ket, until Ginnie Mae deems the Platform fully oper-
ational. 
SEC. 202. INSURANCE. 
(a) IN GENERAL.—Ginnie Mae shall insure 100 per-
cent of each security issued by the Platform, as provided 
in this section. 
(b) PRIVATE REINSURANCE.—Ginnie Mae shall es-
tablish one or both of the programs described under para-
graphs (1) and (2). In selecting which program to estab-
lish, or whether both should be established, Ginnie Mae 
shall determine whether a program is an efficient way to 
operate the insurance requirements under this Act by in-
corporating private sector pricing, would optimize risk 
pricing, and would maximize capital positions based upon 
the state of the economy. 
(1) REINSURANCE BID PROGRAM.—A Reinsur-
ance Bid Program, which shall include the following: 
(A) FORWARD
CONTRACT
FOR
FIRST
PERCENT LOSS.—Prior to any particular quar-
ter (or such other time period determined by 
Ginnie Mae), Ginnie Mae shall enter into con-
tracts with market participants to reinsure the 
first 5 percent of loss on all securities issued by 
the Platform in such quarter (or other time pe-
riod). 
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(B) FORWARD
CONTRACT
FOR
LAST
PERCENT LOSS.—Prior to any particular quar-
ter (or such other time period determined by 
Ginnie Mae), Ginnie Mae shall sign— 
(i) contracts with market participants 
to reinsure the last 95 percent of loss on 
all securities issued by the Platform in 
such quarter (or other time period); and 
(ii) a retrocession contract with each 
such market participant under which 
Ginnie 
Mae 
will 
agree 
to 
offer 
retrocessional reinsurance to reinsure up to 
90 percent of the 95 percent described 
under clause (i) on a pari passu basis. 
(2) GUARANTOR PROGRAM.—A Guarantor Pro-
gram, which shall include the following: 
(A) 
FIRST
LOSS
REQUIREMENT.—The 
mortgage originator or aggregator that wishes 
to deliver a pool of eligible mortgage loans to 
the Platform for securitization shall, prior to 
delivering such pool, contract directly with a 
market participant to insure the first 5 percent 
of loss on all securities issued by the Platform 
that are securitized by such pool of eligible 
mortgage loans. 
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(B) COVERAGE
FOR
LAST
PERCENT 
LOSS.—For each security described under sub-
paragraph (A) Ginnie Mae shall sign— 
(i) contracts with market participants 
to reinsure the last 95 percent of loss on 
the security; and 
(ii) a retrocession contract with each 
such market participant under which 
Ginnie 
Mae 
will 
agree 
to 
offer 
retrocessional reinsurance to reinsure up to 
90 percent of the 95 percent described 
under clause (i) on a pari passu basis. 
(C) ABILITY TO SELECT MARKET PARTICI-
PANTS.— 
(i) IN GENERAL.—If Ginnie Mae de-
termines that it would be an efficient way 
to operate the insurance requirements 
under this Act and would encourage the in-
corporation of private sector pricing, 
Ginnie Mae may allow mortgage origina-
tors and aggregators described under sub-
paragraph (A) to select the market partici-
pant described under subparagraph (B). 
(ii) HANDLING
OF
PRE-SELECTED 
MARKET PARTICIPANTS.—If a market par-
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ticipant is selected by a mortgage origi-
nator or aggregator, as described under 
clause (i)— 
(I) such market participants shall 
be required to meet the same stand-
ards as a market participant selected 
by Ginnie Mae; and 
(II) for purposes of determining 
the insurance fee described under sub-
section (d), Ginnie Mae shall contract 
with a private sector insurer to esti-
mate the risk that the market partici-
pant may default. 
(c) ADDITIONAL PROGRAM REQUIREMENTS.— 
(1) COMPETITIVE
BIDDING
PROCESS.—Ginnie 
Mae shall use a competitive bidding process to deter-
mine which market participants should be granted 
contracts under subsection (b)(1) and, except as pro-
vided under subsection (b)(2)(C), under subsection 
(b)(2)(B). 
(2) USE OF INSURANCE BROKER.—With respect 
to any market participant that Ginnie Mae selects 
under a risk sharing program, Ginnie Mae shall se-
lect an insurance broker, through a competitive bid-
ding process, that will solicit bids, on behalf of 
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Ginnie Mae, for the reinsurance contracts under 
such program. 
(3) CEDING COMMISSION.—As part of a ret-
rocession contract under subsection (b)(1)(B)(ii) or 
subsection (b)(2)(B)(ii), the market participants 
shall be paid a competitively determined ceding com-
mission for the underwriting and administrative 
costs of providing such reinsurance. 
(4) PHASE-IN.—Ginnie Mae may, if it deter-
mines it appropriate— 
(A) phase-in the 5 percent requirements 
under subsections (b)(1)(A) and (b)(2)(A), by 
originally requiring a lower percentage; and 
(B) phase-in the 90 percent requirement 
under 
subsections 
(b)(1)(B)(ii) 
and 
(b)(2)(B)(ii), by originally requiring a higher 
percentage. 
(d) INSURANCE FEE AND TERMS.— 
(1) PRE-PRICING OF INSURANCE FEE.—Ginnie 
Mae shall set the insurance fee applicable to securi-
ties issued by the Platform in advance on a quarter- 
by-quarter basis, through forward contracts estab-
lished with market participants based on the volume 
and type of securities Ginnie Mae anticipates the 
Platform issuing during such quarter. 
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(2) COMPONENTS OF INSURANCE FEE.— 
(A) IN
GENERAL.—The insurance fee 
charged by Ginnie Mae for providing insurance 
shall reflect expected losses and the market risk 
premium necessary to obtain reinsurance and in 
the absence of such market shall reflect the de-
fault risk associated with the mortgage collat-
eral underlying Ginnie Mae’s insurance. 
(B) ADJUSTMENT
FOR
PERFORMANCE.— 
Ginnie Mae may adjust the fee computed under 
subparagraph (A) after periodic review subject 
to its credit analysis, but such adjustment may 
not be based on volume. Such credit analysis 
shall be based on forecasting models assuming 
current economic data and shall be back-tested 
against historical adverse economic scenarios. 
(3) RATE
ADJUSTMENT
PERIOD.—The rate 
charged by a private market participant that con-
tracts with Ginnie Mae pursuant to subsection (b)— 
(A) may not change during the first 100- 
day period for which such reinsurance is effec-
tive; and 
(B) shall be adjusted based on market con-
ditions, on a period to be determined by the Di-
rector. 
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(4) EXPERTISE.—Ginnie Mae shall retain per-
sonnel with expertise in pricing conventional mort-
gages prior to charging insurance fees under this 
section. Such expertise shall include credit risk anal-
ysis of mortgages, default management, and loss 
mitigation. 
(e) STANDARDS FOR MARKET PARTICIPANTS.— 
(1) IN GENERAL.—Ginnie Mae shall issue such 
general standards for market participants described 
under subsection (b) as Ginnie Mae determines ap-
propriate. 
(2) CAPITAL STANDARDS FOR MARKET PARTICI-
PANTS.— 
(A) IN
GENERAL.—For market partici-
pants described under subsection (b), Ginnie 
Mae shall establish, by regulation, capital 
standards and related solvency standards nec-
essary to implement the provisions of this Act. 
(B) DEFINITIONS.— 
(i) IN GENERAL.—The regulations re-
quired under this paragraph shall define 
all such terms as are necessary to carry 
out the purposes of this paragraph. 
(ii) CONSIDERATIONS
IN
DEFINING 
INSTRUMENTS
AND
CONTRACTS
THAT 
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QUALIFY AS CAPITAL.—In defining instru-
ments and contracts that qualify as capital 
pursuant to subparagraph (A), Ginnie 
Mae— 
(I) shall include such instruments 
and contracts that will absorb losses 
before the Fund; and 
(II) may assign significance to 
those instruments and contracts based 
on the nature and risks of such in-
struments and contracts. 
(iii) CONSIDERATIONS
IN
DEFINING 
CAPITAL RATIOS.—Solely for the purposes 
of calculating a capital ratio appropriate to 
the business model of a market participant 
pursuant to subparagraph (A), Ginnie Mae 
shall consider for the denominator— 
(I) total assets; 
(II) total liabilities; 
(III) risk in force; or 
(IV) unpaid principal balance. 
(C) DESIGNED TO ENSURE SAFETY AND 
SOUNDNESS.—The capital and related solvency 
standards established under this paragraph 
shall be designed to— 
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(i) ensure the safety and soundness of 
a market participant; 
(ii) minimize the risk of loss to the 
Fund; 
(iii) in consultation and coordination 
with the Board of Governors of the Fed-
eral Reserve System, the Federal Deposit 
Insurance Corporation, and the Office of 
the Comptroller of the Currency, reduce 
the potential for regulatory arbitrage be-
tween capital standards for market partici-
pants and capital standards promulgated 
by Federal regulatory agencies for insured 
depository institutions and their affiliates; 
and 
(iv) be specifically tailored to accom-
modate a diverse range of business models 
that may be employed by market partici-
pants. 
(D) SUPPLEMENTAL
CAPITAL
REQUIRE-
MENTS.— 
(i) IN GENERAL.—In order to prevent 
or mitigate risks to the secondary mort-
gage market of the United States that 
could arise from the material financial dis-
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tress or failure, or ongoing activities, of 
large market participants that insure secu-
rities under this Act, Ginnie Mae, by regu-
lation— 
(I) shall establish supplemental 
capital requirements for such large 
market participants; and 
(II) may establish such other 
standards that Ginnie Mae determines 
necessary or appropriate. 
(ii) LARGE MARKET PARTICIPANT DE-
FINED.—For purposes of this subpara-
graph, Ginnie Mae shall define the term 
‘‘large market participant’’. 
(E) USE OF CERTAIN CAPITAL MARKETS 
TRANSACTIONS.—Ginnie Mae shall allow mar-
ket participants to prudently reduce the re-
quired capital requirements through the use of 
capital markets transactions that pre-fund the 
risk (such as credit-linked notes). Any funds de-
rived from such transactions may only be used 
for the purpose of loss protection. 
(3) NON-ORIGINATOR REQUIREMENT.—A mar-
ket participant may not originate eligible mortgages 
and may not be affiliated with a person that actively 
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engages in the business of originating eligible mort-
gages. 
(4) LIMITATIONS ON REINSURANCE.—A market 
participant may reinsure any transaction entered 
into under subsection (b), but may not contract for 
reinsurance with another market participant. 
(f) CONFLICT
OF INTERESTS.—Ginnie Mae shall 
issue regulations to prevent conflicts of interest by market 
participants contracting with Ginnie Mae under this sec-
tion. 
(g) INSURANCE FUND.— 
(1) ESTABLISHMENT.—There is established an 
insurance fund (the ‘‘Fund’’), which Ginnie Mae 
shall— 
(A) maintain and administer; and 
(B) use to cover losses incurred under this 
section with respect to mortgage-backed securi-
ties and for such other housing-related purposes 
as Ginnie Mae determines appropriate. 
(2) FUND GOAL.— 
(A) IN GENERAL.—Ginnie Mae shall en-
deavor to ensure that the Fund attains a re-
serve balance— 
(i) of 1.25 percent of the sum of the 
outstanding principal balance of the securi-
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(A) standardized mortgage-backed security 
insured under this Act; or 
(B) mortgage-backed security issued by the 
enterprises. 
(5) FULL FAITH AND CREDIT.—The full faith 
and credit of the United States is pledged to the 
payment of all amounts which may be required to be 
paid under any insurance provided under this sec-
tion. 
(6) PROHIBITIONS AND EXEMPTIONS.— 
(A) EXEMPTION FROM APPORTIONMENT.— 
Notwithstanding any other provision of law, 
amounts in the Fund shall not be subject to ap-
portionment for the purposes of chapter 15 of 
title 31, United States Code, or under any 
other authority. 
(B) NOT GOVERNMENT FUNDS.—Amounts 
in the Fund shall not be construed to be Gov-
ernment or public funds or appropriated money. 
SEC. 203. AUTHORITY TO PROTECT TAXPAYERS IN UN-
USUAL AND EXIGENT MARKET CONDITIONS. 
(a) IN GENERAL.—If Ginnie Mae, by a majority vote 
of its Board of Directors, or the Financial Stability Over-
sight Council (‘‘FSOC’’), by a majority vote of its voting 
members, determines that unusual and exigent cir-
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cumstances have created or threaten to create an anoma-
lous lack of mortgage credit availability within the single- 
family housing market, multifamily housing market, or en-
tire United States housing market that could materially 
and severely disrupt the functioning of the housing finance 
system of the United States, Ginnie Mae or the FSOC 
may, for as such time as either deems necessary— 
(1) modify or waive the reinsurance require-
ments under section 202(b); 
(2) establish provisional standards for approved 
entities; and 
(3) temporarily increase loan limits under sec-
tion 201(f). 
(b) CONSIDERATIONS.—In exercising the authority 
granted under subsection (a), Ginnie Mae and the FSOC 
shall consider the severity of the conditions present in the 
housing markets and the risks presented to the Fund in 
exercising such authority. 
(c) TERMS AND CONDITIONS.—Insurance provided 
under subsection (a) shall be subject to such additional 
or different limitations, restrictions, and regulations as 
Ginnie Mae or the FSOC may prescribe. 
(d) BAILOUT STRICTLY PROHIBITED.—In exercising 
the authority granted under subsection (a), Ginnie Mae 
and the FSOC may not— 
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(1) provide aid to an approved entity or an af-
filiate of the approved entity, if such approved entity 
is in bankruptcy or any other Federal or State insol-
vency proceeding; 
(2) provide aid for the purpose of assisting a 
single and specific company avoid bankruptcy or any 
other Federal or State insolvency proceeding; or 
(3) rescind any contracts entered into by Ginnie 
Mae or the FSOC. 
(e) NOTICE.—Not later than 7 days after authorizing 
insurance or establishing provisional standards under sub-
section (a), Ginnie Mae or the FSOC, as appropriate, shall 
submit to the Committee on Banking, Housing, and 
Urban Affairs of the Senate and the Committee on Finan-
cial Services of the House of Representatives a report that 
includes— 
(1) the justification for the exercise of authority 
to provide such insurance or establish such provi-
sional standards; 
(2) evidence that unusual and exigent cir-
cumstances have created or threatened to create an 
anomalous lack of mortgage credit availability within 
the single-family housing market, multifamily hous-
ing market, or entire United States housing market 
that could materially and severely disrupt the func-
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tioning of the housing finance system of the United 
States; and 
(3) evidence that failure to exercise such au-
thority would have undermined the safety and 
soundness of the housing finance system. 
(f) LIMITATION.—The authority granted to Ginnie 
Mae and the FSOC under this section may not be exer-
cised more than 3 times in any given 3-year period, which 
3-year period shall commence upon the initial exercise of 
authority under subsection (a). 
(g) NORMALIZATION AND REDUCTION OF RISK.— 
Following any exercise of authority under this section, 
Ginnie Mae and the FSOC shall— 
(1) establish a timeline for approved entities to 
meet the approval standards set forth in this Act; 
and 
(2) in a manner and pursuant to a timeline 
that will minimize losses to the Fund, establish a 
program to either— 
(A) sell, in whole or in part, the first loss 
position on securities described in this section 
to private market holders; or 
(B) transfer for value to approved entities, 
or work with approved entities to sell, in whole 
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or in part, the first lost position on securities 
described in this section. 
(h) AUTHORITY TO RESPOND TO SUSTAINED NA-
TIONAL HOME PRICE DECLINE.— 
(1) AUTHORITY.—In the event of a significant 
decline of national home prices, in at least 2 con-
secutive calendar quarters, Ginnie Mae or the FSOC 
may for a period of 6 months permit the transfer of 
guarantees of eligible mortgage loans that secure se-
curities issued under this Act if such eligible mort-
gage loans are refinanced, regardless of the value of 
the underlying collateral securing such eligible mort-
gage loans. 
(2) ADDITIONAL EXERCISE OF AUTHORITY.— 
The authority granted to Ginnie Mae and the FSOC 
under paragraph (1) may be exercised for additional 
6-month periods. 
(3) LIMITATION.—Ginnie Mae and the FSOC 
shall not provide insurance under this Act to any se-
curity issued under this Act that includes mortgage 
loans that do not meet the definition of an eligible 
mortgage loan, except for mortgage loans refinanced 
from eligible mortgage loans in securities issued 
under this Act. 
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103 
subsection shall limit or be construed to 
limit the ability of an Indian tribe or a 
tribally designated housing entity from 
being a permissible designated recipient of 
grant amounts provided by a State under 
this section.’’; 
(C) in paragraph (3)— 
(i) in the heading, by inserting ‘‘IN-
DIAN TRIBES AND’’ before ‘‘STATES’’; 
(ii) in subparagraph (A), by striking 
‘‘The Secretary shall’’ and insert the fol-
lowing: 
‘‘(i) 
MINIMUM
TRIBAL
DISTRIBU-
TIONS.— 
‘‘(I) IN
GENERAL.—The Sec-
retary, acting through the Office of 
Native American Programs, shall dis-
tribute via competitive grants the 
amounts determined under subclause 
(II) and made available under this 
subsection to federally recognized 
tribes and tribally designated housing 
entities. 
‘‘(II) 
AMOUNTS.—The 
total 
amount required to be distributed 
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