‘‘(2) EXPEDITED REVIEW.— 
‘‘(A) ENTERPRISE NOTICE.—For any new 
activity that an enterprise considers not to be a 
product, the enterprise shall provide written no-
tice to the Director of such activity, and may not 
commence such activity until the date of receipt 
of a notice under subparagraph (B) or the expi-
ration of the period described in subparagraph 
(C). The Director shall establish, by regulation, 
the form and content of such written notice. 
‘‘(B) 
DIRECTOR
DETERMINATION.—Not 
later than 15 days after the date of receipt of a 
notice under subparagraph (A), the Director 
shall determine whether such activity is a prod-
uct subject to approval under this section. The 
Director shall, immediately upon so determining, 
notify the enterprise. 
‘‘(C) FAILURE TO ACT.—If the Director fails 
to determine whether such activity is a product 
within the 15-day period described in subpara-
graph (B), the enterprise may commence the new 
activity in accordance with subparagraph (A). 
‘‘(f) NO LIMITATION.—Nothing in this section may be 
construed to restrict—
‘‘(1) the safety and soundness authority of the 
Director over all new and existing products or activi-
ties; or 
‘‘(2) the authority of the Director to review all 
new and existing products or activities to determine 
that such products or activities are consistent with 
the statutory mission of an enterprise.’’. 
SEC. 1124. CONFORMING LOAN LIMITS. 
(a) FANNIE MAE.— 
(1) GENERAL LIMIT.—Section 302(b)(2) of the 
Federal National Mortgage Association Charter Act 
(12 U.S.C. 1717(b)(2)) is amended by striking the 7th 
and 8th sentences and inserting the following new 
sentences: ‘‘Such limitations shall not exceed $417,000 
for a mortgage secured by a single-family residence, 
$533,850 for a mortgage secured by a 2-family resi-
dence, $645,300 for a mortgage secured by a 3-family 
residence, and $801,950 for a mortgage secured by a 
4-family residence, except that such maximum limita-
tions shall be adjusted effective January 1 of each 
year beginning after the effective date of Federal 
Housing Finance Regulatory Reform Act of 2008, 
subject to the limitations in this paragraph. Each ad-
justment shall be made by adding to each such 
amount (as it may have been previously adjusted) a
percentage thereof equal to the percentage increase, 
during the most recent 12-month or 4th-quarter pe-
riod ending before the time of determining such an-
nual adjustment, in the housing price index main-
tained by the Director of the Federal Housing Fi-
nance Agency (pursuant to section 1322 of the Fed-
eral Housing Enterprises Financial Safety and 
Soundness Act of 1992 (12 U.S.C. 4541)). If the 
change in such house price index during the most re-
cent 12-month or 4th-quarter period ending before the 
time of determining such annual adjustment is a de-
crease, then no adjustment shall be made for the next 
year, and the next adjustment shall take into account 
prior declines in the house price index, so that any 
adjustment shall reflect the net change in the house 
price index since the last adjustment. Declines in the 
house price index shall be accumulated and then re-
duce increases until subsequent increases exceed prior 
declines.’’. 
(2) HIGH-COST AREA LIMIT.—Section 302(b)(2) 
of the Federal National Mortgage Association Charter 
Act (12 U.S.C. 1717(b)(2)) is amended by adding 
after the period at the end the following: ‘‘Such fore-
going limitations shall also be increased with respect 
to properties of a particular size located in any area
for which the median price for such size residence ex-
ceeds the foregoing limitation for such size residence, 
to the lesser of 150 percent of such foregoing limita-
tion for such size residence or the amount that is 
equal to the median price in such area for such size 
residence.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by paragraphs (1) and (2) of this subsection shall 
take effect upon the expiration of the date described 
in section 201(a) of the Economic Stimulus Act of 
2008 (Public Law 110–185). 
(b) FREDDIE MAC.— 
(1) GENERAL LIMIT.—Section 305(a)(2) of the 
Federal Home Loan Mortgage Corporation Act (12 
U.S.C. 1454(a)(2)) is amended by striking the 6th 
and 7th sentences and inserting the following new 
sentences: ‘‘Such limitations shall not exceed $417,000 
for a mortgage secured by a single-family residence, 
$533,850 for a mortgage secured by a 2-family resi-
dence, $645,300 for a mortgage secured by a 3-family 
residence, and $801,950 for a mortgage secured by a 
4-family residence, except that such maximum limita-
tions shall be adjusted effective January 1 of each 
year beginning after the effective date of the Federal 
Housing Finance Regulatory Reform Act of 2008,
subject to the limitations in this paragraph. Each ad-
justment shall be made by adding to each such 
amount (as it may have been previously adjusted) a 
percentage thereof equal to the percentage increase, 
during the most recent 12-month or fourth-quarter pe-
riod ending before the time of determining such an-
nual adjustment, in the housing price index main-
tained by the Director of the Federal Housing Fi-
nance Agency (pursuant to section 1322 of the Fed-
eral Housing Enterprises Financial Safety and 
Soundness Act of 1992 (12 U.S.C. 4541)). If the 
change in such house price index during the most re-
cent 12-month or 4th-quarter period ending before the 
time of determining such annual adjustment is a de-
crease, then no adjustment shall be made for the next 
year, and the next adjustment shall take into account 
prior declines in the house price index, so that any 
adjustment shall reflect the net change in the house 
price index since the last adjustment. Declines in the 
house price index shall be accumulated and then re-
duce increases until subsequent increases exceed prior 
declines.’’. 
(2) HIGH-COST AREA LIMIT.—Section 305(a)(2) 
of the Federal Home Loan Mortgage Corporation Act 
is amended by adding after the period at the end the
following: ‘‘Such foregoing limitations shall also be 
increased with respect to properties of a particular 
size located in any area for which the median price 
for such size residence exceeds the foregoing limitation 
for such size residence, to the lesser of 150 percent of 
such foregoing limitation for such size residence or the 
amount that is equal to the median price in such 
area for such size residence.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by paragraphs (1) and (2) of this subsection shall 
take effect upon the expiration of the date described 
in section 201(a) of the Economic Stimulus Act of 
2008 (Public Law 110–185). 
(c) SENSE OF CONGRESS.—It is the sense of the Con-
gress that the securitization of mortgages by the Federal Na-
tional Mortgage Association and the Federal Home Loan 
Mortgage Corporation plays an important role in providing 
liquidity to the United States housing markets. Therefore, 
the Congress encourages the Federal National Mortgage As-
sociation and the Federal Home Loan Mortgage Corpora-
tion to securitize mortgages acquired under the increased 
conforming loan limits established under this Act. 
(d) HOUSING PRICE INDEX.—Part 2 of subtitle A of 
the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is amended
106 
mined by the Director that are occupied by 
extremely low-income renter households or 
are vacant for rent; and 
‘‘(ii) the number of extremely low-in-
come renter households. 
‘‘(B) RULE
OF
CONSTRUCTION.—If the 
number of units described in subparagraph 
(A)(i) exceeds the number of extremely low-in-
come households as described in subparagraph 
(A)(ii), there is no shortage. 
‘‘(31) SHORTAGE OF STANDARD RENTAL UNITS 
BOTH AFFORDABLE AND AVAILABLE TO VERY LOW-IN-
COME RENTER HOUSEHOLDS.— 
‘‘(A) IN GENERAL.—The term ‘shortage of 
standard rental units both affordable and avail-
able to very low-income renter households’ means 
the gap between— 
‘‘(i) the number of units with complete 
plumbing and kitchen facilities with a rent 
that is 30 percent or less of 50 percent of 
the adjusted area median income as deter-
mined by the Director that are occupied by 
either extremely low- or very low-income 
renter households or are vacant for rent; 
and
107 
‘‘(ii) the number of extremely low- and 
very low-income renter households. 
‘‘(B) RULE
OF
CONSTRUCTION.—If the 
number of units described in subparagraph 
(A)(i) exceeds the number of extremely low- and 
very low-income households as described in sub-
paragraph (A)(ii), there is no shortage.’’. 
SEC. 1129. DUTY TO SERVE UNDERSERVED MARKETS. 
(a) ESTABLISHMENT AND EVALUATION OF PERFORM-
ANCE.—Section 1335 of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 
4565) is amended— 
(1) in the section heading, by inserting ‘‘DUTY 
TO SERVE UNDERSERVED MARKETS AND’’ before 
‘‘OTHER’’; 
(2) by striking subsection (b); 
(3) in subsection (a)— 
(A) in the matter preceding paragraph (1), 
by inserting ‘‘and to carry out the duty under 
subsection (a) of this section’’ before ‘‘, each en-
terprise shall’’; 
(B) in paragraph (3), by inserting ‘‘and’’ 
after the semicolon at the end; 
(C) in paragraph (4), by striking ‘‘; and’’ 
and inserting a period;
108 
(D) by striking paragraph (5); and 
(E) by redesignating such subsection as sub-
section (b); 
(4) by inserting before subsection (b) (as so re-
designated by paragraph (3)(E) of this subsection) the 
following new subsection: 
‘‘(a) DUTY TO SERVE UNDERSERVED MARKETS.— 
‘‘(1) DUTY.—In accordance with the purpose of 
the enterprises under section 301(3) of the Federal 
National Mortgage Association Charter Act (12 
U.S.C. 1716) and section 301(b)(3) of the Federal 
Home Loan Mortgage Corporation Act (12 U.S.C. 
1451 note) to undertake activities relating to mort-
gages on housing for very low-, low-, and moderate- 
income families involving a reasonable economic re-
turn that may be less than the return earned on other 
activities, each enterprise shall have the duty to in-
crease the liquidity of mortgage investments and im-
prove the distribution of investment capital available 
for mortgage financing for underserved markets by 
purchasing or securitizing mortgage investments. 
‘‘(2) UNDERSERVED
MARKETS.—To meet its 
duty under paragraph (1), each enterprise shall com-
ply with the following requirements with respect to 
the following underserved markets:
109 
‘‘(A) MANUFACTURED
HOUSING.—The en-
terprise shall lead the industry in developing 
loan products and flexible underwriting guide-
lines to facilitate a secondary market for mort-
gages on manufactured homes for very low-, low- 
, and moderate-income families. 
‘‘(B) AFFORDABLE
HOUSING
PRESERVA-
TION.—The enterprise shall lead the industry in 
developing loan products and flexible under-
writing guidelines to facilitate a secondary mar-
ket to preserve housing affordable to very 
low-, low-, and moderate-income families, in-
cluding housing projects subsidized under— 
‘‘(i) the project-based and tenant-based 
rental assistance programs under section 8 
of the United States Housing Act of 1937; 
‘‘(ii) the program under section 236 of 
the National Housing Act; 
‘‘(iii) the below-market interest rate 
mortgage program under section 221(d)(4) 
of the National Housing Act; 
‘‘(iv) the supportive housing for the el-
derly program under section 202 of the 
Housing Act of 1959;
110 
‘‘(v) the supportive housing program 
for persons with disabilities under section 
811 of the Cranston-Gonzalez National Af-
fordable Housing Act; 
‘‘(vi) the programs under title IV of the 
McKinney-Vento Homeless Assistance Act 
(42 U.S.C. 11361 et seq.), but only perma-
nent supportive housing projects subsidized 
under such programs; and 
‘‘(vii) the rural rental housing pro-
gram under section 515 of the Housing Act 
of 1949. 
‘‘(C) RURAL
AND
OTHER
UNDERSERVED 
MARKETS.—The enterprise shall lead the indus-
try in developing loan products and flexible un-
derwriting guidelines to facilitate a secondary 
market for mortgages on housing for very 
low-, low-, and moderate-income families in 
rural areas, and for mortgages for housing for 
any other underserved market for very low-, low- 
, and moderate-income families that the Director 
identifies as lacking adequate credit through con-
ventional lending sources. Such underserved 
markets may be identified by borrower type, 
market segment, or geographic area.’’; and
111 
(5) by adding at the end the following new sub-
section: 
‘‘(c) EVALUATION AND REPORTING OF COMPLIANCE.— 
‘‘(1) IN
GENERAL.—Not later than 6 months 
after the effective date of the Federal Housing Finance 
Regulatory Reform Act of 2008, the Director shall es-
tablish a manner for evaluating whether, and the ex-
tent to which, the enterprises have complied with the 
duty under subsection (a) to serve underserved mar-
kets and for rating the extent of such compliance. 
Using such method, the Director shall, for each year, 
evaluate such compliance and rate the performance of 
each enterprise as to extent of compliance. The Direc-
tor shall include such evaluation and rating for each 
enterprise for a year in the report for that year sub-
mitted pursuant to section 1319B(a). 
‘‘(2) SEPARATE EVALUATIONS.—In determining 
whether an enterprise has complied with the duty re-
ferred to in paragraph (1), the Director shall sepa-
rately evaluate whether the enterprise has complied 
with such duty with respect to each of the underserved 
markets identified in subsection (a), taking into con-
sideration— 
‘‘(A) the development of loan products and 
more flexible underwriting guidelines;
112 
‘‘(B) the extent of outreach to qualified loan 
sellers in each of such underserved markets; and 
‘‘(C) the volume of loans purchased in each 
of such underserved markets. 
‘‘(3) MANUFACTURED HOUSING MARKET.—In de-
termining whether an enterprise has complied with 
the duty under subparagraph (A) of subsection (a)(2), 
the Director may consider loans secured by both real 
and personal property.’’. 
(b) ENFORCEMENT.—Subsection (a) of section 1336 of 
the Housing and Community Development Act of 1992 (12 
U.S.C. 4566(a)) is amended— 
(1) in paragraph (1), by inserting ‘‘and with the 
duty under section 1335(a) of each enterprise with re-
spect to underserved markets,’’ before ‘‘as provided in 
this section’’; and 
(2) by adding at the end of such subsection, as 
amended by the preceding provisions of this subtitle, 
the following new paragraph: 
‘‘(4) ENFORCEMENT OF DUTY TO PROVIDE MORT-
GAGE CREDIT TO UNDERSERVED MARKETS.—The duty 
under section 1335(a) of each enterprise to serve un-
derserved markets (as determined in accordance with 
section 1335(c)) shall be enforceable under this section 
to the same extent and under the same provisions that
114 
‘‘(A) IN GENERAL.—During the 30-day pe-
riod beginning on the date on which an enter-
prise is provided notice under paragraph (1), the 
enterprise may submit to the Director any writ-
ten information that the enterprise considers ap-
propriate for consideration by the Director in fi-
nally determining whether such failure has oc-
curred or whether the achievement of such goal 
was or is feasible. 
‘‘(B) EXTENDED
PERIOD.—The Director 
may extend the period under subparagraph (A) 
for good cause for not more than 30 additional 
days. 
‘‘(C) SHORTENED
PERIOD.—The Director 
may shorten the period under subparagraph (A) 
for good cause. 
‘‘(D) FAILURE TO RESPOND.—The failure of 
an enterprise to provide information during the 
30-day period under this paragraph (as extended 
or shortened) shall waive any right of the enter-
prise to comment on the proposed determination 
or action of the Director. 
‘‘(3) CONSIDERATION
OF
INFORMATION
AND 
FINAL DETERMINATION.—
115 
‘‘(A) IN GENERAL.—After the expiration of 
the response period under paragraph (2), or 
upon receipt of information provided during 
such period by the enterprise, whichever occurs 
earlier, the Director shall issue a final deter-
mination on— 
‘‘(i) whether the enterprise has failed, 
or there is a substantial probability that the 
enterprise will fail, to meet the housing 
goal; and 
‘‘(ii) whether (taking into consider-
ation market and economic conditions and 
the financial condition of the enterprise) the 
achievement of the housing goal was or is 
feasible. 
‘‘(B) CONSIDERATIONS.—In making a final 
determination under subparagraph (A), the Di-
rector shall take into consideration any relevant 
information submitted by the enterprise during 
the response period. 
‘‘(C) NOTICE.—The Director shall provide 
written notice, including a response to any in-
formation submitted during the response period, 
to the enterprise, the Committee on Banking, 
Housing, and Urban Affairs of the Senate, and
116 
the Committee on Financial Services of the 
House of Representatives, of— 
‘‘(i) each final determination under 
this paragraph that an enterprise has 
failed, or that there is a substantial prob-
ability that the enterprise will fail, to meet 
a housing goal; 
‘‘(ii) each final determination that the 
achievement of a housing goal was or is fea-
sible; and 
‘‘(iii) the reasons for each such final 
determination. 
‘‘(c) CEASE AND DESIST, CIVIL MONEY PENALTIES, 
AND REMEDIES INCLUDING HOUSING PLANS.— 
‘‘(1) REQUIREMENT.—If the Director finds, pur-
suant to subsection (b), that there is a substantial 
probability that an enterprise will fail, or has actu-
ally failed, to meet any housing goal under this sub-
part, and that the achievement of the housing goal 
was or is feasible, the Director may require that the 
enterprise submit a housing plan under this sub-
section. If the Director makes such a finding and the 
enterprise refuses to submit such a plan, submits an 
unacceptable plan, fails to comply with the plan, or 
the Director finds that the enterprise has failed to
117 
meet any housing goal under this subpart, in addi-
tion to requiring an enterprise to submit a housing 
plan, the Director may issue a cease and desist order 
in accordance with section 1341, impose civil money 
penalties in accordance with section 1345, or order 
other remedies as set forth in paragraph (7). 
‘‘(2) HOUSING PLAN.—If the Director requires a 
housing plan under this subsection, such a plan shall 
be— 
‘‘(A) a feasible plan describing the specific 
actions the enterprise will take— 
‘‘(i) to achieve the goal for the next cal-
endar year; and 
‘‘(ii) if the Director determines that 
there is a substantial probability that the 
enterprise will fail to meet a goal in the 
current year, to make such improvements 
and changes in its operations as are reason-
able in the remainder of such year; and 
‘‘(B) sufficiently specific to enable the Di-
rector to monitor compliance periodically. 
‘‘(3) DEADLINE FOR SUBMISSION.—The Director 
shall establish a deadline for an enterprise to comply 
with any remedial action or submit a housing plan 
to the Director, which may not be more than 45 days
124 
‘‘(6) comply with a housing plan for the enter-
prise under section 1336(c). 
‘‘(b) AMOUNT OF PENALTY.—The amount of a penalty 
under this section, as determined by the Director, may not 
exceed— 
‘‘(1) for any failure described in paragraph (1), 
(5), or (6) of subsection (a), $100,000 for each day 
that the failure occurs; and 
‘‘(2) for any failure described in paragraph (2), 
(3), or (4) of subsection (a), $50,000 for each day that 
the failure occurs. 
‘‘(c) PROCEDURES.— 
‘‘(1) ESTABLISHMENT.—The Director shall estab-
lish standards and procedures governing the imposi-
tion of civil money penalties under this section. Such 
standards and procedures— 
‘‘(A) shall provide for the Director to notify 
the enterprise in writing of the determination of 
the Director to impose the penalty, which shall 
be made on the record; 
‘‘(B) shall provide for the imposition of a 
penalty only after the enterprise has been given 
an opportunity for a hearing on the record pur-
suant to section 1342; and
125 
‘‘(C) may provide for review by the Director 
of any determination or order, or interlocutory 
ruling, arising from a hearing. 
‘‘(2) FACTORS IN DETERMINING AMOUNT OF PEN-
ALTY.—In determining the amount of a penalty 
under this section, the Director shall give consider-
ation to factors including— 
‘‘(A) the gravity of the offense; 
‘‘(B) any history of prior offenses; 
‘‘(C) ability to pay the penalty; 
‘‘(D) injury to the public; 
‘‘(E) benefits received; 
‘‘(F) deterrence of future violations; 
‘‘(G) the length of time that the enterprise 
should reasonably take to achieve the goal; and 
‘‘(H) such other factors as the Director may 
determine, by regulation, to be appropriate. 
‘‘(d) ACTION TO COLLECT PENALTY.—If an enterprise 
fails to comply with an order by the Director imposing a 
civil money penalty under this section, after the order is 
no longer subject to review, as provided in sections 1342 
and 1343, the Director may bring an action in the United 
States District Court for the District of Columbia to obtain 
a monetary judgment against the enterprise, and such other 
relief as may be available. The monetary judgment may,
126 
in the court’s discretion, include the attorneys’ fees and 
other expenses incurred by the United States in connection 
with the action. In an action under this subsection, the va-
lidity and appropriateness of the order imposing the pen-
alty shall not be subject to review. 
‘‘(e) SETTLEMENT BY DIRECTOR.—The Director may 
compromise, modify, or remit any civil money penalty 
which may be, or has been, imposed under this section. 
‘‘(f) DEPOSIT OF PENALTIES.—The Director shall use 
any civil money penalties collected under this section to 
help fund the Housing Trust Fund established under section 
1338.’’. 
(e) DIRECTOR AUTHORITY.— 
(1) AUTHORITY TO BRING A CIVIL ACTION.—Sec-
tion 1344(a) of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992 (12 U.S.C. 
4584) is amended by striking ‘‘The Secretary may re-
quest the Attorney General of the United States to 
bring a civil action’’ and inserting ‘‘The Director 
may bring a civil action’’. 
(2) SUBPOENA ENFORCEMENT.—Section 1348(c) 
of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (12 U.S.C. 4588(c)) is 
amended by inserting ‘‘may bring an action or’’ be-
fore ‘‘may request’’.
127 
(3) CONFORMING AMENDMENTS.—Subpart C of 
part 2 of subtitle A of the Federal Housing Enter-
prises Financial Safety and Soundness Act of 1992 
(12 U.S.C. 4581 et seq.) is amended by striking ‘‘Sec-
retary’’ each place that term appears and inserting 
‘‘Director’’ in each of— 
(A) section 1342 (12 U.S.C. 4582); 
(B) section 1343 (12 U.S.C. 4583); 
(C) section 1346 (12 U.S.C. 4586); 
(D) section 1347 (12 U.S.C. 4587); and 
(E) section 1348 (12 U.S.C. 4588). 
SEC. 1131. AFFORDABLE HOUSING PROGRAMS. 
(a) REPEAL.—Section 1337 of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 
(12 U.S.C. 4567) is hereby repealed. 
(b) ANNUAL HOUSING REPORT.—The Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 
(12 U.S.C. 1301 et seq.) is amended by inserting after sec-
tion 1336 the following: 
‘‘SEC. 1337. AFFORDABLE HOUSING ALLOCATIONS. 
‘‘(a) SET ASIDE AND ALLOCATION OF AMOUNTS BY 
ENTERPRISES.—Subject to subsection (b), in each fiscal 
year— 
‘‘(1) the Federal Home Loan Mortgage Corpora-
tion shall—
128 
‘‘(A) set aside an amount equal to 4.2 basis 
points for each dollar of the unpaid principal 
balance of its total new business purchases; and 
‘‘(B) allocate or otherwise transfer— 
‘‘(i) 65 percent of such amounts to the 
Secretary of Housing and Urban Develop-
ment to fund the Housing Trust Fund es-
tablished under section 1338; and 
‘‘(ii) 35 percent of such amounts to 
fund the Capital Magnet Fund established 
pursuant to section 1339; and 
‘‘(2) the Federal National Mortgage Association 
shall— 
‘‘(A) set aside an amount equal to 4.2 basis 
points for each dollar of unpaid principal bal-
ance of its total new business purchases; and 
‘‘(B) allocate or otherwise transfer— 
‘‘(i) 65 percent of such amounts to the 
Secretary of Housing and Urban Develop-
ment to fund the Housing Trust Fund es-
tablished under section 1338; and 
‘‘(ii) 35 percent of such amounts to 
fund the Capital Magnet Fund established 
pursuant to section 1339.
129 
‘‘(b) SUSPENSION OF CONTRIBUTIONS.—The Director 
shall temporarily suspend allocations under subsection (a) 
by an enterprise upon a finding by the Director that such 
allocations— 
‘‘(1) are contributing, or would contribute, to the 
financial instability of the enterprise; 
‘‘(2) are causing, or would cause, the enterprise 
to be classified as undercapitalized; or 
‘‘(3) are preventing, or would prevent, the enter-
prise from successfully completing a capital restora-
tion plan under section 1369C. 
‘‘(c) PROHIBITION OF PASS-THROUGH OF COST OF AL-
LOCATIONS.—The Director shall, by regulation, prohibit 
each enterprise from redirecting the costs of any allocation 
required under this section, through increased charges or 
fees, or decreased premiums, or in any other manner, to 
the originators of mortgages purchased or securitized by the 
enterprise. 
‘‘(d) ENFORCEMENT OF REQUIREMENTS ON ENTER-
PRISE.—Compliance by the enterprises with the require-
ments under this section shall be enforceable under subpart 
C. Any reference in such subpart to this part or to an order, 
rule, or regulation under this part specifically includes this 
section and any order, rule, or regulation under this sec-
tion.
133 
‘‘(A) IN GENERAL.—The Secretary shall, by 
regulation, establish a formula within 12 months 
of the date of enactment of the Federal Housing 
Finance Regulatory Reform Act of 2008, to dis-
tribute amounts made available under this sub-
section to each State to provide affordable hous-
ing to extremely low- and very low-income 
households. 
‘‘(B) BASIS FOR FORMULA.—The formula 
required under subparagraph (A) shall include 
the following: 
‘‘(i) The ratio of the shortage of stand-
ard rental units both affordable and avail-
able to extremely low-income renter house-
holds in the State to the aggregate shortage 
of standard rental units both affordable and 
available to extremely low-income renter 
households in all the States. 
‘‘(ii) The ratio of the shortage of stand-
ard rental units both affordable and avail-
able to very low-income renter households in 
the State to the aggregate shortage of stand-
ard rental units both affordable and avail-
able to very low-income renter households in 
all the States.
134 
‘‘(iii) The ratio of extremely low-in-
come renter households in the State living 
with either (I) incomplete kitchen or plumb-
ing facilities, (II) more than 1 person per 
room, or (III) paying more than 50 percent 
of income for housing costs, to the aggregate 
number of extremely low-income renter 
households living with either (IV) incom-
plete kitchen or plumbing facilities, (V) 
more than 1 person per room, or (VI) pay-
ing more than 50 percent of income for 
housing costs in all the States. 
‘‘(iv) The ratio of very low-income 
renter households in the State paying more 
than 50 percent of income on rent relative 
to the aggregate number of very low-income 
renter households paying more than 50 per-
cent of income on rent in all the States. 
‘‘(v) The resulting sum calculated from 
the factors described in clauses (i) through 
(iv) shall be multiplied by the relative cost 
of construction in the State. For purposes of 
this subclause, the term ‘cost of construc-
tion’—
135 
‘‘(I) means the cost of construction 
or building rehabilitation in the State 
relative to the national cost of con-
struction or building rehabilitation; 
and 
‘‘(II) shall be calculated such that 
values higher than 1.0 indicate that the 
State’s construction costs are higher 
than the national average, a value of 
1.0 indicates that the State’s construc-
tion costs are exactly the same as the 
national average, and values lower 
than 1.0 indicate that the State’s cost 
of construction are lower than the na-
tional average. 
‘‘(C) 
PRIORITY.—The 
formula 
required 
under subparagraph (A) shall give priority em-
phasis and consideration to the factor described 
in subparagraph (B)(i). 
‘‘(4) ALLOCATION OF GRANT AMOUNTS.— 
‘‘(A) NOTICE.—Not later than 60 days after 
the date that the Secretary determines the for-
mula amounts described in paragraph (3), the 
Secretary shall caused to be published in the
136 
Federal Register a notice that such amounts 
shall be so available. 
‘‘(B) GRANT AMOUNT.—In each fiscal year 
other than fiscal year 2009, the Secretary shall 
make a grant to each State in an amount that 
is equal to the formula amount determined under 
paragraph (3) for that State. 
‘‘(C) MINIMUM STATE ALLOCATIONS.—If the 
formula amount determined under paragraph 
(3) for a fiscal year would allocate less than 
$3,000,000 to any State, the allocation for such 
State shall be $3,000,000, and the increase shall 
be deducted pro rata from the allocations made 
to all other States. 
‘‘(5) ALLOCATION PLANS REQUIRED.— 
‘‘(A) IN GENERAL.—For each year that a 
State or State designated entity receives a grant 
under this subsection, the State or State des-
ignated entity shall establish an allocation plan. 
Such plan shall— 
‘‘(i) set forth a plan for the distribu-
tion of grant amounts received by the State 
or State designated entity for such year; 
‘‘(ii) be based on priority housing 
needs, as determined by the State or State
137 
designated entity in accordance with the 
regulations established under subsection 
(g)(2)(C); 
‘‘(iii) comply with paragraph (6); and 
‘‘(iv) include performance goals that 
comply with the requirements established by 
the Secretary pursuant to subsection (g)(2). 
‘‘(B) ESTABLISHMENT.—In establishing an 
allocation plan under this paragraph, a State or 
State designated entity shall— 
‘‘(i) notify the public of the establish-
ment of the plan; 
‘‘(ii) provide an opportunity for public 
comments regarding the plan; 
‘‘(iii) consider any public comments 
received regarding the plan; and 
‘‘(iv) make the completed plan avail-
able to the public. 
‘‘(C) CONTENTS.—An allocation plan of a 
State or State designated entity under this para-
graph shall set forth the requirements for eligible 
recipients under paragraph (8) to apply for such 
grant amounts, including a requirement that 
each such application include—
138 
‘‘(i) a description of the eligible activi-
ties to be conducted using such assistance; 
and 
‘‘(ii) a certification by the eligible re-
cipient applying for such assistance that 
any housing units assisted with such assist-
ance will comply with the requirements 
under this section. 
‘‘(6) SELECTION OF ACTIVITIES FUNDED USING 
HOUSING
TRUST
FUND
GRANT
AMOUNTS.—Grant 
amounts received by a State or State designated enti-
ty under this subsection may be used, or committed 
for use, only for activities that— 
‘‘(A) are eligible under paragraph (7) for 
such use; 
‘‘(B) comply with the applicable allocation 
plan of the State or State designated entity 
under paragraph (5); and 
‘‘(C) are selected for funding by the State or 
State designated entity in accordance with the 
process and criteria for such selection established 
pursuant to subsection (g)(2)(C). 
‘‘(7) ELIGIBLE ACTIVITIES.—Grant amounts al-
located to a State or State designated entity under
139 
this subsection shall be eligible for use, or for commit-
ment for use, only for assistance for— 
‘‘(A) the production, preservation, and reha-
bilitation of rental housing, including housing 
under 
the 
programs 
identified 
in 
section 
1335(a)(2)(B) and for operating costs, except 
that not less than 75 percent of such grant 
amounts shall be used for the benefit only of ex-
tremely low-income families and not more than 
25 percent for the benefit only of very low-in-
come families; and 
‘‘(B) the production, preservation, and re-
habilitation of housing for homeownership, in-
cluding such forms as down payment assistance, 
closing cost assistance, and assistance for interest 
rate buy-downs, that— 
‘‘(i) is available for purchase only for 
use as a principal residence by families that 
qualify both as— 
‘‘(I) extremely low- and very low- 
income families at the times described 
in subparagraphs (A) through (C) of 
section 215(b)(2) of the Cranston-Gon-
zalez National Affordable Housing Act 
(42 U.S.C. 12745(b)(2)); and
140 
‘‘(II) first-time homebuyers, as 
such term is defined in section 104 of 
the Cranston-Gonzalez National Af-
fordable 
Housing 
Act 
(42 
U.S.C. 
12704), except that any reference in 
such section to assistance under title II 
of such Act shall for purposes of this 
subsection be considered to refer to as-
sistance from affordable housing fund 
grant amounts; 
‘‘(ii) has an initial purchase price that 
meets the requirements of section 215(b)(1) 
of the Cranston-Gonzalez National Afford-
able Housing Act; 
‘‘(iii) is subject to the same resale re-
strictions 
established 
under 
section 
215(b)(3) of the Cranston-Gonzalez National 
Affordable Housing Act and applicable to 
the participating jurisdiction that is the 
State in which such housing is located; and 
‘‘(iv) is made available for purchase 
only by, or in the case of assistance under 
this subsection, is made available only to 
homebuyers who have, before purchase com-
pleted a program of independent financial
141 
education and counseling from an eligible 
organization that meets the requirements of 
section 132 of the Federal Housing Finance 
Regulatory Reform Act of 2008. 
‘‘(8) ELIGIBLE RECIPIENTS.—Grant amounts al-
located to a State or State designated entity under 
this subsection may be provided only to a recipient 
that is an organization, agency, or other entity (in-
cluding a for-profit entity or a nonprofit entity) 
that— 
‘‘(A) has demonstrated experience and ca-
pacity to conduct an eligible activity under 
paragraph (7), as evidenced by its ability to— 
‘‘(i) own, construct or rehabilitate, 
manage, and operate an affordable multi-
family rental housing development; 
‘‘(ii) design, construct or rehabilitate, 
and market affordable housing for home-
ownership; or 
‘‘(iii) provide forms of assistance, such 
as down payments, closing costs, or interest 
rate buy-downs for purchasers; 
‘‘(B) demonstrates the ability and financial 
capacity to undertake, comply, and manage the 
eligible activity;
143 
State designated entity under this subsection 
shall be used or committed for use within 2 years 
of the date that such grant amounts are made 
available to the State or State designated entity. 
The Secretary shall recapture any such amounts 
not so used or committed for use and reallocate 
such amounts under this subsection in the first 
year after such recapture. 
‘‘(C) USE
OF
RETURNS.—The Secretary 
shall, by regulation, provide that any return on 
a loan or other investment of any grant amount 
used by a State or State designated entity to 
provide a loan under this subsection shall be 
treated, for purposes of availability to and use 
by the State or State designated entity, as a 
grant amount authorized under this subsection. 
‘‘(D) PROHIBITED
USES.—The Secretary 
shall, by regulation— 
‘‘(i) set forth prohibited uses of grant 
amounts allocated under this subsection, 
which shall include use for— 
‘‘(I) political activities; 
‘‘(II) advocacy; 
‘‘(III) lobbying, whether directly 
or through other parties;
144 
‘‘(IV) counseling services; 
‘‘(V) travel expenses; and 
‘‘(VI) preparing or providing ad-
vice on tax returns; 
‘‘(ii) provide that, except as provided 
in clause (iii), grant amounts of a State or 
State designated entity may not be used for 
administrative, outreach, or other costs of— 
‘‘(I) the State or State designated 
entity; or 
‘‘(II) any other recipient of such 
grant amounts; and 
‘‘(iii) limit the amount of any grant 
amounts for a year that may be used by the 
State or State designated entity for admin-
istrative costs of carrying out the program 
required under this subsection, including 
home ownership counseling, to a percentage 
of such grant amounts of the State or State 
designated entity for such year, which may 
not exceed 10 percent. 
‘‘(E) PROHIBITION OF CONSIDERATION OF 
USE FOR MEETING HOUSING GOALS OR DUTY TO 
SERVE.—In determining compliance with the 
housing goals under this subpart and the duty to
145 
serve underserved markets under section 1335, 
the Director may not consider any grant 
amounts used under this section for eligible ac-
tivities under paragraph (7). The Director shall 
give credit toward the achievement of such hous-
ing goals and such duty to serve underserved 
markets to purchases by the enterprises of mort-
gages for housing that receives funding from such 
grant amounts, but only to the extent that such 
purchases by the enterprises are funded other 
than with such grant amounts. 
‘‘(d) REDUCTION FOR FAILURE TO OBTAIN RETURN 
OF MISUSED FUNDS.—If in any year a State or State des-
ignated entity fails to obtain reimbursement or return of 
the full amount required under subsection (e)(1)(B) to be 
reimbursed or returned to the State or State designated en-
tity during such year— 
‘‘(1) except as provided in paragraph (2)— 
‘‘(A) the amount of the grant for the State 
or State designated entity for the succeeding 
year, as determined pursuant to this section, 
shall be reduced by the amount by which such 
amounts required to be reimbursed or returned 
exceed the amount actually reimbursed or re-
turned; and
146 
‘‘(B) the amount of the grant for the suc-
ceeding year for each other State or State des-
ignated entity whose grant is not reduced pursu-
ant to subparagraph (A) shall be increased by 
the amount determined by applying the formula 
established pursuant to this section to the total 
amount of all reductions for all State or State 
designated entities for such year pursuant to 
subparagraph (A); or 
‘‘(2) in any case in which such failure to obtain 
reimbursement or return occurs during a year imme-
diately preceding a year in which grants under this 
section will not be made, the State or State des-
ignated entity shall pay to the Secretary for realloca-
tion among the other grantees an amount equal to the 
amount of the reduction for the entity that would oth-
erwise apply under paragraph (1)(A). 
‘‘(e) ACCOUNTABILITY OF RECIPIENTS AND GRANT-
EES.— 
‘‘(1) RECIPIENTS.— 
‘‘(A) TRACKING OF FUNDS.—The Secretary 
shall— 
‘‘(i) require each State or State des-
ignated entity to develop and maintain a 
system to ensure that each recipient of as-
147 
sistance under this section uses such 
amounts in accordance with this section, the 
regulations issued under this section, and 
any requirements or conditions under which 
such amounts were provided; and 
‘‘(ii) establish minimum requirements 
for agreements, between the State or State 
designated entity and recipients, regarding 
assistance under this section, which shall 
include— 
‘‘(I) appropriate periodic finan-
cial and project reporting, record re-
tention, and audit requirements for the 
duration of the assistance to the recipi-
ent to ensure compliance with the limi-
tations and requirements of this section 
and the regulations under this section; 
and 
‘‘(II) any other requirements that 
the Secretary determines are necessary 
to ensure appropriate administration 
and compliance. 
‘‘(B) MISUSE OF FUNDS.— 
‘‘(i) 
REIMBURSEMENT
REQUIRE-
MENT.—If any recipient of assistance under
148 
this section is determined, in accordance 
with clause (ii), to have used any such 
amounts in a manner that is materially in 
violation of this section, the regulations 
issued under this section, or any require-
ments or conditions under which such 
amounts were provided, the State or State 
designated entity shall require that, within 
12 months after the determination of such 
misuse, the recipient shall reimburse the 
State or State designated entity for such 
misused amounts and return to the State or 
State designated entity any such amounts 
that remain unused or uncommitted for use. 
The remedies under this clause are in addi-
tion to any other remedies that may be 
available under law. 
‘‘(ii) DETERMINATION.—A determina-
tion is made in accordance with this clause 
if the determination is made by the Sec-
retary or made by the State or State des-
ignated entity, provided that— 
‘‘(I) the State or State designated 
entity provides notification of the de-
termination to the Secretary for re-
149 
view, in the discretion of the Secretary, 
of the determination; and 
‘‘(II) the Secretary does not subse-
quently reverse the determination. 
‘‘(2) GRANTEES.— 
‘‘(A) REPORT.— 
‘‘(i) IN GENERAL.—The Secretary shall 
require each State or State designated enti-
ty receiving grant amounts in any given 
year under this section to submit a report, 
for such year, to the Secretary that— 
‘‘(I) describes the activities funded 
under this section during such year 
with such grant amounts; and 
‘‘(II) the manner in which the 
State or State designated entity com-
plied during such year with any allo-
cation plan established pursuant to 
subsection (c). 
‘‘(ii) PUBLIC AVAILABILITY.—The Sec-
retary shall make such reports pursuant to 
this subparagraph publicly available. 
‘‘(B) MISUSE OF FUNDS.—If the Secretary 
determines, after reasonable notice and oppor-
tunity for hearing, that a State or State des-
150 
ignated entity has failed to comply substantially 
with any provision of this section, and until the 
Secretary is satisfied that there is no longer any 
such failure to comply, the Secretary shall— 
‘‘(i) reduce the amount of assistance 
under this section to the State or State des-
ignated entity by an amount equal to the 
amount of grant amounts which were not 
used in accordance with this section; 
‘‘(ii) require the State or State des-
ignated entity to repay the Secretary any 
amount of the grant which was not used in 
accordance with this section; 
‘‘(iii) limit the availability of assist-
ance under this section to the State or State 
designated entity to activities or recipients 
not affected by such failure to comply; or 
‘‘(iv) terminate any assistance under 
this section to the State or State designated 
entity. 
‘‘(f) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) EXTREMELY LOW-INCOME RENTER HOUSE-
HOLD.—The term ‘extremely low-income renter house-
hold’ means a household whose income is not in excess
151 
of 30 percent of the area median income, with adjust-
ments for smaller and larger families, as determined 
by the Secretary. 
‘‘(2) RECIPIENT.—The term ‘recipient’ means an 
individual or entity that receives assistance from a 
State or State designated entity from amounts made 
available to the State or State designated entity 
under this section. 
‘‘(3) SHORTAGE
OF
STANDARD
RENTAL
UNITS 
BOTH AFFORDABLE AND AVAILABLE TO EXTREMELY 
LOW-INCOME RENTER HOUSEHOLDS.— 
‘‘(A) IN GENERAL.—The term ‘shortage of 
standard rental units both affordable and avail-
able to extremely low-income renter households’ 
means for any State or other geographical area 
the gap between— 
‘‘(i) the number of units with complete 
plumbing and kitchen facilities with a rent 
that is 30 percent or less of 30 percent of 
the adjusted area median income as deter-
mined by the Secretary that are occupied by 
extremely low-income renter households or 
are vacant for rent; and 
‘‘(ii) the number of extremely low-in-
come renter households.
152 
‘‘(B) RULE
OF
CONSTRUCTION.—If the 
number of units described in subparagraph 
(A)(i) exceeds the number of extremely low-in-
come households as described in subparagraph 
(A)(ii), there is no shortage. 
‘‘(4) SHORTAGE
OF
STANDARD
RENTAL
UNITS 
BOTH AFFORDABLE AND AVAILABLE TO VERY LOW-IN-
COME RENTER HOUSEHOLDS.— 
‘‘(A) IN GENERAL.—The term ‘shortage of 
standard rental units both affordable and avail-
able to very low-income renter households’ means 
for any State or other geographical area the gap 
between— 
‘‘(i) the number of units with complete 
plumbing and kitchen facilities with a rent 
that is 30 percent or less of 50 percent of 
the adjusted area median income as deter-
mined by the Secretary that are occupied by 
very low-income renter households or are 
vacant for rent; and 
‘‘(ii) the number of very low-income 
renter households. 
‘‘(B) RULE
OF
CONSTRUCTION.—If the 
number of units described in subparagraph 
(A)(i) exceeds the number of very low-income
153 
households as described in subparagraph (A)(ii), 
there is no shortage. 
‘‘(5) VERY LOW-INCOME FAMILY.—The term ‘very 
low-income family’ has the meaning given such term 
in section 1303, except that such term includes any 
family that resides in a rural area that has an in-
come that does not exceed the poverty line (as such 
term is defined in section 673(2) of the Omnibus 
Budget Reconciliation Act of 1981 (42 U.S.C. 
9902(2)), including any revision required by such sec-
tion) applicable to a family of the size involved. 
‘‘(6) 
VERY
LOW-INCOME
RENTER
HOUSE-
HOLDS.—The term ‘very low-income renter house-
holds’ means a household whose income is in excess of 
30 percent but not greater than 50 percent of the area 
median income, with adjustments for smaller and 
larger families, as determined by the Secretary. 
‘‘(g) REGULATIONS.— 
‘‘(1) IN
GENERAL.—The Secretary shall issue 
regulations to carry out this section. 
‘‘(2) REQUIRED
CONTENTS.—The regulations 
issued under this subsection shall include— 
‘‘(A) a requirement that the Secretary en-
sure that the use of grant amounts under this 
section by States or State designated entities is
154 
audited not less than annually to ensure compli-
ance with this section; 
‘‘(B) authority for the Secretary to audit, 
provide for an audit, or otherwise verify a State 
or State designated entity’s activities to ensure 
compliance with this section; 
‘‘(C) requirements for a process for applica-
tion to, and selection by, each State or State des-
ignated entity for activities meeting the State or 
State designated entity’s priority housing needs 
to be funded with grant amounts under this sec-
tion, which shall provide for priority in funding 
to be based upon— 
‘‘(i) geographic diversity; 
‘‘(ii) ability to obligate amounts and 
undertake activities so funded in a timely 
manner; 
‘‘(iii) in the case of rental housing 
projects under subsection (c)(7)(A), the ex-
tent to which rents for units in the project 
funded are affordable, especially for ex-
tremely low-income families; 
‘‘(iv) in the case of rental housing 
projects under subsection (c)(7)(A), the ex-
155 
tent of the duration for which such rents 
will remain affordable; 
‘‘(v) the extent to which the application 
makes use of other funding sources; and 
‘‘(vi) the merits of an applicant’s pro-
posed eligible activity; 
‘‘(D) requirements to ensure that grant 
amounts provided to a State or State designated 
entity under this section that are used for rental 
housing under subsection (c)(7)(A) are used only 
for the benefit of extremely low- and very low-in-
come families; and 
‘‘(E) requirements and standards for estab-
lishment, by a State or State designated entity, 
for use of grant amounts in 2009 and subsequent 
years of performance goals, benchmarks, and 
timetables for the production, preservation, and 
rehabilitation of affordable rental and home-
ownership housing with such grant amounts. 
‘‘(h) AFFORDABLE HOUSING TRUST FUND.—If, after 
the date of enactment of the Federal Housing Finance Regu-
latory Reform Act of 2008, in any year, there is enacted 
any provision of Federal law establishing an affordable 
housing trust fund other than under this title for use only 
for grants to provide affordable rental housing and afford-
156 
able homeownership opportunities, and the subsequent year 
is a year referred to in subsection (c), the Secretary shall 
in such subsequent year and any remaining years referred 
to in subsection (c) transfer to such affordable housing trust 
fund the aggregate amount allocated pursuant to subsection 
(c) in such year. Notwithstanding any other provision of 
law, assistance provided using amounts transferred to such 
affordable housing trust fund pursuant to this subsection 
may not be used for any of the activities specified in clauses 
(i) through (vi) of subsection (c)(9)(D). 
‘‘(i) 
FUNDING
ACCOUNTABILITY
AND
TRANS-
PARENCY.—Any grant under this section to a grantee by 
a State or State designated entity, any assistance provided 
to a recipient by a State or State designated entity, and 
any grant, award, or other assistance from an affordable 
housing trust fund referred to in subsection (h) shall be con-
sidered a Federal award for purposes of the Federal Fund-
ing Accountability and Transparency Act of 2006 (31 
U.S.C. 6101 note). Upon the request of the Director of the 
Office of Management and Budget, the Secretary shall ob-
tain and provide such information regarding any such 
grants, assistance, and awards as the Director of the Office 
of Management and Budget considers necessary to comply 
with the requirements of such Act, as applicable, pursuant 
to the preceding sentence.
157 
‘‘SEC. 1339. CAPITAL MAGNET FUND. 
‘‘(a) ESTABLISHMENT.—There is established in the 
Treasury of the United States a trust fund to be known 
as the Capital Magnet Fund, which shall be a special ac-
count within the Community Development Financial Insti-
tutions Fund. 
‘‘(b) DEPOSITS TO TRUST FUND.—The Capital Mag-
net Fund shall consist of— 
‘‘(1) any amounts transferred to the Fund pur-
suant to section 1337; and 
‘‘(2) any amounts as are or may be appro-
priated, transferred, or credited to such Fund under 
any other provisions of law. 
‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts 
in the Capital Magnet Fund shall be available to the Sec-
retary of the Treasury to carry out a competitive grant pro-
gram to attract private capital for and increase investment 
in— 
‘‘(1) the development, preservation, rehabilita-
tion, or purchase of affordable housing for primarily 
extremely low-, very low-, and low-income families; 
and 
‘‘(2) economic development activities or commu-
nity service facilities, such as day care centers, work-
force development centers, and health care clinics, 
which in conjunction with affordable housing activi-
163 
recipient of assistance from the Capital 
Magnet Fund uses such amounts in accord-
ance with this section, the regulations issued 
under this section, and any requirements or 
conditions under which such amounts were 
provided; and 
‘‘(ii) establish minimum requirements 
for agreements, between the grantee and the 
Capital Magnet Fund, regarding assistance 
from the Capital Magnet Fund, which shall 
include— 
‘‘(I) appropriate periodic finan-
cial and project reporting, record re-
tention, and audit requirements for the 
duration of the grant to the recipient 
to ensure compliance with the limita-
tions and requirements of this section 
and the regulations under this section; 
and 
‘‘(II) any other requirements that 
the Secretary determines are necessary 
to ensure appropriate grant adminis-
tration and compliance. 
‘‘(B) MISUSE OF FUNDS.—If the Secretary 
of the Treasury determines, after reasonable no-
164 
tice and opportunity for hearing, that a grantee 
has failed to comply substantially with any pro-
vision of this section and until the Secretary is 
satisfied that there is no longer any such failure 
to comply, the Secretary shall— 
‘‘(i) reduce the amount of assistance 
under this section to the grantee by an 
amount equal to the amount of Capital 
Magnet Fund grant amounts which were 
not used in accordance with this section; 
‘‘(ii) require the grantee to repay the 
Secretary any amount of the Capital Mag-
net Fund grant amounts which were not 
used in accordance with this section; 
‘‘(iii) limit the availability of assist-
ance under this section to the grantee to ac-
tivities or recipients not affected by such 
failure to comply; or 
‘‘(iv) terminate any assistance under 
this section to the grantee. 
‘‘(i) PERIODIC REPORTS.— 
‘‘(1) IN GENERAL.—The Secretary of the Treas-
ury shall submit a report, on a periodic basis, to the 
Committee on Banking, Housing, and Urban Affairs 
of the Senate and the Committee on Financial Serv-
165 
ices of the House of Representatives describing the ac-
tivities to be funded under this section. 
‘‘(2) REPORTS AVAILABLE TO PUBLIC.—The Sec-
retary of the Treasury shall make the reports required 
under paragraph (1) publicly available. 
‘‘(j) REGULATIONS.— 
‘‘(1) IN GENERAL.—The Secretary of the Treas-
ury shall issue regulations to carry out this section. 
‘‘(2) REQUIRED
CONTENTS.—The regulations 
issued under this subsection shall include— 
‘‘(A) authority for the Secretary to audit, 
provide for an audit, or otherwise verify an en-
terprise’s activities, to ensure compliance with 
this section; 
‘‘(B) a requirement that the Secretary en-
sure that the allocation of each enterprise is au-
dited not less than annually to ensure compli-
ance with this section; and 
‘‘(C) requirements for a process for applica-
tion to, and selection by, the Secretary for activi-
ties to be funded with amounts from the Capital 
Magnet Fund, which shall provide that— 
‘‘(i) funds be fairly distributed to 
urban, suburban, and rural areas; and
166 
‘‘(ii) selection shall be based upon spe-
cific criteria, including a prioritization of 
funding based upon— 
‘‘(I) the ability to use such funds 
to generate additional investments; 
‘‘(II) affordable housing need (tak-
ing into account the distinct needs of 
different regions of the country); and 
‘‘(III) ability to obligate amounts 
and undertake activities so funded in a 
timely manner.’’. 
SEC. 1132. FINANCIAL EDUCATION AND COUNSELING. 
(a) GOALS.—Financial education and counseling 
under this section shall have the goal of— 
(1) increasing the financial knowledge and deci-
sion making capabilities of prospective homebuyers; 
(2) assisting prospective homebuyers to develop 
monthly budgets, build personal savings, finance or 
plan for major purchases, reduce their debt, improve 
their financial stability, and set and reach their fi-
nancial goals; 
(3) helping prospective homebuyers to improve 
their credit scores by understanding the relationship 
between their credit histories and their credit scores; 
and
167 
(4) educating prospective homebuyers about the 
options available to build savings for short- and long- 
term goals. 
(b) GRANTS.— 
(1) IN GENERAL.—The Secretary of the Treasury 
(in this section referred to as the ‘‘Secretary’’) shall 
make grants to eligible organizations to enable such 
organizations to provide a range of financial edu-
cation and counseling services to prospective home-
buyers. 
(2) SELECTION.—The Secretary shall select eligi-
ble organizations to receive assistance under this sec-
tion based on their experience and ability to provide 
financial education and counseling services that result 
in documented positive behavioral changes. 
(c) ELIGIBLE ORGANIZATIONS.— 
(1) IN GENERAL.—For purposes of this section, 
the term ‘‘eligible organization’’ means an organiza-
tion that is— 
(A) certified in accordance with section 
106(e)(1) of the Housing and Urban Develop-
ment Act of 1968 (12 U.S.C. 1701x(e)); or 
(B) certified by the Office of Financial 
Education of the Department of the Treasury for
173 
(1) IN GENERAL.—Any employee described under 
subsection (a) accepting employment with the Agency 
as a result of a transfer under subsection (a) may re-
tain, for 12 months after the date on which such 
transfer occurs, membership in any employee benefit 
program of the Agency or the Department of Housing 
and Urban Development, as applicable, including in-
surance, to which such employee belongs on such effec-
tive date, if— 
(A) the employee does not elect to give up 
the benefit or membership in the program; and 
(B) the benefit or program is continued by 
the Director of the Federal Housing Finance 
Agency. 
(2) COST DIFFERENTIAL.— 
(A) IN
GENERAL.—The difference in the 
costs between the benefits which would have been 
provided by the Department of Housing and 
Urban Development and those provided by this 
section shall be paid by the Director. 
(B) HEALTH INSURANCE.—If any employee 
elects to give up membership in a health insur-
ance program or the health insurance program is 
not continued by the Director, the employee shall 
be permitted to select an alternate Federal health
174 
insurance program not later than 30 days after 
the date of such election or notice, without regard 
to any other regularly scheduled open season. 
Subtitle C—Prompt Corrective 
Action 
SEC. 1141. CRITICAL CAPITAL LEVELS. 
(a) IN GENERAL.—Section 1363 of the Federal Hous-
ing Enterprises Financial Safety and Soundness Act of 
1992 (12 U.S.C. 4613) is amended— 
(1) by striking ‘‘For’’ and inserting ‘‘(a) ENTER-
PRISES.—FOR’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) FEDERAL HOME LOAN BANKS.— 
‘‘(1) IN GENERAL.—For purposes of this subtitle, 
the critical capital level for each Federal Home Loan 
Bank shall be such amount of capital as the Director 
shall, by regulation, require. 
‘‘(2) CONSIDERATION OF OTHER CRITICAL CAP-
ITAL
LEVELS.—In establishing the critical capital 
level under paragraph (1) for the Federal Home Loan 
Banks, the Director shall take due consideration of the 
critical capital level established under subsection (a) 
for the enterprises, with such modifications as the Di-
rector determines to be appropriate to reflect the dif-
175 
ference in operations between the banks and the enter-
prises.’’. 
(b) REGULATIONS.—Not later than the expiration of 
the 180-day period beginning on the date of enactment of 
this Act, the Director of the Federal Housing Finance Agen-
cy shall issue regulations pursuant to section 1363(b) of the 
Federal Housing Enterprises Financial Safety and Sound-
ness Act of 1992 (as added by this section) establishing the 
critical capital level under such section. 
SEC. 1142. CAPITAL CLASSIFICATIONS. 
(a) IN GENERAL.—Section 1364 of the Federal Hous-
ing Enterprises Financial Safety and Soundness Act of 
1992 (12 U.S.C. 4614) is amended— 
(1) in the heading for subsection (a) by striking 
‘‘In General’’ and inserting ‘‘Enterprises’’; 
(2) in subsection (c)— 
(A) by striking ‘‘subsection (b)’’ and insert-
ing ‘‘subsection (c)’’; 
(B) by striking ‘‘enterprises’’ and inserting 
‘‘regulated entities’’; and 
(C) by striking the last sentence; 
(3) by redesignating subsections (c) (as so 
amended by paragraph (2) of this subsection) and (d) 
as subsections (d) and (f), respectively;
176 
(4) by striking subsection (b) and inserting the 
following: 
‘‘(b) FEDERAL HOME LOAN BANKS.— 
‘‘(1) ESTABLISHMENT AND CRITERIA.—For pur-
poses of this subtitle, the Director shall, by regula-
tion— 
‘‘(A) establish the capital classifications 
specified under paragraph (2) for the Federal 
Home Loan Banks; 
‘‘(B) establish criteria for each such capital 
classification based on the amount and types of 
capital held by a bank and the risk-based, min-
imum, and critical capital levels for the banks 
and taking due consideration of the capital clas-
sifications established under subsection (a) for 
the enterprises, with such modifications as the 
Director determines to be appropriate to reflect 
the difference in operations between the banks 
and the enterprises; and 
‘‘(C) shall classify the Federal Home Loan 
Banks according to such capital classifications. 
‘‘(2) CLASSIFICATIONS.—The capital classifica-
tions specified under this paragraph are— 
‘‘(A) adequately capitalized; 
‘‘(B) undercapitalized;
177 
‘‘(C) significantly undercapitalized; and 
‘‘(D) critically undercapitalized. 
‘‘(c) DISCRETIONARY CLASSIFICATION.— 
‘‘(1) GROUNDS
FOR
RECLASSIFICATION.—The 
Director may reclassify a regulated entity under 
paragraph (2) if— 
‘‘(A) at any time, the Director determines 
in writing that the regulated entity is engaging 
in conduct that could result in a rapid depletion 
of core or total capital or the value of collateral 
pledged as security has decreased significantly or 
that the value of the property subject to any 
mortgage held by the regulated entity (or 
securitized in the case of an enterprise) has de-
creased significantly; 
‘‘(B) after notice and an opportunity for 
hearing, the Director determines that the regu-
lated entity is in an unsafe or unsound condi-
tion; or 
‘‘(C) pursuant to section 1371(b), the Direc-
tor deems the regulated entity to be engaging in 
an unsafe or unsound practice. 
‘‘(2) RECLASSIFICATION.—In addition to any 
other action authorized under this title, including the 
reclassification of a regulated entity for any reason
178 
not specified in this subsection, if the Director takes 
any action described in paragraph (1), the Director 
may classify a regulated entity— 
‘‘(A) as undercapitalized, if the regulated 
entity is otherwise classified as adequately cap-
italized; 
‘‘(B) as significantly undercapitalized, if 
the regulated entity is otherwise classified as 
undercapitalized; and 
‘‘(C) as critically undercapitalized, if the 
regulated entity is otherwise classified as signifi-
cantly undercapitalized.’’; and 
(5) by inserting after subsection (d) (as so redes-
ignated by paragraph (3) of this subsection), the fol-
lowing new subsection: 
‘‘(e) RESTRICTION ON CAPITAL DISTRIBUTIONS.— 
‘‘(1) IN
GENERAL.—A regulated entity shall 
make no capital distribution if, after making the dis-
tribution, the regulated entity would be undercapital-
ized. 
‘‘(2) EXCEPTION.—Notwithstanding paragraph 
(1), the Director may permit a regulated entity, to 
the extent appropriate or applicable, to repurchase, 
redeem, retire, or otherwise acquire shares or owner-
179 
ship interests if the repurchase, redemption, retire-
ment, or other acquisition— 
‘‘(A) is made in connection with the 
issuance of additional shares or obligations of the 
regulated entity in at least an equivalent 
amount; and 
‘‘(B) will reduce the financial obligations of 
the regulated entity or otherwise improve the fi-
nancial condition of the entity.’’. 
(b) REGULATIONS.—Not later than the expiration of 
the 180-day period beginning on the date of enactment of 
this Act, the Director of the Federal Housing Finance Agen-
cy shall issue regulations to carry out section 1364(b) of 
the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992 (as added by this section), relating 
to capital classifications for the Federal Home Loan Banks. 
SEC. 1143. SUPERVISORY ACTIONS APPLICABLE TO UNDER-
CAPITALIZED REGULATED ENTITIES. 
Section 1365 of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992 (12 U.S.C. 4615) 
is amended— 
(1) by striking ‘‘the enterprise’’ each place that 
term appears and inserting ‘‘the regulated entity’’; 
(2) by striking ‘‘An enterprise’’ each place that 
term appears and inserting ‘‘A regulated entity’’;
180 
(3) by striking ‘‘an enterprise’’ each place that 
term appears and inserting ‘‘a regulated entity’’; 
(4) in subsection (a)— 
(A) by redesignating paragraphs (1) and 
(2) as paragraphs (2) and (3), respectively; 
(B) by inserting before paragraph (2), as 
redesignated, the following: 
‘‘(1) REQUIRED
MONITORING.—The Director 
shall— 
‘‘(A) closely monitor the condition of any 
undercapitalized regulated entity; 
‘‘(B) closely monitor compliance with the 
capital restoration plan, restrictions, and re-
quirements imposed on an undercapitalized reg-
ulated entity under this section; and 
‘‘(C) periodically review the plan, restric-
tions, and requirements applicable to an under-
capitalized regulated entity to determine whether 
the plan, restrictions, and requirements are 
achieving the purpose of this section.’’; and 
(C) by adding at the end the following: 
‘‘(4) RESTRICTION
OF
ASSET
GROWTH.—An 
undercapitalized regulated entity shall not permit its 
average total assets during any calendar quarter to
181 
exceed its average total assets during the preceding 
calendar quarter, unless— 
‘‘(A) the Director has accepted the capital 
restoration plan of the regulated entity; 
‘‘(B) any increase in total assets is con-
sistent with the capital restoration plan; and 
‘‘(C) the ratio of tangible equity to assets of 
the regulated entity increases during the cal-
endar quarter at a rate sufficient to enable the 
regulated entity to become adequately capitalized 
within a reasonable time. 
‘‘(5) PRIOR
APPROVAL
OF
ACQUISITIONS
AND 
NEW ACTIVITIES.—An undercapitalized regulated en-
tity shall not, directly or indirectly, acquire any in-
terest in any entity or engage in any new activity, 
unless— 
‘‘(A) the Director has accepted the capital 
restoration plan of the regulated entity, the regu-
lated entity is implementing the plan, and the 
Director determines that the proposed action is 
consistent with and will further the achievement 
of the plan; or 
‘‘(B) the Director determines that the pro-
posed action will further the purpose of this sub-
title.’’;
182 
(5) in subsection (b)— 
(A) in the subsection heading, by striking 
‘‘DISCRETIONARY’’; 
(B) in the matter preceding paragraph (1), 
by striking ‘‘may’’ and inserting ‘‘shall’’; and 
(C) in paragraph (2)— 
(i) by striking ‘‘make, in good faith, 
reasonable efforts necessary to’’; and 
(ii) by striking the period at the end 
and inserting ‘‘in any material respect.’’; 
and 
(6) by striking subsection (c) and inserting the 
following: 
‘‘(c) OTHER DISCRETIONARY SAFEGUARDS.—The Di-
rector may take, with respect to an undercapitalized regu-
lated entity, any of the actions authorized to be taken under 
section 1366 with respect to a significantly undercapital-
ized regulated entity, if the Director determines that such 
actions are necessary to carry out the purpose of this sub-
title.’’.
183 
SEC. 1144. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI-
CANTLY UNDERCAPITALIZED REGULATED EN-
TITIES. 
Section 1366 of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992 (12 U.S.C. 4616) 
is amended— 
(1) in subsection (a)(2), by striking ‘‘under-
capitalized enterprise’’ and inserting ‘‘undercapital-
ized’’; 
(2) by striking ‘‘the enterprise’’ each place that 
term appears and inserting ‘‘the regulated entity’’; 
(3) by striking ‘‘An enterprise’’ each place that 
term appears and inserting ‘‘A regulated entity’’; 
(4) by striking ‘‘an enterprise’’ each place that 
term appears and inserting ‘‘a regulated entity’’; 
(5) in subsection (b)— 
(A) in the subsection heading, by striking 
‘‘DISCRETIONARY SUPERVISORY’’ and inserting 
‘‘SPECIFIC’’; 
(B) in the matter preceding paragraph (1), 
by striking ‘‘may, at any time, take any’’ and 
inserting ‘‘shall carry out this section by taking, 
at any time, 1 or more’’; 
(C) by striking paragraph (6); 
(D) by redesignating paragraph (5) as 
paragraph (6);
184 
(E) by inserting after paragraph (4) the fol-
lowing: 
‘‘(5) IMPROVEMENT OF MANAGEMENT.—Take 1 
or more of the following actions: 
‘‘(A) NEW ELECTION OF BOARD.—Order a 
new election for the board of directors of the reg-
ulated entity. 
‘‘(B) DISMISSAL OF DIRECTORS OR EXECU-
TIVE OFFICERS.—Require the regulated entity to 
dismiss from office any director or executive offi-
cer who had held office for more than 180 days 
immediately before the date on which the regu-
lated entity became undercapitalized. Dismissal 
under this subparagraph shall not be construed 
to be a removal pursuant to the enforcement 
powers of the Director under section 1377. 
‘‘(C) EMPLOY QUALIFIED EXECUTIVE OFFI-
CERS.—Require the regulated entity to employ 
qualified executive officers (who, if the Director 
so specifies, shall be subject to approval by the 
Director).’’; and 
(F) by adding at the end the following: 
‘‘(7) OTHER ACTION.—Require the regulated en-
tity to take any other action that the Director deter-
mines will better carry out the purpose of this section
185 
than any of the other actions specified in this sub-
section.’’; and 
(6) by striking subsection (c) and inserting the 
following: 
‘‘(c) RESTRICTION ON COMPENSATION OF EXECUTIVE 
OFFICERS.—A regulated entity that is classified as signifi-
cantly undercapitalized in accordance with section 1364 
may not, without prior written approval by the Director— 
‘‘(1) pay any bonus to any executive officer; or 
‘‘(2) provide compensation to any executive offi-
cer at a rate exceeding the average rate of compensa-
tion of that officer (excluding bonuses, stock options, 
and profit sharing) during the 12 calendar months 
preceding the calendar month in which the regulated 
entity became significantly undercapitalized.’’. 
SEC. 1145. AUTHORITY OVER CRITICALLY UNDERCAPITAL-
IZED REGULATED ENTITIES. 
(a) IN GENERAL.—Section 1367 of the Federal Hous-
ing Enterprises Financial Safety and Soundness Act of 
1992 (12 U.S.C. 4617) is amended to read as follows: 
‘‘SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITAL-
IZED REGULATED ENTITIES. 
‘‘(a) APPOINTMENT OF THE AGENCY AS CONSERVATOR 
OR RECEIVER.—
186 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of Federal or State law, the Director may 
appoint the Agency as conservator or receiver for a 
regulated entity in the manner provided under para-
graph (2) or (4). All references to the conservator or 
receiver under this section are references to the Agen-
cy acting as conservator or receiver. 
‘‘(2) DISCRETIONARY APPOINTMENT.—The Agen-
cy may, at the discretion of the Director, be ap-
pointed conservator or receiver for the purpose of re-
organizing, rehabilitating, or winding up the affairs 
of a regulated entity. 
‘‘(3) GROUNDS
FOR
DISCRETIONARY
APPOINT-
MENT OF CONSERVATOR OR RECEIVER.—The grounds 
for appointing conservator or receiver for any regu-
lated entity under paragraph (2) are as follows: 
‘‘(A) SUBSTANTIAL DISSIPATION.—Substan-
tial dissipation of assets or earnings due to— 
‘‘(i) any violation of any provision of 
Federal or State law; or 
‘‘(ii) any unsafe or unsound practice. 
‘‘(B) UNSAFE OR UNSOUND CONDITION.— 
An unsafe or unsound condition to transact busi-
ness.
187 
‘‘(C) CEASE
AND
DESIST
ORDERS.—Any 
willful violation of a cease and desist order that 
has become final. 
‘‘(D) CONCEALMENT.—Any concealment of 
the books, papers, records, or assets of the regu-
lated entity, or any refusal to submit the books, 
papers, records, or affairs of the regulated entity, 
for inspection to any examiner or to any lawful 
agent of the Director. 
‘‘(E) INABILITY TO MEET OBLIGATIONS.— 
The regulated entity is likely to be unable to pay 
its obligations or meet the demands of its credi-
tors in the normal course of business. 
‘‘(F) LOSSES.—The regulated entity has in-
curred or is likely to incur losses that will de-
plete all or substantially all of its capital, and 
there is no reasonable prospect for the regulated 
entity to become adequately capitalized (as de-
fined in section 1364(a)(1)). 
‘‘(G) VIOLATIONS OF LAW.—Any violation 
of any law or regulation, or any unsafe or un-
sound practice or condition that is likely to— 
‘‘(i) cause insolvency or substantial 
dissipation of assets or earnings; or
188 
‘‘(ii) weaken the condition of the regu-
lated entity. 
‘‘(H) CONSENT.—The regulated entity, by 
resolution of its board of directors or its share-
holders or members, consents to the appointment. 
‘‘(I) 
UNDERCAPITALIZATION.—The 
regu-
lated entity is undercapitalized or significantly 
undercapitalized 
(as 
defined 
in 
section 
1364(a)(3)), and— 
‘‘(i) has no reasonable prospect of be-
coming adequately capitalized; 
‘‘(ii) fails to become adequately cap-
italized, as required by— 
‘‘(I) section 1365(a)(1) with re-
spect to a regulated entity; or 
‘‘(II) section 1366(a)(1) with re-
spect to a significantly undercapital-
ized regulated entity; 
‘‘(iii) fails to submit a capital restora-
tion plan acceptable to the Agency within 
the time prescribed under section 1369C; or 
‘‘(iv) materially fails to implement a 
capital restoration plan submitted and ac-
cepted under section 1369C.
189 
‘‘(J) CRITICAL
UNDERCAPITALIZATION.— 
The regulated entity is critically undercapital-
ized, as defined in section 1364(a)(4). 
‘‘(K) MONEY LAUNDERING.—The Attorney 
General notifies the Director in writing that the 
regulated entity has been found guilty of a 
criminal offense under section 1956 or 1957 of 
title 18, United States Code, or section 5322 or 
5324 of title 31, United States Code. 
‘‘(4) MANDATORY RECEIVERSHIP.— 
‘‘(A) IN GENERAL.—The Director shall ap-
point the Agency as receiver for a regulated enti-
ty if the Director determines, in writing, that— 
‘‘(i) the assets of the regulated entity 
are, and during the preceding 60 calendar 
days have been, less than the obligations of 
the regulated entity to its creditors and oth-
ers; or 
‘‘(ii) the regulated entity is not, and 
during the preceding 60 calendar days has 
not been, generally paying the debts of the 
regulated entity (other than debts that are 
the subject of a bona fide dispute) as such 
debts become due.
190 
‘‘(B) PERIODIC DETERMINATION REQUIRED 
FOR
CRITICALLY
UNDERCAPITALIZED
REGU-
LATED ENTITY.—If a regulated entity is criti-
cally undercapitalized, the Director shall make a 
determination, in writing, as to whether the reg-
ulated entity meets the criteria specified in 
clause (i) or (ii) of subparagraph (A)— 
‘‘(i) not later than 30 calendar days 
after the regulated entity initially becomes 
critically undercapitalized; and 
‘‘(ii) at least once during each suc-
ceeding 30-calendar day period. 
‘‘(C) DETERMINATION
NOT
REQUIRED
IF 
RECEIVERSHIP
ALREADY
IN
PLACE.—Subpara-
graph (B) does not apply with respect to a regu-
lated entity in any period during which the 
Agency serves as receiver for the regulated entity. 
‘‘(D) RECEIVERSHIP
TERMINATES
CON-
SERVATORSHIP.—The appointment of the Agency 
as receiver of a regulated entity under this sec-
tion shall immediately terminate any con-
servatorship established for the regulated entity 
under this title. 
‘‘(5) JUDICIAL REVIEW.—
191 
‘‘(A) IN GENERAL.—If the Agency is ap-
pointed conservator or receiver under this sec-
tion, the regulated entity may, within 30 days of 
such appointment, bring an action in the United 
States district court for the judicial district in 
which the home office of such regulated entity is 
located, or in the United States District Court 
for the District of Columbia, for an order requir-
ing the Agency to remove itself as conservator or 
receiver. 
‘‘(B) REVIEW.—Upon the filing of an ac-
tion under subparagraph (A), the court shall, 
upon the merits, dismiss such action or direct 
the Agency to remove itself as such conservator 
or receiver. 
‘‘(6) DIRECTORS NOT LIABLE FOR ACQUIESCING 
IN APPOINTMENT OF CONSERVATOR OR RECEIVER.— 
The members of the board of directors of a regulated 
entity shall not be liable to the shareholders or credi-
tors of the regulated entity for acquiescing in or con-
senting in good faith to the appointment of the Agen-
cy as conservator or receiver for that regulated entity. 
‘‘(7) AGENCY NOT SUBJECT TO ANY OTHER FED-
ERAL AGENCY.—When acting as conservator or re-
ceiver, the Agency shall not be subject to the direction
192 
or supervision of any other agency of the United 
States or any State in the exercise of the rights, pow-
ers, and privileges of the Agency. 
‘‘(b) POWERS AND DUTIES OF THE AGENCY AS CON-
SERVATOR OR RECEIVER.— 
‘‘(1) RULEMAKING
AUTHORITY
OF
THE
AGEN-
CY.—The Agency may prescribe such regulations as 
the Agency determines to be appropriate regarding 
the conduct of conservatorships or receiverships. 
‘‘(2) GENERAL POWERS.— 
‘‘(A) SUCCESSOR TO REGULATED ENTITY.— 
The Agency shall, as conservator or receiver, and 
by operation of law, immediately succeed to— 
‘‘(i) all rights, titles, powers, and 
privileges of the regulated entity, and of 
any stockholder, officer, or director of such 
regulated entity with respect to the regu-
lated entity and the assets of the regulated 
entity; and 
‘‘(ii) title to the books, records, and as-
sets of any other legal custodian of such reg-
ulated entity. 
‘‘(B) OPERATE THE REGULATED ENTITY.— 
The Agency may, as conservator or receiver—
193 
‘‘(i) take over the assets of and operate 
the regulated entity with all the powers of 
the shareholders, the directors, and the offi-
cers of the regulated entity and conduct all 
business of the regulated entity; 
‘‘(ii) collect all obligations and money 
due the regulated entity; 
‘‘(iii) perform all functions of the regu-
lated entity in the name of the regulated en-
tity which are consistent with the appoint-
ment as conservator or receiver; 
‘‘(iv) preserve and conserve the assets 
and property of the regulated entity; and 
‘‘(v) provide by contract for assistance 
in fulfilling any function, activity, action, 
or duty of the Agency as conservator or re-
ceiver. 
‘‘(C) FUNCTIONS OF OFFICERS, DIRECTORS, 
AND
SHAREHOLDERS
OF
A
REGULATED
ENTI-
TY.—The Agency may, by regulation or order, 
provide for the exercise of any function by any 
stockholder, director, or officer of any regulated 
entity for which the Agency has been named con-
servator or receiver.
194 
‘‘(D) 
POWERS
AS
CONSERVATOR.—The 
Agency may, as conservator, take such action as 
may be— 
‘‘(i) necessary to put the regulated en-
tity in a sound and solvent condition; and 
‘‘(ii) appropriate to carry on the busi-
ness of the regulated entity and preserve 
and conserve the assets and property of the 
regulated entity. 
‘‘(E) ADDITIONAL POWERS AS RECEIVER.— 
In any case in which the Agency is acting as re-
ceiver, the Agency shall place the regulated entity 
in liquidation and proceed to realize upon the 
assets of the regulated entity in such manner as 
the Agency deems appropriate, including through 
the sale of assets, the transfer of assets to a lim-
ited-life regulated entity established under sub-
section (i), or the exercise of any other rights or 
privileges granted to the Agency under this para-
graph. 
‘‘(F) 
ORGANIZATION
OF
NEW
ENTER-
PRISE.—The Agency shall, as receiver for an en-
terprise, organize a successor enterprise that will 
operate pursuant to subsection (i).
195 
‘‘(G) TRANSFER OR SALE OF ASSETS AND 
LIABILITIES.—The Agency may, as conservator 
or receiver, transfer or sell any asset or liability 
of the regulated entity in default, and may do so 
without any approval, assignment, or consent 
with respect to such transfer or sale. 
‘‘(H) PAYMENT OF VALID OBLIGATIONS.— 
The Agency, as conservator or receiver, shall, to 
the extent of proceeds realized from the perform-
ance of contracts or sale of the assets of a regu-
lated entity, pay all valid obligations of the reg-
ulated entity that are due and payable at the 
time of the appointment of the Agency as conser-
vator or receiver, in accordance with the pre-
scriptions and limitations of this section. 
‘‘(I) SUBPOENA AUTHORITY.— 
‘‘(i) IN GENERAL.— 
‘‘(I) AGENCY
AUTHORITY.—The 
Agency may, as conservator or receiver, 
and for purposes of carrying out any 
power, authority, or duty with respect 
to a regulated entity (including deter-
mining any claim against the regu-
lated entity and determining and real-
izing upon any asset of any person in
196 
the course of collecting money due the 
regulated entity), exercise any power 
established under section 1348. 
‘‘(II) APPLICABILITY
OF
LAW.— 
The provisions of section 1348 shall 
apply with respect to the exercise of 
any power under this subparagraph, 
in the same manner as such provisions 
apply under that section. 
‘‘(ii) SUBPOENA.—A subpoena or sub-
poena duces tecum may be issued under 
clause (i) only by, or with the written ap-
proval of, the Director, or the designee of the 
Director. 
‘‘(iii) RULE OF CONSTRUCTION.—This 
subsection shall not be construed to limit 
any rights that the Agency, in any capac-
ity, might otherwise have under section 
1317 or 1379B. 
‘‘(J) INCIDENTAL
POWERS.—The Agency 
may, as conservator or receiver— 
‘‘(i) exercise all powers and authorities 
specifically granted to conservators or re-
ceivers, respectively, under this section, and
197 
such incidental powers as shall be necessary 
to carry out such powers; and 
‘‘(ii) take any action authorized by 
this section, which the Agency determines is 
in the best interests of the regulated entity 
or the Agency. 
‘‘(K) OTHER PROVISIONS.— 
‘‘(i) SHAREHOLDERS AND CREDITORS 
OF FAILED REGULATED ENTITY.—Notwith-
standing any other provision of law, the ap-
pointment of the Agency as receiver for a 
regulated entity pursuant to paragraph (2) 
or (4) of subsection (a) and its succession, 
by operation of law, to the rights, titles, 
powers, and privileges described in sub-
section (b)(2)(A) shall terminate all rights 
and claims that the stockholders and credi-
tors of the regulated entity may have 
against the assets or charter of the regulated 
entity or the Agency arising as a result of 
their status as stockholders or creditors, ex-
cept for their right to payment, resolution, 
or other satisfaction of their claims, as per-
mitted under subsections (b)(9), (c), and (e).
198 
‘‘(ii) ASSETS
OF
REGULATED
ENTI-
TY.—Notwithstanding any other provision 
of law, for purposes of this section, the char-
ter of a regulated entity shall not be consid-
ered an asset of the regulated entity. 
‘‘(3) AUTHORITY OF RECEIVER TO DETERMINE 
CLAIMS.— 
‘‘(A) IN GENERAL.—The Agency may, as re-
ceiver, determine claims in accordance with the 
requirements of this subsection and any regula-
tions prescribed under paragraph (4). 
‘‘(B) NOTICE
REQUIREMENTS.—The re-
ceiver, in any case involving the liquidation or 
winding up of the affairs of a closed regulated 
entity, shall— 
‘‘(i) promptly publish a notice to the 
creditors of the regulated entity to present 
their claims, together with proof, to the re-
ceiver by a date specified in the notice 
which shall be not less than 90 days after 
the date of publication of such notice; and 
‘‘(ii) republish such notice approxi-
mately 1 month and 2 months, respectively, 
after the date of publication under clause 
(i).
201 
‘‘(I) a statement of each reason for 
the disallowance; and 
‘‘(II) the procedures available for 
obtaining agency review of the deter-
mination to disallow the claim or judi-
cial determination of the claim. 
‘‘(B) ALLOWANCE OF PROVEN CLAIM.—The 
receiver shall allow any claim received on or be-
fore the date specified in the notice published 
under paragraph (3)(B)(i) by the receiver from 
any claimant which is proved to the satisfaction 
of the receiver. 
‘‘(C) DISALLOWANCE
OF
CLAIMS
FILED 
AFTER FILING PERIOD.—Claims filed after the 
date specified in the notice published under 
paragraph (3)(B)(i), or the date specified under 
paragraph (3)(C), shall be disallowed and such 
disallowance shall be final. 
‘‘(D) AUTHORITY TO DISALLOW CLAIMS.— 
‘‘(i) IN GENERAL.—The receiver may 
disallow any portion of any claim by a 
creditor or claim of security, preference, or 
priority which is not proved to the satisfac-
tion of the receiver.
202 
‘‘(ii) PAYMENTS TO LESS THAN FULLY 
SECURED
CREDITORS.—In the case of a 
claim of a creditor against a regulated enti-
ty which is secured by any property or 
other asset of such regulated entity, the re-
ceiver— 
‘‘(I) may treat the portion of such 
claim which exceeds an amount equal 
to the fair market value of such prop-
erty or other asset as an unsecured 
claim against the regulated entity; and 
‘‘(II) may not make any payment 
with respect to such unsecured portion 
of the claim, other than in connection 
with the disposition of all claims of 
unsecured creditors of the regulated en-
tity. 
‘‘(iii) EXCEPTIONS.—No provision of 
this paragraph shall apply with respect 
to— 
‘‘(I) any extension of credit from 
any Federal Reserve Bank, Federal 
Home Loan Bank, or the United States 
Treasury; or
203 
‘‘(II) any security interest in the 
assets of the regulated entity securing 
any such extension of credit. 
‘‘(E) NO JUDICIAL REVIEW OF DETERMINA-
TION
PURSUANT
TO
SUBPARAGRAPH
(D).—No 
court may review the determination of the Agen-
cy under subparagraph (D) to disallow a claim. 
‘‘(F) LEGAL EFFECT OF FILING.— 
‘‘(i) 
STATUTE
OF
LIMITATION 
TOLLED.—For purposes of any applicable 
statute of limitations, the filing of a claim 
with the receiver shall constitute a com-
mencement of an action. 
‘‘(ii) NO
PREJUDICE
TO
OTHER
AC-
TIONS.—Subject to paragraph (10), the fil-
ing of a claim with the receiver shall not 
prejudice any right of the claimant to con-
tinue any action which was filed before the 
date of the appointment of the receiver, sub-
ject to the determination of claims by the 
receiver. 
‘‘(6) PROVISION FOR JUDICIAL DETERMINATION 
OF CLAIMS.— 
‘‘(A) IN GENERAL.—The claimant may file 
suit on a claim (or continue an action com-
204 
menced before the appointment of the receiver) in 
the district or territorial court of the United 
States for the district within which the principal 
place of business of the regulated entity is located 
or the United States District Court for the Dis-
trict of Columbia (and such court shall have ju-
risdiction to hear such claim), before the end of 
the 60-day period beginning on the earlier of— 
‘‘(i) the end of the period described in 
paragraph (5)(A)(i) with respect to any 
claim against a regulated entity for which 
the Agency is receiver; or 
‘‘(ii) the date of any notice of disallow-
ance of such claim pursuant to paragraph 
(5)(A)(i). 
‘‘(B) STATUTE OF LIMITATIONS.—A claim 
shall be deemed to be disallowed (other than any 
portion of such claim which was allowed by the 
receiver), and such disallowance shall be final, 
and the claimant shall have no further rights or 
remedies with respect to such claim, if the claim-
ant fails, before the end of the 60-day period de-
scribed under subparagraph (A), to file suit on 
such claim (or continue an action commenced be-
fore the appointment of the receiver).
205 
‘‘(7) REVIEW OF CLAIMS.— 
‘‘(A) OTHER REVIEW PROCEDURES.— 
‘‘(i) IN GENERAL.—The Agency shall 
establish such alternative dispute resolution 
processes as may be appropriate for the res-
olution of claims filed under paragraph 
(5)(A)(i). 
‘‘(ii) CRITERIA.—In establishing alter-
native dispute resolution processes, the 
Agency shall strive for procedures which are 
expeditious, fair, independent, and low cost. 
‘‘(iii) VOLUNTARY
BINDING
OR
NON-
BINDING
PROCEDURES.—The Agency may 
establish both binding and nonbinding proc-
esses under this subparagraph, which may 
be conducted by any government or private 
party. All parties, including the claimant 
and the Agency, must agree to the use of the 
process in a particular case. 
‘‘(B) CONSIDERATION OF INCENTIVES.—The 
Agency shall seek to develop incentives for claim-
ants to participate in the alternative dispute res-
olution process. 
‘‘(8) EXPEDITED DETERMINATION OF CLAIMS.—
206 
‘‘(A) 
ESTABLISHMENT
REQUIRED.—The 
Agency shall establish a procedure for expedited 
relief outside of the routine claims process estab-
lished under paragraph (5) for claimants who— 
‘‘(i) allege the existence of legally valid 
and enforceable or perfected security inter-
ests in assets of any regulated entity for 
which the Agency has been appointed re-
ceiver; and 
‘‘(ii) allege that irreparable injury will 
occur if the routine claims procedure is fol-
lowed. 
‘‘(B) DETERMINATION PERIOD.—Before the 
end of the 90-day period beginning on the date 
on which any claim is filed in accordance with 
the procedures established under subparagraph 
(A), the Director shall— 
‘‘(i) determine— 
‘‘(I) whether to allow or disallow 
such claim; or 
‘‘(II) whether such claim should 
be determined pursuant to the proce-
dures established under paragraph (5); 
and
208 
the end of such period (other than any portion 
of such claim which was allowed by the receiver), 
such disallowance shall be final, and the claim-
ant shall have no further rights or remedies with 
respect to such claim. 
‘‘(E) LEGAL EFFECT OF FILING.— 
‘‘(i) 
STATUTE
OF
LIMITATION 
TOLLED.—For purposes of any applicable 
statute of limitations, the filing of a claim 
with the receiver shall constitute a com-
mencement of an action. 
‘‘(ii) NO
PREJUDICE
TO
OTHER
AC-
TIONS.—Subject to paragraph (10), the fil-
ing of a claim with the receiver shall not 
prejudice any right of the claimant to con-
tinue any action that was filed before the 
appointment of the receiver, subject to the 
determination of claims by the receiver. 
‘‘(9) PAYMENT OF CLAIMS.— 
‘‘(A) IN GENERAL.—The receiver may, in 
the discretion of the receiver, and to the extent 
that funds are available from the assets of the 
regulated entity, pay creditor claims, in such 
manner and amounts as are authorized under 
this section, which are—
209 
‘‘(i) allowed by the receiver; 
‘‘(ii) approved by the Agency pursuant 
to a final determination pursuant to para-
graph (7) or (8); or 
‘‘(iii) determined by the final judgment 
of any court of competent jurisdiction. 
‘‘(B) AGREEMENTS AGAINST THE INTEREST 
OF THE AGENCY.—No agreement that tends to 
diminish or defeat the interest of the Agency in 
any asset acquired by the Agency as receiver 
under this section shall be valid against the 
Agency unless such agreement is in writing and 
executed by an authorized officer or representa-
tive of the regulated entity. 
‘‘(C) PAYMENT OF DIVIDENDS ON CLAIMS.— 
The receiver may, in the sole discretion of the re-
ceiver, pay from the assets of the regulated entity 
dividends on proved claims at any time, and no 
liability shall attach to the Agency by reason of 
any such payment, for failure to pay dividends 
to a claimant whose claim is not proved at the 
time of any such payment. 
‘‘(D) RULEMAKING AUTHORITY OF THE DI-
RECTOR.—The Director may prescribe such 
rules, including definitions of terms, as the Di-
210 
rector deems appropriate to establish a single 
uniform interest rate for, or to make payments 
of post-insolvency interest to creditors holding 
proven claims against the receivership estates of 
the regulated entity, following satisfaction by the 
receiver of the principal amount of all creditor 
claims. 
‘‘(10) SUSPENSION OF LEGAL ACTIONS.— 
‘‘(A) IN GENERAL.—After the appointment 
of a conservator or receiver for a regulated enti-
ty, the conservator or receiver may, in any judi-
cial action or proceeding to which such regulated 
entity is or becomes a party, request a stay for 
a period not to exceed— 
‘‘(i) 45 days, in the case of any conser-
vator; and 
‘‘(ii) 90 days, in the case of any re-
ceiver. 
‘‘(B) GRANT OF STAY BY ALL COURTS RE-
QUIRED.—Upon receipt of a request by the con-
servator or receiver under subparagraph (A) for 
a stay of any judicial action or proceeding in 
any court with jurisdiction of such action or 
proceeding, the court shall grant such stay as to 
all parties.
211 
‘‘(11) ADDITIONAL RIGHTS AND DUTIES.— 
‘‘(A) PRIOR
FINAL
ADJUDICATION.—The 
Agency shall abide by any final unappealable 
judgment of any court of competent jurisdiction 
which was rendered before the appointment of 
the Agency as conservator or receiver. 
‘‘(B) RIGHTS AND REMEDIES OF CONSER-
VATOR OR RECEIVER.—In the event of any ap-
pealable judgment, the Agency as conservator or 
receiver— 
‘‘(i) shall have all of the rights and 
remedies available to the regulated entity 
(before the appointment of such conservator 
or receiver) and the Agency, including re-
moval to Federal court and all appellate 
rights; and 
‘‘(ii) shall not be required to post any 
bond in order to pursue such remedies. 
‘‘(C) NO ATTACHMENT OR EXECUTION.—No 
attachment or execution may issue by any court 
upon assets in the possession of the receiver, or 
upon the charter, of a regulated entity for which 
the Agency has been appointed receiver.
212 
‘‘(D) LIMITATION ON JUDICIAL REVIEW.— 
Except as otherwise provided in this subsection, 
no court shall have jurisdiction over— 
‘‘(i) any claim or action for payment 
from, or any action seeking a determination 
of rights with respect to, the assets or char-
ter of any regulated entity for which the 
Agency has been appointed receiver; or 
‘‘(ii) any claim relating to any act or 
omission of such regulated entity or the 
Agency as receiver. 
‘‘(E) DISPOSITION
OF
ASSETS.—In exer-
cising any right, power, privilege, or authority 
as conservator or receiver in connection with any 
sale or disposition of assets of a regulated entity 
for which the Agency has been appointed conser-
vator or receiver, the Agency shall conduct its 
operations in a manner which— 
‘‘(i) maximizes the net present value 
return from the sale or disposition of such 
assets; 
‘‘(ii) minimizes the amount of any loss 
realized in the resolution of cases; and
213 
‘‘(iii) ensures adequate competition 
and fair and consistent treatment of 
offerors. 
‘‘(12) STATUTE OF LIMITATIONS FOR ACTIONS 
BROUGHT BY CONSERVATOR OR RECEIVER.— 
‘‘(A) IN
GENERAL.—Notwithstanding any 
provision of any contract, the applicable statute 
of limitations with regard to any action brought 
by the Agency as conservator or receiver shall 
be— 
‘‘(i) in the case of any contract claim, 
the longer of— 
‘‘(I) the 6-year period beginning 
on the date on which the claim accrues; 
or 
‘‘(II) the period applicable under 
State law; and 
‘‘(ii) in the case of any tort claim, the 
longer of— 
‘‘(I) the 3-year period beginning 
on the date on which the claim accrues; 
or 
‘‘(II) the period applicable under 
State law.
214 
‘‘(B) DETERMINATION
OF
THE
DATE
ON 
WHICH A CLAIM ACCRUES.—For purposes of sub-
paragraph (A), the date on which the statute of 
limitations begins to run on any claim described 
in such subparagraph shall be the later of— 
‘‘(i) the date of the appointment of the 
Agency as conservator or receiver; or 
‘‘(ii) the date on which the cause of ac-
tion accrues. 
‘‘(13) REVIVAL OF EXPIRED STATE CAUSES OF 
ACTION.— 
‘‘(A) IN GENERAL.—In the case of any tort 
claim described under clause (ii) for which the 
statute of limitations applicable under State law 
with respect to such claim has expired not more 
than 5 years before the appointment of the Agen-
cy as conservator or receiver, the Agency may 
bring an action as conservator or receiver on 
such claim without regard to the expiration of 
the statute of limitations applicable under State 
law. 
‘‘(B) CLAIMS DESCRIBED.—A tort claim re-
ferred to under clause (i) is a claim arising from 
fraud, intentional misconduct resulting in unjust
223 
‘‘(B) the performance of which the conser-
vator or receiver, in its sole discretion, deter-
mines to be burdensome; and 
‘‘(C) the disaffirmance or repudiation of 
which the conservator or receiver determines, in 
its sole discretion, will promote the orderly ad-
ministration of the affairs of the regulated enti-
ty. 
‘‘(2) TIMING OF REPUDIATION.—The conservator 
or receiver shall determine whether or not to exercise 
the rights of repudiation under this subsection within 
a reasonable period following such appointment. 
‘‘(3) CLAIMS FOR DAMAGES FOR REPUDIATION.— 
‘‘(A) IN
GENERAL.—Except as otherwise 
provided under subparagraph (C) and para-
graphs (4), (5), and (6), the liability of the con-
servator or receiver for the disaffirmance or re-
pudiation of any contract pursuant to para-
graph (1) shall be— 
‘‘(i) limited to actual direct compen-
satory damages; and 
‘‘(ii) determined as of— 
‘‘(I) the date of the appointment 
of the conservator or receiver; or
224 
‘‘(II) in the case of any contract 
or agreement referred to in paragraph 
(8), the date of the disaffirmance or re-
pudiation of such contract or agree-
ment. 
‘‘(B) NO LIABILITY FOR OTHER DAMAGES.— 
For purposes of subparagraph (A), the term ‘ac-
tual direct compensatory damages’ shall not in-
clude— 
‘‘(i) punitive or exemplary damages; 
‘‘(ii) damages for lost profits or oppor-
tunity; or 
‘‘(iii) damages for pain and suffering. 
‘‘(C) MEASURE OF DAMAGES FOR REPUDI-
ATION OF FINANCIAL CONTRACTS.—In the case of 
any qualified financial contract or agreement to 
which paragraph (8) applies, compensatory 
damages shall be— 
‘‘(i) deemed to include normal and rea-
sonable costs of cover or other reasonable 
measures of damages utilized in the indus-
tries for such contract and agreement 
claims; and
225 
‘‘(ii) paid in accordance with this sub-
section and subsection (e), except as other-
wise specifically provided in this section. 
‘‘(4) LEASES
UNDER
WHICH
THE
REGULATED 
ENTITY IS THE LESSEE.— 
‘‘(A) IN GENERAL.—If the conservator or re-
ceiver disaffirms or repudiates a lease under 
which the regulated entity was the lessee, the con-
servator or receiver shall not be liable for any 
damages (other than damages determined under 
subparagraph (B)) for the disaffirmance or repu-
diation of such lease. 
‘‘(B) 
PAYMENTS
OF
RENT.—Notwith-
standing subparagraph (A), the lessor under a 
lease to which that subparagraph applies shall— 
‘‘(i) be entitled to the contractual rent 
accruing before the later of the date on 
which— 
‘‘(I) the notice of disaffirmance or 
repudiation is mailed; or 
‘‘(II) the disaffirmance or repudi-
ation becomes effective, unless the lessor 
is in default or breach of the terms of 
the lease;
226 
‘‘(ii) have no claim for damages under 
any acceleration clause or other penalty 
provision in the lease; and 
‘‘(iii) have a claim for any unpaid 
rent, subject to all appropriate offsets and 
defenses, due as of the date of the appoint-
ment, which shall be paid in accordance 
with this subsection and subsection (e). 
‘‘(5) LEASES
UNDER
WHICH
THE
REGULATED 
ENTITY IS THE LESSOR.— 
‘‘(A) IN GENERAL.—If the conservator or re-
ceiver repudiates an unexpired written lease of 
real property of the regulated entity under which 
the regulated entity is the lessor and the lessee is 
not, as of the date of such repudiation, in de-
fault, the lessee under such lease may either— 
‘‘(i) treat the lease as terminated by 
such repudiation; or 
‘‘(ii) remain in possession of the lease-
hold interest for the balance of the term of 
the lease, unless the lessee defaults under the 
terms of the lease after the date of such re-
pudiation. 
‘‘(B) PROVISIONS APPLICABLE TO LESSEE 
REMAINING IN POSSESSION.—If any lessee under
227 
a lease described under subparagraph (A) re-
mains in possession of a leasehold interest under 
clause (ii) of subparagraph (A)— 
‘‘(i) the lessee— 
‘‘(I) shall continue to pay the con-
tractual rent pursuant to the terms of 
the lease after the date of the repudi-
ation of such lease; and 
‘‘(II) may offset against any rent 
payment which accrues after the date 
of the repudiation of the lease, and any 
damages which accrue after such date 
due to the nonperformance of any obli-
gation of the regulated entity under the 
lease after such date; and 
‘‘(ii) the conservator or receiver shall 
not be liable to the lessee for any damages 
arising after such date as a result of the re-
pudiation, other than the amount of any 
offset allowed under clause (i)(II). 
‘‘(6) CONTRACTS FOR THE SALE OF REAL PROP-
ERTY.— 
‘‘(A) IN GENERAL.—If the conservator or re-
ceiver repudiates any contract for the sale of real 
property and the purchaser of such real property
229 
‘‘(I) not be liable to the purchaser 
for any damages arising after such 
date as a result of the repudiation, 
other than the amount of any offset al-
lowed under clause (i)(II); 
‘‘(II) deliver title to the purchaser 
in accordance with the provisions of 
the contract; and 
‘‘(III) have no obligation under 
the contract other than the performance 
required under subclause (II). 
‘‘(C) ASSIGNMENT AND SALE ALLOWED.— 
‘‘(i) IN
GENERAL.—No provision of 
this paragraph shall be construed as lim-
iting the right of the conservator or receiver 
to assign the contract described under sub-
paragraph (A), and sell the property subject 
to the contract and the provisions of this 
paragraph. 
‘‘(ii) NO LIABILITY AFTER ASSIGNMENT 
AND SALE.—If an assignment and sale de-
scribed under clause (i) is consummated, the 
conservator or receiver shall have no further 
liability under the contract described under 
subparagraph (A), or with respect to the
230 
real property which was the subject of such 
contract. 
‘‘(7) SERVICE CONTRACTS.— 
‘‘(A) SERVICES
PERFORMED
BEFORE
AP-
POINTMENT.—In the case of any contract for 
services between any person and any regulated 
entity for which the Agency has been appointed 
conservator or receiver, any claim of such person 
for services performed before the appointment of 
the conservator or receiver shall be— 
‘‘(i) a claim to be paid in accordance 
with subsections (b) and (e); and 
‘‘(ii) deemed to have arisen as of the 
date on which the conservator or receiver 
was appointed. 
‘‘(B) SERVICES
PERFORMED
AFTER
AP-
POINTMENT AND PRIOR TO REPUDIATION.—If, in 
the case of any contract for services described 
under subparagraph (A), the conservator or re-
ceiver accepts performance by the other person 
before the conservator or receiver makes any de-
termination to exercise the right of repudiation 
of such contract under this section—
231 
‘‘(i) the other party shall be paid 
under the terms of the contract for the serv-
ices performed; and 
‘‘(ii) the amount of such payment shall 
be treated as an administrative expense of 
the conservatorship or receivership. 
‘‘(C) ACCEPTANCE
OF
PERFORMANCE
NO 
BAR
TO
SUBSEQUENT
REPUDIATION.—The ac-
ceptance by the conservator or receiver of services 
referred to under subparagraph (B) in connec-
tion with a contract described in such subpara-
graph shall not affect the right of the conservator 
or receiver to repudiate such contract under this 
section at any time after such performance. 
‘‘(8) 
CERTAIN
QUALIFIED
FINANCIAL
CON-
TRACTS.— 
‘‘(A) RIGHTS OF PARTIES TO CONTRACTS.— 
Subject to paragraphs (9) and (10), and not-
withstanding any other provision of this title 
(other than subsection (b)(9)(B) of this section), 
any other Federal law, or the law of any State, 
no person shall be stayed or prohibited from ex-
ercising— 
‘‘(i) any right of that person to cause 
the termination, liquidation, or acceleration
232 
of any qualified financial contract with a 
regulated entity that arises upon the ap-
pointment of the Agency as receiver for such 
regulated entity at any time after such ap-
pointment; 
‘‘(ii) any right under any security 
agreement or arrangement or other credit 
enhancement relating to one or more quali-
fied financial contracts; or 
‘‘(iii) any right to offset or net out any 
termination value, payment amount, or 
other transfer obligation arising under or in 
connection with 1 or more contracts and 
agreements described in clause (i), includ-
ing any master agreement for such con-
tracts or agreements. 
‘‘(B) APPLICABILITY
OF
OTHER
PROVI-
SIONS.—Subsection (b)(10) shall apply in the 
case of any judicial action or proceeding brought 
against any receiver referred to under subpara-
graph (A), or the regulated entity for which such 
receiver was appointed, by any party to a con-
tract or agreement described under subparagraph 
(A)(i) with such regulated entity.
233 
‘‘(C) CERTAIN
TRANSFERS
NOT
AVOID-
ABLE.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
paragraph (11), or any other provision of 
Federal or State law relating to the avoid-
ance of preferential or fraudulent transfers, 
the Agency, whether acting as such or as 
conservator or receiver of a regulated entity, 
may not avoid any transfer of money or 
other property in connection with any 
qualified financial contract with a regu-
lated entity. 
‘‘(ii) EXCEPTION FOR CERTAIN TRANS-
FERS.—Clause (i) shall not apply to any 
transfer of money or other property in con-
nection with any qualified financial con-
tract with a regulated entity if the Agency 
determines that the transferee had actual 
intent to hinder, delay, or defraud such reg-
ulated entity, the creditors of such regulated 
entity, or any conservator or receiver ap-
pointed for such regulated entity. 
‘‘(D) CERTAIN
CONTRACTS
AND
AGREE-
MENTS
DEFINED.—In this subsection the fol-
lowing definitions shall apply:
234 
‘‘(i) 
QUALIFIED
FINANCIAL
CON-
TRACT.—The term ‘qualified financial con-
tract’ means any securities contract, com-
modity contract, forward contract, repur-
chase agreement, swap agreement, and any 
similar agreement that the Agency deter-
mines by regulation, resolution, or order to 
be a qualified financial contract for pur-
poses of this paragraph. 
‘‘(ii) 
SECURITIES
CONTRACT.—The 
term ‘securities contract’— 
‘‘(I) means a contract for the pur-
chase, sale, or loan of a security, a cer-
tificate of deposit, a mortgage loan, or 
any interest in a mortgage loan, a 
group or index of securities, certificates 
of deposit, or mortgage loans or inter-
ests therein (including any interest 
therein or based on the value thereof) 
or any option on any of the foregoing, 
including any option to purchase or 
sell any such security, certificate of de-
posit, mortgage loan, interest, group or 
index, or option, and including any re-
purchase or reverse repurchase trans-
235 
action on any such security, certificate 
of deposit, mortgage loan, interest, 
group or index, or option; 
‘‘(II) does not include any pur-
chase, sale, or repurchase obligation 
under a participation in a commercial 
mortgage loan, unless the Agency deter-
mines by regulation, resolution, or 
order to include any such agreement 
within the meaning of such term; 
‘‘(III) means any option entered 
into on a national securities exchange 
relating to foreign currencies; 
‘‘(IV) means the guarantee by or 
to any securities clearing agency of 
any settlement of cash, securities, cer-
tificates of deposit, mortgage loans or 
interests therein, group or index of se-
curities, certificates of deposit, or mort-
gage loans or interests therein (includ-
ing any interest therein or based on 
the value thereof) or option on any of 
the foregoing, including any option to 
purchase or sell any such security, cer-
236 
tificate of deposit, mortgage loan, in-
terest, group or index, or option; 
‘‘(V) means any margin loan; 
‘‘(VI) means any other agreement 
or transaction that is similar to any 
agreement or transaction referred to in 
this clause; 
‘‘(VII) means any combination of 
the agreements or transactions referred 
to in this clause; 
‘‘(VIII) means any option to enter 
into any agreement or transaction re-
ferred to in this clause; 
‘‘(IX) means a master agreement 
that provides for an agreement or 
transaction referred to in subclause (I), 
(III), (IV), (V), (VI), (VII), or (VIII), 
together with all supplements to any 
such master agreement, without regard 
to whether the master agreement pro-
vides for an agreement or transaction 
that is not a securities contract under 
this clause, except that the master 
agreement shall be considered to be a 
securities contract under this clause
237 
only with respect to each agreement or 
transaction under the master agree-
ment that is referred to in subclause 
(I), (III), (IV), (V), (VI), (VII), or 
(VIII); and 
‘‘(X) means any security agree-
ment or arrangement or other credit 
enhancement related to any agreement 
or transaction referred to in this 
clause, including any guarantee or re-
imbursement obligation in connection 
with any agreement or transaction re-
ferred to in this clause. 
‘‘(iii) 
COMMODITY
CONTRACT.—The 
term ‘commodity contract’ means— 
‘‘(I) with respect to a futures com-
mission merchant, a contract for the 
purchase or sale of a commodity for fu-
ture delivery on, or subject to the rules 
of, a contract market or board of trade; 
‘‘(II) with respect to a foreign fu-
tures commission merchant, a foreign 
future;
240 
‘‘(iv) FORWARD CONTRACT.—The term 
‘forward contract’ means— 
‘‘(I) a contract (other than a com-
modity contract) for the purchase, sale, 
or transfer of a commodity or any 
similar good, article, service, right, or 
interest which is presently or in the fu-
ture becomes the subject of dealing in 
the forward contract trade, or product 
or byproduct thereof, with a maturity 
date more than 2 days after the date 
on which the contract is entered into, 
including a repurchase transaction, re-
verse repurchase transaction, consign-
ment, lease, swap, hedge transaction, 
deposit, loan, option, allocated trans-
action, unallocated transaction, or any 
other similar agreement; 
‘‘(II) any combination of agree-
ments or transactions referred to in 
subclauses (I) and (III); 
‘‘(III) any option to enter into 
any agreement or transaction referred 
to in subclause (I) or (II);
241 
‘‘(IV) a master agreement that 
provides for an agreement or trans-
action referred to in subclauses (I), 
(II), or (III), together with all supple-
ments to any such master agreement, 
without regard to whether the master 
agreement provides for an agreement 
or transaction that is not a forward 
contract under this clause, except that 
the master agreement shall be consid-
ered to be a forward contract under 
this clause only with respect to each 
agreement or transaction under the 
master agreement that is referred to in 
subclause (I), (II), or (III); or 
‘‘(V) any security agreement or 
arrangement or other credit enhance-
ment related to any agreement or 
transaction referred to in subclause (I), 
(II), (III), or (IV), including any 
guarantee or reimbursement obligation 
in connection with any agreement or 
transaction referred to in any such 
subclause.
242 
‘‘(v) REPURCHASE
AGREEMENT.—The 
term ‘repurchase agreement’ (including a 
reverse repurchase agreement)— 
‘‘(I) means an agreement, includ-
ing related terms, which provides for 
the transfer of one or more certificates 
of deposit, mortgage-related securities 
(as such term is defined in section 3 of 
the Securities Exchange Act of 1934), 
mortgage loans, interests in mortgage- 
related securities or mortgage loans, el-
igible bankers’ acceptances, qualified 
foreign government securities (defined 
for purposes of this clause as a security 
that is a direct obligation of, or that is 
fully guaranteed by, the central govern-
ment of a member of the Organization 
for Economic Cooperation and Devel-
opment, as determined by regulation or 
order adopted by the appropriate Fed-
eral banking authority), or securities 
that are direct obligations of, or that 
are fully guaranteed by, the United 
States or any agency of the United 
States against the transfer of funds by
243 
the transferee of such certificates of de-
posit, eligible bankers’ acceptances, se-
curities, mortgage loans, or interests 
with a simultaneous agreement by such 
transferee to transfer to the transferor 
thereof certificates of deposit, eligible 
bankers’ acceptances, securities, mort-
gage loans, or interests as described 
above, at a date certain not later than 
1 year after such transfers or on de-
mand, against the transfer of funds, or 
any other similar agreement; 
‘‘(II) does not include any repur-
chase obligation under a participation 
in a commercial mortgage loan, unless 
the Agency determines by regulation, 
resolution, or order to include any such 
participation within the meaning of 
such term; 
‘‘(III) means any combination of 
agreements or transactions referred to 
in subclauses (I) and (IV); 
‘‘(IV) means any option to enter 
into any agreement or transaction re-
ferred to in subclause (I) or (III);
244 
‘‘(V) means a master agreement 
that provides for an agreement or 
transaction referred to in subclause (I), 
(III), or (IV), together with all supple-
ments to any such master agreement, 
without regard to whether the master 
agreement provides for an agreement 
or transaction that is not a repurchase 
agreement under this clause, except 
that the master agreement shall be con-
sidered to be a repurchase agreement 
under this subclause only with respect 
to each agreement or transaction under 
the master agreement that is referred to 
in subclause (I), (III), or (IV); and 
‘‘(VI) means any security agree-
ment or arrangement or other credit 
enhancement related to any agreement 
or transaction referred to in subclause 
(I), (III), (IV), or (V), including any 
guarantee or reimbursement obligation 
in connection with any agreement or 
transaction referred to in any such 
subclause.
245 
‘‘(vi) SWAP
AGREEMENT.—The term 
‘swap agreement’ means— 
‘‘(I) any agreement, including the 
terms and conditions incorporated by 
reference in any such agreement, which 
is an interest rate swap, option, future, 
or forward agreement, including a rate 
floor, rate cap, rate collar, cross-cur-
rency rate swap, and basis swap; a 
spot, same day-tomorrow, tomorrow- 
next, forward, or other foreign ex-
change or precious metals agreement; a 
currency swap, option, future, or for-
ward agreement; an equity index or eq-
uity swap, option, future, or forward 
agreement; a debt index or debt swap, 
option, future, or forward agreement; a 
total return, credit spread or credit 
swap, option, future, or forward agree-
ment; a commodity index or com-
modity swap, option, future, or for-
ward agreement; or a weather swap, 
weather derivative, or weather option; 
‘‘(II) any agreement or trans-
action that is similar to any other
246 
agreement or transaction referred to in 
this clause and that is of a type that 
has been, is presently, or in the future 
becomes, the subject of recurrent deal-
ings in the swap markets (including 
terms and conditions incorporated by 
reference in such agreement) and that 
is a forward, swap, future, or option 
on one or more rates, currencies, com-
modities, equity securities or other eq-
uity instruments, debt securities or 
other debt instruments, quantitative 
measures associated with an occur-
rence, extent of an occurrence, or con-
tingency associated with a financial, 
commercial, or economic consequence, 
or economic or financial indices or 
measures of economic or financial risk 
or value; 
‘‘(III) any combination of agree-
ments or transactions referred to in 
this clause; 
‘‘(IV) any option to enter into 
any agreement or transaction referred 
to in this clause;
247 
‘‘(V) a master agreement that pro-
vides for an agreement or transaction 
referred to in subclause (I), (II), (III), 
or (IV), together with all supplements 
to any such master agreement, without 
regard to whether the master agreement 
contains an agreement or transaction 
that is not a swap agreement under 
this clause, except that the master 
agreement shall be considered to be a 
swap agreement under this clause only 
with respect to each agreement or 
transaction under the master agree-
ment that is referred to in subclause 
(I), (II), (III), or (IV); and 
‘‘(VI) any security agreement or 
arrangement or other credit enhance-
ment related to any agreements or 
transactions referred to in subclause 
(I), (II), (III), (IV), or (V), including 
any guarantee or reimbursement obli-
gation in connection with any agree-
ment or transaction referred to in any 
such subclause.
248 
‘‘(vii) TREATMENT OF MASTER AGREE-
MENT
AS
ONE
AGREEMENT.—Any master 
agreement for any contract or agreement de-
scribed in any preceding clause of this sub-
paragraph (or any master agreement for 
such master agreement or agreements), to-
gether with all supplements to such master 
agreement, shall be treated as a single 
agreement and a single qualified financial 
contract. If a master agreement contains 
provisions relating to agreements or trans-
actions that are not themselves qualified fi-
nancial contracts, the master agreement 
shall be deemed to be a qualified financial 
contract only with respect to those trans-
actions that are themselves qualified finan-
cial contracts. 
‘‘(viii) TRANSFER.—The term ‘trans-
fer’ means every mode, direct or indirect, 
absolute or conditional, voluntary or invol-
untary, of disposing of or parting with 
property or with an interest in property, 
including retention of title as a security in-
terest and foreclosure of the equity of re-
demption of the regulated entity.
249 
‘‘(E) CERTAIN PROTECTIONS IN EVENT OF 
APPOINTMENT
OF
CONSERVATOR.—Notwith-
standing any other provision of this section, any 
other Federal law, or the law of any State (other 
than paragraph (10) of this subsection and sub-
section (b)(9)(B)), no person shall be stayed or 
prohibited from exercising— 
‘‘(i) any right such person has to cause 
the termination, liquidation, or acceleration 
of any qualified financial contract with a 
regulated entity in a conservatorship based 
upon a default under such financial con-
tract which is enforceable under applicable 
noninsolvency law; 
‘‘(ii) any right under any security 
agreement or arrangement or other credit 
enhancement relating to 1 or more such 
qualified financial contracts; or 
‘‘(iii) any right to offset or net out any 
termination values, payment amounts, or 
other transfer obligations arising under or 
in connection with such qualified financial 
contracts. 
‘‘(F) CLARIFICATION.—No provision of law 
shall be construed as limiting the right or power
257 
contract to which a regulated entity is a 
party, or to obtain possession of or exercise 
control over any property of the regulated 
entity, or affect any contractual rights of 
the regulated entity, without the consent of 
the conservator or receiver, as appropriate, 
for a period of— 
‘‘(I) 45 days after the date of ap-
pointment of a conservator; or 
‘‘(II) 90 days after the date of ap-
pointment of a receiver. 
‘‘(ii) 
EXCEPTIONS.—This 
subpara-
graph shall not— 
‘‘(I) apply to a contract for liabil-
ity insurance for an officer or director; 
‘‘(II) apply to the rights of parties 
to certain qualified financial contracts 
under subsection (d)(8); and 
‘‘(III) be construed as permitting 
the conservator or receiver to fail to 
comply with otherwise enforceable pro-
visions of such contracts. 
‘‘(14) SAVINGS CLAUSE.—The meanings of terms 
used in this subsection are applicable for purposes of 
this subsection only, and shall not be construed or ap-
258 
plied so as to challenge or affect the characterization, 
definition, or treatment of any similar terms under 
any other statute, regulation, or rule, including the 
Gramm-Leach-Bliley Act, the Legal Certainty for 
Bank Products Act of 2000, the securities laws (as 
that term is defined in section 3(a)(47) of the Securi-
ties Exchange Act of 1934), and the Commodity Ex-
change Act. 
‘‘(15) EXCEPTION FOR FEDERAL RESERVE AND 
FEDERAL HOME LOAN BANKS.—No provision of this 
subsection shall apply with respect to— 
‘‘(A) any extension of credit from any Fed-
eral Home Loan Bank or Federal Reserve Bank 
to any regulated entity; or 
‘‘(B) any security interest in the assets of 
the regulated entity securing any such extension 
of credit. 
‘‘(e) VALUATION OF CLAIMS IN DEFAULT.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of Federal law or the law of any State, and 
regardless of the method which the Agency determines 
to utilize with respect to a regulated entity in default 
or in danger of default, including transactions au-
thorized under subsection (i), this subsection shall
259 
govern the rights of the creditors of such regulated en-
tity. 
‘‘(2) MAXIMUM
LIABILITY.—The maximum li-
ability of the Agency, acting as receiver or in any 
other capacity, to any person having a claim against 
the receiver or the regulated entity for which such re-
ceiver is appointed shall be not more than the amount 
that such claimant would have received if the Agency 
had liquidated the assets and liabilities of the regu-
lated entity without exercising the authority of the 
Agency under subsection (i). 
‘‘(f) LIMITATION ON COURT ACTION.—Except as pro-
vided in this section or at the request of the Director, no 
court may take any action to restrain or affect the exercise 
of powers or functions of the Agency as a conservator or 
a receiver. 
‘‘(g) LIABILITY OF DIRECTORS AND OFFICERS.— 
‘‘(1) IN GENERAL.—A director or officer of a reg-
ulated entity may be held personally liable for mone-
tary damages in any civil action described in para-
graph (2) brought by, on behalf of, or at the request 
or direction of the Agency, and prosecuted wholly or 
partially for the benefit of the Agency— 
‘‘(A) acting as conservator or receiver of 
such regulated entity; or
260 
‘‘(B) acting based upon a suit, claim, or 
cause of action purchased from, assigned by, or 
otherwise conveyed by such receiver or conser-
vator. 
‘‘(2) ACTIONS ADDRESSED.—Paragraph (1) ap-
plies in any civil action for gross negligence, includ-
ing any similar conduct or conduct that demonstrates 
a greater disregard of a duty of care than gross neg-
ligence, including intentional tortious conduct, as 
such terms are defined and determined under applica-
ble State law. 
‘‘(3) NO LIMITATION.—Nothing in this subsection 
shall impair or affect any right of the Agency under 
other applicable law. 
‘‘(h) DAMAGES.—In any proceeding related to any 
claim against a director, officer, employee, agent, attorney, 
accountant, appraiser, or any other party employed by or 
providing services to a regulated entity, recoverable dam-
ages determined to result from the improvident or otherwise 
improper use or investment of any assets of the regulated 
entity shall include principal losses and appropriate inter-
est. 
‘‘(i) LIMITED-LIFE REGULATED ENTITIES.— 
‘‘(1) ORGANIZATION.—
261 
‘‘(A) PURPOSE.—The Agency, as receiver 
appointed pursuant to subsection (a)— 
‘‘(i) may, in the case of a Federal 
Home Loan Bank, organize a limited-life 
regulated entity with those powers and at-
tributes of the Federal Home Loan Bank in 
default or in danger of default as the Direc-
tor determines necessary, subject to the pro-
visions of this subsection, and the Director 
shall grant a temporary charter to that lim-
ited-life regulated entity, and that limited- 
life regulated entity shall operate subject to 
that charter; and 
‘‘(ii) shall, in the case of an enterprise, 
organize a limited-life regulated entity with 
respect to that enterprise in accordance 
with this subsection. 
‘‘(B) AUTHORITIES.—Upon the creation of 
a limited-life regulated entity under subpara-
graph (A), the limited-life regulated entity 
may— 
‘‘(i) assume such liabilities of the regu-
lated entity that is in default or in danger 
of default as the Agency may, in its discre-
tion, determine to be appropriate, except
264 
Mortgage Corporation is subject, except 
as otherwise provided in this sub-
section. 
‘‘(B) INTERESTS IN AND ASSETS AND OBLI-
GATIONS OF REGULATED ENTITY IN DEFAULT.— 
Notwithstanding subparagraph (A) or any other 
provision of law— 
‘‘(i) a limited-life regulated entity shall 
assume, acquire, or succeed to the assets or 
liabilities of a regulated entity only to the 
extent that such assets or liabilities are 
transferred by the Agency to the limited-life 
regulated entity in accordance with, and 
subject to the restrictions set forth in, para-
graph (1)(B); 
‘‘(ii) a limited-life regulated entity 
shall not assume, acquire, or succeed to any 
obligation that a regulated entity for which 
a receiver has been appointed may have to 
any shareholder of the regulated entity that 
arises as a result of the status of that person 
as a shareholder of the regulated entity; and 
‘‘(iii) no shareholder or creditor of a 
regulated entity shall have any right or 
claim against the charter of the regulated
265 
entity once the Agency has been appointed 
receiver for the regulated entity and a lim-
ited-life regulated entity succeeds to the 
charter pursuant to subparagraph (A). 
‘‘(C) LIMITED-LIFE
REGULATED
ENTITY 
TREATED AS BEING IN DEFAULT FOR CERTAIN 
PURPOSES.—A limited-life regulated entity shall 
be treated as a regulated entity in default at 
such times and for such purposes as the Agency 
may, in its discretion, determine. 
‘‘(D) MANAGEMENT.—Upon its establish-
ment, a limited-life regulated entity shall be 
under the management of a board of directors 
consisting of not fewer than 5 nor more than 10 
members appointed by the Agency. 
‘‘(E) BYLAWS.—The board of directors of a 
limited-life regulated entity shall adopt such by-
laws as may be approved by the Agency. 
‘‘(3) CAPITAL STOCK.— 
‘‘(A) NO AGENCY REQUIREMENT.—The 
Agency is not required to pay capital stock 
into a limited-life regulated entity or to 
issue any capital stock on behalf of a lim-
ited-life regulated entity established under 
this subsection.
266 
‘‘(B) AUTHORITY.—If the Director de-
termines that such action is advisable, the 
Agency may cause capital stock or other se-
curities of a limited-life regulated entity es-
tablished with respect to an enterprise to be 
issued and offered for sale, in such amounts 
and on such terms and conditions as the 
Director may determine, in the discretion of 
the Director. 
‘‘(4) INVESTMENTS.—Funds of a limited-life reg-
ulated entity shall be kept on hand in cash, invested 
in obligations of the United States or obligations 
guaranteed as to principal and interest by the United 
States, or deposited with the Agency, or any Federal 
reserve bank. 
‘‘(5) EXEMPT
TAX
STATUS.—Notwithstanding 
any other provision of Federal or State law, a lim-
ited-life regulated entity, its franchise, property, and 
income shall be exempt from all taxation now or here-
after imposed by the United States, by any territory, 
dependency, or possession thereof, or by any State, 
county, municipality, or local taxing authority. 
‘‘(6) WINDING UP.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), not later than 2 years after
267 
the date of its organization, the Agency shall 
wind up the affairs of a limited-life regulated en-
tity. 
‘‘(B) EXTENSION.—The Director may, in 
the discretion of the Director, extend the status 
of a limited-life regulated entity for 3 additional 
1-year periods. 
‘‘(C) TERMINATION OF STATUS AS LIMITED- 
LIFE REGULATED ENTITY.— 
‘‘(i) IN GENERAL.—Upon the sale by 
the Agency of 80 percent or more of the cap-
ital stock of a limited-life regulated entity, 
as defined in clause (iv), to 1 or more per-
sons (other than the Agency)— 
‘‘(I) the status of the limited-life 
regulated entity as such shall termi-
nate; and 
‘‘(II) the entity shall cease to be a 
limited-life regulated entity for pur-
poses of this subsection. 
‘‘(ii) 
DIVESTITURE
OF
REMAINING 
STOCK, IF ANY.— 
‘‘(I) IN GENERAL.—Not later than 
1 year after the date on which the sta-
tus of a limited-life regulated entity is
268 
terminated pursuant to clause (i), the 
Agency shall sell to 1 or more persons 
(other than the Agency) any remaining 
capital stock of the former limited-life 
regulated entity. 
‘‘(II) EXTENSION AUTHORIZED.— 
The Director may extend the period re-
ferred to in subclause (I) for not longer 
than an additional 2 years, if the Di-
rector determines that such action 
would be in the public interest. 
‘‘(iii) 
SAVINGS
CLAUSE.—Notwith-
standing any provision of law, other than 
clause (ii), the Agency shall not be required 
to sell the capital stock of an enterprise or 
a limited-life regulated entity established 
with respect to an enterprise. 
‘‘(iv) APPLICABILITY.—This subpara-
graph applies only with respect to a lim-
ited-life regulated entity that is established 
with respect to an enterprise. 
‘‘(7) TRANSFER OF ASSETS AND LIABILITIES.— 
‘‘(A) IN GENERAL.— 
‘‘(i) TRANSFER OF ASSETS AND LIABIL-
ITIES.—The Agency, as receiver, may trans-
270 
in default or in danger of default that are 
similarly situated under subsection (c)(1) in 
a similar manner in exercising the author-
ity of the Agency under this subsection to 
transfer any assets or liabilities of the regu-
lated entity to the limited-life regulated en-
tity established with respect to such regu-
lated entity, except that the Agency may 
take actions (including making payments) 
that do not comply with this clause, if— 
‘‘(I) the Director determines that 
such actions are necessary to maximize 
the value of the assets of the regulated 
entity, to maximize the present value 
return from the sale or other disposi-
tion of the assets of the regulated enti-
ty, or to minimize the amount of any 
loss realized upon the sale or other dis-
position of the assets of the regulated 
entity; and 
‘‘(II) all creditors that are simi-
larly situated under subsection (c)(1) 
receive not less than the amount pro-
vided in subsection (e)(2).
271 
‘‘(v) LIMITATION ON TRANSFER OF LI-
ABILITIES.—Notwithstanding 
any 
other 
provision of law, the aggregate amount of 
liabilities of a regulated entity that are 
transferred to, or assumed by, a limited-life 
regulated entity may not exceed the aggre-
gate amount of assets of the regulated entity 
that are transferred to, or purchased by, the 
limited-life regulated entity. 
‘‘(8) REGULATIONS.—The Agency may promul-
gate such regulations as the Agency determines to be 
necessary or appropriate to implement this sub-
section. 
‘‘(9) POWERS OF LIMITED-LIFE REGULATED EN-
TITIES.— 
‘‘(A) IN GENERAL.—Each limited-life regu-
lated entity created under this subsection shall 
have all corporate powers of, and be subject to 
the same provisions of law as, the regulated enti-
ty in default or in danger of default to which it 
relates, except that— 
‘‘(i) the Agency may— 
‘‘(I) remove the directors of a lim-
ited-life regulated entity;
272 
‘‘(II) fix the compensation of 
members of the board of directors and 
senior management, as determined by 
the Agency in its discretion, of a lim-
ited-life regulated entity; and 
‘‘(III) indemnify the representa-
tives for purposes of paragraph (1)(B), 
and the directors, officers, employees, 
and agents of a limited-life regulated 
entity on such terms as the Agency de-
termines to be appropriate; and 
‘‘(ii) the board of directors of a lim-
ited-life regulated entity— 
‘‘(I) shall elect a chairperson who 
may also serve in the position of chief 
executive officer, except that such per-
son shall not serve either as chair-
person or as chief executive officer 
without the prior approval of the Agen-
cy; and 
‘‘(II) may appoint a chief execu-
tive officer who is not also the chair-
person, except that such person shall 
not serve as chief executive officer with-
out the prior approval of the Agency.
273 
‘‘(B) STAY OF JUDICIAL ACTION.—Any judi-
cial action to which a limited-life regulated enti-
ty becomes a party by virtue of its acquisition 
of any assets or assumption of any liabilities of 
a regulated entity in default shall be stayed from 
further proceedings for a period of not longer 
than 45 days, at the request of the limited-life 
regulated entity. Such period may be modified 
upon the consent of all parties. 
‘‘(10) NO FEDERAL STATUS.— 
‘‘(A) AGENCY STATUS.—A limited-life regu-
lated entity is not an agency, establishment, or 
instrumentality of the United States. 
‘‘(B) EMPLOYEE
STATUS.—Representatives 
for purposes of paragraph (1)(B), interim direc-
tors, directors, officers, employees, or agents of a 
limited-life regulated entity are not, solely by 
virtue of service in any such capacity, officers or 
employees of the United States. Any employee of 
the Agency or of any Federal instrumentality 
who serves at the request of the Agency as a rep-
resentative for purposes of paragraph (1)(B), in-
terim director, director, officer, employee, or 
agent of a limited-life regulated entity shall 
not—
274 
‘‘(i) solely by virtue of service in any 
such capacity lose any existing status as an 
officer or employee of the United States for 
purposes of title 5, United States Code, or 
any other provision of law; or 
‘‘(ii) receive any salary or benefits for 
service in any such capacity with respect to 
a limited-life regulated entity in addition to 
such salary or benefits as are obtained 
through employment with the Agency or 
such Federal instrumentality. 
‘‘(11) AUTHORITY TO OBTAIN CREDIT.— 
‘‘(A) IN GENERAL.—A limited-life regulated 
entity may obtain unsecured credit and issue 
unsecured debt. 
‘‘(B) INABILITY TO OBTAIN CREDIT.—If a 
limited-life regulated entity is unable to obtain 
unsecured credit or issue unsecured debt, the Di-
rector may authorize the obtaining of credit or 
the issuance of debt by the limited-life regulated 
entity— 
‘‘(i) with priority over any or all of 
the obligations of the limited-life regulated 
entity;
275 
‘‘(ii) secured by a lien on property of 
the limited-life regulated entity that is not 
otherwise subject to a lien; or 
‘‘(iii) secured by a junior lien on prop-
erty of the limited-life regulated entity that 
is subject to a lien. 
‘‘(C) LIMITATIONS.— 
‘‘(i) IN GENERAL.—The Director, after 
notice and a hearing, may authorize the ob-
taining of credit or the issuance of debt by 
a limited-life regulated entity that is se-
cured by a senior or equal lien on property 
of the limited-life regulated entity that is 
subject to a lien (other than mortgages that 
collateralize the mortgage-backed securities 
issued or guaranteed by an enterprise) only 
if— 
‘‘(I) the limited-life regulated en-
tity is unable to otherwise obtain such 
credit or issue such debt; and 
‘‘(II) there is adequate protection 
of the interest of the holder of the lien 
on the property with respect to which 
such senior or equal lien is proposed to 
be granted.
276 
‘‘(D) BURDEN OF PROOF.—In any hearing 
under this subsection, the Director has the bur-
den of proof on the issue of adequate protection. 
‘‘(12) AFFECT ON DEBTS AND LIENS.—The rever-
sal or modification on appeal of an authorization 
under this subsection to obtain credit or issue debt, or 
of a grant under this section of a priority or a lien, 
does not affect the validity of any debt so issued, or 
any priority or lien so granted, to an entity that ex-
tended such credit in good faith, whether or not such 
entity knew of the pendency of the appeal, unless such 
authorization and the issuance of such debt, or the 
granting of such priority or lien, were stayed pending 
appeal. 
‘‘(j) OTHER AGENCY EXEMPTIONS.— 
‘‘(1) APPLICABILITY.—The provisions of this sub-
section shall apply with respect to the Agency in any 
case in which the Agency is acting as a conservator 
or a receiver. 
‘‘(2) TAXATION.—The Agency, including its fran-
chise, its capital, reserves, and surplus, and its in-
come, shall be exempt from all taxation imposed by 
any State, county, municipality, or local taxing au-
thority, except that any real property of the Agency 
shall be subject to State, territorial, county, munic-
277 
ipal, or local taxation to the same extent according to 
its value as other real property is taxed, except that, 
notwithstanding the failure of any person to challenge 
an assessment under State law of the value of such 
property, and the tax thereon, shall be determined as 
of the period for which such tax is imposed. 
‘‘(3) PROPERTY
PROTECTION.—No property of 
the Agency shall be subject to levy, attachment, gar-
nishment, foreclosure, or sale without the consent of 
the Agency, nor shall any involuntary lien attach to 
the property of the Agency. 
‘‘(4) PENALTIES AND FINES.—The Agency shall 
not be liable for any amounts in the nature of pen-
alties or fines, including those arising from the fail-
ure of any person to pay any real property, personal 
property, probate, or recording tax or any recording 
or filing fees when due. 
‘‘(k) PROHIBITION OF CHARTER REVOCATION.—In no 
case may the receiver appointed pursuant to this section 
revoke, annul, or terminate the charter of an enterprise.’’. 
(b) TECHNICAL
AND CONFORMING AMENDMENTS.— 
The Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amend-
ed— 
(1) in section 1368 (12 U.S.C. 4618)—
286 
‘‘(I) any law or regulation; 
‘‘(II) any cease and desist order 
which has become final; 
‘‘(III) any condition imposed in 
writing by the Director in connection 
with the grant of any application or 
other request by such regulated entity; 
or 
‘‘(IV) any written agreement be-
tween such regulated entity and the 
Director; 
‘‘(ii) engaged or participated in any 
unsafe or unsound practice in connection 
with any regulated entity or business insti-
tution; or 
‘‘(iii) committed or engaged in any 
act, omission, or practice which constitutes 
a breach of such party’s fiduciary duty; 
‘‘(B) by reason of the violation, practice, or 
breach described in subparagraph (A)— 
‘‘(i) such regulated entity or business 
institution has suffered or will probably suf-
fer financial loss or other damage; or 
‘‘(ii) such party has received financial 
gain or other benefit; and
287 
‘‘(C) the violation, practice, or breach de-
scribed in subparagraph (A)— 
‘‘(i) involves personal dishonesty on the 
part of such party; or 
‘‘(ii) demonstrates willful or con-
tinuing disregard by such party for the 
safety or soundness of such regulated entity 
or business institution. 
‘‘(b) SUSPENSION ORDER.— 
‘‘(1) SUSPENSION
OR
PROHIBITION
AUTHOR-
ITY.—If the Director serves written notice under sub-
section (a) upon a party subject to that subsection 
(a), the Director may, by order, suspend or remove 
such party from office, or prohibit such party from 
further participation in any manner in the conduct 
of the affairs of the regulated entity, if the Director— 
‘‘(A) determines that such action is nec-
essary for the protection of the regulated entity; 
and 
‘‘(B) serves such party with written notice 
of the order. 
‘‘(2) EFFECTIVE
PERIOD.—Any order issued 
under this subsection— 
‘‘(A) shall become effective upon service; and
288 
‘‘(B) unless a court issues a stay of such 
order under subsection (g), shall remain in effect 
and enforceable until— 
‘‘(i) the date on which the Director dis-
misses the charges contained in the notice 
served under subsection (a) with respect to 
such party; or 
‘‘(ii) the effective date of an order 
issued under subsection (b). 
‘‘(3) COPY OF ORDER.—If the Director issues an 
order under subsection (b) to any party, the Director 
shall serve a copy of such order on any regulated enti-
ty with which such party is affiliated at the time 
such order is issued. 
‘‘(c) NOTICE, HEARING, AND ORDER.— 
‘‘(1) NOTICE.—A notice under subsection (a) of 
the intention of the Director to issue an order under 
this section shall contain a statement of the facts con-
stituting grounds for such action, and shall fix a time 
and place at which a hearing will be held on such ac-
tion. 
‘‘(2) TIMING OF HEARING.—A hearing shall be 
fixed for a date not earlier than 30 days, nor later 
than 60 days, after the date of service of notice under
289 
subsection (a), unless an earlier or a later date is set 
by the Director at the request of— 
‘‘(A) the party receiving such notice, and 
good cause is shown; or 
‘‘(B) the Attorney General of the United 
States. 
‘‘(3) CONSENT.—Unless the party that is the 
subject of a notice delivered under subsection (a) ap-
pears at the hearing in person or by a duly author-
ized representative, such party shall be deemed to 
have consented to the issuance of an order under this 
section. 
‘‘(4) ISSUANCE OF ORDER OF SUSPENSION.—The 
Director may issue an order under this section, as the 
Director may deem appropriate, if— 
‘‘(A) a party is deemed to have consented to 
the issuance of an order under paragraph (3); or 
‘‘(B) upon the record made at the hearing, 
the Director finds that any of the grounds speci-
fied in the notice have been established. 
‘‘(5) EFFECTIVENESS
OF
ORDER.—Any order 
issued under paragraph (4) shall become effective at 
the expiration of 30 days after the date of service 
upon the relevant regulated entity and party (except 
in the case of an order issued upon consent under
290 
paragraph (3), which shall become effective at the 
time specified therein). Such order shall remain effec-
tive and enforceable except to such extent as it is 
stayed, modified, terminated, or set aside by action of 
the Director or a reviewing court. 
‘‘(d) PROHIBITION
OF CERTAIN SPECIFIC ACTIVI-
TIES.—Any person subject to an order issued under this sec-
tion shall not— 
‘‘(1) participate in any manner in the conduct 
of the affairs of any regulated entity or the Office of 
Finance; 
‘‘(2) solicit, procure, transfer, attempt to trans-
fer, vote, or attempt to vote any proxy, consent, or au-
thorization with respect to any voting rights in any 
regulated entity; 
‘‘(3) violate any voting agreement previously ap-
proved by the Director; or 
‘‘(4) vote for a director, or serve or act as an en-
tity-affiliated party of a regulated entity or as an of-
ficer or director of the Office of Finance. 
‘‘(e) INDUSTRY-WIDE PROHIBITION.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), any person who, pursuant to an order 
issued under this section, has been removed or sus-
pended from office in a regulated entity or the Office
292 
cally finds that it should apply to a corporation, firm, or 
other business entity. 
‘‘(g) STAY OF SUSPENSION AND PROHIBITION OF EN-
TITY-AFFILIATED PARTY.—Not later than 10 days after the 
date on which any entity-affiliated party has been sus-
pended from office or prohibited from participation in the 
conduct of the affairs of a regulated entity under this sec-
tion, such party may apply to the United States District 
Court for the District of Columbia, or the United States 
district court for the judicial district in which the head-
quarters of the regulated entity is located, for a stay of such 
suspension or prohibition pending the completion of the ad-
ministrative proceedings pursuant to subsection (c). The 
court shall have jurisdiction to stay such suspension or pro-
hibition. 
‘‘(h) SUSPENSION OR REMOVAL OF ENTITY-AFFILI-
ATED PARTY CHARGED WITH FELONY.— 
‘‘(1) SUSPENSION OR PROHIBITION.— 
‘‘(A) IN GENERAL.—Whenever any entity- 
affiliated party is charged in any information, 
indictment, or complaint, with the commission 
of or participation in a crime involving dishon-
esty or breach of trust which is punishable by 
imprisonment for a term exceeding 1 year under 
Federal or State law, the Director may, if con-
293 
tinued service or participation by such party 
may pose a threat to the regulated entity or im-
pair public confidence in the regulated entity, by 
written notice served upon such party, suspend 
such party from office or prohibit such party 
from further participation in any manner in the 
conduct of the affairs of any regulated entity. 
‘‘(B) PROVISIONS
APPLICABLE
TO
NO-
TICE.— 
‘‘(i) COPY.—A copy of any notice 
under subparagraph (A) shall be served 
upon the relevant regulated entity. 
‘‘(ii) EFFECTIVE PERIOD.—A suspen-
sion or prohibition under subparagraph (A) 
shall remain in effect until the information, 
indictment, or complaint referred to in sub-
paragraph (A) is finally disposed of, or 
until terminated by the Director. 
‘‘(2) REMOVAL OR PROHIBITION.— 
‘‘(A) IN GENERAL.—If a judgment of con-
viction or an agreement to enter a pretrial diver-
sion or other similar program is entered against 
an entity-affiliated party in connection with a 
crime described in paragraph (1)(A), at such 
time as such judgment is not subject to further