I 
114TH CONGRESS 
2D SESSION 
H. R. 6487 
To require Fannie Mae and Freddie Mac to engage in credit risk transfer 
transactions, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 8, 2016 
Mr. ROYCE (for himself and Ms. MOORE) introduced the following bill; which 
was referred to the Committee on Financial Services, and in addition to 
the Committees on Agriculture, and Ways and Means, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
of such provisions as fall within the jurisdiction of the committee con-
cerned 
A BILL 
To require Fannie Mae and Freddie Mac to engage in credit 
risk transfer transactions, and for 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 ‘‘Taxpayer Protections 
and Market Access for Mortgage Finance Act of 2016’’. 
SEC. 2. CREDIT RISK-TRANSFER TRANSACTIONS. 
(a) REQUIREMENT FOR ENTERPRISES.—Subpart A 
of part 2 of subtitle A of the Federal Housing Enterprises 
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Financial Safety and Soundness Act of 1992 (12 U.S.C. 
4541 et seq.) is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 1328. ENTERPRISE CREDIT RISK-TRANSFER TRANS-
ACTIONS. 
‘‘(a) REQUIREMENT.—Not later than 12 months 
after the date of enactment of this Act, the Director shall, 
after taking into consideration market conditions and the 
safety and soundness of the enterprises, establish guide-
lines requiring that each enterprise engage in significant 
and increasing credit risk-transfer transactions. 
‘‘(b) CONSIDERATIONS.—In establishing the guide-
lines under subsection (a), the Director shall— 
‘‘(1) seek to promote a deep, broad market for 
a variety of structures that together insulate the tax-
payer from losses, minimize ongoing risks to the en-
terprises, remain stable through the economic cycle, 
maintain adequate access to the secondary market 
for lenders of all sizes, and promote credit for bor-
rowers in all communities; 
‘‘(2) continue and seek to increase the amount 
and types of risk-transfer transactions that the en-
terprises engaged in during the previous year with 
the goal that the risk transferred by an enterprise 
by all credit risk-transfer transactions shall be at 
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least 400 basis points of risk in total, starting from 
the first dollar of credit loss among all the different 
credit risk-transfer structures; 
‘‘(3) continue and seek to increase front-end 
risk transfer transactions; and 
‘‘(4) continue and seek to increase transactions 
in which the first loss position is transferred or 
shared and through structures that are scalable and 
transparent. 
‘‘(c) GUARANTEE FEES.—The enterprises shall set 
and publish guarantee fees, including up-front delivery 
fees and loan level price adjustments, commensurate with 
the enterprises’ reduced credit risk resulting from any new 
risk-transfer transaction. 
‘‘(d) APA COMPLIANCE.—The guidelines required 
under subsection (a) shall be issued and made available 
to the public pursuant to section 553 of title 5, United 
States Code. 
‘‘(e) COMPENSATION.—The Director shall adjust in-
dividual and corporate scorecards used in determining 
compensation for relevant enterprise employees to align 
with the considerations of subsection (b). 
‘‘(f) EXEMPTION FROM COMMODITY EXCHANGE ACT; 
CONSULTATION.— 
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‘‘(1) EXEMPTION.—A swap (as such term is de-
fined in section 1a of the Commodity Exchange Act 
(7 U.S.C. 1a)) entered into for the purpose of trans-
ferring or sharing credit risk in connection with a 
risk-transfer transaction shall not be deemed to be 
a commodity interest (as such term is defined in sec-
tion 1.3(yy) of the regulations of the Commodity Fu-
tures Trading Commission (17 C.F.R. 1.3(yy))), and 
no swap counterparty or other person sponsoring or 
arranging a risk-transfer transaction shall be 
deemed to be a commodity pool operator (as such 
term is defined in section 1.3(cc) of such regula-
tions), solely by virtue of entering into or sponsoring 
or arranging such a swap in connection with such 
transaction. 
‘‘(2) PRIOR
CONSULTATION
REQUIREMENT.— 
Before the execution of a risk-transfer transaction 
that would be exempt from the Commodity Ex-
change Act pursuant to paragraph (1), the Director 
shall consult with the Commodity Futures Trading 
Commission. 
‘‘(g) REPORT.—The Director shall submit a report, 
not later than October 30 of each year, to the Committee 
on Financial Services of the House of Representatives and 
the Committee on Banking, Housing, and Urban Affairs 
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of the Senate, on the activities of each enterprise in meet-
ing the guidelines established under subsection (a) and 
any obstacles the Director has determined have impeded 
the ability of the enterprises to meet such guidelines. 
‘‘(h) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) CREDIT
RISK.—The term ‘credit risk’ 
means, with respect to a residential mortgage loan 
held or guaranteed, or intended to be held or guar-
anteed, by an enterprise or any security backed by 
residential mortgage loans held or guaranteed by the 
enterprise, the risk of loss to the enterprise that 
could result from a mortgagor’s failure to repay any 
such loan in accordance with its terms. 
‘‘(2) FIRST LOSS.—The term ‘first-loss’ means 
the risk of loss for an enterprise on a mortgage loan 
or security backed by residential mortgage loans, be-
ginning with the first dollar of loss. 
‘‘(3) FRONT-END RISK TRANSFER.—The term 
‘front-end risk transfer’ means, with respect to a 
residential mortgage loan or any security backed by 
residential mortgage loans, a risk transfer or risk 
share that occurs before or simultaneous with the 
acquisition of such loan or security by an enterprise. 
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