I 
112TH CONGRESS 
1ST SESSION H. R. 3644 
To increase standardization, transparency, and to ensure the rule of law 
in the mortgage-backed security system, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 13, 2011 
Mr. 
GARRETT
(for 
himself, 
Mr. 
BACHUS, 
Mr. 
HENSARLING, 
Mr. 
SCHWEIKERT, Mr. NEUGEBAUER, Mrs. BIGGERT, and Mrs. CAPITO) in-
troduced the following bill; which was referred to the Committee on Fi-
nancial Services 
A BILL 
To increase standardization, transparency, and to ensure the 
rule of law in the mortgage-backed security system, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Private Mortgage Market Investment Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; Table of contents. 
TITLE I—STANDARDIZATION AND UNIFORMITY 
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Sec. 101. Facilitating continued standardization and uniformity. 
Sec. 102. Repeal of credit risk retention provisions. 
Sec. 103. Exemption from registration of certain securities conforming to 
standard securitization agreements. 
Sec. 104. Judicial review. 
Sec. 105. Liability for misleading statements. 
Sec. 106. Unlawful representation. 
Sec. 107. Penalties. 
Sec. 108. Contrary stipulations void. 
TITLE II—TRANSPARENCY 
Sec. 201. Requirements for the disclosure of loan-level information to investors, 
rating agencies, and regulators. 
Sec. 202. Mandatory period for review of loan-level information prior to invest-
ment. 
Sec. 203. Dissemination of pricing information of asset-backed securities. 
Sec. 204. Alphanumeric identification of residential mortgage loans in asset- 
backed securities. 
TITLE III—ENSURING THE RULE OF LAW 
Sec. 301. Ensure rule of law and legal certainty. 
Sec. 302. Limitation on mortgages held by loan servicers. 
Sec. 303. Clarification of qualified mortgage exception. 
Sec. 304. FDIC safe harbor. 
Sec. 305. Effective date. 
TITLE I—STANDARDIZATION 
AND UNIFORMITY 
SEC. 101. FACILITATING CONTINUED STANDARDIZATION 
AND UNIFORMITY. 
(a) ESTABLISHMENT
OF
STANDARD
MORTGAGE 
CLASSIFICATIONS.— 
(1) ESTABLISHMENT.—The Director of the 
Federal Housing Finance Agency (hereinafter in this 
Act referred to as the ‘‘Director’’) shall, for pur-
poses of this section, prescribe classifications for 
mortgages having various degrees of credit risk, 
ranging from a classification of mortgages having 
little to no credit risk to a classification of mort-
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gages having higher credit risk, with the goals of 
maximizing the pricing of credit risk, allowing for 
the trading of securities collateralized by the classi-
fications of mortgages established pursuant to this 
section in a forward market, and maintaining well 
functioning liquid markets in securities collateralized 
by each of the classifications of mortgages estab-
lished pursuant to this section. 
(2) UNDERWRITING CRITERIA STANDARDS.— 
(A) UNDERWRITING CRITERIA.—For each 
of the classifications of mortgages established 
under paragraph (1), the Director shall estab-
lish standards for each of the following under-
writing criteria: 
(i) 
DEBT-TO-INCOME
RATIO.—The 
ratio of the amount of the total monthly 
debt of the mortgagor to the amount of the 
monthly income of the mortgagor. 
(ii) 
LOAN-TO-VALUE
RATIO.—The 
ratio of the original principal obligation 
under the mortgage to the original value of 
the residence subject to the mortgage. 
(iii) CREDIT
HISTORY.—Information 
on the credit history of the mortgagor, in-
cluding the credit score of the mortgagor. 
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(iv) LOAN DOCUMENTATION.—The ex-
tent of loan documentation and verification 
of the financial resources of the mortgagor 
used to qualify the mortgagor for the 
mortgage. 
(v) OCCUPANCY.—Whether the resi-
dence subject to the mortgage is occupied 
by the mortgagor. 
(vi) CREDIT ENHANCEMENT.—Wheth-
er any mortgage insurance or other type of 
insurance or credit enhancement was ob-
tained at the time of origination. 
(vii) LOAN PAYMENT TERMS.— 
(I) IN GENERAL.—The terms of 
the mortgage that determine the mag-
nitude and timing of payments due 
from the mortgagor, including the 
term to maturity of the mortgage, the 
frequency of payment, the type of am-
ortization, any prepayment penalties, 
and whether the interest rate is fixed 
or may vary. 
(II) 
INCLUSION
OF
30-YEAR 
FIXED
INTEREST
RATE.—Terms es-
tablished under subclause (I) shall in-
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clude a 30-year fixed interest rate 
mortgage. 
(viii) OTHER.—Such other under-
writing criteria as the Director may estab-
lish consistent with the goals of this title. 
(B) OBJECTIVE.—In developing the under-
writing criteria standards under subparagraph 
(A), the Director shall seek to ensure that such 
standards are readily identifiable to sponsors of, 
and investors in, securities collateralized by 
mortgages so that such sponsors and investors 
can clearly determine the classification to which 
a mortgage belongs. 
(3) DEFINITIONS.—The Director shall, for pur-
poses of this subsection, prescribe definitions for 
each of the following terms: 
(A) MORTGAGE.—The term ‘‘mortgage’’, 
which definition shall include only mortgages on 
residential properties. 
(B) DEFAULT.—The term ‘‘default’’, with 
respect to a mortgage. 
(C) DELINQUENCY.—The term ‘‘delin-
quency’’, with respect to a mortgage. 
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(D) LOAN
DOCUMENTATION.—The term 
‘‘loan documentation’’, with respect to a mort-
gage. 
(E) 
ADDITIONAL
TERMS.—Such 
other 
terms as the Director may establish. 
(b) STANDARD
FORM
SECURITIZATION
AGREE-
MENTS.— 
(1) IN GENERAL.—The Director shall develop, 
adopt, and publish standard form securitization 
agreements for mortgages established under sub-
section (a). 
(2) REQUIRED CONTENT.—The standard form 
securitization agreements to be developed under 
paragraph (1) shall only include terms relating to— 
(A) pooling and servicing; 
(B) purchase and sale; 
(C) representations and warranties, includ-
ing representations and warranties as to com-
pliance or conformity with standards estab-
lished by the Director pursuant to subsections 
(c), (d), (e), and (f), as appropriate; 
(D) indemnification and remedies, includ-
ing principles of a repurchase program that will 
ensure an appropriate amount of risk retention 
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under the representations and warranties set 
forth under subparagraph (C); and 
(E) the qualification, responsibilities, and 
duties of trustees. 
(3) PUBLIC
INVOLVEMENT.—In issuing rules 
and regulations under this section, the Director shall 
allow appropriate notice and comment in accordance 
with the chapter 5 of title 5, United States Code 
(commonly referred to as the ‘‘Administrative Proce-
dures Act’’). The Director shall work with industry 
groups, including servicers, originators, and mort-
gage investors to develop the standards under this 
title. 
(4) QUALIFIED
SECURITY.—For purposes of 
this title, the term ‘‘qualified security’’ means a se-
curity that— 
(A) is issued in accordance with a standard 
form securitization agreement; 
(B) is issued by a qualified sponsor; 
(C) is collateralized by a class, or multiple 
classes, of mortgages established under this 
title; and 
(D) is not guaranteed, in whole or in part, 
by the United States Government. 
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(c) STANDARDS FOR SERVICER REPORTING.—The 
Director shall develop, adopt, and publish standards for 
the reporting obligations of servicers of any mortgage that 
serves as collateral for a qualified security. 
(d) STANDARDS FOR SERVICING.—The Director shall 
develop, adopt, and publish— 
(1) servicing standards, including for the modi-
fication, restructuring, or work-out of any mortgage 
that serves as collateral for a qualified security; and 
(2) a servicer succession plan which may in-
clude provisions for— 
(A) a specialty servicer that can replace 
the existing servicer if the performance of the 
mortgage pool deteriorates to specified levels; 
and 
(B) a plan to achieve consistency in serv-
icing systems related to systematic note-taking, 
consistent mailing addresses, and other points 
of contact for borrowers to use, among other 
items. 
(e) STANDARDS FOR DOCUMENTATION.—The Direc-
tor shall develop, adopt and publish standards for docu-
mentation used to verify the financial resources of a mort-
gagor and to qualify the mortgagor for any mortgage that 
may become collateral for any qualified security, including 
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the form, content, and method of documentation of any 
such mortgage. Such standards shall also address any cus-
todial or delivery obligations related to such documents. 
(f) STANDARDS FOR QUALIFIED SPONSORS.— 
(1) IN GENERAL.—The Director shall develop, 
adopt, and publish standards for a sponsor to qual-
ify as a qualified sponsor. Such standards shall only 
include— 
(A) the experience and integrity of the 
sponsor and its principals, including compliance 
history with Federal and State laws; 
(B) the adequacy of insurance and fidelity 
coverage of the sponsor with respect to errors 
and omissions; and 
(C) a requirement that the sponsor submit 
audited financial statements to the Director, 
who shall make such statements publicly avail-
able through the Federal Housing Finance 
Agency’s website. 
(2) APPLICATION PROCESS.— 
(A) IN GENERAL.—The Director shall es-
tablish an application process for the qualifica-
tion of sponsors, in such form and manner and 
requiring such information as the Director may 
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require, in accordance with standards adopted 
under paragraph (1). 
(B) APPROVAL.—The Director shall ap-
prove any application made pursuant to sub-
paragraph (A) unless the sponsor does not meet 
the standards adopted under paragraph (1). 
(C) PUBLICATION.—The Director shall 
publish a list of newly qualified sponsors in the 
Federal Register and maintain an updated list 
of qualified sponsors on the Federal Housing 
Finance Agency’s website. 
(3) REVIEW AND REVOCATION OF QUALIFIED 
STATUS.— 
(A) IN GENERAL.—The Director may only 
review the status of a qualified sponsor if the 
Director is notified that a claim has been made 
against the sponsor by a trustee with respect to 
a violation of a contractual term in a 
securitization document of the sponsor. 
(B) REVOCATION.— 
(i) IN GENERAL.—Subject to subpara-
graph (C), if the Director determines, in a 
review pursuant to subparagraph (A), that 
a sponsor no longer meets the standards 
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for qualification, the Director shall revoke 
the sponsor’s qualified status. 
(ii) CONSTRUCTION.—The revocation 
of a sponsor’s qualified status under this 
subparagraph shall— 
(I) have no effect on the qualified 
status of any security; and 
(II) not relieve the sponsor of 
any representations, warranties, or re-
purchase obligations related to any 
qualified security issued before such 
revocation. 
(C) GRACE
PERIOD.—The Director shall 
issue regulations that permit a qualified spon-
sor who no longer meets the standards for qual-
ification to have a grace period during which 
the sponsor can work to meet such standards 
without losing the sponsor’s qualified status. 
(D) PUBLICATION.—The Director shall 
publish a list of sponsors who lost their quali-
fied status in the Federal Register and main-
tain an updated list of such sponsors on the 
Federal Housing Finance Agency’s website. 
(g) STANDARDS FOR TRUSTEES.— 
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(1) IN GENERAL.—There shall at all times be 
one or more trustee for each pool of mortgages that 
acts as collateral for a qualified security. 
(2) RULEMAKING.—The Director shall issue 
regulations regarding the qualifications of trustees 
under paragraph (1) that shall, to the extent prac-
ticable, be the same as the qualification provisions 
applicable to trustees under section 310(a) of the 
Trust Indenture Act of 1934 (15 U.S.C. 77jjj(a)). 
(3) CONFLICTS
OF
INTEREST.—The Director 
shall issue conflict of interest regulations that apply 
to a qualified trustee. Such regulations shall, to the 
extent practicable, be the same as those conflict of 
interest provisions applicable to an indenture trustee 
under section 310(b) of the Trust Indenture Act of 
1934 (15 U.S.C. 77jjj(b)). 
(4) REPORTING OF CLAIMS.—Any time a trust-
ee brings a claim against a qualified sponsor on be-
half of investors with respect to a standard form 
securitization agreement, the trustee shall notify the 
Director of such claim. 
(5) PROTECTION OF INVESTOR RIGHTS.—For 
the purpose of protecting investor rights, each trust-
ee shall— 
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(1) be granted access to the loan documents for 
the mortgage loans backing such security and all 
servicing reports the servicer provides to investors 
(beneficial owners) or the trustee; 
(2) be granted access to the list of investors 
(beneficial owners) maintained by the trustee, on the 
condition that the independent third party will not 
make the list available to the investors (beneficial 
owners); and 
(3) have the right, on behalf of the investors 
(beneficial owners), to inform the trustee of such se-
curities of any breach of the securitization agree-
ment identified by the third party. 
(i) TIMING; AUTHORITY TO REVISE STANDARDS.— 
(1) TIMING.—The Director shall develop, adopt, 
and publish the standards required under this title, 
not later than the expiration of the 12-month period 
beginning upon the date of the enactment of this 
title. 
(2) AUTHORITY TO REVISE.— 
(A) IN GENERAL.—The Director may re-
view, revise and, if revised, re-publish any 
standard form securitization agreement or other 
standard required to be developed under this 
section if the Director determines review or re-
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vision to be necessary or appropriate to satisfy 
the goals of this title. 
(B) APPLICATION OF REVISIONS.—Any re-
vision made pursuant to subparagraph (A) shall 
only apply to securitizations made after the 
date of such revision. 
(j) MANDATORY ARBITRATION.— 
(1) IN
GENERAL.—All disputes between an 
owner of a qualified security and the qualified spon-
sor of such security relating to representations and 
warranties shall be subject to mandatory arbitration 
procedures established by the Director, in accord-
ance with current market practices. 
(2) SELECTION
OF
ARBITRATOR.—Investors 
(beneficial owners) and sponsors subject to a dispute 
described under paragraph (1) shall have the right 
to agree on an independent arbitrator. If the parties 
cannot agree on an independent arbitrator, the Di-
rector shall select an independent arbitrator for the 
parties. 
(3) REPORTING DUTY OF ARBITRATOR.— 
(A) UPON
COMMENCEMENT.—The arbi-
trator shall provide the Federal Housing Fi-
nance Agency with notice upon the commence-
ment of any arbitration under this subsection. 
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(B) UPON CONCLUSION.—Upon the con-
clusion of any arbitration under this subsection, 
the arbitrator shall provide the Federal Hous-
ing Finance Agency with— 
(i) the decision reached by the arbi-
trator; and 
(ii) the basis for the arbitrator’s deci-
sion, including any evidence or testimony 
received during the arbitration process. 
(k) DISCLOSURE OF INFORMATION.— 
(1) IN GENERAL.— 
(A) IN
GENERAL.—Not later than 6 
months after the date of the enactment of this 
Act, the Director shall, by rule— 
(i) require sponsors of qualified secu-
rities to disclose all pertinent information 
relating to the residential mortgage loans 
that comprise such securities, including in-
formation set forth in the underwriting 
standards established under subsection (a); 
and 
(ii) allow for the trading of qualified 
securities under this title in a forward 
market. 
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(B) 
PRIVACY
PROTECTIONS.—In 
pre-
scribing the rules required under this para-
graph, the Director shall take into consideration 
issues of consumer privacy and all statutes, 
rules, and regulations related to privacy of con-
sumer credit information and personally identi-
fiable information. Such rules shall expressly 
prohibit the identification of specific borrowers. 
(2) CONSULTATION.—In issuing any rules or 
regulations under this subsection, the Director shall 
consult with the Securities and Exchange Commis-
sion. 
SEC. 102. REPEAL OF CREDIT RISK RETENTION PROVI-
SIONS. 
(a) IN GENERAL.—Section 15G of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o–11) is repealed and 
any regulations promulgated under such section shall have 
no force or effect. 
(b) CONFORMING AMENDMENT.—Section 27B of the 
Securities Act of 1933 is amended by striking subsection 
(d). 
(c) PROHIBITION.—The Office of the Comptroller of 
the Currency, the Board of Governors of the Federal Re-
serve System, the Federal Deposit Insurance Corporation, 
the Bureau of Consumer Financial Protection, and the Se-
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curities and Exchange Commission shall not issue any rule 
or regulation to require risk retention, any premium cap-
ture cash reserve account, or any similar mechanism, un-
less directly authorized by an Act of Congress. 
SEC. 103. EXEMPTION FROM REGISTRATION OF CERTAIN 
SECURITIES 
CONFORMING 
TO 
STANDARD 
SECURITIZATION AGREEMENTS. 
Section 3(a) of the Securities Act of 1933 (15 U.S.C. 
77c(a)) is amended by adding at the end the following: 
‘‘(14) Any qualified security, as such term is 
defined under section 101(b)(4) of the Private Mort-
gage Market Investment Act.’’. 
SEC. 104. JUDICIAL REVIEW. 
(a) IN GENERAL.—Orders of the Federal Housing 
Finance Agency under this title shall be subject to review 
in the same manner, upon the same conditions, and to 
the same extent, as provided in section 9 of the Securities 
Act of 1933, with respect to orders of the Securities and 
Exchange Commission under such title. 
(b) JURISDICTION.—Jurisdiction of offenses and vio-
lations under, and jurisdiction and venue of suits and ac-
tions brought to enforce any liability or duty created by, 
this Act, or any rules or regulations or orders prescribed 
under the authority thereof, shall be as provided in section 
22(a) of the Securities Act of 1933. 
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SEC. 105. LIABILITY FOR MISLEADING STATEMENTS. 
(a) IN GENERAL.—Any person who shall make or 
cause to be made any statement in any application, report, 
or document filed with the Federal Housing Finance 
Agency pursuant to any provisions of this title, or any 
rule, regulation, or order thereunder, which statement was 
at the time and in the light of the circumstances under 
which it was made false or misleading with respect to any 
material fact, or who shall omit to state any material fact 
required to be stated therein or necessary to make the 
statements therein not misleading, shall be liable to any 
person (not knowing that such statement was false or mis-
leading or of such omission) who, in reliance upon such 
statement or omission, shall have purchased or sold a se-
curity issued under the indenture to which such applica-
tion, report, or document relates, for damages caused by 
such reliance, unless the person sued shall prove that he 
acted in good faith and had no knowledge that such state-
ment was false or misleading or of such omission. A per-
son seeking to enforce such liability may sue at law or 
in equity in any court of competent jurisdiction. In any 
such suit the court may, in its discretion, require an un-
dertaking for the payment of the costs of such suit and 
assess reasonable costs, including reasonable attorneys’ 
fees, against either party litigant, having due regard to 
the merits and good faith of the suit or defense. No action 
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shall be maintained to enforce any liability created under 
this section unless brought within one year after the dis-
covery of the facts constituting the cause of action and 
within three years after such cause of action accrued. 
(b) RIGHTS AND REMEDIES UNDER OTHER LAW.— 
The rights and remedies provided by this title shall be in 
addition to any and all other rights and remedies that may 
exist under the Securities Act of 1933 or the Securities 
Exchange Act of 1934 or otherwise at law or in equity; 
but no person permitted to maintain a suit for damages 
under the provisions of this title shall recover, through sat-
isfaction of judgment in one or more actions, a total 
amount in excess of his actual damages on account of the 
act complained of. 
SEC. 106. UNLAWFUL REPRESENTATION. 
It shall be unlawful for any person in offering, selling, 
or issuing any security pursuant to this title to represent 
or imply in any manner whatsoever that any action or fail-
ure to act by the Federal Housing Finance Agency in the 
administration of this title means that the Federal Hous-
ing Finance Agency has in any way passed upon the mer-
its of, or given approval to, any trustee, indenture, or secu-
rity, or any transaction or transactions therein, or that 
any such action or failure to act with regard to any state-
ment or report filed with or examined by the Federal 
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Housing Finance Agency pursuant to this title or any rule, 
regulation, or order thereunder, has the effect of a finding 
by the Federal Housing Finance Agency that such state-
ment or report is true and accurate on its face or that 
it is not false or misleading. 
SEC. 107. PENALTIES. 
Any person who willfully violates any provision of this 
title or any rule, regulation, or order thereunder, or any 
person who willfully, in any application, report, or docu-
ment filed or required to be filed under the provisions of 
this title or any rule, regulation, or order thereunder, 
makes any untrue statement of a material fact or omits 
to state any material fact required to be stated therein 
or necessary to make the statements therein not mis-
leading, shall be subject to the penalties set forth under 
section 325 of the Trust Indenture Act of 1934 (15 U.S.C. 
77yyy). 
SEC. 108. CONTRARY STIPULATIONS VOID. 
Any condition, stipulation, or provision binding any 
person to waive compliance with any provision of this title 
or with any rule, regulation, or order thereunder shall be 
void. 
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TITLE II—TRANSPARENCY 
SEC. 201. REQUIREMENTS FOR THE DISCLOSURE OF LOAN- 
LEVEL INFORMATION TO INVESTORS, RATING 
AGENCIES, AND REGULATORS. 
(a) RULES.—Not later than 6 months after the date 
of the enactment of this title, the Securities and Exchange 
Commission shall, by rule, require sponsors of residential 
mortgage-backed securities to disclose all pertinent infor-
mation relating to the residential mortgage loans that 
comprise such securities, including information regarding 
the income and credit score of borrowers, the loan to value 
ratios, the remaining term to maturity of the loans, and 
require loan-level data to be updated on a monthly basis. 
Such rules shall apply to residential mortgage-backed se-
curities that— 
(1) are registered pursuant to section 6 of the 
Securities Act of 1933 (15 U.S.C. 77f); and 
(2) are offered or sold in reliance on Regulation 
D (17 CFR 230.506) and Rule 144A (17 CFR 
230.144A) of the Commission. 
(b) PRIVACY PROTECTIONS.—In prescribing the rules 
required under subsection (a), the Commission shall take 
into consideration issues of consumer privacy and all stat-
utes, rules, and regulations related to privacy of consumer 
credit information and personally identifiable information. 
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Such rules shall expressly prohibit the identification of 
specific borrowers. 
(c) RULES NOT APPLICABLE TO QUALIFIED SECURI-
TIES.—The rules prescribed under subsection (a) shall not 
apply to any qualified security, as such term is defined 
under section 101(b)(4). 
SEC. 202. MANDATORY PERIOD FOR REVIEW OF LOAN- 
LEVEL INFORMATION PRIOR TO INVEST-
MENT. 
Not later than 6 months after the date of the enact-
ment of this title, the Securities and Exchange Commis-
sion shall revise its rules and regulations to require spon-
sors of asset-backed securities under section 5 of the Secu-
rities Act of 1933 (15 U.S.C. 77e) to file a preliminary 
prospectus containing all material terms of the transaction 
at least 5 days before investors make an investment deci-
sion. 
SEC. 203. DISSEMINATION OF PRICING INFORMATION OF 
ASSET-BACKED SECURITIES. 
Not later than 6 months after the date of the enact-
ment of this title, the Securities and Exchange Commis-
sion shall, by rule, require the dissemination of trans-
action, volume, and pricing information of trades in asset- 
backed securities. Such rules shall require the dissemina-
tion of such information, with exceptions as may be pre-
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scribed by the Commission in the public interest, while 
taking into consideration the effect of such dissemination 
on market liquidity, through the Financial Industry Regu-
latory Authority’s fixed income transparency facility, re-
ferred to as Trade Reporting and Compliance Engine 
(TRACE), or through a similar vehicle. 
SEC. 204. ALPHANUMERIC IDENTIFICATION OF RESIDEN-
TIAL MORTGAGE LOANS IN ASSET-BACKED 
SECURITIES. 
Not later than 6 months after the date of the enact-
ment of this title, the Securities and Exchange Commis-
sion shall, by rule, require that each mortgage loan com-
prising a residential mortgage-backed security be assigned 
and carry with it a unique alphanumeric code that identi-
fies the loan in order to facilitate ascertaining relevant in-
formation about the loan. 
TITLE III—ENSURING THE RULE 
OF LAW 
SEC. 301. ENSURE RULE OF LAW AND LEGAL CERTAINTY. 
(a) JUNIOR MORTGAGE OR LIEN.—With respect to 
the dwelling of a borrower that serves as security for a 
securitized senior mortgage loan, if the borrower enters 
into any credit transaction that would result in the cre-
ation of a new mortgage or other lien on such dwelling 
where the loan-to-value ratio of such credit transaction 
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amount is 80 percent or more, the servicer of the senior 
mortgage loan shall have the right to charge the borrower 
an additional monthly fee in an amount sufficient to offset 
the increased risk to repayment of such loan because of 
the creation of the new mortgage or other lien. 
(b) NOTICE OF JUNIOR MORTGAGE OR LIEN.—With 
respect to the dwelling of a borrower that serves as secu-
rity for a securitized senior mortgage loan, if the borrower 
enters into any credit transaction that would result in the 
creation of a new mortgage or other lien on such dwelling, 
the creditor of such new mortgage or other lien shall notify 
the servicer of the senior mortgage loan of the existence 
of the new mortgage or other lien. 
(c) PREVENTION
OF FORCED PRINCIPAL WRITE- 
DOWNS.—With respect to a securitized mortgage loan, no 
Federal department or agency, including the Board of 
Governors of the Federal Reserve System and the Bureau 
of Consumer Financial Protection, may require a reduc-
tion in the principal amount owed on such mortgage loan. 
SEC. 302. LIMITATION ON MORTGAGES HELD BY LOAN 
SERVICERS. 
(a) LIMITATION.—Neither the servicer of a residen-
tial mortgage loan, nor any affiliate of such servicer, may 
own, or hold any interest in, any other residential mort-
gage loan that is secured by a mortgage, deed of trust, 
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or other equivalent consensual security interest on the 
same dwelling or residential real property that is subject 
to the mortgage, deed of trust, or other security interest 
that secures the residential mortgage loan serviced by the 
servicer. 
(b) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) AFFILIATE.—The term ‘‘affiliate’’ means, 
with respect to a servicer, any person or entity that 
controls, is controlled by, or is under common con-
trol with such servicer, as the Director shall pre-
scribe by regulation. 
(2) RESIDENTIAL MORTGAGE LOAN.—The term 
‘‘residential mortgage loan’’ means any consumer 
credit transaction that is secured by a mortgage, 
deed of trust, or other equivalent consensual security 
interest on a dwelling or on residential real property 
that includes a dwelling, other than a consumer 
credit transaction under an open end credit plan or 
an extension of credit relating to a plan described in 
section 101(53D) of title 11, United States Code. 
(3) SERVICER.—The term ‘‘servicer’’ has the 
meaning provided in section 129A of the Truth in 
Lending Act, except that such term includes a per-
son who makes or holds a residential mortgage loan 
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(including a pool of residential mortgage loans) if 
such person also services the loan. 
(c) INTERESTS.—For purposes of subsection (a), 
ownership of, or holding an interest in a residential mort-
gage loan includes ownership of, or holding an interest 
in— 
(1) a pool of residential mortgage loans that 
contains such residential mortgage loan; or 
(2) any security based on or backed by a pool 
of residential mortgage loans that contains such res-
idential mortgage loan. 
(d) EFFECTIVE DATE.—This section shall apply— 
(1) with respect to the servicer (or affiliate of 
the servicer) of a residential mortgage loan that is 
originated after the date of the enactment of this 
Act, on such date of enactment; and 
(2) with respect to the servicer (or affiliate of 
the servicer) of a residential mortgage loan that is 
originated on or before the date of the enactment of 
this Act, upon the expiration of the 12-month period 
beginning upon such date of enactment. 
SEC. 303. CLARIFICATION OF QUALIFIED MORTGAGE EX-
CEPTION. 
Subsection (b) of section 129C of the Truth in Lend-
ing Act is amended— 
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(1) in the heading of such subsection, by strik-
ing ‘‘PRESUMPTION OF ABILITY TO REPAY’’ and in-
serting ‘‘EXCEPTION FOR QUALIFIED MORTGAGES’’; 
(2) by amending paragraph (1) to read as fol-
lows: 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to a residential mortgage loan that is a quali-
fied mortgage.’’; and 
(3) in paragraph (3), by amending subpara-
graph (B) to read as follows: 
‘‘(B) LOAN
DEFINITION.—The following 
agencies shall, in consultation with the Bureau, 
prescribe rules defining the types of loans they 
insure, guarantee, or administer, as the case 
may be, that are qualified mortgages for pur-
poses of paragraph (2)(A): 
‘‘(i) The Department of Housing and 
Urban Development, with regard to mort-
gages insured under the National Housing 
Act (12 U.S.C. 1707 et seq.). 
‘‘(ii) The Department of Veterans Af-
fairs, with regard to a loan made or guar-
anteed by the Secretary of Veterans Af-
fairs. 
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‘‘(iii) The Department of Agriculture, 
with regards to loans guaranteed by the 
Secretary of Agriculture pursuant to sec-
tion 502(h) of the Housing Act of 1949 
(42 U.S.C. 1472(h)). 
‘‘(iv) The Rural Housing Service, with 
regards to loans insured by the Rural 
Housing Service.’’. 
SEC. 304. FDIC SAFE HARBOR. 
If a pool of mortgages meets the standards set forth 
by the Federal Housing Finance Agency pursuant to title 
I and is securitized in accordance with the standards set 
forth under title I, then the Federal Deposit Insurance 
Corporation safe harbor rule under section 360.6 of title 
12, Code of Federal Regulations, shall apply to the pool 
of mortgages. 
SEC. 305. EFFECTIVE DATE. 
Except as otherwise specifically provided, this title 
and the amendments made by this title shall take effect 
on the date of the enactment of this Act. 
Æ 
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