228 
the amount of assets of the limited-life regu-
lated entity; 
‘‘(ii) purchase such assets of the regu-
lated entity that is in default, or in danger 
of default, as the Agency may, in its discre-
tion, determine to be appropriate; and 
‘‘(iii) perform any other temporary 
function which the Agency may, in its dis-
cretion, prescribe in accordance with this 
section. 
‘‘(2) CHARTER.— 
‘‘(A) CONDITIONS.—The Agency may grant 
a temporary charter if the Agency determines 
that the continued operation of the regulated en-
tity in default or in danger of default is in the 
best interest of the national economy and the 
housing markets. 
‘‘(B) TREATMENT
AS
BEING
IN
DEFAULT 
FOR
CERTAIN
PURPOSES.—A limited-life regu-
lated entity shall be treated as a regulated entity 
in default at such times and for such purposes 
as the Agency may, in its discretion, determine. 
‘‘(C) MANAGEMENT.—A limited-life regu-
lated entity, upon the granting of its charter, 
shall be under the management of a board of di-
229 
rectors consisting of not fewer than 5 nor more 
than 10 members appointed by the Agency. 
‘‘(D) BYLAWS.—The board of directors of a 
limited-life regulated entity shall adopt such by-
laws as may be approved by the Agency. 
‘‘(3) CAPITAL STOCK.—No capital stock need be 
paid into a limited-life regulated entity by the Agen-
cy. 
‘‘(4) INVESTMENTS.—Funds of a limited-life reg-
ulated entity shall be kept on hand in cash, invested 
in obligations of the United States or obligations 
guaranteed as to principal and interest by the United 
States, or deposited with the Agency, or any Federal 
Reserve bank. 
‘‘(5) EXEMPT
STATUS.—Notwithstanding any 
other provision of Federal or State law, the limited- 
life regulated entity, its franchise, property, and in-
come shall be exempt from all taxation now or here-
after imposed by the United States, by any territory, 
dependency, or possession thereof, or by any State, 
county, municipality, or local taxing authority. 
‘‘(6) WINDING UP.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), unless Congress authorizes the sale of 
the capital stock of the limited-life regulated en-
230 
tity, not later than 2 years after the date of its 
organization, the Agency shall wind up the af-
fairs of the limited-life regulated entity. 
‘‘(B) EXTENSION.—The Director may, in 
the discretion of the Director, extend the status 
of the limited-life regulated entity for 3 addi-
tional 1-year periods. 
‘‘(7) TRANSFER OF ASSETS AND LIABILITIES.— 
‘‘(A) IN GENERAL.— 
‘‘(i) TRANSFER OF ASSETS AND LIABIL-
ITIES.—The Agency, as receiver, may trans-
fer any assets and liabilities of a regulated 
entity in default, or in danger of default, to 
the limited-life regulated entity in accord-
ance with paragraph (1). 
‘‘(ii) SUBSEQUENT
TRANSFERS.—At 
any time after a charter is transferred to a 
limited-life regulated entity, the Agency, as 
receiver, may transfer any assets and liabil-
ities of such regulated entity in default, or 
in danger in default, as the Agency may, in 
its discretion, determine to be appropriate 
in accordance with paragraph (1). 
‘‘(iii) 
EFFECTIVE
WITHOUT
AP-
PROVAL.—The transfer of any assets or li-
231 
abilities of a regulated entity in default, or 
in danger of default, transferred to a lim-
ited-life regulated entity shall be effective 
without any further approval under Federal 
or State law, assignment, or consent with 
respect thereto. 
‘‘(8) PROCEEDS.—To the extent that available 
proceeds from the limited-life regulated entity exceed 
amounts required to pay obligations, such proceeds 
may be paid to the regulated entity in default, or in 
danger of default. 
‘‘(9) POWERS.— 
‘‘(A) IN GENERAL.—Each limited-life regu-
lated entity created under this subsection shall 
have all corporate powers of, and be subject to 
the same provisions of law as, the regulated enti-
ty in default or in danger of default to which it 
relates, except that— 
‘‘(i) the Agency may— 
‘‘(I) remove the directors of a lim-
ited-life regulated entity; and 
‘‘(II) fix the compensation of 
members of the board of directors and 
senior management, as determined by
232 
the Agency in its discretion, of a lim-
ited-life regulated entity; 
‘‘(ii) the Agency may indemnify the 
representatives for purposes of paragraph 
(1)(B), and the directors, officers, employ-
ees, and agents of a limited-life regulated 
entity on such terms as the Agency deter-
mines to be appropriate; and 
‘‘(iii) the board of directors of a lim-
ited-life regulated entity— 
‘‘(I) shall elect a chairperson who 
may also serve in the position of chief 
executive officer, except that such per-
son shall not serve either as chair-
person or as chief executive officer 
without the prior approval of the Agen-
cy; and 
‘‘(II) may appoint a chief execu-
tive officer who is not also the chair-
person, except that such person shall 
not serve as chief executive officer with-
out the prior approval of the Agency. 
‘‘(B) STAY OF JUDICIAL ACTION.—Any judi-
cial action to which a limited-life regulated enti-
ty becomes a party by virtue of its acquisition
233 
of any assets or assumption of any liabilities of 
a regulated entity in default shall be stayed from 
further proceedings for a period of up to 45 days 
at the request of the limited-life regulated entity. 
Such period may be modified upon the consent 
of all parties. 
‘‘(10) OBTAINING OF CREDIT AND INCURRING OF 
DEBT.— 
‘‘(A) IN GENERAL.—The limited-life regu-
lated entity may obtain unsecured credit and 
incur unsecured debt in the ordinary course of 
business. 
‘‘(B) INABILITY TO OBTAIN CREDIT.—If the 
limited-life regulated entity is unable to obtain 
unsecured credit the Director may authorize the 
obtaining of credit or the incurring of debt— 
‘‘(i) with priority over any or all ad-
ministrative expenses; 
‘‘(ii) secured by a lien on property that 
is not otherwise subject to a lien; or 
‘‘(iii) secured by a junior lien on prop-
erty that is subject to a lien. 
‘‘(C) LIMITATIONS.— 
‘‘(i) IN GENERAL.—The Director, after 
notice and a hearing, may authorize the ob-
234 
taining of credit or the incurring of debt se-
cured by a senior or equal lien on property 
that is subject to a lien (other than mort-
gages that collateralize the mortgage-backed 
securities issued or guaranteed by the regu-
lated entity) only if— 
‘‘(I) the limited-life regulated en-
tity is unable to obtain such credit oth-
erwise; and 
‘‘(II) there is adequate protection 
of the interest of the holder of the lien 
on the property which such senior or 
equal lien is proposed to be granted. 
‘‘(ii) BURDEN
OF
PROOF.—In any 
hearing under this subsection, the Director 
has the burden of proof on the issue of ade-
quate protection. 
‘‘(D) AFFECT ON DEBTS AND LIENS.—The 
reversal or modification on appeal of an author-
ization under this paragraph to obtain credit or 
incur debt, or of a grant under this section of a 
priority or a lien, does not affect the validity of 
any debt so incurred, or any priority or lien so 
granted, to an entity that extended such credit in 
good faith, whether or not such entity knew of
235 
the pendency of the appeal, unless such author-
ization and the incurring of such debt, or the 
granting of such priority or lien, were stayed 
pending appeal. 
‘‘(11) ISSUANCE OF PREFERRED DEBT.—A lim-
ited-life regulated entity may, subject to the approval 
of the Director and subject to such terms and condi-
tions as the Director may prescribe, issue notes, 
bonds, or other debt obligations of a class to which all 
other debt obligations of the limited-life regulated en-
tity shall be subordinate in right and payment. 
‘‘(12) NO FEDERAL STATUS.— 
‘‘(A) AGENCY STATUS.—A limited-life regu-
lated entity is not an agency, establishment, or 
instrumentality of the United States. 
‘‘(B) EMPLOYEE
STATUS.—Representatives 
for purposes of paragraph (1)(B), interim direc-
tors, directors, officers, employees, or agents of a 
limited-life regulated entity are not, solely by 
virtue of service in any such capacity, officers or 
employees of the United States. Any employee of 
the Agency or of any Federal instrumentality 
who serves at the request of the Agency as a rep-
resentative for purposes of paragraph (1)(B), in-
terim director, director, officer, employee, or
236 
agent of a limited-life regulated entity shall 
not— 
‘‘(i) solely by virtue of service in any 
such capacity lose any existing status as an 
officer or employee of the United States for 
purposes of title 5, United States Code, or 
any other provision of law; or 
‘‘(ii) receive any salary or benefits for 
service in any such capacity with respect to 
a limited-life regulated entity in addition to 
such salary or benefits as are obtained 
through employment with the Agency or 
such Federal instrumentality. 
‘‘(13) ADDITIONAL POWERS.—In addition to any 
other powers granted under this subsection, a limited- 
life regulated entity may— 
‘‘(A) extend a maturity date or change in 
an interest rate or other term of outstanding se-
curities; 
‘‘(B) issue securities of the limited-life regu-
lated entity, for cash, for property, for existing 
securities, or in exchange for claims or interests, 
or for any other appropriate purposes; and 
‘‘(C) take any other action not inconsistent 
with this section.