I 

111TH CONGRESS 

1ST SESSION H. R. 2588 

To prevent foreclosure of home mortgages and increase the availability of 

affordable new mortgages and affordable refinancing of mortgages held 

by Fannie Mae and Freddie Mac. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 21, 2009 

Mr. CARDOZA (for himself and Mr. COSTA) introduced the following bill; which 

was referred to the Committee on Financial Services 

A BILL 

To prevent foreclosure of home mortgages and increase the 

availability of affordable new mortgages and affordable 

refinancing of mortgages held by Fannie Mae and 

Freddie Mac. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Housing Opportunity 

5 and Mortgage Equity Act of 2009’’. 

6 SEC. 2. AFFORDABLE NEW MORTGAGES. 

7 (a) AUTHORITY.—The Federal National Mortgage 

8 Association and the Federal Home Loan Mortgage CorVerDate Nov 24 2008 20:15 May 24, 2009 Jkt 079200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2588.IH H2588

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1 poration shall each carry out a program under this section 

2 to purchase and securitize qualified new mortgages on sin3 gle-family housing, in accordance with this section and 

4 policies and procedures that the Director of the Federal 

5 Housing Finance Agency shall establish. 

6 (b) REQUIREMENT TO PURCHASE QUALIFIED NEW

7 MORTGAGES.—If a lender proffers to an enterprise, in ac8 cordance with requirements established by the Director, 

9 a mortgage or mortgages for purchase under this section, 

10 the enterprise shall make a determination of whether such 

11 mortgage or mortgages are qualified new mortgages. Sub12 ject to subsection (e), if the enterprise determines that 

13 such mortgage or mortgages meet the requirements for 

14 qualified new mortgages, the enterprise shall make a com15 mitment to purchase, and shall purchase, the mortgage 

16 or mortgages. 

17 (c) QUALIFIED NEW MORTGAGES.—For purposes of 

18 this section, the term ‘‘qualified new mortgage’’ means a 

19 mortgage that meets the following requirements: 

20 (1) SINGLE-FAMILY HOUSING.—The property 

21 subject to the mortgage shall be a one- to four-fam22 ily dwelling, including a condominium or a share in 

23 a cooperative ownership housing association. 

24 (2) PRINCIPAL RESIDENCE.—The mortgagor 

25 under the mortgage shall occupy the property subVerDate Nov 24 2008 03:13 May 27, 2009 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2588.IH H2588

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1 ject to the mortgage as his or her principal resi2 dence. 

3 (3) INTEREST RATE; TERM TO MATURITY.—The 

4 mortgage shall— 

5 (A) bear interest at a single rate that is 

6 fixed for the entire term of the mortgage, which 

7 shall not exceed an annual rate that is 1.6 per8 centage points higher than the average annual 

9 rate of interest paid on obligations of the 

10 United States most recently issued by the Sec11 retary of the Treasury and having 10-year ma12 turities; and 

13 (B) have a term to maturity of not less 

14 than 30 years and not more than 40 years from 

15 the date of the beginning of the amortization of 

16 the mortgage. 

17 (4) UNDERWRITING STANDARDS.—The mort18 gage shall meet such underwriting standards as the 

19 Director shall require. 

20 (5) HOME PURCHASE.—The principal loan 

21 amount repayment of which is secured by the mort22 gage shall be used to purchase the property that is 

23 subject to the qualified new mortgage. 


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1 (6) NEW MORTGAGES.—The mortgage was 

2 originated on or after the date of the enactment of 

3 this Act. 

4 (d) SECURITIZATION.— 

5 (1) REQUIREMENT.—Each enterprise shall, 

6 upon such terms and conditions as it may prescribe, 

7 set aside any qualified new mortgages purchased by 

8 it under this section and, upon approval of the Sec9 retary of the Treasury, issue and sell securities 

10 based upon such mortgages set aside. 

11 (2) FORM.—Securities issued under this sub12 section may be in the form of debt obligations or 

13 trust certificates of beneficial interest, or both. 

14 (3) TERMS.—Securities issued under this sub15 section shall have such maturities and bear such 

16 rate or rates of interest as may be determined by the 

17 enterprise with the approval of the Secretary. 

18 (4) EXEMPTION.—Securities issued by an en19 terprise under this subsection shall, to the same ex20 tent as securities which are direct obligations of or 

21 obligations guaranteed as to principal and interest 

22 by the United States, be deemed to be exempt secu23 rities within the meaning of laws administered by 

24 the Securities and Exchange Commission. 


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1 (5) PRINCIPAL AND INTEREST PAYMENTS.— 

2 Mortgages set aside pursuant to this subsection shall 

3 at all times be adequate to enable the issuing enter4 prise to make timely principal and interest payments 

5 on the securities issued and sold pursuant to this 

6 subsection. 

7 (6) REQUIRED DISCLOSURE.—Each enterprise 

8 shall insert appropriate language in all of the securi9 ties issued under this subsection clearly indicating 

10 that such securities, together with the interest there11 on, are not guaranteed by the United States and do 

12 not constitute a debt or obligation of the United 

13 States or any agency or instrumentality thereof 

14 other than the enterprise. 

15 (e) TERMINATION.—The requirement under sub16 section (b) for the enterprises to purchase mortgages shall 

17 not apply to any mortgage proferred to an enterprise after 

18 the expiration of the two-year period beginning on the date 

19 of the enactment of this Act. 

20 SEC. 3. AFFORDABLE REFINANCING OF MORTGAGES HELD 

21 BY FANNIE MAE AND FREDDIE MAC. 

22 (a) AUTHORITY.—The Federal National Mortgage 

23 Association and the Federal Home Loan Mortgage Cor24 poration shall each carry out a program under this section 

25 to provide for the refinancing of qualified mortgages on 


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1 single-family housing owned by such enterprise and for the 

2 purchase of and securitization of such refinancing mort3 gages, in accordance with this section and policies and 

4 procedures that the Director of the Federal Housing Fi5 nance Agency shall establish. Such program shall require 

6 such refinancing of a qualified mortgage upon the request 

7 of the mortgagor made to the applicable enterprise and 

8 a determination by the enterprise that the mortgage is a 

9 qualified mortgage. 

10 (b) QUALIFIED REFINANCING MORTGAGE.—For pur11 poses of this section, the term ‘‘qualified mortgage’’ means 

12 a mortgage that meets the following requirements: 

13 (1) SINGLE-FAMILY HOUSING.—The property 

14 subject to the mortgage shall be a one- to four-fam15 ily dwelling, including a condominium or a share in 

16 a cooperative ownership housing association. 

17 (2) REFINANCING OF GSE-OWNED MORT18 GAGES.—The principal loan amount repayment of 

19 which is secured by the mortgage shall be used to 

20 satisfy all indebtedness under an existing first mort21 gage that— 

22 (A) was made for purchase of, or refi23 nancing another first mortgage on, the same 

24 property that is subject to the qualified refi25 nancing mortgage; 


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1 (B) is owned by the Federal National 

2 Mortgage Association or the Federal Home 

3 Loan Mortgage Corporation; and 

4 (C) was originated on or before January 1, 

5 2008. 

6 (3) INTEREST RATE.—The mortgage shall bear 

7 interest at a single rate that is fixed for the entire 

8 term of the mortgage, which shall not exceed an an9 nual rate that is 1.6 percentage points higher than 

10 the average annual rate of interest paid on obliga11 tions of the United States most recently issued by 

12 the Secretary of the Treasury and having 10-year 

13 maturities. 

14 (4) WAIVER OF PREPAYMENT PENALTIES.—All 

15 penalties for prepayment or refinancing of the un16 derlying mortgage refinanced by the mortgage, and 

17 all fees and penalties related to the default or delin18 quency on such mortgage, shall have been waived or 

19 forgiven. 

20 (c) TERMINATION.—The requirement under sub21 section (a) for the enterprises to refinance qualified mort22 gages shall not apply to any request for refinancing made 

23 after the expiration of the two-year period beginning on 

24 the date of the enactment of this Act. 


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1 SEC. 4. TREASURY FINANCING. 

2 (a) AUTHORITY.—Subject to subsection (e), the Sec3 retary may purchase securities issued by the enterprises 

4 pursuant to the programs under this Act and such other 

5 obligations as may be issued by the enterprises for pur6 poses of carrying out the programs under this Act. 

7 (b) PUBLIC DEBT TRANSACTION.—For the purpose 

8 of purchasing any such securities and obligations, the Sec9 retary may use as a public debt transaction the proceeds 

10 from the sale of any securities issued under chapter 31 

11 of title 31, United States Code, and the purposes for which 

12 securities are issued under such chapter are hereby ex13 tended to include any purchase by the Secretary of such 

14 obligations under this section. 

15 (c) CHARACTERISTICS OF OBLIGATIONS.—Obliga16 tions issued and purchased pursuant to this section shall 

17 be in such forms and denominations, bear such maturities, 

18 bear interest at such rate, and be subject to such other 

19 terms and conditions, as the Secretary shall determine. In 

20 determining the term to maturity of such obligations, the 

21 Secretary shall take into consideration the terms to matu22 rity of the various securities issued by the enterprises pur23 suant to the programs under this Act and the terms to 

24 maturity and possibility of prepayment of mortgages pur25 chased and securitized under such programs. 


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1 (d) TREATMENT.—All redemptions, purchases, and 

2 sales by the Secretary of obligations under this section 

3 shall be treated as public debt transactions of the United 

4 States. 

5 (e) LIMITATION ON AMOUNT.—The aggregate prin6 cipal amount of outstanding obligations and securities 

7 purchased under subsection (a) by the Secretary and held 

8 at any one time may not exceed $10,000,000,000. 

9 SEC. 5. DEFINITIONS. 

10 For purposes of this Act, the following definitions 

11 shall apply: 

12 (1) DIRECTOR.—The term ‘‘Director’’ means 

13 the Director of the Federal Housing Finance Agen14 cy. 

15 (2) ENTERPRISE.—The term ‘‘enterprise’’ 

16 means the Federal National Mortgage Association 

17 and the Federal Home Loan Mortgage Corporation. 

18 (3) SECRETARY.—The term ‘‘Secretary’’ means 

19 the Secretary of the Treasury. 

Æ 


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