I 
112TH CONGRESS 
1ST SESSION H. R. 1859 
To ensure the availability of reasonably priced conventional mortgages to 
borrowers in all economic cycles by encouraging private sector capital 
to support the secondary mortgage market, limiting the role of the 
Federal government and the exposure of taxpayers, and other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 12, 2011 
Mr. CAMPBELL (for himself and Mr. PETERS) introduced the following bill; 
which was referred to the Committee on Financial Services 
A BILL 
To ensure the availability of reasonably priced conventional 
mortgages to borrowers in all economic cycles by encour-
aging private sector capital to support the secondary 
mortgage market, limiting the role of the Federal govern-
ment and the exposure of taxpayers, and other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Housing Finance Re-
form Act of 2011’’. 
SEC. 2. STATEMENT OF PURPOSES. 
The purposes of this Act are to— 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
(1) ensure the availability of reasonably priced 
conventional residential mortgages to qualified bor-
rowers in all economic cycles; 
(2) provide incentives for private sector capital 
to support the secondary market for residential 
mortgages; 
(3) limit the role of the Federal Government in 
the secondary market for residential mortgages and 
the exposure of taxpayers to the operations of the 
secondary markets for residential mortgages; and 
(4) provide for the orderly wind down of the 
Federal National Mortgage Association and the Fed-
eral Home Loan Mortgage Corporation. 
SEC. 3. ESTABLISHMENT, OPERATION, SUPERVISION, AND 
REGULATION OF HOUSING FINANCE GUAR-
ANTY ASSOCIATIONS. 
The Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is 
amended by inserting the following new subtitle D, and 
designating the existing subtitles D and E as subtitles E 
and F, respectively, and renumbering the sections of those 
subtitles accordingly: 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘Subtitle D—Establishment, Oper-
ation, Supervision, and Regula-
tion of Housing Finance Guar-
antee Associations 
‘‘SEC. 1381. DEFINITIONS. 
‘‘For purposes of this subtitle, the following defini-
tions shall apply: 
‘‘(1) ASSOCIATION.—The term ‘association’ 
means a housing finance guarantee association char-
tered by the Director pursuant to section 1382. 
‘‘(2) ASSOCIATION-AFFILIATED
PARTY.—The 
term ‘association-affiliated party’ means— 
‘‘(A) any director, officer, employee, or 
controlling stockholder of, or agent for, an asso-
ciation; 
‘‘(B) any shareholder, affiliate, consultant, 
or joint venture partner of an association, and 
any other person, as determined by the Director 
(by regulation or on a case-by-case basis) that 
participates in the conduct of the affairs of an 
association; 
‘‘(C) any independent contractor for an as-
sociation (including any attorney, appraiser, or 
accountant), if— 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(i) the independent contractor know-
ingly 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 prac-
tice caused, or is likely to cause, more than 
a minimal financial loss to, or a significant 
adverse effect on, the association. 
‘‘(3) CONVENTIONAL
MORTGAGE.—The term 
‘conventional mortgage’ means a mortgage loan as 
defined in section 1390(e)(2). 
‘‘(4) FEDERAL HOUSING FINANCE AGENCY SE-
CURITY.—The term ‘Federal Housing Finance Agen-
cy security’ means a security issued by an associa-
tion through the Office of Securitization that con-
forms to the terms and conditions of section 1387. 
‘‘(5) LIMITED-LIFE
ASSOCIATION.—The term 
‘limited-life association’ means, with respect to an 
association in default or in danger of default, an en-
tity organized by the Agency under section 1367(i) 
with respect to such association. 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(6) OFFICE OF SECURITIZATION.—The term 
‘Office of Securitization’ means the Office estab-
lished by section 1386. 
‘‘(7) ORGANIZER.—The term ‘organizer’ means 
the person or group of persons seeking to organize 
an association. 
‘‘(8) PERSON.—The term ‘person’ means any 
natural person or business entity. 
‘‘SEC. 1382. ESTABLISHMENT OF HOUSING FINANCE GUAR-
ANTY ASSOCIATIONS. 
‘‘(a) DIRECTOR’S AUTHORITY.—The Director is au-
thorized, under such regulations as the Director may pre-
scribe, to provide for the organization, incorporation, ex-
amination, operation, and regulation of housing finance 
guaranty associations, and to issue charters for such enti-
ties. 
‘‘(b) FORMATION OF ASSOCIATIONS; ARTICLES OF 
ASSOCIATION.—Subject to the terms of this Act and regu-
lations issued by the Director, an organizer may file an 
application with the Director to establish an association. 
The association may be chartered as a corporation, mutual 
association, partnership, limited liability corporation, co-
operative, or any other organizational form that the orga-
nizer may deem appropriate. The Director may not require 
the organizer to adopt any particular organizational form. 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(c) CONTENTS OF THE APPLICATION.—An applica-
tion for establishment of an association shall include— 
‘‘(1) the proposed articles of association; 
‘‘(2) a statement of the general object and pur-
poses of the association; 
‘‘(3) the proposed capitalization and business 
plan for the association; 
‘‘(4) information on the financial resources of 
the organizers; 
‘‘(5) a statement of the relevant housing fi-
nance experience of the organizers; 
‘‘(6) identification of the proposed senior man-
agers of the association and the relevant experience 
of such individuals; and 
‘‘(7) any other information the Director deter-
mines may be necessary to evaluate the background, 
experience, and integrity of the organizers and the 
proposed senior managers, or information otherwise 
necessary to determine the likely success of the pro-
posed association. 
‘‘(d) ISSUANCE
OF CHARTERS
AND CHARTERING 
CRITERIA.— 
‘‘(1) IN GENERAL.—The Director may issue a 
charter for an association to commence business if 
the Director determines that the proposed associa-
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
tion would be consistent with the purposes of this 
Act and the Housing Finance Reform Act of 2011, 
and that the association would have the managerial 
and financial resources to succeed. 
‘‘(2) CHARTERING CRITERIA.—In making the 
determination under paragraph (1), the Director 
shall consider the competence, experience, and integ-
rity of the organizer and proposed senior managers 
of the association, and the financial resources and 
future prospects of the proposed association. The 
Director may not issue a charter if the organizer 
fails to— 
‘‘(A) comply with all applicable formation 
requirements; 
‘‘(B) provide all information requested by 
the Director; 
‘‘(C) demonstrate the competence, experi-
ence, and integrity necessary to operate the as-
sociation in a safe or sound manner; 
‘‘(D) demonstrate sufficient financial re-
sources necessary to operate the association in 
a safe or sound manner; or 
‘‘(E) provide the Director with assurances 
that the association will make available to the 
Director, on an on-going basis, such informa-
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
tion on the operations or activities of the asso-
ciation, or any affiliate of the association, that 
the Director deems necessary to ensure the safe 
and sound operation of the association and to 
enforce compliance with this Act. 
‘‘(3) EXPLANATION FOR DENIAL.—Within 30 
days of denying any application for the issuance of 
a charter under this section, the Director shall pro-
vide the organizer with a written explanation of the 
basis for the denial. 
‘‘(e) SPECIAL PURPOSE ASSOCIATIONS.— 
‘‘(1) IN GENERAL.—The Director may issue a 
special purpose charter to the organizer of an asso-
ciation if the operations of the proposed association 
would be limited to serving a particular mortgage 
market, such as multifamily housing, or a particular 
category of mortgage lenders, such as community 
banks. All provisions of this Act that apply to asso-
ciations shall apply to special purpose associations, 
including the criteria for obtaining a charter. 
‘‘(2) NONDISCRIMINATION.—The operation of a 
special purpose association shall not be considered 
discriminatory for purposes of section 1385(a)(9). 
‘‘(f) INVESTMENTS BY BANKING ORGANIZATIONS.— 
A national bank, State bank, trust company, Federal or 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
State credit union, or other banking organization, includ-
ing a bank holding company and a savings and loan hold-
ing company, may acquire an interest in an association, 
and hold or dispose of such interest, subject to the provi-
sions of this Act, and subject to the approval by the appro-
priate Federal banking agency for such institution. 
‘‘SEC. 1383. GENERAL POWERS OF ASSOCIATIONS. 
‘‘An association may— 
‘‘(1) adopt and use a corporate seal; 
‘‘(2) adopt, amend, and repeal by-laws; 
‘‘(3) sue or be sued; 
‘‘(4) make contracts and guarantees, incur li-
abilities, borrow money, issue notes, bonds, and 
other obligations; 
‘‘(5) purchase, receive, hold, and use real and 
personal property and other assets necessary for the 
conduct of its operations; 
‘‘(6) lend money; 
‘‘(7) invest, and reinvest funds, subject to the 
limitations of sections 1384 and 1385; 
‘‘(8) elect or appoint directors, officers, employ-
ees, and agents; and 
‘‘(9) issue securities, membership certificates, 
and other forms of ownership interests. 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘SEC. 1384. HOUSING FINANCE RELATED POWERS OF ASSO-
CIATIONS. 
‘‘In addition to its general powers under section 
1383, an association may— 
‘‘(1) purchase, hold, sell, and otherwise deal in 
conventional mortgages only for the purpose of— 
‘‘(A) creating a secondary market for such 
mortgages, including new conventional mort-
gage products; 
‘‘(B) facilitating the securitization of con-
ventional mortgages; and 
‘‘(C) supporting multifamily housing; 
‘‘(2) issue, through the Office of Securitization, 
Federal Housing Finance Agency securities; 
‘‘(3) establish a trust or similar entity that 
shall not be subject to the claims made by creditors 
of the association in order to provide for the sale of 
beneficial interests in pools of mortgage loans or the 
right to receive interest and principal from such 
pools; 
‘‘(4) guarantee the timely payment of principal 
and interest on Federal Housing Finance Agency se-
curities and charge a fee for such guarantee; 
‘‘(5) ensure that Federal Housing Finance 
Agency securities are properly serviced, which shall 
include the right to remove a mortgage servicer in 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
the event the association determines that such 
servicer fails to perform contractual servicing obliga-
tions or other legal requirements imposed on mort-
gage servicers; and 
‘‘(6) hedge credit, interest rate and other risks 
associated with the purchase and sale of conven-
tional mortgages. 
‘‘SEC. 1385. PROHIBITED ACTIVITIES. 
‘‘(a) IN GENERAL.—An association may not— 
‘‘(1) originate a mortgage; 
‘‘(2) service a mortgage; 
‘‘(3) guarantee timely payment of principal or 
interest on any mortgage-related security other than 
a Federal Housing Finance Agency security; 
‘‘(4) invest in securities other than Federal 
Housing Finance Agency securities, securities issued 
by the Federal Government or any agency of the 
Federal Government, and any other securities 
deemed appropriate by the Director; 
‘‘(5) speculate on credit, interest rate, and 
other risks; 
‘‘(6) underwrite, offer, sell, or solicit any form 
of insurance; 
‘‘(7) purchase any mortgage from an institution 
that holds a voting interest in the association; 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(8) purchase a conventional mortgage secured 
by a property comprised of one-to-four family dwell-
ing units if the outstanding principal balance of the 
mortgage at the time of purchase exceeds 80 percent 
of the value of the property securing the mortgage, 
unless— 
‘‘(A) the seller retains a participation of 
not less than 10 percent in the mortgage; 
‘‘(B) for such period and under such cir-
cumstances as the Director may require, the 
seller agrees to repurchase or replace the mort-
gage upon demand of the association in the 
event that the mortgage is in default; or 
‘‘(C) that portion of the unpaid principal 
balance of the mortgage which is in excess of 
such 80 percent is guaranteed or insured by a 
qualified insurer, as determined by the Direc-
tor. 
‘‘(9) discriminate against, or provide a pref-
erence to, any mortgage originator on the basis of 
the charter or license of such originator, the asset 
size of the originator, or the existence any ownership 
interest in the association by the originator; or 
‘‘(10) engage in any activity that is not author-
ized by this Act. 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(b) RULE OF CONSTRUCTION.—Subsection (a)(8) 
shall not be construed to prevent an association from set-
ting standards related to the financial condition of origina-
tors from which it may acquire a conventional mortgage 
or prevent an association from setting guarantee fees 
based upon the volume of mortgages an originator sells 
to the association. 
‘‘SEC. 1386. OFFICE OF SECURITIZATION. 
‘‘(a) IN GENERAL.—The Director shall establish an 
Office of Securitization within the Agency to facilitate the 
securitization of conventional mortgages. 
‘‘(b) FUNCTIONS
OF
OFFICE.—The Office of 
Securitization shall— 
‘‘(1) subject to section 1387, create and label 
Federal Housing Finance Agency securities; 
‘‘(2) take such actions as may be necessary to 
issue the catastrophic federal guarantee described in 
section 1388 with respect to Federal Housing Fi-
nance Agency securities; 
‘‘(3) impose and collect the fee for the cata-
strophic federal guarantee; 
‘‘(4) administer and service Federal Housing 
Finance Agency securities, including acting as trust-
ee for any trust established by an association for 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
purposes of facilitating the securitization of conven-
tional mortgages; and 
‘‘(5) engage in such other activities the Director 
determines to be incidental to the securitization of 
conventional mortgages. 
‘‘(c) MANAGEMENT OF THE OFFICE.—The Office of 
Securitization shall be managed by the Deputy Director 
of the Agency for Housing Finance Guarantee Associa-
tion, who shall be designated by the Director in accord-
ance with section 1391 and shall be subject to the direc-
tion and control of the Director. 
‘‘(d) NO ECONOMIC INTEREST.—In the performance 
of its functions, the Office of Securitization shall not as-
sume any economic interest in the securities issued by an 
association. 
‘‘(e) CONTRACTING AUTHORITY.—The Director may 
contract with the Government National Mortgage Associa-
tion to perform any or all of the functions of the Office 
of Securitization specified in subsection (b). 
‘‘SEC. 1387. FEDERAL HOUSING FINANCE AGENCY SECURI-
TIES. 
‘‘(a) IN GENERAL.—The Director shall establish, by 
regulation, one or more standard forms for Federal Hous-
ing Finance Agency securities issued by associations. 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(b) COMMON LABEL; STANDARD TERMS AND CON-
DITIONS.—The forms required by subsection (a) shall— 
‘‘(1) identify the securities as Federal Housing 
Finance Agency securities; 
‘‘(2) set forth the terms and conditions for the 
payment of interest and principal on such securities; 
‘‘(3) state that such securities are guaranteed 
by the full faith and credit of the United States, 
subject to the limitations of section 1388(b); 
‘‘(4) address the servicing of Federal Housing 
Finance Agency securities; and 
‘‘(5) include such other standardized terms and 
conditions that the Director deems appropriate to 
enhance the liquidity of the securities, and shall in-
clude a representation and warranty certifying that 
a policy of a title insurance be in place to transfer 
title-related risks to State licensed title insurance 
companies 
for 
all 
conventional 
mortgages 
collateralizing a Federal Housing Finance Agency 
security. 
‘‘(c) LIMITATION.—The forms established by the Di-
rector pursuant to subsection (a) shall not prevent Federal 
Housing Finance Agency securities to vary based upon— 
‘‘(1) the maturity of the securities; 
‘‘(2) the yield of the securities; 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(3) the type of conventional mortgages that 
serve as collateral for the securities; or 
‘‘(4) such other terms and conditions that the 
Director deems appropriate. 
‘‘(d) TEMPORARY
REGULATION
OF
GUARANTEE 
FEES.— 
‘‘(1) GAO STUDY.—Not later than the expira-
tion of the 12-month period beginning upon the date 
of the enactment of the Housing Finance Reform 
Act of 2011, the Comptroller General of the United 
States shall conduct a study to determine the mar-
ket value of the catastrophic guarantee under sec-
tion 1388 and submit to the Director a report set-
ting forth the findings of such study. 
‘‘(2) AMOUNT.—Taking into consideration the 
findings of the study pursuant to paragraph (1), the 
Director shall establish a pricing structure for guar-
antee fees by associations that provides for a reason-
able rate of return to associations. 
‘‘(3) QUARTERLY ADJUSTMENT.—After initially 
establishing the pricing structure pursuant to para-
graph (2), the Director shall, on a calendar quar-
terly basis, review such prices and adjust the pricing 
structure as appropriate. 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(4) EMERGENCY ADJUSTMENT.—The Director 
may, at any time, adjust the prices and pricing 
structure under this subsection if the Director deter-
mines that market conditions or other factors re-
quire such adjustment. 
‘‘(5) TERMINATION OF PRICING STRUCTURE.— 
The Director shall monitor competition between as-
sociations to determine the first time at which both 
are the following conditions exist: 
‘‘(A) There is sufficient competition be-
tween the associations. 
‘‘(B) The associations, individually and col-
lectively, are stable and sufficient to serve the 
market. 
Upon such a determination, the Director shall pro-
vide for the termination of the applicability and ad-
justment of pricing structure under this subsection 
upon a date certain and shall terminate the pricing 
structure on such date. On and after such date, each 
association shall establish guarantee fees to be 
charged by the association. 
‘‘(e) DISCLOSURE REQUIREMENT.— 
‘‘(1) IN GENERAL.—Federal Housing Finance 
Agency securities shall not be registered securities 
under the terms of the Securities Act of 1933 (15 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
U.S.C. 77a et seq.) and shall be exempt securities 
for purposes of the Securities Exchange Act of 1934 
(15 U.S.C. 78a et seq.). 
‘‘(2) 
DISCLOSURE
REGULATION.—Notwith-
standing paragraph (1), the Director shall, by regu-
lation, ensure transparency of Federal Housing Fi-
nance Agency securities by requiring each associa-
tion to publicly disclose information about the com-
position of each pool of mortgages backing the secu-
rity, including the average loan-to-value ratio, the 
average debt-to-income ratio, the average payment 
history of the mortgagors, the number and value of 
mortgages from each State, the distribution of mort-
gage coupon rates, and whether the mortgages were 
originated in broker or non-broker channels. 
‘‘SEC. 1388. CATASTROPHIC FEDERAL GUARANTEE. 
‘‘(a) AUTHORIZATION.—Subject to the limitations in 
subsection (b), and such other terms and conditions that 
the Director deems appropriate, the Director shall guar-
antee the timely payment of the principal and interest of 
Federal Housing Finance Agency securities, and the full 
faith and credit of the United States is hereby pledged 
to the payment of all amounts which may be required to 
be paid as a result of such guarantee. 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(b) LIMITATIONS.—A guarantee under this section 
shall apply only if— 
‘‘(1) the association that issued the securities 
has been placed into conservatorship or receivership 
by the Director; and 
‘‘(2) the Reserve Fund established by section 
1389 lacks sufficient funds to make the required 
principal and interest payments. 
‘‘(c) FEE.— 
‘‘(1) ESTABLISHMENT.—The Director shall es-
tablish, on an annual basis, a fee to be paid by asso-
ciations for a guarantee issued under this section in 
connection with Federal Housing Finance Agency 
securities issued by such associations. 
‘‘(2) ADMINISTRATION.—The Director shall im-
pose and collect such fee through the Office of 
Securitization. 
‘‘(3) AMOUNT.—The Director shall establish 
the fee at a level to ensure that amounts in the Re-
serve Fund are sufficient to cover potential claims 
on such Fund, taking into consideration— 
‘‘(A) general economic conditions; 
‘‘(B) trends in housing prices; and 
‘‘(C) such other factors that the Director 
deems appropriate. 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(d) SPECIAL ASSESSMENT TO REPAY COST
OF 
FEDERAL GUARANTEE.— 
‘‘(1) IN GENERAL.—If the Director is required 
to make payments pursuant to the catastrophic Fed-
eral guarantee authorized under subsection (a) in 
excess of the amounts in the Reserve Fund, the Di-
rector shall impose a special assessment on associa-
tions to recoup all costs associated with the guar-
antee. 
‘‘(2) CRITERIA.—The Director, by regulation, 
shall establish criteria for the imposition of a special 
assessment. Such criteria shall— 
‘‘(A) apportion the assessment equally 
among all associations; and 
‘‘(B) to the extent feasible and prudent, 
permit associations to pay the assessment over 
a period of time so that the assessment does 
not cause an association to be undercapitalized 
or otherwise materially impair the operations of 
an association. 
‘‘(e) NO FEDERAL SUPPORT FOR OTHER SECURI-
TIES OR OBLIGATIONS OF ASSOCIATIONS.—This Act may 
not be construed to authorize or provide any guarantee 
of any security or obligation of an association by the 
United States or any agency or instrumentality of the 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
United States, other than Federal Housing Finance Agen-
cy securities issued by an association. 
‘‘SEC. 1389. RESERVE FUND. 
‘‘(a) ESTABLISHMENT; CREDITS.—The Director shall 
establish a Reserve Fund, which shall be credited with all 
fees imposed and collected pursuant to section 1388(c). 
‘‘(b) ORGANIZATION.—The Reserve Fund shall be 
maintained with a Federal Reserve Bank or with a deposi-
tory institution designated as a depository or fiscal agent 
of the United States. 
‘‘(c) USE.—Amounts in the Reserve Fund shall be 
used by the Director, through the Office of Securitization, 
to make principal and interest payments to the owners of 
Federal Housing Finance Agency securities issued by an 
association that has been placed into conservatorship or 
receivership— 
‘‘(1) for payment under guarantees issued 
under subsection (a) of section 1388 only under the 
terms provided in subsection (b) of such section; and 
‘‘(2) to the extent such amounts are not other-
wise needed, for investment in obligations of the 
United States or in obligations guaranteed as to 
principal and interest by the United States. 
‘‘(d) TREASURY ADVANCE.— 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(1) IN GENERAL.—If amounts in the Reserve 
Fund are insufficient to satisfy the liabilities of the 
Fund, the Secretary of the Treasury shall advance 
to the Fund such amounts as may be necessary to 
meet the obligations of the Fund, as determined by 
the Director and the Secretary, and the Director 
shall agree to repay such advance on such terms and 
conditions as required by the Secretary. 
‘‘(2) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to the Sec-
retary, without fiscal year limitation, such sums as 
may be necessary to carry out this subsection. 
‘‘SEC. 1390. SUPERVISION OF ASSOCIATIONS. 
‘‘(a) GENERAL SUPERVISORY AUTHORITY OF DIREC-
TOR.— 
‘‘(1) IN GENERAL.—The Director shall have su-
pervisory authority over associations, and may issue 
such regulations, orders, and interpretations as the 
Director determines necessary to ensure that an as-
sociation operates in a safe and sound manner. 
‘‘(2) USE OF EXISTING AUTHORITY.—Except as 
provided in this section, an association, an associa-
tion-affiliated party, and a limited-life association 
shall be subject to the same supervisory and enforce-
ment powers of the Director to the same extent as 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
if an association was a regulated entity, the associa-
tion-affiliated party was an entity-affiliated party, 
and the limited-life association was a limited-life en-
tity, including— 
‘‘(A) the enforcement powers under sec-
tions 1371 through 1379 (12 U.S.C. 4631–9); 
‘‘(B) authority to reclassify a capital clas-
sification (as established pursuant to subsection 
(h)(2) of this section) as provided in section 
1364(c) (12 U.S.C. 4614(c)); 
‘‘(C) authority to restrict capital distribu-
tions in accordance with section 1364(e) (12 
U.S.C. 4614(e)); 
‘‘(D) authority to take prompt corrective 
supervisory actions in response to capital classi-
fications as provided for in sections 1365 and 
1366 (12 U.S.C. 4615, 4616); and 
‘‘(E) authority to appoint the Agency as 
the conservator or a receiver in accordance with 
section 1367 (12 U.S.C. 4617). 
‘‘(b) EXAMINATIONS.—The Director shall conduct a 
full-scope examination of an association not less frequently 
than once every 12 months, and shall have real-time access 
to all data and information related to the activities and 
operations of an association. 
VerDate Mar 15 2010 
04:41 May 26, 2011
Jkt 099200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(c) CAPITAL STANDARDS.— 
‘‘(1) ESTABLISHMENT.—The Director shall es-
tablish, by regulation, risk-based and leverage cap-
ital standards for associations. 
‘‘(2) CRITERIA.—In setting the capital stand-
ards required by paragraph (1), the Director shall 
take into consideration— 
‘‘(A) the risk associated with conventional 
mortgages; 
‘‘(B) underwriting standards that apply to 
conventional mortgages; and 
‘‘(C) such other factors as the Director 
deems appropriate. 
‘‘(d) MANAGEMENT
AND
OPERATIONAL
STAND-
ARDS.—The Director shall establish, by regulation, stand-
ards for the management and operations of associations, 
including standards related to— 
‘‘(1) adequacy of internal controls and informa-
tion systems taking into account the nature and 
scale of business operations; 
‘‘(2) independence and adequacy of internal 
audit systems; 
‘‘(3) management of interest rate risk exposure; 
‘‘(4) management of market risk, including 
standards that provide for systems that accurately 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
measure, monitor, and control market risks and, as 
warranted, that establish limitations on market risk; 
‘‘(5) adequacy and maintenance of liquidity and 
reserves; 
‘‘(6) management of asset growth; 
‘‘(7) investments and acquisitions of assets con-
sistent with this Act; 
‘‘(8) overall risk management processes, includ-
ing adequacy of oversight by senior management and 
the board of directors and of processes and policies 
to identify, measure, monitor, and control material 
risks, including reputational risks, and for adequate, 
well-tested business resumption plans for all major 
systems with remote site facilities to protect against 
disruptive events; 
‘‘(9) management of credit and counterparty 
risk, including systems to identify concentrations of 
credit risk and prudential limits to restrict exposure 
of the association to a single counterparty or groups 
of related counterparties; 
‘‘(10) maintenance of adequate records, in ac-
cordance with consistent accounting policies and 
practices that enable the Director to evaluate the fi-
nancial condition of the association; and 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(11) such other operational and management 
standards as the Director determines to be appro-
priate. 
‘‘(e) UNDERWRITING
STANDARDS
FOR
CONVEN-
TIONAL MORTGAGES.— 
‘‘(1) REGULATION
REQUIRED.—The Director 
shall establish, by regulation, underwriting stand-
ards for conventional mortgage purchased by an as-
sociation. Such standards shall be the same as the 
standards established by the Bureau for Consumer 
Financial Protection of the Federal Reserve System 
for qualified mortgages pursuant to section 129C(b) 
of the Truth in Lending Act (15 U.S.C. 1639c(b); 
as added by section 1412 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (124 
Stat. 2145)). 
‘‘(2) DEFINITION.—For purposes of this sub-
section, the term ‘conventional mortgage’ means a 
loan that— 
‘‘(A) is secured by a mortgage, lien, or 
other security interest on a— 
‘‘(i) a one-to-four family residence 
that is the principal residence of the mort-
gagor, 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(ii) a property comprising five or 
more family dwelling units; 
‘‘(iii) a manufactured home that is the 
principal residence of the mortgagor; or 
‘‘(iv) the stock or membership interest 
or certificate issued to a tenant-stockholder 
or resident-member of a cooperative hous-
ing corporation, as defined in section 216 
of the Internal Revenue Code of 1986, and 
in the proprietary lease, occupancy agree-
ment, or right of tenancy in the dwelling 
union of the tenant-stockholder or resi-
dent-member in such cooperative housing 
corporation; 
‘‘(B) is a subordinate mortgage or lien 
on— 
‘‘(i) a one-to-four family residence 
that is the principal residence of the mort-
gage; or 
‘‘(ii) a property that comprises five or 
more family dwelling units: 
‘‘(C) is not insured or guaranteed under— 
‘‘(i) the National Housing Act (12 
U.S.C. 1701 et seq.); 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(ii) title V of the Housing Act of 
1949 (42 U.S.C. 1471 et seq.); 
‘‘(iii) chapter 37 of title 38, United 
States Code; or 
‘‘(D) meets the underwriting standards set 
by the Director pursuant to paragraph (1). 
‘‘(f) LIMITATION ON MAXIMUM ORIGINAL PRINCIPAL 
AMOUNT.—The Director shall prohibit any association 
from purchasing any conventional mortgage for which the 
maximum original principal obligation exceeds the greater 
of— 
‘‘(1) 150 percent of the average home price in 
the United States for a residence having the same 
number of dwelling units as the residence subject to 
the mortgage; or 
‘‘(2) 150 percent of the median price, for the 
area in which the residence subject the mortgage is 
located for a residence having the same number of 
dwelling units as the residence subject to the mort-
gage. 
‘‘(g) REPORTING REQUIREMENTS.— 
‘‘(1) IN GENERAL.—An association shall submit 
to the Director such reports, containing such infor-
mation and in such form and at such times, as the 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
Director deems necessary to assess the condition, 
operations and activities of the association. 
‘‘(2) INFORMATION
REGARDING
AREAS
AND 
MARKETS SERVED.— 
‘‘(A) SUBMISSION OF INFORMATION.—The 
Director shall require each association to sub-
mit data annually to the Director that the Di-
rector determines is sufficient to indicate the 
geographic areas and market segments being 
served by the association. 
‘‘(B) PUBLIC
AVAILABILITY.—Upon re-
ceipt of information submitted pursuant to sub-
paragraph (A), the Director shall make such in-
formation available to the public in a form and 
manner determined appropriate by the Director. 
‘‘(h) PROMPT CORRECTIVE ACTIONS.— 
‘‘(1) ESTABLISHMENT AND CRITERIA.—The Di-
rector, by regulation, shall— 
‘‘(A) establish the capital classifications 
specified under paragraph (2) for associations; 
‘‘(B) establish criteria for each such cap-
ital classification based upon the amount and 
types of capital held by an association; and 
‘‘(C) classify each association according to 
such capital classifications. 
VerDate Mar 15 2010 
04:41 May 26, 2011
Jkt 099200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(2) CAPITAL
CLASSIFICATIONS.—The capital 
classifications specified under this paragraph are— 
‘‘(A) adequately capitalized; 
‘‘(B) undercapitalized; 
‘‘(C) significantly undercapitalized; and 
‘‘(D) critically undercapitalized. 
‘‘(i) CONSERVATORSHIP AND RECEIVERSHIP.— 
‘‘(1) ADDITIONAL
GROUNDS
FOR
APPOINT-
MENT.—In addition to the grounds for the appoint-
ment of conservator or receiver under section 
1367(a)(3) (12 U.S.C. 4617(a)(3)), the Director 
shall appoint the Agency as the conservator or re-
ceiver of an association if the association fails to 
make a timely payment of principal or interest on a 
Federal Housing Finance Agency security issued by 
the association. 
‘‘(2) LIMITED-LIFE ASSOCIATION.—If the Agen-
cy is appointed as receiver for an association, the 
Agency, as receiver, may organize a limited life asso-
ciation to assume the assets and purchase the liabil-
ities of the association subject to the same provisions 
applicable under section 1367(i) to a limited-life reg-
ulated entity appointed for a regulated entity, and 
such limited-life association shall, by operation of 
law and immediately upon its organization, succeed 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
to the charter of the association and operate in ac-
cordance with such charter, this Act, and any other 
provision of law to which the association is subject. 
‘‘SEC. 1391. AGENCY OPERATIONS. 
‘‘(a) APPLICATIONS PROCESSING DIVISION.—The 
Director shall establish a division within the Agency to 
accept and process applications for the formation of asso-
ciations, and shall employ accountants, financial analysts, 
lawyers, and such other personnel as the Director deter-
mines necessary to evaluate the qualifications of the orga-
nizer or organizers and the financial prospects of a pro-
posed association. 
‘‘(b) AUDITING DIVISION.—The Director shall estab-
lish a division within the Agency to conduct regular audits 
of the processes and systems used by associations. Such 
audits shall include a review of loan files and systems for 
tracking loan documents. 
‘‘(c) DEPUTY DIRECTOR
FOR HOUSING FINANCE 
GUARANTEE ASSOCIATIONS.— 
‘‘(1) IN GENERAL.—The Agency shall have a 
Deputy Director for Housing Finance Guarantee As-
sociations, who shall be designated by the Director 
from among individuals with demonstrated under-
standing of housing markets and housing finance. 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(2) FUNCTIONS.—The Deputy Director for 
Housing Finance Guarantee Associations shall have 
such functions, powers, and duties with respect to 
the formation, regulation, and supervision of associa-
tions 
and 
the 
operations 
of 
the 
Office 
of 
Securitization as the Director shall prescribe. 
‘‘(3) LIMITATIONS.—The Deputy Director for 
Housing Finance Guarantee Associations may not— 
‘‘(A) have any direct or indirect financial 
interest in any association or regulated entity; 
‘‘(B) hold any office, position, or employ-
ment in any association or regulated entity; or 
‘‘(C) have served as an executive officer or 
director of any association or regulated entity 
at any time during the 3-year period preceding 
the date of the designation of such individual by 
the Director. 
‘‘(d) ANNUAL
ASSESSMENT
OF
AGENCY
OPER-
ATIONS.—In addition to the general authority of the Fed-
eral Housing Finance Oversight Board provided under 
section 1313A (12 U.S.C. 4513a), the Board, annually, 
shall— 
‘‘(1) conduct an assessment of the operations 
and resources of the Agency to determine whether 
the Director and the Agency have the powers, sys-
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
tems, personnel, and other resources necessary to 
charter, supervise, and regulate associations; 
‘‘(2) make recommendations to the Director 
based upon the assessment required in paragraph 
(1); and 
‘‘(3) report the results of the assessment under 
this subsection and any recommendations pursuant 
to such assessment to the Congress. 
‘‘(e) ASSESSMENTS AND OTHER FEES.—The Direc-
tor shall establish, by regulation, such assessments and 
fees the Director deems necessary to cover the Agency’s 
direct and indirect costs for chartering, supervising, and 
regulating associations under this subtitle, including all 
costs associated with the establishment and operation of 
the Office of Securitization. 
‘‘SEC. 1392. APPLICABLE LAW. 
‘‘(a) IN GENERAL.—All authorized activities of an as-
sociation shall be governed by Federal law and subject to 
exclusive regulation and supervision by the Agency. No 
State may prevent or restrict an association from engag-
ing directly or indirectly in any activity authorized under 
or pursuant to this subtitle. 
‘‘(b) LIMITATION.—Subsection (a) may not be con-
strued to prevent the application of nondiscriminatory 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
State laws that apply to all businesses operating in a 
State, including criminal, tax, and zoning laws. 
‘‘SEC. 1393. JUDICIAL REVIEW. 
‘‘(a) IN GENERAL.—An association affected by an ac-
tion of the Director may seek review of such action in an 
appropriate Federal court. 
‘‘(b) PRIVATE RIGHTS OF ACTION.—Nothing in this 
Act may be construed to create a private right of action 
on behalf of any person against an association, or any offi-
cer or director of an association. 
‘‘SEC. 1394. BUDGET NEUTRALITY. 
‘‘The Director shall exercise the authority provided 
in this subtitle over the formation, regulation, and super-
vision of associations and the operations of the Office of 
Securitization so as to ensure that associations and the 
Office of Securitization operate in a manner that does not 
increase the budget deficit, or debt, of the Federal Govern-
ment.’’. 
SEC. 4. TRANSITION. 
(a) TRANSITION PLAN.—Not later than six months 
after the date of the enactment of this Act, the Director 
of the Federal Housing Finance Agency shall submit to 
the Congress a plan that provides for— 
(1) the winding down of the enterprises; and 
VerDate Mar 15 2010 
04:41 May 26, 2011
Jkt 099200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
(2) the formation, supervision, and regulation 
of associations as provided in subtitle D of the Fed-
eral Housing Enterprises Financial Safety and 
Soundness Act of 1992, as added by the amendment 
made by section 3 of this Act. 
(b) CONTENTS OF PLAN.—The plan required by sub-
section (a) shall provide for— 
(1) measures to ensure the continued operation 
of the enterprises during the transition period, in-
cluding the retention of qualified personnel; 
(2) the transfer of qualified personnel and sys-
tems from the enterprises to associations; 
(3) the implementation of the transitional ac-
tions required by subsections (b) through (m) of this 
section; and 
(4) such other matters as the Director deems 
appropriate. 
(c) REPEAL OF AFFORDABLE HOUSING GOALS.— 
(1) REPEAL.—The Federal Housing Enter-
prises Financial Safety and Soundness Act of 1992 
is amended by striking sections 1331 through 1336 
(12 U.S.C. 4561–6). 
(2) 
CONFORMING
AMENDMENTS.—Federal 
Housing Enterprises Financial Safety and Sound-
ness Act of 1992 is amended— 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS
(7) 
in 
section 
1371(a)(2) 
(12 
U.S.C. 
4631(a)(2))— 
(A) by striking ‘‘with any housing goal es-
tablished under subpart B of part 2 of subtitle 
A of this title,’’; and 
(B) by striking ‘‘section 1336 or’’. 
Æ 
VerDate Mar 15 2010 
05:42 May 25, 2011
Jkt 099200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6301
E:\BILLS\H1859.IH
H1859
smartinez on DSKB9S0YB1PROD with BILLS