105 
‘‘(2) where the data referred to in paragraph (1) 
are not available, rent levels affordable to low-income 
and very low-income families. 
A rent level shall be considered to be affordable for purposes 
of this subsection for an income category referred to in this 
subsection if it does not exceed 30 percent of the maximum 
income level of such income category, with appropriate ad-
justments for unit size as measured by the number of bed-
rooms. 
‘‘(d) DETERMINATION OF COMPLIANCE.—The Director 
shall, for each year that the housing goal under this section 
is in effect pursuant to section 1331(a), determine whether 
each enterprise has complied with such goal and the addi-
tional requirements under subsection (a)(2). 
‘‘SEC. 1334. DISCRETIONARY ADJUSTMENT OF HOUSING 
GOALS. 
‘‘(a) AUTHORITY.—An enterprise may petition the Di-
rector in writing at any time during a year to reduce the 
level of any goal for such year established pursuant to this 
subpart. 
‘‘(b) STANDARD FOR REDUCTION.—The Director may 
reduce the level for a goal pursuant to such a petition only 
if—
106 
‘‘(1) market and economic conditions or the fi-
nancial condition of the enterprise require such ac-
tion; or 
‘‘(2) efforts to meet the goal would result in the 
constraint of liquidity, over-investment in certain 
market segments, or other consequences contrary to 
the intent of this subpart, or section 301(3) of the 
Federal National Mortgage Association Charter Act 
(12 U.S.C. 1716(3)) or section 301(3) of the Federal 
Home Loan Mortgage Corporation Act (12 U.S.C. 
1451 note), as applicable. 
‘‘(c) DETERMINATION.—The Director shall make a de-
termination regarding any proposed reduction within 30 
days of receipt of the petition regarding the reduction. The 
Director may extend such period for a single additional 15- 
day period, but only if the Director requests additional in-
formation from the enterprise. A denial by the Director to 
reduce the level of any goal under this section may be ap-
pealed to the United States District Court for the District 
of Columbia or the United States district court in the juris-
diction in which the headquarters of an enterprise is lo-
cated.’’. 
(b) CONFORMING AMENDMENTS.—The Housing and 
Community Development Act of 1992 is amended——
107 
(1) in section 1335(a) (12 U.S.C. 4565(a)), in 
the matter preceding paragraph (1), by striking ‘‘low- 
and moderate-income housing goal’’ and all that fol-
lows through ‘‘section 1334’’ and inserting ‘‘housing 
goals established under this subpart’’; and 
(2) in section 1336(a)(1) (12 U.S.C. 4566(a)(1)), 
by striking ‘‘sections 1332, 1333, and 1334,’’ and in-
serting ‘‘this subpart’’ . 
(c) DEFINITIONS.—Section 1303 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4502), as 
amended by the preceding provisions of this Act, is further 
amended— 
(1) in paragraph (26), by striking ‘‘60 percent’’ 
each place such term appears and inserting ‘‘50 per-
cent’’; 
(2) by redesignating paragraphs (23) through 
(26) as paragraphs (27) through (30), respectively; 
(3) by inserting after paragraph (22) the fol-
lowing new paragraph: 
‘‘(26) RURAL
AREAS.—The term ‘rural areas’ 
means any areas that are non-metropolitan areas (as 
such term is defined by the Director of the Office of 
Management and Budget), including micropolitan 
areas and tribal trust lands.’’.
108 
(4) by redesignating paragraphs (14) through 
(22) as paragraphs (17) through (25), respectively; 
and 
(5) by inserting after paragraph (13) the fol-
lowing new paragraph: 
‘‘(16) LOW-INCOME
AREA.—The term ‘low in-
come area’ means a census tract or block numbering 
area in which the median income does not exceed 80 
percent of the median income for the area in which 
such census tract or block numbering area is located, 
and, for the purposes of section 1332(a)(2), shall in-
clude families having incomes not greater than 100 
percent of the area median income who reside in mi-
nority census tracts.’’; 
(6) by redesignating paragraphs (12) and (13) 
as paragraphs (14) and (15), respectively; 
(7) by inserting after paragraph (11) the fol-
lowing new paragraph: 
‘‘(13) EXTREMELY LOW-INCOME.—The term ‘ex-
tremely low-income’ means— 
‘‘(A) in the case of owner-occupied units, 
income not in excess of 30 percent of the area 
median income; and 
‘‘(B) in the case of rental units, income not 
in excess of 30 percent of the area median in-
109 
come, with adjustments for smaller and larger 
families, as determined by the Secretary.’’; 
(8) by redesignating paragraphs (8) through (11) 
as paragraphs (9) through (12), respectively; and 
(9) by inserting after paragraph (7) the fol-
lowing new paragraph: 
‘‘(8) CONFORMING MORTGAGE.—The term ‘con-
forming mortgage’ means, with respect to an enter-
prise, a conventional mortgage having an original 
principal obligation that does not exceed the dollar 
limitation, in effect at the time of such origination, 
under, as applicable— 
‘‘(A) section 302(b)(2) of the Federal Na-
tional Mortgage Association Charter Act; or 
‘‘(B) section 305(a)(2) of the Federal Home 
Loan Mortgage Corporation Act.’’. 
SEC. 126. DUTY TO SERVE UNDERSERVED MARKETS. 
(a) ESTABLISHMENT AND EVALUATION OF PERFORM-
ANCE.—Section 1335 of the Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4565) is amended— 
(1) in the section heading, by inserting ‘‘DUTY 
TO SERVE UNDERSERVED MARKETS AND’’ before 
‘‘OTHER’’; 
(2) by striking subsection (b); 
(3) in subsection (a)—
110 
(A) in the matter preceding paragraph (1), 
by inserting ‘‘and to carry out the duty under 
subsection (a) of this section’’ before ‘‘, each en-
terprise shall’’; 
(B) in paragraph (3), by inserting ‘‘and’’ 
after the semicolon at the end; 
(C) in paragraph (4), by striking ‘‘; and’’ 
and inserting a period; 
(D) by striking paragraph (5); and 
(E) by redesignating such subsection as sub-
section (b); 
(4) by inserting before subsection (b) (as so re-
designated by paragraph (3)(E) of this subsection) the 
following new subsection: 
‘‘(a) DUTY TO SERVE UNDERSERVED MARKETS.— 
‘‘(1) DUTY.—In accordance with the purpose of 
the enterprises under section 301(3) of the Federal 
National Mortgage Association Charter Act (12 
U.S.C. 1716) and section 301(b)(3) of the Federal 
Home Loan Mortgage Corporation Act (12 U.S.C. 
1451 note) to undertake activities relating to mort-
gages on housing for very low-, low-, and moderate- 
income families involving a reasonable economic re-
turn that may be less than the return earned on other 
activities, each enterprise shall have the duty to in-
111 
crease the liquidity of mortgage investments and im-
prove the distribution of investment capital available 
for mortgage financing for underserved markets. 
‘‘(2) UNDERSERVED
MARKETS.—To meet its 
duty under paragraph (1), each enterprise shall com-
ply with the following requirements with respect to 
the following underserved markets: 
‘‘(A) MANUFACTURED
HOUSING.—The en-
terprise shall lead the industry in developing 
loan products and flexible underwriting guide-
lines to facilitate a secondary market for mort-
gages on manufactured homes for very low-, low- 
, and moderate-income families. 
‘‘(B) AFFORDABLE
HOUSING
PRESERVA-
TION.—The enterprise shall lead the industry in 
developing loan products and flexible under-
writing guidelines to facilitate a secondary mar-
ket to preserve housing affordable to very low-, 
low-, and moderate-income families, including 
housing projects subsidized under— 
‘‘(i) the project-based and tenant-based 
rental assistance programs under section 8 
of the United States Housing Act of 1937; 
‘‘(ii) the program under section 236 of 
the National Housing Act;
112 
‘‘(iii) the below-market interest rate 
mortgage program under section 221(d)(4) 
of the National Housing Act; 
‘‘(iv) the supportive housing for the el-
derly program under section 202 of the 
Housing Act of 1959; 
‘‘(v) the supportive housing program 
for persons with disabilities under section 
811 of the Cranston-Gonzalez National Af-
fordable Housing Act; and 
‘‘(vi) the rural rental housing program 
under section 515 of the Housing Act of 
1949. 
‘‘(C) RURAL
AND
OTHER
UNDERSERVED 
MARKETS.—The enterprise shall lead the indus-
try in developing loan products and flexible un-
derwriting guidelines to facilitate a secondary 
market for mortgages on housing for very low-, 
low-, and moderate-income families in rural 
areas, and for mortgages for housing for any 
other underserved market for very low-, low-, and 
moderate-income families that the Secretary 
identifies as lacking adequate credit through con-
ventional lending sources. Such underserved
113 
markets may be identified by borrower type, 
market segment, or geographic area.’’; and 
(5) by adding at the end the following new sub-
section: 
‘‘(c) EVALUATION AND REPORTING OF COMPLIANCE.— 
‘‘(1) IN
GENERAL.—Not later than 6 months 
after the effective date under section 185 of the Fed-
eral Housing Finance Reform Act of 2005, the Direc-
tor shall establish a manner for evaluating whether, 
and the extent to which, the enterprises have complied 
with the duty under subsection (a) to serve under-
served markets and for rating the extent of such com-
pliance. Using such method, the Director shall, for 
each year, evaluate such compliance and rate the per-
formance of each enterprise as to extent of compli-
ance. The Director shall include such evaluation and 
rating for each enterprise for a year in the report for 
that year submitted pursuant to section 1319B(a). 
‘‘(2) SEPARATE EVALUATIONS.—In determining 
whether an enterprise has complied with the duty re-
ferred to in paragraph (1), the Director shall sepa-
rately evaluate whether the enterprise has complied 
with such duty with respect to each of the underserved 
markets identified in subsection (a), taking into con-
sideration—
114 
‘‘(A) the development of loan products and 
more flexible underwriting guidelines; 
‘‘(B) the extent of outreach to qualified loan 
sellers in each of such underserved markets; and 
‘‘(C) the volume of loans purchased in each 
of such underserved markets.’’. 
(b) ENFORCEMENT.—Subsection (a) of section 1336 of 
the Housing and Community Development Act of 1992 (12 
U.S.C. 4566(a)) is amended— 
(1) in paragraph (1), by inserting ‘‘and with the 
duty under section 1335A of each enterprise with re-
spect to underserved markets,’’ before ‘‘as provided in 
this section,’’; and 
(2) by adding at the end of such subsection, as 
amended by the preceding provisions of this title, the 
following new paragraph: 
‘‘(4) ENFORCEMENT OF DUTY TO PROVIDE MORT-
GAGE CREDIT TO UNDERSERVED MARKETS.—The duty 
under section 1335(a) of each enterprise to serve un-
derserved markets (as determined in accordance with 
section 1335(c)) shall be enforceable under this section 
to the same extent and under the same provisions that 
the housing goals established under sections 1332, 
1333, and 1334 are enforceable. Such duty shall not 
be enforceable under any other provision of this title
115 
(including subpart C of this part) other than this sec-
tion or under any provision of the Federal National 
Mortgage Association Charter Act or the Federal 
Home Loan Mortgage Corporation Act.’’. 
SEC. 127. MONITORING AND ENFORCING COMPLIANCE 
WITH HOUSING GOALS. 
Section 1336 of the Housing and Community Develop-
ment Act of 1992 (12 U.S.C. 4566) is amended— 
(1) in subsection (b)— 
(A) in the subsection heading, by inserting 
‘‘Preliminary’’ before ‘‘Determination’’; 
(B) by striking paragraph (1) and inserting 
the following new paragraph: 
‘‘(1) NOTICE.—If the Director preliminarily de-
termines that an enterprise has failed, or that there 
is a substantial probability that an enterprise will 
fail, to meet any housing goal established under this 
subpart, the Director shall provide written notice to 
the enterprise of such a preliminary determination, 
the reasons for such determination, and the informa-
tion on which the Director based the determination.’’; 
(C) in paragraph (2)— 
(i) in subparagraph (A), by inserting 
‘‘finally’’ before ‘‘determining’’;
116 
(ii) by striking subparagraphs (B) and 
(C) and inserting the following new sub-
paragraph: 
‘‘(B) EXTENSION OR SHORTENING OF PE-
RIOD.—The Director may— 
‘‘(i) extend the period under subpara-
graph (A) for good cause for not more than 
30 additional days; and 
‘‘(ii) shorten the period under subpara-
graph (A) for good cause.’’; and 
(iii) by redesignating subparagraph 
(D) as subparagraph (C); and 
(D) in paragraph (3)— 
(i) in subparagraph (A), by striking 
‘‘determine’’ and inserting ‘‘issue a final de-
termination of’’; 
(ii) in subparagraph (B), by inserting 
‘‘final’’ before ‘‘determinations’’; and 
(iii) in subparagraph (C)— 
(I) by striking ‘‘Committee on 
Banking, Finance and Urban Affairs’’ 
and inserting ‘‘Committee on Finan-
cial Services’’; and
117 
(II) by inserting ‘‘final’’ before 
‘‘determination’’ each place such term 
appears; and 
(2) in subsection (c)— 
(A) by striking the subsection designation 
and heading and all that follows through the end 
of paragraph (1) and inserting the following: 
‘‘(c) CEASE AND DESIST ORDERS, CIVIL MONEY PEN-
ALTIES, AND REMEDIES INCLUDING HOUSING PLANS.— 
‘‘(1) REQUIREMENT.—If the Director finds, pur-
suant to subsection (b), that there is a substantial 
probability that an enterprise will fail, or has actu-
ally failed, to meet any housing goal under this sub-
part and that the achievement of the housing goal was 
or is feasible, the Director may require that the enter-
prise submit a housing plan under this subsection. If 
the Director makes such a finding and the enterprise 
refuses to submit such a plan, submits an unaccept-
able plan, fails to comply with the plan or the Direc-
tor finds that the enterprise has failed to meet any 
housing goal under this subpart, in addition to re-
quiring an enterprise to submit a housing plan, the 
Director may issue a cease and desist order in accord-
ance with section 1341, impose civil money penalties 
in accordance with section 1345, or order other rem-
118 
edies as set forth in paragraph (7) of this sub-
section.’’; 
(B) in paragraph (2)— 
(i) by striking ‘‘CONTENTS.—Each 
housing plan’’ and inserting ‘‘HOUSING 
PLAN.—If the Director requires a housing 
plan under this section, such a plan’’; and 
(ii) in subparagraph (B), by inserting 
‘‘and changes in its operations’’ after ‘‘im-
provements’’; 
(C) in paragraph (3)— 
(i) by inserting ‘‘comply with any re-
medial action or’’ before ‘‘submit a housing 
plan’’; and 
(ii) by striking ‘‘under subsection 
(b)(3) that a housing plan is required’’; 
(D) in paragraph (4), by striking the first 
two sentences and inserting the following: ‘‘The 
Director shall review each submission by an en-
terprise, including a housing plan submitted 
under this subsection, and not later than 30 days 
after submission, approve or disapprove the plan 
or other action. The Director may extend the pe-
riod for approval or disapproval for a single ad-
119 
ditional 30-day period if the Director determines 
such extension necessary.’’; and 
(E) by adding at the end the following new 
paragraph: 
‘‘(7) ADDITIONAL REMEDIES FOR FAILURE TO 
MEET
GOALS.—In addition to ordering a housing 
plan under this section, issuing cease and desist or-
ders under section 1341, and ordering civil money 
penalties under section 1345, the Director may seek 
other actions when an enterprise fails to meet a goal, 
and exercise appropriate enforcement authority avail-
able to the Director under this Act to prohibit the en-
terprise from entering into new programs and new 
business activities and to order the enterprise to sus-
pend programs and business activities pending its 
achievement of the goal.’’. 
SEC. 128. AFFORDABLE HOUSING FUND. 
(a) IN GENERAL.—The Housing and Community De-
velopment Act of 1992 is amended by striking sections 1337 
and 1338 (12 U.S.C. 4562 note) and inserting the following 
new section: 
‘‘SEC. 1337. AFFORDABLE HOUSING FUND. 
‘‘(a) ESTABLISHMENT
AND PURPOSE.—Each enter-
prise shall establish and manage an affordable housing fund
120 
in accordance with this section. The purpose of the afford-
able housing fund shall be— 
‘‘(1) to increase homeownership for extremely 
low-and very low-income families; 
‘‘(2) to increase investment in housing in low-in-
come areas, and areas designated as qualified census 
tracts or an area of chronic economic distress pursu-
ant to section 143(j) of the Internal Revenue Code of 
1986 (26 U.S.C. 143(j)); 
‘‘(3) to increase and preserve the supply of rental 
and owner-occupied housing for extremely low- and 
very low-income families; and 
‘‘(4) to increase investment in economic and 
community development in economically underserved 
areas. 
‘‘(b) ALLOCATION OF AMOUNTS BY ENTERPRISES.— 
‘‘(1) IN GENERAL.—In accordance with regula-
tions issued by the Director under subsection (l) and 
subject to paragraph (2) of this subsection, each enter-
prise shall allocate to the affordable housing fund es-
tablished under subsection (a) by the enterprise, in 
each year beginning after the effective date under sec-
tion 185 of the Federal Housing Finance Reform Act 
of 2005, 5 percent of the after-tax income of the enter-
prise for the preceding year.
121 
‘‘(2) LIMITATION.—An enterprise shall not be re-
quired to make an allocation for a year to the afford-
able housing fund of the enterprise established under 
subsection (a) unless— 
‘‘(A) the enterprise is classified by the Di-
rector at the time of such allocation as ade-
quately capitalized; and 
‘‘(B) the enterprise generated after-tax in-
come for the preceding year. 
‘‘(3) DETERMINATION OF AFTER-TAX INCOME.— 
For purposes of this section, the term ‘after-tax in-
come’ means, with respect to an enterprise for a year, 
the amount reported by the enterprise for such year 
in the enterprise’s annual report for such year that 
is filed with the Securities and Exchange Commis-
sion, except that for any year in which no such filing 
is made by an enterprise or such filing is not timely 
made, such term means the amount determined by the 
Director based on the income tax return filings of the 
enterprise. 
‘‘(c) SELECTION OF ACTIVITIES FUNDED USING AF-
FORDABLE HOUSING FUND AMOUNTS.—Amounts from the 
affordable housing fund of the enterprise may be used, or 
committed for use, only for activities that—
122 
‘‘(1) are eligible under subsection (d) for such 
use; and 
‘‘(2) are selected for funding by the enterprise in 
accordance with the process and criteria for such se-
lection established pursuant to subsection (l)(2)(C). 
‘‘(d) ELIGIBLE ACTIVITIES.—Amounts from the afford-
able housing fund of an enterprise shall be eligible for use, 
or for commitment for use, only for assistance for— 
‘‘(1) the production, preservation, and rehabili-
tation of rental housing, including housing under the 
programs identified in section 1335(a)(2)(B), except 
that amounts provided from the Fund may be used 
for the benefit only of extremely low- and very low- 
income families; 
‘‘(2) the production, preservation, and rehabili-
tation of housing for homeownership, including such 
forms as downpayment assistance, closing cost assist-
ance, and assistance for interest-rate buy-downs, 
that— 
‘‘(A) is available for purchase only for use 
as a principal residence by families that qualify 
both as— 
‘‘(i) extremely low- and very-low in-
come families at the times described in sub-
paragraphs (A) through (C) of section