 (2) by adding at the end the following new sen18 tence: ‘‘An independent Bank director may continue 

19 to serve as a director after the expiration of the term 

20 of such director until a successor is appointed.’’; 

21 (3) in the paragraph heading, by striking ‘‘AP22 POINTED’’ and inserting ‘‘INDEPENDENT’’; and 

23 (4) by striking ‘‘appointive’’ each place such 

24 term appears and inserting ‘‘independent’’. 


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1 (d) CONFORMING AMENDMENTS.—Section 7(f)(3) of 

2 the Federal Home Loan Bank Act (12 U.S.C. 1427(f)(3)) 

3 is amended— 

4 (1) in the paragraph heading, by striking 

5 ‘‘ELECTED’’ and inserting ‘‘MEMBER’’; and 

6 (2) by striking ‘‘elective’’ each place such term 

7 appears in the first and third sentences and inserting 

8 ‘‘member’’. 

9 (e) COMPENSATION.—Subsection (i) of section 7 of the 

10 Federal Home Loan Bank Act (12 U.S.C. 1427(i)) is 

11 amended to read as follows: 

12 ‘‘(i) DIRECTORS’ COMPENSATION.— 

13 ‘‘(1) IN GENERAL.—Each Federal home loan 

14 bank may pay the directors on the board of directors 

15 for the bank reasonable and appropriate compensa16 tion for the time required of such directors, and rea17 sonable and appropriate expenses incurred by such 

18 directors, in connection with service on the board of 

19 directors, in accordance with resolutions adopted by 

20 the board of directors and subject to the approval of 

21 the Director. 

22 ‘‘(2) ANNUAL REPORT BY THE BOARD.—The Di23 rector shall include, in the annual report submitted to 

24 the Congress pursuant to section 1319B of the Federal 

25 Housing Enterprises Financial Safety and Soundness 


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1 Act of 1992, information regarding the compensation 

2 and expenses paid by the Federal home loan banks to 

3 the directors on the boards of directors of the banks.’’. 

4 (f) TRANSITION RULE.—Any member of the board of 

5 directors of a Federal Home Loan Bank serving as of the 

6 effective date under section 211 may continue to serve as 

7 a member of such board of directors for the remainder of 

8 the term of such office as provided in section 7 of the Fed9 eral Home Loan Bank Act, as in effect before such effective 

10 date. 

11 SEC. 203. FEDERAL HOUSING FINANCE AGENCY OVERSIGHT 

12 OF FEDERAL HOME LOAN BANKS. 

13 The Federal Home Loan Bank Act (12 U.S.C. 1421 

14 et seq.), other than in provisions of that Act added or 

15 amended otherwise by this Act, is amended— 

16 (1) by striking sections 2A and 2B (12 U.S.C. 

17 1422a, 1422b); 

18 (2) in section 6 (12 U.S.C. 1426(b)(1))— 

19 (A) in subsection (b)(1), in the matter pre20 ceding subparagraph (A), by striking ‘‘Finance 

21 Board approval’’ and inserting ‘‘approval by the 

22 Director’’; and 

23 (B) in each of subsections (c)(4)(B) and 

24 (d)(2), by striking ‘‘Finance Board regulations’’ 


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1 each place that term appears and inserting ‘‘reg2 ulations of the Director’’; 

3 (3) in section 8 (12 U.S.C. 1428), in the section 

4 heading, by striking ‘‘BY THE BOARD’’; 

5 (4) in section 10(b) (12 U.S.C. 1430(b)), by 

6 striking ‘‘by formal resolution’’; 

7 (5) in section 10 (12 U.S.C. 1430), by adding at 

8 the end the following new subsection: 

9 ‘‘(k) MONITORING AND ENFORCING COMPLIANCE WITH

10 AFFORDABLE HOUSING AND COMMUNITY INVESTMENT

11 PROGRAM REQUIREMENTS.—The requirements under sub12 section (i) and (j) that the Banks establish Community In13 vestment and Affordable Housing Programs, respectively, 

14 and contribute to the Affordable Housing Program, shall 

15 be enforceable by the Director with respect to the Banks in 

16 the same manner and to the same extent as the housing 

17 goals under subpart B of part 2 of subtitle A of title XIII 

18 of the Housing and Community Development Act of 1992 

19 (12 U.S.C. 4561 et seq.) are enforceable under section 1336 

20 of such Act with respect to the Federal National Mortgage 

21 Association and the Federal Home Loan Mortgage Corpora22 tion.’’; 

23 (6) in section 11 (12 U.S.C. 1431)— 

24 (A) in subsection (b)— 

25 (i) in the first sentence— 


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1 (I) by striking ‘‘The Board’’ and 

2 inserting ‘‘The Office of Finance, as 

3 agent for the Banks,’’; and 

4 (II) by striking ‘‘the Board’’ and 

5 inserting ‘‘such Office’’; and 

6 (ii) in the second and fourth sentences, 

7 by striking ‘‘the Board’’ each place such 

8 term appears and inserting ‘‘the Office of 

9 Finance’’; 

10 (B) in subsection (c)— 

11 (i) by striking ‘‘the Board’’ the first 

12 place such term appears and inserting ‘‘the 

13 Office of Finance, as agent for the Banks,’’; 

14 and 

15 (ii) by striking ‘‘the Board’’ the second 

16 place such term appears and inserting 

17 ‘‘such Office’’; and 

18 (C) in subsection (f)— 

19 (i) by striking the two commas after 

20 ‘‘permit’’ and inserting ‘‘or’’; and 

21 (ii) by striking the comma after ‘‘re22 quire’’; 

23 (7) in section 15 (12 U.S.C. 1435), by inserting 

24 ‘‘or the Director’’ after ‘‘the Board’’; 


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1 (8) in section 18 (12 U.S.C. 1438), by striking 

2 subsection (b); 

3 (9) in section 21 (12 U.S.C. 1441)— 

4 (A) in subsection (b)— 

5 (i) in paragraph (5), by striking 

6 ‘‘Chairperson of the Federal Housing Fi7 nance Board’’ and inserting ‘‘Director’’; 

8 and 

9 (ii) in the heading for paragraph (8), 

10 by striking ‘‘FEDERAL HOUSING FINANCE

11 BOARD’’ and inserting ‘‘DIRECTOR’’; and 

12 (B) in subsection (i), in the heading for 

13 paragraph (2), by striking ‘‘FEDERAL HOUSING

14 FINANCE BOARD’’ and inserting ‘‘DIRECTOR’’; 

15 (10) in section 23 (12 U.S.C. 1443), by striking 

16 ‘‘Board of Directors of the Federal Housing Finance 

17 Board’’ and inserting ‘‘Director’’; 

18 (11) by striking ‘‘the Board’’ each place such 

19 term appears in such Act (except in section 15 (12 

20 U.S.C. 1435), section 21(f)(2) (12 U.S.C. 1441(f)(2)), 

21 subsections (a), (k)(2)(B)(i), and (n)(6)(C)(ii) of sec22 tion 21A (12 U.S.C. 1441a), subsections (f)(2)(C), 

23 and (k)(7)(B)(ii) of section 21B (12 U.S.C. 1441b), 

24 and the first two places such term appears in section 

25 22 (12 U.S.C. 1442)) and inserting ‘‘the Director’’; 


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1 (12) by striking ‘‘The Board’’ each place such 

2 term appears in such Act (except in sections 7(e) (12 

3 U.S.C. 1427(e)), and 11(b) (12 U.S.C. 1431(b)) and 

4 inserting ‘‘The Director’’; 

5 (13) by striking ‘‘the Board’s’’ each place such 

6 term appears in such Act and inserting ‘‘the Direc7 tor’s’’; 

8 (14) by striking ‘‘The Board’s’’ each place such 

9 term appears in such Act and inserting ‘‘The Direc10 tor’s’’; 

11 (15) by striking ‘‘the Finance Board’’ each place 

12 such term appears in such Act and inserting ‘‘the Di13 rector’’; 

14 (16) by striking ‘‘Federal Housing Finance 

15 Board’’ each place such term appears and inserting 

16 ‘‘Director’’; 

17 (17) in section 11(i) (12 U.S.C. 1431(i), by 

18 striking ‘‘the Chairperson of’’; and 

19 (18) in section 21(e)(9) (12 U.S.C. 1441(e)(9)), 

20 by striking ‘‘Chairperson of the’’. 

21 SEC. 204. JOINT ACTIVITIES OF BANKS. 

22 Section 11 of the Federal Home Loan Bank Act (12 

23 U.S.C. 1431) is amended by adding at the end the following 

24 new subsection: 


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1 ‘‘(l) JOINT ACTIVITIES.—Subject to the regulation of 

2 the Director, any two or more Federal Home Loan Banks 

3 may establish a joint office for the purpose of performing 

4 functions for, or providing services to, the Banks on a com5 mon or collective basis, or may require that the Office of 

6 Finance perform such functions or services, but only if the 

7 Banks are otherwise authorized to perform such functions 

8 or services individually.’’. 

9 SEC. 205. SHARING OF INFORMATION BETWEEN FEDERAL 

10 HOME LOAN BANKS. 

11 (a) IN GENERAL.—The Federal Home Loan Bank Act 

12 is amended by inserting after section 20 (12 U.S.C. 1440) 

13 the following new section: 

14 ‘‘SEC. 20A. SHARING OF INFORMATION BETWEEN FEDERAL 

15 HOME LOAN BANKS. 

16 ‘‘(a) REGULATORY AUTHORITY.—The Director shall 

17 prescribe such regulations as may be necessary to ensure 

18 that each Federal Home Loan Bank has access to informa19 tion that the Bank needs to determine the nature and extent 

20 of its joint and several liability. 

21 ‘‘(b) NO WAIVER OF PRIVILEGE.—The Director shall 

22 not be deemed to have waived any privilege applicable to 

23 any information concerning a Federal Home Loan Bank 

24 by transferring, or permitting the transfer of, that informa25 tion to any other Federal Home Loan Bank for the purpose 


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1 of enabling the recipient to evaluate the nature and extent 

2 of its joint and several liability.’’. 

3 (b) REGULATIONS.—The regulations required under 

4 the amendment made by subsection (a) shall be issued in 

5 final form not later than 6 months after the effective date 

6 under section 211 of this Act. 

7 SEC. 206. REORGANIZATION OF BANKS AND VOLUNTARY 

8 MERGER. 

9 Section 26 of the Federal Home Loan Bank Act (12 

10 U.S.C. 1446) is amended— 

11 (1) by inserting ‘‘(a) REORGANIZATION.—’’ be12 fore ‘‘Whenever’’; and 

13 (2) by striking ‘‘liquidated or’’ each place such 

14 phrase appears; 

15 (3) by striking ‘‘liquidation or’’; and 

16 (4) by adding at the end the following new sub17 section: 

18 ‘‘(b) VOLUNTARY MERGERS.—Any two or more Banks 

19 may, with the approval of the Director, and the approval 

20 of the boards of directors of the Banks involved, merge. The 

21 Director shall promulgate regulations establishing the con22 ditions and procedures for the consideration and approval 

23 of any such voluntary merger, including the procedures for 

24 Bank member approval.’’. 


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1 SEC. 207. SECURITIES AND EXCHANGE COMMISSION DIS2 CLOSURE. 

3 (a) IN GENERAL.—The Federal Home Loan Banks 

4 shall be exempt from compliance with— 

5 (1) sections 13(e), 14(a), 14(c), and 17A of the 

6 Securities Exchange Act of 1934 and related Commis7 sion regulations; and 

8 (2) section 15 of that Act and related Securities 

9 and Exchange Commission regulations with respect to 

10 transactions in capital stock of the Banks. 

11 (b) MEMBER EXEMPTION.—The members of the Fed12 eral Home Loan Banks shall be exempt from compliance 

13 with sections 13(d), 13(f), 13(g), 14(d), and 16 of the Secu14 rities Exchange Act of 1934 and related Securities and Ex15 change Commission regulations with respect to their owner16 ship of, or transactions in, capital stock of the Federal 

17 Home Loan Banks. 

18 (c) EXEMPTED AND GOVERNMENT SECURITIES.— 

19 (1) CAPITAL STOCK.—The capital stock issued by 

20 each of the Federal Home Loan Banks under section 

21 6 of the Federal Home Loan Bank Act are— 

22 (A) exempted securities within the meaning 

23 of section 3(a)(2) of the Securities Act of 1933; 

24 and 


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1 (B) ‘‘exempted securities’’ within the mean2 ing of section 3(a)(12)(A) of the Securities Ex3 change Act of 1934. 

4 (2) OTHER OBLIGATIONS.—The debentures, 

5 bonds, and other obligations issued under section 11 

6 of the Federal Home Loan Bank Act are— 

7 (A) exempted securities within the meaning 

8 of section 3(a)(2) of the Securities Act of 1933; 

9 (B) ‘‘government securities’’ within the 

10 meaning of section 3(a)(42) of the Securities Ex11 change Act of 1934; 

12 (C) excluded from the definition of ‘‘govern13 ment securities broker’’ within section 3(a)(43) 

14 of the Securities Exchange Act of 1934; 

15 (D) excluded from the definition of ‘‘govern16 ment securities dealer’’ within section 3(a)(44) of 

17 the Securities Exchange Act of 1934; and 

18 (E) ‘‘government securities’’ within the 

19 meaning of section 2(a)(16) of the Investment 

20 Company Act of 1940. 

21 (d) EXEMPTION FROM REPORTING REQUIREMENTS.— 

22 The Federal Home Loan Banks shall be exempt from peri23 odic reporting requirements pertaining to— 


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1 (1) the disclosure of related party transactions 

2 that occur in the ordinary course of business of the 

3 Banks with their members; and 

4 (2) the disclosure of unregistered sales of equity 

5 securities. 

6 (e) TENDER OFFERS.—The Securities and Exchange 

7 Commission’s rules relating to tender offers shall not apply 

8 in connection with transactions in capital stock of the Fed9 eral Home Loan Banks. 

10 (f) REGULATIONS.—In issuing any final regulations 

11 to implement provisions of this section, the Securities and 

12 Exchange Commission shall consider the distinctive charac13 teristics of the Federal Home Loan Banks when evaluating 

14 the accounting treatment with respect to the payment to 

15 Resolution Funding Corporation, the role of the combined 

16 financial statements of the twelve Banks, the accounting 

17 classification of redeemable capital stock, and the account18 ing treatment related to the joint and several nature of the 

19 obligations of the Banks. 

20 SEC. 208. COMMUNITY FINANCIAL INSTITUTION MEMBERS. 

21 (a) TOTAL ASSET REQUIREMENT.—Paragraph (10) of 

22 section 2 of the Federal Home Loan Bank Act (12 U.S.C. 

23 1422(10)), as so redesignated by section 201(3) of this Act, 

24 is amended by striking ‘‘$500,000,000’’ each place such 

25 term appears and inserting ‘‘$1,000,000,000’’. 


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1 (b) USE OF ADVANCES FOR COMMUNITY DEVELOP2 MENT ACTIVITIES.—Section 10(a) of the Federal Home 

3 Loan Bank Act (12 U.S.C. 1430(a)) is amended— 

4 (1) in paragraph (2)(B)— 

5 (A) by striking ‘‘and’’; and 

6 (B) by inserting ‘‘, and community develop7 ment activities’’ before the period at the end; 

8 (2) in paragraph (3)(E), by inserting ‘‘or com9 munity development activities’’ after ‘‘agriculture,’’; 

10 and 

11 (3) in paragraph (6)— 

12 (A) by striking ‘‘and’’; and 

13 (B) by inserting ‘‘, and ‘community devel14 opment activities’ ’’ before ‘‘shall’’. 

15 SEC. 209. TECHNICAL AND CONFORMING AMENDMENTS. 

16 (a) RIGHT TO FINANCIAL PRIVACY ACT OF 1978.—Sec17 tion 1113(o) of the Right to Financial Privacy Act of 1978 

18 (12 U.S.C. 3413(o)) is amended— 

19 (1) by striking ‘‘Federal Housing Finance 

20 Board’’ and inserting ‘‘Federal Housing Finance 

21 Agency’’; and 

22 (2) by striking ‘‘Federal Housing Finance 

23 Board’s’’ and inserting ‘‘Federal Housing Finance 

24 Agency’s’’. 


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1 (b) RIEGLE COMMUNITY DEVELOPMENT AND REGU2 LATORY IMPROVEMENT ACT OF 1994.—Section 117(e) of the 

3 Riegle Community Development and Regulatory Improve4 ment Act of 1994 (12 U.S.C. 4716(e)) is amended by strik5 ing ‘‘Federal Housing Finance Board’’ and inserting ‘‘Fed6 eral Housing Finance Agency’’. 

7 (c) TITLE 18, UNITED STATES CODE.—Title 18, 

8 United States Code, is amended by striking ‘‘Federal Hous9 ing Finance Board’’ each place such term appears in each 

10 of sections 212, 657, 1006, 1014, and inserting ‘‘Federal 

11 Housing Finance Agency’’. 

12 (d) MAHRA ACT OF 1997.—Section 517(b)(4) of the 

13 Multifamily Assisted Housing Reform and Affordability 

14 Act of 1997 (42 U.S.C. 1437f note) is amended by striking 

15 ‘‘Federal Housing Finance Board’’ and inserting ‘‘Federal 

16 Housing Finance Agency’’. 

17 (e) TITLE 44, UNITED STATES CODE.—Section 

18 3502(5) of title 44, United States Code, is amended by strik19 ing ‘‘Federal Housing Finance Board’’ and inserting ‘‘Fed20 eral Housing Finance Agency’’. 

21 (f) ACCESS TO LOCAL TV ACT OF 2000.—Section 

22 1004(d)(2)(D)(iii) of the Launching Our Communities’ Ac23 cess to Local Television Act of 2000 (47 U.S.C. 

24 1103(d)(2)(D)(iii)) is amended by striking ‘‘Office of Fed25 eral Housing Enterprise Oversight, the Federal Housing FiVerDate Aug 31 2005 01:58 May 10, 2007 Jkt 059200 PO 00000 Frm 00317 Fmt 6652 Sfmt 6203 E:\BILLS\H1427.RH H1427

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1 nance Board’’ and inserting ‘‘Federal Housing Finance 

2 Agency’’. 

3 (g) SARBANES-OXLEY ACT OF 2002.—Section 

4 105(b)(5)(B)(ii)(II) of the Sarbanes-Oxley Act of 2002 (15 

5 U.S.C. 7215(B)(5)(b)(ii)(II)) is amended by inserting ‘‘and 

6 the Director of the Federal Housing Finance Agency’’ after 

7 ‘‘Commission,’’. 

8 SEC. 210. STUDY OF AFFORDABLE HOUSING PROGRAM USE 

9 FOR LONG-TERM CARE FACILITIES. 

10 The Comptroller General shall conduct a study of the 

11 use of affordable housing programs of the Federal home loan 

12 banks under section 10(j) of the Federal Home Loan Bank 

13 Act to determine how and the extent to which such programs 

14 are used to assist long-term care facilities for low- and mod15 erate-income individuals, and the effectiveness and ade16 quacy of such assistance in meeting the needs of affected 

17 communities. The study shall examine the applicability of 

18 such use to the affordable housing programs required to be 

19 established by the enterprises pursuant to the amendment 

20 made by section 139 of this Act. The Comptroller General 

21 shall submit a report to the Director of the Federal Housing 

22 Finance Agency and the Congress regarding the results of 

23 the study not later than the expiration of the 1-year period 

24 beginning on the date of the enactment of this Act. This 


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1 section shall take effect on the date of the enactment of this 

2 Act. 

3 SEC. 211. EFFECTIVE DATE. 

4 Except as specifically provided otherwise in this title, 

5 this title shall take effect on and the amendments made by 

6 this title shall take effect on, and shall apply beginning on, 

7 the expiration of the 6-month period beginning on the date 

8 of the enactment of this Act. 

9 TITLE III—TRANSFER OF FUNC10 TIONS, PERSONNEL, AND 

11 PROPERTY OF OFFICE OF 

12 FEDERAL HOUSING ENTER13 PRISE OVERSIGHT, FEDERAL 

14 HOUSING FINANCE BOARD, 

15 AND DEPARTMENT OF HOUS16 ING AND URBAN DEVELOP17 MENT 

18 Subtitle A—Office of Federal 

19 Housing Enterprise Oversight 

20 SEC. 301. ABOLISHMENT OF OFHEO. 

21 (a) IN GENERAL.—Effective at the end of the 6-month 

22 period beginning on the date of the enactment of this Act, 

23 the Office of Federal Housing Enterprise Oversight of the 

24 Department of Housing and Urban Development and the 


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1 positions of the Director and Deputy Director of such Office 

2 are abolished. 

3 (b) DISPOSITION OF AFFAIRS.—During the 6-month 

4 period beginning on the date of the enactment of this Act, 

5 the Director of the Office of Federal Housing Enterprise 

6 Oversight shall, for the purpose of winding up the affairs 

7 of the Office of Federal Housing Enterprise Oversight and 

8 in addition to carrying out its other responsibilities under 

9 law— 

10 (1) manage the employees of such Office and pro11 vide for the payment of the compensation and benefits 

12 of any such employee which accrue before the effective 

13 date of the transfer of such employee pursuant to sec14 tion 303; and 

15 (2) may take any other action necessary for the 

16 purpose of winding up the affairs of the Office. 

17 (c) STATUS OF EMPLOYEES BEFORE TRANSFER.—The 

18 amendments made by title I and the abolishment of the Of19 fice of Federal Housing Enterprise Oversight under sub20 section (a) of this section may not be construed to affect 

21 the status of any employee of such Office as employees of 

22 an agency of the United States for purposes of any other 

23 provision of law before the effective date of the transfer of 

24 any such employee pursuant to section 303. 

25 (d) USE OF PROPERTY AND SERVICES.— 


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1 (1) PROPERTY.—The Director of the Federal 

2 Housing Finance Agency may use the property of the 

3 Office of Federal Housing Enterprise Oversight to 

4 perform functions which have been transferred to the 

5 Director of the Federal Housing Finance Agency for 

6 such time as is reasonable to facilitate the orderly 

7 transfer of functions transferred pursuant to any 

8 other provision of this Act or any amendment made 

9 by this Act to any other provision of law. 

10 (2) AGENCY SERVICES.—Any agency, depart11 ment, or other instrumentality of the United States, 

12 and any successor to any such agency, department, or 

13 instrumentality, which was providing supporting 

14 services to the Office of Federal Housing Enterprise 

15 Oversight before the expiration of the period under 

16 subsection (a) in connection with functions that are 

17 transferred to the Director of the Federal Housing Fi18 nance Agency shall— 

19 (A) continue to provide such services, on a 

20 reimbursable basis, until the transfer of such 

21 functions is complete; and 

22 (B) consult with any such agency to coordi23 nate and facilitate a prompt and reasonable 

24 transition. 

25 (e) SAVINGS PROVISIONS.— 


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1 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA2 TIONS NOT AFFECTED.—Subsection (a) shall not affect 

3 the validity of any right, duty, or obligation of the 

4 United States, the Director of the Office of Federal 

5 Housing Enterprise Oversight, or any other person, 

6 which— 

7 (A) arises under or pursuant to the title 

8 XIII of the Housing and Community Develop9 ment Act of 1992, the Federal National Mortgage 

10 Association Charter Act, the Federal Home Loan 

11 Mortgage Corporation Act, or any other provi12 sion of law applicable with respect to such Of13 fice; and 

14 (B) existed on the day before the abolish15 ment under subsection (a) of this section. 

16 (2) CONTINUATION OF SUITS.—No action or 

17 other proceeding commenced by or against the Direc18 tor of the Office of Federal Housing Enterprise Over19 sight in connection with functions that are trans20 ferred to the Director of the Federal Housing Finance 

21 Agency shall abate by reason of the enactment of this 

22 Act, except that the Director of the Federal Housing 

23 Finance Agency shall be substituted for the Director 

24 of the Office of Federal Housing Enterprise Oversight 

25 as a party to any such action or proceeding. 


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1 SEC. 302. CONTINUATION AND COORDINATION OF CERTAIN 

2 REGULATIONS. 

3 All regulations, orders, determinations, and resolutions 

4 that— 

5 (1) were issued, made, prescribed, or allowed to 

6 become effective by— 

7 (A) the Office of Federal Housing Enter8 prise Oversight; or 

9 (B) a court of competent jurisdiction and 

10 that relate to functions transferred by this sub11 title; and 

12 (2) are in effect on the date of the abolishment 

13 under section 301(a) of this Act, shall remain in effect 

14 according to the terms of such regulations, orders, de15 terminations, and resolutions, and shall be enforceable 

16 by or against the Director of the Federal Housing Fi17 nance Agency until modified, terminated, set aside, or 

18 superseded in accordance with applicable law by such 

19 Director, as the case may be, any court of competent 

20 jurisdiction, or operation of law. 

21 SEC. 303. TRANSFER AND RIGHTS OF EMPLOYEES OF 

22 OFHEO. 

23 (a) TRANSFER.—Each employee of the Office of Fed24 eral Housing Enterprise Oversight shall be transferred to 

25 the Federal Housing Finance Agency for employment no 

26 later than the date of the abolishment under section 301(a) 


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1 of this Act and such transfer shall be deemed a transfer 

2 of function for purposes of section 3503 of title 5, United 

3 States Code. 

4 (b) GUARANTEED POSITIONS.—Each employee trans5 ferred under subsection (a) shall be guaranteed a position 

6 with the same status, tenure, grade, and pay as that held 

7 on the day immediately preceding the transfer. Each such 

8 employee holding a permanent position shall not be invol9 untarily separated or reduced in grade or compensation for 

10 12 months after the date of transfer, except for cause or, 

11 if the employee is a temporary employee, separated in ac12 cordance with the terms of the appointment. 

13 (c) APPOINTMENT AUTHORITY FOR EXCEPTED SERV14 ICE EMPLOYEES.— 

15 (1) IN GENERAL.—In the case of employees occu16 pying positions in the excepted service, any appoint17 ment authority established pursuant to law or regula18 tions of the Office of Personnel Management for filling 

19 such positions shall be transferred, subject to para20 graph (2). 

21 (2) DECLINE OF TRANSFER.—The Director of the 

22 Federal Housing Finance Agency may decline a 

23 transfer of authority under paragraph (1) (and the 

24 employees appointed pursuant thereto) to the extent 

25 that such authority relates to positions excepted from 


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1 the competitive service because of their confidential, 

2 policy-making, policy-determining, or policy-advo3 cating character. 

4 (d) REORGANIZATION.—If the Director of the Federal 

5 Housing Finance Agency determines, after the end of the 

6 1-year period beginning on the date of the abolishment 

7 under section 301(a), that a reorganization of the combined 

8 work force is required, that reorganization shall be deemed 

9 a major reorganization for purposes of affording affected 

10 employees retirement under section 8336(d)(2) or 

11 8414(b)(1)(B) of title 5, United States Code. 

12 (e) EMPLOYEE BENEFIT PROGRAMS.—Any employee 

13 of the Office of Federal Housing Enterprise Oversight ac14 cepting employment with the Director of the Federal Hous15 ing Finance Agency as a result of a transfer under sub16 section (a) may retain for 12 months after the date such 

17 transfer occurs membership in any employee benefit pro18 gram of the Federal Housing Finance Agency or the Office 

19 of Federal Housing Enterprise Oversight, as applicable, in20 cluding insurance, to which such employee belongs on the 

21 date of the abolishment under section 301(a) if— 

22 (1) the employee does not elect to give up the 

23 benefit or membership in the program; and 

24 (2) the benefit or program is continued by the 

25 Director of the Federal Housing Finance Agency, 


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1 The difference in the costs between the benefits which would 

2 have been provided by such agency and those provided by 

3 this section shall be paid by the Director of the Federal 

4 Housing Finance Agency. If any employee elects to give up 

5 membership in a health insurance program or the health 

6 insurance program is not continued by such Director, the 

7 employee shall be permitted to select an alternate Federal 

8 health insurance program within 30 days of such election 

9 or notice, without regard to any other regularly scheduled 

10 open season. 

11 SEC. 304. TRANSFER OF PROPERTY AND FACILITIES. 

12 Upon the abolishment under section 301(a), all prop13 erty of the Office of Federal Housing Enterprise Oversight 

14 shall transfer to the Director of the Federal Housing Fi15 nance Agency. 

16 Subtitle B—Federal Housing 

17 Finance Board 

18 SEC. 321. ABOLISHMENT OF THE FEDERAL HOUSING FI19 NANCE BOARD. 

20 (a) IN GENERAL.—Effective at the end of the 6-month 

21 period beginning on the date of enactment of this Act, the 

22 Federal Housing Finance Board (in this title referred to 

23 as the ‘‘Board’’) is abolished. 

24 (b) DISPOSITION OF AFFAIRS.—During the 6-month 

25 period beginning on the date of enactment of this Act, the 


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1 Board, for the purpose of winding up the affairs of the 

2 Board and in addition to carrying out its other responsibil3 ities under law— 

4 (1) shall manage the employees of such Board 

5 and provide for the payment of the compensation and 

6 benefits of any such employee which accrue before the 

7 effective date of the transfer of such employee under 

8 section 323; and 

9 (2) may take any other action necessary for the 

10 purpose of winding up the affairs of the Board. 

11 (c) STATUS OF EMPLOYEES BEFORE TRANSFER.—The 

12 amendments made by titles I and II and the abolishment 

13 of the Board under subsection (a) may not be construed to 

14 affect the status of any employee of such Board as employees 

15 of an agency of the United States for purposes of any other 

16 provision of law before the effective date of the transfer of 

17 any such employee under section 323. 

18 (d) USE OF PROPERTY AND SERVICES.— 

19 (1) PROPERTY.—The Director of the Federal 

20 Housing Finance Agency may use the property of the 

21 Board to perform functions which have been trans22 ferred to the Director of the Federal Housing Finance 

23 Agency for such time as is reasonable to facilitate the 

24 orderly transfer of functions transferred under any 


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1 other provision of this Act or any amendment made 

2 by this Act to any other provision of law. 

3 (2) AGENCY SERVICES.—Any agency, depart4 ment, or other instrumentality of the United States, 

5 and any successor to any such agency, department, or 

6 instrumentality, which was providing supporting 

7 services to the Board before the expiration of the pe8 riod under subsection (a) in connection with func9 tions that are transferred to the Director of the Fed10 eral Housing Finance Agency shall— 

11 (A) continue to provide such services, on a 

12 reimbursable basis, until the transfer of such 

13 functions is complete; and 

14 (B) consult with any such agency to coordi15 nate and facilitate a prompt and reasonable 

16 transition. 

17 (e) SAVINGS PROVISIONS.— 

18 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA19 TIONS NOT AFFECTED.—Subsection (a) shall not affect 

20 the validity of any right, duty, or obligation of the 

21 United States, a member of the Board, or any other 

22 person, which— 

23 (A) arises under the Federal Home Loan 

24 Bank Act or any other provision of law applica25 ble with respect to such Board; and 


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1 (B) existed on the day before the effective 

2 date of the abolishment under subsection (a). 

3 (2) CONTINUATION OF SUITS.—No action or 

4 other proceeding commenced by or against the Board 

5 in connection with functions that are transferred to 

6 the Director of the Federal Housing Finance Agency 

7 shall abate by reason of the enactment of this Act, ex8 cept that the Director of the Federal Housing Finance 

9 Agency shall be substituted for the Board or any 

10 member thereof as a party to any such action or pro11 ceeding. 

12 SEC. 322. CONTINUATION AND COORDINATION OF CERTAIN 

13 REGULATIONS. 

14 (a) IN GENERAL.—All regulations, orders, determina15 tions, and resolutions described under subsection (b) shall 

16 remain in effect according to the terms of such regulations, 

17 orders, determinations, and resolutions, and shall be en18 forceable by or against the Director of the Federal Housing 

19 Finance Agency until modified, terminated, set aside, or 

20 superseded in accordance with applicable law by such Di21 rector, any court of competent jurisdiction, or operation of 

22 law. 

23 (b) APPLICABILITY.—A regulation, order, determina24 tion, or resolution is described under this subsection if it— 


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1 (1) was issued, made, prescribed, or allowed to 

2 become effective by— 

3 (A) the Board; or 

4 (B) a court of competent jurisdiction and 

5 relates to functions transferred by this subtitle; 

6 and 

7 (2) is in effect on the effective date of the abolish8 ment under section 321(a). 

9 SEC. 323. TRANSFER AND RIGHTS OF EMPLOYEES OF THE 

10 FEDERAL HOUSING FINANCE BOARD. 

11 (a) TRANSFER.—Each employee of the Board shall be 

12 transferred to the Federal Housing Finance Agency for em13 ployment not later than the effective date of the abolishment 

14 under section 321(a), and such transfer shall be deemed a 

15 transfer of function for purposes of section 3503 of title 5, 

16 United States Code. 

17 (b) GUARANTEED POSITIONS.—Each employee trans18 ferred under subsection (a) shall be guaranteed a position 

19 with the same status, tenure, grade, and pay as that held 

20 on the day immediately preceding the transfer. Each such 

21 employee holding a permanent position shall not be invol22 untarily separated or reduced in grade or compensation for 

23 12 months after the date of transfer, except for cause or, 

24 if the employee is a temporary employee, separated in ac25 cordance with the terms of the appointment. 


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1 (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND

2 SENIOR EXECUTIVE SERVICE EMPLOYEES.— 

3 (1) IN GENERAL.—In the case of employees occu4 pying positions in the excepted service or the Senior 

5 Executive Service, any appointment authority estab6 lished under law or by regulations of the Office of 

7 Personnel Management for filling such positions shall 

8 be transferred, subject to paragraph (2). 

9 (2) DECLINE OF TRANSFER.—The Director of the 

10 Federal Housing Finance Agency may decline a 

11 transfer of authority under paragraph (1) to the ex12 tent that such authority relates to positions excepted 

13 from the competitive service because of their confiden14 tial, policymaking, policy-determining, or policy-ad15 vocating character, and noncareer positions in the 

16 Senior Executive Service (within the meaning of sec17 tion 3132(a)(7) of title 5, United States Code). 

18 (d) REORGANIZATION.—If the Director of the Federal 

19 Housing Finance Agency determines, after the end of the 

20 1-year period beginning on the effective date of the abolish21 ment under section 321(a), that a reorganization of the 

22 combined workforce is required, that reorganization shall 

23 be deemed a major reorganization for purposes of affording 

24 affected employees retirement under section 8336(d)(2) or 

25 8414(b)(1)(B) of title 5, United States Code. 


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1 (e) EMPLOYEE BENEFIT PROGRAMS.— 

2 (1) IN GENERAL.—Any employee of the Board 

3 accepting employment with the Federal Housing Fi4 nance Agency as a result of a transfer under sub5 section (a) may retain for 12 months after the date 

6 on which such transfer occurs membership in any em7 ployee benefit program of the Federal Housing Fi8 nance Agency or the Board, as applicable, including 

9 insurance, to which such employee belongs on the ef10 fective date of the abolishment under section 321(a) 

11 if— 

12 (A) the employee does not elect to give up 

13 the benefit or membership in the program; and 

14 (B) the benefit or program is continued by 

15 the Director of the Federal Housing Finance 

16 Agency. 

17 (2) COST DIFFERENTIAL.—The difference in the 

18 costs between the benefits which would have been pro19 vided by the Board and those provided by this section 

20 shall be paid by the Director of the Federal Housing 

21 Finance Agency. If any employee elects to give up 

22 membership in a health insurance program or the 

23 health insurance program is not continued by such 

24 Director, the employee shall be permitted to select an 

25 alternate Federal health insurance program within 30 


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1 days after such election or notice, without regard to 

2 any other regularly scheduled open season. 

3 SEC. 324. TRANSFER OF PROPERTY AND FACILITIES. 

4 Upon the effective date of the abolishment under sec5 tion 321(a), all property of the Board shall transfer to the 

6 Director of the Federal Housing Finance Agency. 

7 Subtitle C—Department of Housing 

8 and Urban Development 

9 SEC. 341. TERMINATION OF ENTERPRISE-RELATED FUNC10 TIONS. 

11 (a) TERMINATION DATE.—For purposes of this sub12 title, the term ‘‘termination date’’ means the date that oc13 curs 6 months after the date of the enactment of this Act. 

14 (b) DETERMINATION OF TRANSFERRED FUNCTIONS

15 AND EMPLOYEES.— 

16 (1) IN GENERAL.—Not later than the expiration 

17 of the 3-month period beginning on the date of the en18 actment of this Act, the Secretary, in consultation 

19 with the Director of the Office of Federal Housing 

20 Enterprise Oversight, shall determine— 

21 (A) the functions, duties, and activities of 

22 the Secretary of Housing and Urban Develop23 ment regarding oversight or regulation of the en24 terprises under or pursuant to the authorizing 

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1 nity Development Act of 1992, and any other 

2 provisions of law, as in effect before the date of 

3 the enactment of this Act, but not including any 

4 such functions, duties, and activities of the Di5 rector of the Office of Federal Housing Enter6 prise Oversight of the Department of Housing 

7 and Urban Development and such Office; and 

8 (B) the employees of the Department of 

9 Housing and Urban Development necessary to 

10 perform such functions, duties, and activities. 

11 (2) ENTERPRISE-RELATED FUNCTIONS.—For 

12 purposes of this subtitle, the term ‘‘enterprise-related 

13 functions of the Department’’ means the functions, 

14 duties, and activities of the Department of Housing 

15 and Urban Development determined under paragraph 

16 (1)(A). 

17 (3) ENTERPRISE-RELATED EMPLOYEES.—For 

18 purposes of this subtitle, the term ‘‘enterprise-related 

19 employees of the Department’’ means the employees of 

20 the Department of Housing and Urban Development 

21 determined under paragraph (1)(B). 

22 (c) DISPOSITION OF AFFAIRS.—During the 6-month 

23 period beginning on the date of enactment of this Act, the 

24 Secretary of Housing and Urban Development (in this title 

25 referred to as the ‘‘Secretary’’), for the purpose of winding 


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1 up the affairs of the Secretary regarding the enterprise-re2 lated functions of the Department of Housing and Urban 

3 Development (in this title referred to as the ‘‘Department’’) 

4 and in addition to carrying out the Secretary’s other re5 sponsibilities under law regarding such functions— 

6 (1) shall manage the enterprise-related employees 

7 of the Department and provide for the payment of the 

8 compensation and benefits of any such employee 

9 which accrue before the effective date of the transfer 

10 of any such employee under section 343; and 

11 (2) may take any other action necessary for the 

12 purpose of winding up the enterprise-related functions 

13 of the Department. 

14 (d) STATUS OF EMPLOYEES BEFORE TRANSFER.—The 

15 amendments made by titles I and II and the termination 

16 of the enterprise-related functions of the Department under 

17 subsection (b) may not be construed to affect the status of 

18 any employee of the Department as employees of an agency 

19 of the United States for purposes of any other provision 

20 of law before the effective date of the transfer of any such 

21 employee under section 343. 

22 (e) USE OF PROPERTY AND SERVICES.— 

23 (1) PROPERTY.—The Director of the Federal 

24 Housing Finance Agency may use the property of the 

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1 ferred to the Director of the Federal Housing Finance 

2 Agency for such time as is reasonable to facilitate the 

3 orderly transfer of functions transferred under any 

4 other provision of this Act or any amendment made 

5 by this Act to any other provision of law. 

6 (2) AGENCY SERVICES.—Any agency, depart7 ment, or other instrumentality of the United States, 

8 and any successor to any such agency, department, or 

9 instrumentality, which was providing supporting 

10 services to the Secretary regarding enterprise-related 

11 functions of the Department before the termination 

12 date under subsection (a) in connection with such 

13 functions that are transferred to the Director of the 

14 Federal Housing Finance Agency shall— 

15 (A) continue to provide such services, on a 

16 reimbursable basis, until the transfer of such 

17 functions is complete; and 

18 (B) consult with any such agency to coordi19 nate and facilitate a prompt and reasonable 

20 transition. 

21 (f) SAVINGS PROVISIONS.— 

22 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA23 TIONS NOT AFFECTED.—Subsection (a) shall not affect 

24 the validity of any right, duty, or obligation of the 


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1 United States, the Secretary, or any other person, 

2 which— 

3 (A) arises under the authorizing statutes, 

4 title XIII of the Housing and Community Devel5 opment Act of 1992, or any other provision of 

6 law applicable with respect to the Secretary, in 

7 connection with the enterprise-related functions 

8 of the Department; and 

9 (B) existed on the day before the termi10 nation date under subsection (a). 

11 (2) CONTINUATION OF SUITS.—No action or 

12 other proceeding commenced by or against the Sec13 retary in connection with the enterprise-related func14 tions of the Department shall abate by reason of the 

15 enactment of this Act, except that the Director of the 

16 Federal Housing Finance Agency shall be substituted 

17 for the Secretary or any member thereof as a party 

18 to any such action or proceeding. 

19 SEC. 342. CONTINUATION AND COORDINATION OF CERTAIN 

20 REGULATIONS. 

21 (a) IN GENERAL.—All regulations, orders, and deter22 minations described in subsection (b) shall remain in effect 

23 according to the terms of such regulations, orders, deter24 minations, and resolutions, and shall be enforceable by or 

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1 cy until modified, terminated, set aside, or superseded in 

2 accordance with applicable law by such Director, any court 

3 of competent jurisdiction, or operation of law. 

4 (b) APPLICABILITY.—A regulation, order, or deter5 mination is described under this subsection if it— 

6 (1) was issued, made, prescribed, or allowed to 

7 become effective by— 

8 (A) the Secretary; or 

9 (B) a court of competent jurisdiction and 

10 that relate to the enterprise-related functions of 

11 the Department; and 

12 (2) is in effect on the termination date under 

13 section 341(a). 

14 SEC. 343. TRANSFER AND RIGHTS OF EMPLOYEES OF DE15 PARTMENT OF HOUSING AND URBAN DEVEL16 OPMENT. 

17 (a) TRANSFER.— 

18 (1) IN GENERAL.—Except as provided in para19 graph (2), each enterprise-related employee of the De20 partment shall be transferred to the Federal Housing 

21 Finance Agency for employment not later than the 

22 termination date under section 341(a) and such 

23 transfer shall be deemed a transfer of function for 

24 purposes of section 3503 of title 5, United States 

25 Code. 


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1 (2) AUTHORITY TO DECLINE.—An enterprise-re2 lated employee of the Department may, in the discre3 tion of the employee, decline transfer under para4 graph (1) to a position in the Federal Housing Fi5 nance Agency and shall be guaranteed a position in 

6 the Department with the same status, tenure, grade, 

7 and pay as that held on the day immediately pre8 ceding the date that such declination was made. Each 

9 such employee holding a permanent position shall not 

10 be involuntarily separated or reduced in grade or 

11 compensation for 12 months after the date that the 

12 transfer would otherwise have occurred, except for 

13 cause or, if the employee is a temporary employee, 

14 separated in accordance with the terms of the ap15 pointment. 

16 (b) GUARANTEED POSITIONS.—Each enterprise-related 

17 employee of the Department transferred under subsection 

18 (a) shall be guaranteed a position with the same status, 

19 tenure, grade, and pay as that held on the day immediately 

20 preceding the transfer. Each such employee holding a per21 manent position shall not be involuntarily separated or re22 duced in grade or compensation for 12 months after the date 

23 of transfer, except for cause or, if the employee is a tem24 porary employee, separated in accordance with the terms 

25 of the appointment. 


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1 (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND

2 SENIOR EXECUTIVE SERVICE EMPLOYEES.— 

3 (1) IN GENERAL.—In the case of employees occu4 pying positions in the excepted service or the Senior 

5 Executive Service, any appointment authority estab6 lished under law or by regulations of the Office of 

7 Personnel Management for filling such positions shall 

8 be transferred, subject to paragraph (2). 

9 (2) DECLINE OF TRANSFER.—The Director of the 

10 Federal Housing Finance Agency may decline a 

11 transfer of authority under paragraph (1) (and the 

12 employees appointed pursuant thereto) to the extent 

13 that such authority relates to positions excepted from 

14 the competitive service because of their confidential, 

15 policymaking, policy-determining, or policy-advo16 cating character, and noncareer positions in the Sen17 ior Executive Service (within the meaning of section 

18 3132(a)(7) of title 5, United States Code). 

19 (d) REORGANIZATION.—If the Director of the Federal 

20 Housing Finance Agency determines, after the end of the 

21 1-year period beginning on the termination date under sec22 tion 341(a), that a reorganization of the combined work23 force is required, that reorganization shall be deemed a 

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1 ployees retirement under section 8336(d)(2) or 

2 8414(b)(1)(B) of title 5, United States Code. 

3 (e) EMPLOYEE BENEFIT PROGRAMS.— 

4 (1) IN GENERAL.—Any enterprise-related em5 ployee of the Department accepting employment with 

6 the Federal Housing Finance Agency as a result of a 

7 transfer under subsection (a) may retain for 12 

8 months after the date on which such transfer occurs 

9 membership in any employee benefit program of the 

10 Federal Housing Finance Agency or the Department, 

11 as applicable, including insurance, to which such em12 ployee belongs on the termination date under section 

13 341(a) if— 

14 (A) the employee does not elect to give up 

15 the benefit or membership in the program; and 

16 (B) the benefit or program is continued by 

17 the Director of the Federal Housing Finance 

18 Agency. 

19 (2) COST DIFFERENTIAL.—The difference in the 

20 costs between the benefits which would have been pro21 vided by the Department and those provided by this 

22 section shall be paid by the Director of the Federal 

23 Housing Finance Agency. If any employee elects to 

24 give up membership in a health insurance program 

25 or the health insurance program is not continued by 


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1 such Director, the employee shall be permitted to se2 lect an alternate Federal health insurance program 

3 within 30 days after such election or notice, without 

4 regard to any other regularly scheduled open season. 

5 SEC. 344. TRANSFER OF APPROPRIATIONS, PROPERTY, AND 

6 FACILITIES. 

7 Upon the termination date under section 341(a), all 

8 assets, liabilities, contracts, property, records, and unex9 pended balances of appropriations, authorizations, alloca10 tions, and other funds employed, held, used, arising from, 

11 available to, or to be made available to the Department in 

12 connection with enterprise-related functions of the Depart13 ment shall transfer to the Director of the Federal Housing 

14 Finance Agency. Unexpended funds transferred by this sec15 tion shall be used only for the purposes for which the funds 

16 were originally authorized and appropriated. 


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Union Calendar No. 84 

110TH CONGRESS 

1ST SESSION H. R. 1427 

[Report No. 110

–142] 

A BILL 

To reform the regulation of certain housing-related 

purposes. Government-sponsored enterprises, and for other 

MAY 9, 2007 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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