I 
108TH CONGRESS 
1ST SESSION H. R. 2575
To reform the regulation of certain housing-related Government-sponsored 
enterprises, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 24, 2003
Mr. BAKER (for himself, Mr. OSE, Mr. BACHUS, Mr. KING of New York, Mr. 
LEACH, Mr. SHAYS, Mr. LINDER, Ms. GINNY BROWN-WAITE of Florida, 
Mr. COX, Mr. RYAN of Wisconsin, Mr. GARY G. MILLER of California, 
Mr. RENZI, Mr. MANZULLO, Ms. HART, Mr. HOEKSTRA, Mr. JONES of 
North Carolina, Mr. TOOMEY, Mr. HENSARLING, Mr. GILLMOR, Mr. 
LUCAS of Oklahoma, and Ms. HARRIS) introduced the following bill; 
which was referred to the Committee on Financial Services 
A BILL 
To reform the regulation of certain housing-related 
Government-sponsored enterprises, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Secondary Mortgage Market Enterprises Regulatory Im-
provement Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows:
Sec. 1. Short title and table of contents. 
TITLE I—REFORM OF REGULATION OF FANNIE MAE AND 
FREDDIE MAC 
Subtitle A—Improvement of Supervision 
Sec. 101. Change of name of Office of Thrift Supervision to Office of Housing 
Finance Supervision. 
Sec. 102. Transfer of authority to regulate safety and soundness of enterprises 
to Office of Housing Finance Supervision. 
Sec. 103. Duties and authorities of Director. 
Sec. 104. Examiners and accountants. 
Sec. 105. Regulations. 
Sec. 106. Assessments. 
Sec. 107. Authority of Secretary of HUD for new activities, housing informa-
tion, and housing goals. 
Sec. 108. Prior approval of Secretary of HUD for new activities. 
Sec. 109. Limitation on nonmission-related assets. 
Sec. 110. Conforming loan limits. 
Sec. 111. Public disclosure of information. 
Sec. 112. Reviews of enterprises. 
Sec. 113. Risk-based capital test for enterprises. 
Sec. 114. Minimum and critical capital levels. 
Sec. 115. Required implementation of agreement. 
Sec. 116. Definitions. 
Subtitle B—Prompt Corrective Action 
Sec. 131. Capital classifications. 
Sec. 132. Supervisory actions applicable to undercapitalized enterprises. 
Sec. 133. Supervisory actions applicable to significantly undercapitalized enter-
prises. 
Sec. 134. Authority over critically undercapitalized enterprises. 
Subtitle C—Enforcement Actions 
Sec. 151. Cease-and-desist proceedings. 
Sec. 152. Temporary cease-and-desist proceedings. 
Sec. 153. Removal and prohibition authority. 
Sec. 154. Enforcement and jurisdiction. 
Sec. 155. Civil money penalties. 
Sec. 156. Criminal penalty. 
Subtitle D—Reporting Regarding Enterprises 
Sec. 161. Reporting regarding enterprises. 
Subtitle E—General Provisions 
Sec. 171. Conforming and technical amendments. 
Sec. 172. Effective date. 
TITLE II—TRANSFER OF FUNCTIONS, PERSONNEL, AND 
PROPERTY 
Sec. 201. Abolishment of OFHEO. 
Sec. 202. Continuation and coordination of certain regulations.
Sec. 203. Transfer and rights of employees of OFHEO. 
Sec. 204. Transfer of property and facilities.
TITLE I—REFORM OF REGULA-
TION OF FANNIE MAE AND 
FREDDIE MAC 
Subtitle A—Improvement of 
Supervision 
SEC. 101. CHANGE OF NAME OF OFFICE OF THRIFT SUPER-
VISION TO OFFICE OF HOUSING FINANCE SU-
PERVISION. 
(a) IN GENERAL.—Section 3 of the Home Owners’ 
Loan Act (12 U.S.C. 1462a) is amended—
(1) in the section heading, by striking 
‘‘THRIFT’’ and inserting ‘‘HOUSING
FINANCE’’; 
and 
(2) in subsection (a), by striking ‘‘Office of 
Thrift Supervision’’ and inserting ‘‘Office of Hous-
ing Finance Supervision’’. 
(b) CONFORMING AMENDMENTS TO HOME OWNERS’ 
LOAN ACT.—The Home Owners’ Loan Act is amended—
(1) by striking ‘‘Thrift Supervision’’ each place 
such term appears and inserting ‘‘Housing Finance 
Supervision’’; and
(2) in the table of contents in section 1, by 
striking the item relating to section 3 and inserting 
the following new item:
‘‘Sec. 3. Director of the Office of Housing Finance Supervision.’’
(c) OTHER REFERENCES.—Any reference in any 
Federal law, executive order, rule, regulation, or delega-
tion of authority, or any document of or pertaining to the 
Office of Thrift Supervision—
(1) to the Director of the Office of Thrift Su-
pervision is deemed to refer to the Director of the 
Office of Housing Finance Supervision; and 
(2) to the Office of Thrift Supervision is 
deemed to refer to the Office of Housing Finance 
Supervision. 
SEC. 102. TRANSFER OF AUTHORITY TO REGULATE SAFETY 
AND SOUNDNESS OF ENTERPRISES TO OF-
FICE OF HOUSING FINANCE SUPERVISION. 
(a) IN GENERAL.—Part 1 of subtitle A of title XIII 
of the Housing and Community Development Act of 1992 
is amended by striking sections 1311 and 1312 (12 U.S.C. 
4511, 4512) and inserting the following new section: 
‘‘SEC. 1311. SUPERVISION AND REGULATION BY OFFICE OF 
HOUSING FINANCE SUPERVISION. 
‘‘(a) IN GENERAL.—The enterprises shall, to the ex-
tent provided in this title, be subject to the supervision 
and regulation of the Director of the Office of Housing
Finance Supervision. The Director shall succeed to the au-
thority of the Director of the Office of Federal Housing 
Enterprise Oversight of the Department of Housing and 
Urban Development and the general regulatory and any 
other authority of the Secretary of Housing and Urban 
Development with respect to the enterprises (except as 
specifically provided otherwise in this Act, the Federal Na-
tional Mortgage Association Charter Act, the Federal 
Home Loan Mortgage Corporation Act, and any other pro-
vision of Federal law). 
‘‘(b) SAVINGS PROVISION.—The authority of the Di-
rector to take actions under subtitles B and C does not 
in any way limit the general supervisory and regulatory 
authority granted to the Director under subsection (a).’’. 
(b) PROHIBITION OF FINANCIAL INTERESTS OF DI-
RECTOR.—
(1) IN GENERAL.—Section 3(d) of the Home 
Owners’ Loan Act (12 U.S.C. 1462a(d)) is amended 
by inserting ‘‘, or in any enterprise, as defined in 
section 1303 of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992 (12 
U.S.C. 4502)’’ before the period at the end. 
(2) APPLICABILITY.—The amendment made by 
paragraph (1) shall apply beginning on the expira-
tion of the 1-year period that begins on the date of 
the enactment of this Act. 
SEC. 103. DUTIES AND AUTHORITIES OF DIRECTOR. 
(a) IN GENERAL.—Section 1313 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4513) 
is amended to read as follows: 
‘‘SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR. 
‘‘(a) DUTIES.—
‘‘(1) PRINCIPAL DUTIES.—The principal duties 
under this title of the Director shall be to ensure 
that the enterprises—
‘‘(A) operate in a financially safe and 
sound manner; 
‘‘(B) carry out their missions in a finan-
cially safe and sound manner and only through 
activities that have been authorized under, and 
are consistent with the purposes of, the provi-
sions of Federal law that charter the enter-
prises, including as determined by the Secretary 
of Housing and Urban Development under sec-
tion 1322; and 
‘‘(C) remain adequately capitalized. 
‘‘(2) OTHER DUTIES.—To the extent consistent 
with paragraph (1), the duty of the Director shall be 
to exercise general supervisory and regulatory au-
thority over the enterprises, in accordance with this 
title, the Federal National Mortgage Association 
Charter Act, the Federal Home Loan Mortgage Cor-
poration Act, and any other provisions of law. 
‘‘(b) AUTHORITY EXCLUSIVE OF SECRETARY.—Ex-
cept as specifically provided in this Act, the Federal Na-
tional Mortgage Association Charter Act, the Federal 
Home Loan Mortgage Corporation Act, or any other pro-
vision of Federal law, the authority of the Director with 
respect to the enterprises shall not be subject to the re-
view, approval, or intervention of the Secretary of the 
Treasury. 
‘‘(c) DELEGATION
OF AUTHORITY.—The Director 
may delegate to officers and employees of the Director any 
of the functions, powers, and duties of the Director, with 
respect to supervision and regulation of the enterprises, 
as the Director considers appropriate.’’. 
SEC. 104. EXAMINERS AND ACCOUNTANTS. 
(a) EXAMINATIONS.—Section 1317 of the Housing 
and Community Development Act of 1992 (12 U.S.C. 
4517) is amended—
(1) in the second sentence of subsection (c)—
(A) by striking ‘‘The’’ and inserting ‘‘Dur-
ing the 3-year period that begins upon the date 
of the enactment of the Secondary Mortgage
Market Enterprises Regulatory Improvement 
Act, the’’; and 
(B) by inserting ‘‘to conduct examinations 
under this section’’ before the period; and 
(2) in subsection (d)—
(A) by inserting ‘‘, with respect to the en-
terprises,’’ after ‘‘penalties’’; and 
(B) by striking ‘‘Federal Reserve banks’’ 
and inserting ‘‘Director, with respect to exami-
nations of savings associations’’. 
(b) ENHANCED AUTHORITY TO HIRE EXAMINERS 
AND ACCOUNTANTS.—Section 1317 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4517) 
is amended by adding at the end the following new sub-
section: 
‘‘(g) APPOINTMENT OF ACCOUNTANTS, ECONOMISTS, 
AND EXAMINERS.—
‘‘(1) APPLICABILITY.—This section applies with 
respect to any position of examiner, accountant, and 
economist at the Office, with respect to supervision 
and regulation of the enterprises, that is in the com-
petitive service. 
‘‘(2) APPOINTMENT AUTHORITY.—
‘‘(A) IN GENERAL.—The Director may ap-
point candidates to any position described in 
paragraph (1)—
‘‘(i) in accordance with the statutes, 
rules, and regulations governing appoint-
ments in the excepted service; and 
‘‘(ii) notwithstanding any statutes, 
rules, and regulations governing appoint-
ments in the competitive service. 
‘‘(B) RULE OF CONSTRUCTION.—The ap-
pointment of a candidate to a position under 
authority of this paragraph shall not be consid-
ered to cause such position to be converted 
from the competitive service to the excepted 
service. 
‘‘(3) REPORTS.—No later than 90 days after 
the end of fiscal year 2003 (for fiscal year 2003) 
and 90 days after the end of fiscal year 2005 (for 
fiscal years 2004 and 2005), the Director shall sub-
mit a report with respect to its exercise of the au-
thority granted by paragraph (2) during such fiscal 
years to the Committee on Government Reform and 
the Committee on Financial Services of the House of 
Representatives and the Committee on Govern-
mental Affairs and the Committee on Banking,
Housing, and Urban Affairs of the Senate. Such re-
ports shall describe the changes in the hiring process 
authorized by such paragraph, including relevant in-
formation related to—
‘‘(A) the quality of candidates; 
‘‘(B) the procedures used by the Director 
to select candidates through the streamlined 
hiring process; 
‘‘(C) the numbers, types, and grades of 
employees hired under the authority; 
‘‘(D) any benefits or shortcomings associ-
ated with the use of the authority; 
‘‘(E) the effect of the exercise of the au-
thority on the hiring of veterans and other de-
mographic groups; and 
‘‘(F) the way in which managers were 
trained in the administration of the streamlined 
hiring system.’’. 
SEC. 105. REGULATIONS. 
Section 1319G of the Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4526) is amended—
(1) by striking subsection (a) and inserting the 
following new subsection:
‘‘(a) AUTHORITY.—The Director shall issue any reg-
ulations and orders necessary to carry out the duties of
the Director, with respect to supervision and regulation 
of the enterprises, under this title, the Federal National 
Mortgage Association Charter Act, and the Federal Home 
Loan Mortgage Corporation Act, and to ensure that the 
purposes of this title and such Acts are accomplished.’’; 
and 
(2) in subsection (c), by striking ‘‘Committee on 
Banking, Finance and Urban Affairs’’ and inserting 
‘‘Committee on Financial Services’’. 
SEC. 106. ASSESSMENTS. 
Section 1316 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4516) is amended—
(1) by striking subsection (a) and inserting the 
following new subsection: 
‘‘(a) ANNUAL ASSESSMENTS.—
‘‘(1) DIRECTOR.—The Director shall establish 
and collect from the enterprises annual assessments 
in an amount not exceeding the amount sufficient to 
provide for reasonable costs and expenses of the Di-
rector, with respect to regulation and supervision of 
the enterprises, including the expenses of any exami-
nations under section 1317 and the expenses of ob-
taining any reviews and credit assessments under 
subsection section 1319.
‘‘(2) SECRETARY OF HUD.—The Secretary of 
Housing and Urban Development shall establish and 
collect from the enterprises annual assessments in 
an amount not exceeding the amount sufficient to 
provide for reasonable costs and expenses of the De-
partment of Housing and Urban Development in 
carrying out the responsibilities of the Secretary of 
Housing and Urban Development under this sub-
title, the Federal National Mortgage Association 
Charter Act, and the Federal Home Loan Mortgage 
Corporation Act.’’; 
(2) in subsection (b)—
(A) in paragraph (1)—
(i) by inserting ‘‘and to the Secretary 
of Housing and Urban Development’’ after 
‘‘Director’’; 
(ii) by inserting ‘‘paragraph (1) and 
(2), respectively, of’’ before ‘‘subsection 
(a)’’; and 
(iii) by inserting ‘‘under such para-
graph’’ after ‘‘total annual assessment’’; 
and 
(B) in paragraph (2)—
(i) by striking ‘‘The annual assess-
ment’’ and inserting ‘‘Each of the annual
assessments pursuant to paragraphs (1) 
and (2) of subsection (a)’’; and 
(ii) by realigning paragraph (2) two 
ems from the left margin, so as to align 
the left margin of such paragraph with the 
left margins of paragraphs (1) and (3); 
(3) in subsection (c)—
(A) by inserting ‘‘for an assessment under 
subsection (a)(1) that are’’ after ‘‘The semi-
annual payments’’; and 
(B) by adding at the end the following new 
sentence: ‘‘The Director may adjust the 
amounts of any semiannual assessments for an 
assessment under subsection (a)(1) that are to 
be paid pursuant to subsection (b) by an enter-
prise, as necessary in the discretion of the Di-
rector, to ensure that the costs of enforcement 
activities under subtitles B and C for an enter-
prise are borne only by that enterprise.’’; 
(4) in subsection (d)—
(A) by inserting ‘‘by the Director or by the 
Secretary of Housing and Urban Development’’ 
before ‘‘from an enterprise’’; and
(6) in subsection (g)—
(A) by striking paragraphs (1) and (2) and 
inserting the following new paragraphs: 
‘‘(1) FINANCIAL OPERATING PLANS AND FORE-
CASTS.—Before the beginning of each fiscal year—
‘‘(A) the Director shall submit a copy of 
the financial operating plans and forecasts for 
the Director, with respect to regulation and su-
pervision of the enterprises, to the Director of 
the Office of Management and Budget; and 
‘‘(B) the Secretary of Housing and Urban 
Development shall submit, to the Director, a 
copy of the financial operating plans and fore-
casts for the Department of Housing and 
Urban Development, with respect to responsibil-
ities and activities of the Secretary under this 
title. 
‘‘(2) REPORTS
OF
OPERATIONS.—As soon as 
practicable after the end of each fiscal year and each 
quarter thereof—
‘‘(A) the Director shall submit a copy of 
the report of the results of the operations of the 
Director, with respect to regulation and super-
vision of the enterprises, during such period to
the Director of the Office of Management and 
Budget; and 
‘‘(B) the Secretary of Housing and Urban 
Development shall submit, to the Director, a re-
port of the results of the operations of the De-
partment of Housing and Urban Development, 
with respect to responsibilities and activities of 
the Secretary under this title.’’; and 
(B) in paragraph (3)—
(i) by striking ‘‘(A)’’; 
(ii) by striking ‘‘, and (B)’’ and in-
serting the following: ‘‘. The annual plans, 
forecasts, and reports required under para-
graphs (1)(B) and (2)(B) shall be in-
cluded’’; and 
(iii) by inserting ‘‘of Housing and 
Urban Development’’ before the period at 
the end. 
SEC. 107. AUTHORITY OF SECRETARY OF HUD FOR NEW AC-
TIVITIES, 
HOUSING 
INFORMATION, 
AND 
HOUSING GOALS. 
(a) IN GENERAL.—Part 2 of subtitle A of title XIII 
of the Housing and Community Development Act of 1992 
is amended—
(1) by striking the heading for the part and the 
heading for subpart A and inserting the following: 
‘‘PART 2—NEW ACTIVITIES, HOUSING 
INFORMATION, AND HOUSING GOALS 
‘‘Subpart A—New Activities and Housing 
Information’’; 
and 
(2) by striking section 1321 (12 U.S.C. 4541). 
(b) RETENTION OF FAIR HOUSING RESPONSIBIL-
ITIES.—Section 1325 of the Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4545) is amended, in 
the matter preceding paragraph (1), by inserting ‘‘of 
Housing and Urban Development’’ after ‘‘The Secretary’’. 
(c) RETENTION OF AUTHORITY TO ESTABLISH AND 
ENFORCE HOUSING GOALS.—Part 2 of subtitle A of the
Housing and Community Development Act of 1992 is 
amended—
(1) by inserting ‘‘of Housing and Urban Devel-
opment (in this subpart referred to as the ‘Sec-
retary’)’’ after ‘‘The Secretary’’, each place such 
term appears in—
(A) the first sentence of section 1331(a) 
(12 U.S.C. 4561(a)); and 
(B) section 1341(a) (12 U.S.C. 4581(a));
(2) in section 1332 (12 U.S.C. 4562), by strik-
ing subsection (d); 
(3) in section 1333 (12 U.S.C. 4563), by strik-
ing subsection (d); 
(4) in section 1334 (12 U.S.C. 4564), by strik-
ing subsection (d); 
(5) in section 1336 (12 U.S.C. 4566)—
(A) in subsection (b)(3)(C), by inserting 
‘‘the Director,’’ after ‘‘notice to the enter-
prise,’’; and 
(B) in subsection (c)(5), by inserting ‘‘, 
and to the Director,’’ after ‘‘housing plan’’; 
(6) by striking sections 1337 and 1338 (12 
U.S.C. 4567, 4562 note); 
(7) 
in 
section 
1341(b)(1) 
(12 
U.S.C. 
4581(b)(1)), by inserting after the period at the end 
the following new sentence: ‘‘Immediately upon 
issuing and serving a notice of charges under this 
section, the Secretary shall submit a copy of such 
notice to the Director.’’; 
(8) in section 1345 (12 U.S.C. 4585)—
(A) in subsection (c)(1)(A), by inserting 
‘‘and the Director’’ after ‘‘enterprise’’; and 
(B) in subsection (d), by inserting ‘‘, upon 
notification to the Director,’’ after ‘‘1343’’; and
(9) in section 1346(a) (12 U.S.C. 4586(a)), in 
the matter preceding paragraph (1), by inserting 
‘‘and to the Director’’ after ‘‘the public’’. 
(d) RETENTION OF ANNUAL HOUSING REPORT RE-
SPONSIBILITY.—Section 1324 of the Housing and Com-
munity Development Act of 1992 (12 U.S.C. 4544) is 
amended—
(1) by inserting ‘‘of Housing and Urban Devel-
opment’’ after ‘‘the Secretary’’ each place such term 
appears; and 
(2) in subsection (a), by striking ‘‘, as part of 
the annual report under section 1328(a) of this 
title,’’. 
(e) AUTHORITY OF SECRETARY TO ENFORCE NO-
TICES AND ORDERS.—Section 1344 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4584) 
is amended by striking subsection (a) and inserting the 
following new subsection: 
‘‘(a) ENFORCEMENT.—The Secretary of Housing and 
Urban Development may, in the discretion of such Sec-
retary, apply to the United States District Court for the 
District of Columbia, or the United States district court 
within the jurisdiction of which the headquarters of the 
enterprise is located, for the enforcement of any effective 
and outstanding notice or order issued under section 1341
or 1345, or request that the Attorney General of the 
United States bring such an action. Such court shall have 
jurisdiction and power to order and require compliance 
with such notice or order.’’. 
(f) REGULATORY AUTHORITY.—Subpart A of part 2 
of subtitle A of title XIII of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4541 et seq.) is 
amended by adding at the end the following new section: 
‘‘SEC. 1329. AUTHORITY OF SECRETARY OF HUD TO ISSUE 
REGULATIONS. 
‘‘The Secretary of Housing and Urban Development 
shall issue any regulations as are necessary to carry out 
the responsibilities of the Secretary under this subtitle.’’. 
SEC. 108. PRIOR APPROVAL OF SECRETARY OF HUD FOR 
NEW ACTIVITIES. 
(a) IN GENERAL.—Section 1322 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4542) 
is amended to read as follows: 
‘‘SEC. 1322. PRIOR APPROVAL AUTHORITY FOR NEW ACTIVI-
TIES. 
‘‘(a) AUTHORITY.—The Secretary of Housing and 
Urban Development shall have the authority to approve 
all new activities, and to review all ongoing activities, of 
an enterprise to ensure compliance with the Federal Na-
tional Mortgage Association Charter Act or the Federal 
Home Loan Mortgage Corporation Act, as applicable. 
‘‘(b) REQUIREMENT FOR PRIOR APPROVAL.—An en-
terprise may not commence any new activity before obtain-
ing the approval of the Secretary of Housing and Urban 
Development for the new activity, in accordance with this 
section. 
‘‘(c) STANDARD FOR APPROVAL.—The Secretary of 
Housing and Urban Development may approve a new ac-
tivity of an enterprise only if—
‘‘(1) the new activity is authorized—
‘‘(A) with respect to the Federal National 
Mortgage Association, under the Federal Na-
tional Mortgage Association Charter Act or 
other Federal law; and 
‘‘(B) with respect to the Federal Home 
Loan Mortgage Corporation, under the Federal 
Home Loan Mortgage Corporation Act or other 
Federal law; 
‘‘(2) the Secretary of Housing and Urban De-
velopment determines, after consultation with the 
Director, that the enterprise can conduct the new 
activity in a safe and sound manner; and
‘‘(3) the Secretary of Housing and Urban De-
velopment determines that the new activity is in the 
public interest. 
‘‘(d) PROCEDURE FOR APPROVAL.—The Secretary of 
Housing and Urban Development shall, by regulation, es-
tablish procedures for the enterprises to obtain the ap-
proval of the Secretary of Housing and Urban Develop-
ment for purposes of subsection (b).’’. 
(b) DEFINITION
OF NEW ACTIVITY.—Paragraph 
(13) of section 1303 of the Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4502(13)) is amended 
to read as follows: 
‘‘(13) NEW ACTIVITY.—The term ‘new activity’ 
means, with respect to the enterprises, any program, 
activity, business process, or investment that directly 
or indirectly provides financing or other services re-
lated to conventional mortgages (including pur-
chasing, servicing, selling, and lending on the secu-
rity of such mortgages) that—
‘‘(A) is significantly different from pro-
grams, activities, business processes, or invest-
ments that (i) have been approved under this 
Act, or (ii) were approved or engaged in by an 
enterprise before the date of the enactment of
the Housing and Community Development Act 
of 1992; or 
‘‘(B) represents an expansion, in terms of 
the dollar volume or number of mortgages or 
securities involved, of programs above limits ex-
pressly contained in any prior approval.’’. 
(c) CONFORMING AMENDMENTS.—
(1) FANNIE
MAE.—Section 302(b)(6) of the 
Federal National Mortgage Association Charter Act 
(12 U.S.C. 1717(b)(6)) is amended by striking ‘‘pro-
gram’’ and inserting ‘‘activity’’. 
(2) FREDDIE MAC.—Section 305(c) of the Fed-
eral Home Loan Mortgage Corporation Act (12 
U.S.C. 1454(c)) is amended by striking ‘‘program’’ 
and inserting ‘‘activity’’. 
(3) 1992 ACT.—Section 1369C(a)(4) of the 
Housing and Community Development Act of 1992 
(12 U.S.C. 4622(a)(4)) is amended by striking ‘‘pro-
grams’’ and inserting ‘‘activities’’.
SEC. 109. LIMITATION ON NONMISSION-RELATED ASSETS. 
Subtitle B of title XIII of the Housing and Commu-
nity Development Act of 1992 (12 U.S.C. 4611 et seq.) 
is amended—
(1) by striking the subtitle designation and 
heading and inserting the following:
‘‘Subtitle B—Required Capital Lev-
els for Enterprises, Special En-
forcement Powers, and Limita-
tion on Nonmission-Related As-
sets’’; 
and 
(2) by adding at the end the following new sec-
tion: 
‘‘SEC. 1369E. LIMITATION ON NONMISSION-RELATED AS-
SETS. 
‘‘(a) IN GENERAL.—The Secretary of Housing and 
Urban Development shall, by regulation, limit the nonmis-
sion-related assets that an enterprise may hold at any 
time. The Secretary of Housing and Urban Development 
shall define the term ‘nonmission-related asset’ for pur-
poses of this section. 
‘‘(b) RULE OF CONSTRUCTION.—Subsection (a) may 
not be construed to authorize an enterprise to engage in 
any new activity (as such term is defined in section 1303) 
relating to any nonmission-related asset without obtaining 
the prior approval of the Secretary of Housing and Urban 
Development in accordance with section 1322.’’. 
SEC. 110. CONFORMING LOAN LIMITS. 
(a) FANNIE MAE.—Section 302(b)(2) of the Federal 
National Mortgage Association Charter Act (12 U.S.C.
1717(b)(2)) is amended by striking the 7th and 8th sen-
tences and inserting the following new sentences: ‘‘Such 
limitations shall not exceed $275,000 for a mortgage se-
cured by a single-family residence, $351,950 for a mort-
gage secured by a 2-family residence, $425,400 for a 
mortgage secured by a 3-family residence, and $528,700 
for a mortgage secured by a 4-family residence, except 
that such maximum limitations shall be adjusted effective 
January 1 of each year beginning with 2002, subject to 
the limitations in this paragraph. Each adjustment shall 
be made by adding to or subtracting from each such 
amount (as it may have been previously adjusted) a per-
centage thereof equal to the percentage increase or de-
crease during the 12-month period ending with the pre-
vious October in the housing price index maintained by 
the Director of the Office of Housing Finance Supervision 
(pursuant to section 1321 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4541)).’’. 
(b) FREDDIE MAC.—Section 305(a)(2) of the Fed-
eral National Mortgage Association Charter 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 $275,000 for a mort-
gage secured by a single-family residence, $351,950 for 
a mortgage secured by a 2-family residence, $425,400 for
a mortgage secured by a 3-family residence, and $528,700 
for a mortgage secured by a 4-family residence, except 
that such maximum limitations shall be adjusted effective 
January 1 of each year beginning with 2002, subject to 
the limitations in this paragraph. Each adjustment shall 
be made by adding to or subtracting from each such 
amount (as it may have been previously adjusted) a per-
centage thereof equal to the percentage increase or de-
crease during the 12-month period ending with the pre-
vious October in the housing price index maintained by 
the Director of the Office of Housing Finance Supervision 
(pursuant to section 1321 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4541)).’’. 
(c) HOUSING PRICE INDEX.—Subpart A of part 2 of 
subtitle A of title XIII of the Housing and Community 
Development Act of 1992 (as amended by the preceding 
provisions of this Act) is amended by inserting before sec-
tion 1322 (12 U.S.C. 4542) the following new section: 
‘‘SEC. 1321. HOUSING PRICE INDEX. 
‘‘The Director shall establish and maintain a method 
of assessing the national average 1-family house price for 
use for adjusting the conforming loan limitations of the 
enterprises (as such term is defined in section 1303 of 
Federal Housing Enterprises Financial Safety and Sound-
ness Act of 1992). In establishing such method, the Direc-
tor shall take into consideration the monthly survey of all 
major lenders conducted by the Federal Housing Finance 
Board to determine the national average 1-family house 
price, the House Price Index maintained by the Office of 
Federal Housing Enterprise Oversight of the Department 
of Housing and Urban Development before the effective 
date of the Secondary Mortgage Market Enterprises Reg-
ulatory Improvement Act, any appropriate house price in-
dexes of the Bureau of the Census of the Department of 
Commerce, and any other indexes or measures that the 
Director considers appropriate.’’.
SEC. 111. PUBLIC DISCLOSURE OF INFORMATION. 
Section 1314 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4514) is amended—
(1) in the section heading by striking ‘‘BY EN-
TERPRISES’’ and inserting ‘‘AND INFORMATION’’; 
and 
(2) by adding at the end the following new sub-
section: 
‘‘(c) PUBLIC DISCLOSURE OF INFORMATION.—The 
Director shall, by regulation, require each enterprise to 
disclose to the public, on not less than an annual basis, 
such financial, business, and other information that the 
Director determines would be in the public interest.’’.
SEC. 112. REVIEWS OF ENTERPRISES. 
Section 1319 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4519) is amended—
(1) in the section heading—
(A) by striking ‘‘AUTHORITY TO PRO-
VIDE FOR’’; and 
(B) in the section heading, by striking ‘‘BY 
RATING ORGANIZATION’’; 
(2) by inserting after ‘‘any entity’’ the fol-
lowing: ‘‘that the Director considers appropriate, in-
cluding an entity’’; 
(3) by inserting ‘‘(a) AUTHORITY TO PROVIDE 
FOR REVIEWS.—’’ before ‘‘The’’; and 
(4) by adding at the end the following new sub-
section: 
‘‘(b) BIENNIAL DETERMINATION OF CREDIT RAT-
ING.—
‘‘(1) IN GENERAL.—On a biennial basis, the Di-
rector shall provide for 2 entities effectively recog-
nized by the Division of Market Regulation of the 
Securities and Exchange Commission as nationally 
recognized statistical rating organizations for the 
purposes of the capital rules for broker dealers, each 
to conduct an assessment of the financial condition 
of each enterprise for the purpose of determining the 
level of risk that the enterprise will be unable to
meet its obligations, taking into consideration the 
legal status evidenced by the statements required 
under—
‘‘(A) the penultimate sentence of section 
304(b) of the Federal National Mortgage Asso-
ciation Charter Act (12 U.S.C. 1719(b)); 
‘‘(B) the last sentence of section 304(d) of 
the Federal National Mortgage Association 
Charter Act (12 U.S.C. 1719(d)); 
‘‘(C) the penultimate sentence of section 
304(e) of the Federal National Mortgage Asso-
ciation Charter Act (12 U.S.C. 1719(e)); and 
‘‘(D) section 306(h)(2) of the Federal 
Home Loan Mortgage Corporation Act (12 
U.S.C. 1455(h)(2)). 
‘‘(2) CREDIT
RATING.—The assessment shall 
include assigning a credit rating for each enterprise 
using a scale similar to that used by such organiza-
tion with respect to obligations of other financial in-
stitutions, and shall include the report regarding 
such assessment and the rating in the report of the 
Director under section 1319B(a).’’.
SEC. 113. RISK-BASED CAPITAL TEST FOR ENTERPRISES. 
Section 1361 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4611) is amended—
(1) in subsection (a)(2)(A), by inserting ‘‘or 
change in such other manner as the Director con-
siders appropriate,’’ after ‘‘subparagraph (C),’’; 
(2) in subsection (b)(1), by inserting after the 
period at the end the following: ‘‘Notwithstanding 
subsection (a), the Director may, in the sole discre-
tion of the Director, make any assumptions that the 
Director considers appropriate regarding interest 
rates, home prices, and new business.’’; and 
(3) in subsection (c)(2), by inserting ‘‘or such 
other percentage as the Director considers appro-
priate’’ before the period at the end. 
SEC. 114. MINIMUM AND CRITICAL CAPITAL LEVELS. 
(a) MINIMUM CAPITAL LEVEL.—Section 1362 of the 
Housing and Community Development Act of 1992 (12 
U.S.C. 4612) is amended—
(1) by striking subsection (b); 
(2) by striking ‘‘(a) IN GENERAL.—’’; and 
(3) in the matter preceding paragraph (1), by 
inserting before ‘‘the sum of’’ the following: ‘‘the 
amount established by the Director, by regulation or 
order, as such amount may be adjusted from time-
to-time by the Director to achieve the purposes of 
this title, that is not less than’’.
(b) CRITICAL CAPITAL LEVEL.—Section 1363 of the 
Housing and Community Development Act of 1992 (12 
U.S.C. 4613) is amended, in the matter preceding para-
graph (1), by inserting before ‘‘the sum of’’ the following: 
‘‘the amount established by the Director, by regulation or 
order, as such amount may be adjusted from time-to-time 
by the Director to achieve the purposes of this title, that 
is not less than’’. 
SEC. 
115. 
REQUIREMENTS 
TO 
ENHANCE 
CAPITAL 
STRENGTH, DISCLOSURE, AND MARKET DIS-
CIPLINE. 
Section 1361 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4611) is amended by add-
ing at the end the following new subsection: 
‘‘(g) REQUIRED
IMPLEMENTATION
OF
AGREE-
MENT.—The Director shall, by regulation, require each 
enterprise—
‘‘(1) to issue subordinated debt of such type 
and in such amount as the Director considers nec-
essary; 
‘‘(2) to maintain appropriate levels of liquidity; 
‘‘(3) to obtain and disclose an annual credit 
rating; 
‘‘(4) to publicly disclose interest rate risk; and 
‘‘(5) to publicly disclose credit risk.
SEC. 116. DEFINITIONS. 
Section 1303 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4502) is amended—
(1) in paragraph (5), by striking ‘‘Federal 
Housing Enterprise Oversight of the Department of 
Housing and Urban Development’’ and inserting 
‘‘Housing Finance Supervision’’; 
(2) in paragraphs (8), (9), (10), and (19), by 
inserting ‘‘of Housing and Urban Development’’ 
after ‘‘Secretary’’ each place such term appears; 
(3) in paragraph (14), by striking ‘‘Federal 
Housing Enterprise Oversight of the Department of 
Housing and Urban Development’’ and inserting 
‘‘Housing Finance Supervision’’; 
(4) by striking paragraph (15); 
(5) by redesignating paragraphs (7) through 
(14) (as amended by the preceding provisions of this 
Act) as paragraphs (8) through (15), respectively; 
and 
(6) by inserting after paragraph (6) the fol-
lowing new paragraph: 
‘‘(7) 
ENTERPRISE-AFFILIATED
PARTY.—The 
term ‘enterprise-affiliated party’ means—
‘‘(A) any director, officer, employee, or 
controlling stockholder of, or agent for, an en-
terprise;
‘‘(B) any shareholder, consultant, joint 
venture partner, and any other person as deter-
mined by the Director (by regulation or case-
by-case) who participates in the conduct of the 
affairs of an enterprise; and 
‘‘(C) any independent contractor (including 
any attorney, appraiser, or accountant) who 
knowingly or recklessly participates in—
‘‘(i) any violation of any law or regu-
lation; 
‘‘(ii) any breach of fiduciary duty; or 
‘‘(iii) any unsafe or unsound practice, 
which caused or is likely to cause more than a 
minimal financial loss to, or a significant ad-
verse effect on, the enterprise.’’. 
Subtitle B—Prompt Corrective 
Action
SEC. 131. CAPITAL CLASSIFICATIONS. 
Section 1364 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4614) is amended—
(1) by striking subsection (b) and inserting the 
following new subsection: 
‘‘(b) DISCRETIONARY CLASSIFICATION.—
‘‘(1) GROUNDS
FOR
RECLASSIFICATION.—The 
Director may reclassify an enterprise under para-
graph (2) if—
‘‘(A) at any time, the Director determines 
in writing that an enterprise is engaging in con-
duct that could result in a rapid depletion of 
core capital or that the value of the property 
subject to mortgages held or securitized by the 
enterprise has decreased significantly; 
‘‘(B) after notice and an opportunity for 
hearing, the Director determines that an enter-
prise is in an unsafe or unsound condition; or 
‘‘(C) pursuant to section 1371(b), the Di-
rector deems an enterprise 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 an enterprise for any reason 
not specified in this subsection, if the Director takes 
any action described in paragraph (1) the Director 
may classify an enterprise—
‘‘(A) as undercapitalized, if the enterprise 
is otherwise classified as adequately capitalized;
‘‘(B) as significantly undercapitalized, if 
the enterprise is otherwise classified as under-
capitalized; and 
‘‘(C) as critically undercapitalized, if the 
enterprise is otherwise classified as significantly 
undercapitalized.’’; 
(2) by redesignating subsection (d) as sub-
section (e); and 
(3) by inserting after subsection (c) the fol-
lowing new subsection: 
‘‘(d) RESTRICTION ON CAPITAL DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—An enterprise shall make 
no capital distribution if, after making the distribu-
tion, the enterprise would be undercapitalized. 
‘‘(2) EXCEPTION.—Notwithstanding paragraph 
(1), the Director may permit an enterprise to repur-
chase, redeem, retire, or otherwise acquire shares or 
ownership interests if the repurchase, redemption, 
retirement, or other acquisition—
‘‘(A) is made in connection with the 
issuance of additional shares or obligations of 
the enterprise in at least an equivalent amount; 
and
‘‘(B) will reduce the financial obligations of 
the enterprise or otherwise improve the finan-
cial condition of the enterprise.’’. 
SEC. 132. SUPERVISORY ACTIONS APPLICABLE TO UNDER-
CAPITALIZED ENTERPRISES. 
(a) EFFECTIVE DATE FOR SUPERVISORY ACTIONS.—
Section 1365(c) of the Housing and Community Develop-
ment Act of 1992 (12 U.S.C. 4615(c)) is amended by 
striking ‘‘1-year’’ and inserting ‘‘6-month’’.
(b) SUPERVISORY ACTIONS.—Section 1365 of the 
Housing and Community Development Act of 1992 (12 
U.S.C. 4615) is amended—
(1) in subsection (a)—
(A) by redesignating paragraphs (1) and 
(2) as paragraphs (2) and (3), respectively; 
(B) by inserting before paragraph (2) the 
following paragraph: 
‘‘(1) REQUIRED
MONITORING.—The Director 
shall—
‘‘(A) closely monitor the condition of any 
undercapitalized enterprise; 
‘‘(B) closely monitor compliance with the 
capital restoration plan, restrictions, and re-
quirements imposed under this section; and
‘‘(C) periodically review the plan, restric-
tions, and requirements applicable to the under-
capitalized enterprise to determine whether the 
plan, restrictions, and requirements are achiev-
ing the purpose of this section.’’; and 
(C) by inserting at the end the following 
new paragraphs: 
‘‘(4) RESTRICTION
OF
ASSET
GROWTH.—An 
undercapitalized enterprise shall not permit its aver-
age total assets during any calendar quarter to ex-
ceed its average total assets during the preceding 
calendar quarter unless—
‘‘(A) the Board has accepted the enter-
prise’s capital restoration plan; 
‘‘(B) any increase in total assets is con-
sistent with the plan; and 
‘‘(C) the enterprise’s ratio of tangible eq-
uity to assets increases during the calendar 
quarter at a rate sufficient to enable the enter-
prise to become adequately capitalized within a 
reasonable time. 
‘‘(5) PRIOR APPROVAL OF ACQUISITIONS AND 
ISSUANCE OF NEW PRODUCTS.—An undercapitalized 
enterprise shall not, directly or indirectly, acquire
any interest in any entity or issue a new product 
unless—
‘‘(A) the Director has accepted the enter-
prise’s capital restoration plan, the enterprise is 
implementing the plan, and the Director deter-
mines 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 
section.’’; and 
(2) in the subsection heading for subsection (b), 
by striking ‘‘FROM UNDERCAPITALIZED TO SIGNIFI-
CANTLY UNDERCAPITALIZED’’; 
(3) by redesignating subsection (c) (as amended 
by subsection (a) of this section) as subsection (d); 
and 
(4) by inserting after subsection (b) the fol-
lowing new subsection: 
‘‘(c) OTHER DISCRETIONARY SAFEGUARDS.—The 
Director may take, with respect to an undercapitalized en-
terprise, any of the actions authorized to be taken under 
section 1366 with respect to a significantly undercapital-
ized enterprise, if the Director determines that such ac-
tions are necessary to carry out the purpose of this sub-
title.’’. 
SEC. 133. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI-
CANTLY UNDERCAPITALIZED ENTERPRISES. 
Section 1366 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4616) is amended—
(1) in subsection (b)—
(A) in the subsection heading, by striking 
‘‘DISCRETIONARY SUPERVISORY ACTIONS’’ and 
inserting ‘‘SPECIFIC ACTIONS’’; 
(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 redesignating paragraphs (5) and 
(6) as paragraphs (6) and (7), respectively; 
(D) by inserting after paragraph (4) the 
following new paragraph: 
‘‘(5) IMPROVEMENT
OF
MANAGEMENT.—Take 
one or more of the following actions: 
‘‘(A) NEW ELECTION OF BOARD.—Order a 
new election for the board of directors of the 
enterprise. 
‘‘(B) DISMISSAL OF DIRECTORS OR EXECU-
TIVE OFFICERS.—Require the enterprise to dis-
miss from office any director or executive offi-
cer who had held office for more than 180 days 
immediately before the enterprise became 
undercapitalized. Dismissal under this subpara-
graph shall not be construed to be a removal 
pursuant to the Director’s enforcement powers 
provided in section 1377. 
‘‘(C) EMPLOY QUALIFIED EXECUTIVE OF-
FICERS.—Require the enterprise to employ 
qualified executive officers (who, if the Director 
so specifies, shall be subject to approval by the 
Director).’’; and 
(E) by inserting at the end the following 
new paragraph: 
‘‘(8) OTHER ACTION.—Require the enterprise 
to take any other action that the Director deter-
mines will better carry out the purpose of this sec-
tion than any of the actions specified in this para-
graph.’’; 
(2) by redesignating subsection (c) as sub-
section (d); and 
(3) by inserting after subsection (b) the fol-
lowing new subsection: 
‘‘(c) RESTRICTION ON COMPENSATION OF EXECU-
TIVE OFFICERS.—An enterprise that is classified as sig-
nificantly undercapitalized may not, without prior written 
approval by the Director—
‘‘(A) pay any bonus to any executive offi-
cer; or 
‘‘(B) provide compensation to any execu-
tive officer at a rate exceeding that officer’s av-
erage rate of compensation (excluding bonuses, 
stock options, and profit sharing) during the 12 
calendar months preceding the calendar month 
in which the enterprise became undercapital-
ized.’’.
SEC. 134. AUTHORITY OVER CRITICALLY UNDERCAPITAL-
IZED ENTERPRISES. 
Section 1368 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4618) is amended to read 
as follows: 
‘‘SEC. 1368. APPOINTMENT OF RECEIVERS. 
‘‘(a) APPOINTMENT.—
‘‘(1) AUTHORITY.—Upon a determination that 
an enterprise is critically undercapitalized and a de-
termination that the enterprise meets such other 
conditions for taking action pursuant to this sub-
section as the Director shall by regulation establish, 
the 
Director 
may, 
notwithstanding 
section 
1367(a)(1), appoint a receiver for the enterprise in
accordance with this section and in lieu of appoint-
ment of a conservator pursuant to section 1367. If 
the Director takes action pursuant to this sub-
section, the Director shall appoint the receiver not 
later than 30 days after providing notice under 
paragraph (2) of this subsection. 
‘‘(2) NOTICE.—Upon making a determination 
under paragraph (1) to appoint a receiver for an en-
terprise, the Director shall provide written notice to 
the enterprise, the Committee on Financial Services 
of the House of Representatives, and the Committee 
on Banking, Housing, and Urban Affairs of the Sen-
ate—
‘‘(A) that a receiver will be appointed for 
the enterprise; 
‘‘(B) stating the reasons for the appoint-
ment of the receiver; and 
‘‘(C) identifying the person or govern-
mental agency that the Director intends to ap-
point as a receiver. 
‘‘(3) QUALIFICATIONS.—The receiver shall be—
‘‘(A) the Director or any other govern-
mental agency; or 
‘‘(B) any person that—
‘‘(i) has no claim against, or financial 
interest in, the enterprise or other basis for 
a conflict of interest; and 
‘‘(ii) has the financial and manage-
ment expertise necessary to carry out the 
duties under subsection (c). 
‘‘(b) JUDICIAL REVIEW.—The provisions of section 
1369(b) shall apply to the appointment of a receiver pur-
suant to this section to the same extent that such provi-
sions apply to the appointment of a conservator pursuant 
to this subtitle. 
‘‘(c) DUTIES.—A receiver appointed pursuant to this 
section shall be appointed for the purpose, and shall have 
the duty, of liquidating or winding up the affairs of the 
enterprise, in accordance with such regulations as the Di-
rector may issue, and notwithstanding the second sen-
tences of paragraphs (1) and (2)(B) of section 302(a) of 
the Federal National Mortgage Association Charter Act 
(12 U.S.C. 1717(a)) and section 303(c)(2) of the Federal 
Home Loan Mortgage Corporation Act (12 U.S.C. 
1452(c)(2)). 
‘‘(d) REPLACEMENT, POWERS, LIABILITY PROTEC-
TION.—The provisions of subsections (c) and (d) of section 
1369, section 1369A, and section 1369B shall apply to 
a receiver appointed pursuant to this section to the same
extent that such provisions apply to a conservator ap-
pointed pursuant to this subtitle. In addition to any pow-
ers under section 1369A, a receiver appointed pursuant 
to this section shall have such powers with respect to an 
enterprise, as the Director may by regulation provide, that 
the Federal Deposit Insurance Corporation has under sec-
tion 11 of the Federal Deposit Insurance Act (12 U.S.C. 
1821), as in effect at that time, with respect to a insured 
depository institution when acting as a receiver under such 
section.’’. 
Subtitle C—Enforcement Actions
SEC. 151. CEASE-AND-DESIST PROCEEDINGS. 
Section 1371 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4631) is amended—
(1) by striking subsections (a) and (b) and in-
serting the following new subsections: 
‘‘(a) ISSUANCE FOR UNSAFE OR UNSOUND PRAC-
TICES AND VIOLATIONS OF RULES OR LAWS.—If, in the 
opinion of the Director, an enterprise or any enterprise-
affiliated party is engaging or has engaged, or the Direc-
tor has reasonable cause to believe that the enterprise or 
any enterprise-affiliated party is about to engage, in an 
unsafe or unsound practice in conducting the business of 
the enterprise or is violating or has violated, or the Direc-
tor has reasonable cause to believe that the enterprise or
any enterprise-affiliated party is about to violate, a law, 
rule, or regulation, or any condition imposed in writing 
by the Director in connection with the granting of any 
application or other request by the enterprise or any writ-
ten agreement entered into with the Director, the Director 
may issue and serve upon the enterprise or such party a 
notice of charges in respect thereof. The Director may not 
enforce compliance with any housing goal established 
under subpart B of part 2 of subtitle A of this title, with 
section 1336 or 1337 of this title, with subsection (m) or 
(n) of section 309 of the Federal National Mortgage Asso-
ciation Charter Act (12 U.S.C. 1723a(m), (n)), or with 
subsection (e) or (f) of section 307 of the Federal Home 
Loan Mortgage Corporation Act (12 U.S.C. 1456(e), (f)). 
‘‘(b) ISSUANCE FOR UNSATISFACTORY RATING.—If 
an enterprise receives, in its most recent report of exam-
ination, a less-than-satisfactory rating for asset quality, 
management, earnings, or liquidity, the Director may (if 
the deficiency is not corrected) deem the enterprise to be 
engaging in an unsafe or unsound practice for purposes 
of this subsection.’’; and 
(2) in subsection (c)(2), by striking ‘‘or direc-
tor’’ and inserting ‘‘director, or enterprise-affiliated 
party’’.
SEC. 152. TEMPORARY CEASE-AND-DESIST PROCEEDINGS. 
Section 1372 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4632) is amended—
(1) by striking subsection (a) and inserting the 
following new subsection: 
‘‘(a) GROUNDS FOR ISSUANCE.—Whenever the Direc-
tor determines that the violation or threatened violation 
or the unsafe or unsound practice or practices specified 
in the notice of charges served upon the enterprise or any 
enterprise-affiliated party pursuant to section 1371(a), or 
the continuation thereof, is likely to cause insolvency or 
significant dissipation of assets or earnings of the enter-
prise, or is likely to weaken the condition of the enterprise 
prior to the completion of the proceedings conducted pur-
suant to sections 1371 and 1373, the Director may issue 
a temporary order requiring the enterprise or such party 
to cease and desist from any such violation or practice 
and to take affirmative action to prevent or remedy such 
insolvency, dissipation, condition, or prejudice pending 
completion of such proceedings. Such order may include 
any requirement authorized under subsection 1371(d).’’; 
(2) in subsection (b), by striking ‘‘or director’’ 
and inserting ‘‘director, or enterprise-affiliated 
party’’;
(3) in subsection (d), striking ‘‘or director’’ and 
inserting ‘‘director, or enterprise-affiliated party’’; 
and 
(4) by striking subsection (e) and in inserting 
the following new subsection: 
‘‘(e) ENFORCEMENT.—In the case of violation or 
threatened violation of, or failure to obey, a temporary 
cease-and-desist order issued pursuant to this section, the 
Director may apply to the United States District Court 
for the District of Columbia or the United States district 
court within the jurisdiction of which the headquarters of 
the enterprise is located, for an injunction to enforce such 
order, and, if the court determines that there has been 
such violation or threatened violation or failure to obey, 
it shall be the duty of the court to issue such injunction.’’. 
SEC. 153. REMOVAL AND PROHIBITION AUTHORITY. 
(a) IN GENERAL.—Subtitle C of title XIII of the 
Housing and Community Development Act of 1992 is 
amended—
(1) by redesignating sections 1377 through 
1379B (12 U.S.C. 4637–41) as sections 1379 
through 1379D, respectively; and 
(2) by inserting after section 1376 (12 U.S.C. 
4636) the following new section:
‘‘SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY. 
‘‘(a) AUTHORITY TO ISSUE ORDER.—Whenever the 
Director determines that—
‘‘(1) any enterprise-affiliated party has, directly 
or indirectly—
‘‘(A) violated—
‘‘(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 enterprise; or 
‘‘(iv) any written agreement between 
such enterprise and the Director; 
‘‘(B) engaged or participated in any unsafe 
or unsound practice in connection with any en-
terprise; or
‘‘(C) committed or engaged in any act, 
omission, or practice which constitutes a breach 
of such party’s fiduciary duty; 
‘‘(2) by reason of the violation, practice, or 
breach described in any subparagraph of paragraph 
(1)—
‘‘(A) such enterprise has suffered or will 
probably suffer financial loss or other damage; 
or 
‘‘(B) such party has received financial gain 
or other benefit by reason of such violation, 
practice, or breach; and 
‘‘(3) such violation, practice, or breach—
‘‘(A) involves personal dishonesty on the 
part of such party; or 
‘‘(B) demonstrates willful or continuing 
disregard by such party for the safety or sound-
ness of such enterprise, 
the Director may serve upon such party a written notice 
of the Director’s intention to remove such party from of-
fice or to prohibit any further participation by such party, 
in any manner, in the conduct of the affairs of any enter-
prise. 
‘‘(b) SUSPENSION ORDER.—
‘‘(1) SUSPENSION
OR
PROHIBITION
AUTHOR-
ITY.—If the Director serves written notice under 
subsection (a) to any enterprise-affiliated party of 
the Director’s intention to issue an order under such 
subsection, the Director may suspend such party 
from office or prohibit such party from further par-
ticipation in any manner in the conduct of the af-
fairs of the enterprise, if the Director—
‘‘(A) determines that such action is nec-
essary for the protection of the enterprise; and 
‘‘(B) serves such party with written notice 
of the suspension order. 
‘‘(2) EFFECTIVE
PERIOD.—Any suspension 
order issued under subsection (a)—
‘‘(A) shall become effective upon service; 
and 
‘‘(B) unless a court issues a stay of such 
order under subsection (g) of this section, shall 
remain in effect and enforceable until—
‘‘(i) the date the Director dismisses 
the charges contained in the notice served 
under subsection (a) with respect to such 
party; or 
‘‘(ii) the effective date of an order 
issued by the Director to such party under 
subsection (a). 
‘‘(3) COPY OF ORDER.—If the Director issues a 
suspension order under subsection (a) to any enter-
prise-affiliated party, the Director shall serve a copy 
of such order on any enterprise with which such 
party is affiliated at the time such order is issued.
‘‘(c) NOTICE, HEARING, AND ORDER.—A notice of 
intention to remove an enterprise-affiliated party from of-
fice or to prohibit such party from participating in the 
conduct of the affairs of an enterprise shall contain a 
statement of the facts constituting grounds for such ac-
tion, and shall fix a time and place at which a hearing 
will be held on such action. Such hearing shall be fixed 
for a date not earlier than 30 days nor later than 60 days 
after the date of service of such notice, unless an earlier 
or a later date is set by the Director at the request of 
(1) such party, and for good cause shown, or (2) the At-
torney General of the United States. Unless such party 
shall appear 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 of such removal or 
prohibition. In the event of such consent, or if upon the 
record made at any such hearing the Director shall find 
that any of the grounds specified in such notice have been 
established, the Director may issue such orders of suspen-
sion or removal from office, or prohibition from participa-
tion in the conduct of the affairs of the enterprise, as it 
may deem appropriate. Any such order shall become effec-
tive at the expiration of 30 days after service upon such 
enterprise and such party (except in the case of an order 
issued upon consent, which shall become effective at the
time specified therein). Such order shall remain effective 
and enforceable except to such extent as it is stayed, modi-
fied, 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 
section shall not—
‘‘(1) participate in any manner in the conduct 
of the affairs of any enterprise; 
‘‘(2) solicit, procure, transfer, attempt to trans-
fer, vote, or attempt to vote any proxy, consent, or 
authorization with respect to any voting rights in 
any enterprise; 
‘‘(3) violate any voting agreement previously 
approved by the Director; or 
‘‘(4) vote for a director, or serve or act as an 
enterprise-affiliated party. 
‘‘(e) INDUSTRY-WIDE PROHIBITION.—
‘‘(1) IN GENERAL.—Except as provided in sub-
paragraph (2), any person who, pursuant to an 
order issued under subsection (h), has been removed
or suspended from office in an enterprise or prohib-
ited from participating in the conduct of the affairs 
of an enterprise may not, while such order is in ef-
fect, continue or commence to hold any office in, or
participate in any manner in the conduct of the af-
fairs of any enterprise. 
‘‘(2) EXCEPTION IF DIRECTOR PROVIDES WRIT-
TEN CONSENT.—If, on or after the date an order is 
issued under this section which removes or suspends 
from office any enterprise-affiliated party or pro-
hibits such party from participating in the conduct 
of the affairs of an enterprise, such party receives 
the written consent of the Director, the order shall, 
to the extent of such consent, cease to apply to such 
party with respect to the enterprise described in the 
written consent. If the Director grants such a writ-
ten consent, it shall publicly disclose such consent. 
‘‘(3) VIOLATION OF PARAGRAPH (1) TREATED 
AS VIOLATION OF ORDER.—Any violation of para-
graph (1) by any person who is subject to an order 
described in such subsection shall be treated as a 
violation of the order. 
‘‘(f) APPLICABILITY.—This section shall only apply 
to a person who is an individual, unless the Director spe-
cifically finds that it should apply to a corporation, firm, 
or other business enterprise. 
‘‘(g) STAY OF SUSPENSION AND PROHIBITION OF 
ENTERPRISE-AFFILIATED PARTY.—Within 10 days after 
any enterprise-affiliated party has been suspended from
office and/or prohibited from participation in the conduct 
of the affairs of an enterprise under this section, 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 headquarters 
of the enterprise is located, for a stay of such suspension 
and/or prohibition pending the completion of the adminis-
trative proceedings pursuant to the notice served upon 
such party under this section, and such court shall have 
jurisdiction to stay such suspension and/or prohibition. 
‘‘(h) SUSPENSION OR REMOVAL OF ENTERPRISE-AF-
FILIATED PARTY CHARGED WITH FELONY.—
‘‘(1) SUSPENSION OR PROHIBITION.—
‘‘(A) IN GENERAL.—Whenever any enter-
prise-affiliated party is charged in any informa-
tion, indictment, or complaint, with the commis-
sion of or participation in a crime involving dis-
honesty or breach of trust which is punishable 
by imprisonment for a term exceeding one year 
under State or Federal law, the Director may, 
if continued service or participation by such 
party may pose a threat to the enterprise or im-
pair public confidence in the enterprise, by writ-
ten 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 enterprise. 
‘‘(B) PROVISIONS
APPLICABLE
TO
NO-
TICE.—
‘‘(i) COPY.—A copy of any notice 
under paragraph (1)(A) shall also be 
served upon the enterprise. 
‘‘(ii) EFFECTIVE PERIOD.—A suspen-
sion or prohibition under subparagraph (A) 
shall remain in effect until the informa-
tion, indictment, or complaint referred to 
in such subparagraph 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 di-
version or other similar program is entered 
against an enterprise-affiliated party in connec-
tion with a crime described in paragraph 
(1)(A), at such time as such judgment is not 
subject to further appellate review, the Director 
may, if continued service or participation by 
such party may pose a threat to the enterprise 
or impair public confidence in the enterprise, 
issue and serve upon such party an order re-
moving such party from office or prohibiting 
such party from further participation in any 
manner in the conduct of the affairs of the en-
terprise without the prior written consent of the 
Director. 
‘‘(B) 
PROVISIONS
APPLICABLE
TO 
ORDER.—
‘‘(i) COPY.—A copy of any order 
under paragraph (2)(A) shall also be 
served upon the enterprise, whereupon the 
enterprise-affiliated party who is subject to 
the order (if a director or an officer) shall 
cease to be a director or officer of such en-
terprise. 
‘‘(ii) EFFECT OF ACQUITTAL.—A find-
ing of not guilty or other disposition of the 
charge shall not preclude the Director from 
instituting proceedings after such finding 
or disposition to remove such party from 
office or to prohibit further participation in 
enterprise affairs pursuant to subsections 
(a), (d), or (e) of this section. 
‘‘(iii) EFFECTIVE
PERIOD.—Any no-
tice of suspension or order of removal 
issued under this subsection shall remain
effective and outstanding until the comple-
tion of any hearing or appeal authorized 
under paragraph (4) unless terminated by 
the Director. 
‘‘(3) AUTHORITY OF REMAINING BOARD MEM-
BERS.—If at any time, because of the suspension of 
one or more directors pursuant to this section, there 
shall be on the board of directors of an enterprise 
less than a quorum of directors not so suspended, all 
powers and functions vested in or exercisable by 
such board shall vest in and be exercisable by the di-
rector or directors on the board not so suspended, 
until such time as there shall be a quorum of the 
board of directors. In the event all of the directors 
of an enterprise are suspended pursuant to this sec-
tion, the Director shall appoint persons to serve tem-
porarily as directors in their place and stead pending 
the termination of such suspensions, or until such 
time as those who have been suspended, cease to be 
directors of the enterprise and their respective suc-
cessors take office. 
‘‘(4) HEARING
REGARDING
CONTINUED
PAR-
TICIPATION.—Within 30 days from service of any 
notice of suspension or order of removal issued pur-
suant to paragraph (1) or (2) of this subsection, the
enterprise-affiliated party concerned may request in 
writing an opportunity to appear before the Director 
to show that the continued service to or participation 
in the conduct of the affairs of the enterprise by 
such party does not, or is not likely to, pose a threat 
to the interests of the enterprise or threaten to im-
pair public confidence in the enterprise. Upon re-
ceipt of any such request, the Director shall fix a 
time (not more than 30 days after receipt of such 
request, unless extended at the request of such 
party) and place at which such party may appear, 
personally or through counsel, before one or more 
members of the Director or designated employees of 
the Director to submit written materials (or, at the 
discretion of the Director, oral testimony) and oral 
argument. Within 60 days of such hearing, the Di-
rector shall notify such party whether the suspension 
or prohibition from participation in any manner in 
the conduct of the affairs of the enterprise will be 
continued, terminated, or otherwise modified, or 
whether the order removing such party from office 
or prohibiting such party from further participation 
in any manner in the conduct of the affairs of the 
enterprise will be rescinded or otherwise modified. 
Such notification shall contain a statement of the
basis for the Director’s decision, if adverse to such 
party. The Director is authorized to prescribe such 
rules as may be necessary to effectuate the purposes 
of this subsection. 
‘‘(i) HEARINGS AND JUDICIAL REVIEW.—
‘‘(1) VENUE
AND
PROCEDURE.—Any hearing 
provided for in this section shall be held in the Dis-
trict of Columbia or in the Federal judicial district 
in which the headquarters of the enterprise is lo-
cated, unless the party afforded the hearing consents 
to another place, and shall be conducted in accord-
ance with the provisions of chapter 5 of title 5, 
United States Code. After such hearing, and within 
90 days after the Director has notified the parties 
that the case has been submitted to it for final deci-
sion, it shall render its decision (which shall include 
findings of fact upon which its decision is predi-
cated) and shall issue and serve upon each party to 
the proceeding an order or orders consistent with 
the provisions of this section. Judicial review of any 
such order shall be exclusively as provided in this 
subsection. Unless a petition for review is timely 
filed in a court of appeals of the United States, as 
provided in paragraph (2), and thereafter until the 
record in the proceeding has been filed as so pro-
vided, the Director may at any time, upon such no-
tice and in such manner as it shall deem proper, 
modify, terminate, or set aside any such order. Upon 
such filing of the record, the Director may modify, 
terminate, or set aside any such order with permis-
sion of the court. 
‘‘(2) REVIEW OF ORDER.—Any party to any 
proceeding under paragraph (1) may obtain a review 
of any order served pursuant to paragraph (1) 
(other than an order issued with the consent of the 
enterprise or the enterprise-affiliated party con-
cerned, or an order issued under subsection (h) of 
this section) by the filing in the United States Court 
of Appeals for the District of Columbia Circuit or 
court of appeals of the United States for the circuit 
in which the headquarters of the enterprise is lo-
cated, within 30 days after the date of service of 
such order, a written petition praying that the order 
of the Director be modified, terminated, or set aside. 
A copy of such petition shall be forthwith trans-
mitted by the clerk of the court to the Director, and 
thereupon the Director shall file in the court the 
record in the proceeding, as provided in section 2112 
of title 28, United States Code. Upon the filing of 
such petition, such court shall have jurisdiction,
which upon the filing of the record shall (except as 
provided in the last sentence of paragraph (1)) be 
exclusive, to affirm, modify, terminate, or set aside, 
in whole or in part, the order of the Director. Re-
view of such proceedings shall be had as provided in 
chapter 7 of title 5, United States Code. The judg-
ment and decree of the court shall be final, except 
that the same shall be subject to review by the Su-
preme Court upon certiorari, as provided in section 
1254 of title 28, United States Code. 
‘‘(3) PROCEEDINGS NOT TREATED AS STAY.—
The commencement of proceedings for judicial re-
view under paragraph (2) shall not, unless specifi-
cally ordered by the court, operate as a stay of any 
order issued by the Director.’’. 
(b) CONFORMING AMENDMENTS.—
(1) 1992 ACT.—Section 1317(f) of the Housing 
and Community Development Act of 1992 (12 
U.S.C. 4517(f)) is amended by striking ‘‘section 
1379B’’ and inserting ‘‘section 1379D’’. 
(2) FANNIE MAE CHARTER ACT.—The second 
sentence of subsection (b) of section 308 of the Fed-
eral National Mortgage Association Charter Act (12 
U.S.C. 1723(b)) is amended by striking ‘‘The’’ and 
inserting ‘‘Except to the extent action under section
1377 of the Housing and Community Development 
Act of 1992 temporarily results in a lesser number, 
the’’. 
(3) FREDDIE MAC ACT.—The second sentence 
of subparagraph (A) of section 303(a)(2) of the 
Federal Home Loan Mortgage Corporation Act (12 
U.S.C. 1452(a)(2)(A)) is amended by striking 
‘‘The’’ and inserting ‘‘Except to the extent action 
under section 1377 of the Housing and Community 
Development Act of 1992 temporarily results in a 
lesser number, the’’. 
SEC. 154. ENFORCEMENT AND JURISDICTION. 
Section 1375 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4635) is amended—
(1) by striking subsection (a) and inserting the 
following new subsection: 
‘‘(a) ENFORCEMENT.—The Director may, in the dis-
cretion of the Director, apply to the United States District 
Court for the District of Columbia, or the United States 
district court within the jurisdiction of which the head-
quarters of the enterprise is located, for the enforcement 
of any effective and outstanding notice or order issued 
under this subtitle or subtitle B, or request that the Attor-
ney General of the United States bring such an action.
Such court shall have jurisdiction and power to order and 
require compliance with such notice or order.’’; and 
(2) in subsection (b), by striking ‘‘or 1376’’ and 
inserting ‘‘1376, or 1377’’. 
SEC. 155. CIVIL MONEY PENALTIES. 
Section 1376 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4636) is amended—
(1) in subsection (a), in the matter preceding 
paragraph (1), by striking ‘‘or any executive officer 
or’’ and inserting ‘‘any executive officer of an enter-
prise, any enterprise-affiliated party, or any’’; 
(2) by striking subsection (b) and inserting the 
following new subsection:
‘‘(b) AMOUNT OF PENALTY.—
‘‘(1) FIRST
TIER.—Any enterprise which, or 
any enterprise-affiliated party who—
‘‘(A) violates any provision of this title, the 
Federal National Mortgage Association Charter 
Act (12 U.S.C. 1716 et seq.), the Federal 
Home Loan Mortgage Corporation Act (12 
U.S.C. 1451 et seq.), or any order, condition, 
rule, or regulation under any such title or Act, 
except that the Director may not enforce com-
pliance with any housing goal established under 
subpart B of part 2 of subtitle A of this title,
with section 1336 or 1337 of this title, with 
subsection (m) or (n) of section 309 of the Fed-
eral National Mortgage Association Charter Act 
(12 U.S.C. 1723a(m), (n)), or with subsection 
(e) or (f) of section 307 of the Federal Home 
Loan Mortgage Corporation Act (12 U.S.C. 
1456(e), (f)); 
‘‘(B) violates any final or temporary order 
or notice issued pursuant to this title; 
‘‘(C) violates any condition imposed in 
writing by the Director in connection with the 
grant of any application or other request by 
such enterprise; 
‘‘(D) violates any written agreement be-
tween the enterprise and the Director; or 
‘‘(E) engages in any conduct the Director 
determines to be an unsafe or unsound practice, 
shall forfeit and pay a civil penalty of not more than 
$10,000 for each day during which such violation 
continues. 
‘‘(2) SECOND
TIER.—Notwithstanding para-
graph (1)—
‘‘(A) if an enterprise, or an enterprise-af-
filiated party—
‘‘(i) commits any violation described 
in any subparagraph of paragraph (1); 
‘‘(ii) recklessly engages in an unsafe 
or unsound practice in conducting the af-
fairs of such enterprise; or 
‘‘(iii) breaches any fiduciary duty 
which violation, practice, or breach; and 
‘‘(B) the violation, practice, or breach—
‘‘(i) is part of a pattern of mis-
conduct; 
‘‘(ii) causes or is likely to cause more 
than a minimal loss to such enterprise; or 
‘‘(iii) results in pecuniary gain or 
other benefit to such party, 
the enterprise or enterprise-affiliated party shall for-
feit and pay a civil penalty of not more than 
$50,000 for each day during which such violation, 
practice, or breach continues. 
‘‘(3) 
THIRD
TIER.—Notwithstanding 
para-
graphs (1) and (2), any enterprise which, or any en-
terprise-affiliated party who—
‘‘(A) knowingly—
‘‘(i) commits any violation described 
in any subparagraph of paragraph (1);
‘‘(ii) engages in any unsafe or un-
sound practice in conducting the affairs of 
such enterprise; or 
‘‘(iii) breaches any fiduciary duty; and 
‘‘(B) knowingly or recklessly causes a sub-
stantial loss to such enterprise or a substantial 
pecuniary gain or other benefit to such party by 
reason of such violation, practice, or breach, 
shall forfeit and pay a civil penalty in an amount not 
to exceed the applicable maximum amount deter-
mined under paragraph (4) for each day during 
which such violation, practice, or breach continues. 
‘‘(4) MAXIMUM AMOUNTS OF PENALTIES FOR 
ANY
VIOLATION
DESCRIBED
IN
PARAGRAPH
(3).—
The maximum daily amount of any civil penalty 
which may be assessed pursuant to paragraph (3) 
for any violation, practice, or breach described in 
such paragraph is—
‘‘(A) in the case of any person other than 
an enterprise, an amount not to exceed 
$2,000,000; and 
‘‘(B) in the case of any enterprise, 
$2,000,000.’’; and 
(3) in subsection (d)—
(A) by striking ‘‘or director’’ each place 
such term appears and inserting ‘‘director, or 
enterprise-affiliated party’’; 
(B) by striking ‘‘request the Attorney Gen-
eral of the United States to’’; 
(C) by inserting ‘‘, or the United States 
district court within the jurisdiction of which 
the headquarters of the enterprise is located,’’ 
after ‘‘District of Columbia’’; and 
(D) by striking ‘‘, or may, under the direc-
tion and control of the Attorney General, bring 
such an action’’. 
SEC. 156. CRIMINAL PENALTY. 
Subtitle C of title XIII of the Housing and Commu-
nity Development Act of 1992 (12 U.S.C. 4631 et seq.) 
is amended by inserting after section 1377 (as added by 
the preceding provisions of this Act) the following new sec-
tion: 
‘‘SEC. 1378. CRIMINAL PENALTY. 
‘‘Whoever, being subject to an order in effect under 
section 1377, without the prior written approval of the Di-
rector, knowingly participates, directly or indirectly, in any 
manner (including by engaging in an activity specifically 
prohibited in such an order) in the conduct of the affairs 
of any enterprise shall, notwithstanding section 3571 of
title 18, be fined not more than $1,000,000, imprisoned 
for not more than 5 years, or both.’’. 
Subtitle D—Reporting Regarding 
Enterprises 
SEC. 161. REPORTING REGARDING ENTERPRISES. 
Part 3 of subtitle A of the Housing and Community 
Development Act of 1992 is amended—
(1) by striking sections 1351, 1352, and 1353 
(Public Law 102–550; 106 Stat. 3969), except the 
provisions of law amended by such sections repealed 
shall not be affected by such repeal; and 
(2) by striking sections 1354, 1355, and 1356 
(12 U.S.C. 4601–3) and inserting the following new 
section:
‘‘SEC. 1351. REPORTS REGARDING ENTERPRISE ISSUES 
AND ACTIVITIES. 
‘‘(a) INSURED DEPOSITORY INSTITUTION HOLDINGS 
OF ENTERPRISE DEBT AND MORTGAGE-BACKED SECURI-
TIES.—Not later than 180 days after the date of the en-
actment of the Secondary Mortgage Market Enterprises 
Regulatory Improvement Act, the Secretary of the Treas-
ury, the Board of Governors of the Federal Reserve Sys-
tem, the Board of Directors of the Federal Deposit Insur-
ance Corporation, and the National Credit Union Admin-
istration Board shall jointly submit a report to the Con-
gress regarding—
‘‘(1) the extent to which obligations issued or 
guaranteed by the enterprises (including mortgage-
backed securities) are held by federally insured de-
pository institutions, including such extent by type 
of institution and such extent relative to the institu-
tions’ capital; 
‘‘(2) the extent to which the unlimited holdings 
by federally insured depository institutions of the ob-
ligations of the enterprises could produce systemic 
risk issues, particularly for the safety and soundness 
of the banking system in the United States, in the 
event of default or failure by an enterprise; and 
‘‘(3) the effects on the enterprises, the banking 
industry, and mortgage markets, if prudent limits on 
the holdings of enterprise obligations were placed on 
federally insured depository institutions. 
‘‘(b) PORTFOLIO OPERATIONS, RISK MANAGEMENT, 
AND MISSION.—Not later than one year after the date of 
the enactment of the Secondary Mortgage Market Enter-
prises Regulatory Improvement Act, the Director shall 
submit a report to the Congress—
‘‘(1) describing the holdings of the enterprises 
in retained mortgages and repurchased mortgage-
backed securities and the use of derivatives for hedg-
ing purposes; 
‘‘(2) describing the extent of such holdings rel-
ative to other assets and the risk implications of 
such holdings; 
‘‘(3) containing an analysis of such holdings for 
safety and soundness and/or mission compliance pur-
poses; and 
‘‘(4) containing an assessment of whether such 
holdings and other assets of the enterprises fulfill 
the mission purposes of the enterprises under the 
Federal National Mortgage Association Charter Act 
and the Federal Home Loan Mortgage Corporation 
Act. 
The Director shall consult with the Comptroller General 
of the United States in preparing the report under this 
subsection and in conducting any research, analyses, and 
assessments for the report. 
‘‘(c) DEBT ISSUANCES.—Not later than one year 
after the date of the enactment of the Secondary Mortgage 
Market Enterprises Regulatory Improvement Act, the Sec-
retary of the Treasury shall submit a report to the Con-
gress regarding—
‘‘(1) the extent of outstanding obligations of the 
enterprises and the rate of growth of such obliga-
tions; and 
‘‘(2) an analysis of whether debt issuances 
should be limited or reduced if an enterprise is not 
operating in a safe and sound manner and/or not 
complying with its mission, or if an enterprise fails 
to maintain a certain credit rating and/or debt rat-
ing. 
‘‘(d) TREASURY LINE OF CREDIT.—Not later than 
one year after the date of the enactment of the Secondary 
Mortgage Market Enterprises Regulatory Improvement 
Act, the Secretary of the Treasury shall submit a report 
to the Congress regarding the purposes of the authority 
of the Secretary of the Treasury to purchase the debt obli-
gations of the enterprises. The report shall assess the de-
sirability of limiting such authority in certain cir-
cumstances or eliminating such authority. 
‘‘(e) RISK-BASED CAPITAL LEVELS.—The Director 
shall submit a report to the Congress annually, on fiscal 
year basis, regarding—
‘‘(1) the risk-based capital levels for the enter-
prises under section 1361, including a description of 
the risk-based capital test under such section and
any assumptions of the Director and factors used by 
the Director in establishing the test; and 
(2) the minimum and critical capital levels for 
the enterprises pursuant to sections 1362 and 1363, 
respectively. 
Each report under this subsection for a fiscal year shall 
be submitted not later than the December 31 first occur-
ring after the conclusion of such fiscal year. 
‘‘(f) RECOMMENDATIONS.—Each report submitted 
pursuant to this section shall include specific recommenda-
tions of appropriate policies, limitations, regulations, legis-
lation, or other actions to deal appropriately and effec-
tively with the issues addressed by such report.’’. 
Subtitle E—General Provisions 
SEC. 171. CONFORMING AND TECHNICAL AMENDMENTS. 
(a) AMENDMENTS TO 1992 ACT.—Title XIII of the 
Housing and Community Development Act of 1992 (12 
U.S.C. 4501 et seq.), as amended by the preceding provi-
sions of this Act, is further amended—
(1) in section 1315 (12 U.S.C. 4515)—
(A) in subsection (a)—
(i) in the subsection heading, by strik-
ing ‘‘OFFICE PERSONNEL’’ and inserting 
‘‘IN GENERAL’’;
(ii) by striking ‘‘The’’ and inserting 
‘‘Subject to title II of the Secondary Mort-
gage Market Enterprises Regulatory Im-
provement Act, the’’; and 
(iii) by striking ‘‘Director and the Of-
fice. Officers’’ and inserting ‘‘Director, 
with respect to regulation and supervision 
of the enterprises. Such officers’’; 
(B) in subsection (b)—
(i) by striking ‘‘, and maintain com-
parability with compensation of officers 
and employees of’’; 
(ii) by inserting ‘‘and’’ after ‘‘Sys-
tem,’’; and 
(iii) by striking ‘‘the Office of Thrift 
Supervision’’ and inserting the following: 
‘‘and shall maintain comparability with 
compensation of officers and employees of 
such Office, Board, and Corporation, and 
of other officers and employees of the Of-
fice of Housing Finance Supervision’’; 
(C) in subsection (c), by inserting ‘‘, with 
respect to regulation and supervision of the en-
terprises’’ before the first comma; 
(D) in subsection (d)—
(i) in the subsection heading, by strik-
ing ‘‘HUD’’ and inserting ‘‘DEPARTMENT 
OF THE TREASURY’’; and 
(ii) by striking ‘‘Housing and Urban 
Development’’ and inserting ‘‘the Treas-
ury’’; 
(E) in subsection (e), by inserting ‘‘, with 
respect to regulation and supervision of the en-
terprises’’ before the period at the end; and 
(F) by striking subsection (f); 
(2) in section 1319A (12 U.S.C. 4520)—
(A) by striking ‘‘(a) IN GENERAL.—’’; and 
(B) by striking subsection (b); 
(3) in section 1319C (12 U.S.C. 4522)—
(A) in subsection (a)(1), by inserting 
‘‘under this title’’ after ‘‘redressed’’; and 
(B) in subsection (b), by inserting ‘‘under 
this title’’ after ‘‘issued’’; 
(4) in section 1319D (12 U.S.C. 4523), by in-
serting ‘‘to conduct duties relating to the regulation 
and supervision of the enterprises’’ before the second 
comma; 
(5) in section 1319E (12 U.S.C. 4524)—
(A) by inserting ‘‘relating to regulation 
and supervision of the enterprises’’ before ‘‘in 
accordance with’’; and 
(B) by inserting ‘‘in functions relating to 
the regulation and supervision of the enter-
prises’’ before ‘‘shall be made available’’; 
(6) in section 1319F (12 U.S.C. 4525), by 
striking ‘‘Code’’ and all that follows through ‘‘agen-
cies’’ and inserting ‘‘Code, the Office of Housing Fi-
nance Supervision, to the extent only of its func-
tions, activities, and employees involved in the regu-
lation and supervision of the enterprises, shall be 
considered an agency’’; 
(7) in the section heading for section 1328, by 
striking ‘‘SECRETARY’’ and inserting ‘‘DIREC-
TOR’’;
(8) in section 1361 (12 U.S.C. 4611)—
(A) in subsection (e)(1), by striking the 
first sentence and inserting the following new 
sentence: ‘‘The Director shall establish the risk-
based capital test under this section by regula-
tion.’’; and 
(B) in subsection (f), by striking ‘‘the Sec-
retary,’’;
(9) in section 1364(c) (12 U.S.C. 4614(c)), by 
striking the last sentence; 
(10) 
in 
section 
1367(a)(2) 
(12 
U.S.C. 
4617(a)(2)), by striking ‘‘with the written concur-
rence of the Secretary of the Treasury,’’; 
(11) in section 1369A(i) (12 U.S.C. 4620(i)), 
by inserting ‘‘having duties relating to regulation 
and supervision of the enterprises’’ before the period 
at the end; 
(12) by striking section 1383; 
(13) by striking ‘‘Committee on Banking, Fi-
nance and Urban Affairs’’ and inserting ‘‘Committee 
on Financial Services’’ each place such term appears 
in 
sections 
1319B, 
1319G(c), 
1328(a), 
1336(b)(3)(C), 1337, and 1369(a)(3); and 
(14) by striking ‘‘Secretary’’ and inserting ‘‘Di-
rector’’ each place such term appears in —
(A) subpart A of part 2 of subtitle A (ex-
cept in sections 1322, 1324, and 1325); 
(B) 
subtitle 
B 
(except 
in 
section 
1361(d)(1) and 1369E); and 
(C) subtitle C. 
(b) AMENDMENTS TO FANNIE MAE CHARTER ACT.—
The Federal National Mortgage Association Charter Act 
(12 U.S.C. 1716 et seq.) is amended—
(1) by striking ‘‘Director of the Office of Fed-
eral Housing Enterprise Oversight of the Depart-
ment of Housing and Urban Development’’ each 
place such term appears, and inserting ‘‘Director of 
the Office of Housing Finance Supervision’’, in—
(A) 
section 
303(c)(2) 
(12 
U.S.C. 
1718(c)(2));
(B) section 309(d)(3)(B) (12 U.S.C. 
1723a(d)(3)(B)); and 
(C) section 309(k)(1); and 
(2) in section 309(n)—
(A) in paragraph (1), by inserting ‘‘the Di-
rector of the Office of Housing Finance Super-
vision,’’ after ‘‘Senate,’’; and 
(B) in paragraph (3)(B), by striking ‘‘Sec-
retary’’ and inserting ‘‘Director of the Office of 
Housing Finance Supervision’’. 
(c) AMENDMENTS TO FREDDIE MAC ACT.—The Fed-
eral Home Loan Mortgage Corporation Act is amended—
(1) by striking ‘‘Director of the Office of Fed-
eral Housing Enterprise Oversight of the Depart-
ment of Housing and Urban Development’’ each 
place such term appears, and inserting ‘‘Director of 
the Office of Housing Finance Supervision’’, in—
(A) 
section 
303(b)(2) 
(12 
U.S.C. 
1452(b)(2)); 
(B) 
section 
303(h)(2) 
(12 
U.S.C. 
1452(h)(2)); and 
(C) 
section 
307(c)(1) 
(12 
U.S.C. 
1456(c)(1)); 
(2) in section 306(i) (12 U.S.C. 1455(i))—
(A) by striking ‘‘section 1316(c)’’ and in-
serting ‘‘section 306(c)’’; and 
(B) by striking ‘‘section 106’’ and insert-
ing ‘‘section 1316’’; and 
(3) in section 307 (12 U.S.C. 1456)—
(A) in subsection (f)—
(i) in paragraph (1), by inserting ‘‘the 
Director of the Office of Housing Finance 
Supervision,’’ after ‘‘Senate,’’; and 
(ii) in paragraph (3)(B), by striking 
‘‘Secretary’’ and inserting ‘‘Director of the 
Office of Housing Finance Supervision’’.
(d) AMENDMENT
TO TITLE 18, UNITED STATES 
CODE.—Section 1905 of title 18, United States Code, is 
amended by striking ‘‘Office of Federal Housing Enter-
prise Oversight’’ and inserting ‘‘Office of Housing Finance 
Supervision in its capacity under title XIII of the Housing 
and Community Development Act of 1992’’.
(e) AMENDMENTS TO FLOOD DISASTER PROTECTION 
ACT OF 1973.—Section 102(f)(3)(A) of the Flood Dis-
aster Protection Act of 1973 (42 U.S.C. 4012a(f)(3)(A)) 
is amended by striking ‘‘Director of the Office of Federal 
Housing Enterprise Oversight of the Department of Hous-
ing and Urban Development’’ and inserting ‘‘Director of 
the Office of Housing Finance Supervision’’. 
(f) AMENDMENT TO DEPARTMENT OF HOUSING AND 
URBAN DEVELOPMENT ACT.—Section 5 of the Depart-
ment of Housing and Urban Development Act (42 U.S.C. 
3534) is amended by striking subsection (d). 
(g) AMENDMENT
TO TITLE 5, UNITED STATES 
CODE.—Section 5315 of title 5, United States Code, is 
amended by striking the item relating to the Director of 
the Office of Federal Housing Enterprise Oversight, De-
partment of Housing and Urban Development. 
SEC. 172. EFFECTIVE DATE. 
Except as specifically provided otherwise in this title, 
the amendments made by this title shall take effect on, 
and shall apply beginning on, the expiration of the 1-year 
period beginning on the date of the enactment of this Act.
TITLE II—TRANSFER OF FUNC-
TIONS, 
PERSONNEL, 
AND 
PROPERTY 
SEC. 201. ABOLISHMENT OF OFHEO. 
(a) IN GENERAL.—Effective at the end of the 1-year 
period beginning on the date of the enactment of this Act, 
the Office of Federal Housing Enterprise Oversight of the 
Department of Housing and Urban Development and the 
positions of the Director and Deputy Director of such Of-
fice are abolished.
(b) DISPOSITION OF AFFAIRS.—During the 1-year 
period beginning on the date of the enactment of this Act, 
the Director of the Office of Federal Housing Enterprise 
Oversight shall, solely for the purpose of winding up the 
affairs of the Office of Federal Housing Enterprise Over-
sight—
(1) manage the employees of such Office and 
provide for the payment of the compensation and 
benefits of any such employee which accrue before 
the effective date of any transfer of such employee 
pursuant to section 203; and 
(2) may take any other action necessary for the 
purpose of winding up the affairs of the Office. 
(c) STATUS OF EMPLOYEES AS FEDERAL AGENCY 
EMPLOYEES.—The amendments made by title I and the
abolishment of the Office of Federal Housing Enterprise 
Oversight under subsection (a) of this section may not be 
construed to affect the status of any employee of such Of-
fice as employees of an agency of the United States for 
purposes of any other provision of law during any time 
such employee is so employed. 
(d) USE OF PROPERTY AND SERVICES.—
(1) PROPERTY.—The Director of the Office of 
Housing Finance Supervision may use the property 
of the Office of Federal Housing Enterprise Over-
sight to perform functions which have been trans-
ferred to the Director of the Office of Housing Fi-
nance Supervision for such time as is reasonable to 
facilitate the orderly transfer of functions trans-
ferred pursuant to any other provision of this Act or 
any amendment made by this Act to any other provi-
sion of law. 
(2) AGENCY
SERVICES.—Any agency, depart-
ment, or other instrumentality of the United States, 
and any successor to any such agency, department, 
or instrumentality, which was providing supporting 
services to the Office of Federal Housing Enterprise 
Oversight before the expiration of the period under 
subsection (a) in connection with functions that are
transferred to the Director of the Office of Housing 
Finance Supervision shall—
(A) continue to provide such services, on a 
reimbursable basis, until the transfer of such 
functions is complete; and 
(B) consult with any such agency to co-
ordinate and facilitate a prompt and reasonable 
transition. 
(e) SAVINGS PROVISIONS.—
(1) EXISTING RIGHTS, DUTIES, AND OBLIGA-
TIONS NOT AFFECTED.—Subsection (a) shall not af-
fect the validity of any right, duty, or obligation of 
the United States, the Director of the Office of Fed-
eral Housing Enterprise Oversight, or any other per-
son, which—
(A) arises under or pursuant to the title 
XIII of the Housing and Community Develop-
ment Act of 1992, the Federal National Mort-
gage Association Charter Act, the Federal 
Home Loan Mortgage Corporation Act, or any 
other provision of law applicable with respect to 
such Office; and 
(B) existed on the day before the abolish-
ment under subsection (a) of this section.
(2) CONTINUATION
OF
SUITS.—No action or 
other proceeding commenced by or against the Di-
rector of the Office of Federal Housing Enterprise 
Oversight shall abate by reason of the enactment of 
this Act, except that the Director of the Office of 
Housing Finance Supervision shall be substituted 
for the Director of the Office of Federal Housing 
Enterprise Oversight as a party to any such action 
or proceeding. 
SEC. 202. CONTINUATION AND COORDINATION OF CERTAIN 
REGULATIONS. 
All regulations, orders, determinations, and resolu-
tions that—
(1) were issued, made, prescribed, or allowed to 
become effective by—
(A) the Office of Federal Housing Enter-
prise Oversight; 
(B) the Secretary of Housing and Urban 
Development and that relate to the Secretary’s 
authority under—
(i) title XIII of the Housing and Com-
munity Development Act of 1992; 
(ii) under the Federal National Mort-
gage Association Charter Act, with respect
to the Federal National Mortgage Associa-
tion; or 
(iii) the Federal Home Loan Mort-
gage Corporation Act; or 
(C) a court of competent jurisdiction and 
that relate to functions transferred by this Act; 
and 
(2) are in effect on the date of the abolishment 
under section 201(a) of this Act, 
shall remain in effect according to the terms of such regu-
lations, orders, determinations, and resolutions and shall 
be enforceable by or against the Director of the Office of 
Housing Finance Supervision until modified, terminated, 
set aside, or superseded in accordance with applicable law 
by such Board, any court of competent jurisdiction, or op-
eration of law. 
SEC. 203. TRANSFER AND RIGHTS OF EMPLOYEES OF 
OFHEO. 
(a) AUTHORITY TO TRANSFER.—The Director of the 
Office of Housing Finance Supervision may transfer em-
ployees of the Office of Federal Housing Enterprise Over-
sight to the Office of Housing Finance Supervision for em-
ployment no later than the date of the abolishment under 
section 201(a) of this Act, as the Director considers ap-
propriate. This Act and the amendments made by this Act
shall not be considered to result in the transfer of any 
function from one agency to another or the replacement 
of one agency by another, for purposes of section 3505 
of title 5, United States Code, except to the extent that 
the Director of the Office of Housing Finance Supervision 
specifically provides so. 
(b) APPOINTMENT AUTHORITY FOR EXCEPTED AND 
SENIOR EXECUTIVE SERVICE EMPLOYEES.—
(1) IN GENERAL.—In the case of employees oc-
cupying positions in the excepted service or the Sen-
ior Executive Service, any appointment authority es-
tablished pursuant to law or regulations of the Of-
fice of Personnel Management for filling such posi-
tions shall be transferred, subject to paragraph (2). 
(2) DECLINE OF TRANSFER.—The Director of 
the Office of Housing Finance Supervision may de-
cline a transfer of authority under paragraph (1) 
(and the employees appointed pursuant thereto) to 
the extent that such authority relates to positions 
excepted from the competitive service because of 
their confidential, policy-making, policy-determining, 
or policy-advocating character, and noncareer posi-
tions in the Senior Executive Service (within the 
meaning of section 3132(a)(7) of title 5, United 
States Code).
(c) REORGANIZATION.—If the Director of the Office 
of Housing Finance Supervision determines, after the end 
of the 1-year period beginning on the date of the abolish-
ment under section 201(a), that a reorganization of the 
combined work force is required, that reorganization shall 
be deemed a major reorganization for purposes of afford-
ing 
affected 
employees 
retirement 
under 
section 
8336(d)(2) or 8414(b)(1)(B) of title 5, United States 
Code. 
(d) EMPLOYEE BENEFIT PROGRAMS.—Any employee 
of the Office of Federal Housing Enterprise Oversight ac-
cepting employment with the Director of the Office of 
Housing Finance Supervision as a result of a transfer 
under subsection (a) may retain for 18 months after the 
date such transfer occurs membership in any employee 
benefit program of the Director of the Office of Housing 
Finance Supervision or the Office of Federal Housing En-
terprise Oversight, as applicable, including insurance, to 
which such employee belongs on the date of the abolish-
ment under section 201(a) if—
(1) the employee does not elect to give up the 
benefit or membership in the program; and 
(2) the benefit or program is continued by the 
Director of the Office of Housing Finance Super-
vision.
The difference in the costs between the benefits which 
would have been provided by such agency and those pro-
vided by this section shall be paid by the Director of the 
Office of Housing Finance Supervision. If any employee 
elects to give up membership in a health insurance pro-
gram or the health insurance program is not continued 
by such Director, the employee shall be permitted to select 
an alternate Federal health insurance program within 30 
days of such election or notice, without regard to any other 
regularly scheduled open season. 
SEC. 204. TRANSFER OF PROPERTY AND FACILITIES. 
Upon the abolishment under section 201(a), all prop-
erty of the Office of Federal Housing Enterprise Oversight 
shall transfer to the Director of the Office of Housing Fi-
nance Supervision.
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