I
104TH CONGRESS
1ST SESSION
H. R. 1708
To establish the Federal Mortgage Insurance Corporation as a wholly owned
Government corporation to provide full mortgage insurance and provide
for the development of credit enhancement products for mortgages for
single family homes of low- and moderate-income homebuyers, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 24, 1995
Mr. WELLER (for himself, Mr. METCALF, Mr. BARR, Mr. FOX of Pennsylva-
nia, Mr. STOCKMAN, Mr. EHRLICH, Mr. CHRYSLER, Mr. NEY, Mr.
HEINEMAN, Mr. BONO, Mr. HAYWORTH, Mr. LOBIONDO, Mrs. KELLY,
Mr. TATE, Mr. DAVIS, Mr. GRAHAM, Mr. FOLEY, Mr. FORBES, Mr.
SALMON, Mr. ENGLISH of Pennsylvania, Mr. FRISA, Mr. BURR, Mr.
WAMP, and Mr. BRYANT of Tennessee) introduced the following bill;
which was referred to the Committee on Banking and Financial Services
A BILL
To establish the Federal Mortgage Insurance Corporation
as a wholly owned Government corporation to provide
full mortgage insurance and provide for the development
of credit enhancement products for mortgages for single
family homes of low- and moderate-income homebuyers,
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.
This Act may be cited as the ‘‘Federal Mortgage In-
surance Corporation Charter Act’’.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definitions.
TITLE I—ORGANIZATION OF CORPORATION
Sec. 101. Establishment.
Sec. 102. Purposes.
Sec. 103. General powers.
Sec. 104. Board of Directors.
Sec. 105. Officers and employees.
Sec. 106. Procurement.
Sec. 107. Financial safety and soundness.
Sec. 108. Federal credit reform procedures.
Sec. 109. Additional oversight and reporting requirements.
Sec. 110. Transition.
Sec. 111. Applicability of laws.
Sec. 112. GAO evaluation.
Sec. 113. Rule of construction.
Sec. 114. Authorization of appropriations.
TITLE II—BUSINESS OF CORPORATION
Sec. 201. Single family housing requirement.
Sec. 202. Transfer of FHA single family housing business.
Sec. 203. New lines of business.
Sec. 204. Limitations on business activity.
TITLE III—PROVISIONS RELATING TO GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION AND OFFICE OF FEDERAL HOUSING
ENTERPRISE OVERSIGHT
Sec. 301. GNMA authority.
Sec. 302. Safety and soundness oversight of Corporation by OFHEO.
TITLE IV—FHA IMPROVEMENTS
Sec. 401. Calculation of downpayment.
Sec. 402. Delegation of single family mortgage insuring authority to direct en-
dorsement mortgagees.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions
shall apply:
(1) CORPORATION.—The term ‘‘Corporation’’
means the Federal Mortgage Insurance Corporation
established under this Act.
(2) NATIVE
AMERICAN
GOVERNMENT.—The
term ‘‘Native American government’’ means the gov-
ernment of any Indian or Alaska native tribe, band,
nation, pueblo, village or community that the Sec-
retary of the Interior acknowledges to exist as an In-
dian tribe, pursuant to the Federally Recognized In-
dian Tribe List Act of 1994.
(3) SINGLE FAMILY HOUSING.—The term ‘‘sin-
gle family housing’’ means a property on which there
is located a 1- to 4-family residence.
(4) 
UNITED
STATES.—The 
term 
‘‘United
States’’ includes the States, the District of Colum-
bia, the Commonwealth of Puerto Rico, the Com-
monwealth of the Northern Mariana Islands, Guam,
the Virgin Islands, American Samoa, and Native
American governments.
TITLE I—ORGANIZATION OF
CORPORATION
SEC. 101. ESTABLISHMENT.
(a) IN GENERAL.—There is hereby established a
body corporate to be known as the Federal Mortgage In-
surance Corporation, which shall have succession until dis-
solved by Act of Congress.
(b) GOVERNMENT CORPORATION.—The Corporation
shall be established as a wholly owned Government cor-
poration subject to chapter 91 of title 31, United States
Code (commonly referred to as the Government Corpora-
tion Control Act), except as otherwise provided in this Act.
(c) FEDERAL AGENCY.—
(1) IN GENERAL.—The Corporation shall be an
agency of the United States, except that the Cor-
poration shall not be considered an agency for pur-
poses of holding, managing, and disposing of assets
acquired by the Corporation under the provisions of
this subtitle or subtitle B.
(2) PROPERTY DISPOSITION AUTHORITY.—For
purposes of this subsection, the term ‘‘holding, man-
aging, and disposing of assets’’ includes the powers
to—
(A) deal with, complete, reconstruct, rent,
renovate, modernize, insure, make contracts for
the management of, establish suitable agencies
for the management of, or exercise discretion to
sell for cash or credit or lease, any acquired
property;
(B) pursue collection by way of com-
promise or otherwise all assigned and trans-
ferred claims; and
(C) at any time, upon default, foreclose on
any property secured by any assigned or trans-
ferred mortgage.
(d) SELF-SUPPORTING ENTITY.—The Corporation
shall operate and conduct its business as a self-supporting
entity.
(e) CORPORATE OFFICES
AND RESIDENCY.—The
Corporation shall maintain its principal office in the Dis-
trict of Columbia and shall be deemed, for purposes of
venue in civil actions, to be a resident of the District of
Columbia. The Corporation may establish other officers in
such other places as the Corporation considers appropriate
in the conduct of its business.
(f) TAX STATUS.—The Corporation, including its
franchise, activities, income, and assets, shall be exempt
from all taxation now or hereafter imposed by any taxing
authority in the United States, except that any real prop-
erty of the Corporation (other than real property that the
Corporation uses as an office) shall be subject to taxation
to the same extent according to its value as any taxing
authority taxes other real property.
(g) PROTECTION OF NAME.—No person, except the
body corporate established under this section shall, after
the date of the enactment of this Act, use the words ‘‘Fed-
eral Mortgage Insurance Corporation’’ or the initials
‘‘FMIC’’ as the name or part thereof under which such
person shall do business. Violations of the preceding sen-
tence may be enjoined by any court of general jurisdiction
at the suit of the Corporation. In any such suit, the Cor-
poration may recover any actual damages flowing from
such violation, and, in addition, shall be entitled to puni-
tive damages (regardless of the existence or nonexistence
of actual damages) of not more than $100 for each day
during which such violation is committed or repeated.
SEC. 102. PURPOSES.
The Corporation is established for the following pur-
poses:
(1) To expand the opportunities in the United
States for single family homeownership through the
provision of full mortgage insurance and credit en-
hancement products and related activities.
(2) To address the unmet single family housing
credit needs of families and communities in the
United States.
(3) To engage in research, development, and
testing of new products designed to make housing
credit available to underserved markets.
(4) To deliver full mortgage insurance and
credit enhancement products, and provide other
services, for single family housing in a nondiscrim-
inatory manner, and to administer its business in a
manner which affirmatively furthers fair housing.
(5) To promote liquidity and provide stability to
the single family housing finance market, by con-
tinuing to provide full mortgage insurance and credit
enhancement products on a sound basis during times
of regional and national economic downturn.
(6) To expand access to decent and affordable
single family housing and to deliver housing credit
to families and communities in the United States.
SEC. 103. GENERAL POWERS.
To further the purposes of this Act, in accordance
with chapter 91 of title 31 of the United States Code (re-
lating to government corporations), the Corporation—
(1) may adopt, amend, and repeal bylaws, and
other written administrative guidance;
(2) may adopt, alter, and use a corporate seal,
which shall be judicially noted;
(3) may enhance and make commitments to en-
hance credit to the extent authorized under this Act,
including commitments to insure, reinsure, advance,
and incur liabilities, to the extent provided in title
II;
(4) may acquire, hold, use, improve, deal in, or
dispose of, by any means, any interests in any real
property or any personal property;
(5) may execute contracts, make grants, and
make other agreements in its own name, with any
agency, public or private entity, or person, and carry
out any lawful requirement of such contracts,
grants, or other agreements;
(6) may take any actions (including the restruc-
turing of debt) that Corporation determines are nec-
essary to manage the Corporation’s portfolio of
property, assets, and obligations;
(7) may, to the extent authorized under this
Act—
(A) create and supply any product or serv-
ice consistent with its corporate purposes;
(B) collect, generate, and make available
any information relevant to the provision of sin-
gle family housing credit; and
(C) assess fees and charges for such prod-
ucts, information, and services in an amount, as
determined by the Corporation, that does not
exceed their value in the market and that per-
mits the Corporation to recover its fully allo-
cated long-term costs and maintain the level of
capital determined by the Corporation to be
necessary and sufficient to carry out the public
purposes of the Corporation;
(8) may insulate any product, line, or service
from any other, by creating distinct insurance funds
or other devices to segregate or permit limitations on
liability for business activities or accounts;
(9) may qualify any person or entity to engage
in business with the Corporation and enforce and
impose penalties for the breach of any duties, obliga-
tions, and other commitments made by such persons
or entities;
(10) shall take actions necessary to administer
its business in a manner which is nondiscriminatory
and which affirmatively furthers fair housing;
(11) may use the services or obtain the goods
of any Federal agency, including the Department of
Housing and Urban Development, under working or
cooperation agreements or contracts with such agen-
cies and make or receive payment for the cost of
such activities;
(12) shall have the power, in its corporate
name, to sue and be sued, and to complain and de-
fend, in any court of competent jurisdiction, State or
Federal, but no attachment, garnishment, injunc-
tion, or other similar process, mesne or final, shall
be issued against the property of the Corporation or
against the Corporation with respect to its property,
and the Corporation shall not be liable for interest
prior to judgment, for punitive or exemplary dam-
ages, for penalties, or for claims based upon unjust
enrichment, quasi-contract, or contracts implied-in-
law, nor shall the Corporation be subject to trial by
jury;
(13) notwithstanding any other provision of
law—
(A) shall be an agency of the Federal Gov-
ernment, and the officers and employees of the
Corporation shall be officers and employees of
the Federal Government, for purposes of part
IV of title 28, United States Code;
(B) shall have all civil actions to which the
Corporation is a party deemed to arise under
the laws of the United States; and
(C) may, at any time before trial and with-
out bond or security, remove any civil or crimi-
nal action or proceeding in a State court to
which the Corporation is a party to the United
States district court for the District of Colum-
bia or to the United States district court with
jurisdiction over the place where the civil action
or proceeding is pending, by following any pro-
cedure for removal of actions in effect at the
time of such removal;
(14) may—
(A) accept and use voluntary and uncom-
pensated services and accept, hold, administer,
and use gifts and bequests of property, both
real and personal, for the purpose of aiding or
facilitating the work of the Corporation; and
(B) hold gifts and bequests of money and
the proceeds from sales of other property re-
ceived as gifts or bequests in a separate ac-
count, and such amounts shall be disbursed as
determined by the Corporation:
except that property accepted pursuant to this para-
graph, and the proceeds thereof, shall be used as
nearly as possible in accordance with the terms of
the gift or bequest and, for the purpose of Federal
income, estate, and gift taxes, property accepted
under this paragraph shall be considered as a gift or
bequest to or for the use of the United States;
(15) shall have any transaction in which it par-
ticipates be exempt from the terms of any State or
other law or prohibition against payment of usurious
interest;
(16) may act as a fiduciary in connection with
any of its undertakings;
(17) may foreclose any single family housing
mortgages held by the Corporation pursuant to the
same procedures applicable to the Secretary under
the Single Family Mortgage Foreclosure Act of
1994;
(18) shall have the priority of the United States
with respect to the payment of debts out of bank-
rupt, insolvent, and decedents’ estates;
(19) may invest in systems, technology, or other
capital resources, to enhance its ability to carry out
the purposes of this Act; and
(20) shall have and exercise all powers nec-
essary or appropriate to effect any purposes of this
Act, including the power to carry out any authority
transferred to the Corporation under this Act.
SEC. 104. BOARD OF DIRECTORS.
(a) IN GENERAL.—The powers of the Corporation
shall be vested in the Board of Directors of the Corpora-
tion.
(b) APPOINTMENT.—The Board of Directors shall
consist of 9 individuals appointed by the President by and
with the advise and consent of the Senate. The President
shall designate a chairperson of the Board from among
members of the Board.
(c) QUALIFICATIONS.—Members of the Board of Di-
rectors shall be citizens of the United States. The Board
of Directors shall at all times include as members not less
than—
(1) 1 individual from the mortgage finance in-
dustry;
(2) 1 individual from the home building indus-
try;
(3) 1 individual with knowledge and experience
regarding secondary mortgage market activities;
(4) 1 individual with knowledge and experience
regarding home sales;
(5) 1 individual with knowledge and experience
regarding single family housing asset management;
(6) 1 individual from a State or local housing
agency engaged in single family housing activities;
(7) 1 individual who represents consumer or
community interests in single family housing; and
(8) 1 individual who represents or resides in an
urban or rural neighborhood whose population con-
sists predominantly of members of minorities.
(d) TERMS.—
(1) IN GENERAL.—Each member of the Board
of Directors shall be appointed for a term of 6 years,
except as provided in paragraphs (2) and (3).
(2) TERMS OF INITIAL APPOINTEES.—As des-
ignated by the President at the time of appointment,
of the members first appointed—
(A) 3 shall be appointed for terms of 2
years; and
(B) 3 shall be appointed for terms of 4
years.
(3) VACANCIES.—Any member appointed to fill
a vacancy occurring before the expiration of the
term for which the member’s predecessor was ap-
pointed shall be appointed only for the remainder of
that term. A member may serve after the expiration
of that member’s term until a successor has taken
office. A vacancy in the Board shall be filled in the
manner in which the original appointment was
made.
(e) MEETINGS AND QUORUM.—The Board of Direc-
tors shall meet at any time pursuant to the call of the
Chairperson or a majority of its members and as provided
by the bylaws of the Corporation, but not less than quar-
terly. 5 members of the Board shall constitute a quorum.
(f) POWERS.—The Board of Directors shall be re-
sponsible for the general management of the Corporation
and shall have the same authority, privileges, and respon-
sibilities as the board of directors of a private corporation
incorporated under the District of Columbia Business Cor-
poration Act.
(g) COMPENSATION.—Members of the Board of Di-
rectors shall serve on a part-time basis and shall serve
without pay.
(h) TRAVEL EXPENSES.—Each member shall receive
travel expenses, including per diem in lieu of subsistence,
in accordance with sections 5702 and 5703 of title 5,
United States Code.
SEC. 105. OFFICERS AND EMPLOYEES.
(a) APPOINTMENT OF OFFICERS.—The Board of Di-
rectors of the Corporation shall appoint a president and
vice president of the Corporation, and such other officers
as are provided for in the bylaws of the Corporation.
(b) APPOINTMENT OF EMPLOYEES.—The Board of
Directors shall appoint such other employees of the Cor-
poration as the Board considers necessary for the trans-
action of its business.
(c) COMPENSATION, DUTIES, AND REMOVAL.—
(1) IN GENERAL.—The Board of Directors shall
fix the compensation of all officers and employees of
the Corporation, define their duties, and provide a
system of management and organization to fix re-
sponsibility and promote efficiency.
(2) CONSIDERATIONS
IN
FIXING
COMPENSA-
TION.—No officer or employee of the Corporation
may receive pay in excess of the annual rate of basic
pay payable for level III of the Executive Schedule.
(d) PRINCIPLES GOVERNING PERSONNEL MANAGE-
MENT.—The Board shall ensure that the system of organi-
zation, compensation, and management for personnel is
consistent with the principles under section 2301(b) of
title 5, United States Code (regarding merit system prin-
ciples).
(e) APPLICABILITY
OF CERTAIN CIVIL SERVICE
LAWS.—The officers and employees of the Corporation
shall be appointed without regard to the provisions of title
5, United States Code, governing appointments in the
competitive service, and may be paid without regard to
the provisions of chapter 51 and subchapter III of chapter
53 of that title relating to classification and General
Schedule pay rates.
(f) USE OF FEDERAL AGENCIES.—In carrying out its
purposes, the Corporation may use information, services,
staff, and facilities of any executive agency, independent
agency, or department (including the Department of
Housing and Urban Development), with the consent of the
agency or department, and shall reimburse the agency or
department for the cost of such information, services,
staff, and facilities.
(g) INDEMNIFICATION.—The Corporation may pro-
vide for the indemnification of any officer, employee, con-
tractor, or agent of the Corporation on such terms as the
Corporation determines proper, except that, to the extent
that the Corporation self-insures for any indemnifica-
tion—
(1) the aggregate maximum amount of all in-
demnifications outstanding at any time shall not ex-
ceed 5 percent of the required capital level deter-
mined under section 1386 of the Federal Housing
Enterprises Financial Safety and Soundness Act of
1992 by the Director of the Office of Federal Hous-
ing Enterprise Oversight; and
(2) no more than $1,000,000 may be paid as
an indemnity for any single event.
SEC. 106. PROCUREMENT.
(a) IN GENERAL.—The Board shall establish an eco-
nomical and results-oriented system for procurement, sup-
ply, and disposition by the Corporation of personal prop-
erty and nonpersonal services, which shall include per-
formance measures and standards for determining the ex-
tent to which the Corporation’s procurement of property
and services satisfies the objective for which the procure-
ment was undertaken. The system shall be consistent with
the principles of impartiality and competitiveness.
(b) CONSIDERATION
OF FEDERAL PROCUREMENT
SYSTEM.—In establishing the system for procurement,
supply, and disposition under this subsection, the Board
shall take into consideration—
(1) the requirements under the Federal Prop-
erty and Administrative Services Act of 1949 and
the appropriateness or inappropriateness of adopting
identical or similar procedures for the Corporation;
and
(2) the experience of the Department of Hous-
ing and Urban Development in complying with such
Act in procurement, supply, and disposition activities
relating to the single family mortgage insurance pro-
gram under the National Housing Act.
(c) EXEMPTION FROM FEDERAL PROPERTY AND AD-
MINISTRATIVE
SERVICE
ACT
PROVISIONS.—Section
602(d) of the Federal Property and Administrative Serv-
ices Act of 1949 (40 U.S.C. 474) is amended—
(1) in paragraph (20), by striking ‘‘and’’ at the
end;
(2) in paragraph (21), by striking the period at
the end and inserting ‘‘; and’’; and
(3) by adding at the end the following new
paragraph:
‘‘(22) The Federal Mortgage Insurance Cor-
poration.’’.
(d) EXEMPTION FROM PROCUREMENT PROTEST
SYSTEM.—Subchapter V of chapter 35 of title 31, United
States Code, relating to the procurement protest system,
shall not apply to the Corporation.
SEC. 107. FINANCIAL SAFETY AND SOUNDNESS.
The Director of the Office of Federal Housing Enter-
prise Oversight shall oversee the financial safety and
soundness of the Corporation, pursuant to subtitle E of
the Federal Housing Enterprise Financial Safety and
Soundness Act of 1992.
SEC. 108. FEDERAL CREDIT REFORM PROCEDURES.
(a) SUBMISSION OF BUDGET AND BUSINESS PLAN
TO OFHEO.—In each year, the Corporation shall submit
its annual budget and business plan to the Director of the
Office of Federal Housing Enterprise Oversight by a date
Soundness Act of 1992 and to fulfill the purposes of
this Act.
SEC. 
109. 
ADDITIONAL 
OVERSIGHT 
AND 
REPORTING
REQUIREMENTS.
(a) INSPECTOR GENERAL.—For purposes of the In-
spector General Act of 1978 and chapter 91 of title 31,
United States Code, the Inspector General of the Depart-
ment of Housing and Urban Development shall perform
the functions of Inspector General for the Corporation.
(b) ANNUAL BUSINESS PLAN.—The Corporation
shall establish a business plan on an annual basis and
shall make such plan available for review by the Congress
and the President. Such plan shall specify the product and
operational strategy of the Corporation, including plans
to address compliance with the safety and soundness re-
quirements applicable to the Corporation.
SEC. 110. TRANSITION.
(a) TRANSITION DATE AND TRANSITION PERIOD.—
For purposes of this Act, the following definitions shall
apply:
(1) TRANSITION DATE.—The term ‘‘transition
date’’ means the latter of the following 2 dates:
(A) EARLIEST DATE.—January 1, 1997.
(B) REQUIRED ACTIONS.—The first date
by which all of the following have occurred:
(i) The Corporation has submitted an
initial annual budget and business plan to
the Congress and the President that have
been approved by the President.
(ii) The Director of the Office of Fed-
eral Housing Enterprise Oversight has cer-
tified to the Congress and the President
that the Director has developed an interim
model under section 1386(a)(2) of the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 that is
sufficient for the Director’s purposes.
(iii) The Director of the Office of
Management and Budget has certified to
the Congress and the President that the
application of such interim model is con-
sistent with the Federal Credit Reform Act
of 1990.
(iv) The Director of the Office of
Management and Budget determines that
the staff, systems, and administrative in-
frastructure of the Corporation are suffi-
cient to permit the Corporation to fully
conduct the operation of its business.
(2) TRANSITION
PERIOD.—The term ‘‘transi-
tion period’’ means the period beginning upon the
organization of the Corporation under this Act and
ending upon the transition date.
(b) AUTHORITY DURING TRANSITION PERIOD.—
During the transition period—
(1) the Secretary of Housing and Urban Devel-
opment shall, in consultation with the Corporation
and the Director of the Office of Management and
Budget, transfer to the Corporation such powers and
responsibilities of the Secretary to carry out the sin-
gle family mortgage insurance programs under the
National Housing Act, at such times as are appro-
priate for the Corporation to assume such powers
and responsibilities;
(2) the Corporation may carry out any power or
responsibility that the Secretary of Housing and
Urban Development transfers to the Corporation
consistent with paragraph (1) and section 202, using
the staff, systems, and administrative infrastructure
that the Corporation engages or acquires during the
transition period, or the personnel and other re-
sources of the Secretary;
(3) the Corporation may incur any obligation
consistent with—
(A) the carrying out of a delegated power
or responsibility; or
(B) the acquisition, engagement, or devel-
opment of staff, systems (including technology
to enhance its ability to engage in the business
of the Corporation authorized by the Act), and
administrative structure; and
(4) the Corporation may engage in any other
activity or undertake any responsibility (not includ-
ing any authority under section 203) that the Board
of Directors determines to be consistent with the
start-up of the Corporation and the authority of the
Corporation under this Act.
SEC. 111. APPLICABILITY OF LAWS.
(a) GOVERNMENT CORPORATION CONTROL ACT.—
Section 9101(3) of title 31, United States Code, is amend-
ed by adding at the end the following new subparagraph:
‘‘(P) the Federal Mortgage Insurance Cor-
poration.’’
(b) TAX EXEMPT STATUS OF CORPORATION.—Sec-
tion 501(l) of the Internal Revenue Code of 1986 (26
U.S.C. 501(l)) is amended by adding at the end the follow-
ing new paragraph:
‘‘(4) The Federal Mortgage Insurance Corpora-
tion established under the Federal Mortgage Insur-
ance Corporation Charter Act.’’.
(c) NOTICE
AND
COMMENT
RULEMAKING.—Any
matter relating to mortgage insurance, credit enhance-
ment, or other business activities of the Corporation au-
thorized under this Act shall be considered a matter relat-
ing to agency management or personnel or to public prop-
erty, loans, grants, benefits, or contracts, for purposes of
section 553(a) of title 5, United States Code.
(d) CONFORMING AMENDMENT RELATING TO USURY
EXEMPTION FOR VETERANS LOANS.—Section 3728 of
title 38, United States Code, is amended by inserting after
‘‘National Housing Act’’ the following: ‘‘, or are credit-
enhanced under the Federal Mortgage Insurance Corpora-
tion Charter Act,’’.
SEC. 112. GAO EVALUATION.
(a) IN GENERAL.—The Comptroller General of the
United States shall conduct a study and submit a report
to the President and the Congress on—
(1) whether this Act provides sufficient author-
ity to permit the Corporation to accomplish its pub-
lic purposes efficiently and effectively, and in a safe
and sound manner;
(2) the impact of the limitations on business ac-
tivities as to mortgage amounts and aggregate com-
mitments, and any other statutory limitations, on
the current and anticipated business activity of the
Corporation; and
(3) whether the safety and soundness and other
requirements under this Act and the Federal Hous-
ing Enterprises Financial Safety and Soundness Act
of 1992 appropriately provide that the Corporation
will be operated in a safe and sound manner and will
fulfill the public purposes of its establishment.
(b) TIMING.—The report required by this section
shall be submitted on the third January 1st occurring
after the conclusion of the transition period.
SEC. 113. RULE OF CONSTRUCTION.
Notwithstanding any other evidence of the intent of
Congress, it is hereby declared to be the intent of Congress
that the provisions of this Act shall be construed broadly
to achieve the purposes of the Act, and the provisions of
any other Act that must be construed with any provision
of this Act shall similarly be construed to achieve the pur-
poses of this Act to the extent reasonably possible.
SEC. 114. AUTHORIZATION OF APPROPRIATIONS.
(a) ANNUAL
AVAILABILITY
OF
NEGATIVE
SUB-
SIDY.—There is authorized to be appropriated, in each fis-
cal year, for conducting operations of the Corporation, an
amount not exceeding the amount of any net income from
the operations of the Corporation. Such sums shall remain
available until expended.
(b) FUNDING OF CLAIMS.— Amounts credited to the
financing account of the Corporation, established pursu-
ant to title V of the Congressional Budget Act of 1974,
shall be permanently and indefinitely available for pay-
ment of any claim that the Corporation approves under
a contract of insurance or other credit enhancement in-
strument under this Act. To the extent that such amounts
are insufficient for such purpose, the Federal Mortgage
Insurance Corporation may borrow from the Treasury
pursuant to title V of the Congressional Budget Act of
1974.
TITLE II—BUSINESS OF
CORPORATION
SEC. 201. SINGLE FAMILY HOUSING REQUIREMENT.
The Corporation may provide mortgage insurance or
credit enhancement only with respect to credit extended
for property that—
(1) is a 1- to 4-family residence; and
(2) is located in the United States.
SEC. 202. TRANSFER OF FHA SINGLE FAMILY HOUSING
BUSINESS.
(a) IN GENERAL.—After the transition date under
section 110—
(1) the Corporation shall carry out a program
to insure mortgages on 1- to 4-family dwellings,
which shall be subject to the same limitations under
the National Housing Act (as amended by title IV
of this Act) that are applicable to the mortgage in-
surance program for 1- to 4-family dwellings carried
out by the Secretary of Housing and Urban Devel-
opment;
(2) the Corporation may exercise any authority
and undertake any responsibility of the Secretary of
Housing and Urban Development under the Na-
tional Housing Act relating to providing mortgage
insurance described in paragraph (1) of this sub-
section, except that any authority that requires an
appropriation may be conducted only to the extent
that amounts are so appropriated; and
(3) the Corporation shall manage any assets
and obligations transferred under subsection (b)
subject to the same limitations applicable to the Sec-
retary of Housing and Urban Development under
the National Housing Act (as amended by title IV
of this Act).
(b) TRANSFER OF ASSETS AND OBLIGATIONS.—The
Secretary of Housing and Urban Development, in con-
sultation with the Secretary of the Treasury, shall, to the
extent approved in appropriation Acts, transfer to the Cor-
poration, on or before the transition date, all assets and
obligations of the Secretary of Housing and Urban Devel-
opment relating to the program for mortgage insurance
for 1- to 4-family dwellings, including all assets and obli-
gations of the Mutual Mortgage Insurance Fund under
section 202 of the National Housing Act and all assets
and obligations of the General Insurance Fund and Spe-
cial Risk Insurance Fund under sections 519 and 238(b),
respectively, of such Act relating to mortgage insurance
for such dwellings.
(c) CONTINUATION OF CONTRACTS.—This Act may
not be construed to affect the validity of any right, duty,
or obligation of the United States or other person arising
under or pursuant to any commitment or agreement law-
fully entered into under the National Housing Act before
the enactment of this Act. The provisions of this Act and
the National Housing Act shall continue to apply to any
such obligations to the same extent such provisions were
applicable before such enactment, except only that any ob-
ligation of the Secretary of Housing and Urban Develop-
ment transferred to the Corporation pursuant to sub-
section (b) shall be an obligation of the Corporation to
the same extent as if the Corporation had originally exe-
cuted such obligation.
(d) TERMINATION OF HUD MORTGAGE INSURANCE
AUTHORITY.—Notwithstanding any other provision of
law, after the transition date the Secretary of Housing and
Urban Development may not provide any insurance, or
make any commitment to insure, any mortgage for a 1-
to 4-family dwelling, pursuant to title II of the National
Housing Act.
SEC. 203. NEW LINES OF BUSINESS.
(a) AUTHORITY.—After the transition date, the Cor-
poration may, subject to the requirements of this section
and section 204—
(1) provide full mortgage insurance for mort-
gages involving 1- to 4-family dwellings that is not
subject to the limitations under the National Hous-
ing Act; and
(2) engage in any other method of enhancing
credit for mortgages involving 1- to 4-family dwell-
ings.
(b) FULL INSURANCE.—In insuring or providing
credit enhancement pursuant to this section for any mort-
gage, the Corporation—
(1) may provide such insurance or enhancement
only with respect to the full mortgage amount; and
(2) may not provide such insurance or enhance-
ment in any manner under which the Corporation
and any other agency, organization, or person agree
to each insure or enhance a portion of the mortgage
amount or to bear a particular portion of the loss
under such insurance or enhancement.
(c) APPROVAL.—The Corporation may not engage in
any activity under subsection (a) unless—
(1) such activity is within the authority pro-
vided under this Act for the Corporation and is spe-
cifically approved, as to the nature of the activity
and the scope of such activity, by a majority vote of
the Board of Directors; and
(2) the Director of the Office of Federal Hous-
ing Enterprise Oversight has specifically determined,
and notified the Board of Directors in writing, that
engaging in such activity will not cause the Corpora-
tion to violate the requirement under section 101(d)
and such activity is not likely to result in the Cor-
poration being classified as undercapitalized or sig-
nificantly undercapitalized, pursuant to section 1386
of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992.
SEC. 204. LIMITATIONS ON BUSINESS ACTIVITY.
The Corporation shall be subject to the following limi-
tations on business activity:
(1) MORTGAGE AMOUNT LIMITATION.—
(A) IN GENERAL.—To be eligible for mort-
gage insurance or other credit enhancement
under this Act, a mortgage shall involve a prin-
cipal obligation in an amount that does not ex-
ceed the lesser of—
(i) in the case of a 1-family residence,
95 percent of the median 1-family house
price in the area, as determined by the
Corporation; in the case of a 2-family resi-
dence, 107 percent of such median price;
in the case of a 3-family residence, 130
percent of such median price; or in the
case of a 4-family residence, 150 percent
of such median price; or
(ii) in the case of a residence for
fewer than five families, 75 percent of the
dollar amount limitation determined under
section 305(a)(2) of the Federal Home
Loan Mortgage Corporation Act for a resi-
dence of the applicable size.
(B) MINIMUM
AREA
LIMITATION.—Not-
withstanding subparagraph (A), the principal
obligation limitation in effect for any area
under this paragraph may not be less than the
greater of (i) the dollar amount limitation in ef-
fect under section 203(b)(2) of the National
Housing Act for the area on September 28,
1994, or (ii) 38 percent of the dollar amount
limitation determined under section 305(a)(2)
of the Federal Home Loan Mortgage Corpora-
tion Act for a residence of the applicable size.
(C) APPLICABILITY OF EXCEPTIONS.—Any
exceptions to the limit on principal obligations
set forth in section 203(b)(2)(A) of the Na-
tional Housing Act, as such section and such
exceptions exist as of the date of the enactment
of this Act, shall apply to the limitations set
forth in subparagraphs (A) and (B) of this
paragraph.
(2) AGGREGATE MORTGAGE AMOUNT OF NEW
BUSINESS.—The aggregate principal amount of
mortgages that, during any fiscal year, are insured
or provided other credit enhancement by the Cor-
poration pursuant to authority under section 203
may not exceed 15 percent of the aggregate prin-
cipal amount of all mortgages insured or provided
other credit enhancement by the Corporation during
such fiscal year.
(3) AGGREGATE NEW MORTGAGE COMMITMENT
LIMITATION.—The Corporation may not, during the
5-year period beginning upon the transition period,
enter into commitments to insure mortgages or pro-
vide other credit enhancement for mortgages with an
aggregate 
principal 
amount 
that 
exceeds
$520,000,000,000.
TITLE III—PROVISIONS RELAT-
ING 
TO 
GOVERNMENT 
NA-
TIONAL MORTGAGE ASSOCIA-
TION AND OFFICE OF FED-
ERAL HOUSING ENTERPRISE
OVERSIGHT
SEC. 301. GNMA AUTHORITY.
Title III of the National Housing Act (12 U.S.C.
1716 et seq.) is amended—
(1) in section 301(5), by inserting after ‘‘feder-
ally owned mortgage portfolios’’ the following: ‘‘(in-
cluding any owned by the Federal Mortgage Insur-
ance Corporation)’’;
(2) in the first sentence of section 306(g)(1)—
(A) by inserting ‘‘the Association, or by’’
after ‘‘shall (i) be issued by’’; and
(B) by striking ‘‘which are insured under
the National Housing Act’’ and all that follows
through the period and inserting ‘‘which are
guaranteed or insured under the National
Housing Act, the Federal Mortgage Insurance
Corporation Charter Act, title V of the Housing
Act of 1949, the Servicemen’s Readjustment
Act of 1944, or chapter 37 of title 38, United
States Code.’’; and
(3) in section 306(g)(3)(A)(i), by inserting after
‘‘National Housing Act’’ the following: ‘‘or the Fed-
eral Mortgage Insurance Corporation Charter Act’’.
SEC. 302. SAFETY AND SOUNDNESS OVERSIGHT OF COR-
PORATION BY OFHEO.
(a) IN GENERAL.—Title XIII of the Housing and
Community Development Act of 1992 (Public Law 102–
550; 106 Stat. 4009) is amended—
(1) by redesignating subtitle E as subtitle F;
and
(2) by inserting after subtitle D the following
new subtitle:
‘‘SUBTITLE 
E—SUPERVISION
AND REGULATION OF FED-
ERAL MORTGAGE INSURANCE
CORPORATION
‘‘SEC. 1384. AUTHORITY OF DIRECTOR.
‘‘(a) IN GENERAL.—The Director of the Office of
Federal Housing Enterprise Oversight shall supervise and
regulate the safety and soundness of the Federal Mortgage
Insurance Corporation (in this subtitle referred to as the
‘Corporation’).
‘‘(b) AUTHORITY EXCLUSIVE OF SECRETARY.—The
Director is authorized, without the review or approval of
the Secretary of Housing and Urban Development, to
make such determinations, take such actions, and perform
such functions as the Director determines necessary to
meet the responsibilities of the Director under this sub-
title.
‘‘(c) REVIEW
OF NEW BUSINESS
OF CORPORA-
TION.—The Director shall review any proposed new busi-
ness activity of the Corporation authorized under section
203(c) of the Federal Mortgage Insurance Corporation
Charter Act by the Board of Directors of the Corporation
to determine whether such activity will cause the Corpora-
tion to violate the requirement under section 101(d) of
such Act or is likely to result in the Corporation being
classified 
as 
undercapitalized 
or 
significantly
undercapitalized, pursuant to section 1386 of this Act.
The Director shall submit written notice of the results of
any such determination to the Board of Directors.
‘‘SEC. 1385. EXAMINATIONS, REPORTS, AND COST ESTI-
MATES.
‘‘(a) EXAMINATIONS.—The Director shall conduct
such examinations of the Corporation as the Director de-
termines necessary to evaluate the safety and soundness
of the Corporation. Such examinations shall be subject to
and governed by subsections (c) through (f) of section
1317.
‘‘(b) REPORTS.—The Director may require the Cor-
poration to submit, within a reasonable period of time, any
regular or special report, data, or other information when-
ever, in the judgment of the Director, such report, data,
or information is necessary to carry out the Director’s re-
sponsibilities under this subtitle and the Federal Mortgage
Insurance Corporation Charter Act.
‘‘(c) CREDIT SUBSIDY COST ESTIMATES.—
‘‘(1) IN GENERAL.—The Director shall produce
and submit to the Director of the Office of Manage-
ment and Budget the annual credit subsidy cost esti-
mates for the Corporation required for the Presi-
dent’s budget. Such estimates shall be consistent
with the estimates of performance generated by the
risk-based capital model or the interim model, as ap-
propriate, developed in accordance with section
1386(a), and with the President’s economic forecast.
‘‘(2) UNIFIED ESTIMATES.—The annual credit
subsidy cost estimates produced under this sub-
section by the Director shall be reported on a unified
basis, which shall be based upon the Corporation’s
business as a whole.
‘‘(d) ANNUAL REPORT
ON SAFETY
AND SOUND-
NESS.—The Director shall submit an annual report to
Congress and the Director of the Office of Management
and Budget on the Corporation’s financial safety and
soundness, as measured pursuant to this subtitle.
‘‘SEC. 1386. CAPITAL REQUIREMENTS.
‘‘(a) REQUIRED CAPITAL LEVEL.—
‘‘(1) STRESS TEST.—
‘‘(A) IN GENERAL.—The Director shall de-
velop a risk-based capital model to determine
the amount of capital that is sufficient for the
Corporation to maintain positive capital during
a stressful period. The model shall incorporate
the assumptions under subparagraphs (B) and
(C). The required capital level for the Corpora-
tion shall be equal to twice the amount of cap-
ital so determined.
‘‘(B) CREDIT RISK.—For purposes of sub-
paragraph (A), the Director shall assume that,
during the stressful period referred to in sub-
paragraph (A), credit losses occur at a rate con-
sistent with a nationwide economic recession of
average severity based on nationwide economic
recessions since 1950.
‘‘(C) OTHER RISKS.—For purposes of sub-
paragraph (A), the Director shall make as-
sumptions about such other aspects of the
stressful period as the Director determines are
appropriate and consistent.
‘‘(2) INTERIM REQUIREMENTS.—Until the Di-
rector has established a risk-based capital test as de-
scribed in paragraph (1), the Director may establish
a required capital level for the Corporation based on
consideration of such factors as the Director consid-
ers appropriate.
‘‘(3) CAPITAL CLASSIFICATION.—
‘‘(A) 
ADEQUATELY
CAPITALIZED.—The
Corporation shall be classified as adequately
capitalized if the capital of the Corporation
equals or exceeds the required capital level.