the mortgage are borne by State-licensed title insurance 
companies. 
(g) UNDERWRITING STANDARDS.—The regulations 
of the FHFA Board pursuant to subsection (a) shall pro-
vide that a mortgage shall not be considered a safe and 
sound mortgage unless such mortgage meets such under-
writing standards as the FHFA Board shall establish 
that— 
(1) promote transparency, uniformity, and con-
sumer protections; and 
(2) ensure a mortgagor’s ability to repay the 
mortgage obligation, including standards for deter-
mining mortgagors’ income, assets, liabilities, credit 
history, and credit risk. 
(h) PROPERTY VALUATION STANDARDS.—The regu-
lations of the FHFA Board pursuant to subsection (a) 
shall provide that a mortgage shall not be considered a 
safe and sound mortgage unless such mortgage meets the 
property valuation and appraisal standards under subpart 
E of part 226 of title 12, Code of Federal Regulations 
(Regulation Z). 
(i) PRICE LIMITATIONS.—The Facility shall ensure 
that prices to be paid by the Facility for residential mort-
gages purchased shall be based on market prices for the 
particular class of mortgages involved. 
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(j) SELLER APPROVAL.—The Facility may purchase 
residential mortgages meeting the requirements of this 
title only from sellers who have been approved by the Fa-
cility as meeting such standards for approval as the Facil-
ity Board shall establish, which shall include standards 
governing the following: 
(1) Care and due diligence in complying with 
the underwriting standards established pursuant to 
subsection (g). 
(2) Minimum capital to ensure the ability to 
perform under standard representations and warran-
ties. 
(3) Contractual obligations. 
(4) Representations and warranties pursuant to 
subsection (f). 
(5) Indemnification for losses. 
(6) Delivery of documents. 
(7) Ownership, establishment, maintenance, re-
taining, examination, and storage of mortgage 
records and information. 
(8) Fidelity bond and errors and omissions cov-
erage. 
(9) Capitalization, net worth, and liquidity. 
(10) Lending practices. 
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(k) SERVICING OF MORTGAGES.—This Act may not 
be construed to prohibit, or to authorize the Facility 
Board or the FHFA Board to prohibit, any approved sell-
er who sells a mortgage to the Facility from servicing such 
mortgage. 
SEC. 103. REDUCTION OF MARKET SHARE. 
(a) LIMITATIONS.—The FHFA Board shall, by regu-
lation, seek to ensure that the market share of the Facil-
ity, as defined by the FHFA Board, does not exceed ap-
proximately 50 percent of mortgage originations in the 
United States. 
(b) STANDARDS AND REQUIREMENTS.—The FHFA 
Board shall establish such standards and requirements re-
garding the maximum volume of purchases by the Facility. 
In establishing such standards, the FHFA Board shall 
seek to avoid excessive disruption to stability of the resi-
dential mortgage market. 
(c) SAFETY VALVE.—Notwithstanding any other pro-
vision of this section, the FHFA Board may provide, in 
a timely manner, for the temporary suspension or adjust-
ment of the limits under this section on the market share 
of the Facility, but only if the FHFA Board determines 
that the private market has significantly reduced partici-
pation in the residential mortgage markets, taking into 
consideration the yield spread between private label mort-
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gage-backed securities and mortgage-backed securities 
issued by the Facility and such other indicia as the FHFA 
Board considers appropriate. 
(d) CORRECTION PLAN.—If at any time the FHFA 
Board determines that the market share of the Facility 
exceeds the maximum market share permitted under this 
section, the FHFA Board shall require the Facility to es-
tablish and implement a plan that— 
(1) reduces such market share so that it com-
plies with the subsection (a)(1); 
(2) impacts all geographic regions of the coun-
try similarly; 
(3) restricts or prohibits the business of the Fa-
cility in mortgages that are used to prepay an exist-
ing loan secured by the same property as such mort-
gage; and 
(4) increases guarantee fees under section 105 
or reinsurance fees under section 106(a), or both. 
Such a plan shall seek to impact all lenders as equally 
as possible, taking into account each lender’s history re-
garding its share of activity in selling mortgages to the 
Facility. 
SEC. 104. CAPITAL STANDARDS. 
(a) IN GENERAL.—The FHFA Board shall, by regu-
lation, establish risk-based capital requirements for the 
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Facility to ensure that the Facility operates in a safe and 
sound manner, maintaining sufficient capital and reserves 
to support the risks that arise in operations and manage-
ment of the Facility. 
(b) FACTORS.—The capital requirements for the Fa-
cility shall— 
(1) be based on the risks specifically involved in 
the purchase and securitization of safe and sound 
mortgages, as such term is defined pursuant to sec-
tion 103(a); and 
(2) be based on actuarial loss rate history of 
mortgages having similar characteristics. 
SEC. 105. GUARANTEE FEES. 
(a) ESTABLISHMENT.—The Facility shall charge a 
guarantee fee under this section in connection with any 
purchase of residential mortgages from approved sellers 
and in connection with any guarantee issued by the Facil-
ity of timely payment of principal and interest on mort-
gage-backed securities, notes, and other obligations issued 
by the Facility. 
(b) AMOUNT.—Any guarantee fee under this section 
shall be in an amount that the Facility Board determines 
appropriate and reasonable, based on likelihood of loss for 
the particular type of product, to provide for operation of 
the Facility in accordance with this Act, except that such 
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fees may be increased to facilitate compliance with the 
market share limitations under section 103 or for such 
other purpose as the FHFA Board may approve. The 
FHFA Board may establish a minimum amount for the 
guarantee fee. 
(c) IMPERMISSIBLE CONSIDERATIONS.—Such fees 
shall be based on quality of mortgages and may not be 
based on or incorporate— 
(1) the geographic location of properties subject 
to mortgages backing or on which are based such se-
curities, notes, or other obligations; 
(2) the volume of mortgages sold to the Facility 
by an approved seller; or 
(3) any consideration of reducing the costs of 
homeownership. 
SEC. 106. FEDERAL INSURANCE BACKSTOP. 
(a) REINSURANCE FEES.— 
(1) IN
GENERAL.—The Facility shall collect 
and transfer to the Reinsurance Fund established 
under subsection (b), a reinsurance fee under this 
subsection in connection with any guarantee issued 
by the Facility of timely payment of principal and 
interest on mortgage-backed securities, notes, and 
other obligations issued by the Facility. 
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(2) AMOUNT.—The fee shall be established by 
the Facility Board in such amount as may be nec-
essary to cover obligations of the Facility under such 
guarantees to the extent the capital funds of the Fa-
cility cannot cover such obligations and shall be 
based on the outstanding mortgage exposure of the 
Facility. The FHFA Board may establish a min-
imum amount for the reinsurance fee. 
(b) REINSURANCE FUND.— 
(1) ESTABLISHMENT.—There is established in 
the Treasury of the United States a Reinsurance 
Fund for the Facility. 
(2) CREDITS.—The Reinsurance Fund shall be 
credited with— 
(A) all reinsurance fees collected by the 
Facility pursuant to subsection (a); 
(B) any amounts earned on investments of 
the Fund pursuant to paragraph (4); and 
(C) such other amounts as may be credited 
to the Fund, including amounts as may be re-
quired to be credited by the Secretary of the 
Treasury. 
(3) USE.—Amounts in the Reinsurance Fund 
shall be available, at the direction of FHFA Board, 
only for payment of obligations of the Facility under 
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guarantees issued by the Facility of timely payment 
of principal and interest on mortgage-backed securi-
ties, notes, and other obligations issued by the Facil-
ity and only to the extent that the FHFA Board de-
termines that the capital of the Facility is insuffi-
cient to cover such obligations. 
(4) INVESTMENTS.—The Secretary may invest 
such amounts as the Secretary considers advisable in 
obligations issued or guaranteed by the United 
States. 
SEC. 107. DEFICIT REDUCTION. 
Any receipts and earnings of the Facility in excess 
of amounts required to comply with the capital standards 
established pursuant to section 104, amounts required to 
be deposited in the Reinsurance Fund established under 
section 106(b), and amounts required for the repurchase 
of senior preferred stock of the enterprises issued pursu-
ant to the Senior Preferred Stock Purchase Agreements 
entered into between the Department of the Treasury and 
the enterprises in September 2008 (as such Agreement 
may be amended and restated), shall be transferred into 
the General Fund of the Treasury and used to reduce the 
budget deficit of the Federal Government. 
SEC. 108. PORTFOLIO REDUCTION. 
(a) LIMITATION.— 
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(1) IN GENERAL.—The Facility may not own 
mortgage assets in excess of $250,000,000,000, as 
such amount shall be adjusted by the FHFA Board, 
effective January 1 of each year beginning after the 
date of the enactment of this Act, in accordance 
with an appropriate inflationary index, as deter-
mined by the FHFA Board. The FHFA Board shall 
cause notice of each such adjustment to be published 
promptly in the Federal Register. 
(2) DEFINITION.—For purposes of this section, 
the term ‘‘mortgage assets’’ means, with respect to 
the Facility, assets of the Facility consisting of 
mortgages, mortgage loans, mortgage-related securi-
ties, participation certificates, mortgage-backed com-
mercial paper, obligations of real estate mortgage in-
vestment conduits and similar assets, in each case to 
the extent such assets would appear on the balance 
sheet of the Facility. 
(b) USE.—Mortgage assets owned by the Facility 
shall be available for use— 
(1) to support multifamily housing and residen-
tial mortgages that cannot readily be securitized; 
(2) to provide financing to support residential 
mortgage markets affected by economic downturns; 
and 
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(3) to modify delinquent mortgages that are 
purchased from pools of mortgages backing or on 
which are based mortgage-backed securities issued 
and guaranteed by the Facility. 
(c) MONITORING.—The FHFA Board shall monitor 
the mortgage assets owned by the Facility to ensure com-
pliance with this section. 
(d) SAFETY
VALVE.—Notwithstanding subsection 
(a), the FHFA Board may provide for the temporary in-
crease in the limitation under subsection (a) on mortgage 
assets owned by the Facility if the FHFA Board deter-
mines that the there has been a substantial reduction in 
the availability of private residential mortgage financing, 
taking into consideration such indicia as the FHFA Board 
considers appropriate. 
SEC. 109. INITIAL STANDARDS. 
Not later than the expiration of the 6-month period 
beginning upon the appointment of all initial members of 
the FHFA Board pursuant to section 301(b) the FHFA 
Board shall issue such regulations, guidelines, orders, re-
quirements, and standards pursuant to section 1396C of 
the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992 (as added by section 302 of this 
Act) as may be required under this title for the establish-
ment and operation of the Facility. 
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member to serve as Acting Chairperson during the absence 
or disability of the Chairperson. 
‘‘(e) TERM; REMOVAL.—Each member of the FHFA 
Board shall be appointed for a term of 5 years, and may 
be removed by the President only for cause. 
‘‘(f) VACANCIES.—A member of the FHFA Board 
appointed to fill a vacancy occurring before the expiration 
of the term for which the member’s predecessor was ap-
pointed shall be appointed only for the remainder of that 
term. 
‘‘(g) CONTINUATION OF MEMBERSHIP.—A member 
of the FHFA Board may serve after the expiration of the 
member’s term until a successor has been appointed. 
‘‘(h) COMPENSATION.—Members of the FHFA 
Board shall each receive compensation at the rate pre-
scribed for level III of the Executive Schedule under sec-
tion 5314 of title 5, United States Code. 
‘‘(i) MEETINGS.—The FHFA Board shall meet upon 
notice by the Chairperson, but in no event shall the FHFA 
Board meet less frequently than once every 2 months. Any 
member of the FHA Board may, upon giving written no-
tice to the Chairperson, require a special meeting of the 
FHFA Board, which shall be convened by the Chairperson 
within 30 days after such notice. 
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