I 
111TH CONGRESS 
2D SESSION 
H. R. 5816 
To establish a commercial real estate credit guarantee program to empower 
community banks and other lenders to make loans while stabilizing 
the value of small denomination commercial real estate assets, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 22, 2010 
Mr. MINNICK (for himself, Mr. SHULER, Mr. SIMPSON, Ms. KOSMAS, Mr. 
LATOURETTE, Mr. HEINRICH, and Mr. MARSHALL) introduced the fol-
lowing bill; which was referred to the Committee on Financial Services 
A BILL 
To establish a commercial real estate credit guarantee pro-
gram to empower community banks and other lenders 
to make loans while stabilizing the value of small denomi-
nation commercial real estate assets, and for other pur-
poses. 
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 ‘‘Commercial Real Es-
tate Stabilization Act of 2010’’. 
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SEC. 2. OVERSIGHT BOARD. 
(a) IN GENERAL.—There is hereby established the 
Oversight Board (hereinafter in this Act referred to as the 
‘‘Board’’) to provide advice to the Secretary of the Treas-
ury (hereinafter in this Act referred to as the ‘‘Secretary’’) 
with regard to the implementation, operation, and over-
sight related to, and in accordance with, the Commercial 
Real Estate Credit Guarantee Program established under 
section 3. The Board is hereby charged particularly in ad-
vising the Secretary with regard to the development of ap-
propriate underwriting guidelines and credit risk assess-
ments in connection with the Program, subject to the pro-
visions of section 3(e)(4), and is further charged with the 
design and operation of the Program in such ways as to 
encourage both participation by eligible institutions as well 
as the prompt displacement of the Program by private 
market interests. 
(b) MEMBERSHIP.—The Board shall consist of the 
following 9 members: 
(1) The Secretary. 
(2) The Chairman of the Board of Governors of 
the Federal Reserve System. 
(3) The Chairman of the Securities Exchange 
Commission. 
(4) The Chairperson of the Federal Deposit In-
surance Corporation. 
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(5) The Director of the Federal Housing Fi-
nance Agency. 
(6) Four members to be appointed by the Presi-
dent, from among individuals who have comprehen-
sive and practical experience in the financial indus-
try. 
(c) REPORTS.—Not later than the end of the 3-month 
period beginning on the date of the enactment of this Act, 
and quarterly thereafter, the Board shall issue reports to 
the Secretary, the Committee on Financial Services of the 
House of Representatives, and the Committee on Banking, 
Housing, and Urban Affairs of the Senate on— 
(1) the Program; and 
(2) the current state of the credit system in the 
United States with respect to commercial lending, 
including small business and commercial real estate 
lending. 
(d) TERMINATION.—The Board shall terminate on 
the date that is the end of the 1-month period following 
the program termination date. 
SEC. 3. COMMERCIAL REAL ESTATE CREDIT GUARANTEE 
PROGRAM. 
(a) IN GENERAL.—The Secretary shall establish a 
Commercial Real Estate Credit Guarantee Program (here-
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as an alternative to the guarantees provided 
under the Program. 
(c) GENERAL PROGRAM DETAILS.— 
(1) CREDIT GUARANTEE.— 
(A) IN GENERAL.—With respect to a credit 
instrument that is approved for the Program 
under subsection (b), the Secretary shall guar-
antee payments of interest and principal on 
such credit instrument. 
(B) CREDIT INSTRUMENT DEFINED.—The 
term ‘‘credit instrument’’, as used in this Act, 
means each and all of the following: a mortgage 
loan or a participation therein, a bond or cer-
tificate backed by one or more mortgage loans 
or participation interests therein, a guarantee 
other than a guarantee issued under the Pro-
gram, or any other lending arrangement (in-
cluding aggregation facilities) approved by the 
Secretary upon recommendation of the Board, 
provided that the ultimate collateral for any 
such credit instrument is commercial real estate 
described in subsection (d). In no event shall a 
credit instrument be eligible for a guarantee 
under the Program if such credit instrument 
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was issued prior to the effective date of this 
Act. 
(C) RECOVERIES.—The payment by the 
Secretary under a guarantee shall not discharge 
the liability of the related issuer with respect to 
the defaulted payment, and the Secretary shall 
be fully subrogated to the rights of the owner 
of the credit instrument to receive the full 
amount of such defaulted payment from the re-
lated issuer, and shall be entitled to receive 
such amounts from such issuer, subject to the 
availability of funds thereof. 
(D) SUNSET.—No credit instrument shall 
be eligible for a guarantee under the Program 
if such credit instrument is issued after the ear-
lier to occur of— 
(i) the date that is the end of the 3- 
year period beginning on the date on which 
the first guarantee is issued under the 
Program; and 
(ii) the date on which the Board has 
delivered a certification to the Secretary 
that the commercial real estate credit mar-
ket has recovered to such an extent that 
the Program is no longer necessary. 
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(2) TIMESPAN OF GUARANTEE.—A credit in-
strument guarantee under the Program shall expire 
at the end of the 10-year period beginning on the 
date on which the credit instrument is issued. 
(3) USE OF PROFITS.—All profits made from 
the Program shall be used for deficit reduction. 
(d) ISSUE REQUIREMENTS.—In order to be an eligi-
ble credit instrument for purposes of the Program, the 
credit instrument must be a performing commercial real 
estate loan, or be backed by one or more performing com-
mercial real estate loans which, in either case, at the time 
of the issuance of such credit instrument, are performing 
commercial real estate loans— 
(1) where each loan is either— 
(A) newly originated, including a new loan 
on a commercial property which was REO; or 
(B) a refinancing of an existing loan made 
by the same borrower; 
(2) for which payments of interest and principal 
are not past due; 
(3) which has a loan term of 10 years or less, 
and which amortizes over its terms; 
(4) which was originated within the past 180 
days (or other similar time period, to be determined 
by the Board based on the applicable asset class) 
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preceding the issuance date of such credit instru-
ment; and 
(5) which complies with such other require-
ments as the Board may specify to ensure that the 
Program is not used in a manner that was not in-
tended. 
(e) ADDITIONAL REQUIREMENTS.—A loan relating to 
a credit instrument, as described in subsection (d), shall 
meet the following criteria: 
(1) LOAN ORIGINATORS.—Such loan shall have 
been originated by an eligible institution as defined 
in section 5. 
(2) MAXIMUM AMOUNT.—The principal amount 
of such loan must be $10,000,000 or less. 
(3) NO REQUIREMENT FOR OWNER-OCCUPIED 
PROPERTY.—Such a loan may be with respect to ei-
ther owner-occupied or nonowner-occupied commer-
cial real estate. 
(4) RISK
ASSESSMENTS
AND
UNDERWRITING 
GUIDELINES.— 
(A) RISK
ASSESSMENT.—No guarantee 
shall be issued under the Program unless the 
application submitted to the Secretary dem-
onstrates that the guarantee fees associated 
with such guarantee, based upon the credit risk 
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associated with the related credit instrument, 
shall create reserves sufficient, with regard to 
that individual credit instrument, to meet the 
anticipated claims by paying for any related 
losses and to ensure that the Secretary and the 
taxpayers are fully protected, based on 2 risk- 
assessment analyses conducted by 2 inde-
pendent third-party risk assessment entities. 
(B) Each such risk assessment shall be 
conducted by an independent third party ap-
proved by the Board. With respect to bonds or 
certificates backed by pools of commercial real 
estate assets, or aggregation facilities relating 
to such assets, such third party may be any na-
tionally recognized statistical rating organiza-
tion approved by the Board, or any other third- 
party entity which, upon application to the 
Board and approval by the Board, has a de-
monstrable expertise in the assessment of credit 
risk involving pools of commercial real estate 
assets. With respect to individual commercial 
real estate loans, such third party may be any 
entity, including any nationally recognized sta-
tistical rating organization, which, upon appli-
cation to the Board and approval by the Board, 
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has a demonstrable expertise in the assessment 
of credit risk involving individual commercial 
real estate assets. 
(C) No guarantee shall be issued under the 
Program unless each of the related independent 
third-party risk assessment entities shall have 
concluded in writing that the related risk to the 
Secretary, after taking into account the reserves 
created by the related guarantee fee, the Sec-
retary’s subrogation rights, and the credit char-
acteristics of the related credit instrument, is 
not less than investment grade, where the term 
‘‘investment grade’’ shall have its generally un-
derstood meaning in the context of the fixed-in-
come investments rated by nationally recognized 
statistical rating organizations. No guarantee 
shall be issued under the Program covering a 
portion or tranche of any credit instrument. 
Such investment grade risk assessment shall be 
required on a guarantee-by-guarantee basis, 
and shall not take into account the ‘‘cross- 
collateralization’’ resulting from Program-wide 
reserves as may be accounted for by the Sec-
retary relating to the Program as a whole. 
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(D) Any third-party risk assessment entity 
shall be independent of the issuer, sponsor, 
placement agent, arranger, or underwriter (if 
any) of the related credit instrument. In ap-
proving third-party risk assessment entities, the 
Board shall, to the maximum extent practicable 
ensure the inclusion and utilization of minority, 
women-, and veteran-owned businesses. The 
cost of each risk assessment shall be paid by 
the related issuer or the related sponsor, and 
shall in no event be a cost borne by the Sec-
retary or by the Board. 
(E) All risk assessments shall be evaluated 
on the basis of the underlying credit instru-
ments, the level of the guarantee fee and the 
Secretary’s subrogation rights, but shall not 
take into account the credit support provided by 
the guarantee itself. 
(f) UNDERWRITING GUIDELINES.—The Board shall, 
within 60 days of the effective date of this Act, issue 
standardized underwriting guidelines for participation in 
the Program for credit instruments which are individual 
commercial mortgage loans. 
(1) Such guidelines shall seek to— 
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(A) make the Program a profitable invest-
ment for the Government; 
(B) provide a safety net for more conserv-
ative borrowers; and 
(C) promote the reestablishment of the pri-
vate credit market for commercial real estate. 
(2) Such guidelines shall be developed with the 
assistance of not fewer than 3 independent risk as-
sessment entities approved by the Board, which shall 
have each concluded that bonds or certificates 
backed by pools containing performing commercial 
real estate loans meeting such underwriting guide-
lines would be rated at least investment grade if the 
risk of the related guarantee fee were 100 basis 
points per annum. 
(g) RISK RETENTION.—The Board shall, within 60 
days of the effective date of this Act, by regulation, require 
the related issuer or sponsor or a third-party purchaser 
that has specifically negotiated for the purchase of such 
economic interest and has conducted due diligence on such 
loan or pool of loans, in each case to retain an economic 
interest in a portion of the credit risk for each loan or 
pool of loans as prescribed in section 941(b) of the Dodd- 
Frank Wall Street Reform and Consumer Protection Act. 
For the avoidance of doubt, the forms of such economic 
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interest shall include, but are not limited to, subordinated 
excess interest strips, subordinated principal, and subordi-
nated securities. Such regulations shall further provide 
that the owner of such economic interest not directly or 
indirectly hedge or otherwise transfer the required credit 
risk, and shall specify the minimum duration of the risk 
retention required under this subsection. 
(h) REPORTING.— 
(1) IN GENERAL.—Not later than the end of 
the 180-day period beginning on the date of the en-
actment of this Act, and quarterly thereafter, the 
Secretary shall issue a report to the Congress con-
taining a review of credit instruments being guaran-
teed under the Program and information on the 
loans and properties backing such credit instru-
ments, including the number of loans and properties, 
the value of the loans and properties, and informa-
tion on the performance of the loans and properties. 
(2) 
PUBLIC
AVAILABILITY.—The 
Secretary 
shall make all reports made under paragraph (1) 
available to the public, including on a Web site. 
(i) STATUS OF GUARANTIES.—All guarantees issued 
pursuant to this section shall constitute general obliga-
tions of the United States, for which the full faith and 
credit of the United States is pledged. All such guarantees 
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shall be treated as ‘‘loan guarantees’’ under section 502(3) 
of the Federal Credit Reform Act of 1990. 
SEC. 4. FUNDING. 
(a) IN GENERAL.—There is hereby authorized to be 
appropriated, out of funds in the Treasury not otherwise 
appropriated, in addition to such amounts as may be nec-
essary for the reasonable costs of administering the Pro-
gram, such sum as may be necessary to issue guarantees 
of credit instruments having an aggregate, cumulative 
principal balance not in excess of $25,000,000,000, as de-
termined in a manner consistent with the Federal Credit 
Reform Act of 1990. 
(b) GUARANTEES NOT UNDER TARP.—The guaran-
tees provided for hereunder are established as a separate 
and distinct program from the guarantees described in 
section 102 of the Emergency Economic Stabilization Act 
of 2008. No eligible institution, sponsor, or issuer shall 
be considered a recipient of the Troubled Asset Relief Pro-
gram solely by virtue of participation in the Program. 
(c) PROGRAM UTILIZATION TO BE ENCOURAGED.— 
(1) The Congress finds that, with respect to the 
smaller insured depository institutions, the lingering 
financial crisis and lack of liquidity and leverage in 
the commercial real estate market has resulted in a 
substantial number of small bank failures, with the 
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result that the FDIC and its Deposit Insurance 
Fund have absorbed many of the resulting losses. 
The Congress has concluded that the Program es-
tablished under this Act is, under certain cir-
cumstances, a preferred approach to this problem, as 
opposed to continued reliance on the FDIC’s resolu-
tion authority, which was never intended to provide 
liquidity and leverage to the commercial real estate 
markets. 
(2) The Congress further finds that the utiliza-
tion of this Program by smaller depository institu-
tions may be inhibited due to concerns that the cred-
it issuance transactions contemplated by this Act 
may, under current rules and regulations governing 
loss recognition, regulatory capital, and related ac-
counting matters, result in unfavorable regulatory 
accounting treatment to such institutions, notwith-
standing the other benefits accruing to such institu-
tions, the commercial real estate markets and the 
economy at large by the utilization of this Program. 
In addition, the Congress specifically finds that the 
requirements of FAS 166/167 shall not be applicable 
to the Program, provided that any assets or liabil-
ities created by the issuance of securities under the 
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Program shall be reasonably and adequately dis-
closed. 
(3) Consequently, it is the intent of the Con-
gress that this Program be utilized when such utili-
zation otherwise proves beneficial, and that, in such 
cases, utilization not be unduly inhibited by concerns 
related to potential unfavorable regulatory account-
ing treatment. In furtherance of such Congressional 
intent, the Board is directed to confer with the 
Chairperson of the FDIC, representatives of the 
Conference of State Banking Supervisors, represent-
atives of the Financial Accounting Standards Board, 
and representatives of the community banking in-
dustry, with the result that the FDIC shall issue, 
within 60 days of the enactment of this Act, such 
rules and regulations as are consistent with such 
Congressional intent stated herein. 
(4) Additionally, in order to ensure that State 
foreclosure laws do not contravene the mechanics 
and operational efficiency of this Program, all loans 
backing bonds issued under this Program shall be 
subject to an expedited Federal court foreclosure 
process should such loans default. The underlying 
documentation need not specify foreclosure remedies, 
and in furtherance of the Congressional intent de-
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scribed above, such foreclosure action instituted in 
Federal court shall be subject to removal to State 
court. No such foreclosure action shall be stayed as 
a result of the bankruptcy of the related borrower. 
SEC. 5. OTHER DEFINITIONS. 
For purposes of this Act: 
(1) BOARD.—The term ‘‘Board’’ means the 
Oversight Board established under section 2. 
(2) COST.—The term ‘‘cost’’ has the meaning 
given such term under section 502(5)(A) of the Fed-
eral Credit Reform Act of 1990, as amended. 
(3) EFFECTIVE
DATE.—The term ‘‘effective 
date’’ shall mean the date on which the provision of 
this Act becomes law. 
(4) ELIGIBLE INSTITUTION.—The term ‘‘eligi-
ble institution’’ means, for purposes of this Act, ei-
ther— 
(A)(i) any insured depository institution, 
which— 
(I) is not controlled by a bank holding 
company or savings and loan holding com-
pany that is also an eligible institution; 
(II) has total assets of equal to or less 
than $10,000,000,000, as reported in the 
call report as of the end of the fourth 
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quarter of the most recently ended year for 
such fourth-quarter call report is available; 
and 
(III) is not directly or indirectly con-
trolled by any company or other entity that 
has total consolidated assets of more than 
$10,000,000,000, as so reported; 
(ii) any bank holding company which has 
total 
assets 
of 
equal 
to 
or 
less 
than 
$10,000,000,000; 
(iii) any savings and loan holding company 
which has total assets of equal to or less than 
$10,000,000; or 
(B) any entity not described in subpara-
graph (A) above and which the Board has not 
determined is ineligible to participate in the 
Program. 
(5) INSURED DEPOSITORY INSTITUTION.—The 
term ‘‘insured depository institution’’ has the mean-
ing given such term under section 3(c)(2) of the 
Federal 
Deposit 
Insurance 
Act 
(12 
U.S.C. 
1813(c)(2)). 
(6) ISSUER.—The term ‘‘issuer’’ means ei-
ther— 
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(A) with respect to a credit instrument 
which is an individual mortgage loan or a par-
ticipation interest in an individual mortgage 
loan (including a new loan on a commercial 
property which was REO or a refinancing of an 
existing loan made by the same borrower), or a 
guarantee of an individual mortgage loan, the 
related borrower; or 
(B) with respect to a credit instrument 
which is a bond or certificate, or with respect 
to a guarantee relating to a pool of mortgage 
loans, participation interests in mortgage loans 
(including a new loan on a commercial property 
which was REO or a refinancing of an existing 
loan made by the same borrower), a ‘‘special 
purpose vehicle’’ entity (such as a trust or lim-
ited liability company) that issues such a credit 
instrument; 
in each case that is guaranteed under the Program. 
(7) PROGRAM.—The term ‘‘Program’’ means 
the commercial real estate credit guarantee program 
established under section 3. 
(8) REO.—The term ‘‘REO’’ means, with re-
spect to an eligible institution, any real property to 
which such eligible institution holds title pursuant to 
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foreclosure, a deed of lieu of foreclosure, assignment, 
conveyance, or any other action in connection with 
a mortgage made, held, insured, guaranteed, or 
securitized by such eligible institution. 
(9) SPONSOR.—The term ‘‘Sponsor’’ ‘‘’’ means, 
in the case of a securitization or aggregation ar-
rangement, an entity that— 
(A) securitizes commercial real estate loans 
and that has met the Board’s expertise require-
ments for participation in the Program, pro-
vided that the Sponsor’s management expertise 
and previous bond performance will be strongly 
considered as part of the Sponsor’s approval 
process; 
(B) forms an issuer; and 
(C) creates the credit instruments issued 
by the issuer under the Program (and the spon-
sor described herein may also be an eligible in-
stitution with respect to the related loans). 
(10) PROGRAM TERMINATION DATE.—The term 
‘‘program termination date’’ means the date on 
which the last credit instrument has been paid in 
full (disregarding for this purpose any amounts 
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owed to the Secretary on account of the Secretary’s 
subrogation rights). 
Æ 
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