290 
this section, or any requirements or condi-
tions under which such amounts were pro-
vided, the grantee shall require that, within 
12 months after the determination of such 
misuse, the recipient shall reimburse the 
grantee for such misused amounts and re-
turn to the grantee any amounts from the 
affordable housing fund grant amounts of 
the grantee that remain unused or uncom-
mitted for use. The remedies under this 
clause are in addition to any other remedies 
that may be available under law. 
‘‘(ii) DETERMINATION.—A determina-
tion is made in accordance with this clause 
if the determination is— 
‘‘(I) made by the Director; or 
‘‘(II)(aa) made by the grantee; 
‘‘(bb) the grantee provides notifi-
cation of the determination to the Di-
rector for review, in the discretion of 
the Director, of the determination; and 
‘‘(cc) the Director does not subse-
quently reverse the determination. 
‘‘(2) GRANTEES.— 
‘‘(A) REPORT.—
291 
‘‘(i) IN GENERAL.—The Director shall 
require each grantee receiving affordable 
housing fund grant amounts for a year to 
submit a report, for such year, to the Direc-
tor that— 
‘‘(I) describes the activities funded 
under this section during such year 
with the affordable housing fund grant 
amounts of the grantee; and 
‘‘(II) the manner in which the 
grantee complied during such year 
with the allocation plan established 
pursuant to subsection (e) for the 
grantee. 
‘‘(ii) PUBLIC AVAILABILITY.—The Di-
rector shall make such reports pursuant to 
this subparagraph publicly available. 
‘‘(B) MISUSE OF FUNDS.—If the Director 
determines, after reasonable notice and oppor-
tunity for hearing, that a grantee has failed to 
comply substantially with any provision of this 
section and until the Director is satisfied that 
there is no longer any such failure to comply, the 
Director shall—
292 
‘‘(i) reduce the amount of assistance 
under this section to the grantee by an 
amount equal to the amount affordable 
housing fund grant amounts which were not 
used in accordance with this section; 
‘‘(ii) require the grantee to repay the 
Director an amount equal to the amount of 
the amount affordable housing 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. 
‘‘(k) CAPITAL REQUIREMENTS.—The utilization or 
commitment of amounts from the affordable housing fund 
shall not be subject to the risk-based capital requirements 
established pursuant to section 1361(a). 
‘‘(l) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) 
AFFORDABLE
HOUSING
FUND
GRANT 
AMOUNTS.—The term ‘affordable housing fund grant 
amounts’ means amounts from the affordable housing
293 
fund established under subsection (a) that are pro-
vided to a grantee pursuant to subsection (d)(3). 
‘‘(2) GRANTEE.—The term ‘grantee’ means— 
‘‘(A) with respect to 2008, the Louisiana 
Housing Finance Agency and the Mississippi 
Development Authority; and 
‘‘(B) with respect to the years referred to in 
subsection (b)(1), other than 2008, each State (as 
such term is defined in section 1303) and each 
federally recognized Indian tribe. 
‘‘(3) RECIPIENT.—The term ‘recipient’ means an 
entity meeting the requirements under subsection (h) 
that receives assistance from a grantee from affordable 
housing fund grant amounts of the grantee. 
‘‘(4) TOTAL MORTGAGE PORTFOLIO.—The term 
‘total mortgage portfolio’ means, with respect to a 
year, the sum, for all mortgages outstanding during 
that year in any form, including whole loans, mort-
gage-backed securities, participation certificates, or 
other structured securities backed by mortgages, of the 
dollar amount of the unpaid outstanding principal 
balances under such mortgages. Such term includes 
all such mortgages or securitized obligations, whether 
retained in portfolio, or sold in any form. The Direc-
tor is authorized to promulgate rules further defining
294 
such term as necessary to implement this section and 
to address market developments. 
‘‘(5) VERY-LOW INCOME FAMILY.—The term ‘very 
low-income family’ has the meaning given such term 
in section 1303, except that such term includes any 
family that resides in a rural area that has an in-
come that does not exceed the poverty line (as such 
term is defined in section 673(2) of the Omnibus 
Budget Reconciliation Act of 1981 (42 U.S.C. 
9902(2)), including any revision required by such sec-
tion) applicable to a family of the size involved. 
‘‘(m) REGULATIONS.— 
‘‘(1) IN GENERAL.—The Director, in consultation 
with the Secretary of Housing and Urban Develop-
ment, shall issue regulations to carry out this section. 
‘‘(2) REQUIRED
CONTENTS.—The regulations 
issued under this subsection shall include— 
‘‘(A) a requirement that the Director ensure 
that the program of each grantee for use of af-
fordable housing fund grant amounts of the 
grantee is audited not less than annually to en-
sure compliance with this section; 
‘‘(B) authority for the Director to audit, 
provide for an audit, or otherwise verify a grant-
295 
ee’s activities, to ensure compliance with this sec-
tion; 
‘‘(C) requirements for a process for applica-
tion to, and selection by, each grantee for activi-
ties meeting the grantee’s priority housing needs 
to be funded with affordable housing fund grant 
amounts of the grantee, which shall provide for 
priority in funding to be based upon— 
‘‘(i) greatest impact; 
‘‘(ii) geographic diversity; 
‘‘(iii) ability to obligate amounts and 
undertake activities so funded in a timely 
manner; 
‘‘(iv) in the case of rental housing 
projects under subsection (g)(1), the extent 
to which rents for units in the project fund-
ed are affordable, especially for extremely 
low-income families; 
‘‘(v) in the case of rental housing 
projects under subsection (g)(1), the extent 
of the duration for which such rents will re-
main affordable; 
‘‘(vi) the extent to which the applica-
tion makes use of other funding sources; and
296 
‘‘(vii) the merits of an applicant’s pro-
posed eligible activity; 
‘‘(D) requirements to ensure that amounts 
provided to a grantee from the affordable housing 
fund that are used for rental housing under sub-
section (g)(1) are used only for the benefit of ex-
tremely low- and very-low income families; 
‘‘(E) limitations on public infrastructure 
development activities that are eligible pursuant 
to subsection (g)(3) for funding with affordable 
housing fund grant amounts and requirements 
for the connection between such activities and 
housing activities funded under paragraph (1) or 
(2) of subsection (g); and 
‘‘(F) requirements and standards for estab-
lishment, by grantees (including the grantees for 
2008 pursuant to subsection (l)(2)(A)), of per-
formance goals, benchmarks, and timetables for 
the production, preservation, and rehabilitation 
of affordable rental and homeownership housing 
with affordable housing fund grant amounts. 
‘‘(n) ENFORCEMENT OF REQUIREMENTS ON ENTER-
PRISE.—Compliance by the enterprises with the require-
ments under this section shall be enforceable under subpart 
C. Any reference in such subpart to this part or to an order,
297 
rule, or regulation under this part specifically includes this 
section and any order, rule, or regulation under this sec-
tion. 
‘‘(o) AFFORDABLE HOUSING TRUST FUND.—If, after 
the enactment of the Federal Housing Finance Reform Act 
of 2008, in any year, there is enacted any provision of Fed-
eral law establishing an affordable housing trust fund other 
than under this title for use only for grants to provide af-
fordable rental housing and affordable homeownership op-
portunities, and the subsequent year is a year referred to 
in subsection (b)(1), the Director shall in such subsequent 
year and any remaining years referred to in subsection 
(b)(1) transfer to such affordable housing trust fund the ag-
gregate amount allocated pursuant to subsection (b) in such 
year to the affordable housing fund under this section, less 
any amounts used pursuant to subsection (i)(1). For such 
subsequent and remaining years, the provisions of sub-
sections (c) and (d) shall not apply. Notwithstanding any 
other provision of law, assistance provided using amounts 
transferred to such affordable housing trust fund pursuant 
to this subsection may not be used for any of the activities 
specified in clauses (i) through (vi) of subsection (i)(6). 
Nothing in this subsection shall be construed to alter the 
terms and conditions of the affordable housing fund under 
this section or to extend the life of such fund.
298 
‘‘(p) 
FUNDING
ACCOUNTABILITY
AND
TRANS-
PARENCY.—Any grant under this section to a grantee from 
the affordable housing fund established under subsection (a), 
any assistance provided to a recipient by a grantee from 
affordable housing fund grant amounts, and any grant, 
award, or other assistance from an affordable housing trust 
fund referred to in subsection (o) shall be considered a Fed-
eral award for purposes of the Federal Funding Account-
ability and Transparency Act of 2006 (31 U.S.C. 6101 
note). Upon the request of the Director of the Office of Man-
agement and Budget, the Director of the Federal Housing 
Finance Agency shall obtain and provide such information 
regarding any such grants, assistance, and awards as the 
Director of the Office of Management and Budget considers 
necessary to comply with the requirements of such Act, as 
applicable pursuant to the preceding sentence.’’. 
(b) TIMELY ESTABLISHMENT OF AFFORDABLE HOUS-
ING NEEDS FORMULA.— 
(1) IN GENERAL.—The Secretary of Housing and 
Urban Development shall, not later than the effective 
date under section 365 of this title, issue the regula-
tions establishing the affordable housing needs for-
mulas in accordance with the provisions of section 
1337(c)(2) of the Housing and Community Develop-
299 
ment Act of 1992, as such section is amended by sub-
section (a) of this section. 
(2) 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 enterprise (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 Cor-
poration in each calendar year the amounts allo-
cated for use under this subparagraph pursuant 
to section 1337(i)(1) of such Act.’’.
300 
(d) GAO REPORT.—The Comptroller General shall 
conduct a study to determine the effects that the affordable 
housing fund established under section 1337 of the Housing 
and Community Development Act of 1992, as added by the 
amendment made by subsection (a) of this section, will have 
on the availability and affordability of credit for home-
buyers, including the effects on such credit of the require-
ment under such section 1337(b) that the Federal National 
Mortgage Association and Federal Home Loan Mortgage 
Corporation make allocations of amounts to such fund 
based on the average total mortgage portfolios, and the ex-
tent to which the costs of such allocation requirement will 
be borne by such entities or will be passed on to homebuyers. 
Not later than the expiration of the 12-month period begin-
ning on the date of the enactment of this Act, the Comp-
troller General shall submit a report to the Congress setting 
forth the results and conclusions of such study. This sub-
section shall take effect on the date of the enactment of this 
Act. 
SEC. 341. 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 the preceding provisions of this title, the 
following new section:
302 
Charter Act, or subsection (e) or (f) of section 307 of 
the Federal Home Loan Mortgage Corporation 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: ‘‘requir-
ing the enterprise to— 
‘‘(A) comply with the goal or goals; 
‘‘(B) submit a report under section 1314; 
‘‘(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
303 
Act or subsection (e) or (f) of section 307 of the 
Federal Home Loan Mortgage Corporation 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 amended 
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-
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 require compli-
ance 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—
304 
(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 determination 
by the Director; 
‘‘(3) submit the information required under sub-
section (m) or (n) of section 309 of the Federal Na-
tional Mortgage Association Charter Act, or sub-
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).
305 
‘‘(b) AMOUNT OF PENALTY.—The amount of the pen-
alty, 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 
(B) in paragraph (2), by inserting after the 
period at the end the following: ‘‘In determining 
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)—
306 
(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 subsection 
(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 discre-
tion 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,’’. 
(e) CONFORMING AMENDMENT.—The heading for sub-
part C of part 2 of subtitle A of title XIII of the Housing 
and Community Development Act of 1992 is amended to 
read as follows:
307 
‘‘Subpart C—Enforcement’’. 
SEC. 343. 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) by redesignating section 1329 (as amended 
by section 335) as section 1327; 
(6) in sections 1345(c)(1)(A), 1346(a), and 
1346(b) (12 U.S.C. 4585(c)(1)(A), 4586(a), and 
4586(b)), by striking ‘‘Secretary’s’’ each place such 
term appears and inserting ‘‘Director’s’’; and 
(7) by striking section 1349 (12 U.S.C. 4589). 
CHAPTER 3—PROMPT CORRECTIVE 
ACTION 
SEC. 345. CAPITAL CLASSIFICATIONS. 
(a) IN GENERAL.—Section 1364 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4614) is 
amended—
308 
(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; 
(4) by striking subsection (b) and inserting the 
following new subsections: 
‘‘(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-
309 
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; 
‘‘(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, in the case of an en-
terprise, that the value of the property subject to 
mortgages held or securitized by the enterprise 
has decreased significantly;
310 
‘‘(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 
not specified in this subsection, if the Director takes 
any action described in paragraph (1) the Director 
may classify a regulated entity— 
‘‘(A) as undercapitalized, if the regulated 
entity is otherwise classified as adequately cap-
italized; 
‘‘(B) as significantly undercapitalized, if 
the regulated entity is otherwise classified as 
undercapitalized; and 
‘‘(C) as critically undercapitalized, if the 
regulated entity is otherwise classified as signifi-
cantly undercapitalized.’’; and 
(5) by inserting after subsection (d) (as so redes-
ignated by paragraph (3) of this subsection), the fol-
lowing new subsection:
311 
‘‘(e) RESTRICTION ON CAPITAL DISTRIBUTIONS.— 
‘‘(1) IN
GENERAL.—A regulated entity shall 
make no capital distribution if, after making the dis-
tribution, the regulated entity would be undercapital-
ized. 
‘‘(2) EXCEPTION.—Notwithstanding paragraph 
(1), the Director may permit a regulated entity, to 
the extent appropriate or applicable, to repurchase, 
redeem, retire, or otherwise acquire shares or owner-
ship interests if the repurchase, redemption, retire-
ment, or other acquisition— 
‘‘(A) is made in connection with the 
issuance of additional shares or obligations of the 
regulated entity in at least an equivalent 
amount; and 
‘‘(B) will reduce the financial obligations of 
the regulated entity or otherwise improve the fi-
nancial condition of the entity.’’. 
(b) REGULATIONS.—Not later than the expiration of 
the 180-day period beginning on the effective date under 
section 365, the Director of the Federal Housing Finance 
Agency shall issue regulations to carry out section 1364(b) 
of the Housing and Community Development Act of 1992 
(as added by paragraph (4) of this subsection), relating to 
capital classifications for the Federal home loan banks.
312 
SEC. 346. SUPERVISORY ACTIONS APPLICABLE TO UNDER-
CAPITALIZED REGULATED ENTITIES. 
Section 1365 of the Housing and Community Develop-
ment Act of 1992 (12 U.S.C. 4615) is amended— 
(1) in the section heading, by striking ‘‘ENTER-
PRISES’’ and inserting ‘‘REGULATED ENTITIES’’; 
(2) in subsection (a)— 
(A) by redesignating paragraphs (1) and 
(2) as paragraphs (2) and (3), respectively; 
(B) by inserting before paragraph (2), as so 
redesignated by subparagraph (A) of this para-
graph, the following paragraph: 
‘‘(1) REQUIRED
MONITORING.—The Director 
shall— 
‘‘(A) closely monitor the condition of any 
regulated entity that is classified as under-
capitalized; 
‘‘(B) closely monitor compliance with the 
capital restoration plan, restrictions, and re-
quirements imposed under this section; and 
‘‘(C) periodically review the plan, restric-
tions, and requirements applicable to the under-
capitalized regulated entity to determine whether 
the plan, restrictions, and requirements are 
achieving the purpose of this section.’’; and
313 
(C) by inserting at the end the following 
new paragraphs: 
‘‘(4) RESTRICTION OF ASSET GROWTH.—A regu-
lated entity that is classified as undercapitalized shall 
not permit its average total assets (as such term is de-
fined in section 1316(b) during any calendar quarter 
to exceed its average total assets during the preceding 
calendar quarter unless— 
‘‘(A) the Director has accepted the capital 
restoration plan of the regulated entity; 
‘‘(B) any increase in total assets is con-
sistent with the plan; and 
‘‘(C) the ratio of total capital to assets for 
the regulated entity increases during the cal-
endar quarter at a rate sufficient to enable the 
entity to become adequately capitalized within a 
reasonable time. 
‘‘(5) PRIOR
APPROVAL
OF
ACQUISITIONS, NEW 
PRODUCTS, AND NEW ACTIVITIES.—A regulated entity 
that is classified as undercapitalized shall not, di-
rectly or indirectly, acquire any interest in any enti-
ty or initially offer any new product (as such term 
is defined in section 1321(f)) or engage in any new 
activity, service, undertaking, or offering unless—
319 
‘‘(E) CONCEALMENT.—Any concealment of 
the books, papers, records, or assets of the regu-
lated entity, or any refusal to submit the books, 
papers, records, or affairs of the regulated entity, 
for inspection to any examiner or to any lawful 
agent of the Director. 
‘‘(F) INABILITY TO MEET OBLIGATIONS.— 
The regulated entity is likely to be unable to pay 
its obligations or meet the demands of its credi-
tors in the normal course of business. 
‘‘(G) LOSSES.—The regulated entity has in-
curred or is likely to incur losses that will de-
plete all or substantially all of its capital, and 
there is no reasonable prospect for the regulated 
entity to become adequately capitalized (as de-
fined in section 1364(a)(1)). 
‘‘(H) VIOLATIONS OF LAW.—Any violation 
of any law or regulation, or any unsafe or un-
sound practice or condition that is likely to— 
‘‘(i) cause insolvency or substantial 
dissipation of assets or earnings; or 
‘‘(ii) weaken the condition of the regu-
lated entity.
320 
‘‘(I) CONSENT.—The regulated entity, by 
resolution of its board of directors or its share-
holders or members, consents to the appointment. 
‘‘(J) 
UNDERCAPITALIZATION.—The 
regu-
lated entity is undercapitalized or significantly 
undercapitalized 
(as 
defined 
in 
section 
1364(a)(3) or in regulations issued pursuant to 
section 1364(b), as applicable), and— 
‘‘(i) has no reasonable prospect of be-
coming adequately capitalized; 
‘‘(ii) fails to become adequately cap-
italized, as required by— 
‘‘(I) section 1365(a)(1) with re-
spect to an undercapitalized regulated 
entity; or 
‘‘(II) section 1366(a)(1) with re-
spect to a significantly undercapital-
ized regulated entity; 
‘‘(iii) fails to submit a capital restora-
tion plan acceptable to the Agency within 
the time prescribed under section 1369C; or 
‘‘(iv) materially fails to implement a 
capital restoration plan submitted and ac-
cepted under section 1369C.
321 
‘‘(K) CRITICAL
UNDERCAPITALIZATION.— 
The regulated entity is critically undercapital-
ized, as defined in section 1364(a)(4) or in regu-
lations issued pursuant to section 1364(b), as 
applicable. 
‘‘(L) MONEY
LAUNDERING.—The Attorney 
General notifies the Director in writing that the 
regulated entity has been found guilty of a 
criminal offense under section 1956 or 1957 of 
title 18, United States Code, or section 5322 or 
5324 of title 31, United States Code. 
‘‘(4) MANDATORY RECEIVERSHIP.— 
‘‘(A) IN GENERAL.—The Director shall ap-
point the Agency as receiver for a regulated enti-
ty if the Director determines, in writing, that— 
‘‘(i) the assets of the regulated entity 
are, and during the preceding 30 calendar 
days have been, less than the obligations of 
the regulated entity to its creditors and oth-
ers; or 
‘‘(ii) the regulated entity is not, and 
during the preceding 30 calendar days has 
not been, generally paying the debts of the 
regulated entity (other than debts that are
322 
the subject of a bona fide dispute) as such 
debts become due. 
‘‘(B) PERIODIC DETERMINATION REQUIRED 
FOR
CRITICALLY
UNDER
CAPITALIZED
REGU-
LATED ENTITY.—If a regulated entity is criti-
cally undercapitalized, the Director shall make a 
determination, in writing, as to whether the reg-
ulated entity meets the criteria specified in 
clause (i) or (ii) of subparagraph (A)— 
‘‘(i) not later than 30 calendar days 
after the regulated entity initially becomes 
critically undercapitalized; and 
‘‘(ii) at least once during each suc-
ceeding 30-calendar day period. 
‘‘(C) DETERMINATION
NOT
REQUIRED
IF 
RECEIVERSHIP
ALREADY
IN
PLACE.—Subpara-
graph (B) shall not apply with respect to a regu-
lated entity in any period during which the 
Agency serves as receiver for the regulated entity. 
‘‘(D) RECEIVERSHIP
TERMINATES
CON-
SERVATORSHIP.—The appointment under this 
section of the Agency as receiver of a regulated 
entity shall immediately terminate any con-
servatorship established under this title for the 
regulated entity.
323 
‘‘(5) JUDICIAL REVIEW.— 
‘‘(A) IN GENERAL.—If the Agency is ap-
pointed conservator or receiver under this sec-
tion, the regulated entity may, within 30 days of 
such appointment, bring an action in the United 
States District Court for the judicial district in 
which the principal place of business of such reg-
ulated entity is located, or in the United States 
District Court for the District of Columbia, for 
an order requiring the Agency to remove itself as 
conservator or receiver. 
‘‘(B) REVIEW.—Upon the filing of an ac-
tion under subparagraph (A), the court shall, 
upon the merits, dismiss such action or direct 
the Agency to remove itself as such conservator 
or receiver. 
‘‘(6) DIRECTORS NOT LIABLE FOR ACQUIESCING 
IN APPOINTMENT OF CONSERVATOR OR RECEIVER.— 
The members of the board of directors of a regulated 
entity shall not be liable to the shareholders or credi-
tors of the regulated entity for acquiescing in or con-
senting in good faith to the appointment of the Agen-
cy as conservator or receiver for that regulated entity. 
‘‘(7) AGENCY NOT SUBJECT TO ANY OTHER FED-
ERAL AGENCY.—When acting as conservator or re-
324 
ceiver, the Agency shall not be subject to the direction 
or supervision of any other agency of the United 
States or any State in the exercise of the rights, pow-
ers, and privileges of the Agency. 
‘‘(b) POWERS AND DUTIES OF THE AGENCY AS CON-
SERVATOR OR RECEIVER.— 
‘‘(1) RULEMAKING
AUTHORITY
OF
THE
AGEN-
CY.—The Agency may prescribe such regulations as 
the Agency determines to be appropriate regarding 
the conduct of conservatorships or receiverships. 
‘‘(2) GENERAL POWERS.— 
‘‘(A) SUCCESSOR TO REGULATED ENTITY.— 
The Agency shall, as conservator or receiver, and 
by operation of law, immediately succeed to— 
‘‘(i) all rights, titles, powers, and 
privileges of the regulated entity, and of 
any stockholder, officer, or director of such 
regulated entity with respect to the regu-
lated entity and the assets of the regulated 
entity; and 
‘‘(ii) title to the books, records, and as-
sets of any other legal custodian of such reg-
ulated entity. 
‘‘(B) OPERATE THE REGULATED ENTITY.— 
The Agency may, as conservator or receiver—
325 
‘‘(i) take over the assets of and operate 
the regulated entity with all the powers of 
the shareholders, the directors, and the offi-
cers of the regulated entity and conduct all 
business of the regulated entity; 
‘‘(ii) collect all obligations and money 
due the regulated entity; 
‘‘(iii) perform all functions of the regu-
lated entity in the name of the regulated en-
tity which are consistent with the appoint-
ment as conservator or receiver; and 
‘‘(iv) preserve and conserve the assets 
and property of such regulated entity. 
‘‘(C) FUNCTIONS OF OFFICERS, DIRECTORS, 
AND
SHAREHOLDERS
OF
A
REGULATED
ENTI-
TY.—The Agency may, by regulation or order, 
provide for the exercise of any function by any 
stockholder, director, or officer of any regulated 
entity for which the Agency has been named con-
servator or receiver. 
‘‘(D) 
POWERS
AS
CONSERVATOR.—The 
Agency may, as conservator, take such action as 
may be— 
‘‘(i) necessary to put the regulated en-
tity in a sound and solvent condition; and
326 
‘‘(ii) appropriate to carry on the busi-
ness of the regulated entity and preserve 
and conserve the assets and property of the 
regulated entity, including, if two or more 
Federal home loan banks have been placed 
in 
conservatorship 
contemporaneously, 
merging two or more such banks into a sin-
gle Federal home loan bank. 
‘‘(E) ADDITIONAL POWERS AS RECEIVER.— 
The Agency may, as receiver, place the regulated 
entity in liquidation and proceed to realize upon 
the assets of the regulated entity, having due re-
gard to the conditions of the housing finance 
market. 
‘‘(F) ORGANIZATION
OF
NEW
REGULATED 
ENTITIES.—The Agency may, as receiver, orga-
nize a successor regulated entity that will oper-
ate pursuant to subsection (i). 
‘‘(G) TRANSFER
OF
ASSETS
AND
LIABIL-
ITIES.—The Agency may, as conservator or re-
ceiver, transfer any asset or liability of the regu-
lated entity in default without any approval, as-
signment, or consent with respect to such trans-
fer. Any Federal home loan bank may, with the 
approval of the Agency, acquire the assets of any
327 
Bank in conservatorship or receivership, and as-
sume the liabilities of such Bank. 
‘‘(H) PAYMENT OF VALID OBLIGATIONS.— 
The Agency, as conservator or receiver, shall, to 
the extent of proceeds realized from the perform-
ance of contracts or sale of the assets of a regu-
lated entity, pay all valid obligations of the reg-
ulated entity in accordance with the prescrip-
tions and limitations of this section. 
‘‘(I) SUBPOENA AUTHORITY.— 
‘‘(i) IN GENERAL.— 
‘‘(I) IN
GENERAL.—The Agency 
may, as conservator or receiver, and 
for purposes of carrying out any 
power, authority, or duty with respect 
to a regulated entity (including deter-
mining any claim against the regu-
lated entity and determining and real-
izing upon any asset of any person in 
the course of collecting money due the 
regulated entity), exercise any power 
established under section 1348. 
‘‘(II) APPLICABILITY
OF
LAW.— 
The provisions of section 1348 shall 
apply with respect to the exercise of
328 
any power exercised under this sub-
paragraph in the same manner as such 
provisions apply under that section. 
‘‘(ii) AUTHORITY
OF
DIRECTOR.—A 
subpoena or subpoena duces tecum may be 
issued under clause (i) only by, or with the 
written approval of, the Director, or the des-
ignee of the Director. 
‘‘(iii) RULE OF CONSTRUCTION.—This 
subsection shall not be construed to limit 
any rights that the Agency, in any capac-
ity, might otherwise have under section 
1317 or 1379D. 
‘‘(J) CONTRACTING
FOR
SERVICES.—The 
Agency may, as conservator or receiver, provide 
by contract for the carrying out of any of its 
functions, activities, actions, or duties as conser-
vator or receiver. 
‘‘(K) INCIDENTAL
POWERS.—The Agency 
may, as conservator or receiver— 
‘‘(i) exercise all powers and authorities 
specifically granted to conservators or re-
ceivers, respectively, under this section, and 
such incidental powers as shall be necessary 
to carry out such powers; and
329 
‘‘(ii) take any action authorized by 
this section, which the Agency determines is 
in the best interests of the regulated entity 
or the Agency. 
‘‘(3) AUTHORITY OF RECEIVER TO DETERMINE 
CLAIMS.— 
‘‘(A) IN GENERAL.—The Agency may, as re-
ceiver, determine claims in accordance with the 
requirements of this subsection and any regula-
tions prescribed under paragraph (4). 
‘‘(B) NOTICE
REQUIREMENTS.—The re-
ceiver, in any case involving the liquidation or 
winding up of the affairs of a closed regulated 
entity, shall— 
‘‘(i) promptly publish a notice to the 
creditors of the regulated entity to present 
their claims, together with proof, to the re-
ceiver by a date specified in the notice 
which shall be not less than 90 days after 
the publication of such notice; and 
‘‘(ii) republish such notice approxi-
mately 1 month and 2 months, respectively, 
after the publication under clause (i). 
‘‘(C) MAILING
REQUIRED.—The receiver 
shall mail a notice similar to the notice pub-
330 
lished under subparagraph (B)(i) at the time of 
such publication to any creditor shown on the 
books of the regulated entity— 
‘‘(i) at the last address of the creditor 
appearing in such books; or 
‘‘(ii) upon discovery of the name and 
address of a claimant not appearing on the 
books of the regulated entity within 30 days 
after the discovery of such name and ad-
dress. 
‘‘(4) RULEMAKING AUTHORITY RELATING TO DE-
TERMINATION OF CLAIMS.—Subject to subsection (c), 
the Director may prescribe regulations regarding the 
allowance or disallowance of claims by the receiver 
and providing for administrative determination of 
claims and review of such determination. 
‘‘(5) PROCEDURES
FOR
DETERMINATION
OF 
CLAIMS.— 
‘‘(A) DETERMINATION PERIOD.— 
‘‘(i) IN GENERAL.—Before the end of 
the 180-day period beginning on the date on 
which any claim against a regulated entity 
is filed with the Agency as receiver, the 
Agency shall determine whether to allow or 
disallow the claim and shall notify the
331 
claimant of any determination with respect 
to such claim. 
‘‘(ii) EXTENSION
OF
TIME.—The pe-
riod described in clause (i) may be extended 
by a written agreement between the claim-
ant and the Agency. 
‘‘(iii) MAILING
OF
NOTICE
SUFFI-
CIENT.—The notification requirements of 
clause (i) shall be deemed to be satisfied if 
the notice of any determination with respect 
to any claim is mailed to the last address 
of the claimant which appears— 
‘‘(I) on the books of the regulated 
entity; 
‘‘(II) in the claim filed by the 
claimant; or 
‘‘(III) in documents submitted in 
proof of the claim. 
‘‘(iv) CONTENTS
OF
NOTICE
OF
DIS-
ALLOWANCE.—If any claim filed under 
clause (i) is disallowed, the notice to the 
claimant shall contain— 
‘‘(I) a statement of each reason for 
the disallowance; and
332 
‘‘(II) the procedures available for 
obtaining agency review of the deter-
mination to disallow the claim or judi-
cial determination of the claim. 
‘‘(B) ALLOWANCE OF PROVEN CLAIM.—The 
receiver shall allow any claim received on or be-
fore the date specified in the notice published 
under paragraph (3)(B)(i), or the date specified 
in the notice required under paragraph (3)(C), 
which is proved to the satisfaction of the receiver. 
‘‘(C) DISALLOWANCE
OF
CLAIMS
FILED 
AFTER
END
OF
FILING
PERIOD.—Claims filed 
after the date specified in the notice published 
under paragraph (3)(B)(i), or the date specified 
under paragraph (3)(C), shall be disallowed and 
such disallowance shall be final. 
‘‘(D) AUTHORITY TO DISALLOW CLAIMS.— 
‘‘(i) IN GENERAL.—The receiver may 
disallow any portion of any claim by a 
creditor or claim of security, preference, or 
priority which is not proved to the satisfac-
tion of the receiver. 
‘‘(ii) PAYMENTS TO LESS THAN FULLY 
SECURED
CREDITORS.—In the case of a 
claim of a creditor against a regulated enti-
333 
ty which is secured by any property or 
other asset of such regulated entity, the re-
ceiver— 
‘‘(I) may treat the portion of such 
claim which exceeds an amount equal 
to the fair market value of such prop-
erty or other asset as an unsecured 
claim against the regulated entity; and 
‘‘(II) may not make any payment 
with respect to such unsecured portion 
of the claim other than in connection 
with the disposition of all claims of 
unsecured creditors of the regulated en-
tity. 
‘‘(iii) EXCEPTIONS.—No provision of 
this paragraph shall apply with respect to 
any extension of credit from any Federal 
Reserve Bank, Federal home loan bank, or 
the Treasury of the United States. 
‘‘(E) NO JUDICIAL REVIEW OF DETERMINA-
TION
PURSUANT
TO
SUBPARAGRAPH (d).—No 
court may review the determination of the Agen-
cy under subparagraph (D) to disallow a claim. 
This subparagraph shall not affect the authority
334 
of a claimant to obtain de novo judicial review 
of a claim pursuant to paragraph (6). 
‘‘(F) LEGAL EFFECT OF FILING.— 
‘‘(i) 
STATUTE
OF
LIMITATION 
TOLLED.—For purposes of any applicable 
statute of limitations, the filing of a claim 
with the receiver shall constitute a com-
mencement of an action. 
‘‘(ii) NO
PREJUDICE
TO
OTHER
AC-
TIONS.—Subject to paragraph (10), the fil-
ing of a claim with the receiver shall not 
prejudice any right of the claimant to con-
tinue any action which was filed before the 
date of the appointment of the receiver, sub-
ject to the determination of claims by the 
receiver. 
‘‘(6) PROVISION FOR JUDICIAL DETERMINATION 
OF CLAIMS.— 
‘‘(A) IN GENERAL.—The claimant may file 
suit on a claim (or continue an action com-
menced before the appointment of the receiver) in 
the district or territorial court of the United 
States for the district within which the principal 
place of business of the regulated entity is located 
or the United States District Court for the Dis-
344 
‘‘(A) IN
GENERAL.—Notwithstanding any 
provision of any contract, the applicable statute 
of limitations with regard to any action brought 
by the Agency as conservator or receiver shall 
be— 
‘‘(i) in the case of any contract claim, 
the longer of— 
‘‘(I) the 6-year period beginning 
on the date the claim accrues; or 
‘‘(II) the period applicable under 
State law; and 
‘‘(ii) in the case of any tort claim, the 
longer of— 
‘‘(I) the 3-year period beginning 
on the date the claim accrues; or 
‘‘(II) the period applicable under 
State law. 
‘‘(B) DETERMINATION
OF
THE
DATE
ON 
WHICH A CLAIM ACCRUES.—For purposes of sub-
paragraph (A), the date on which the statute of 
limitations begins to run on any claim described 
in such subparagraph shall be the later of— 
‘‘(i) the date of the appointment of the 
Agency as conservator or receiver; or
354 
graphs (4), (5), and (6), the liability of the con-
servator or receiver for the disaffirmance or re-
pudiation of any contract pursuant to para-
graph (1) shall be— 
‘‘(i) limited to actual direct compen-
satory damages; and 
‘‘(ii) determined as of— 
‘‘(I) the date of the appointment 
of the conservator or receiver; or 
‘‘(II) in the case of any contract 
or agreement referred to in paragraph 
(8), the date of the disaffirmance or re-
pudiation of such contract or agree-
ment. 
‘‘(B) NO LIABILITY FOR OTHER DAMAGES.— 
For purposes of subparagraph (A), the term ‘ac-
tual direct compensatory damages’ shall not in-
clude— 
‘‘(i) punitive or exemplary damages; 
‘‘(ii) damages for lost profits or oppor-
tunity; or 
‘‘(iii) damages for pain and suffering. 
‘‘(C) MEASURE OF DAMAGES FOR REPUDI-
ATION OF FINANCIAL CONTRACTS.—In the case of 
any qualified financial contract or agreement to
355 
which paragraph (8) applies, compensatory 
damages shall be— 
‘‘(i) deemed to include normal and rea-
sonable costs of cover or other reasonable 
measures of damages utilized in the indus-
tries for such contract and agreement 
claims; and 
‘‘(ii) paid in accordance with this sub-
section and subsection (e), except as other-
wise specifically provided in this section. 
‘‘(4) LEASES
UNDER
WHICH
THE
REGULATED 
ENTITY IS THE LESSEE.— 
‘‘(A) IN GENERAL.—If the conservator or re-
ceiver disaffirms or repudiates a lease under 
which the regulated entity was the lessee, the con-
servator or receiver shall not be liable for any 
damages (other than damages determined under 
subparagraph (B)) for the disaffirmance or repu-
diation of such lease. 
‘‘(B) 
PAYMENTS
OF
RENT.—Notwith-
standing subparagraph (A), the lessor under a 
lease to which that subparagraph applies shall— 
‘‘(i) be entitled to the contractual rent 
accruing before the later of the date—
356 
‘‘(I) the notice of disaffirmance or 
repudiation is mailed; or 
‘‘(II) the disaffirmance or repudi-
ation becomes effective, unless the lessor 
is in default or breach of the terms of 
the lease; 
‘‘(ii) have no claim for damages under 
any acceleration clause or other penalty 
provision in the lease; and 
‘‘(iii) have a claim for any unpaid 
rent, subject to all appropriate offsets and 
defenses, due as of the date of the appoint-
ment, which shall be paid in accordance 
with this subsection and subsection (e). 
‘‘(5) LEASES
UNDER
WHICH
THE
REGULATED 
ENTITY IS THE LESSOR.— 
‘‘(A) IN GENERAL.—If the conservator or re-
ceiver repudiates an unexpired written lease of 
real property of the regulated entity under which 
the regulated entity is the lessor and the lessee is 
not, as of the date of such repudiation, in de-
fault, the lessee under such lease may either— 
‘‘(i) treat the lease as terminated by 
such repudiation; or
357 
‘‘(ii) remain in possession of the lease-
hold interest for the balance of the term of 
the lease, unless the lessee defaults under the 
terms of the lease after the date of such re-
pudiation. 
‘‘(B) PROVISIONS APPLICABLE TO LESSEE 
REMAINING IN POSSESSION.—If any lessee under 
a lease described under subparagraph (A) re-
mains in possession of a leasehold interest under 
clause (ii) of such subparagraph— 
‘‘(i) the lessee— 
‘‘(I) shall continue to pay the con-
tractual rent pursuant to the terms of 
the lease after the date of the repudi-
ation of such lease; and 
‘‘(II) may offset against any rent 
payment which accrues after the date 
of the repudiation of the lease, and any 
damages which accrue after such date 
due to the nonperformance of any obli-
gation of the regulated entity under the 
lease after such date; and 
‘‘(ii) the conservator or receiver shall 
not be liable to the lessee for any damages 
arising after such date as a result of the re-