‘‘(4) GUARANTEE FEE.—The term ‘guarantee 
fee’ has the meaning given such term in section 
1327(a) (12 U.S.C. 4547(a)). 
‘‘(5) RISK-TRANSFER TRANSACTION.—The term 
‘risk-transfer transaction’ means any transaction 
that provides for— 
‘‘(A) the sale, disposition, retention, or 
transfer within the private sector of credit risk 
on any single-family residential mortgage loan 
or a pool of such loans that back securities on 
which the enterprise guarantees the timely pay-
ment of principal and interest; or 
‘‘(B) the retention by the private sector of 
any such credit risk in connection with the sale 
of any such loan or security to an enterprise.’’. 
(b) CONFORMING AMENDMENT TO COMMODITY EX-
CHANGE ACT.—Paragraph (10) of section 1a of the Com-
modity Exchange Act (7 U.S.C. 1a(10)) is amended by 
adding at the end the following new subparagraph: 
‘‘(C) RULE OF CONSTRUCTION.—A swap 
(as such term is defined in section 1a) entered 
into for the purpose of transferring or sharing 
credit risk in connection with a risk-transfer 
transaction shall not be considered to be a com-
modity interest (as such term is defined in sec-
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lotter on DSK5VPTVN1PROD with BILLS
tion 1.3(yy) of title 17, Code of Federal Regula-
tions), and no swap counterparty or other per-
son sponsoring or arranging a risk-transfer 
transaction shall be considered to be a com-
modity pool operator (as such term is defined 
in section 1.3(cc) of such title), solely by virtue 
of entering into or sponsoring or arranging 
such a swap in connection with such trans-
action.’’. 
(c) 
CONFORMING
AMENDMENTS
TO
EXISTING 
LAWS.— 
(1) INVESTMENT COMPANY ACT OF 1940.—Sec-
tion 3(c)(5) of the Investment Company Act of 1940 
(15 U.S.C. 80a–3(c)(5)) is amended by inserting be-
fore the period the following: ‘‘, including notes, 
bonds, other evidences of indebtedness, certificates, 
securities, and other interests, that are a risk-trans-
fer transaction (as such term is defined in section 
1328(h) of the Federal Housing Enterprises Finan-
cial Safety and Soundness Act of 1992)’’. 
(2) ASSET AND INCOME TEST CLARIFICATION 
FOR ENTERPRISE RISK-TRANSFER TRANSACTIONS.— 
The Internal Revenue Code of 1986 is amended— 
(A) in subparagraph (B) of section 
856(c)(3) (26 U.S.C. 856(c)(3)(B)), by insert-
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lotter on DSK5VPTVN1PROD with BILLS
ing before the semicolon at the end the fol-
lowing ‘‘, and gross income resulting from par-
ticipation in any transaction, including notes, 
bonds, other evidences of indebtedness, certifi-
cates, securities, and other interests, that are 
risk-transfer transactions (as such term is de-
fined in section 1328(h) of the Federal Housing 
Enterprises Financial Safety and Soundness 
Act of 1992)’’; and 
(B) in subparagraph (B) of section 
856(c)(5) (26 U.S.C. 856(c)(5)(B)), by insert-
ing before the period at the end of the first sen-
tence the following: ‘‘, and participation in any 
transaction, including notes, bonds, other evi-
dences of indebtedness, certificates, securities, 
and other interests, that are risk-transfer trans-
actions (as such term is defined in section 
1328(h) of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992)’’. 
SEC. 3. PILOT PROGRAM FOR SMALL LENDER RISK TRANS-
FER. 
Not later than one year after the date of the enact-
ment of this Act, the Director of the Federal Housing Fi-
nance Agency shall require each enterprise to establish a 
pilot program under which the enterprise shall annually 
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engage, for each of the next 5 consecutive years, in at least 
one front-end risk sharing transaction for which both bank 
and 
non-bank 
mortgage 
originators 
having 
under 
$10,000,000,000 in assets are eligible participants. 
SEC. 4. PILOT PROGRAM FOR MORTGAGE INSURANCE RISK 
TRANSFER. 
(a) IN GENERAL.—Not later than one year after the 
date of the enactment of this Act, the Director of the Fed-
eral Housing Finance Agency shall require the enterprises 
jointly to establish a pilot program to increase the amount 
of risk that is transferred by the enterprises using private 
mortgage insurance. 
(b) PROGRAM REQUIREMENTS.—The pilot program 
established pursuant to subsection (a) shall meet the fol-
lowing requirements: 
(1) DURATION.—The pilot program shall have 
a duration of 5 years. 
(2) AMOUNT OF MORTGAGE PURCHASES.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), in each year the enterprises 
shall purchase under the pilot program suffi-
cient qualifying loans or pools of qualifying 
loans such that the aggregate unpaid principal 
balance of all qualifying loans or loan pools pur-
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chased or issued by both enterprises is not less 
than $50,000,000,000. 
(B) EXCEPTION.—The amount of quali-
fying loans that the enterprises are required to 
purchase each year under paragraph (1) may be 
reduced if the Director and the Secretary of the 
Treasury jointly— 
(i) make a determination that such a 
reduction is necessary to prevent an ad-
verse impact to the housing market; and 
(ii) submit to the Congress a report 
describing the justification for the deter-
mination referred to in clause (i). 
(3) SELECTION OF MORTGAGE INSURANCE.— 
For each transaction under the pilot program involv-
ing a qualifying loan, the loan originator shall select 
an eligible mortgage insurance provider or providers, 
consistent with existing market practice. 
(4) MORTGAGE INSURANCE PREMIUMS.—Mort-
gage insurance premiums applicable to qualifying 
loans purchased by the enterprises under the pilot 
program shall be subject to requirements and limita-
tions under State laws. 
(5) GUARANTEE FEES.—The enterprises shall 
set and publish guarantee fees, including up-front 
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