I 
110TH CONGRESS 
1ST SESSION H. R. 1427 
To reform the regulation of certain housing-related Government-sponsored 
enterprises, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 9, 2007 
Mr. FRANK of Massachusetts (for himself, Mr. WATT, Mr. BAKER, and Mr. 
GARY G. MILLER of California) 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 
‘‘Federal Housing Finance Reform Act of 2007’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title and table of contents. 
Sec. 2. Definitions. 
TITLE I—REFORM OF REGULATION OF ENTERPRISES AND 
FEDERAL HOME LOAN BANKS 
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Subtitle A—Improvement of Safety and Soundness 
Sec. 101. Establishment of the Federal Housing Finance Agency. 
Sec. 102. Duties and authorities of Director. 
Sec. 103. Federal Housing Enterprise Board. 
Sec. 104. Authority to require reports by regulated entities. 
Sec. 105. Disclosure of charitable contributions by Enterprises. 
Sec. 106. Assessments. 
Sec. 107. Examiners and accountants. 
Sec. 108. Prohibition and withholding of executive compensation. 
Sec. 109. Reviews of regulated entities. 
Sec. 110. Regulations and orders. 
Sec. 111. Risk-Based capital requirements. 
Sec. 112. Minimum and critical capital levels. 
Sec. 113. Review of and authority over enterprise assets and liabilities. 
Sec. 114. Corporate governance of enterprises. 
Sec. 115. Required registration under Securities Exchange Act of 1934. 
Sec. 116. Financial Institutions Examination Council. 
Sec. 117. Guarantee fee study. 
Sec. 118. Conforming amendments. 
Subtitle B—Improvement of Mission Supervision 
Sec. 121. Transfer of product approval and housing goal oversight. 
Sec. 122. Review of enterprise products. 
Sec. 123. Conforming loan limits. 
Sec. 124. Annual housing report regarding regulated entities. 
Sec. 125. Revision of housing goals. 
Sec. 126. Duty to serve underserved markets. 
Sec. 127. Monitoring and enforcing compliance with housing goals. 
Sec. 128. Affordable Housing Fund. 
Sec. 129. Consistency with mission. 
Sec. 130. Enforcement. 
Sec. 131. Conforming amendments. 
Subtitle C—Prompt Corrective Action 
Sec. 141. Capital classifications. 
Sec. 142. Supervisory actions applicable to undercapitalized regulated entities. 
Sec. 143. Supervisory actions applicable to significantly undercapitalized regu-
lated entities. 
Sec. 144. Authority over critically undercapitalized regulated entities. 
Sec. 145. Conforming amendments. 
Subtitle D—Enforcement Actions 
Sec. 161. Cease-and-Desist proceedings. 
Sec. 162. Temporary Cease-and-Desist proceedings. 
Sec. 163. Prejudgment attachment. 
Sec. 164. Enforcement and jurisdiction. 
Sec. 165. Civil money penalties. 
Sec. 166. Removal and prohibition authority. 
Sec. 167. Criminal penalty. 
Sec. 168. Subpoena authority. 
Sec. 169. Conforming amendments. 
Subtitle E—General Provisions 
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Sec. 181. Boards of Enterprises. 
Sec. 182. Report on portfolio operations, safety and soundness, and mission of 
Enterprises. 
Sec. 183. Conforming and technical amendments. 
Sec. 184. Study of alternative secondary market systems. 
Sec. 185. Effective date. 
TITLE II—FEDERAL HOME LOAN BANKS 
Sec. 201. Definitions. 
Sec. 202. Directors. 
Sec. 203. Federal Housing Finance Agency oversight of Federal Home Loan 
Banks. 
Sec. 204. Joint activities of Banks. 
Sec. 205. Sharing of information between Federal Home Loan Banks. 
Sec. 206. Reorganization of Banks and voluntary merger. 
Sec. 207. Securities and Exchange Commission disclosure. 
Sec. 208. Community financial institution members. 
Sec. 209. Technical and conforming amendments. 
Sec. 210. Study of affordable Housing program use for long-term care facilities. 
Sec. 211. Effective date. 
TITLE III—TRANSFER OF FUNCTIONS, PERSONNEL, AND PROP-
ERTY OF OFFICE OF FEDERAL HOUSING ENTERPRISE OVER-
SIGHT, FEDERAL HOUSING FINANCE BOARD, AND DEPART-
MENT OF HOUSING AND URBAN DEVELOPMENT 
Subtitle A—Office of Federal Housing Enterprise Oversight 
Sec. 301. Abolishment of OFHEO. 
Sec. 302. Continuation and coordination of certain regulations. 
Sec. 303. Transfer and rights of employees of OFHEO. 
Sec. 304. Transfer of property and facilities. 
Subtitle B—Federal Housing Finance Board 
Sec. 321. Abolishment of the Federal Housing Finance Board. 
Sec. 322. Continuation and coordination of certain regulations. 
Sec. 323. Transfer and rights of employees of the Federal Housing Finance 
Board. 
Sec. 324. Transfer of property and facilities. 
Subtitle C—Department of Housing and Urban Development 
Sec. 341. Termination of enterprise-related functions. 
Sec. 342. Continuation and coordination of certain regulations. 
Sec. 343. Transfer and rights of employees. 
Sec. 344. Transfer of appropriations, property, and facilities. 
SEC. 2. DEFINITIONS. 
Section 1303 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4502) is amended— 
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(1) in paragraph (7), by striking ‘‘an enter-
prise’’ and inserting ‘‘a regulated entity’’; 
(2) by striking ‘‘the enterprise’’ each place such 
term appears (except in paragraphs (4) and (18)) 
and inserting ‘‘the regulated entity’’; 
(3) in paragraph (5), by striking ‘‘Office of 
Federal Housing Enterprise Oversight of the De-
partment of Housing and Urban Development’’ and 
inserting ‘‘Federal Housing Finance Agency’’; 
(4) in each of paragraphs (8), (9), (10), and 
(19), by striking ‘‘Secretary’’ each place that term 
appears and inserting ‘‘Director’’; 
(5) in paragraph (13), by inserting ‘‘, with re-
spect to an enterprise,’’ after ‘‘means’’; 
(6) by redesignating paragraphs (16) through 
(19) as paragraphs (20) through (23), respectively; 
(7) by striking paragraphs (14) and (15) and 
inserting the following new paragraphs: 
‘‘(18) REGULATED ENTITY.—The term ‘regu-
lated entity’ means— 
‘‘(A) the Federal National Mortgage Asso-
ciation and any affiliate thereof; 
‘‘(B) the Federal Home Loan Mortgage 
Corporation and any affiliate thereof; and 
‘‘(C) each Federal home loan bank. 
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‘‘(19) 
REGULATED
ENTITY-AFFILIATED 
PARTY.—The term ‘regulated entity-affiliated party’ 
means— 
‘‘(A) any director, officer, employee, or 
agent for, a regulated entity, or controlling 
shareholder of an enterprise; 
‘‘(B) any shareholder, affiliate, consultant, 
or joint venture partner of a regulated entity, 
and any other person, as determined by the Di-
rector (by regulation or on a case-by-case basis) 
that participates in the conduct of the affairs of 
a regulated entity, except that a shareholder of 
a regulated entity shall not be considered to 
have participated in the affairs of that regu-
lated entity solely by reason of being a member 
or customer of the regulated entity; 
‘‘(C) any independent contractor for a reg-
ulated entity (including any attorney, appraiser, 
or accountant), if— 
‘‘(i) the independent contractor know-
ingly or recklessly participates in— 
‘‘(I) any violation of any law or 
regulation; 
‘‘(II) any breach of fiduciary 
duty; or 
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‘‘(III) any unsafe or unsound 
practice; and 
‘‘(ii) such violation, breach, or prac-
tice caused, or is likely to cause, more than 
a minimal financial loss to, or a significant 
adverse effect on, the regulated entity; 
and’’. 
‘‘(D) any not-for-profit corporation that re-
ceives its principal funding, on an ongoing 
basis, from any regulated entity.’’; 
(8) by redesignating paragraphs (8) through 
(13) as paragraphs (12) through (17), respectively; 
and 
(9) by inserting after paragraph (7) the fol-
lowing new paragraph: 
‘‘(11) FEDERAL HOME LOAN BANK.—The term 
‘Federal home loan bank’ means a bank established 
under the authority of the Federal Home Loan 
Bank Act.’’; 
(10) by redesignating paragraphs (2) through 
(7) as paragraphs (5) through (10), respectively; 
and 
(11) by inserting after paragraph (1) the fol-
lowing new paragraphs: 
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‘‘(2) AGENCY.—The term ‘Agency’ means the 
Federal Housing Finance Agency. 
‘‘(3) AUTHORIZING STATUTES.—The term ‘au-
thorizing statutes’ means— 
‘‘(A) the Federal National Mortgage Asso-
ciation Charter Act; 
‘‘(B) the Federal Home Loan Mortgage 
Corporation Act; and 
‘‘(C) the Federal Home Loan Bank Act. 
‘‘(4) BOARD.—The term ‘Board’ means the 
Federal Housing Enterprise Board established under 
section 1313B.’’. 
TITLE I—REFORM OF REGULA-
TION OF ENTERPRISES AND 
FEDERAL HOME LOAN BANKS 
Subtitle A—Improvement of Safety 
and Soundness 
SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING FI-
NANCE AGENCY. 
(a) IN GENERAL.—The Housing and Community De-
velopment Act of 1992 (12 U.S.C. 4501 et seq.) is amend-
ed by striking sections 1311 and 1312 and inserting the 
following: 
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‘‘SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING 
FINANCE AGENCY. 
‘‘(a) ESTABLISHMENT.—There is established the 
Federal Housing Finance Agency, which shall be an inde-
pendent agency of the Federal Government. 
‘‘(b) GENERAL SUPERVISORY AND REGULATORY AU-
THORITY.— 
‘‘(1) IN GENERAL.—Each regulated entity shall, 
to the extent provided in this title, be subject to the 
supervision and regulation of the Agency. 
‘‘(2) AUTHORITY OVER FANNIE MAE, FREDDIE 
MAC, AND FEDERAL HOME LOAN BANKS.—The Di-
rector of the Federal Housing Finance Agency shall 
have general supervisory and regulatory authority 
over each regulated entity and shall exercise such 
general regulatory authority, including such duties 
and authorities set forth under section 1313 of this 
Act, to ensure that the purposes of this Act, the au-
thorizing statutes, and any other applicable law are 
carried out. 
‘‘(c) SAVINGS PROVISION.—The authority of the Di-
rector to take actions under subtitles B and C shall not 
in any way limit the general supervisory and regulatory 
authority granted to the Director. 
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‘‘SEC. 1312. DIRECTOR. 
‘‘(a) ESTABLISHMENT OF POSITION.—There is estab-
lished the position of the Director of the Federal Housing 
Finance Agency, who shall be the head of the Agency. 
‘‘(b) APPOINTMENT; TERM.— 
‘‘(1) APPOINTMENT.—The Director shall be ap-
pointed by the President, by and with the advice and 
consent of the Senate, from among individuals who 
are citizens of the United States, have a dem-
onstrated understanding of financial management or 
oversight, and have a demonstrated understanding 
of capital markets, including the mortgage securities 
markets and housing finance. 
‘‘(2) TERM AND REMOVAL.—The Director shall 
be appointed for a term of 5 years and may be re-
moved by the President only for cause. 
‘‘(3) VACANCY.—A vacancy in the position of 
Director that occurs before the expiration of the 
term for which a Director was appointed shall be 
filled in the manner established under paragraph 
(1), and the Director appointed to fill such vacancy 
shall be appointed only for the remainder of such 
term. 
‘‘(4) SERVICE AFTER END OF TERM.—An indi-
vidual may serve as the Director after the expiration 
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of the term for which appointed until a successor 
has been appointed. 
‘‘(5) 
TRANSITIONAL
PROVISION.—Notwith-
standing paragraphs (1) and (2), the Director of the 
Office of Federal Housing Enterprise Oversight of 
the Department of Housing and Urban Development 
shall serve as the Director until a successor has been 
appointed under paragraph (1). 
‘‘(c) DEPUTY DIRECTOR OF THE DIVISION OF EN-
TERPRISE REGULATION.— 
‘‘(1) IN GENERAL.—The Agency shall have a 
Deputy Director of the Division of Enterprise Regu-
lation, who shall be appointed by the Director from 
among individuals who are citizens of the United 
States, have a demonstrated understanding of finan-
cial management or oversight and of mortgage secu-
rities markets and housing finance. 
‘‘(2) FUNCTIONS.—The Deputy Director of the 
Division of Enterprise Regulation shall have such 
functions, powers, and duties with respect to the 
oversight of the enterprises as the Director shall pre-
scribe. 
‘‘(d) DEPUTY DIRECTOR OF THE DIVISION OF FED-
ERAL HOME LOAN BANK REGULATION.— 
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‘‘(1) IN GENERAL.—The Agency shall have a 
Deputy Director of the Division of Federal Home 
Loan Bank Regulation, who shall be appointed by 
the Director from among individuals who are citi-
zens of the United States, have a demonstrated un-
derstanding of financial management or oversight 
and of the Federal Home Loan Bank System and 
housing finance. 
‘‘(2) FUNCTIONS.—The Deputy Director of the 
Division of Federal Home Loan Bank Regulation 
shall have such functions, powers, and duties with 
respect to the oversight of the Federal home loan 
banks as the Director shall prescribe. 
‘‘(e) DEPUTY DIRECTOR FOR HOUSING.— 
‘‘(1) IN GENERAL.—The Agency shall have a 
Deputy Director for Housing, who shall be ap-
pointed by the Director from among individuals who 
are citizens of the United States, and have a dem-
onstrated understanding of the housing markets and 
housing finance. 
‘‘(2) FUNCTIONS.—The Deputy Director for 
Housing shall have such functions, powers, and du-
ties with respect to the oversight of the housing mis-
sion and goals of the enterprises, and with respect 
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to oversight of the housing mission of the Federal 
home loan banks, as the Director shall prescribe. 
‘‘(f) LIMITATIONS.—The Director and each of the 
Deputy Directors may not— 
‘‘(1) have any direct or indirect financial inter-
est in any regulated entity or regulated entity-affili-
ated party; 
‘‘(2) hold any office, position, or employment in 
any regulated entity or regulated entity-affiliated 
party; or 
‘‘(3) have served as an executive officer or di-
rector of any regulated entity, or regulated entity-af-
filiated party, at any time during the 3-year period 
ending on the date of appointment of such individual 
as Director or Deputy Director. 
‘‘(g) OMBUDSMAN.—The Director shall establish, by 
regulation, an Office of the Ombudsman in the Agency. 
Such regulations shall provide that the Ombudsman will 
consider complaints and appeals from any regulated entity 
and any person that has a business relationship with a 
regulated entity and shall specify the duties and authority 
of the Ombudsman.’’. 
(b) APPOINTMENT OF DIRECTOR.—Notwithstanding 
any other provision of law or of this Act, the President 
may, any time after the date of the enactment of this Act, 
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