145
‘‘(I) two shall be appointed for a 
term of one year; and 
‘‘(II) three shall be appointed for 
a term of two years; 
‘‘(3) DUTIES.—The duties of the affordable 
housing board shall be—
‘‘(A) to determine extremely low- and very 
low-income housing needs; 
‘‘(B) to advise the Director with respect 
to—
‘‘(i) establishment of the selection cri-
teria under subsection (k)(2)(C) that pro-
vide for appropriate use of amounts from 
the affordable housing funds of the enter-
prises to meet such needs; and 
‘‘(ii) operation of, and changes to, the 
program under this section appropriate to 
meet such needs; and 
‘‘(C) to review the reports submitted by 
the enterprises pursuant to subsection (g)(1) to 
determine whether the activities funded using 
amounts from the affordable housing funds of 
the enterprises comply with the regulations 
issued pursuant to subsection (k)(2)(C) and in-
146
form the Director of such determinations, for 
purposes of subsection (g)(2). 
‘‘(4) MEETINGS.—The board shall meet not less 
than quarterly, except that during the 2-year period 
referred to in paragraph (7), the board shall meet 
only as the Director determines necessary. 
‘‘(5) EXPENSES AND PER DIEM.—Members of 
the board shall receive travel expenses, including per 
diem in lieu of subsistence, in accordance with sec-
tions 5702 and 5703 of title 5, United States Code. 
‘‘(6) ADVISORY COMMITTEE.—The board shall 
be considered an advisory committee for purposes of 
the Federal Advisory Committee Act (5 U.S.C. 
App.). 
‘‘(7) TERMINATION.— The board shall termi-
nate upon the expiration of the 2-year period that 
begins upon the conclusion of the last year referred 
to in subsection (b)(1)(C). 
‘‘(k) REGULATIONS.—
‘‘(1) IN
GENERAL.—The Director shall issue 
regulations to carry out this section. 
‘‘(2) REQUIRED
CONTENTS.—The regulations 
issued under this subsection shall include—
‘‘(A) authority for the Director to audit, 
provide for an audit, or otherwise verify an en-
147
terprise’s activities, to ensure compliance with 
this section; 
‘‘(B) a requirement that the Director en-
sure that the affordable housing fund of each 
enterprise is audited not less than annually to 
ensure compliance with this section; 
‘‘(C) requirements for a process for appli-
cation to, and selection by, an enterprise for ac-
tivities to be funded with amounts from the af-
fordable housing fund, which shall provide 
that—
‘‘(i) selection shall be based upon spe-
cific criteria, which shall provide that—
‘‘(I) in any selection of activities 
occurring during the 2-year period be-
ginning on the effective date under 
section 185 of the Federal Housing 
Finance Reform Act of 2005, addi-
tional weight shall be given to applica-
tions for eligible activities under sub-
section (d) that—
‘‘(aa) are to be carried out 
in any area that was declared by 
the President as a major disaster 
area pursuant to the Robert T.
148
Stafford 
Disaster 
Relief 
and 
Emergency Assistance Act as re-
sult of Hurricane Katrina or 
Hurricane Rita in 2005; or 
‘‘(bb) the enterprise deter-
mines, in accordance with regula-
tions issued by the Director, 
serve persons significantly af-
fected by the occurrence of Hur-
ricane Katrina or Hurricane Rita 
in 2005 (including persons dis-
placed as a result of such hurri-
canes and persons whose afford-
able housing opportunities are 
significantly affected by the pres-
ence of persons displaced as a re-
sult of such hurricanes); and 
‘‘(II) taking into consideration 
any additional weight afforded appli-
cations pursuant to subclause (I), pri-
ority in funding shall be based upon—
‘‘(aa) whether activities are 
to be carried out in any area 
that, not more than 2 years be-
fore such selection, was declared
149
by the President as a major dis-
aster area pursuant to the Rob-
ert T. Stafford Disaster Relief 
and Emergency Assistance Act; 
‘‘(bb) greatest impact; 
‘‘(cc) geographic diversity; 
‘‘(dd) 
ability 
to 
obligate 
amounts and undertake activities 
so funded in a timely manner; 
‘‘(ee) in the case of rental 
housing projects under subsection 
(d)(1), the extent to which rents 
for units in the project funded 
are affordable, especially for ex-
tremely low-income families; and 
‘‘(ff) in the case of rental 
housing projects under subsection 
(d)(1), the extent of the duration 
for which such rents will remain 
affordable; and 
‘‘(ii) an enterprise may not require for 
such selection that an activity involve fi-
nancing or underwriting of any kind by the 
enterprise (other than funding through the 
affordable housing fund of the enterprise)
150
and may not give preference in such selec-
tion to activities that involve such financ-
ing; 
‘‘(D) requirements to ensure that amounts 
from the affordable housing funds of the enter-
prises used for rental housing under subsection 
(d)(1) are used only for the benefit of extremely 
low- and very-low income families; and 
‘‘(E) limitations on public infrastructure 
development activities that are eligible pursuant 
to subsection (d)(3) for funding with amounts 
from the affordable housing funds of the enter-
prises and requirements for the connection be-
tween such activities and housing activities 
funded under paragraph (1) or (2) of sub-
section (d). 
‘‘(l) ENFORCEMENT.—Compliance by the enterprises 
with the requirements under this section shall be enforce-
able under subpart C. Any reference in such subpart to 
this part or to an order, rule, or regulation under this part 
specifically includes this section and any order, rule, or 
regulation under this section.’’. 
(b) CONTRIBUTIONS FOR TRANSITION PERIOD.—
(1) RESERVATION AND CONTRIBUTION; PROHI-
BITION OF DOUBLE CONTRIBUTIONS.—If the date of
151
the enactment of this Act does not occur in the same 
calendar year as the effective date under section 185 
of this Act, each enterprise (as such term is defined 
in section 1303 of the Housing and Community De-
velopment Act of 1992) shall, in the year that such 
date of enactment occurs, reserve for contribution to 
the affordable housing fund to be established by the 
enterprise pursuant to section 1337 of such Act (as 
amended by subsection (a) of this section) an 
amount equal to 3.5 percent of the after-tax income 
of the enterprise for the preceding year. Upon the 
establishment of such affordable housing fund, each 
enterprise shall allocate to such fund the amounts 
reserved under this paragraph by the enterprise. 
(2) EXCEPTION
TO
DEADLINE
FOR
COMMIT-
MENT.—Section 1337(f)(4) of the Housing and 
Community Development Act of 1992 (as amended 
by subsection (a) of this section) shall not apply to 
any amounts allocated to the affordable housing 
fund of an enterprise pursuant to paragraph (1) of 
this subsection. 
(3) AFTER-TAX INCOME.—For purposes of this 
subsection, the term ‘‘after-tax income’’ has the 
meaning provided in subsection (b)(5) of the new
152
section 1337 to be inserted by the amendment made 
by subsection (a) of this section. 
(4) EFFECTIVE
DATE.—This subsection shall 
take effect on the date of the enactment of this Act. 
(c) REFCORP PAYMENTS.—Section 21B(f)(2) of 
the Federal Home Loan Bank Act (12 U.S.C. 
1441b(f)(2)) is amended—
(1) in subparagraph (E), by striking ‘‘and (D)’’ 
and inserting ‘‘(D), and (E)’’; 
(2) by redesignating subparagraph (E) as sub-
paragraph (F); and 
(3) by inserting after subparagraph (D) the fol-
lowing new subparagraph: 
‘‘(E) PAYMENTS
BY
FANNIE
MAE
AND 
FREDDIE
MAC.—To 
the 
extent 
that 
the 
amounts available pursuant to subparagraphs 
(A), (B), (C), and (D) are insufficient to cover 
the amount of interest payments, each enter-
prise (as such term is defined in section 1303 
of the Housing and Community Development 
Act of 1992 (42 U.S.C. 4502)) shall transfer to 
the Funding Corporation in each calendar year 
the amounts allocated for use under this sub-
paragraph pursuant to section 1337(f)(1) of 
such Act.’’.
153
SEC. 129. CONSISTENCY WITH MISSION. 
Subpart B of part 2 of subtitle A of title XIII of the 
Housing and Community Development Act of 1992 (12 
U.S.C. 4561 et seq.) is amended by adding after section 
1337, as added by section 127 of this Act, the following 
new section: 
‘‘SEC. 1338. CONSISTENCY WITH MISSION. 
‘‘This subpart may not be construed to authorize an 
enterprise to engage in any program or activity that con-
travenes or is inconsistent with the Federal National 
Mortgage Association Charter Act or the Federal Home 
Loan Mortgage Corporation Act.’’. 
SEC. 130. ENFORCEMENT. 
(a) 
CEASE-AND-DESIST
PROCEEDINGS.—Section 
1341 of the Housing and Community Development Act 
of 1992 (12 U.S.C. 4581) is amended—
(1) by striking subsection (a) and inserting the 
following new subsection: 
‘‘(a) GROUNDS FOR ISSUANCE.—The Director may 
issue and serve a notice of charges under this section upon 
an enterprise if the Director determines—
‘‘(1) the enterprise has failed to meet any hous-
ing goal established under subpart B, following a 
written notice and determination of such failure in 
accordance with section 1336;
154
‘‘(2) the enterprise has failed to submit a report 
under section 1314, following a notice of such fail-
ure, an opportunity for comment by the enterprise, 
and a final determination by the Director; 
‘‘(3) the enterprise has failed to submit the in-
formation required under subsection (m) or (n) of 
section 309 of the Federal National Mortgage Asso-
ciation Charter Act, or subsection (e) or (f) of sec-
tion 307 of the Federal Home Loan Mortgage Cor-
poration Act; 
‘‘(4) the enterprise has violated any provision of 
this part or any order, rule or regulation under this 
part; 
‘‘(5) the enterprise has failed to submit a hous-
ing plan that complies with section 1336(c) within 
the applicable period; or 
‘‘(6) the enterprise has failed to comply with a 
housing plan under section 1336(c).’’; 
(2) in subsection (b)(2), by striking ‘‘requiring 
the enterprise to’’ and all that follows through the 
end of the paragraph and inserting the following: 
‘‘requiring the enterprise to—
‘‘(A) comply with the goal or goals; 
‘‘(B) submit a report under section 1314;
155
‘‘(C) comply with any provision this part 
or any order, rule or regulation under such 
part; 
‘‘(D) submit a housing plan in compliance 
with section 1336(c); 
‘‘(E) comply with a housing plan submitted 
under section 1336(c); or 
‘‘(F) provide the information required 
under subsection (m) or (n) of section 309 of 
the Federal National Mortgage Association 
Charter Act or subsection (e) or (f) of section 
307 of the Federal Home Loan Mortgage Cor-
poration Act, as applicable.’’; 
(3) in subsection (c), by inserting ‘‘date of the’’ 
before ‘‘service of the order’’; and 
(4) by striking subsection (d). 
(b) AUTHORITY OF DIRECTOR TO ENFORCE NOTICES 
AND ORDERS.—Section 1344 of the Housing and Commu-
nity Development Act of 1992 (12 U.S.C. 4584) is amend-
ed 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-
156
quarters 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 re-
quire compliance with such notice or order.’’. 
(c) CIVIL MONEY PENALTIES.—Section 1345 of the 
Housing and Community Development Act of 1992 (12 
U.S.C. 4585) is amended—
(1) by striking subsections (a) and (b) and in-
serting the following new subsections: 
‘‘(a) AUTHORITY.—The Director may impose a civil 
money penalty, in accordance with the provisions of this 
section, on any enterprise that has failed to—
‘‘(1) meet any housing goal established under 
subpart B, following a written notice and determina-
tion of such failure in accordance with section 
1336(b); 
‘‘(2) submit a report under section 1314, fol-
lowing a notice of such failure, an opportunity for 
comment by the enterprise, and a final determina-
tion by the Director; 
‘‘(3) submit the information required under 
subsection (m) or (n) of section 309 of the Federal 
National Mortgage Association Charter Act, or sub-
157
section (e) or (f) of section 307 of the Federal Home 
Loan Mortgage Corporation Act; 
‘‘(4) comply with any provision of this part or 
any order, rule or regulation under this part; 
‘‘(5) submit a housing plan pursuant to section 
1336(c) within the required period; or 
‘‘(6) comply with a housing plan for the enter-
prise under section 1336(c). 
‘‘(b) AMOUNT OF PENALTY.—The amount of the 
penalty, as determined by the Director, may not exceed—
‘‘(1) for any failure described in paragraph (1), 
(5), or (6) of subsection (a), $50,000 for each day 
that the failure occurs; and 
‘‘(2) for any failure described in paragraph (2), 
(3), or (4) of subsection (a), $20,000 for each day 
that the failure occurs.’’; 
(2) in subsection (c)—
(A) in paragraph (1)—
(i) in subparagraph (A), by inserting 
‘‘and’’ after the semicolon at the end; 
(ii) in subparagraph (B), by striking 
‘‘; and’’ and inserting a period; and 
(iii) by striking subparagraph (C); 
and
158
(B) in paragraph (2), by inserting after 
the period at the end the following: ‘‘In deter-
mining the penalty under subsection (a)(1), the 
Director shall give consideration to the length 
of time the enterprise should reasonably take to 
achieve the goal.’’; 
(3) in the first sentence of subsection (d)—
(A) by striking ‘‘request the Attorney Gen-
eral of the United States to’’ and inserting ‘‘, 
in the discretion of the Director,’’; and 
(B) by inserting ‘‘, or request that the At-
torney General of the United States bring such 
an action’’ before the period at the end; 
(4) by striking subsection (f); and 
(5) by redesignating subsection (g) as sub-
section (f). 
(d) 
ENFORCEMENT
OF
SUBPOENAS.—Section 
1348(c) of the Housing and Community Development Act 
of 1992 (12 U.S.C. 4588(c)) is amended—
(1) by striking ‘‘request the Attorney General 
of the United States to’’ and inserting ‘‘, in the dis-
cretion of the Director,’’; and 
(2) by inserting ‘‘or request that the Attorney 
General of the United States bring such an action,’’ 
after ‘‘District of Columbia,’’
159
(e) CONFORMING AMENDMENT.—The heading for 
subpart C of part 2 of subtitle A of the Housing and Com-
munity Development Act of 1992 is amended to read as 
follows: 
‘‘Subpart C—Enforcement’’. 
SEC. 131. CONFORMING AMENDMENTS. 
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—
(1) by striking ‘‘Secretary’’ each place such 
term appears in such part and inserting ‘‘Director’’; 
(2) in the section heading for section 1323 (12 
U.S.C. 4543), by inserting ‘‘OF ENTERPRISES’’ be-
fore the period at the end; 
(3) by striking section 1327 (12 U.S.C. 4547); 
(4) by striking section 1328 (12 U.S.C. 4548); 
(5) in sections 1345(c)(1)(A) and 1346(b) (12 
U.S.C. 4585(c)(1)(A), 4586(b)), by striking ‘‘Sec-
retary’s’’ each place such term appears and inserting 
‘‘Director’s’’; and 
(6) by striking section 1349 (12 U.S.C. 4589).
160
Subtitle C—Prompt Corrective 
Action 
SEC. 141. CAPITAL CLASSIFICATIONS. 
(a) IN GENERAL.—Section 1364 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4614) 
is amended—
(1) in the heading for subsection (a) by striking 
‘‘In General’’ and inserting ‘‘Enterprises’’; 
(2) in subsection (c)—
(A) by striking ‘‘subsection (b)’’ and in-
serting ‘‘subsection (c)’’; 
(B) by striking ‘‘enterprises’’ and inserting 
‘‘regulated entities’’; and 
(C) by striking the last sentence; 
(3) by redesignating subsections (c) (as so 
amended by paragraph (2) of this subsection) and 
(d) as subsections (d) and (f), respectively; 
(4) by striking subsection (b) and inserting the 
following new subsections: 
‘‘(b) FEDERAL HOME LOAN BANKS.—
‘‘(1) ESTABLISHMENT
AND
CRITERIA.—For 
purposes of this subtitle, the Director shall, by regu-
lation—