I 
115TH CONGRESS 
2D SESSION 
H. R. 6746 
To protect American taxpayers and homeowners by creating a sustainable 
housing finance system for the 21st century, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 7, 2018 
Mr. HENSARLING introduced the following bill; which was referred to the 
Committee on Financial Services, and in addition to the Committee on 
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 concerned 
A BILL 
To protect American taxpayers and homeowners by creating 
a sustainable housing finance system for the 21st cen-
tury, 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; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Protecting American Taxpayers and Homeowners Act of 
2018’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
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Sec. 1. Short title; table of contents. 
TITLE I—WIND-DOWN OF FANNIE MAE AND FREDDIE MAC 
Sec. 101. Definitions. 
Sec. 102. Termination of current conservatorship; mandatory receivership. 
Sec. 103. Limitations on enterprise authority. 
Sec. 104. Modifications to increases in conforming loan limits. 
Sec. 105. Mandatory risk-sharing. 
Sec. 106. Limitation of enterprise mortgage purchases to qualified mortgages. 
Sec. 107. Prohibition relating to use of power of eminent domain. 
Sec. 108. Receiver’s discretionary authority to create receivership entity. 
Sec. 109. Authority of receiver to repeal enterprise charter. 
TITLE II—FHA REFORM 
Subtitle A—Business Authority and Requirements 
Sec. 201. Authority to carry out FHA and other business. 
Sec. 202. Eligible single-family mortgages. 
Sec. 203. Risk transfer. 
Sec. 204. Premiums. 
Sec. 205. Affordability requirements for multifamily mortgage insurance. 
Sec. 206. Effective date. 
Subtitle B—Financial Safety and Soundness 
Sec. 211. Authority of Director. 
Sec. 212. Budgets and business plans. 
Sec. 213. Annual business plan. 
Sec. 214. Examinations, reports, and cost estimates. 
Sec. 215. Reimbursement of costs. 
Sec. 216. Mutual Mortgage Insurance Fund capital reserve. 
Sec. 217. Capital classifications and performance measures for Mutual Mort-
gage Insurance Fund. 
Sec. 218. Enforcement. 
Sec. 219. Capital reserve requirements for other funds. 
Sec. 220. Authority to establish temporary capital ratios in cases of nationwide 
countercyclical market adjustment. 
Sec. 221. 7-year borrower suspension for foreclosure. 
Sec. 222. Borrower ineligibility upon second foreclosure. 
Sec. 223. Limitation on seller concessions. 
Sec. 224. Lender repurchase requirement. 
Sec. 225. Indemnification by mortgagees. 
Sec. 226. Prohibitions relating to use of power of eminent domain. 
Sec. 227. Residual income requirement. 
Sec. 228. Effective date. 
Subtitle C—Miscellaneous 
Sec. 241. Rule of construction. 
Sec. 242. Definitions. 
TITLE III—DEVELOPMENT AND DEPLOYMENT OF A MORTGAGE 
SECURITY MARKET EXCHANGE, DATA REPOSITORY, AND COV-
ERED BOND MARKET 
Sec. 301. Purposes. 
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Sec. 302. Definitions. 
Subtitle A—Establishment and Authority of the Exchange 
Sec. 311. Establishment. 
Sec. 312. General powers; authorized and prohibited activities. 
Sec. 313. Mission and structure of Common Securitization Solutions. 
Sec. 314. Transition period. 
Sec. 315. Transfer date. 
Sec. 316. Repayment of cost. 
Sec. 317. Regulation, supervision, and enforcement. 
Subtitle B—Standards for Qualified Securities 
Sec. 321. Qualified securities. 
Sec. 322. Standards for qualified securities. 
Sec. 323. Conforming amendments to Securities Act of 1933. 
Subtitle C—National Mortgage Data Repository 
Sec. 331. Organization and operation. 
Sec. 332. Legal effect of registration with Repository. 
Sec. 333. Grants to States; repayment. 
Sec. 334. Judicial review. 
Sec. 335. Transition provisions. 
Subtitle D—Covered Bonds 
Sec. 341. Definitions. 
Sec. 342. Regulatory oversight of covered bond programs established. 
Sec. 343. Resolution upon default or insolvency. 
Sec. 344. Securities law provisions. 
Sec. 345. Miscellaneous provisions. 
TITLE IV—REMOVING BARRIERS TO NEW INVESTMENT 
Sec. 401. Basel III Liquidity Coverage Ratio amendments. 
Sec. 402. Definition of points and fees. 
Sec. 403. Exclusion of issuers of asset-backed securities from covered funds. 
Sec. 404. Mortgages in qualified securities. 
Sec. 405. Mortgage loans held in portfolio. 
Sec. 406. Repeal of certain mortgage-related provisions. 
Sec. 407. Amendments to the Truth in Lending Act. 
Sec. 408. Financial Institutions Examination Fairness and Reform. 
Sec. 409. Notice of junior mortgage or lien. 
Sec. 410. Limitation on mortgages held by loan servicers. 
TITLE V—REGULATORY STRUCTURE 
Subtitle A—Ginnie Mae 
Sec. 501. Removal from HUD; establishment as independent entity. 
Sec. 502. Guarantee fees. 
Subtitle B—FHA 
Sec. 511. Definitions. 
PART 1—ORGANIZATION 
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Sec. 521. Establishment. 
Sec. 522. Purposes. 
Sec. 523. General powers. 
Sec. 524. Board of Directors. 
Sec. 525. Officers and personnel. 
Sec. 526. Financial, underwriting, and operations systems. 
Sec. 527. Procurement. 
Sec. 528. Applicability of laws. 
Sec. 529. Evaluation. 
Sec. 530. Funding. 
PART 2—AUTHORITY OVER RURAL HOUSING PROGRAMS OF DEPARTMENT 
OF AGRICULTURE 
Sec. 541. Authority over Rural Housing Service programs. 
Sec. 542. Termination of Secretary of Agriculture’s rural housing authority. 
Sec. 543. Continuation of Obligations. 
Sec. 544. Status of employees. 
PART 3—TRANSITION 
Sec. 551. Transition period. 
Sec. 552. Authority during transition period. 
Sec. 553. Advisory Board. 
Sec. 554. Transfer of HUD authority. 
Sec. 555. Wind-up of HUD affairs. 
Sec. 556. Continuation and coordination of certain actions. 
Sec. 557. Transfer and rights of HUD employees. 
Sec. 558. Transfer of property and facilities. 
Sec. 559. Effective Date. 
TITLE VI—MISCELLANEOUS PROVISIONS 
Sec. 601. Preservation of attorney-client privilege for information provided to 
FHFA. 
Sec. 602. FHFA Liaison Membership in Federal Financial Institutions Exam-
ination Council. 
Sec. 603. Recognition of FHFA enforcement authority with regard to regulated 
entities. 
Sec. 604. Exception from Right to Financial Privacy Act for FHFA as conser-
vator or receiver. 
Sec. 605. Technical amendment to Federal Housing Enterprises Financial 
Safety and Soundness Act of 1992. 
Sec. 606. Application of presumption to enterprise streamlined refinancings. 
Sec. 607. FHFA authority to regulate and examine contractual counterparties. 
Sec. 608. Election of directors of a merged Federal Home Loan Bank. 
Sec. 609. Home equity conversion mortgage program. 
Sec. 610. FHA-related conforming amendments. 
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TITLE I—WIND-DOWN OF FANNIE 
MAE AND FREDDIE MAC 
SEC. 101. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply: 
(1) CHARTER.—The term ‘‘charter’’ means— 
(A) with respect to the Federal National 
Mortgage Association, the Federal National 
Mortgage Association Charter Act (12 U.S.C. 
1716 et seq.); and 
(B) with respect to the Federal Home 
Loan Mortgage Corporation, the Federal Home 
Loan Mortgage Corporation Act (12 U.S.C. 
1451 et seq.). 
(2) DIRECTOR.—The term ‘‘Director’’ means 
the Director of the Federal Housing Finance Agen-
cy. 
(3) 
ENTERPRISE.—The 
term 
‘‘enterprise’’ 
means— 
(A) the Federal National Mortgage Asso-
ciation; and 
(B) the Federal Home Loan Mortgage 
Corporation. 
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SEC. 102. TERMINATION OF CURRENT CONSERVATORSHIP; 
MANDATORY RECEIVERSHIP. 
Upon the expiration of the 5-year period beginning 
upon the date of the enactment of this Act, the Director 
shall, with respect to each enterprise, immediately appoint 
the Federal Housing Finance Agency as receiver under 
section 1367 of the Federal Housing Enterprises Finan-
cial Safety and Soundness Act of 1992 and carry out such 
receivership under the authority of such section. 
SEC. 103. LIMITATIONS ON ENTERPRISE AUTHORITY. 
(a) PORTFOLIO LIMITATIONS.—Subtitle B of title 
XIII of the Housing and Community Development Act of 
1992 (12 U.S.C. 4611 et seq.) is amended by adding at 
the end the following new section: 
‘‘SEC. 1369F. RESTRICTION ON MORTGAGE ASSETS OF EN-
TERPRISES. 
‘‘(a) RESTRICTION.—No enterprise shall own, at any 
time, mortgage assets in excess of $250,000,000,000. 
‘‘(b) DEFINITION OF MORTGAGE ASSETS.—For pur-
poses of this section, the term ‘mortgage assets’ means, 
with respect to an enterprise, assets of such enterprise 
consisting of mortgages, mortgage loans, mortgage-related 
securities, participation certificates, mortgage-backed 
commercial 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 
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such enterprise in accordance with generally accepted ac-
counting principles in effect in the United States as of 
September 7, 2008 (as set forth in the opinions and pro-
nouncements of the Accounting Principles Board and the 
American Institute of Certified Public Accountants and 
statements and pronouncements of the Financial Account-
ing Standards Board from time to time; and without giv-
ing any effect to any change that may be made after Sep-
tember 7, 2008, in respect of Statement of Financial Ac-
counting Standards No. 140 or any similar accounting 
standard).’’. 
(b) EQUITABILITY IN GUARANTEE FEES.—Section 
1327 of Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (12 U.S.C. 4547) is amended 
by adding at the end the following new subsection: 
‘‘(f) EQUITABILITY IN GUARANTEE FEES.— 
‘‘(1) 
REQUIREMENT.—Notwithstanding 
any 
other provision of this section, the Director shall en-
sure, pursuant to the annual review conducted under 
paragraph (2), that each enterprise charges a guar-
antee fee, in connection with any mortgage guaran-
teed after the date of the enactment of the Pro-
tecting American Taxpayers and Homeowners Act of 
2018, in an amount that the Director determines is 
equivalent to the amount that the enterprise would 
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charge if the enterprise were held to the same cap-
ital standards as private banks or financial institu-
tions. 
‘‘(2) ANNUAL DETERMINATION.—Not less often 
than annually, the Director shall review the guar-
antee fees charged by each enterprise and determine 
how such fees compare to the amount determined by 
the Director under paragraph (1). If the Director 
determines that such fees charged by an enterprise 
are less than such amount, the Director shall, by 
order, require the enterprise to increase such fees in 
such amount as the Director determines necessary to 
comply with paragraph (1). 
‘‘(3) FLEXIBILITY IN DETERMINATION OF IN-
CREASE.—To determine the amount of any increase 
under this subsection, the Director shall establish a 
pricing mechanism as the Director considers appro-
priate, taking into consideration current market con-
ditions, including the current market share of an en-
terprise, and any data collected pursuant to section 
1601 of the Housing and Economic Recovery Act of 
2008 (12 U.S.C. 4514a).’’. 
(c) REPEAL
OF
MANDATORY
HOUSING
ACTIVI-
TIES.— 
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(1) REPEAL OF HOUSING GOALS.—The Federal 
Housing Enterprises Financial Safety and Sound-
ness 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— 
(A) in section 1303(28) (12 U.S.C. 
4502(28)), by striking ‘‘, and, for the purposes’’ 
and all that follows through ‘‘designated dis-
aster areas’’; 
(B) in section 1324(b)(1)(A) (12 U.S.C. 
4544(b)(1)(A)), by striking clauses (i), (ii), and 
(iv); 
(C) 
in 
section 
1339(h) 
(12 
U.S.C. 
4569(h)), by striking paragraph (7); 
(D) in section 1341 (12 U.S.C. 4581)— 
(i) in subsection (a)— 
(I) in paragraph (1), by inserting 
‘‘or’’ after the semicolon at the end; 
(II) in paragraph (2), by striking 
the semicolon at the end and inserting 
a period; and 
(III) by striking paragraphs (3) 
and (4); and 
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of 1992 is amended by striking sections 1337 
and 1338 (12 U.S.C. 4567, 4568). 
(B) 
CONFORMING
AMENDMENTS.—The 
Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 is amended— 
(i) in section 1303(24)(B) (12 U.S.C. 
4502(24)(B)), by striking ‘‘1338 and’’; 
(ii) in section 1324(b)(1)(A) (12 
U.S.C. 4544(b)(1)(A)), as amended by the 
preceding provisions of this Act— 
(I) by striking clause (iii); 
(II) by striking the dash after 
‘‘which’’ and inserting the text of 
clause (v) and a period; and 
(III) by striking clause (v); 
(iii) in section 1339(b)— 
(I) by striking paragraph (1); 
(II) by striking the dash after 
‘‘consist of’’ and inserting the text of 
paragraph (2) and a period; and 
(III) by striking paragraph (2); 
and 
(iv) in section 1345 (12 U.S.C. 4585), 
by striking subsection (f). 
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SEC. 104. MODIFICATIONS TO INCREASES IN CONFORMING 
LOAN LIMITS. 
(a) FANNIE MAE.—Section 302(b)(2) of the Federal 
National Mortgage Association Charter Act (12 U.S.C. 
1717(b)(2)) is amended— 
(1) in the 8th sentence— 
(A) in inserting ‘‘or subtracting from’’ 
after ‘‘adding to’’; and 
(B) by inserting ‘‘or decrease, respectively’’ 
before the first comma; 
(2) by striking the 9th and 10th sentences; 
(3) by striking the last sentence; 
(4) by inserting ‘‘(A)’’ after the paragraph des-
ignation; and 
(5) by adding at the end the following new sub-
paragraph: 
‘‘(B) HIGH-COST AREAS.— 
‘‘(i) MAXIMUM
ORIGINAL
PRINCIPAL
LIMITA-
TION.—Subject to clause (ii), the limitations estab-
lished pursuant to subparagraph (A) shall also be in-
creased, with respect to properties of a particular 
size located in any area for which 115 percent of the 
median house price for such size residence exceeds 
the limitation under subparagraph (A) for such size 
residence, to the lesser of— 
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‘‘(I)(aa) for the first year beginning after 
the date of the enactment of the Protecting 
American Taxpayers and Homeowners Act of 
2018, the difference between— 
‘‘(AA) 150 percent of the limitation 
under subparagraph (A) for such size resi-
dence; and 
‘‘(BB) $20,000 in the case of a 1- 
family residence, $25,604 in the case of a 
2-family residence, $30,950 in the case of 
a 3-family residence, and $38,463 in the 
case of a 4-family residence; 
‘‘(bb) for the second year beginning after 
the date of the enactment of the Protecting 
American Taxpayers and Homeowners Act of 
2018, the difference between— 
‘‘(AA) 150 percent of the limitation 
under subparagraph (A) for such size resi-
dence; and 
‘‘(BB) $40,000 in the case of a 1- 
family residence, $51,208 in the case of a 
2-family residence, $61,900 in the case of 
a 3-family residence, and $76,926 in the 
case of a 4-family residence; 
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‘‘(cc) for the third year beginning after the 
date of the enactment of the Protecting Amer-
ican Taxpayers and Homeowners Act of 2018, 
the difference between— 
‘‘(AA) 150 percent of the limitation 
under subparagraph (A) for such size resi-
dence; and 
‘‘(BB) $60,000 in the case of a 1- 
family residence, $76,812 in the case of a 
2-family residence, $92,850 in the case of 
a 3-family residence, and $103,389 in the 
case of a 4-family residence; 
‘‘(dd) for the fourth year beginning after 
the date of the enactment of the Protecting 
American Taxpayers and Homeowners Act of 
2018, the difference between— 
‘‘(AA) 150 percent of the limitation 
under subparagraph (A) for such size resi-
dence; and 
‘‘(BB) $80,000 in the case of a 1- 
family residence, $102,416 in the case of a 
2-family residence, $123,800 in the case of 
a 3-family residence, and $153,852 in the 
case of a 4-family residence; and 
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creased, with respect to properties of a particular 
size located in any area for which 115 percent of the 
median house price for such size residence exceeds 
the limitation under subparagraph (A) for such size 
residence, to the lesser of— 
‘‘(I)(aa) for the first year beginning after 
the date of the enactment of the Protecting 
American Taxpayers and Homeowners Act of 
2018, the difference between— 
‘‘(AA) 150 percent of the limitation 
under subparagraph (A) for such size resi-
dence; and 
‘‘(BB) $20,000 in the case of a 1- 
family residence, $25,604 in the case of a 
2-family residence, $30,950 in the case of 
a 3-family residence, and $38,463 in the 
case of a 4-family residence; 
‘‘(bb) for the second year beginning after 
the date of the enactment of the Protecting 
American Taxpayers and Homeowners Act of 
2018, the difference between— 
‘‘(AA) 150 percent of the limitation 
under subparagraph (A) for such size resi-
dence; and 
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‘‘(BB) $40,000 in the case of a 1- 
family residence, $51,208 in the case of a 
2-family residence, $61,900 in the case of 
a 3-family residence, and $76,926 in the 
case of a 4-family residence; 
‘‘(cc) for the third year beginning after the 
date of the enactment of the Protecting Amer-
ican Taxpayers and Homeowners Act of 2018, 
the difference between— 
‘‘(AA) 150 percent of the limitation 
under subparagraph (A) for such size resi-
dence; and 
‘‘(BB) $60,000 in the case of a 1- 
family residence, $76,812 in the case of a 
2-family residence, $92,850 in the case of 
a 3-family residence, and $103,389 in the 
case of a 4-family residence; 
‘‘(dd) for the fourth year beginning after 
the date of the enactment of the Protecting 
American Taxpayers and Homeowners Act of 
2018, the difference between— 
‘‘(AA) 150 percent of the limitation 
under subparagraph (A) for such size resi-
dence; and 
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‘‘(BB) $80,000 in the case of a 1- 
family residence, $102,416 in the case of a 
2-family residence, $123,800 in the case of 
a 3-family residence, and $153,852 in the 
case of a 4-family residence; and 
‘‘(ee) for the fifth year beginning after the 
date of the enactment of the Protecting Amer-
ican Taxpayers and Homeowners Act of 2018, 
the difference between— 
‘‘(AA) 150 percent of the limitation 
under subparagraph (A) for such size resi-
dence; and 
‘‘(BB) $100,000 in the case of a 1- 
family residence, $128,020 in the case of a 
2-family residence, $154,750 in the case of 
a 3-family residence, and $192,315 in the 
case of a 4-family residence; 
‘‘(II) the amount that is equal to 115 per-
cent of the median house price in such area for 
such size residence; or 
‘‘(III) the limitation in effect for such size 
residence for such area, pursuant to the last 
sentence of this paragraph as in effect imme-
diately before the enactment of the Protecting 
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American Taxpayers and Homeowners Act of 
2018, as of the date of such enactment. 
‘‘(ii) 
PROHIBITION
ON
NEW
HIGH-COST 
AREAS.—The limitations established pursuant to 
subparagraph (A) may not be increased, with respect 
to properties of any size located in a particular area 
unless, as of the date of the enactment of the Pro-
tecting American Taxpayers and Homeowners Act of 
2018, such foregoing limitations in effect for such 
area for any size residence were determined under 
the authority provided in the last sentence of this 
paragraph, as in effect immediately before such en-
actment.’’. 
SEC. 105. MANDATORY RISK-SHARING. 
Subpart A of part 2 of subtitle A of the Federal 
Housing Enterprises Financial Safety and Soundness Act 
of 1992 is amended by adding after section 1327 (12 
U.S.C. 4547) the following new section: 
‘‘SEC. 1328. MANDATORY RISK-SHARING TRANSACTIONS. 
‘‘(a) IN GENERAL.—The Director shall require each 
enterprise to develop and undertake transactions involving 
the guarantee by the enterprises of securities and obliga-
tions based on or backed by mortgages on residential real 
properties designed principally for occupancy of from 1 to 
4 families that provide for private market participants to 
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share or assume credit risk associated with such mort-
gages, as follows: 
‘‘(1) REQUIRED PERCENTAGE OF BUSINESS.— 
The Director shall require that not less than 10 per-
cent of the annual business of each enterprise (as 
measured in such manner as the Director shall de-
termine) in guaranteeing such securities and obliga-
tions involve such transactions. 
‘‘(2) MULTIPLE
TYPES
OF
TRANSACTIONS.— 
The Director shall require that in complying with 
paragraph (1), each enterprise undertake multiple 
types of the various transactions and structures de-
scribed in subsection (b). 
‘‘(b) TYPES OF TRANSACTIONS.—The risk-sharing 
transactions referred to in subsection (a) may include 
transactions involving increased mortgage insurance re-
quirements, credit-linked notes and securities, senior and 
subordinated security structures, and such other struc-
tures and transactions as the Director considers appro-
priate to increase private market assumption of credit 
risk.’’. 
SEC. 106. LIMITATION OF ENTERPRISE MORTGAGE PUR-
CHASES TO QUALIFIED MORTGAGES. 
(a) FANNIE MAE.—Section 302(b) of the Federal 
National Mortgage Association Charter Act (12 U.S.C. 
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1717(b)) is amended by adding at the end the following 
new paragraph: 
‘‘(7) Effective for mortgages with application dates 
on or after January 10, 2019, the corporation may only 
purchase, make commitments to purchase, service, sell, 
lend on the security of, or otherwise deal in a mortgage 
that is a qualified mortgage (as such term is defined in 
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)), in accordance with the regulations issued by 
the Bureau of Consumer Financial Protection to carry out 
such section.’’. 
(b) FREDDIE MAC.—Section 305(a) of the Federal 
Home Loan Mortgage Corporation Act (12 U.S.C. 
1454(a)) is amended by adding at the end the following 
new paragraph: 
‘‘(6) Effective for mortgages with application dates 
on or after January 10, 2019, the Corporation may only 
purchase, make commitments to purchase, service, sell, 
lend on the security of, or otherwise deal in a mortgage 
that is a qualified mortgage (as such term is defined in 
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 
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Stat. 2145)), in accordance with the regulations issued by 
the Bureau of Consumer Financial Protection to carry out 
such section.’’. 
SEC. 107. PROHIBITION RELATING TO USE OF POWER OF 
EMINENT DOMAIN. 
(a) FANNIE MAE.—Subsection (b) of section 302 of 
the Federal National Mortgage Association Charter Act 
(12 U.S.C. 1717(b)) is amended by adding at the end the 
following new paragraph: 
‘‘(7)(A) Notwithstanding any other provision of law, 
the corporation may not purchase or guarantee any mort-
gage that is secured by a structure or dwelling unit that 
is located within a county that contains any structure or 
dwelling unit that secures or secured a residential mort-
gage loan which mortgage loan was obtained by the State 
during the preceding 120 months by exercise of the power 
of eminent domain. 
‘‘(B) For purposes of this paragraph, the following 
definitions shall apply: 
‘‘(i) The term ‘residential mortgage loan’ means 
a mortgage loan that is evidenced by a promissory 
note and secured by a mortgage, deed of trust, or 
other security instrument on a residential structure 
or a dwelling unit in a residential structure. Such 
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term includes a first mortgage loan or any subordi-
nate mortgage loan. 
‘‘(ii) The term ‘State’ includes the District of 
Columbia, the Commonwealth of Puerto Rico, and 
any territory or possession of the United States, and 
includes any agency or political subdivision of a 
State.’’. 
(b) FREDDIE MAC.—Subsection (a) of section 305 of 
the Federal Home Loan Mortgage Corporation Act (12 
U.S.C. 1454(a)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6)(A) Notwithstanding any other provision of law, 
the Corporation may not purchase or guarantee any mort-
gage that is secured by a structure or dwelling unit that 
is located within a county that contains any structure or 
dwelling unit that secures or secured a residential mort-
gage loan which mortgage loan was obtained by the State 
during the preceding 120 months by exercise of the power 
of eminent domain. 
‘‘(B) For purposes of this paragraph, the following 
definitions shall apply: 
‘‘(i) The term ‘residential mortgage loan’ means 
a mortgage loan that is evidenced by a promissory 
note and secured by a mortgage, deed of trust, or 
other security instrument on a residential structure 
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or a dwelling unit in a residential structure. Such 
term includes a first mortgage or any subordinate 
mortgage. 
‘‘(ii) The term ‘State’ includes the District of 
Columbia, the Commonwealth of Puerto Rico, and 
any territory or possession of the United States, and 
includes any agency or political subdivision of a 
State.’’. 
SEC. 108. RECEIVER’S DISCRETIONARY AUTHORITY TO 
CREATE RECEIVERSHIP ENTITY. 
Section 1367 of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992 (12 U.S.C. 
4617) is amended by striking subsection (i) and inserting 
the following: 
‘‘(i) RECEIVERSHIP ENTITY.— 
‘‘(1) AUTHORITY; ORGANIZATION.—The Agen-
cy, as receiver appointed pursuant to subsection (a), 
may establish a receivership entity in such form or 
structure as the Agency deems appropriate to meet 
the purposes of receivership and this section. 
‘‘(2) POWERS.—Upon creation of such receiver-
ship entity, the Agency may transfer to it any assets 
or liabilities of the regulated entity in default as the 
Agency, in its discretion, determines to be appro-
priate, and may authorize the receivership entity to 
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perform any temporary function that the Agency, in 
its discretion, prescribes in accordance with this sec-
tion. The transfer of any assets or liabilities of a 
regulated entity for which the Agency has been ap-
pointed receiver shall be effective without any fur-
ther approval under Federal or State law, assign-
ment, or consent with respect thereto. Such author-
ity is in addition to any other power the Agency may 
have as receiver or may confer on the receivership 
entity. 
‘‘(3) EXEMPTION
FROM
TAXATION.—Notwith-
standing any other provision of Federal or State 
law, any receivership entity established by the Agen-
cy pursuant to this section, its franchise, property 
and income, shall be exempt from all taxation now 
or hereafter imposed by the United States, by any 
territory, dependency, or possession thereof, or by 
any State, county, municipality, or local taxing au-
thority. 
‘‘(4) REGULATIONS.—The Agency may promul-
gate such regulations as the Agency determines to 
be necessary or appropriate to implement this sub-
section. 
‘‘(5) NO FEDERAL STATUS.—A receivership en-
tity established pursuant to this section shall not be 
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an agency, establishment, or instrumentality of the 
United States.’’. 
SEC. 109. AUTHORITY OF RECEIVER TO REPEAL ENTER-
PRISE CHARTER. 
Section 1367 of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992 (12 U.S.C. 
4617) is amended by striking subsection (k) and inserting 
the following new subsection: 
‘‘(k) REPEAL OF ENTERPRISE CHARTERS.— 
‘‘(1) FANNIE MAE.—Effective five years after 
the date of the enactment of the Protecting Amer-
ican Taxpayers and Homeowners Act of 2018, the 
charter of the Federal National Mortgage Associa-
tion is repealed and the Federal National Mortgage 
Association shall have no authority to conduct new 
business under such charter, except that the provi-
sions of such charter in effect immediately before 
such repeal shall continue to apply with respect to 
the rights and obligations of any holders of— 
‘‘(A) outstanding debt obligations of the 
Federal National Mortgage Association, includ-
ing any— 
‘‘(i) bonds, debentures, notes, or other 
similar instruments; 
‘‘(ii) capital lease obligations; or 
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‘‘(iii) obligations in respect of letters 
of credit, bankers’ acceptances, or other 
similar instruments; or 
‘‘(B) mortgage-backed securities guaran-
teed by the Federal National Mortgage Associa-
tion. 
‘‘(2) FREDDIE MAC.—Effective five years after 
the date of the enactment of the Protecting Amer-
ican Taxpayers and Homeowners Act of 2018, the 
charter of the Federal Home Loan Mortgage Cor-
poration is repealed and the Federal Home Loan 
Mortgage Corporation shall have no authority to 
conduct new business under such charter, except 
that the provisions of such charter in effect imme-
diately before such repeal shall continue to apply 
with respect to the rights and obligations of any 
holders of— 
‘‘(A) outstanding debt obligations of the 
Federal Home Loan Mortgage Corporation, in-
cluding any— 
‘‘(i) bonds, debentures, notes, or other 
similar instruments; 
‘‘(ii) capital lease obligations; or 
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‘‘(iii) obligations in respect of letters 
of credit, bankers’ acceptances, or other 
similar instruments; or 
‘‘(B) mortgage-backed securities guaran-
teed by the Federal Home Loan Mortgage Cor-
poration. 
‘‘(3) EXISTING GUARANTEE OBLIGATIONS.— 
‘‘(A) EXPLICIT
GUARANTEE.—The full 
faith and credit of the United States is pledged 
to the payment of all amounts which may be re-
quired to be paid under any obligation de-
scribed in paragraph (1) or (2). 
‘‘(B) CONTINUED DIVIDEND PAYMENTS.— 
Notwithstanding any other provision of law, 
provision 2(a) (relating to Dividend Payment 
Dates and Dividend Periods) and provision 2(c) 
(relating to Dividend Rates and Dividend 
Amount) of the Senior Preferred Stock Pur-
chase Agreement, or any provision of any cer-
tificate in connection with such Agreement cre-
ating or designating the terms, powers, pref-
erences, privileges, limitations, or any other 
conditions of the Variable Liquidation Pref-
erence Senior Preferred Stock of an enterprise 
issued pursuant to such Agreement— 
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‘‘(i) shall not be amended, restated, or 
otherwise changed to reduce the rate or 
amount of dividends in effect pursuant to 
such Agreement as of the Letter Agree-
ments between the Secretary of the Treas-
ury and the conservator of the enterprises 
dated December 21, 2017, except that any 
amendment to such Agreement to facilitate 
the sale of assets of the enterprises shall 
be permitted; and 
‘‘(ii) shall remain in effect until the 
guarantee 
obligations 
described 
under 
paragraphs (1)(B) and (2)(B) of this sub-
section are fully extinguished. 
‘‘(C) APPLICABILITY.—All guarantee fee 
amounts derived from the single-family mort-
gage guarantee business of the enterprises in 
existence as of five years after the date of the 
enactment of the Protecting American Tax-
payers and Homeowners Act of 2018 shall be 
deposited into the United States Treasury, for 
purposes of deficit reduction. 
‘‘(D) SENIOR
PREFERRED
STOCK
PUR-
CHASE
AGREEMENT
DEFINED.—For purposes 
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of this paragraph, the term ‘Senior Preferred 
Stock Purchase Agreement’ means— 
‘‘(i) the Amended and Restated Senior 
Preferred 
Stock 
Purchase 
Agreement, 
dated September 26, 2008, as such Agree-
ment has been amended on May 6, 2009, 
December 24, 2009, and August 17, 2012, 
respectively, as such Agreement has been 
modified by the Letter Agreements be-
tween the Secretary of the Treasury and 
the conservator of the enterprises dated 
December 21, 2017, and as such Agree-
ment may be further amended and re-
stated, entered into between the Depart-
ment of the Treasury and each enterprise, 
as applicable; and 
‘‘(ii) any provision of any certificate in 
connection with such Agreement creating 
or designating the terms, powers, pref-
erences, privileges, limitations, or any 
other conditions of the Variable Liquida-
tion Preference Senior Preferred Stock of 
an enterprise issued or sold pursuant to 
such Agreement.’’. 
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TITLE II—FHA REFORM 
Subtitle A—Business Authority and 
Requirements 
SEC. 201. AUTHORITY TO CARRY OUT FHA AND OTHER 
BUSINESS. 
(a) IN GENERAL.—After the expiration of the transi-
tion period under section 551— 
(1) the FHA may exercise (in addition to pow-
ers set forth in section 552) any authority and un-
dertake any responsibilities of the Secretary of 
Housing and Urban Development under the Na-
tional Housing Act (as amended by this title) relat-
ing to mortgage insurance, except as otherwise pro-
vided in this title and except that any authority that 
requires an appropriation may be conducted only to 
the extent that amounts are so appropriated; 
(2) any amounts in the Mutual Mortgage Insur-
ance Fund under section 202(a) of the National 
Housing Act (12 U.S.C. 1708(a)), any amounts in 
the General Insurance Fund and Special Risk Insur-
ance Fund under sections 519 and 238(b), respec-
tively, of such Act (12 U.S.C. 1735c, 1715z–3(b)), 
and any amounts in the Cooperative Management 
Housing Insurance Fund under section 213(k) of 
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such Act (12 U.S.C. 1715e(k)), shall be used by the 
FHA only— 
(A) for meeting any obligations of such 
Funds entered into before such transition date; 
and 
(B) for carrying out the mortgage insur-
ance obligations of the FHA pursuant to sec-
tion 662(1) and paragraph (1) of this section; 
and 
(3) the FHA may exercise any authority of the 
FHA under this title. 
(b) TERMINATION OF SECRETARY OF HUD’S FHA 
AUTHORITY.—After the expiration of the transition period 
under section 551, the Secretary of Housing and Urban 
Development may not exercise any authority under the 
National Housing Act relating to mortgage insurance. 
This subsection may not be construed to limit or otherwise 
affect the Secretary’s authority under title I of the Na-
tional Housing Act (12 U.S.C. 1702 et seq.). 
(c) CONTINUATION OF OBLIGATIONS.—This section 
and section 552(1) may not be construed to affect the va-
lidity of any right, duty, or obligation of the United States 
or other person arising under or pursuant to any commit-
ment or agreement lawfully entered into with the Sec-
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retary of Housing and Urban Development under the Na-
tional Housing Act. 
SEC. 202. ELIGIBLE SINGLE-FAMILY MORTGAGES. 
(a) IN GENERAL.—Notwithstanding section 203 of 
the National Housing Act (12 U.S.C. 1709) or any other 
provision of law, the FHA may insure, and make commit-
ments to insure, a mortgage on a 1- to 4-family residential 
property only if the mortgage complies with the following 
requirements: 
(1) MORTGAGE AMOUNT.—The mortgage shall 
involve a principal obligation (including such initial 
service charges, appraisal, inspection, and other fees 
as the FHA shall approve) in an amount not to ex-
ceed the following amounts: 
(A) APPRAISED
VALUE.—100 percent of 
the appraised value of the property. 
(B) AREA LIMITATION.— 
(i) MAXIMUM
LIMIT.—The lesser of 
the following amounts: 
(I) In the case of— 
(aa) a 1-family residence, 
100 percent of the median 1-fam-
ily house price in the area in 
which such residence is located, 
as determined by the FHA; and 
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(bb) in the case of a 2-, 3- 
, or 4-family residence, the per-
centage of such median price 
that bears the same ratio to such 
median 
price 
as 
the 
dollar 
amount 
limitation 
determined 
under the sixth sentence of sec-
tion 305(a)(2) of the Federal 
Home Loan Mortgage Corpora-
tion Act (12 U.S.C. 1454(a)(2)) 
for a 2-, 3-, or 4-family resi-
dence, respectively, bears to the 
dollar amount limitation deter-
mined under such section for a 1- 
family residence; or 
(II) 150 percent of the dollar 
amount limitation determined under 
the sixth sentence of such section 
305(a)(2) for a residence of the appli-
cable size. 
For purposes of the preceding sentence, 
the term ‘‘area’’ means, for any property 
located within a metropolitan statistical 
area as established by the Office of Man-
agement and Budget, the zip code within 
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which the property is located, and for any 
property not located within a metropolitan 
statistical area, the county within which 
the property is located. The dollar amount 
limitations referred to in this clause shall 
remain in effect for purposes of this clause 
notwithstanding the receivership or dis-
solution of the Federal Home Loan Mort-
gage Corporation. 
(ii) 
MINIMUM
LIMIT.—Notwith-
standing clause (i), the principal obligation 
limitation in effect for any area under this 
subparagraph may not be less than 
$200,000. 
(2) DOWNPAYMENT.—The mortgage shall be 
executed by a mortgagor who shall have paid on ac-
count of the property subject to the mortgage an 
amount, in cash or its equivalent, equal to or exceed-
ing 3.5 percent of the appraised value of the prop-
erty, as determined by the FHA. 
(3) PROHIBITED MORTGAGES.—The mortgage 
is not— 
(A) a mortgage the proceeds of which are 
used to prepay or pay off an existing loan that 
is not— 
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(i) a loan insured under the National 
Housing Act or under this title; or 
(ii) a loan insured, made, or guaran-
teed under title V of the Housing Act of 
1949; or 
(B) a mortgage under which a portion of 
the proceeds of the mortgage are used to pre-
pay or pay off the outstanding principal and in-
terest owed on an existing loan and a portion 
of such proceeds are made available to or on be-
half of the borrower. 
(4) PUBLIC
PURPOSE
REQUIREMENT.—The 
mortgage shall meet the requirements of any one of 
the following subparagraphs: 
(A) FIRST-TIME HOMEBUYER.—The mort-
gagor under the mortgage is a first-time home-
buyer (as such term is defined in section 242) 
of the property subject to the mortgage and the 
property is used as the principal residence of 
the mortgagor. 
(B) LOW- OR
MODERATE-INCOME
MORT-
GAGOR.—The mortgagor under the mortgage is 
a member of a family as follows: 
(i) IN GENERAL.—A family having an 
income that is less than 115 percent of the 
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median income, as determined by the 
FHA, for the area in which the property 
subject to the mortgage is located, except 
that the FHA may establish income ceil-
ings higher or lower than 115 percent of 
the median for the area to take into con-
sideration various sizes of families. 
(ii) HIGH-COST
AREAS.—A family 
that— 
(I) resides in any area for which 
the median 1-family house price ex-
ceeds the maximum dollar amount 
limitation in effect for that year on 
the original principal obligation of a 
mortgage on a 1-family residence that 
may be purchased by the Federal 
Home Loan Mortgage Corporation, as 
determined under section 305(a)(2) of 
the Federal Home Loan Mortgage 
Corporation 
Act 
(12 
U.S.C. 
1454(a)(2)); and 
(II) has an income that is less 
than 150 percent of the median in-
come, as determined by the FHA, for 
the area in which the property subject 
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to the mortgage is located, except that 
the FHA may establish income ceil-
ings higher or lower than 150 percent 
of the median for the area to take 
into consideration various sizes of 
families. 
For purposes of this subparagraph, the term 
‘‘area’’ has the meaning given such term in the 
last sentence of paragraph (1)(B)(i). 
(C) COUNTER-CYCLICAL MARKET ADJUST-
MENT.—The property subject to the mortgage 
is located in a county or counties for which a 
determination under this subparagraph has 
been made, as follows: 
(i) 
DETERMINATION.—A 
mortgage 
may be insured pursuant to this subpara-
graph only upon a determination by the 
Board, in consultation with the Chief Risk 
Officer that— 
(I) available credit for the pur-
chase of 1- to 4-family homes located 
in such county or counties has con-
tracted significantly, as measured by 
the credit availability measure of the 
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Office of the Comptroller of the Cur-
rency; 
(II) housing prices in such coun-
ty or counties have declined signifi-
cantly, as measured by the applicable 
housing price index of the Federal 
Housing Finance Agency; or 
(III) available credit for the pur-
chase of housing or such other eco-
nomic conditions exist sufficient to 
evidence a significant contraction of 
capital in such county or counties, as 
measured by a metric identified by the 
Board, in consultation with the Chief 
Risk Officer, in a written notice made 
publicly available, and provided to the 
Congress, in advance of such deter-
mination. 
(ii) CONDITIONS OF TERMINATION.— 
Upon making a determination under clause 
(i), the Board, in consultation with the 
Chief Risk Officer, shall also identify 
measurable criteria for determining that 
the conditions determined under clause (i) 
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for such county or counties have ceased to 
exist. 
(iii) NOTICE
TO
CONGRESS.—Upon 
making a determination under clause (i), 
the Board shall provide written notice to 
the Congress of such determination and 
the specific measurable criteria identified 
pursuant to clause (ii). 
(iv) LIMITATION.—The Board may 
not, pursuant to the authority under this 
subparagraph— 
(I) reduce premiums required to 
be paid for mortgage insurance under 
this title by more than 50 basis points 
from the premiums charged, imme-
diately before the determination under 
this subparagraph was made for such 
county or counties, for mortgage in-
surance for mortgages on properties 
located in such county or counties; 
(II) increase the limitation under 
this title on the amount of the max-
imum principal obligation of a mort-
gage that may be insured; or 
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(III) decrease the amount re-
quired to be paid, in cash or its equiv-
alent, on account of a property sub-
ject to a mortgage insured under this 
title. 
(v) TERMINATION.—The authority to 
insure mortgages pursuant to this subpara-
graph on properties located in a county or 
counties shall terminate upon the earlier 
of— 
(I) the expiration of the 18- 
month period beginning upon the date 
that notification under clause (iii) is 
provided to the Congress of the deter-
mination under clause (i) with respect 
to such county or counties; or 
(II) the occurrence of the condi-
tions identified pursuant to clause (ii) 
with respect to such county or coun-
ties. 
(vi) MULTIPLE
DETERMINATIONS.— 
Nothing in this subparagraph may be con-
strued to prevent multiple or consecutive 
periods for a county or counties during 
which mortgages on properties located in 
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such county or counties may be insured 
pursuant to this subparagraph. 
(D) DISASTER AREA.—The Board of Di-
rectors exercises the authority to insure mort-
gages under this subparagraph, subject to the 
following requirements: 
(i) IMPLEMENTATION.—The Board of 
Directors may implement authority to in-
sure mortgages under this subparagraph 
only if the Board— 
(I) by a vote of the majority of 
its members, approves such implemen-
tation for a specific disaster area 
under clause (iii) and a specific dis-
aster period under clause (iv); and 
(II) notifies the Congress and the 
President in writing of such approval, 
such disaster period, and such dis-
aster area not less than 30 days be-
fore the commencement of the dis-
aster period. 
(ii) 
ELIGIBLE
MORTGAGES.—The 
FHA may insure, or make a commitment 
to insure, a mortgage under authority 
under this subparagraph only if— 
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(I) the mortgage is made for the 
purchase of a principal residence by a 
mortgagor whose home (that the 
mortgagor occupied as an owner or 
tenant) was located in a disaster area 
described under clause (iii) and was 
destroyed or damaged to such an ex-
tent that reconstruction is required, 
as a result of a major disaster de-
clared by the President under the 
Robert T. Stafford Disaster Relief 
and Emergency Assistance Act; and 
(II) the commitment for mort-
gage insurance is made during the 
disaster 
period 
established 
under 
clause (iv) for such disaster area. 
(iii) DISASTER
AREA.—A disaster 
area may be established for purposes of 
this subparagraph only for the area af-
fected by a major disaster, as declared by 
the President under the Robert T. Stafford 
Disaster Relief and Emergency Assistance 
Act, or a portion of such area, as deter-
mined by the FHA. 
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(iv) DISASTER
PERIOD.—A disaster 
period established for purposes of this sub-
paragraph shall— 
(I) commence upon or after the 
declaration of the major disaster re-
ferred to in clause (iii); and 
(v) terminate on the date certain 
approved by the Board of Directors 
under clause (i)(I) and contained in 
the notice under clause (i)(II), which 
shall not be later than 18 months 
after the commencement of the period. 
(b) CONFORMING AMENDMENTS.—Section 203(b) of 
the National Housing Act (12 U.S.C. 1709(b)) is amend-
ed— 
(1) by striking paragraph (2); and 
(2) in paragraph (9)— 
(A) by striking subparagraph (A); and 
(B) in subparagraph (B), by striking ‘‘this 
paragraph’’ and inserting ‘‘section 242(a)(2) of 
the Protecting American Taxpayers and Home-
owners Act of 2018’’. 
SEC. 203. RISK TRANSFER. 
(a) DEMONSTRATION MODEL.— 
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(1) IN GENERAL.—The Administrator shall an-
nually cede a portion of the risk with respect to the 
mortgages insured by the FHA to the private rein-
surance or capital markets, or any combination 
thereof, and at rates and terms that the Adminis-
trator determines to be reasonable and appropriate, 
in an amount that— 
(A) is sufficient to maintain the ability of 
FHA to pay claims; 
(B) manages and limits the annual expo-
sure of the funds managed by FHA; and 
(C) is subject to market conditions. 
(2) DEVELOPMENT AND IMPLEMENTATION.— 
(A) TIMING.—The Administrator shall de-
velop and implement models and standards for 
ceding of risk as required under paragraph (1) 
not later than the expiration of the 24-month 
period beginning upon the date of the enact-
ment of this Act. 
(B) CONSULTATION WITH GINNIE MAE.— 
In developing the models and standards under 
subparagraph (A), the FHA shall consult with 
the Government National Mortgage Association 
and shall review such Association’s guidelines 
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relating to risk-sharing and other credit en-
hancement activities. 
(b) QUALIFICATIONS
OF RISK TRANSFER PART-
NERS.— 
(1) ESTABLISHMENT.—The model and stand-
ards established under this section shall include 
guidelines for the qualification of persons or entities 
to participate in risk transfer and other credit en-
hancement activities with the FHA. 
(2) PROCEDURES.—In establishing such guide-
lines, the FHA shall review the guidelines estab-
lished by the Director for qualification of persons or 
entities to participate in risk transfer, risk-sharing, 
and other credit enhancement activities with the 
Federal National Mortgage Association or the Fed-
eral Home Loan Mortgage Corporation. The FHA 
shall determine whether such guidelines for such en-
terprises are sufficient for purposes of the FHA, in-
cluding whether such guidelines meet the require-
ments under paragraph (3), and— 
(A) if the FHA determines that such 
guidelines are so sufficient, the FHA shall 
adopt such guidelines for purposes of this sec-
tion, to the extent appropriate, with any 
changes necessary to account for differences be-
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tween the mortgages insured under this title 
and the National Housing Act and the business 
under such provisions and the business of such 
enterprises; or 
(B) if the FHA determines that such 
guidelines are not so sufficient, the FHA shall 
adopt such guidelines for purposes of this sec-
tion, to the extent appropriate and with changes 
referred to in subparagraph (A), together with 
additional criteria sufficient to address any 
such insufficiency. 
(3) CONTENT.—Such guidelines shall ensure 
that— 
(A) persons or entities participating in risk 
transfer, risk-sharing, and other credit enhance-
ment activities pursuant to this section have 
sufficient capital, credit worthiness, and liquid-
ity, and are otherwise capable of fulfilling their 
obligations to the FHA; 
(B) such persons or entities and their prin-
cipals or officers are not engaged in a business 
the goals of which would conflict with the pur-
poses of the FHA or the National Housing Act; 
for purposes of this section, private mortgage 
insurance is not considered a business the goals 
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of which conflict with the purposes of the FHA 
or the National Housing Act; and 
(C) product or service delivery will be con-
ducted in a manner that is efficient and effec-
tive, and that will comply with the requirement 
under section 521(d). 
(c) RISK TRANSFER REQUIREMENT.— 
(1) REQUIREMENT.—After the expiration of the 
24-month period referred to in subsection (a)(2)(A), 
the FHA shall ensure that, in each fiscal year, not 
less than 10 percent of any new business in mort-
gages on 1- to 4-family residential property is in-
sured pursuant to a risk transfer agreement with re-
spect to such mortgage that complies with the stand-
ards established pursuant to subsection (a). 
(2) LIMITATION.—In any fiscal year, the FHA 
may not comply with paragraph (1) by entering into 
risk transfer agreements with respect only to one or 
a limited number of types or categories of mort-
gages, or mortgages having only particular, or a par-
ticular range of, original principal obligation 
amounts, but shall enter into risk transfer agree-
ments for all types and amounts of mortgages in-
sured by the FHA, to the extent required under 
paragraph (1). 
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(3) NEW BUSINESS.—For purposes of this sub-
section, with respect to a fiscal year, the term ‘‘new 
business’’ means the aggregate dollar amount of the 
principal obligations of mortgages for which a com-
mitment to insure is made pursuant to the National 
Housing Act or this title, as applicable, during such 
fiscal year. 
(d) REPORTS TO CONGRESS.—Upon the expiration of 
each of the 3- and 5-year periods beginning on the date 
of the enactment of this Act, the FHA shall submit a re-
port to the Congress on the findings and results of risk 
transfer activities under this section. Such reports shall 
describe the model and standards for entering into risk 
transfer agreements, analyze appropriate dollar amount 
limits for the original principal obligations of mortgages 
that should be subject to a risk transfer requirement, iden-
tify the effects of such risk transfer activities on the Mu-
tual Mortgage Insurance Fund, identify the effects of such 
risk transfer activities with respect to the Government Na-
tional Mortgage Association, and make recommendations 
regarding expanding the risk transfer requirement under 
subsection (c). 
(e) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act. During the tran-
sition period under section 551, any reference in this sec-
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tion to the FHA shall be construed to refer to the Sec-
retary of Housing and Urban Development to the extent 
the Secretary has not delegated authority under this sec-
tion to the FHA pursuant to section 552(1). 
SEC. 204. PREMIUMS. 
(a) ESTABLISHMENT.—The FHA shall establish and 
collect premium payments for mortgage insurance pro-
vided pursuant to this title and the amendments made by 
this title, and shall provide for sharing of premiums with 
entities entering into risk transfer agreements with the 
FHA pursuant to section 203 based on the relative portion 
of the mortgage insured and the risk of loss borne. 
(b) MINIMUM PREMIUMS.—In the case of mortgages 
on 1- to 4-family residential properties insured by the 
FHA, the premiums established and collected by the FHA 
shall include an annual premium payment payable during 
the entire term of the mortgage, in the following amounts: 
(1) LTV EQUAL TO OR EXCEEDING 80 PER-
CENT.—In the case of a mortgage for which the out-
standing principal obligation is equal to or exceeds 
80 percent of the appraised value of the property, 
the annual premium payment shall be an amount 
that is not less than 0.55 percent of the remaining 
insured principal balance (excluding the portion of 
the remaining balance attributable to any premium 
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collected at the time of insurance and without taking 
into account delinquent payments or prepayments), 
as the FHA shall establish. 
(2) LTV LESS THAN 80 PERCENT.—In the case 
of a mortgage for which the outstanding principal 
obligation is less than 80 percent of the appraised 
value of the property, the annual premium payment 
shall be an amount that is less than the amount of 
the annual premium payment established pursuant 
to paragraph (1), as the FHA shall establish. 
(c) PROCEDURES.—The FHA shall establish guide-
lines and procedures for mortgagors to apply for reduc-
tions of premiums pursuant to subsection (b)(2) and to 
submit evidence regarding the appraised value of the prop-
erty subject to the mortgage. 
(d) 
SELF-SUFFICIENT
OPERATIONS.—Notwith-
standing section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)) or any other provision of law, premium 
rates established under this section shall be established in 
amounts sufficient to cover— 
(1) costs of providing mortgage insurance cov-
erage under this title; 
(2) costs for administration, operations, man-
agement, and technology systems for the FHA for 
carrying out this title; 
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(3) the capital ratio required for the Mutual 
Mortgage Insurance Fund under section 216(b) and 
under section 219 with respect to mortgage insur-
ance for mortgages on multifamily properties; and 
(4) salaries and expenses for officers and per-
sonnel of the FHA. 
(e) RISK-BASED PREMIUMS.—The FHA may, with 
respect to mortgages on 1- to 4-family residential prop-
erties insured by the FHA, establish a mortgage insurance 
premium structure involving a single premium payment 
collected prior to the insurance of the mortgage or annual 
payments (which may be collected on a periodic basis), or 
both. 
(f) DISTRIBUTIVE SHARES.— 
(1) REQUIREMENT.—Upon any termination of 
the insurance obligation of the Mutual Mortgage In-
surance Fund by payment of any mortgage insured 
thereunder, which termination occurs after the expi-
ration of the 24-month period beginning on the date 
of the enactment of this Act, the FHA shall dis-
tribute to the mortgagor a share of the Participating 
Reserve Account of the Mutual Mortgage Insurance 
Fund in such manner and amount as the Secretary 
shall determine to be equitable and in accordance 
with sound actuarial and accounting practice. 
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(2) AMOUNT.—In no event shall any distribut-
able share pursuant to paragraph (1) exceed the ag-
gregate scheduled annual premiums of the mort-
gagor to the year of termination of the insurance. 
(3) STATUTE OF LIMITATIONS.—The Secretary 
shall not distribute any share to an eligible mort-
gagor under this subsection beginning on the date 
which is 6 years after the date the Secretary first 
transmitted written notification of eligibility to the 
last known address of the mortgagor, unless the 
mortgagor has applied in accordance with proce-
dures prescribed by the Secretary for payment of the 
share within the 6-year period. 
(4) 
APPLICABILITY.—This 
subsection 
shall 
apply with respect only to mortgages insured under 
the Mutual Mortgage Insurance Fund after the date 
of the enactment of this Act. 
(g) SAVINGS PROVISION.—Nothing in this section 
may be construed to affect premiums charged for mort-
gage insurance provided for mortgages insured before the 
date of the enactment of this Act. 
(h) LIMITATION.—Nothing in this section shall per-
mit or be construed to permit the FHA to apply different 
premium rates to the same mortgage product during the 
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same time period based solely on the characteristics of the 
mortgagor. 
SEC. 205. AFFORDABILITY REQUIREMENTS FOR MULTI-
FAMILY MORTGAGE INSURANCE. 
(a) IN GENERAL.—Notwithstanding any provision of 
the National Housing Act or any other provision of law, 
the FHA may not insure any mortgage on a residential 
property having 5 or more dwelling units unless the prop-
erty complies with such affordability requirements as the 
FHA shall establish to ensure that each such insured 
mortgage contributes to the financing of affordable hous-
ing for low- and moderate-income families, including such 
families in areas that the FHA determines to have high 
housing costs. 
(b) LIMITATION.—This section may not be construed 
to require the FHA to establish or enforce annual income 
verification or rent certification requirements for residen-
tial properties referred to in subsection (a). 
SEC. 206. EFFECTIVE DATE. 
This subtitle and the amendments made by this sub-
title, except for section 203, shall take effect upon the ex-
piration of the transition period under section 551. 
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Subtitle B—Financial Safety and 
Soundness 
SEC. 211. AUTHORITY OF DIRECTOR. 
(a) DUTY.—The Director of the Federal Housing Fi-
nance Agency shall supervise and regulate the safety and 
soundness of the FHA and the programs of the Rural 
Housing Service of the Department of Agriculture for 
housing loans made, insured, or guaranteed under title V 
of the Housing Act of 1949, and it shall be the duty of 
the Director to ensure that the FHA and such Rural 
Housing Service programs are adequately capitalized and 
operating safely. 
(b) AUTHORITY.—The Director may make such de-
terminations, take such actions, and perform such func-
tions as the Director determines necessary to meet the re-
sponsibilities of the Director under this subtitle. 
SEC. 212. BUDGETS AND BUSINESS PLANS. 
(a) SUBMISSION OF BUSINESS-TYPE BUDGET.—In 
each year, the FHA shall prepare and submit an annual 
budget as required under section 9103 of title 31, United 
States Code, and shall submit such budget to the Director 
by a date sufficient to enable the Director to produce, pur-
suant to section 215(c) of this title, the credit subsidy cost 
estimates that are required for the budget of the United 
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States Government under section 1105(a) of title 31, 
United States Code. 
(b) SUBMISSION OF BUDGET AND CREDIT COST ES-
TIMATES TO OMB.—For purposes of inclusion in the 
budget of the United States Government, the FHA shall 
submit the annual budget of the FHA and the annual 
credit subsidy cost estimates produced pursuant to section 
215(c) of this title to the Director of the Office of Manage-
ment and Budget. 
(c) RESERVES.— 
(1) ESTABLISHMENT.—Subject to sections 216 
and 219, the FHA may establish any reserve that 
the FHA determines is necessary for the business 
operations of the FHA. 
(2) AMOUNTS.—The FHA may hold as a re-
serve in any financing account, as defined in section 
502 of the Congressional Budget Act of 1974 (2 
U.S.C. 661a), such amounts as the FHA considers 
necessary to comply with the capital requirements 
established for the FHA under sections 216 and 219 
of this title and to fulfill the purposes of this title. 
SEC. 213. ANNUAL BUSINESS PLAN. 
The FHA shall establish a business plan on an an-
nual basis and shall make such plan available for review 
by the Director. Such plan shall specify the products and 
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operational strategy of the FHA, including plans to ad-
dress compliance with the safety and soundness require-
ments applicable to the FHA. 
SEC. 214. EXAMINATIONS, REPORTS, AND COST ESTIMATES. 
(a) EXAMINATIONS.—The Director shall conduct 
such examinations of the FHA and the Rural Housing 
Service programs referred to in section 211(a) as the Di-
rector determines necessary to evaluate the safety and 
soundness of the FHA and such programs. Such examina-
tions shall be subject to and governed by subsections (c) 
through (h) of section 1317 of the Federal Housing Enter-
prises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4517), except that the last sentence of subsection 
(c) shall not apply and any reimbursements referred to 
in such sentence shall be made from amounts collected 
under section 215 of this title. 
(b) REPORTS.—The Director may require the FHA 
and the Rural Housing Service to submit, within a reason-
able period of time, any regular or special report, data, 
or other information whenever, in the judgment of the Di-
rector, such report, data, or information is necessary to 
carry out the Director’s responsibilities under this title. 
(c) CREDIT SUBSIDY COST ESTIMATES.— 
(1) IN GENERAL.—The Director shall produce 
and submit to the Director of the Office of Manage-
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ment and Budget the annual credit subsidy cost esti-
mates for the FHA and the Rural Housing Service 
programs referred to in section 211(a) required for 
the President’s budget. Such estimates shall be con-
sistent with the estimates of performance generated 
by the risk-based capital model developed in accord-
ance with section 217(b), and with the President’s 
economic forecast. 
(2) UNIFIED
ESTIMATES.—The annual credit 
subsidy cost estimates produced under this sub-
section by the Director shall be reported on a unified 
basis, which shall be based upon the business of the 
FHA, and the Rural Housing Service programs re-
ferred to in section 211(a), as a whole. 
(d) ANNUAL REPORT
ON SAFETY
AND SOUND-
NESS.—The Director shall submit an annual report to 
Congress and the Director of the Office of Management 
and Budget on the financial safety and soundness of the 
FHA and the Rural Housing Service programs referred 
to in section 211(a), as measured pursuant to this subtitle. 
SEC. 215. REIMBURSEMENT OF COSTS. 
(a) ASSESSMENT AND COLLECTION.—The Director 
shall assess and collect from the FHA and the Secretary 
of Agriculture annual assessments in such amounts deter-
mined by the Director as necessary to reimburse the Fed-
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eral Housing Finance Agency for the reasonable costs and 
expenses of the activities undertaken by such Agency to 
carry out the duties of the Director under this subtitle, 
including the costs of examination, enforcement, and over-
sight expenses. 
(b) REQUIREMENTS.—Annual assessments imposed 
by the Director shall be— 
(1) imposed prior to October 1 of each year; 
(2) allocated among the FHA and the Secretary 
of Agriculture proportionally based on the costs and 
expenses of the Agency of carrying out the duties 
under this subtitle with respect to FHA and the 
Rural Housing Service program referred to in sec-
tion 211(a), respectively; 
(3) collected at such time or times during each 
assessment year as determined necessary or appro-
priate by the Director; and 
(4) treated in the same manner as provided 
under section 1316(f) of the Federal Housing Enter-
prises Financial Safety and Soundness Act of 
1992(12 U.S.C. 4516(f)) with respect to amounts 
received by the Director from assessments under 
section 1316 of such Act, except that amounts from 
assessments under this section may be used only for 
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expenses of the Director and the Agency relating to 
the functions and responsibilities under this subtitle. 
SEC. 216. MUTUAL MORTGAGE INSURANCE FUND CAPITAL 
RESERVE. 
(a) SEGREGATION OF BOOKS.—To ensure accurate 
determinations of the capital ratio under subsection (b) 
of this section and such ratio under section 205(f) of the 
National Housing Act, as amended by subsection (d) of 
this section, the FHA shall establish separate accounts in 
the Mutual Mortgage Insurance Fund and take such other 
actions as may be necessary to segregate the following 
amounts: 
(1) Capital attributable to new business. 
(2) Capital attributable to mortgages that be-
come insured before the expiration of the transition 
period under section 551. 
(b) CAPITAL RATIO FOR NEW BUSINESS.—The FHA 
shall ensure that the account for the Mutual Mortgage In-
surance Fund that is established pursuant to subsection 
(a)(1) of this section at all times maintains a capital ratio 
of not less than 4.0 percent. 
(c) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) CAPITAL.—The term ‘‘capital’’ means the 
economic net worth of the account of the Fund that 
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is established pursuant to subsection (a)(1) of this 
section, as determined by the FHA under the annual 
audit required under section 538 of the National 
Housing Act (12 U.S.C. 1735f–16). 
(2) CAPITAL RATIO.—The term ‘‘capital ratio’’ 
means the ratio of capital to unamortized insurance- 
in-force. 
(3) ECONOMIC NET WORTH.—The term ‘‘eco-
nomic net worth’’ means the current cash available 
to the account of the Fund that is established pursu-
ant to subsection (a)(1) of this section, plus the net 
present value of all future cash inflows and outflows 
expected to result from outstanding new business. 
(4) FUND.—The term ‘‘Fund’’ means the Mu-
tual Mortgage Insurance Fund established under 
section 205 of the National Housing Act (12 U.S.C. 
1711). 
(5) NEW BUSINESS.—The term ‘‘new business’’ 
means mortgages that are obligations of the Mutual 
Mortgage Insurance Fund that become insured by 
the FHA after the expiration of the transition period 
under section 551. 
(6) UNAMORTIZED INSURANCE IN FORCE.—The 
term ‘‘unamortized insurance-in-force’’ means the 
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remaining obligation on outstanding new business, 
as estimated by the FHA. 
(d) TREATMENT OF EXISTING CAPITAL RATIO.— 
Paragraph (4) of section 205(f) of the National Housing 
Act (12 U.S.C. 1711(f)(4)) is amended— 
(1) in subparagraph (A), by striking ‘‘Mutual 
Mortgage Insurance Fund’’ and inserting ‘‘account 
of the Mutual Mortgage Insurance Fund that is es-
tablished pursuant to section 216(a)(2) of the Pro-
tecting American Taxpayers and Homeowners Act of 
2018’’; 
(2) in subparagraph (C)— 
(A) by striking ‘‘Fund’’ the first place such 
term appears and inserting ‘‘account of the Mu-
tual Mortgage Insurance Fund that is estab-
lished pursuant to section 216(a)(2) of the Pro-
tecting American Taxpayers and Homeowners 
Act of 2018’’; and 
(B) by striking ‘‘the Fund.’’ and inserting 
the following: ‘‘such account that become in-
sured by the Secretary of Housing and Urban 
Development (or the FHA, pursuant to subtitle 
B of title II of the Protecting American Tax-
payers and Homeowners Act of 2018) before 
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the expiration of the transition period under 
section 551 of such Act.’’; and 
(3) in subparagraph (D), by inserting before 
the comma the following: ‘‘and become insured be-
fore the expiration of the transition period under 
section 551 of the Protecting American Taxpayers 
and Homeowners Act of 2018’’. 
SEC. 217. CAPITAL CLASSIFICATIONS AND PERFORMANCE 
MEASURES FOR MUTUAL MORTGAGE INSUR-
ANCE FUND. 
(a) CAPITAL CLASSIFICATION; EFFECT ON INSUR-
ANCE AUTHORITY.— 
(1) ADEQUATELY CAPITALIZED.—At any time 
that the capital ratio (as such term is defined in sec-
tion 216(c)(2) of this title) is greater than 4.0 per-
cent, the account for the Mutual Mortgage Insur-
ance Fund established pursuant to section 216(a)(1) 
shall be classified as adequately capitalized for pur-
poses of this subtitle. 
(2) UNDERCAPITALIZED.—At any time that the 
capital ratio is greater than 0.0 percent and is less 
than 4.0 percent, the account for the Mutual Mort-
gage Insurance Fund established pursuant to section 
216(a)(1) shall be classified as undercapitalized for 
purposes of this subtitle. 
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(3) SIGNIFICANTLY
UNDERCAPITALIZED.—At 
any time that the capital ratio is less than 0.0 per-
cent— 
(A) the account for the Mutual Mortgage 
Insurance Fund established pursuant to section 
216(a)(1) shall be classified as significantly 
undercapitalized for purposes of this subtitle; 
and 
(B) the Director may, pursuant to section 
218(a)(1), take actions under section 218(b). 
(4) QUARTERLY DETERMINATION OF CAPITAL 
RATIO.—The Director shall determine the capital 
ratio and the capital classification of the account for 
the Mutual Mortgage Insurance Fund established 
pursuant to section 216(a)(1) for purposes of this 
subtitle not less frequently than each calendar quar-
ter. 
(b) STRESS TEST.— 
(1) IN GENERAL.—The Director shall develop a 
risk-based capital model to determine the amount of 
capital that is sufficient for the FHA to maintain 
positive capital during a period of economic stress. 
The model shall incorporate the assumptions under 
paragraphs (2) and (3). 
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(2) CREDIT RISK.—For purposes of paragraph 
(1), the Director shall assume that, during the pe-
riod of economic stress referred to in paragraph (1), 
credit losses occur at a rate consistent with a nation-
wide economic recession of average severity based on 
nationwide economic recessions since 1950. 
(3) OTHER RISKS.—For purposes of paragraph 
(1), the Director shall make assumptions about such 
other aspects of the period of economic stress as the 
Director determines are appropriate and consistent. 
(4) TIMING.—Not later than the expiration of 
the 180-day period beginning on the date of the en-
actment of this Act, the Director shall submit the 
risk-based capital model developed pursuant to this 
to the Congress. The Director may not implement or 
otherwise employ such risk-based capital model be-
fore the expiration of the 120-day period beginning 
upon the submission of such model to the Congress. 
(c) CAPITAL RESTORATION PLAN REQUIREMENT.— 
If the account for the Mutual Mortgage Insurance Fund 
established pursuant to section 216(a)(1) is classified as 
undercapitalized or significantly undercapitalized, the 
FHA shall— 
(1) submit to the Director a capital restoration 
plan meeting the requirements of section 218(d) for 
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raising or restoring the capital of such account to an 
amount not less than the amount required for such 
account to be classified as adequately capitalized; 
and 
(2) upon approval by the Director, carry out 
such plan. 
If the Director disapproves a capital restoration plan sub-
mitted under this subsection, the Director shall convey in 
writing reasons for such disapproval and shall provide for 
the FHA to resubmit a revised plan for approval by the 
Director. 
SEC. 218. ENFORCEMENT. 
(a) GROUNDS.—The Director may take actions under 
subsection (b) only if— 
(1) the account for the Mutual Mortgage Insur-
ance Fund established pursuant to section 216(a)(1) 
is classified under section 217(a) as significantly 
undercapitalized; 
(2) the account for the Mutual Mortgage Insur-
ance Fund established pursuant to section 216(a)(1) 
is classified under section 217(a) as undercapitalized 
and— 
(A) the FHA does not submit a capital 
restoration plan that is substantially in compli-
ance with section 217(c) within the applicable 
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period, or the Director disapproves the capital 
restoration plan submitted by the FHA; or 
(B) the FHA has failed to make, in good 
faith, reasonable efforts necessary to comply 
with the capital restoration plan; or 
(3) the FHA is engaging or has engaged, or the 
Director has reasonable cause to believe that the 
FHA is about to engage in— 
(A) any conduct that is likely to threaten 
the adequacy of the capital of the account for 
the Mutual Mortgage Insurance Fund estab-
lished pursuant to section 216(a)(1); 
(B) any failure to comply with any written 
agreement entered into by the FHA with the 
Director; or 
(C) any failure to comply with any request 
by the Director for a report, data, or informa-
tion under section 214(b). 
(b) ACTIONS.—The Director may, under this sub-
section, require the FHA— 
(1) to cease and desist from any conduct or ac-
tivity that— 
(A) with respect to the account for the 
Mutual Mortgage Insurance Fund established 
pursuant to section 216(a)(1), is described in 
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paragraph (2) or (3) of subsection (a), or that 
contributes to the condition described in sub-
section (a)(1); and 
(B) with respect to any other Fund, con-
tributes to a failure to meet a capital reserve 
requirement established pursuant to section 
219(a) or is likely to threaten the adequacy of 
the capital of such Fund; and 
(2) to take corrective or remedial action, includ-
ing— 
(A) restricting the growth of, or con-
tracting, any category of assets or liabilities; 
(B) reducing, modifying, or terminating 
any activity that the Director determines cre-
ates excessive risk to the FHA; 
(C) terminating agreements or contracts; 
(D) engaging or employing qualified em-
ployees (who may be subject to approval by the 
Director at the direction of the Director); or 
(E) submitting to the Director for review 
and approval a detailed and complete operating 
plan. 
(c) REPORTS.—If the Director is authorized under 
subsection (a) of this section or section 219(b) to take ac-
tion under subsection (b) of this section and determines 
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not to take any such action, the Director shall prepare 
a report detailing the basis of the Director’s decision not 
to take such action and shall, within 30 days of the deci-
sion, submit the report to the President, the Director of 
the Office of Management and Budget, the Comptroller 
General of the United States, the Committee on Financial 
Services of the House of Representatives, and the Com-
mittee on Banking, Housing, and Urban Affairs of the 
Senate. 
(d) CAPITAL RESTORATION PLANS.—A capital res-
toration plan submitted pursuant to section 217(c), 
219(b), or 220(d)(3) shall— 
(1) set forth a feasible plan for raising or re-
storing the capital of the Fund for which it is pre-
pared; 
(2) specify the level of capital to be achieved 
and maintained; 
(3) be submitted to the Director within 45 days 
from the date of notification, or if the Director de-
termines that an extension is necessary, within such 
additional time as the Director so determines; 
(4) describe the actions that the FHA shall 
take for such Fund to become classified as ade-
quately capitalized; 
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(5) establish a schedule for completing the ac-
tions set forth in the plan; and 
(6) specify the types and levels of activities (in-
cluding existing and new business activities) in 
which the FHA shall engage during the term of the 
plan. 
SEC. 219. CAPITAL RESERVE REQUIREMENTS FOR OTHER 
FUNDS. 
(a) REQUIREMENTS.—The Director shall establish 
capital reserve requirements for— 
(1) the General Insurance Fund established 
under section 519 of the National Housing Act (12 
U.S.C. 1735c); 
(2) the Special Risk Insurance Fund estab-
lished under section 238(b) of such Act (12 U.S.C. 
1715z–3(b)); 
(3) the Cooperative Management Housing In-
surance Fund established under section 213(k) of 
such Act (12 U.S.C. 1715e(k)); 
(4) the Rural Housing Insurance Fund estab-
lished under title V of the Housing Act of 1949 (42 
U.S.C. 1471), or the various accounts of such Fund; 
and 
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(5) the Home Equity Conversion Insurance 
Fund established under section 255(s) of the Na-
tional Housing Act (12 U.S.C. 1715–20(s)). 
(b) ENFORCEMENT.—The Director may enforce com-
pliance with the requirements under subsection (a) of this 
section with respect to a Fund by taking action under sec-
tion 218(b) or by requiring submission of a capital res-
toration plan for such Fund meeting the requirements of 
section 218(d). 
SEC. 220. AUTHORITY TO ESTABLISH TEMPORARY CAPITAL 
RATIOS IN CASES OF NATIONWIDE COUNTER-
CYCLICAL MARKET ADJUSTMENT. 
(a) AUTHORITY; DETERMINATION.—The Director 
may suspend the applicability of the capital ratio under 
section 716(b) for the Mutual Mortgage Insurance Fund 
or any capital reserve requirement established pursuant 
to section 219 for any Fund specified under such section 
and establish a temporary alternative capital ratio with 
respect to such Fund for a specified period of time, but 
only upon a determination by the Board, in consultation 
with the Chief Risk Officer, that— 
(1) available credit throughout the United 
States or a significant portion of the United States 
for the purchase of the types of residences for which 
mortgages that obligations of such Fund are made 
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has contracted significantly, as measured by the 
credit availability measure of the Office of the 
Comptroller of the Currency; 
(2) housing prices throughout the United States 
or a significant portion of the United States have 
declined significantly, as measured by the applicable 
housing price index of the Federal Housing Finance 
Agency; or 
(3) available credit for the purchase of housing 
or such other economic conditions exist sufficient to 
evidence a significant contraction of capital through-
out the United States or a significant portion of the 
United States, as measured by a metric identified by 
the Director and the Chief Risk Officer in a written 
notice made publicly available, and provided to the 
Congress, in advance of such determination. 
(b) CONDITIONS OF TERMINATION.—Upon making a 
determination under subsection (a), the Board, after con-
sultation with the Chief Risk Officer, shall also identify 
measurable criteria for determining that the conditions de-
termined under subsection (a) have ceased to exist. 
(c) NOTICE TO CONGRESS.—Upon making a deter-
mination under subsection (a), the Board, after consulta-
tion with the Chief Risk Officer, shall provide written no-
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tice to the Congress of such determination and the specific 
measurable criteria identified pursuant to subsection (b). 
(d) EFFECT OF TEMPORARY ALTERNATIVE CAPITAL 
RATIO.—During any period that a temporary alternative 
capital ratio is in effect pursuant to subsection (a) with 
respect to any Fund— 
(1) in the case of a temporary capital ratio for 
the Mutual Mortgage Insurance Fund, subsections 
(a) and (c) of section 217 and section 218 shall not 
apply; 
(2) such temporary and alternative capital clas-
sifications as the Director shall establish shall be in 
effect with respect to such Fund; and 
(3) the Director shall require the FHA to sub-
mit and carry out a capital restoration plan for such 
Fund meeting the requirements under section 
218(d) and may take actions under section 218(b) 
with respect to such Fund only in accordance with 
such standards relating to such temporary and alter-
native capital classifications for such Fund as the 
Director shall establish. 
(e) TERMINATION.—Any temporary alternative cap-
ital ratio established pursuant to subsection (a) shall ter-
minate upon the earlier of— 
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(1) the expiration of the 18-month period begin-
ning upon the date that notification under sub-
section (c) is provided to the Congress of the deter-
mination under subsection (a); or 
(2) the occurrence of the conditions identified 
pursuant to subsection (b). 
(f) MULTIPLE DETERMINATIONS.—Nothing in this 
section may be construed to prevent multiple or consecu-
tive periods during which temporary alternative capital ra-
tios are in effect pursuant to this section. 
SEC. 221. 7-YEAR BORROWER SUSPENSION FOR FORE-
CLOSURE. 
(a) FHA.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), with respect to any mortgage on a 1- to 
4-family residential property that is foreclosed upon, 
during the 7-year period beginning upon the date of 
such foreclosure, the FHA may not newly insure, 
under any provision of this title, the National Hous-
ing Act, or any FHA program, any other mortgage 
under which the mortgagor is the individual who was 
the mortgagor under the mortgage that was fore-
closed upon. 
(2) WAIVER.—The FHA shall provide, by regu-
lation, for the FHA to waive the applicability of 
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paragraph (1) with respect to a mortgagor in cases 
in which hardship circumstances materially contrib-
uted to the default and foreclosure of the mortgage. 
For purposes of this subsection, such hardship cir-
cumstances may include divorce, job or other income 
loss, health problems, death in the family, and such 
other situations as the FHA may prescribe. 
(b) RURAL HOUSING.—Section 505 of the Housing 
Act of 1949 (42 U.S.C. 1475) is amended by adding at 
the end the following new subsection: 
‘‘(c) 7-YEAR BORROWER SUSPENSION FOR FORE-
CLOSURE.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), with respect to any mortgage on a 1- to 
4-family residential property that is foreclosed upon, 
during the 7-year period beginning upon the date of 
such foreclosure, the Secretary may not newly make, 
insure, or guarantee, under any provision of this 
title, any other loan under which the borrower is in-
dividual who was the mortgagor under the mortgage 
that was foreclosed upon. 
‘‘(2) WAIVER.—The Secretary shall provide, by 
regulation, for waiver of the applicability of para-
graph (1) with respect to a borrower in cases in 
which hardship circumstances materially contributed 
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to the default and foreclosure of the mortgage. For 
purposes of this subsection, such hardship cir-
cumstances may include divorce, job or other income 
loss, health problems, death in the family, and such 
other situations as the Secretary may prescribe.’’. 
(c) REGULATIONS.—The FHA and the Secretary of 
Agriculture shall jointly issue regulations required under 
subsection (a) of this section and section 505(c) of the 
Housing Act of 1949, as added by subsection (b) of this 
section. 
SEC. 222. BORROWER INELIGIBILITY UPON SECOND FORE-
CLOSURE. 
(a) FHA.—If any individual is the mortgagor under 
any two mortgages on 1- to 4-family residential properties 
that have been foreclosed upon, the FHA may not newly 
insure, under any provision of this title, the National 
Housing Act, or any FHA program, any other mortgage 
under which such individual is the mortgagor. 
(b) RURAL HOUSING.—Section 505 of the Housing 
Act of 1949 (42 U.S.C. 1475), as amended by the pre-
ceding provisions of this title, is further amended by add-
ing at the end the following new subsection: 
‘‘(d) BORROWER
INELIGIBILITY
UPON
SECOND 
FORECLOSURE.—If any individual is the mortgagor under 
any two mortgages for 1- to 4-family residential properties 
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that have been foreclosed upon, the Secretary may not 
newly make, insure, or guarantee, under any provision of 
this title, any other loan under which such individual is 
the borrower.’’. 
SEC. 223. LIMITATION ON SELLER CONCESSIONS. 
(a) FHA.—The FHA may not newly insure, under 
any provision of this title, the National Housing Act, or 
any FHA program, any mortgage on a 1- to 4-family resi-
dential property with respect to which the seller of the 
property subject to such mortgage (or any third party or 
entity that is reimbursed directly or indirectly by the sell-
er) contributes toward the acquisition of the property by 
the mortgagor any amount in excess of 3 percent of the 
lesser of the sale price of the property or the appraised 
value of the property as of the time of such sale. 
(b) RURAL HOUSING.—Section 501 of the Housing 
Act of 1949 (42 U.S.C. 1471), as amended by the pre-
ceding provisions of this title, is further amended by add-
ing at the end the following new subsection: 
‘‘(n) LIMITATION ON SELLER CONCESSIONS.—The 
Secretary may not newly make, insure, or guarantee, 
under any provision of this title, any loan for a 1- to 4- 
family residential property with respect to which the seller 
of the property for which the loan is made (or any third 
party or entity that is reimbursed directly or indirectly by 
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the seller) contributes toward the acquisition of the prop-
erty by the borrower any amount in excess of 3 percent 
of the lesser of the sale price of the property or the ap-
praised value of the property as of the time of such sale.’’. 
SEC. 224. LENDER REPURCHASE REQUIREMENT. 
(a) REQUIREMENT.—The FHA may not newly in-
sure, under any provision of this title, the National Hous-
ing Act, or any FHA program, any mortgage on a 1- to 
4-family residential property unless the mortgagee under 
such mortgage enters into such binding agreements as the 
FHA considers necessary to ensure that, if the mortgagor 
is in default with respect to the mortgagor’s obligation to 
make payments under the mortgage for 60 or more con-
secutive days during the 6-month period beginning upon 
origination of the mortgage, the mortgagee will, except as 
provided pursuant to subsection (b) and upon notice by 
the FHA, repurchase such mortgage in an amount equal 
to the remaining principal obligation under the mortgage, 
as determined in accordance with guidelines issued by the 
FHA. 
(b) EXCEPTION.—The FHA shall provide, by regula-
tion, for the FHA to waive the applicability of any binding 
agreements regarding repurchase of a mortgage entered 
into by a mortgagee pursuant to subsection (a) in cases 
in which hardship circumstances for the mortgagor mate-
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rially contributed to the default of the mortgage. For pur-
poses of this subsection, such hardship circumstances may 
include divorce, job or other income loss, health problems, 
death in the family, and such other situations as the FHA 
may prescribe. 
(c) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act. During the tran-
sition period under section 551, any reference in this sec-
tion to the FHA shall be construed to refer to the Sec-
retary of Housing and Urban Development to the extent 
the Secretary has not delegated authority under this sec-
tion to the FHA pursuant to section 552(1). 
SEC. 225. INDEMNIFICATION BY MORTGAGEES. 
(a) IN GENERAL.—If the FHA determines that at or 
before the time of loan closing the mortgagee knew, or 
should have known based on the information then reason-
ably available to the mortgagee, of a serious and material 
violation of the requirements established by the FHA with 
respect to a mortgage executed after the date of the enact-
ment of this Act by such mortgagee approved by the FHA 
under the direct endorsement program or insured by a 
mortgagee pursuant to the delegation of authority under 
section 256 of the National Housing Act (12 U.S.C. 
1715z–21) such that the mortgage loan should not have 
been approved and endorsed for insurance, and the FHA 
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pays an insurance claim with respect to the mortgage 
within a reasonable period specified by the FHA, the FHA 
may require the mortgagee approved by the FHA under 
the direct endorsement program or the mortgagee dele-
gated authority under such section 256 to indemnify the 
FHA for the loss, or any portion thereof, if the violation 
was a materially contributing factor to the cause of the 
mortgage default. 
(b) FRAUD OR MATERIAL MISREPRESENTATION.—If 
fraud or material misrepresentation was involved in con-
nection with the origination or underwriting of a mortgage 
executed after enactment by the mortgagee and the FHA 
determines that at or before the time of loan closing such 
mortgagee knew or should have known, based on the infor-
mation then reasonably available to such mortgagee, of the 
fraud or material misrepresentation such that the mort-
gage loan should not have been approved and endorsed 
for insurance, the FHA shall require the mortgagee ap-
proved by the FHA under the direct endorsement program 
or the mortgagee delegated authority under such section 
256 to indemnify the FHA for the loss, or any portion 
thereof, if the fraud or material misrepresentation was a 
materially contributing factor to the cause of the mortgage 
default. 
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(c) APPEALS PROCESS.—The FHA shall, by regula-
tion, establish an appeals process for mortgagees to appeal 
indemnification determinations made pursuant to sub-
section (a) or (b). 
(d) REQUIREMENTS AND PROCEDURES.—The FHA 
shall issue regulations establishing appropriate require-
ments and procedures governing the indemnification of the 
FHA by the mortgagee, including public reporting on— 
(1) the number of loans that— 
(A) were not originated or underwritten in 
accordance with the requirements established by 
the FHA; 
(B) involved fraud or material misrepre-
sentation in connection with the origination or 
underwriting that was a material contributing 
factor to the cause of the mortgage default; and 
(C) the financial impact on the Mutual 
Mortgage Insurance Fund when indemnification 
is required. 
(e) QUALITY CONTROL AND ASSURANCE.— 
(1) MANUAL.—The FHA shall, pursuant to its 
existing regulatory authority, issue and update an-
nually a manual, handbook, or guide that collects all 
of the origination and underwriting requirements 
that a mortgagee must follow to make residential 
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mortgage loans eligible for insurance by the FHA 
which shall— 
(A) provide clear and concise directions so 
that a mortgagee can reasonably know what is 
expected of it; 
(B) identify examples of specific serious 
and material violations that could be the basis 
for an indemnification demand under this sec-
tion; 
(C) apply nationally and be interpreted by 
the FHA uniformly with respect to all mort-
gages endorsed for insurance; and 
(D) permit prospective changes with rea-
sonable advance notice to mortgagees, which 
such changes must be incorporated into the fol-
lowing year’s revised version of the manual, 
handbook, or guide and may not provide for 
retroactive changes to mortgages previously en-
dorsed for insurance. 
(2) REQUIREMENTS.—The FHA shall— 
(A) make prompt initial determinations of 
a mortgagee’s potential liability for either in-
demnification under this section or other ad-
ministrative remedies or sanctions that may be 
available under the National Housing Act or 
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other applicable laws, based on either self-re-
ports by the mortgagee or other findings by the 
FHA through its examination processes of po-
tential serious and material violations of such 
origination and underwriting requirements es-
tablished under paragraph (1) or other fraud 
and material misrepresentations; 
(B) promptly notify the mortgagee of such 
initial determination and afford the lender the 
opportunity to provide additional information 
and analysis before a final determination is 
made; and 
(C) not pursue indemnification under sub-
sections (a) and (b) with respect to those mort-
gages reviewed under this subsection unless an 
initial determination of mortgagee liability is 
made and communicated to the mortgagee with-
in six months of the FHA’s receipt of informa-
tion that is reasonably sufficient to enable the 
FHA to determine initially that a serious and 
material violation or fraud or material mis-
representation may have occurred. 
(f) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act. During the tran-
sition period under section 551, any reference in this sec-
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tion to the FHA shall be construed to refer to the Sec-
retary of Housing and Urban Development to the extent 
the Secretary has not delegated authority under this sec-
tion to the FHA pursuant to section 552(1). 
SEC. 226. PROHIBITIONS RELATING TO USE OF POWER OF 
EMINENT DOMAIN. 
(a) FHA.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, the FHA may not newly insure, 
under any provision of this title, the National Hous-
ing Act, or any FHA program, any mortgage that 
is secured by a structure or dwelling unit that is lo-
cated within a county that contains any structure or 
dwelling unit that secures or secured a residential 
mortgage loan which mortgage loan was obtained by 
the State during the preceding 120 months by exer-
cise of the power of eminent domain. 
(2) DEFINITIONS.—For purposes of this para-
graph, the following definitions shall apply: 
(A) RESIDENTIAL MORTGAGE LOAN.—The 
term ‘‘residential mortgage loan’’ means a 
mortgage loan that is evidenced by a promis-
sory note and secured by a mortgage, deed of 
trust, or other security instrument on a residen-
tial structure or a dwelling unit in a residential 
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structure. Such term includes a first mortgage 
or any subordinate mortgage. 
(B) STATE.—The term ‘‘State’’ includes 
the District of Columbia, the Commonwealth of 
Puerto Rico, and any territory or possession of 
the United States, and includes any agency or 
political subdivision of a State. 
(b) RURAL HOUSING.—Section 501 of the Housing 
Act of 1949 (42 U.S.C. 1471), as amended by the pre-
ceding provisions of this title, is further amended by add-
ing at the end the following new subsection: 
‘‘(o) PROHIBITION RELATING TO USE OF POWER OF 
EMINENT DOMAIN.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, the Secretary may not newly guar-
antee, make, or insure under this title any mortgage 
that is secured by a structure or dwelling unit that 
is located within a county that contains any struc-
ture or dwelling unit that secures or secured a resi-
dential mortgage loan which mortgage loan was ob-
tained by the State during the preceding 120 
months by exercise of the power of eminent domain. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
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‘‘(A) RESIDENTIAL
MORTGAGE
LOAN.— 
The term ‘residential mortgage loan’ means a 
mortgage loan that is evidenced by a promis-
sory note and secured by a mortgage, deed of 
trust, or other security instrument on a residen-
tial structure or a dwelling unit in a residential 
structure. Such term includes a first mortgage 
or any subordinate mortgage. 
‘‘(B) STATE.—The term ‘State’ has the 
meaning given such term in section 502(h)(12), 
and includes any agency or political subdivision 
of a State.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—This section and the amend-
ment made by this section shall take effect on the 
date of the enactment of this Act. 
(2) TRANSITION PERIOD.—During the transi-
tion period under section 551— 
(A) any reference in subsection (a) to the 
FHA shall be construed to refer to the Sec-
retary of Housing and Urban Development to 
the extent such Secretary has not delegated au-
thority under subsection (a) to the FHA pursu-
ant to section 552(1); and 
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(B) any reference in section 501(o) of the 
Housing Act of 1949 to the Secretary shall be 
construed to refer to the FHA to the extent the 
Secretary has delegated authority under such 
section 501(o) pursuant to section 552(4). 
SEC. 227. RESIDUAL INCOME REQUIREMENT. 
(a) IN GENERAL.—The FHA may not newly insure, 
under any provision of this title, the National Housing 
Act, or title V of the Housing Act of 1949, or under any 
FHA program, any mortgage on a 1- to 4-family residen-
tial property unless the mortgagor under such mortgage 
meets such requirements as the FHA shall, by regulation, 
establish to ensure that the mortgagor has sufficient resid-
ual income. 
(b) RESIDUAL INCOME.—For purposes of this sec-
tion, the term ‘‘residual income’’ means, with respect to 
a mortgagor, the net monthly income of the mortgagor, 
as provided by regulation by the FHA, after taking into 
consideration— 
(1) any assets of the mortgagor other than the 
property subject to such mortgage; and 
(2) any monthly obligations of the mortgagor 
with respect to mortgage payments, insurance pay-
ment, and taxes for the property subject to the 
mortgage, income and other taxes, maintenance, and 
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utility expenses for the property, child care expenses, 
auto, consumer, and any other debt obligations, ali-
mony and child support expenses, and such other ex-
penses as the FHA may provide. 
(c) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act. During the tran-
sition period under section 551, any reference in this sec-
tion to the FHA shall be construed to refer to the Sec-
retary of Housing and Urban Development to the extent 
the Secretary has not delegated authority under this sec-
tion to the FHA pursuant to section 552(1). 
SEC. 228. EFFECTIVE DATE. 
This subtitle and the amendments made by this sub-
title (except for sections 224, 225, 226, and 227, and any 
amendments made by such sections) shall take effect upon 
the expiration of the transition period under section 661. 
Subtitle C—Miscellaneous 
SEC. 241. RULE OF CONSTRUCTION. 
Notwithstanding any other evidence of the intent of 
the Congress, it is hereby declared to be the intent of Con-
gress that the provisions of this title shall be construed 
broadly to achieve the purposes of the title, and the provi-
sions of any other Act that must be construed with any 
provision of this title shall similarly be construed to 
achieve the purposes of this title to the extent reasonably 
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possible. This section shall take effect on the date of the 
enactment of this Act. 
SEC. 242. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply: 
(1) BOARD.—The term ‘‘Board’’ means the 
Board of Directors of the FHA established under 
section 524. 
(2) DIRECTOR.—The term ‘‘Director’’ means 
the Director of the Federal Housing Finance Agen-
cy. 
(3) FHA.—The term ‘‘FHA’’ means the Fed-
eral Housing Administration established under this 
title. 
(4) FIRST-TIME HOMEBUYER.—The term ‘‘first- 
time homebuyer’’ means an individual who meets 
any of the following criteria: 
(A) An individual, and his or her spouse, 
who has never had ownership in a principal res-
idence, as evidenced by inclusion of such indi-
vidual’s name on a mortgage, title, or deed in 
connection with such ownership. 
(B) A single parent (as such term is de-
fined in section 956 of the Cranston-Gonzalez 
National Affordable Housing Act (42 U.S.C. 
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12713)) who has only owned a principal resi-
dence with a former spouse while married. 
(C) An individual who is divorced, whose 
only ownership in a principal residence was to-
gether with a previous spouse, as evidenced by 
inclusion of such individual’s name on a mort-
gage, title, or deed in connection with such 
ownership. 
(D) An individual who is a displaced home-
maker (as such term is defined in such section 
956 of the Cranston-Gonzalez National Afford-
able Housing Act) and has only owned a prin-
cipal residence with a spouse. 
(E) An individual who has only owned a 
principal residence not permanently affixed to a 
permanent foundation in accordance with appli-
cable regulations. 
(F) An individual who has only owned a 
property that was not in compliance with state, 
local or model building codes and which cannot 
be brought into compliance for less than the 
cost of constructing a permanent structure. 
(5) NATIVE
AMERICAN
GOVERNMENT.—The 
term ‘‘Native American government’’ means the gov-
ernment of any Indian or Alaska native tribe, band, 
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nation, pueblo, village or community that the Sec-
retary of the Interior acknowledges to exist as an In-
dian Tribe, pursuant to the Federally Recognized 
Indian Tribe List Act of 1994. 
(6) 
UNITED
STATES.—The 
term 
‘‘United 
States’’ includes the States, the District of Colum-
bia, the Commonwealth of Puerto Rico, the Com-
monwealth of the Northern Mariana Islands, Guam, 
the Virgin Islands, American Samoa, and Native 
American governments. 
TITLE III—DEVELOPMENT AND 
DEPLOYMENT OF A MORT-
GAGE SECURITY MARKET EX-
CHANGE, DATA REPOSITORY, 
AND COVERED BOND MARKET 
SEC. 301. PURPOSES. 
The purposes of the national mortgage security mar-
ket exchange created by this title are— 
(1) to enhance efficiency, liquidity, and security 
in the secondary market for residential mortgages, 
including mortgage-backed securities; 
(2) to establish standards related to originating 
and servicing eligible collateral and for issuers and 
trustees of qualified securities, which would be ex-
empt from the Securities Act of 1933; 
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(3) to improve uniformity, quality and accessi-
bility of information related to the performance of 
residential mortgage loans; 
(4) to operate a common securitization platform 
that could be available to issuers of residential mort-
gage-backed securities; 
(5) to foster the use and uniformity of elec-
tronic methods for the creation, authentication, 
transmission, storage, and availability of materials 
relating to mortgages; 
(6) to provide a central repository for notes, 
mortgages, and other mortgage-related information, 
and address problems that can arise when paper 
notes cannot be produced, due to loss or destruction 
as a result of natural disaster or other causes; and 
(7) to provide a uniform procedure for dem-
onstrating the right to act with regard to such notes 
or other registered data for all actions in any State 
or Federal proceeding, judicial or nonjudicial, involv-
ing such notes or other data. 
SEC. 302. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply: 
(1) AFFILIATE.—With respect to the Exchange, 
the term ‘‘affiliate’’ means any entity that controls, 
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is controlled by, or is under common control with, 
the Exchange. 
(2) AGENCY.—The term ‘‘Agency’’ means the 
Federal Housing Finance Agency. 
(3) 
COMMON
SECURITIZATION
PLATFORM; 
PLATFORM.—The terms ‘‘Common Securitization 
Platform’’ and ‘‘Platform’’ mean the securitization 
platform first described by the paper issued by the 
Agency on October 4, 2012, entitled ‘‘Building a 
New Infrastructure for the Secondary Mortgage 
Market’’, and updated in subsequent documents re-
leased by the Agency, including annual strategic 
plans for the conservatorship of the enterprises and 
annual conservatorship scorecards. 
(4) COMMON
SECURITIZATION
SOLUTIONS.— 
The term ‘‘Common Securitization Solutions’’ means 
Common Securitization Solutions, LLC, the joint 
venture formed by the enterprises in October 2013, 
or any successor to Common Securitization Solu-
tions, LLC, that is a joint venture of the enterprises. 
(5) 
DEPOSITOR.—The 
term 
‘‘depositor’’ 
means— 
(A) any person authorized to submit docu-
ments or data for registration with the Reposi-
tory; and 
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(B) any person qualified pursuant to sec-
tion 331 (relating to organization and operation 
of the Repository) to inform the Repository 
of— 
(i) newly identified interest holders, 
whether through creation, assignment, or 
transfer; or 
(ii) changes to interests of existing 
holders, including through modification, 
amendment, or restatement of, or dis-
charge related to, any registered mortgage- 
related document. 
(6) DIRECTOR.—The term ‘‘Director’’ means 
the Director of the Federal Housing Finance Agen-
cy. 
(7) ELIGIBLE COLLATERAL.—The term ‘‘eligi-
ble collateral’’ means a residential mortgage loan 
that meets any standard for mortgage classification 
established pursuant to section 322 (relating to 
standards for qualified securities). 
(8) 
ENTERPRISE.—The 
term 
‘‘enterprise’’ 
means— 
(A) the Federal National Mortgage Asso-
ciation and any affiliate thereof, and 
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(B) the Federal Home Loan Mortgage 
Corporation and any affiliate thereof. 
(9) EXCHANGE.—The term ‘‘Exchange’’ means 
the mortgage security market exchange established 
under section 311. 
(10) 
EXCHANGE-AFFILIATED
PARTY.—The 
term ‘‘exchange-affiliated party’’ means— 
(A) any director, officer, employee or con-
trolling shareholder of, or agent for, the Ex-
change; 
(B) any shareholder, affiliate, consultant, 
or joint venture partner of the Exchange, 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 the 
Exchange; and 
(C) any independent contractor of the Ex-
change (including any attorney, appraiser or ac-
countant) if— 
(i) the independent contractor know-
ingly or recklessly participates in any viola-
tion of law or regulation, any breach of fi-
duciary duty, or any unsafe or unsound 
practice; and 
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(ii) such violation, breach or practice 
caused, or is likely to cause, more than a 
minimal financial loss to, or a significant 
adverse effect on, the Exchange. 
(11) MORTGAGE-RELATED
DOCUMENT.—The 
term ‘‘mortgage-related document’’ means any docu-
ment or other information or data related to the use 
of residential real estate as security for a loan, in-
cluding documents establishing an obligation to 
repay a loan secured by residential real estate, es-
tablishing a security interest in real estate (so long 
as such security interest has first been recorded or 
registered under State law to establish the priority 
of such interest), establishing the value of the real 
estate at the time the security interest is created, 
and insuring clear title to residential real estate 
pledged as security, or as the Director by regulation 
may define. Such documents may include electronic 
documents. 
(12) 
ORGANIZER.—The 
term 
‘‘organizer’’ 
means the person or entity that establishes the Ex-
change. 
(13) PARTICIPANT.—The term ‘‘participant’’ 
means any person authorized to use data maintained 
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or created by the Repository that is not otherwise 
available to the public. 
(14) REPOSITORY.—The term ‘‘Repository’’ 
means the national mortgage data repository orga-
nized under section 331. 
(15) TRANSFER
DATE.—The term ‘‘Transfer 
Date’’ means the date established under section 
315(b). 
(16) TRANSITION PERIOD.—The term ‘‘Transi-
tion Period’’ means the period beginning on the date 
of the enactment of this Act and ending on the 
Transfer Date. 
Subtitle A—Establishment and 
Authority of the Exchange 
SEC. 311. ESTABLISHMENT. 
(a) AUTHORITY OF DIRECTOR.—Under such regula-
tions as the Director may prescribe, the Director shall pro-
vide for the organization, incorporation, examination, op-
eration, and regulation of a Mortgage Security Market Ex-
change (‘‘Exchange’’). The Exchange shall be organized, 
operated, and managed as a not-for-profit entity. 
(b) FORMATION OF EXCHANGE; APPLICATION.— 
(1) FORMATION.—Subject to the terms of this 
subtitle and any regulations issued by the Director, 
a person or entity may file an application with the 
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Director to establish the Exchange. The Exchange 
may be established as a corporation, mutual associa-
tion, partnership, limited liability corporation, coop-
erative, or any other organizational form that the 
applicant may deem appropriate. 
(2) CONTENTS OF APPLICATION.—An applica-
tion for establishment of the Exchange shall in-
clude— 
(A) the proposed articles of association; 
(B) a statement of the general object and 
purpose of the Exchange, consistent with the 
provisions of this subtitle; 
(C) the proposed capitalization and busi-
ness plan for the Exchange; 
(D) the proposed State whose law would 
govern, by election of the applicant, the oper-
ation of the Exchange to the extent not other-
wise covered by this subtitle; 
(E) information on the financial resources 
of the applicant; 
(F) a statement of the relevant housing fi-
nance experience of the applicant; 
(G) identification of the proposed senior 
managers of the Exchange, and the relevant ex-
perience of such individuals; and 
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100 
(H) any other information the Director de-
termines to be necessary to evaluate the back-
ground, experience, and integrity of the appli-
cant and the proposed senior managers, or in-
formation otherwise relevant to determine the 
likely success of the proposed Exchange. 
(3) DIRECTORS.—The Exchange shall be gov-
erned by a board of directors— 
(A) a majority of which have experience in 
housing and housing finance businesses; 
(B) at least one of which shall have knowl-
edge of smaller financial institutions; and 
(C) at least one of which shall have knowl-
edge of residential mortgage securitization in-
vesting. 
(4) SELECTION OF APPLICANT.—The Director 
shall select the applicant to establish the Exchange 
that the Director determines, in the Director’s sole 
discretion, has the managerial, financial, and oper-
ational resources to succeed, consistent with the pur-
poses of this subtitle 
(c) STATUS.— 
(1) NOT A FEDERAL GOVERNMENT INSTRUMEN-
TALITY.—The Exchange is not, and shall not be 
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101 
deemed to be, a department, agency, or instrumen-
tality of the United States Government. 
(2) SUPERVISION.—Notwithstanding any other 
provision of law— 
(A) the Exchange shall be subject to exclu-
sive supervision by the Agency, and the Agency 
shall have sole enforcement authority with re-
spect to the Exchange for any violation of Fed-
eral law; 
(B) the Exchange shall not be subject to 
designation under the Payment, Clearing, and 
Settlement Supervision Act of 2010; and 
(C) the Exchange is authorized to conduct 
its business without regard to any qualification 
or similar statute in any State. 
(3) EXEMPTION
FROM
TAXATION.—The Ex-
change shall be exempt from all taxation imposed by 
the United States, any territory, dependency, or pos-
session of the United States or any State, county, 
municipality, or local taxing authority, except that 
any real property of the Repository shall be subject 
to State, territorial, county, municipal, or local tax-
ation to the same extent according to its value as 
other real property. 
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102 
(d) REPORTS TO CONGRESS.—Commencing with the 
first annual report of the Director following the date of 
the enactment of this Act, the annual report of the Direc-
tor under section 1319B of the Federal Housing Enter-
prises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4521) shall include a description of the Agency’s 
activities with regard to organization, incorporation, ex-
amination, operation, and regulation of the Exchange. 
SEC. 312. GENERAL POWERS; AUTHORIZED AND PROHIB-
ITED ACTIVITIES. 
(a) GENERAL POWERS.—The Exchange may— 
(1) adopt and use a corporate seal; 
(2) determine a State whose law will govern the 
corporate business activities of the Exchange; 
(3) adopt, amend, and repeal by-laws; 
(4) sue or be sued, subject to section 334 (re-
lating to judicial review); 
(5) make contracts, incur liabilities, and borrow 
money; 
(6) purchase, receive, hold, and use real and 
personal property and other assets necessary for the 
conduct of its operations; 
(7) elect or appoint directors, officers, employ-
ees and agents, subject to section 311(d); and 
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103 
(8) upon receipt of the Director’s prior written 
approval, establish subsidiaries or affiliates that 
shall be subject to the same rights, duties and re-
sponsibilities as the Exchange. 
(b) AUTHORIZED ACTIVITIES.—In addition to the 
general powers under subsection (a), the Exchange shall— 
(1) develop standards and disclosures related to 
originating, pooling, and securitizing residential 
mortgage loans in accordance with subtitle B; 
(2) develop standards and disclosures related to 
servicing residential mortgage loans in accordance 
with subtitle B; 
(3) operate and maintain the Platform and es-
tablish fees for use of the Platform; 
(4) establish basic rules for use of the Platform; 
(5) establish the Repository and establish fees 
for registration of mortgage-related documents and 
maintenance and use of data of the Repository, in 
accordance with subtitle C; 
(6) perform any other service or engage in any 
other activity that the Director determines, by regu-
lation or order, to be incidental to the activities enu-
merated in this subsection; and 
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104 
(7) establish fees for the provision of other re-
lated or incidental services not inconsistent with the 
purposes of this subtitle. 
(c) PROHIBITED ACTIVITIES.—The Exchange may 
not— 
(1) own, originate, aggregate, issue, service, in-
sure, or guarantee any residential mortgage or other 
financial instrument that is associated with a resi-
dential mortgage; 
(2) guarantee timely payment of principal or in-
terest on any mortgage-related security; 
(3) adopt access rules or fees for the Platform 
the effect of which is to discriminate against loan 
originators, aggregators, or issuers based on size, 
composition, business line, or loan volume; or 
(4) perform any service or engage in any activ-
ity other than those authorized under this subtitle, 
unless such activity has been determined by the Di-
rector to be incidental to an authorized activity. 
SEC. 
313. 
MISSION 
AND 
STRUCTURE 
OF 
COMMON 
SECURITIZATION SOLUTIONS. 
(a) MISSION.—Prior to the Transfer Date, the mis-
sion of Common Securitization Solutions shall be to ac-
complish the following goals: 
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105 
(1) Developing a Common Securitization Plat-
form— 
(A) that is based upon interoperable tech-
nology and standards that can accommodate all 
platform users; and 
(B) that ensures fair and non-discrimina-
tory access for any issuer, enterprise, servicer, 
agency, or other counterparty. 
(2) Developing a uniform contractual and dis-
closure framework that facilitates a deep, liquid, and 
resilient secondary mortgage market for mortgage- 
backed securities. 
(3) Developing functions to support the non- 
Government guaranteed securitization market. 
(4) Continuing, advancing, or developing any 
other initiative as authorized by the CSS Board of 
Managers, with the approval of the Director, to en-
hance efficiency, liquidity, and security in the sec-
ondary market for residential mortgage loans, pro-
vided such initiative does not conflict with or unrea-
sonably delay the completion of the goals described 
under paragraph (1), (2), or (3). 
(b) CSS BOARD OF MANAGERS.— 
(1) SIZE.—The size of the membership of the 
CSS Board of Managers shall be fixed at: 
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106 
(A) For the one-year period beginning 
upon commencement of the Transition Period, 
four members. 
(B) For the one-year period following the 
period described under subparagraph (A), seven 
members. 
(C) After the end of the one-year period 
described under subparagraph (B), nine mem-
bers. 
(2) APPOINTMENT AND QUALIFICATIONS.—The 
Director shall appoint the additional members re-
quired under paragraph (1) from among individuals 
that— 
(A) have demonstrated knowledge of, or 
experience in, financial management, financial 
services, risk management, information tech-
nology, 
mortgage 
securitization, 
secondary 
mortgage markets, or housing finance; and 
(B) will not be simultaneously employed by 
an enterprise or serving as a director of an en-
terprise. 
(3) FIDUCIARY
DUTY.—All members of CSS 
Board of Managers shall owe a fiduciary duty to the 
enterprises prior to the Transfer Date. 
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107 
SEC. 314. TRANSITION PERIOD. 
(a) REQUIRED ACTIVITIES PRIOR TO THE TRANSFER 
DATE.— 
(1) IN GENERAL.—Prior to the Transfer Date, 
Common Securitization Solutions shall develop, pro-
mulgate, and finalize standards that— 
(A) develop a uniform contractual and dis-
closure framework for issuers, including issuers 
other than the enterprises; 
(B) specify the requirements for loans that 
may serve as collateral for mortgage-backed se-
curities 
issued 
through 
the 
Common 
Securitization Platform, including securities 
that will be issued by issuers other than the en-
terprises; and 
(C) specify the requirements for operating 
and maintaining the Common Securitization 
Platform and the establishment of reasonable 
fees for use of the Common Securitization Plat-
form. 
(2) APPROVAL AND MODIFICATIONS OF STAND-
ARDS.— 
(A) INITIAL STANDARDS.—In establishing 
the standards described under paragraph (1), 
Common Securitization Solutions shall use es-
tablished industry standards as a basis for 
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108 
standardization requirements for the issuance 
of 
such 
securities 
through 
the 
Common 
Securitization Platform. 
(B) 
APPROVAL
OF
STANDARDS.—The 
standards developed pursuant to paragraph (1) 
shall be subject to approval by a 2⁄3 vote of the 
CSS Board of Managers and by the Director. 
(C) REVISIONS TO STANDARDS.—Common 
Securitization Solutions or the Exchange, as 
applicable, may revise the standards established 
pursuant to paragraph (1) from time to time as 
may be necessary. Material revisions to such 
standards shall require a 2⁄3 vote of the CSS 
Board of Managers or the board of directors of 
the Exchange, as applicable, and approval of 
the Director. 
(3) ISSUING SECURITIES AND ENSURING CAPA-
BILITIES.— 
(A) IN GENERAL.—The Director shall es-
tablish a date or dates, not later than 2 years 
after the date of enactment of this Act, by 
which Common Securitization Solutions shall 
facilitate the issuance of securities by issuers 
other than the enterprises to issue mortgage- 
backed securities. 
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(B) EXCEPTION.—The Director may delay 
a date established under subparagraph (A) for 
1 year if the Director, in consultation with the 
Federal Housing Finance Oversight Board— 
(i) determines that— 
(I) facilitation of such securities 
is not feasible within that period of 
time and could adversely impact the 
housing market; or 
(II) the capabilities of other enti-
ties is not feasible within that period 
of time and could adversely impact fa-
cilitating the issuance of securities by 
the enterprises; and 
(ii) submits to Congress a report de-
scribing the justification for the determina-
tions made under clause (i). 
(4) TRANSFER OF FUNDS FROM THE ENTER-
PRISES.—At a time established by the Director, but 
not later than the Transfer Date, the Agency shall 
transfer to Common Securitization Solutions such 
funds from the enterprises as the Director, after 
consultation with the CSS Board of Managers, de-
termines may be reasonably necessary for Common 
Securitization Solutions to begin carrying out the 
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operations 
and 
activities 
of 
the 
Common 
Securitization Platform and the contractual and dis-
closure framework. 
(b) REPORTS
ON
DEVELOPMENT
AND
TRANSI-
TION.— 
(1) QUARTERLY REPORT ON DEVELOPMENT.— 
Not later than 1 year after the date of enactment 
of this Act, and every quarter thereafter until the 
Transfer Date, the Director shall submit to Con-
gress a report on the status of the development of 
the Common Securitization Platform and the con-
tractual and disclosure framework, which shall in-
clude— 
(A) the projected timelines, including 
issues and impediments, for— 
(i) completing development of the 
Common Securitization Platform to sup-
port the securitization needs of the enter-
prises; and 
(ii) completing development of the 
Common Securitization Platform and the 
contractual and disclosure framework to 
support the securitization needs of issuers 
other than the enterprises; and 
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111 
(B) the projected budget, including costs 
incurred by Common Securitization Solutions 
and the enterprises, for the development of the 
Common Securitization Platform and the con-
tractual and disclosure framework. 
(2) REPORT ON TRANSITION.—Not later than 2 
years after the date of enactment of this Act, the 
Director shall develop a plan, and submit to the 
Committee on Banking, Housing, and Urban Affairs 
of the Senate and the Committee on Financial Serv-
ices of the House of Representatives a report on 
such plan, to transition, by the Transfer Date, the 
Common Securitization Platform and the contrac-
tual and disclosure framework from Common 
Securitization Solutions into a private, nonprofit en-
tity that best facilitates a deep, liquid, and resilient 
secondary mortgage market for mortgage-backed se-
curities. 
(3) 
ANNUAL
REPORT
ON
THE
COMMON 
SECURITIZATION
PLATFORM.—The Inspector Gen-
eral of the Agency shall issue an annual report to 
the Congress on the status of the Common 
Securitization Platform until the Transfer Date. 
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SEC. 315. TRANSFER DATE. 
(a) TRANSFER OF PLATFORM TO EXCHANGE.—Com-
mon Securitization Solutions shall transition the Common 
Securitization Platform and the contractual and disclosure 
framework, including any associated intellectual property, 
technology, systems, and infrastructure, at the Transfer 
Date, to the Exchange, in accordance with this Act. 
(b) TRANSFER DATE.— 
(1) DESIGNATED TRANSFER DATE.—The Direc-
tor shall establish a Transfer Date for the transition 
of ownership of the Common Securitization Platform 
and the contractual disclosure framework, including 
any associated intellectual property, technology, sys-
tems, and infrastructure, from the enterprises and 
Common Securitization Solutions to the Exchange. 
(2) 
PUBLIC
NOTICE.—In 
establishing 
the 
Transfer Date under paragraph (1), the Director 
shall provide notice to the public of such date, in-
cluding on the website of the Agency. 
(3) DEADLINE.—The Transfer Date established 
under paragraph (1) shall be no earlier than 2 years 
after the date of the enactment of this Act and no 
later than the date on which both charters of the en-
terprises are terminated pursuant to section 1367(k) 
of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992. 
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(c) TRANSFER OF PROPERTY.— 
(1) IN GENERAL.—At a time established by the 
Director, but not later than the Transfer Date, the 
Director shall direct the enterprises or Common 
Securitization Solutions to transfer or sell to the Ex-
change any property, including intellectual property, 
technology, systems, and infrastructure (including 
technology, systems, and infrastructure developed by 
the enterprises for the Common Securitization Plat-
form), as well as any other legacy systems, infra-
structure, and processes that may be necessary to 
carry out their operations and activities. 
(2) CONTRACTUAL AND OTHER LEGAL OBLIGA-
TIONS.—As may be necessary for the Agency and 
the enterprises to comply with legal, contractual, or 
other obligations, the Director shall have the author-
ity to require that any transfer authorized under 
paragraph (1) occurs as an exchange for value, in-
cluding through the provision of appropriate com-
pensation to the enterprises or other entities respon-
sible for creating, or contracting with, the Exchange. 
SEC. 316. REPAYMENT OF COST. 
(a) IN GENERAL.—Not later than 10 years after the 
Transfer Date, the total cost of the property transferred 
in accordance with section 315(c) at the time of the transi-
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114 
tion, as determined by the Director, in consultation with 
the Federal Housing Finance Oversight Board, shall be 
repaid by the Exchange to the entity that owned the prop-
erty prior to the time of transfer. 
(b) THIRD-PARTY VALUATION.—Before the repay-
ment required under subsection (a), the Director shall 
contract with a third-party to provide a valuation of the 
total cost of the property transferred in accordance with 
section 315(c) at the time of the transition. 
(c) FEES PERMITTED.—The Exchange may charge 
a reasonable fee for the use of the Common Securitization 
Platform and other services, for the purpose of making 
the repayment described under subsection (a). 
SEC. 317. REGULATION, SUPERVISION, AND ENFORCEMENT. 
(a) GENERAL OVERSIGHT.—The Director shall exer-
cise, by rule, order, or guidance, oversight of the Ex-
change, which shall include the authority to regulate, su-
pervise, and examine the Exchange and take enforcement 
actions against the Exchange or any Exchange-affiliated 
party, consistent with the provisions of the Federal Hous-
ing Enterprise Financial Safety and Soundness Act of 
1992. 
(b) SCOPE OF AUTHORITY.—The authority of the Di-
rector under this section shall include the authority to ex-
ercise such incidental powers as may be necessary or ap-
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115 
propriate to fulfill the duties and responsibilities of the 
Director in the oversight, supervision, and regulation of 
the Exchange. 
(c) CONSULTATION WITH OTHER AGENCIES.—In ex-
ercising authority to regulate and supervise the Exchange, 
the Director shall consult with other Federal departments 
and agencies that regulate or supervise entities, institu-
tions, or companies that are or may become subject to 
standards, rules, processes, or procedures developed by the 
Exchange (including issuers through the Platform and de-
positors or participants in the Repository), including the 
Government National Mortgage Association, the Bureau 
of Consumer Financial Protection, any Federal banking 
agency (as defined under section 3 of the Federal Deposit 
Insurance Act), and the National Credit Union Adminis-
tration. 
(d) ANNUAL ASSESSMENT.—The Director shall es-
tablish and collect from the Exchange an annual assess-
ment in an amount not exceeding the amount sufficient 
to provide for reasonable costs (including administrative 
costs) and expenses of the Agency related to its oversight 
of the Exchange. The amounts received by the Director 
from assessments under this section shall not be construed 
to be Government or public funds or appropriated money. 
Notwithstanding any other provision of law, the amounts 
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received by the Director from assessments under this sec-
tion shall not be subject to apportionment for the purpose 
of chapter 15 of title 31, United States Code, or under 
any other authority. 
Subtitle B—Standards for Qualified 
Securities 
SEC. 321. QUALIFIED SECURITIES. 
For purposes of this subtitle, the term ‘‘qualified se-
curity’’ means a security that— 
(1) is collateralized by a class, or multiple class-
es, of residential mortgages established under sec-
tion 322(a); 
(2) is issued in accordance with a standard 
form securitization agreement under section 322(d); 
(3) is issued in accordance with section 322(c); 
(4) is issued through the Platform; and 
(5) is not guaranteed, in whole or in part, by 
the United States Government. 
SEC. 322. STANDARDS FOR QUALIFIED SECURITIES. 
(a) STANDARD MORTGAGE CLASSIFICATIONS.— 
(1) ESTABLISHMENT
OF
MORTGAGE
CLASSI-
FICATIONS.—The Exchange shall prescribe classi-
fications for residential mortgages having various de-
grees of credit risk, ranging from a classification of 
mortgages having little to no credit risk to a classi-
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fication of mortgages having higher credit risk. In 
prescribing such classifications the Exchange shall 
seek to allow for the pricing of credit risk, allow for 
the trading of securities collateralized by each classi-
fication of mortgages established pursuant to this 
subsection in the forward market, and maintain well- 
functioning liquid markets in securities collateralized 
by each of the classifications of mortgages estab-
lished pursuant to this subsection. 
(2) UNDERWRITING CRITERIA.—For each clas-
sification of mortgages established under paragraph 
(1), the Exchange shall establish standards for each 
of the following underwriting criteria: 
(A) DEBT-TO-INCOME
RATIO.—The ratio 
of the amount of the total monthly debt of the 
mortgagor to the amount of the monthly income 
of the mortgagor. 
(B) LOAN-TO-VALUE RATIO.—The ratio of 
the principal obligation under the mortgage to 
the value of the residence subject to the mort-
gage, at the time of mortgage origination. 
(C) CREDIT HISTORY.—Information on the 
credit history of the mortgagor, including credit 
scores of the mortgagor. 
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(D) LOAN DOCUMENTATION.—The extent 
of loan documentation and verification of the fi-
nancial resources of the mortgagor used to 
qualify the mortgagor for the mortgage, includ-
ing any appraisal. 
(E) OCCUPANCY.—Whether the residence 
subject to the mortgage is occupied by the 
mortgagor. 
(F) 
CREDIT
ENHANCEMENT.—Whether 
any mortgage insurance or other type of insur-
ance or credit enhancement was obtained at the 
time of origination. 
(G) LOAN PAYMENT TERMS.— 
(i) IN GENERAL.—The terms of the 
mortgage that determine the magnitude 
and timing of payments due from the 
mortgagor, including the term to maturity 
of the mortgage, the frequency of payment, 
the type of amortization, any prepayment 
penalties, and whether the interest rate is 
fixed or may vary. 
(ii) INCLUSION OF 30-YEAR FIXED IN-
TEREST
RATE.—Terms established under 
clause (i) shall include a 30-year fixed in-
terest rate mortgage. 
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(H) OTHER.—Such other underwriting cri-
teria as the Exchange may establish, consistent 
with the goals of this subtitle. 
(3) DEFINITIONS.—The Exchange shall, for 
purposes of this subsection, prescribe definitions for 
each of the following terms: 
(A) MORTGAGE.—The term ‘‘mortgage’’, 
which definition shall include only mortgages on 
residential properties. 
(B) DEFAULT.—The term ‘‘default’’, with 
respect to a mortgage. 
(C) DELINQUENCY.—The term ‘‘delin-
quency’’, with respect to a mortgage. 
(D) LOAN
DOCUMENTATION.—The term 
‘‘loan documentation’’, with respect to a mort-
gage. 
(E) 
ADDITIONAL
TERMS.—Such 
other 
terms as the Exchange may establish. 
(b) STANDARDS FOR AGGREGATORS.—The Exchange 
may develop, adopt, and publish standards for aggregation 
of eligible collateral by entities, institutions, or companies 
other than an issuer. Notwithstanding any such standards 
developed by the Exchange, any Federal Home Loan Bank 
may act as an aggregator and offer the service of aggrega-
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tion to any member of such Bank, subject to regulations 
prescribed by the Director. 
(c) STANDARDS FOR QUALIFIED ISSUERS.— 
(1) IN GENERAL.—The Exchange shall develop, 
adopt, and publish standards for an issuer to qualify 
as a qualified issuer. Such standards shall only in-
clude— 
(A) the experience, financial resources, and 
integrity of the issuer and its principals, includ-
ing compliance history with Federal and State 
laws; 
(B) the adequacy of insurance and fidelity 
coverage of the issuer with respect to errors 
and omissions; and 
(C) a requirement that the issuer submit 
audited financial statements to the Exchange, 
who shall make such statements publicly avail-
able through the Exchange’s Web site. 
(2) APPLICATION PROCESS.— 
(A) IN GENERAL.—The Exchange shall es-
tablish an application process for the qualifica-
tion of issuers, in such form and manner and 
requiring such information as the Exchange 
may prescribe, in accordance with standards 
adopted under paragraph (1). 
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(B) APPROVAL.—The Exchange shall ap-
prove any application made pursuant to sub-
paragraph (A) unless the issuer does not meet 
the standards adopted under paragraph (1). 
(C) PUBLICATION.—The Agency shall pub-
lish a list of newly qualified issuers in the Fed-
eral Register and the Exchange shall maintain 
an updated list of qualified issuers on the Ex-
change’s Web site. 
(3) REVIEW AND REVOCATION OF QUALIFIED 
STATUS.— 
(A) IN GENERAL.—The Exchange may re-
view the status of a qualified issuer if the Ex-
change is notified that a claim has been made 
against the issuer by a trustee with respect to 
a violation of a contractual term in a 
securitization document of the issuer. 
(B) REVOCATION.— 
(i) IN GENERAL.—Subject to subpara-
graph (C), if the Exchange determines, 
subject to the approval of the Director, in 
a review pursuant to subparagraph (A), 
that an issuer no longer meets the stand-
ards for qualification, the Exchange shall 
revoke the issuer’s qualified status. 
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(ii) CONSTRUCTION.—The revocation 
of an issuer’s qualified status under this 
subparagraph shall— 
(I) have no effect on the qualified 
status of any security issued before 
such revocation; and 
(II) not relieve the issuer of any 
obligation associated with any rep-
resentation or warranty or any repur-
chase obligations related to any quali-
fied security issued before such rev-
ocation. 
(C) GRACE PERIOD.—The Exchange shall 
establish standards by which a qualified issuer 
who no longer meets the standards for quali-
fication may remediate and return to meeting 
the standards, without losing the issuer’s quali-
fied status. 
(D) PUBLICATION.—The Agency shall pub-
lish a list of issuers who are no longer qualified 
in the Federal Register and the Exchange shall 
maintain an updated list of such issuers on the 
Exchange’s Web site. 
(d) STANDARD
FORM
SECURITIZATION
AGREE-
MENTS.— 
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(1) IN GENERAL.—The Exchange shall develop, 
adopt, and publish standard form securitization 
agreements for collateral that will be used to back 
qualified securities. 
(2) REQUIRED CONTENT.—The standard form 
securitization agreements to be developed under 
paragraph (1) shall include terms relating to— 
(A) pooling and servicing; 
(B) purchase and sale; 
(C) representations and warranties, includ-
ing representations and warranties as to com-
pliance or conformity with standards estab-
lished by the Exchange, as appropriate; 
(D) indemnification and remedies, includ-
ing principles of a repurchase program that will 
ensure an appropriate amount of risk retention 
under the representations and warranties set 
forth under subparagraph (C); and 
(E) the qualification, responsibilities, and 
duties of trustees. 
(e) REGISTRATION WITH
THE REPOSITORY.—The 
Exchange shall require that any mortgage-related docu-
ment associated with collateral for qualified securities be 
registered with the Repository. 
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(f) STANDARDS
FOR SERVICING.—The Exchange 
shall develop, adopt, and publish— 
(1) servicing standards, including for the modi-
fication, restructuring, or work-out of any mortgage 
that serves as collateral for a qualified security; and 
(2) a servicer succession plan, which may in-
clude provisions for— 
(A) a specialty servicer that can replace 
the existing servicer if the performance of the 
mortgage pool deteriorates to specified levels; 
and 
(B) a plan to achieve consistency in serv-
icing systems related to systematic note-taking, 
consistent mailing addresses, and other points 
of contact for borrowers to use, among other 
items. 
(g) STANDARDS FOR SERVICER REPORTING.—The 
Exchange shall develop, adopt, and publish standards for 
the reporting obligations of servicers of any mortgage that 
serves as collateral for a qualified security. 
(h) DATA STANDARDS; DISCLOSURE STANDARDS.— 
(1) DATA
STANDARDS.—The Exchange shall 
develop, adopt, and publish standard data definitions 
for all aspects of loan origination, appraisals, and 
servicing. In developing such definitions, the Ex-
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125 
change shall consider the data standard-setting work 
undertaken by the Mortgage Industry Standards 
Maintenance Organization through the enterprises’ 
Uniform Mortgage Data Program announced by the 
Agency on May 24, 2010. 
(2) DISCLOSURE STANDARDS.—The Exchange 
shall develop, adopt, and publish standards for dis-
closure of loan origination, appraisal, and servicing 
data, including data required in subsection (a)(2) 
(relating to underwriting criteria) for residential 
mortgage loans that comprise qualified securities. 
(3) COORDINATION.—In developing the data 
and disclosure standards required by this subsection, 
the Exchange shall ensure that such standards are 
coordinated. 
(4) PRIVACY PROTECTIONS.—In prescribing the 
definitions and standards required under this sub-
section, the Exchange shall take into consideration 
issues of consumer privacy and all statutes, rules, 
and regulations related to privacy of consumer credit 
information and personally identifiable information. 
Such standards shall expressly prohibit the identi-
fication of specific borrowers. 
(5) CONSULTATION.—When reviewing any dis-
closure standards established under this subsection, 
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the Director shall consult with the Securities and 
Exchange Commission. 
(i) STANDARDS FOR TRUSTEES.— 
(1) IN GENERAL.—There shall at all times be 
one or more trustee for each pool of mortgages that 
acts as collateral for a qualified security. 
(2) RULEMAKING.—The Director shall issue 
regulations regarding the qualifications of trustees 
under paragraph (1) that shall, to the extent prac-
ticable, be consistent with the qualification provi-
sions applicable to trustees under section 310(a) of 
the Trust Indenture Act of 1939 (15 U.S.C. 
77jjj(a)). 
(3) CONFLICTS
OF
INTEREST.—The Director 
shall issue conflicts of interest regulations that apply 
to a qualified trustee. Such regulations shall, to the 
extent practicable, be consistent with those conflicts 
of interest provisions applicable to an indenture 
trustee under section 310(b) of the Trust Indenture 
Act of 1939 (15 U.S.C. 77jjj(b)). 
(4) REPORTING OF CLAIMS.—Any time a trust-
ee brings a claim against a qualified issuer on behalf 
of investors with respect to a standard form 
securitization agreement, the trustee shall notify the 
Director of such claim. 
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(5) PROTECTION OF INVESTOR RIGHTS.—For 
the purpose of protecting investor rights, each trust-
ee shall— 
(A) maintain a list of all investors (bene-
ficial owners) in a qualified security; 
(B) update such list from time to time; 
(C) not make such list available to inves-
tors (beneficial owners); and 
(D) act as a means to communicate infor-
mation about the qualified security to investors 
(beneficial owners) and act as a means for in-
vestors (beneficial owners) to communicate with 
each other. 
(6) NO LIABILITY FOR CERTAIN COMMUNICA-
TIONS.—A trustee shall not be liable for the content 
of any information provided to the trustee by an in-
vestor (beneficial owner) that the trustee commu-
nicates to another investor (beneficial owner). 
(7) INVESTOR (BENEFICIAL OWNER) NOTIFICA-
TION OF TRUSTEE.—A person who becomes an in-
vestor (beneficial owner) in a qualified security shall 
promptly notify the trustee of such security of the 
change in ownership. 
(j) INDEPENDENT THIRD PARTY.—If the majority of 
investors (beneficial owners) in a pool of qualified securi-
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ties chooses to hire an independent third party to act on 
behalf of the best interests of the investors (beneficial own-
ers), such party shall— 
(1) be granted access to the loan documents for 
the mortgage loans backing such security and all 
servicing reports the servicer provides to investors 
(beneficial owners) or the trustee; 
(2) be granted access to the list of investors 
(beneficial owners) maintained by the trustee, on the 
condition that the independent third party will not 
make the list available to the investors (beneficial 
owners); and 
(3) have the right, on behalf of the investors 
(beneficial owners), to inform the trustee of such se-
curities of any breach of the securitization agree-
ment identified by the third party. 
(k) MANDATORY ARBITRATION.— 
(1) IN
GENERAL.—All disputes between an 
owner of a qualified security and the qualified issuer 
of such security relating to representations and war-
ranties shall be subject to mandatory arbitration 
procedures established by the Exchange, in accord-
ance with current market practices. 
(2) SELECTION
OF
ARBITRATOR.—Investors 
(beneficial owners) and issuers subject to a dispute 
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129 
described under paragraph (1) shall have the right 
to agree on an independent arbitrator. If the parties 
cannot agree on an independent arbitrator, the Ex-
change shall select an independent arbitrator for the 
parties. 
(3) REPORTING DUTY OF ARBITRATOR.— 
(A) UPON
COMMENCEMENT.—The arbi-
trator shall provide the Exchange with notice 
upon commencement of any arbitration under 
this subsection. 
(B) UPON CONCLUSION.—Upon conclusion 
of any arbitration under this subsection, the ar-
bitrator shall provide the Exchange with— 
(i) the decision reached by the arbi-
trator; and 
(ii) the basis for the arbitrator’s deci-
sion, including any evidence or testimony 
received during the arbitration process. 
(l) USE OF STANDARDS.—In developing, adopting, 
and publishing the initial standards required under this 
section, the Exchange shall, to the extent practicable, uti-
lize the standards finalized by Common Securitization So-
lutions pursuant to section 314(a). 
(m) TIMING OF ISSUANCE; AGENCY REVIEW; AU-
THORITY TO REVISE STANDARDS.— 
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130 
(1) TIMING.—The Director shall issue any reg-
ulations required by this section not later than the 
end of the 12-month period beginning on the date of 
the enactment of this Act. The Exchange shall issue 
any definitions, standards, rules, processes, or proce-
dures required by this section not later than the end 
of the 12-month period beginning on the date of the 
establishment of the Exchange. 
(2) AGENCY
REVIEW.—Any definition, stand-
ard, rule, process or procedure established by the 
Exchange shall be submitted to the Director for re-
view and approval prior to its implementation if, in 
the Director’s discretion, the Director requires such 
submission. Any definition, standard, rule, process 
or procedure that the Director requires be submitted 
to the Agency for review and approval shall be re-
viewed within three months of submission. 
(3) AUTHORITY TO REVISE.— 
(A) IN GENERAL.—The Exchange may re-
view, revise, and, if revised, re-publish any 
standard form securitization agreement or other 
definition, standard, rule, process, or procedure 
required to be developed by this subtitle if the 
Exchange determines review or revision to be 
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131 
necessary or appropriate to satisfy the goals of 
this subtitle. 
(B) APPLICATION OF REVISIONS.—Any re-
visions made pursuant to subparagraph (A) 
shall apply only to securitizations made after 
the date of such revision. 
(n) EFFECT OF CONFLICT.—In the event a defini-
tion, standard, rule, process, or procedure established by 
the Exchange is in conflict with any definition, standard, 
rule, process, or procedure established by another Federal 
department or agency, the Director shall consult with the 
other Federal department or agency, and provide prompt 
written notification to the Committee on Banking, Hous-
ing, and Urban Affairs of the Senate and the Committee 
on Financial Services of the House of Representatives, of 
the conflict. 
(o) PUBLIC INVOLVEMENT.—In developing defini-
tions, standards, rules, processes, and procedures required 
by this subtitle, the Exchange shall work with market par-
ticipants, including servicers, originators, and mortgage 
investors, and develop methods for gathering information 
and comment from such groups. 
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132 
SEC. 323. CONFORMING AMENDMENTS TO SECURITIES ACT 
OF 1933. 
(a) EXEMPTED SECURITIES.—Section 3(a) of the Se-
curities Act of 1933 (15 U.S.C. 77c(a)) is amended by 
adding at the end the following new paragraph: 
‘‘(15) Any qualified security, as such term is 
defined in section 321 of the Protecting American 
Taxpayers and Homeowners Act of 2018.’’. 
(b) REMOVAL OF CREDIT RISK RETENTION REF-
ERENCE.—Section 27B of the Securities Act of 1933 (15 
U.S.C. 77z–2a) is amended by striking subsection (d). 
Subtitle C—National Mortgage 
Data Repository 
SEC. 331. ORGANIZATION AND OPERATION. 
(a) ORGANIZATION AND OPERATION.—Under such 
regulations as the Director may prescribe, the Exchange 
shall organize and operate a national mortgage data repos-
itory (‘‘Repository’’). 
(b) AUTHORIZED ACTIVITIES.—In addition to orga-
nizing and operating the Repository, the Exchange shall— 
(1) establish and operate a repository for mort-
gage-related documents; 
(2) establish standards for qualification of any 
depositor of mortgage-related documents to the Re-
pository; 
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(3) establish standards and procedures for sub-
mission of mortgage-related documents to the Re-
pository, including required information and the type 
and format of information and data; 
(4) establish procedures for validation of mort-
gage-related documents and the data contained in 
the Repository; 
(5) establish standards and procedures for ac-
ceptance of mortgage-related documents (including 
electronic copies), and notice of acceptance, by the 
Repository; 
(6) establish standards and procedures for reg-
istration of any mortgage-related document with the 
Repository, including notice of registration and the 
assignment of a unique identifier, where such stand-
ards and procedures include a requirement that any 
such mortgage-related document must first be re-
corded in the appropriate local jurisdiction, as may 
be required under State or local law; 
(7) establish standards and procedures for re-
cording the creation, assignment, or transfer of an 
interest in any registered mortgage-related document 
and for requiring the Repository to notify the appro-
priate local jurisdiction of such creation, assignment, 
or transfer; 
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(8) establish standards and procedures for qual-
ification of depositors and participants in the Repos-
itory; 
(9) establish procedures for proper demonstra-
tion of registration of mortgage-related documents 
with the Repository and recordation of an interest 
by the holder of an interest in any such document, 
subject to regulations issued by the Director in ac-
cordance with section 332 (relating to legal effect of 
registration with the Repository); 
(10) establish and maintain a catalog of the 
mortgage-related documents registered with the Re-
pository; 
(11) establish standards and procedures for dis-
position of mortgage-related documents, including 
safekeeping, long-term storage, or destruction of 
paper documents; 
(12) establish standards and procedures for 
making data publicly available; 
(13) ensure that data collected and maintained 
by the Repository are kept secure and protected 
against unauthorized disclosure, taking into consid-
eration issues of consumer privacy and all statutes, 
rules, and regulations related to privacy of consumer 
credit information and personally identifiable infor-
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135 
mation, and prohibit the identification of specific 
borrowers; 
(14) establish a process, including notification 
from the public, for identification and correction of 
incorrect information submitted to or maintained by 
the Repository; 
(15) establish fees for registration of mortgage- 
related documents and maintenance and use of data, 
and for the provision of other related services not in-
consistent with the purposes of this subtitle; and 
(16) perform any other service or engage in any 
other activity that the Director determines, by regu-
lation or order, to be incidental to the activities enu-
merated in this subsection. 
(c) PROHIBITED ACTIVITIES.—The Exchange may 
not— 
(1) transfer or sell data maintained by the Re-
pository to the parent or affiliated companies of the 
operator of the Exchange; and 
(2) use data maintained by the Repository for 
marketing or any other purpose not directly associ-
ated with the operation of the Exchange. 
(d) REQUIREMENTS ON PARTICIPANTS.—Each par-
ticipant shall— 
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136 
(1) comply with such requirements as may be 
set by the Repository for using data maintained or 
created by the Repository; and 
(2) use such designation as the Repository may 
provide, such as a unique identifier. 
SEC. 332. LEGAL EFFECT OF REGISTRATION WITH REPOSI-
TORY. 
Notwithstanding any provision of State or Federal 
law to the contrary, by proper demonstration of registra-
tion with the Repository, any holder of an interest in any 
mortgage-related note shall satisfy any requirement for 
demonstration of a right to act regarding such note or 
other registered data that exists in State or Federal law, 
including any obligation to produce or possess an original 
note. The Director shall provide for the establishment of 
procedures for proper demonstration of registration of any 
mortgage-related document and of an interest by the hold-
er of an interest in any such document with the Reposi-
tory. Once registered with the Repository, such registra-
tion shall be a legal right enforceable in any judicial or 
nonjudicial process. Nothing in this section shall be con-
strued as preempting any State or local law requiring a 
mortgage-related document to be recorded in the appro-
priate local jurisdiction. 
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137 
SEC. 333. GRANTS TO STATES; REPAYMENT. 
(a) GRANTS TO STATES.—There is hereby authorized 
to be appropriated $50,000,000 to the Director for the 
establishment of a fund to be administered by the Agency 
for providing grants to States, on application to the Agen-
cy, to facilitate participation in the Repository by any de-
positor or participant or class of depositors or partici-
pants, or any other person upon appropriate demonstra-
tion to the Agency that such a grant would assist in the 
accomplishment of the purposes of this subtitle. Any such 
amounts appropriated and not granted by the Agency 
within five years of the date of the enactment of this Act 
shall be returned to the Treasury of the United States. 
(b) REPAYMENT.—The Director shall cause to be col-
lected from the Exchange and deposit in the Treasury of 
the United States an amount equal to the aggregate 
amount provided as grants to States pursuant to sub-
section (a) within the 10-year period beginning on the date 
that the first grant is made pursuant to subsection (a). 
SEC. 334. JUDICIAL REVIEW. 
Except as otherwise expressly provided under this 
subtitle, no person other than the Director or the Attorney 
General of the United States, or any duly authorized rep-
resentative of the Director or the Attorney General, may 
proceed against the Repository in any State or Federal 
court. The prohibition in the preceding sentence shall not 
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138 
apply to a civil action against the Repository or any duly 
authorized agent thereof for breach of a contract, includ-
ing breach of a representation or warranty, or breach of 
privacy related to data collected and maintained by the 
Repository or any duly authorized agent thereof. 
SEC. 335. TRANSITION PROVISIONS. 
(a) IN GENERAL.—The Agency shall provide for a 
transition period to permit the efficient implementation of 
the provisions of this subtitle. Such transition may include 
periods for testing, early adoption, and final mandatory 
adoption for all recorded mortgages. 
(b) ELECTRONIC
SUBMISSIONS.—The Repository 
shall accept electronic submissions and paper-based docu-
ments submitted electronically subject to rules of the Re-
pository. After the expiration of the 10-year period that 
begins upon the date of the enactment of this Act, subject 
to an extension of such period for up to 5 additional years 
if the Director determines appropriate, the Repository 
shall require only electronic submission. 
Subtitle D—Covered Bonds 
SEC. 341. DEFINITIONS. 
For purposes of this subtitle, the following definitions 
shall apply: 
(1) ANCILLARY
ASSET.—The term ‘‘ancillary 
asset’’ means— 
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(A) any interest rate or currency swap as-
sociated with 1 or more eligible assets, sub-
stitute assets, or other assets in a cover pool; 
(B) any credit enhancement or liquidity ar-
rangement associated with 1 or more eligible 
assets, substitute assets, or other assets in a 
cover pool; 
(C) any guarantee, letter-of-credit right, or 
other secondary obligation that supports any 
payment or performance of 1 or more eligible 
assets, substitute assets, or other assets in a 
cover pool; and 
(D) any proceeds of, or other property in-
cident to, 1 or more eligible assets, substitute 
assets, or other assets in a cover pool. 
(2) CORPORATION.—The term ‘‘Corporation’’ 
means the Federal Deposit Insurance Corporation. 
(3) COVER
POOL.—The term ‘‘cover pool’’ 
means a dynamic pool of assets that is comprised 
of— 
(A) in the case of any eligible issuer de-
scribed in subparagraph (A), (B), or (C) of 
paragraph (9)— 
(i) 1 or more eligible assets from a 
single eligible asset class; and 
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(ii) 1 or more substitute assets or an-
cillary assets; and 
(B) in the case of any eligible issuer de-
scribed in paragraph (9)(D)— 
(i) the covered bonds issued by each 
sponsoring eligible issuer; and 
(ii) 1 or more substitute assets or an-
cillary assets. 
(4) COVERED
BOND.—The term ‘‘covered 
bond’’ means any recourse debt obligation of an eli-
gible issuer that— 
(A) has an original term to maturity of not 
less than 1 year; 
(B) is secured by a perfected security in-
terest in or other perfected lien on a cover pool 
that is owned directly or indirectly by the issuer 
of the obligation; 
(C) is issued under a covered bond pro-
gram that has been approved by the applicable 
covered bond regulator; 
(D) is identified in a register of covered 
bonds that is maintained by the Secretary; and 
(E) is not a deposit (as defined in section 
3(l) of the Federal Deposit Insurance Act (12 
U.S.C. 1813(l))). 
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141 
(5) COVERED
BOND
PROGRAM.—The term 
‘‘covered bond program’’ means any program of an 
eligible issuer under which, on the security of a sin-
gle cover pool, 1 or more series of covered bonds 
may be issued. 
(6) COVERED
BOND
REGULATOR.—The term 
‘‘covered bond regulator’’ means— 
(A) for any eligible issuer that is subject to 
the jurisdiction of an appropriate Federal bank-
ing agency (as defined in section 3(q) of the 
Federal Deposit Insurance Act (12 U.S.C. 
1813(q))), the appropriate Federal banking 
agency; 
(B) for any eligible issuer that is described 
in paragraph (9)(D), that is not subject to the 
jurisdiction of an appropriate Federal banking 
agency, and that is sponsored by only 1 eligible 
issuer, the covered bond regulator for the spon-
sor; 
(C) for any eligible issuer that is described 
in paragraph (9)(D), that is not subject to the 
jurisdiction of an appropriate Federal banking 
agency, and that is sponsored by more than 1 
eligible issuer, the covered bond regulator for 
the sponsor whose covered bonds constitute the 
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144 
(B) a commercial mortgage asset class; 
(C) a public sector asset class; 
(D) an auto asset class; 
(E) a student loan asset class; 
(F) a credit or charge card asset class; 
(G) a small business asset class; and 
(H) any other eligible asset class des-
ignated by the Secretary, by rule and in con-
sultation with the covered bond regulators. 
(9) ELIGIBLE
ISSUER.—The term ‘‘eligible 
issuer’’ means— 
(A) any insured depository institution and 
any subsidiary of such institution; 
(B) any bank holding company, any sav-
ings and loan holding company, and any sub-
sidiary of any of such companies; 
(C) any nonbank financial company (as de-
fined in section 102(a)(4) of the Dodd-Frank 
Wall Street Reform and Consumer Protection 
Act (12 U.S.C. 5311(a)(4))) that is supervised 
by the Board of Governors of the Federal Re-
serve System under section 113 of the Dodd- 
Frank Wall Street Reform and Consumer Pro-
tection Act (12 U.S.C. 5323), including any in-
termediate holding company supervised as a 
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nonbank financial company, and any subsidiary 
of such a nonbank financial company; and 
(D) any issuer that is sponsored by 1 or 
more eligible issuers for the sole purpose of 
issuing covered bonds on a pooled basis. 
(10) OVERSIGHT PROGRAM.—The term ‘‘over-
sight program’’ means the covered bond regulatory 
oversight program established under section 342(a). 
(11) 
SECRETARY.—The 
term 
‘‘Secretary’’ 
means the Secretary of the Department of the 
Treasury. 
(12) SUBSTITUTE
ASSET.—The term ‘‘sub-
stitute asset’’ means— 
(A) cash; 
(B) any direct obligation of the United 
States Government, and any security or other 
obligation whose full principal and interest are 
insured or guaranteed by the full faith and 
credit of the United States Government; 
(C) any direct obligation of a United 
States Government corporation or Government- 
sponsored enterprise of the highest credit qual-
ity, and any other security or other obligation 
of the highest credit quality whose full principal 
and interest are insured or guaranteed by such 
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corporation or enterprise, except that the out-
standing principal amount of these obligations 
in any cover pool may not exceed an amount 
equal to 20 percent of the outstanding principal 
amount of all assets in the cover pool without 
the approval of the applicable covered bond reg-
ulator; 
(D) any overnight investment in Federal 
funds; 
(E) any other substitute asset designated 
by the Secretary, by rule and in consultation 
with the covered bond regulators; and 
(F) any deposit account or securities ac-
count into which only an asset described in sub-
paragraph (A), (B), (C), (D), or (E) may be de-
posited or credited. 
SEC. 342. REGULATORY OVERSIGHT OF COVERED BOND 
PROGRAMS ESTABLISHED. 
(a) ESTABLISHMENT.— 
(1) IN
GENERAL.—Not later than 180 days 
after the date of the enactment of this Act, the Sec-
retary shall, by rule and in consultation with the 
covered bond regulators, establish a covered bond 
regulatory oversight program that provides for— 
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(A) covered bond programs to be evaluated 
according to reasonable and objective standards 
in order to be approved under paragraph (2), 
including any additional eligibility standards for 
eligible assets and any other criteria determined 
appropriate by the Secretary to further the pur-
poses of this subtitle; 
(B) covered bond programs to be main-
tained in a manner that is consistent with this 
subtitle and safe and sound asset-liability man-
agement and other financial practices; and 
(C) any estate created under section 343 
to be administered in a manner that is con-
sistent with maximizing the value and the pro-
ceeds of the related cover pool in a resolution 
under this subtitle. 
(2) APPROVAL OF EACH COVERED BOND PRO-
GRAM.— 
(A) IN GENERAL.—A covered bond shall be 
subject to this subtitle only if the covered bond 
is issued by an eligible issuer under a covered 
bond program that is approved by the applica-
ble covered bond regulator. 
(B) APPROVAL
PROCESS.—Each covered 
bond regulator shall apply the standards estab-
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148 
lished by the Secretary under the oversight pro-
gram to evaluate a covered bond program that 
has been submitted by an eligible issuer for ap-
proval. Each covered bond regulator also shall 
take into account relevant supervisory factors, 
including safety and soundness considerations, 
in evaluating a covered bond program that has 
been submitted for approval. Each covered bond 
regulator, promptly after approving a covered 
bond program, shall provide the Secretary with 
the name of the covered bond program, the 
name of the eligible issuer, and all other infor-
mation reasonably requested by the Secretary in 
order to update the registry under paragraph 
(3)(A). Each eligible issuer, promptly after 
issuing a covered bond under an approved cov-
ered bond program, shall provide the Secretary 
with all information reasonably requested by 
the Secretary in order to update the registry 
under paragraph (3)(B). 
(C) 
EXISTING
COVERED
BOND
PRO-
GRAMS.—A covered bond regulator may approve 
a covered bond program that is in existence on 
the date of the enactment of this Act. Upon 
such approval, each covered bond under the 
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149 
covered bond program shall be subject to this 
subtitle, regardless of when the covered bond 
was issued. 
(D) MULTIPLE COVERED BOND PROGRAMS 
PERMITTED.—An eligible issuer may have more 
than 1 covered bond program. 
(E) CEASE AND DESIST AUTHORITY.—The 
applicable covered bond regulator may direct an 
eligible issuer to cease issuing covered bonds 
under an approved covered bond program if the 
covered bond program is not maintained in a 
manner that is consistent with this subtitle and 
the oversight program and if, after notice that 
is reasonable under the circumstances, the 
issuer does not remedy all deficiencies identified 
by the applicable covered bond regulator. 
(F) CAP
ON
THE
AMOUNT
OF
OUT-
STANDING COVERED BONDS.— 
(i) IN
GENERAL.—With respect to 
each eligible issuer that submits a covered 
bond program for approval, the applicable 
covered bond regulator shall set, consistent 
with safety and soundness considerations 
and the financial condition of the eligible 
issuer, the maximum amount, as a percent-
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150 
age of the eligible issuer’s total assets, of 
outstanding covered bonds that the eligible 
issuer may issue. 
(ii) REVIEW OF CAP.—The applicable 
covered bond regulator may, not more fre-
quently than quarterly, review the percent-
age set under clause (i) and, if safety and 
soundness considerations or the financial 
condition 
of 
the 
eligible 
issuer 
has 
changed, increase or decrease such per-
centage. Any decrease made pursuant to 
this clause shall have no effect on existing 
covered bonds issued by the eligible issuer. 
(3) REGISTRY.—Under the oversight program, 
the Secretary shall maintain a registry that is pub-
lished on a Web site available to the public and that, 
for each covered bond program approved by a cov-
ered bond regulator, contains— 
(A) the name of the covered bond program, 
the name of the eligible issuer, and all other in-
formation that the Secretary considers nec-
essary to adequately identify the covered bond 
program and the eligible issuer; and 
(B) all information that the Secretary con-
siders necessary to adequately identify all out-
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151 
standing covered bonds issued under the cov-
ered bond program (including the reports de-
scribed in paragraphs (3) and (4) of subsection 
(b)). 
(4) FEES.—Each covered bond regulator may 
levy, on the issuers of covered bonds under the pri-
mary supervision of such covered bond regulator, 
reasonably apportioned fees that such covered bond 
regulator considers necessary, in the aggregate, to 
defray the costs of such covered bond regulator car-
rying out the provisions of this subtitle. Such funds 
shall not be construed to be Government funds or 
appropriated monies and shall not be subject to ap-
portionment for purposes of chapter 15 of title 31, 
United States Code, or any other provision of law. 
(b) MINIMUM OVER-COLLATERALIZATION REQUIRE-
MENTS.— 
(1) REQUIREMENTS ESTABLISHED.—The Sec-
retary, by rule and in consultation with the covered 
bond regulators, shall establish minimum over- 
collateralization requirements for covered bonds 
backed by each of the eligible asset classes. The min-
imum over-collateralization requirements shall be de-
signed to ensure that sufficient eligible assets and 
substitute assets are maintained in the cover pool to 
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152 
satisfy all principal and interest payments on the 
covered bonds when due through maturity and shall 
be based on the credit, collection, and interest rate 
risks (excluding the liquidity risks) associated with 
the eligible asset class. 
(2) ASSET COVERAGE TEST.—The eligible as-
sets and the substitute assets in any cover pool shall 
be required, in the aggregate, to meet at all times 
the applicable minimum over-collateralization re-
quirements. 
(3) MONTHLY
REPORTING.—On a monthly 
basis, each issuer of covered bonds shall submit a re-
port on whether the cover pool that secures the cov-
ered bonds meets the applicable minimum over- 
collateralization requirements to— 
(A) the Secretary; 
(B) the applicable covered bond regulator; 
(C) the applicable indenture trustee; 
(D) the applicable covered bondholders; 
and 
(E) the applicable independent asset mon-
itor. 
(4) INDEPENDENT ASSET MONITOR.— 
(A) APPOINTMENT.—Each issuer of cov-
ered bonds shall appoint the indenture trustee 
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for the covered bonds, or another unaffiliated 
entity, as an independent asset monitor for the 
applicable cover pool. 
(B) DUTIES.—An independent asset mon-
itor appointed under subparagraph (A) shall, on 
an annual or other more frequent periodic basis 
determined by the Secretary under the over-
sight program— 
(i) verify whether the cover pool meets 
the 
applicable 
minimum 
over- 
collateralization requirements; and 
(ii) report to the Secretary, the appli-
cable covered bond regulator, the applica-
ble indenture trustee, and the applicable 
covered bondholders on whether the cover 
pool meets the applicable minimum over- 
collateralization requirements. 
(5) NO LOSS OF STATUS.—Covered bonds shall 
remain subject to this subtitle regardless of whether 
the applicable cover pool ceases to meet the applica-
ble minimum over-collateralization requirements. 
(6) FAILURE TO MEET REQUIREMENTS.— 
(A) IN GENERAL.—If a cover pool fails to 
meet 
the 
applicable 
minimum 
over- 
collateralization requirements, and if the failure 
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154 
is not cured within the time specified in the re-
lated transaction documents, the failure shall be 
an uncured default for purposes of section 
343(a). 
(B) NOTICE REQUIRED.—An issuer of cov-
ered bonds shall promptly give the Secretary 
and the applicable covered bond regulator writ-
ten notice if the cover pool securing the covered 
bonds fails to meet the applicable minimum 
over-collateralization requirements, if the failure 
is cured within the time specified in the related 
transaction documents, or if the failure is not 
so cured. 
(c) REQUIREMENTS FOR ELIGIBLE ASSETS.— 
(1) REQUIREMENTS.— 
(A) LOANS.—A loan shall not qualify as an 
eligible asset for so long as the loan is delin-
quent for more than 60 consecutive days. 
(B) SECURITIES.—A security shall not 
qualify as an eligible asset for so long as the se-
curity does not meet any credit-quality require-
ment under this subtitle. 
(C) ORIGINATION.—An asset shall not 
qualify as an eligible asset if the asset was not 
originated in compliance with any rule or super-
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visory guidance of a Federal agency applicable 
to the asset at the time of origination. 
(D) NO DOUBLE PLEDGE.—An asset shall 
not qualify as an eligible asset for so long as 
the asset is subject to a prior perfected security 
interest or other prior perfected lien that has 
been granted in an unrelated transaction. Noth-
ing in this subtitle shall affect such a prior per-
fected security interest or other prior perfected 
lien, and the rights of such lien holders. 
(2) FAILURE TO MEET REQUIREMENTS.—Sub-
ject to paragraph (1)(D), if an asset in a cover pool 
does not satisfy any applicable requirement de-
scribed in paragraph (1) or any other applicable 
standard or criterion described in this subtitle, the 
oversight program, or the related transaction docu-
ments, the asset shall not qualify as an eligible asset 
for purposes of the asset coverage test described in 
subsection (b)(2). A disqualified asset shall remain 
in the cover pool unless and until removed by the 
issuer in compliance with the provisions of this sub-
title, the oversight program, and the related trans-
action documents. No disqualified asset may be re-
moved from the cover pool after an estate has been 
created for the related covered bond program under 
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the Department of Housing and Urban Develop-
ment. 
‘‘(5) EFFECTIVE DATE.—Notwithstanding sec-
tion 1400(c) of the Mortgage Reform and Anti-Pred-
atory Lending Act, this subsection shall take effect 
after the end of the 1-year period beginning on the 
earlier of— 
‘‘(A) the date on which the first online or 
telephone-operated counseling service is ap-
proved under paragraph (4); and 
‘‘(B) the date on which the Department of 
Housing and Urban Development begins pro-
viding online or telephone-operated counseling 
services described under paragraph (4).’’; 
(2) in section 129C (15 U.S.C. 1639c)— 
(A) in subsection (b)(2)(A)(viii), by strik-
ing ‘‘30’’ and inserting ‘‘40’’; 
(B) by striking subsections (c), (d), and 
(e); and 
(C) by redesignating subsections (f), (g), 
(h), and (i) as subsections (c), (d), (e), and (f), 
respectively; and 
(3) 
in 
section 
129E(k)(1) 
(15 
U.S.C. 
1639e(k)(1)) by inserting after ‘‘this section’’ the 
following: ‘‘, other than subsection (e),’’. 
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