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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2413 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 2413

   To establish a sustainable Federal Secondary Market Facility for 
Residential Mortgages that is financed by private capital, to terminate 
   the conservatorships of Fannie Mae and Freddie Mac and repeal the 
       charter Acts of such enterprises, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              July 6, 2011

Mr. Gary G. Miller of California (for himself and Mrs. McCarthy of New 
    York) introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL

 
   To establish a sustainable Federal Secondary Market Facility for 
Residential Mortgages that is financed by private capital, to terminate 
   the conservatorships of Fannie Mae and Freddie Mac and repeal the 
       charter Acts of such enterprises, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Secondary Market 
Facility for Residential Mortgages Act of 2011''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Purpose.
Sec. 3. Definitions.
      TITLE I--SECONDARY MARKET FACILITY FOR RESIDENTIAL MORTGAGES

Sec. 101. Establishment of Secondary Market Facility for Residential 
                            Mortgages.
Sec. 102. Limitations on mortgage purchases.
Sec. 103. Reduction of market share.
Sec. 104. Capital standards.
Sec. 105. Guarantee fees.
Sec. 106. Federal insurance backstop.
Sec. 107. Deficit reduction.
Sec. 108. Portfolio reduction.
Sec. 109. Initial standards.
  TITLE II--ENDING THE CONSERVATORSHIPS OF FANNIE MAE AND FREDDIE MAC

Sec. 201. Treasury plan.
Sec. 202. Implementation of plan.
Sec. 203. Repeal of charter Acts.
               TITLE III--FEDERAL HOUSING FINANCE AGENCY

Sec. 301. Establishment of Federal Housing Finance Agency Board.
Sec. 302. Supervision and regulation of Facility by FHFA.
Sec. 303. Conforming amendments.

SEC. 2. PURPOSE.

    The purpose of this Act is to establish a Federal secondary market 
facility for residential mortgages, to provide that the operations 
thereof shall be financed by private capital, and to authorize such 
facility to--
            (1) provide stability in the secondary market for 
        residential mortgages;
            (2) respond appropriately to the private capital market;
            (3) maintain the secondary market for residential 
        mortgages, including the ``TBA'' (to-be-announced) market;
            (4) improve the distribution of investment capital 
        available for residential mortgage financing and as a result 
        facilitate access to mortgage credit to qualified borrowers 
        throughout the United States (including in central cities, 
        rural areas, high-cost areas, and underserved areas); and
            (5) manage and liquidate the mortgage portfolios of Fannie 
        Mae and Freddie Mac in an orderly manner, in a way that 
        contributes to the stability of the housing market and with 
        minimum loss and maximum profit to the Federal Government.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Approved seller.--The term ``approved seller'' means a 
        seller of a mortgage who has been approved by the Facility in 
        accordance with the standards established by the FHFA Board 
        pursuant to section 102(j).
            (2) Conservatorship.--The term ``conservatorship'' means, 
        with respect to an enterprise, the conservatorship of the 
        enterprise established pursuant to section 1367 of the Federal 
        Housing Enterprises Financial Safety and Soundness Act of 1992 
        (12 U.S.C. 4617) and in effect on the date of the enactment of 
        this Act.
            (3) Enterprise.--The term ``enterprise'' means--
                    (A) the Federal National Mortgage Association; and
                    (B) the Federal Home Loan Mortgage Corporation.
            (4) Facility.--The term ``Facility'' means the Secondary 
        Market Facility for Residential Mortgages established under 
        section 101 of this Act.
            (5) Facility-affiliated party.--The term ``Facility-
        affiliated party'' means--
                    (A) any director, officer, or employee of, or agent 
                for, the Facility;
                    (B) any affiliate, consultant, or joint venture 
                partner of the Facility, and any other person, as 
                determined by the FHFA Board (by regulation or on a 
                case-by-case basis) that participates in the conduct of 
                the affairs of the Facility; and
                    (C) any independent contractor for the Facility 
                (including any attorney, appraiser, or accountant), 
                if--
                            (i) the independent contractor knowingly or 
                        recklessly participates in--
                                    (I) any violation of any law or 
                                regulation;
                                    (II) any breach of fiduciary duty; 
                                or
                                    (III) any unsafe or unsound 
                                practice; and
                            (ii) such violation, breach, or practice 
                        caused, or is likely to cause, more than a 
                        minimal financial loss to, or a significant 
                        adverse effect on, the Facility.
            (6) Facility board.--The term ``Facility Board'' means the 
        Board of Directors of the Secondary Market Facility for 
        Residential Mortgages, established under section 101.
            (7) FHFA board.--The term ``FHFA Board'' means the Federal 
        Housing Finance Agency Board established under section 1312 of 
        the Federal Housing Enterprises Financial Safety and Soundness 
        Act of 1992, as amended by section 301 of this Act.
            (8) Residential mortgage.--The term ``residential 
        mortgage'' means a mortgage on single-family housing or 
        multifamily housing.
            (9) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (10) Single-family housing.--The term ``single-family 
        housing'' means a residence consisting of 1 to 4 dwelling 
        units.
            (11) Multifamily housing.--The term ``multifamily housing'' 
        means a residence consisting of more than 4 dwelling units.

      TITLE I--SECONDARY MARKET FACILITY FOR RESIDENTIAL MORTGAGES

SEC. 101. ESTABLISHMENT OF SECONDARY MARKET FACILITY FOR RESIDENTIAL 
              MORTGAGES.

    (a) Establishment.--There is hereby established a Secondary Market 
Facility for Residential Mortgages, which shall be a body corporate 
without capital stock.
    (b) Purpose.--The purpose of the Facility shall be to ensure that 
capital for residential mortgages is available to qualified homebuyers 
throughout the United States, without regard to region, area, or other 
geographic location.
    (c) Federal Status.--The Facility shall be an instrumentality of 
the Federal Government.
    (d) Board of Directors.--
            (1) Establishment; appointment.--The Facility shall be 
        under the direction of a Board of Directors, which shall 
        consist of 5 members who shall be appointed by the President, 
        and shall not be officers or employees of the Federal 
        Government. The initial members of the Facility Board shall be 
        appointed not later than the expiration of the 6-month period 
        beginning on the date of the enactment of this Act.
            (2) Qualifications.--Of the members appointed to the 
        Facility Board--
                    (A) 3 members shall possess extensive experience 
                and expertise in financial management or oversight, 
                capital markets (including debt markets), the secondary 
                mortgage market, and mortgage-backed securities; and
                    (B) 2 members shall possess extensive experience 
                and expertise in mortgage finance (including single-
                family and multifamily housing mortgage finance and 
                with credit unions and small institutions).
            (3) Political affiliation.--Not more than three members of 
        the Facility Board may be members of the same political party.
            (4) Term; removal.--Each member of the Facility Board shall 
        be appointed for a term of 5 years, except that any member may 
        be removed from office by the President for good cause.
            (5) Chairperson.--The Chairperson of the Facility Board 
        shall be designated by the President at the time of 
        appointment. The Chairperson shall designate another member to 
        serve as Acting Chairperson during the absence or disability of 
        the Chairperson.
            (6) Vacancies.--A member of the Facility Board appointed to 
        fill a vacancy occurring before the expiration of the term for 
        which the member's predecessor was appointed shall be appointed 
        only for the remainder of that term.
            (7) Continuation of membership.--A member of the Facility 
        Board may serve after the expiration of the member's term until 
        a successor has been appointed.
    (e) Mortgage-Related Activities.--The business of the Facility 
shall be limited to the following functions, and such activities as may 
be incident to such functions:
            (1) Borrowing.--Borrowing, giving security, paying interest 
        and other return, and issuing notes, debentures, bonds, and 
        other obligations and securities to fund the purchase of 
        residential mortgages, and to achieve initial capitalization 
        levels as required by the FHFA Board.
            (2) Single-family mortgage purchase.--The purchase of 
        residential mortgages on single-family housing that are 
        originated by approved sellers pursuant to section 102(j).
            (3) Multifamily mortgage purchase.--The purchase of 
        residential mortgages on multifamily housing that are 
        originated by approved sellers pursuant to section 102(j).
            (4) Maintenance of tba market.--Maintaining the ``to-be-
        announced'' market for securities based on or backed by 
        residential mortgages on single-family or multifamily housing.
            (5) Mortgage-backed securities.--Issuing, and guaranteeing 
        timely payment of principal and interest on, securities and 
        other obligations based on or backed by a pool of residential 
        mortgages purchased by the Facility, whose quality and 
        characteristics are interchangeable with securities issued by 
        the enterprises before the date of the enactment of this Act, 
        including applicable rules related to the calculation of net 
        capital requirements.
            (6) Collection of fees.--The collection of guarantee fees 
        established under section 105 in connection with mortgage 
        purchases and reinsurance fees established under section 
        106(a).
            (7) Risk management.--The management of interest rate risk 
        associated with operations of the Facility.
    (f) Prohibition on Mortgage Origination.--The Facility shall not 
engage in mortgage origination.
    (g) Self-Supporting.--The operations of the Facility shall be 
funded only by income derived from its operations, after obligations 
for capital reserves in accordance with section 104 and for the 
Reinsurance Fund under section 106(b) are met.
    (h) Equal Access to Products.--The FHFA Board shall, by regulation, 
require that the Facility operate to carry out the purposes under 
subsection (b) in a manner that provides equal access at all times, by 
all eligible or qualified and approved residential mortgage lenders, 
and all markets, to products of the Facility.
    (i) Personnel.--The Facility Board may fix the number and basic pay 
of, and appoint and direct, all employees of the Facility without 
regard to the provisions of title 5, United States Code.
    (j) Leasing Authority.--For the purpose of mitigating losses to the 
taxpayer and stabilizing home prices, the Facility may market for 
rental any real-estate owned properties and assets of the enterprises 
that are transferred to the Facility pursuant to section 201(b) and 
enter into such lease agreements with lessees as the Facility Board 
determines appropriate, prior to sale of such properties and assets, 
except that any such lease agreement shall terminate before the 
expiration of the 5-year period beginning upon the establishment of the 
Facility.
    (k) Budgets; Audits; Management Reports; Obligations.--The Facility 
shall be considered a wholly owned Government corporation for purposes 
of chapter 91 of title 31, United States Code, but not including 
section 9108 of such chapter.
    (l) General Powers.--The Facility may--
            (1) adopt, amend, and repeal bylaws;
            (2) adopt and use a corporate seal;
            (3) enter into contracts, incur liabilities, make 
        guarantees, borrow money, issue notes, bonds, and other 
        obligations;
            (4) sue or be sued in its own capacity; and
            (5) purchase, receive, hold, and use real and personal 
        property and other assets necessary for the conduct of its 
        operations.

SEC. 102. LIMITATIONS ON MORTGAGE PURCHASES.

    (a) Safe and Sound Mortgages.--
            (1) Limitation on facility purchases.--To limit the risk 
        assumed by the Facility, the FHFA Board shall, by regulation, 
        limit the residential mortgages that may be purchased by the 
        Facility to safe and sound mortgages, as such term is defined 
        pursuant to paragraph (2), within such mortgage product types 
        and classifications as are approved in advance by the FHFA 
        Board pursuant to paragraph (3).
            (2) Definition.--The FHFA Board shall, by regulation, 
        define the term ``safe and sound residential mortgages'' for 
        purposes of this subsection, which shall--
                    (A) be established by the FHFA Board;
                    (B) be limited to mortgages that are of a quality, 
                type, and class determined by the FHFA Board to be 
                appropriate to provide adequate liquidity in the 
                housing finance markets and that serve a range of 
                residential mortgagors and residential housing markets, 
                which shall include--
                            (i) mortgages having a term to maturity of 
                        30 years or less and a fixed rate of interest 
                        over the entire term of mortgage;
                            (ii) mortgages for single-family housing 
                        and mortgages for multifamily housing;
                            (iii) programs for whole loans and 
                        certificates; and
                            (iv) other mortgages that are not insured 
                        under the National Housing Act and not 
                        securitized through securities guaranteed by 
                        the Government National Mortgage Association;
                    (C) incorporate--
                            (i) the outstanding balance requirements 
                        for single-family mortgages under subsection 
                        (b) of this section;
                            (ii) the conforming loan limits for single-
                        family mortgages under subsection (c) of this 
                        section;
                            (iii) the downpayment requirements for 
                        single-family mortgages under subsection (d) of 
                        this section;
                            (iv) the requirements for adjustable rate 
                        mortgages under subsection (e) of this section;
                            (v) the representation and warranty 
                        requirements under subsection (f) of this 
                        section;
                            (vi) the underwriting standards under 
                        subsection (g) of this section; and
                            (vii) the property valuation standards 
                        under subsection (h) of this section.
            (3) Product approval.--The FHFA Board shall require the 
        Facility to obtain the approval of the FHFA Board for any 
        product of the Facility before initially offering the product. 
        The FHFA Board shall establish standards for approval of 
        products, which shall provide for conditional approval and 
        procedures for submission of requests for such approval.
    (b) Outstanding Balance Requirements for Single-Family Mortgages.--
The regulations of the FHFA Board pursuant to subsection (a) shall 
ensure that a mortgage on single-family housing shall not be considered 
a safe and sound mortgage if the outstanding principal balance under 
the mortgage at the time of purchase by the Facility exceeds 80 percent 
of the sale price of the single-family residence securing the mortgage, 
unless--
            (1) the seller retains a participation of not less than 10 
        percent of the sale price of the single-family residence 
        securing the mortgage, and the aggregate amount any outstanding 
        principal balance (including such participation) shall not 
        exceed 90 percent of the sale price of the single-family 
        residence securing the mortgage;
            (2) for such period and under such circumstances as the 
        Facility Board may require, the seller agrees to repurchase or 
        replace the mortgage upon demand of the Facility in the event 
        that the mortgage is in default;
            (3) the portion of the outstanding principal balance of the 
        mortgage that exceeds such 80 percent is guaranteed or insured 
        by a qualified insurer, as determined by the Facility in 
        accordance with such standards and requirements as the FHFA 
        Board shall establish; or
            (4) the mortgage is financed in part through a shared 
        equity arrangement under which independent, private sector 
        investors invest, together with the mortgagors, equity funds 
        for such residences in the form of cash (or its equivalent) 
        paid on account of the property and thereby share in the 
        ownership of such residences, except that--
                    (A) the mortgagor shall retain an ownership in the 
                residence under the shared equity arrangement that is 
                not less than 50 percent; and
                    (B) such private sector financing may provide not 
                more than half of the minimum downpayment amount 
                required under subsection (d).
    (c) Conforming Loan Limits for Single-Family Mortgages.--The 
regulations of the FHFA Board pursuant to subsection (a) shall ensure 
that a mortgage on single-family housing of a particular size shall not 
be considered a safe and sound mortgage if the mortgage has an original 
principal obligation that exceeds the higher of--
            (1) the maximum dollar amount limitation for such fiscal 
        year governing the maximum original principal obligation of 
        mortgages that are purchased by the Federal Home Loan Mortgage 
        Corporation for such size residence, as determined under 
        section 305(a)(2) of the Federal Home Loan Mortgage Corporation 
        Act (12 U.S.C. 1454(a)(2)), or
            (2) 125 percent of the area median price for a residence of 
        the applicable size, but in no case to exceed 175 percent of 
        the limitation for such year determined under such section 
        305(a)(2) for a residence of the applicable size,
except that, for mortgages originated in any year, if the limitation 
for such year on the maximum original principal obligation of a 
mortgage that may be purchased by the Federal National Mortgage 
Association or the Federal Home Loan Mortgage Corporation determined 
under section 302(b)(2) of the Federal National Mortgage Association 
Charter Act (12 U.S.C. 1717(b)(2)) or section 305(a)(2) of the Federal 
Home Loan Mortgage Corporation Act (12 U.S.C. 1754(a)(2)) respectively, 
for any size residence for any area is less than such maximum original 
principal obligation limitation that was in effect for such size 
residence for such area for 2008 pursuant to section 201 of the 
Economic Stimulus Act of 2008 (Public Law 110-185; 122 Stat. 619), 
notwithstanding any other provision of law or of this Act, the 
limitation under this subsection on the maximum original principal 
obligation of a mortgage for such size residence for such area that may 
be considered a safe and sound mortgage shall be such maximum 
limitation in effect for such size residence for such area for 2008.
    (d) Downpayment Requirement.--The regulations of the FHFA Board 
pursuant to subsection (a) shall ensure that, notwithstanding any other 
provision of this title, a mortgage on single-family housing shall not 
be considered a safe and sound mortgage unless the mortgagor has paid 
on account of the property subject to the mortgage, in cash (or its 
equivalent), an amount equal to not less than 5 percent of the sale 
price of the property or such larger amount as the FHFA Board may 
establish to mitigate risks and prevent losses to the Facility.
    (e) Adjustable Rate Mortgages.--The regulations of the FHFA Board 
pursuant to subsection (a) shall provide that a mortgage on single-
family housing having an interest rate that is not fixed at a single 
annual percentage rate for the entire term of the mortgage shall not be 
considered a safe and sound mortgage unless such quality, type, and 
class of non-fixed rate mortgages has been approved for purposes of 
this section by the FHFA Board as consistent with the safety and 
soundness of the Facility and the mortgage finance system.
    (f) Representation and Warranty Requirement.--The regulations of 
the FHFA Board pursuant to subsection (a) shall provide that a mortgage 
shall not be considered a safe and sound mortgage unless such mortgage 
meets such requirements regarding representations and warranties 
sufficient to certifying that the mortgage is covered by a policy for 
title insurance as the FHFA Board shall establish to ensure that title-
related risks for the mortgage are borne by State-licensed title 
insurance companies.
    (g) Underwriting Standards.--The regulations of the FHFA Board 
pursuant to subsection (a) shall provide that a mortgage shall not be 
considered a safe and sound mortgage unless such mortgage meets such 
underwriting standards as the FHFA Board shall establish that--
            (1) promote transparency, uniformity, and consumer 
        protections; and
            (2) ensure a mortgagor's ability to repay the mortgage 
        obligation, including standards for determining mortgagors' 
        income, assets, liabilities, credit history, and credit risk.
    (h) Property Valuation Standards.--The regulations of the FHFA 
Board pursuant to subsection (a) shall provide that a mortgage shall 
not be considered a safe and sound mortgage unless such mortgage meets 
the property valuation and appraisal standards under subpart E of part 
226 of title 12, Code of Federal Regulations (Regulation Z).
    (i) Price Limitations.--The Facility shall ensure that prices to be 
paid by the Facility for residential mortgages purchased shall be based 
on market prices for the particular class of mortgages involved.
    (j) Seller Approval.--The Facility may purchase residential 
mortgages meeting the requirements of this title only from sellers who 
have been approved by the Facility as meeting such standards for 
approval as the Facility Board shall establish, which shall include 
standards governing the following:
            (1) Care and due diligence in complying with the 
        underwriting standards established pursuant to subsection (g).
            (2) Minimum capital to ensure the ability to perform under 
        standard representations and warranties.
            (3) Contractual obligations.
            (4) Representations and warranties pursuant to subsection 
        (f).
            (5) Indemnification for losses.
            (6) Delivery of documents.
            (7) Ownership, establishment, maintenance, retaining, 
        examination, and storage of mortgage records and information.
            (8) Fidelity bond and errors and omissions coverage.
            (9) Capitalization, net worth, and liquidity.
            (10) Lending practices.
    (k) Servicing of Mortgages.--This Act may not be construed to 
prohibit, or to authorize the Facility Board or the FHFA Board to 
prohibit, any approved seller who sells a mortgage to the Facility from 
servicing such mortgage.

SEC. 103. REDUCTION OF MARKET SHARE.

    (a) Limitations.--The FHFA Board shall, by regulation, seek to 
ensure that the market share of the Facility, as defined by the FHFA 
Board, does not exceed approximately 50 percent of mortgage 
originations in the United States.
    (b) Standards and Requirements.--The FHFA Board shall establish 
such standards and requirements regarding the maximum volume of 
purchases by the Facility. In establishing such standards, the FHFA 
Board shall seek to avoid excessive disruption to stability of the 
residential mortgage market.
    (c) Safety Valve.--Notwithstanding any other provision of this 
section, the FHFA Board may provide, in a timely manner, for the 
temporary suspension or adjustment of the limits under this section on 
the market share of the Facility, but only if the FHFA Board determines 
that the private market has significantly reduced participation in the 
residential mortgage markets, taking into consideration the yield 
spread between private label mortgage-backed securities and mortgage-
backed securities issued by the Facility and such other indicia as the 
FHFA Board considers appropriate.
    (d) Correction Plan.--If at any time the FHFA Board determines that 
the market share of the Facility exceeds the maximum market share 
permitted under this section, the FHFA Board shall require the Facility 
to establish and implement a plan that--
            (1) reduces such market share so that it complies with the 
        subsection (a)(1);
            (2) impacts all geographic regions of the country 
        similarly;
            (3) restricts or prohibits the business of the Facility in 
        mortgages that are used to prepay an existing loan secured by 
        the same property as such mortgage; and
            (4) increases guarantee fees under section 105 or 
        reinsurance fees under section 106(a), or both.
Such a plan shall seek to impact all lenders as equally as possible, 
taking into account each lender's history regarding its share of 
activity in selling mortgages to the Facility.

SEC. 104. CAPITAL STANDARDS.

    (a) In General.--The FHFA Board shall, by regulation, establish 
risk-based capital requirements for the Facility to ensure that the 
Facility operates in a safe and sound manner, maintaining sufficient 
capital and reserves to support the risks that arise in operations and 
management of the Facility.
    (b) Factors.--The capital requirements for the Facility shall--
            (1) be based on the risks specifically involved in the 
        purchase and securitization of safe and sound mortgages, as 
        such term is defined pursuant to section 103(a); and
            (2) be based on actuarial loss rate history of mortgages 
        having similar characteristics.

SEC. 105. GUARANTEE FEES.

    (a) Establishment.--The Facility shall charge a guarantee fee under 
this section in connection with any purchase of residential mortgages 
from approved sellers and in connection with any guarantee issued by 
the Facility of timely payment of principal and interest on mortgage-
backed securities, notes, and other obligations issued by the Facility.
    (b) Amount.--Any guarantee fee under this section shall be in an 
amount that the Facility Board determines appropriate and reasonable, 
based on likelihood of loss for the particular type of product, to 
provide for operation of the Facility in accordance with this Act, 
except that such fees may be increased to facilitate compliance with 
the market share limitations under section 103 or for such other 
purpose as the FHFA Board may approve. The FHFA Board may establish a 
minimum amount for the guarantee fee.
    (c) Impermissible Considerations.--Such fees shall be based on 
quality of mortgages and may not be based on or incorporate--
            (1) the geographic location of properties subject to 
        mortgages backing or on which are based such securities, notes, 
        or other obligations;
            (2) the volume of mortgages sold to the Facility by an 
        approved seller; or
            (3) any consideration of reducing the costs of 
        homeownership.

SEC. 106. FEDERAL INSURANCE BACKSTOP.

    (a) Reinsurance Fees.--
            (1) In general.--The Facility shall collect and transfer to 
        the Reinsurance Fund established under subsection (b), a 
        reinsurance fee under this subsection in connection with any 
        guarantee issued by the Facility of timely payment of principal 
        and interest on mortgage-backed securities, notes, and other 
        obligations issued by the Facility.
            (2) Amount.--The fee shall be established by the Facility 
        Board in such amount as may be necessary to cover obligations 
        of the Facility under such guarantees to the extent the capital 
        funds of the Facility cannot cover such obligations and shall 
        be based on the outstanding mortgage exposure of the Facility. 
        The FHFA Board may establish a minimum amount for the 
        reinsurance fee.
    (b) Reinsurance Fund.--
            (1) Establishment.--There is established in the Treasury of 
        the United States a Reinsurance Fund for the Facility.
            (2) Credits.--The Reinsurance Fund shall be credited with--
                    (A) all reinsurance fees collected by the Facility 
                pursuant to subsection (a);
                    (B) any amounts earned on investments of the Fund 
                pursuant to paragraph (4); and
                    (C) such other amounts as may be credited to the 
                Fund, including amounts as may be required to be 
                credited by the Secretary of the Treasury.
            (3) Use.--Amounts in the Reinsurance Fund shall be 
        available, at the direction of FHFA Board, only for payment of 
        obligations of the Facility under guarantees issued by the 
        Facility of timely payment of principal and interest on 
        mortgage-backed securities, notes, and other obligations issued 
        by the Facility and only to the extent that the FHFA Board 
        determines that the capital of the Facility is insufficient to 
        cover such obligations.
            (4) Investments.--The Secretary may invest such amounts as 
        the Secretary considers advisable in obligations issued or 
        guaranteed by the United States.

SEC. 107. DEFICIT REDUCTION.

    Any receipts and earnings of the Facility in excess of amounts 
required to comply with the capital standards established pursuant to 
section 104, amounts required to be deposited in the Reinsurance Fund 
established under section 106(b), and amounts required for the 
repurchase of senior preferred stock of the enterprises issued pursuant 
to the Senior Preferred Stock Purchase Agreements entered into between 
the Department of the Treasury and the enterprises in September 2008 
(as such Agreement may be amended and restated), shall be transferred 
into the General Fund of the Treasury and used to reduce the budget 
deficit of the Federal Government.

SEC. 108. PORTFOLIO REDUCTION.

    (a) Limitation.--
            (1) In general.--The Facility may not own mortgage assets 
        in excess of $250,000,000,000, as such amount shall be adjusted 
        by the FHFA Board, effective January 1 of each year beginning 
        after the date of the enactment of this Act, in accordance with 
        an appropriate inflationary index, as determined by the FHFA 
        Board. The FHFA Board shall cause notice of each such 
        adjustment to be published promptly in the Federal Register.
            (2) Definition.--For purposes of this section, the term 
        ``mortgage assets'' means, with respect to the Facility, assets 
        of the Facility consisting of mortgages, mortgage loans, 
        mortgage-related securities, participation certificates, 
        mortgage-backed commercial paper, obligations of real estate 
        mortgage investment conduits and similar assets, in each case 
        to the extent such assets would appear on the balance sheet of 
        the Facility.
    (b) Use.--Mortgage assets owned by the Facility shall be available 
for use--
            (1) to support multifamily housing and residential 
        mortgages that cannot readily be securitized;
            (2) to provide financing to support residential mortgage 
        markets affected by economic downturns; and
            (3) to modify delinquent mortgages that are purchased from 
        pools of mortgages backing or on which are based mortgage-
        backed securities issued and guaranteed by the Facility.
    (c) Monitoring.--The FHFA Board shall monitor the mortgage assets 
owned by the Facility to ensure compliance with this section.
    (d) Safety Valve.--Notwithstanding subsection (a), the FHFA Board 
may provide for the temporary increase in the limitation under 
subsection (a) on mortgage assets owned by the Facility if the FHFA 
Board determines that the there has been a substantial reduction in the 
availability of private residential mortgage financing, taking into 
consideration such indicia as the FHFA Board considers appropriate.

SEC. 109. INITIAL STANDARDS.

    Not later than the expiration of the 6-month period beginning upon 
the appointment of all initial members of the FHFA Board pursuant to 
section 301(b) the FHFA Board shall issue such regulations, guidelines, 
orders, requirements, and standards pursuant to section 1396C of the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 
(as added by section 302 of this Act) as may be required under this 
title for the establishment and operation of the Facility.

  TITLE II--ENDING THE CONSERVATORSHIPS OF FANNIE MAE AND FREDDIE MAC

SEC. 201. TREASURY PLAN.

    (a) In General.--Not later than the expiration of the 6-month 
period beginning upon the date of the enactment of this Act, the 
Secretary of the Treasury, in consultation with the Director of the 
Federal Housing Finance Agency, shall develop and submit to the 
Congress a plan that provides for the orderly and timely wind-down and 
termination of the enterprises, during such period as the Secretary 
considers appropriate but in no case ending later than 36 months after 
the date of the enactment of this Act, in accordance with this section 
and the receivership authority under section 1367 of the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992 and in a 
manner that avoids excessive disruption to the stability of the 
residential mortgage market.
    (b) Contents.--Such plan--
            (1) shall provide for the termination, during the period 
        referred to in subsection (a), of the authority of the 
        enterprises to conduct any new business;
            (2) shall provide for the transfer of the assets, 
        obligations, and liabilities of the enterprises to the 
        Secondary Market Facility for Residential Mortgages established 
        under title I;
            (3) may provide for the Facility to segregate such sound 
        assets and troubled or impaired assets of the enterprises into 
        separate trusts or entities;
            (4) shall provide for the full repayment to the taxpayers 
        and the Federal Government of the investment made by the 
        taxpayers and the Federal Government in the enterprises, which 
        repayment shall be made by the Facility from income generated 
        by the Facility, in a manner that is generally consistent with 
        the manner in which the taxpayers and the Federal Government 
        were reimbursed by financial institutions assisted under the 
        Troubled Assets Relief Program of the Secretary of the Treasury 
        under title I of the Emergency Economic Stabilization Act of 
        2008 (12 U.S.C. 5211 et seq.), or in such other manner as the 
        Secretary considers appropriate;
            (5) shall provide for the Secondary Market Facility for 
        Residential Mortgages established under title I of this Act to 
        purchase from the Secretary of the Treasury all preferred stock 
        held by the Treasury pursuant to purchase under the Senior 
        Preferred Stock Purchase Agreements entered into with the 
        Treasury by the enterprises in September 2008 (as such 
        Agreements have been amended and restated);
            (6) shall provide that, notwithstanding any other provision 
        of law, any provision of the Senior Preferred Stock Purchase 
        Agreement entered into between the Department of the Treasury 
        and an enterprise in September 2008 (as any such Agreement may 
        be amended and restated), or any provision of any certificate 
        in connection with such an Agreement creating or designating 
        the terms, powers, preferences, privileges, limitations, or any 
        other conditions of the Variable Liquidation Preference Senior 
        Preferred Stock of an enterprise issued pursuant to such an 
        Agreement, the annual rate of dividends paid on the Variable 
        Liquidation Preference Senior Preferred Stock of each 
        enterprise issued pursuant to such an Agreement shall, until 
        all such stock is purchases by the Facility pursuant to 
        paragraph (5) of this subsection--
                    (A) be reduced to not more than 5 percent; and
                    (B) be variable and based on market conditions and 
                performance;
            (7) shall provide for the fulfillment of all obligations of 
        the enterprises under any outstanding debt obligations and 
        mortgage-backed securities of the enterprises; and
            (8) shall provide a date during the period referred to in 
        subsection (a) for the repeal of the Federal National Mortgage 
        Association Charter Act and the Federal Home Loan Mortgage 
        Corporation Act.

SEC. 202. IMPLEMENTATION OF PLAN.

    The Secretary shall--
            (1) commence implementation of the plan submitted to the 
        Congress under section 201 upon expiration of the 90-day period 
        beginning upon such submission; and
            (2) wind-down and terminate the enterprises in accordance 
        with the terms of the plan.

SEC. 203. REPEAL OF CHARTER ACTS.

    Upon the date specified in the plan pursuant to section 201(b)(8), 
the following provisions are repealed:
            (1) The Federal National Mortgage Association Charter Act 
        (12 U.S.C. 1716 et seq.).
            (2) The Federal Home Loan Mortgage Corporation Act (12 
        U.S.C. 1451 et seq.).

               TITLE III--FEDERAL HOUSING FINANCE AGENCY

SEC. 301. ESTABLISHMENT OF FEDERAL HOUSING FINANCE AGENCY BOARD.

    (a) Establishment.--Section 1312 of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4512) is 
amended--
            (1) by striking the section designation and heading and all 
        that follows through subsection (c);
            (2) by striking subsections (e) through (g);
            (3) by redesignating subsection (d) as subsection (l); and
            (4) by inserting before subsection (l) (as so redesignated) 
        the following:

``SEC. 1312. FEDERAL HOUSING FINANCE AGENCY BOARD.

    ``(a) Establishment.--There is established the Federal Housing 
Finance Agency Board, who shall govern the Agency.
    ``(b) Appointment.--The FHFA Board which shall consist of 5 
members, as follows:
            ``(1) Ex officio members.--Two ex officio members who shall 
        be--
                    ``(A) the Secretary of the Treasury or the 
                Secretary's designee; and
                    ``(B) the Secretary of Housing and Urban 
                Development or the Secretary's designee.
            ``(2) Appointed members.--Three members, who shall be 
        appointed by the President, by and with the advice and consent 
        of the Senate, who shall include--
                    ``(A) one member who shall possess extensive 
                experience and expertise in financial management or 
                oversight, capital markets (including debt markets), 
                the secondary mortgage market, and mortgage-backed 
                securities; and
                    ``(B) two members who shall possess extensive 
                experience and expertise in mortgage finance (including 
                single-family and multifamily housing mortgage finance 
                and with credit unions and smaller financial 
                institutions), development of affordable housing, and 
                economic development and revitalization.
    ``(c) Political Affiliation.--Not more than three members of the 
FHFA Board may be members of the same political party.
    ``(d) Chairperson.--The Chairperson of the FHFA Board shall be 
designated by the President at the time of appointment. The Chairperson 
shall designate another member to serve as Acting Chairperson during 
the absence or disability of the Chairperson.
    ``(e) Term; Removal.--Each member of the FHFA Board shall be 
appointed for a term of 5 years, and may be removed by the President 
only for cause.
    ``(f) Vacancies.--A member of the FHFA Board appointed to fill a 
vacancy occurring before the expiration of the term for which the 
member's predecessor was appointed shall be appointed only for the 
remainder of that term.
    ``(g) Continuation of Membership.--A member of the FHFA Board may 
serve after the expiration of the member's term until a successor has 
been appointed.
    ``(h) Compensation.--Members of the FHFA Board shall each receive 
compensation at the rate prescribed for level III of the Executive 
Schedule under section 5314 of title 5, United States Code.
    ``(i) Meetings.--The FHFA Board shall meet upon notice by the 
Chairperson, but in no event shall the FHFA Board meet less frequently 
than once every 2 months. Any member of the FHA Board may, upon giving 
written notice to the Chairperson, require a special meeting of the 
FHFA Board, which shall be convened by the Chairperson within 30 days 
after such notice.
    ``(j) Testimony.--On an annual basis, the Board shall testify 
before the Congress regarding the safety and soundness of the Secondary 
Market Facility for Residential Mortgages, any material deficiencies in 
the conduct of the operations of the Facility; the overall operational 
status of the Facility; operations, resources, and performance of the 
FHFA Board, and such other matters relating to the FHFA Board and the 
Facility.
    ``(k) Advisory Committee.--
            ``(1) Establishment.--There is established an Advisory 
        Committee to consist of 12 members who shall be appointed by 
        the FHFA Board.
            ``(2) Membership.--Members of the Advisory Committee shall 
        be broadly representative of mortgage loan originators, 
        investors in mortgage-backed securities, and consumer advocacy 
        organizations, and shall include--
                    ``(A) 3 members who have extensive experience and 
                expertise in financial management or oversight, capital 
                markets (including debt markets), the secondary 
                mortgage market, and mortgage-backed securities;
                    ``(B) 3 members who have extensive experience and 
                expertise in mortgage finance, including with single 
                family and multifamily housing and with credit unions 
                and small institutions;
                    ``(C) 3 members who have extensive experience and 
                expertise in mortgage loan origination and closing, 
                including mortgage bankers, mortgage brokers, 
                settlement services providers; and
                    ``(D) 3 members from consumer advocacy 
                organizations and other organizations that the FHFA 
                Board deems appropriate to advise the FHFA Board in 
                effectively carrying out its oversight of the Facility.
            ``(3) Meetings.--The Advisory Committee shall meet at least 
        once each calendar quarter.
            ``(4) Duties.--The Advisory Committee shall advise the FHFA 
        Board on its operations and discharge of its duties, and shall 
        submit its own comments to the Congress on the extent to which 
        the FHFA Board is meeting its responsibilities under the law 
        and any suggestions for improvements in such regard.''.
    (b) Transition.--
            (1) Timing of appointments.--The President shall endeavor 
        to appoint and have confirmed all initial members of the 
        Federal Housing Finance Agency Board pursuant to section 
        1312(b)(2) of the Federal Housing Enterprises Financial Safety 
        and Soundness Act of 1992 (as amended by subsection (a)(1) of 
        this section) not later than the expiration of the 6-month 
        period beginning upon the date of the enactment of this Act.
            (2) Continued service of director.--Notwithstanding the 
        amendment made by subsection (a), during the period beginning 
        on the date of the enactment of this Act and ending upon the 
        first date on which all initial members of the Federal Housing 
        Finance Agency Board are appointed and confirmed, the person 
        serving as the Director of the Federal Housing Finance Agency 
        on such date of enactment shall act for all purposes as, and 
        with the full powers of, the Federal Housing Finance Agency 
        Board.
    (c) Conforming Amendment; References.--
            (1) Conforming amendment.--Section 5313 of title 5, United 
        States Code, is amended by striking the item relating to 
        Director of the Federal Housing Finance Agency.
            (2) References.--Any references to the Director of the 
        Federal Housing Finance Agency in statutes, Executive orders, 
        rules, regulations, directives, or delegations of authority 
        shall be deemed to refer to the Federal Housing Finance Agency 
        Board established under the amendment made by subsection (a) of 
        this section.

SEC. 302. SUPERVISION AND REGULATION OF FACILITY BY FHFA.

    The Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992 is amended by adding at the end the following new subtitle:

 ``Subtitle F--Supervision and Regulation of Secondary Market Facility 
                       for Residential Mortgages

``SEC. 1396. OVERSIGHT OF FACILITY.

    ``(a) Authority.--
            ``(1) In general.--The Secondary Market Facility for 
        Residential Mortgages established by title I of the Secondary 
        Market Facility for Residential Mortgages Act of 2011 (in this 
        subtitle referred to as the `Facility') shall be subject to the 
        supervision and regulation of the FHFA Board. The FHFA Board 
        shall have general regulatory authority over the Facility and 
        shall exercise such authority, and may issue such regulations, 
        orders, and interpretations as the FHFA Board determines 
        necessary to ensure that the purposes of title I of such Act 
        and this subtitle and any other applicable laws are carried out 
        and that the Facility is operated in a safe and sound manner.
            ``(2) Limitation.--Any authority under this subtitle of the 
        FHFA Board to supervise and regulate the Facility may not be 
        construed to authorize the FHFA Board to establish or regulate 
        the amount of guarantee fees under section 105 of the Secondary 
        Market Facility for Residential Mortgages Act of 2011.
    ``(b) Use of Existing Authority.--Except as provided in this 
section, the Facility and a Facility-affiliated party shall be subject 
to the same supervisory and enforcement powers of the Director under 
this title, to the same extent as if the Facility was a regulated 
entity and the Facility-affiliated party was an entity-affiliated 
party, including--
            ``(1) authority to establish and enforce prudential 
        management and operations standards under section 1313B (12 
        U.S.C. 4513b);
            ``(2) authority to require reports under section 1314 (12 
        U.S.C. 4514);
            ``(3) authority to conduct examinations under section 1317 
        (12 U.S.C. 4517);
            ``(4) the enforcement powers under sections 1371 through 
        1379 (12 U.S.C. 4631-9); and
            ``(5) authority to take prompt corrective supervisory 
        actions in response to capital classifications as provided for 
        in sections 1365 and 1366 (12 U.S.C. 4615, 4616).

``SEC. 1396A. MONITORING AND EVALUATION.

    ``(a) Monitoring.--The FHFA Board shall monitor compliance by the 
Facility with the requirements of title I of the Secondary Market 
Facility for Residential Mortgages Act of 2011.
    ``(b) Evaluation.--Upon the expiration of the 5-year period 
beginning on the date of the enactment of the Secondary Market Facility 
for Residential Mortgages Act of 2011, the FHFA Board shall submit to 
the Congress a report analyzing the performance of the Facility in 
meeting the purposes of title I of such Act. Such report shall analyze 
and compare the performance of the enterprises during the period 
consisting of the year 2008 and years prior to the performance of the 
enterprises and the Facility during the period consisting of the year 
2009 and years after through the end of such 5-year period.

``SEC. 1396B. FUNDING OF FHFA BOARD OVERSIGHT OF FACILITY.

    ``(a) Annual Assessments.--The FHFA Board shall establish and 
collect from the Facility annual assessments in an amount not exceeding 
the amount sufficient to provide for reasonable costs (including 
administrative costs) and expenses of the Agency attributable to the 
Agency's supervision and regulation of the Facility, including--
            ``(1) the expenses of any examinations pursuant section 
        1396(b)(3);
            ``(2) the expenses of monitoring pursuant to section 
        1396A(a); and
            ``(3) such amounts in excess of actual expenses for any 
        given year as deemed necessary by the FHFA Board to maintain a 
        working capital fund in accordance with subsection (e) of this 
        section.
    ``(b) Timing of Payment.--The annual assessment shall be payable 
semiannually for each fiscal year, on October 1 and April 1.
    ``(c) Increased Costs of Regulation.--
            ``(1) Increase for inadequate capitalization.--If the FHFA 
        Board determines that the Facility is not adequately 
        capitalized in accordance with the standards established under 
        section 104 of the Secondary Market Facility for Residential 
        Mortgages Act of 2011, the semiannual payments made pursuant to 
        subsection (b) by the Facility may be increased, as necessary, 
        in the discretion of the Board to pay additional estimated 
        costs of regulation of the Facility.
            ``(2) Additional assessment for deficiencies.--If at any 
        time, as a result of increased costs of regulation of the 
        Facility that is not classified (for purposes of the standards 
        established under section 104 of such Act) as adequately 
        capitalized or as the result of supervisory or enforcement 
        activities pursuant to this subtitle for the Facility, the 
        amount available from any semiannual payment made by the 
        Facility pursuant to subsection (b) is insufficient to cover 
        the costs of the Agency with respect to the Facility, the FHFA 
        Board may make and collect from the Facility an immediate 
        assessment to cover the amount of such deficiency for the 
        semiannual period. If, at the end of any semiannual period 
        during which such an assessment is made, any amount remains 
        from such assessment, such remaining amount shall be deducted 
        from the assessment for the Facility for the following 
        semiannual period.
    ``(d) Surplus.--Except with respect to amounts collected pursuant 
to subsection (a)(3), if any amount from any annual assessment 
collected from the Facility remains unobligated at the end of the year 
for which the assessment was collected, such amount shall be credited 
to the assessment to be collected from the Facility for the following 
year.
    ``(e) Working Capital Fund.--At the end of each year for which an 
assessment under this section is made, the FHFA Board shall remit to 
the Facility any amount of assessment collected from the Facility that 
is attributable to subsection (a)(3) and is in excess of the amount the 
FHFA Board deems necessary to maintain a working capital fund.
    ``(f) Treatment of Assessments.--
            ``(1) Deposit.--Amounts received by the FHFA Board from 
        assessments under this section may be deposited by the Board in 
        the manner provided in section 5234 of the Revised Statutes of 
        the United States (12 U.S.C. 192) for monies deposited by the 
        Comptroller of the Currency.
            ``(2) Not government funds.--The amounts received by the 
        FHFA Board from any assessment under this section shall not be 
        construed to be Government or public funds or appropriated 
        money.
            ``(3) No apportionment of funds.--Notwithstanding any other 
        provision of law, the amounts received by the FHFA Board from 
        any assessment under this section shall not be subject to 
        apportionment for the purpose of chapter 15 of title 31, United 
        States Code, or under any other authority.
            ``(4) Use of funds.--The FHFA Board may use any amounts 
        received by the Board from assessments under this section for 
        compensation of the Board and other employees of the Agency and 
        for all other expenses of the Board and the Agency.
            ``(5) Treasury investments.--
                    ``(A) Authority.--The FHFA Board may request the 
                Secretary of the Treasury to invest such portions of 
                amounts received by the Board from assessments paid 
                under this section that, in the Board's discretion, are 
                not required to meet the current working needs of the 
                Agency.
                    ``(B) Government obligations.--Pursuant to a 
                request under subparagraph (A), the Secretary of the 
                Treasury shall invest such amounts in Government 
                obligations guaranteed as to principal and interest by 
                the United States with maturities suitable to the needs 
                of the Agency and bearing interest at a rate determined 
                by the Secretary of the Treasury taking into 
                consideration current market yields on outstanding 
                marketable obligations of the United States of 
                comparable maturity.

``SEC. 1396C. REGULATIONS AND ORDERS.

    ``(a) Authority.--The FHFA Board shall issue any regulations, 
guidelines, or orders necessary to carry out the duties of the FHFA 
Board under this subtitle and title I of the Secondary Market Facility 
for Residential Mortgages Act of 2011, and to ensure that the purposes 
of this subtitle and title I of such Act are accomplished.
    ``(b) Notice and Comment.--Any regulations issued by the FHFA Board 
under this section shall be issued after notice and opportunity for 
public comment pursuant to the provisions of section 553 of title 5.''.

SEC. 303. CONFORMING AMENDMENTS.

    The Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992 is amended--
            (1) in section 1303 (12 U.S.C. 4502)--
                    (A) by striking paragraph (4);
                    (B) by redesignating paragraphs (5) through (8) as 
                paragraphs (4) through (7), respectively;
                    (C) by striking paragraph (9);
                    (D) by redesignating paragraphs (10) through (12) 
                as paragraphs (8) through (10), respectively;
                    (E) by inserting before paragraph (13) the 
                following new paragraph:
            ``(11) FHFA board.--The term `FHFA Board' means the Federal 
        Housing Finance Agency Board established under section 1312.''; 
        and
                    (F) by redesignating paragraphs (13) through (31) 
                as paragraphs (12) through (30), respectively;
            (2) by striking section 1313A (12 U.S.C. 4513a: relating to 
        the Federal Housing Finance Agency Oversight Board);
            (3) by striking ``Director'' each place such term appears 
        (except in section 1316(g), 1338(i), and 1355) and inserting 
        ``FHFA Board'';
            (4) by striking ``Director's'' each place such term appears 
        and inserting ``FHFA Board's'';
            (5) by striking ``Director'' each place such term appears 
        in the section headings for sections 1313, 1319B, and 1369D and 
        inserting ``fhfa board''; and
            (6) in the heading for part 2 of subtitle A, by striking 
        ``director'' and inserting ``fhfa board''.
                                 <all>
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