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Capital Magnet Fund, regarding assistance 
from the Capital Magnet Fund, which shall 
include— 
‘‘(I) appropriate periodic finan-
cial and project reporting, record re-
tention, and audit requirements for the 
duration of the grant to the recipient 
to ensure compliance with the limita-
tions and requirements of this section 
and the regulations under this section; 
and 
‘‘(II) any other requirements that 
the Secretary determines are necessary 
to ensure appropriate grant adminis-
tration and compliance. 
‘‘(B) MISUSE OF FUNDS.—If the Secretary 
of the Treasury determines, after reasonable no-
tice and opportunity for hearing, that a grantee 
has failed to comply substantially with any pro-
vision of this section and until the Secretary is 
satisfied that there is no longer any such failure 
to comply, the Secretary shall— 
‘‘(i) reduce the amount of assistance 
under this section to the grantee by an 
amount equal to the amount of Capital
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Magnet Fund grant amounts which were 
not used in accordance with this section; 
‘‘(ii) require the grantee to repay the 
Secretary any amount of the Capital Mag-
net Fund grant amounts which were not 
used in accordance with this section; 
‘‘(iii) limit the availability of assist-
ance under this section to the grantee to ac-
tivities or recipients not affected by such 
failure to comply; or 
‘‘(iv) terminate any assistance under 
this section to the grantee. 
‘‘(i) PERIODIC REPORTS.— 
‘‘(1) IN GENERAL.—The Secretary of the Treas-
ury shall submit a report, on a periodic basis, to the 
Committee on Banking, Housing, and Urban Affairs 
of the Senate and the Committee on Financial Serv-
ices of the House of Representatives describing the ac-
tivities to be funded under this section. 
‘‘(2) REPORTS AVAILABLE TO PUBLIC.—The Sec-
retary of the Treasury shall make the reports required 
under paragraph (1) publicly available. 
‘‘(j) REGULATIONS.— 
‘‘(1) IN GENERAL.—The Secretary of the Treas-
ury shall issue regulations to carry out this section.
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‘‘(2) REQUIRED
CONTENTS.—The regulations 
issued under this subsection shall include— 
‘‘(A) authority for the Secretary to audit, 
provide for an audit, or otherwise verify an en-
terprise’s activities, to ensure compliance with 
this section; 
‘‘(B) a requirement that the Secretary en-
sure that the allocation of each enterprise is au-
dited not less than annually to ensure compli-
ance with this section; 
‘‘(C) a requirement that, for the purposes of 
subparagraphs (A) and (B), any financial state-
ment submitted by a grantee to the Secretary 
shall be reviewed by an independent certified 
public accountant in accordance with Statements 
on Standards for Accounting and Review Serv-
ices, issued by the American Institute of Cer-
tified Public Accountants; and 
‘‘(D) requirements for a process for applica-
tion to, and selection by, the Secretary for activi-
ties to be funded with amounts from the Capital 
Magnet Fund, which shall provide that— 
‘‘(i) funds be fairly distributed to 
urban, suburban, and rural areas; and
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‘‘(ii) selection shall be based upon spe-
cific criteria, including a prioritization of 
funding based upon— 
‘‘(I) the ability to use such funds 
to generate additional investments; 
‘‘(II) affordable housing need (tak-
ing into account the distinct needs of 
different regions of the country); and 
‘‘(III) ability to obligate amounts 
and undertake activities so funded in a 
timely manner.’’. 
SEC. 1132. FINANCIAL EDUCATION AND COUNSELING. 
(a) GOALS.—Financial education and counseling 
under this section shall have the goal of— 
(1) increasing the financial knowledge and deci-
sion making capabilities of prospective homebuyers; 
(2) assisting prospective homebuyers to develop 
monthly budgets, build personal savings, finance or 
plan for major purchases, reduce their debt, improve 
their financial stability, and set and reach their fi-
nancial goals; 
(3) helping prospective homebuyers to improve 
their credit scores by understanding the relationship 
between their credit histories and their credit scores; 
and
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(4) educating prospective homebuyers about the 
options available to build savings for short- and long- 
term goals. 
(b) GRANTS.— 
(1) IN GENERAL.—The Secretary of the Treasury 
(in this section referred to as the ‘‘Secretary’’) shall 
make grants to eligible organizations to enable such 
organizations to provide a range of financial edu-
cation and counseling services to prospective home-
buyers. 
(2) SELECTION.—The Secretary shall select eligi-
ble organizations to receive assistance under this sec-
tion based on their experience and ability to provide 
financial education and counseling services that result 
in documented positive behavioral changes. 
(c) ELIGIBLE ORGANIZATIONS.— 
(1) IN GENERAL.—For purposes of this section, 
the term ‘‘eligible organization’’ means an organiza-
tion that is— 
(A) certified in accordance with section 
106(e)(1) of the Housing and Urban Develop-
ment Act of 1968 (12 U.S.C. 1701x(e)); or 
(B) certified by the Office of Financial 
Education of the Department of the Treasury for
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(1) IN GENERAL.—Any employee described under 
subsection (a) accepting employment with the Agency 
as a result of a transfer under subsection (a) may re-
tain, for 12 months after the date on which such 
transfer occurs, membership in any employee benefit 
program of the Agency or the Department of Housing 
and Urban Development, as applicable, including in-
surance, to which such employee belongs on such effec-
tive date, if— 
(A) the employee does not elect to give up 
the benefit or membership in the program; and 
(B) the benefit or program is continued by 
the Director of the Federal Housing Finance 
Agency. 
(2) COST DIFFERENTIAL.— 
(A) IN
GENERAL.—The difference in the 
costs between the benefits which would have been 
provided by the Department of Housing and 
Urban Development and those provided by this 
section shall be paid by the Director. 
(B) HEALTH INSURANCE.—If any employee 
elects to give up membership in a health insur-
ance program or the health insurance program is 
not continued by the Director, the employee shall 
be permitted to select an alternate Federal health
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insurance program not later than 30 days after 
the date of such election or notice, without regard 
to any other regularly scheduled open season. 
Subtitle C—Prompt Corrective 
Action 
SEC. 1141. CRITICAL CAPITAL LEVELS. 
(a) IN GENERAL.—Section 1363 of the Federal Hous-
ing Enterprises Financial Safety and Soundness Act of 
1992 (12 U.S.C. 4613) is amended— 
(1) by striking ‘‘For’’ and inserting ‘‘(a) ENTER-
PRISES.—FOR’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) FEDERAL HOME LOAN BANKS.— 
‘‘(1) IN GENERAL.—For purposes of this subtitle, 
the critical capital level for each Federal Home Loan 
Bank shall be such amount of capital as the Director 
shall, by regulation, require. 
‘‘(2) CONSIDERATION OF OTHER CRITICAL CAP-
ITAL
LEVELS.—In establishing the critical capital 
level under paragraph (1) for the Federal Home Loan 
Banks, the Director shall take due consideration of the 
critical capital level established under subsection (a) 
for the enterprises, with such modifications as the Di-
rector determines to be appropriate to reflect the dif-
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ference in operations between the banks and the enter-
prises.’’. 
(b) REGULATIONS.—Not later than the expiration of 
the 180-day period beginning on the date of enactment of 
this Act, the Director of the Federal Housing Finance Agen-
cy shall issue regulations pursuant to section 1363(b) of the 
Federal Housing Enterprises Financial Safety and Sound-
ness Act of 1992 (as added by this section) establishing the 
critical capital level under such section. 
SEC. 1142. CAPITAL CLASSIFICATIONS. 
(a) IN GENERAL.—Section 1364 of the Federal Hous-
ing Enterprises Financial Safety and Soundness 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 insert-
ing ‘‘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;
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(4) by striking subsection (b) and inserting the 
following: 
‘‘(b) FEDERAL HOME LOAN BANKS.— 
‘‘(1) ESTABLISHMENT AND CRITERIA.—For pur-
poses of this subtitle, the Director shall, by regula-
tion— 
‘‘(A) establish the capital classifications 
specified under paragraph (2) for the Federal 
Home Loan Banks; 
‘‘(B) establish criteria for each such capital 
classification based on the amount and types of 
capital held by a bank and the risk-based, min-
imum, and critical capital levels for the banks 
and taking due consideration of the capital clas-
sifications established under subsection (a) for 
the enterprises, with such modifications as the 
Director determines to be appropriate to reflect 
the difference in operations between the banks 
and the enterprises; and 
‘‘(C) shall classify the Federal Home Loan 
Banks according to such capital classifications. 
‘‘(2) CLASSIFICATIONS.—The capital classifica-
tions specified under this paragraph are— 
‘‘(A) adequately capitalized; 
‘‘(B) undercapitalized;
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‘‘(C) significantly undercapitalized; and 
‘‘(D) critically undercapitalized. 
‘‘(c) DISCRETIONARY CLASSIFICATION.— 
‘‘(1) GROUNDS
FOR
RECLASSIFICATION.—The 
Director may reclassify a regulated entity under 
paragraph (2) if— 
‘‘(A) at any time, the Director determines 
in writing that the regulated entity is engaging 
in conduct that could result in a rapid depletion 
of core or total capital or the value of collateral 
pledged as security has decreased significantly or 
that the value of the property subject to mort-
gages held by the regulated entity (or securitized 
in the case of an enterprise) has decreased sig-
nificantly; 
‘‘(B) after notice and an opportunity for 
hearing, the Director determines that the regu-
lated entity is in an unsafe or unsound condi-
tion; or 
‘‘(C) pursuant to section 1371(b), the Direc-
tor deems the regulated entity to be engaging in 
an unsafe or unsound practice. 
‘‘(2) RECLASSIFICATION.—In addition to any 
other action authorized under this title, including the 
reclassification of a regulated entity for any reason