(2) APPROVAL OF EACH COVERED BOND PRO-
GRAM.— 
(A) IN GENERAL.—A covered bond shall be 
subject to this Act only if the covered bond is 
issued by an eligible issuer under a covered bond 
program that is approved by the applicable cov-
ered bond regulator. 
(B) APPROVAL
PROCESS.—Each covered 
bond regulator shall apply the standards estab-
lished by the Secretary under the oversight pro-
gram to evaluate a covered bond program that 
has been submitted by an eligible issuer for ap-
proval. Each covered bond regulator also shall 
take into account relevant supervisory factors, 
including safety and soundness considerations, 
in evaluating a covered bond program that has 
been submitted for approval. Each covered bond 
regulator, promptly after approving a covered 
bond program, shall provide the Secretary with 
the name of the covered bond program, the name 
of the eligible issuer, and all other information 
reasonably requested by the Secretary in order to 
update the registry under paragraph (3)(A). 
Each eligible issuer, promptly after issuing a 
covered bond under an approved covered bond 
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program, shall provide the Secretary with all in-
formation reasonably requested by the Secretary 
in order to update the registry under paragraph 
(3)(B). 
(C) EXISTING COVERED BOND PROGRAMS.— 
A covered bond regulator may approve a covered 
bond program that is in existence on the date of 
the enactment of this Act. Upon such approval, 
each covered bond under the covered bond pro-
gram shall be subject to this Act, regardless of 
when the covered bond was issued. 
(D) MULTIPLE COVERED BOND PROGRAMS 
PERMITTED.—An eligible issuer may have more 
than 1 covered bond program. 
(E) CEASE AND DESIST AUTHORITY.—The 
applicable covered bond regulator may direct an 
eligible issuer to cease issuing covered bonds 
under an approved covered bond program if the 
covered bond program is not maintained in a 
manner that is consistent with this Act and the 
oversight program and if, after notice that is 
reasonable under the circumstances, the issuer 
does not remedy all deficiencies identified by the 
applicable covered bond regulator. 
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(F) CAP ON THE AMOUNT OF OUTSTANDING 
COVERED BONDS.— 
(i) IN GENERAL.—With respect to each 
eligible issuer that submits a covered bond 
program for approval, the applicable cov-
ered bond regulator shall set, consistent with 
safety and soundness considerations and the 
financial condition of the eligible issuer, the 
maximum amount, as a percentage of the 
eligible issuer’s total assets, of outstanding 
covered bonds that the eligible issuer may 
issue. 
(ii) REVIEW OF CAP.—The applicable 
covered bond regulator may, not more fre-
quently than quarterly, review the percent-
age set under clause (i) and, if safety and 
soundness considerations or the financial 
condition of the eligible issuer has changed, 
increase or decrease such percentage. Any 
decrease made pursuant to this clause shall 
have no effect on existing covered bonds 
issued by the eligible issuer. 
(3) REGISTRY.—Under the oversight program, 
the Secretary shall maintain a registry that is pub-
lished on a Web site available to the public and that, 
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for each covered bond program approved by a covered 
bond regulator, contains— 
(A) the name of the covered bond program, 
the name of the eligible issuer, and all other in-
formation that the Secretary considers necessary 
to adequately identify the covered bond program 
and the eligible issuer; and 
(B) all information that the Secretary con-
siders necessary to adequately identify all out-
standing covered bonds issued under the covered 
bond program (including the reports described in 
paragraphs (3) and (4) of subsection (b)). 
(4) FEES.—Each covered bond regulator may 
levy, on the issuers of covered bonds under the pri-
mary supervision of such covered bond regulator, rea-
sonably apportioned fees that such covered bond regu-
lator considers necessary, in the aggregate, to defray 
the costs of such covered bond regulator carrying out 
the provisions of this Act. Such funds shall not be 
construed to be Government funds or appropriated 
monies and shall not be subject to apportionment for 
purposes of chapter 15 of title 31, United States Code, 
or any other provision of law. 
(b) MINIMUM OVER-COLLATERALIZATION REQUIRE-
MENTS.— 
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(1) REQUIREMENTS
ESTABLISHED.—The Sec-
retary, by rule and in consultation with the covered 
bond regulators, shall establish minimum over- 
collateralization requirements for covered bonds 
backed by each of the eligible asset classes. The min-
imum over-collateralization requirements shall be de-
signed to ensure that sufficient eligible assets and sub-
stitute assets are maintained in the cover pool to sat-
isfy all principal and interest payments on the cov-
ered bonds when due through maturity and shall be 
based on the credit, collection, and interest rate risks 
(excluding the liquidity risks) associated with the eli-
gible asset class. 
(2) ASSET COVERAGE TEST.—The eligible assets 
and the substitute assets in any cover pool shall be re-
quired, in the aggregate, to meet at all times the ap-
plicable minimum over-collateralization requirements. 
(3) MONTHLY REPORTING.—On a monthly basis, 
each issuer of covered bonds shall submit a report on 
whether the cover pool that secures the covered bonds 
meets the applicable minimum over-collateralization 
requirements to— 
(A) the Secretary; 
(B) the applicable covered bond regulator; 
(C) the applicable indenture trustee; 
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(D) the applicable covered bondholders; and 
(E) the applicable independent asset mon-
itor. 
(4) INDEPENDENT ASSET MONITOR.— 
(A) APPOINTMENT.—Each issuer of covered 
bonds shall appoint the indenture trustee for the 
covered bonds, or another unaffiliated entity, as 
an independent asset monitor for the applicable 
cover pool. 
(B) DUTIES.—An independent asset mon-
itor appointed under subparagraph (A) shall, on 
an annual or other more frequent periodic basis 
determined by the Secretary under the oversight 
program— 
(i) verify whether the cover pool meets 
the 
applicable 
minimum 
over- 
collateralization requirements; and 
(ii) report to the Secretary, the appli-
cable covered bond regulator, the applicable 
indenture trustee, and the applicable cov-
ered bondholders on whether the cover pool 
meets 
the 
applicable 
minimum 
over- 
collateralization requirements. 
(5) NO LOSS OF STATUS.—Covered bonds shall 
remain subject to this Act regardless of whether the 
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applicable cover pool ceases to meet the applicable 
minimum over-collateralization requirements. 
(6) FAILURE TO MEET REQUIREMENTS.— 
(A) IN GENERAL.—If a cover pool fails to 
meet 
the 
applicable 
minimum 
over- 
collateralization requirements, and if the failure 
is not cured within the time specified in the re-
lated transaction documents, the failure shall be 
an uncured default for purposes of section 4(a). 
(B) NOTICE REQUIRED.—An issuer of cov-
ered bonds shall promptly give the Secretary and 
the applicable covered bond regulator written no-
tice if the cover pool securing the covered bonds 
fails to meet the applicable minimum over- 
collateralization requirements, if the failure is 
cured within the time specified in the related 
transaction documents, or if the failure is not so 
cured. 
(c) REQUIREMENTS FOR ELIGIBLE ASSETS.— 
(1) REQUIREMENTS.— 
(A) LOANS.—A loan shall not qualify as an 
eligible asset for so long as the loan is delinquent 
for more than 60 consecutive days. 
(B) SECURITIES.—A security shall not 
qualify as an eligible asset for so long as the se-
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curity does not meet any credit-quality require-
ment under this Act. 
(C) ORIGINATION.—An asset shall not qual-
ify as an eligible asset if the asset was not origi-
nated in compliance with any rule or super-
visory guidance of a Federal agency applicable 
to the asset at the time of origination. 
(D) NO DOUBLE PLEDGE.—An asset shall 
not qualify as an eligible asset for so long as the 
asset is subject to a prior perfected security in-
terest or other prior perfected lien that has been 
granted in an unrelated transaction. Nothing in 
this Act shall affect such a prior perfected secu-
rity interest or other prior perfected lien, and the 
rights of such lien holders. 
(2) FAILURE TO MEET REQUIREMENTS.—Subject 
to paragraph (1)(D), if an asset in a cover pool does 
not satisfy any applicable requirement described in 
paragraph (1) or any other applicable standard or 
criterion described in this Act, the oversight program, 
or the related transaction documents, the asset shall 
not qualify as an eligible asset for purposes of the 
asset coverage test described in subsection (b)(2). A 
disqualified asset shall remain in the cover pool un-
less and until removed by the issuer in compliance 
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with the provisions of this Act, the oversight program, 
and the related transaction documents. No disquali-
fied asset may be removed from the cover pool after 
an estate has been created for the related covered bond 
program under section 4(b)(1) or 4(c)(2), except in 
connection with the management of the cover pool 
under section 4(d)(1)(E). 
(d) OTHER REQUIREMENTS.— 
(1) BOOKS
AND
RECORDS
OF
ISSUER.—Each 
issuer of covered bonds shall clearly mark its books 
and records to identify the assets that comprise the 
cover pool securing the covered bonds. 
(2) SCHEDULE OF ELIGIBLE ASSETS AND SUB-
STITUTE ASSETS.—Each issuer of covered bonds shall 
deliver to the applicable indenture trustee and the ap-
plicable independent asset monitor, on at least a 
monthly basis, a schedule that identifies all eligible 
assets and substitute assets in the cover pool securing 
the covered bonds. 
(3) SINGLE ELIGIBLE ASSET CLASS.—No cover 
pool described in section 2(3)(A) may include eligible 
assets from more than 1 eligible asset class. No cover 
poll described in section 2(3)(B) may include covered 
bonds backed by more than 1 eligible asset class. 
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SEC. 4. RESOLUTION UPON DEFAULT OR INSOLVENCY. 
(a) UNCURED DEFAULT DEFINED.—For purposes of 
this section, the term ‘‘uncured default’’ means a default 
on a covered bond that has not been cured within the time, 
if any, specified in the related transaction documents. 
(b) DEFAULT ON COVERED BONDS PRIOR TO CON-
SERVATORSHIP, RECEIVERSHIP, LIQUIDATION, OR BANK-
RUPTCY.— 
(1) CREATION
OF
SEPARATE
ESTATE.—If an 
uncured default occurs on a covered bond before the 
issuer of the covered bond enters conservatorship, re-
ceivership, liquidation, or bankruptcy, an estate shall 
be immediately and automatically created by oper-
ation of law and shall exist and be administered sep-
arate and apart from the issuer or any subsequent 
conservatorship, receivership, liquidating agency, or 
estate in bankruptcy for the issuer or any other assets 
of the issuer. A separate estate shall be created for 
each affected covered bond program. 
(2) ASSETS AND LIABILITIES OF ESTATE.—Any 
estate created under paragraph (1) shall be comprised 
of the cover pool (including over-collateralization in 
the cover pool) that secures the covered bond. The 
cover pool shall be immediately and automatically re-
leased to and held by the estate free and clear of any 
right, title, interest, or claim of the issuer or any con-
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servator, receiver, liquidating agent, or trustee in 
bankruptcy for the issuer or any other assets of the 
issuer. The estate shall be fully liable on the covered 
bond and all other covered bonds and related obliga-
tions of the issuer (including obligations under re-
lated derivative transactions) that are secured by a 
perfected security interest in or other perfected lien on 
the cover pool when the estate is created. The estate 
shall not be liable on any obligation of the issuer that 
is not secured by a perfected security interest in or 
other perfected lien on the cover pool when the estate 
is created. No conservator, receiver, liquidating agent, 
or trustee in bankruptcy for the issuer may charge or 
assess the estate for any claim of the conservator, re-
ceiver, liquidating agent, or trustee in bankruptcy or 
the conservatorship, receivership, liquidating agency, 
or estate in bankruptcy and may not obtain or perfect 
a security interest in or other lien on the cover pool 
to secure such a claim. 
(3) RETENTION OF CLAIMS.—Any holder of a 
covered bond or related obligation for which an estate 
has become liable under paragraph (2) shall retain a 
claim against the issuer for any deficiency with re-
spect to the covered bond or related obligation. If the 
issuer enters conservatorship, receivership, liquida-
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tion, or bankruptcy, any contingent claim for such a 
deficiency shall be allowed as a provable claim in the 
conservatorship, receivership, liquidating agency, or 
bankruptcy case. The contingent claim shall be esti-
mated by the conservator, receiver, liquidating agent, 
or bankruptcy court for purposes of allowing the 
claim as a provable claim if awaiting the fixing of 
the contingent claim would unduly delay the resolu-
tion of the conservatorship, receivership, liquidating 
agency, or bankruptcy case. 
(4) RESIDUAL INTEREST.— 
(A) ISSUANCE OF RESIDUAL INTEREST.— 
Upon the creation of an estate under paragraph 
(1), a residual interest in the estate shall be im-
mediately and automatically issued by operation 
of law to the issuer. 
(B) NATURE OF RESIDUAL INTEREST.—The 
residual interest under subparagraph (A) shall— 
(i) be an exempted security as de-
scribed in section 5; 
(ii) represent the right to any surplus 
from the cover pool after the covered bonds 
and all other liabilities of the estate have 
been fully and irrevocably paid; and 
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(iii) be evidenced by a certificate exe-
cuted by the trustee of the estate. 
(5) OBLIGATIONS OF ISSUER.— 
(A) IN GENERAL.—After the creation of an 
estate under paragraph (1), the issuer shall— 
(i) transfer to or at the direction of the 
trustee for the estate all property of the es-
tate that is in the possession or under the 
control of the issuer, including all tangible 
or electronic books, records, files, and other 
documents or materials relating to the as-
sets and liabilities of the estate; and 
(ii) at the election of the trustee or a 
servicer or administrator for the estate, con-
tinue servicing the applicable cover pool for 
120 days after the creation of the estate in 
return for a fair-market-value fee, as deter-
mined by the trustee in consultation with 
the applicable covered bond regulator, that 
shall be payable from the estate as an ad-
ministrative expense. 
(B) OBLIGATIONS ABSOLUTE.—Neither the 
issuer, whether acting as debtor in possession or 
in any other capacity, nor any conservator, re-
ceiver, liquidating agent, or trustee in bank-
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ruptcy for the issuer or any other assets of the 
issuer may disaffirm, repudiate, or reject the ob-
ligation to turn over property or to continue 
servicing the cover pool as provided in subpara-
graph (A). 
(c) DEFAULT
ON
COVERED
BONDS
UPON
CON-
SERVATORSHIP, RECEIVERSHIP, LIQUIDATION, OR BANK-
RUPTCY.— 
(1) CORPORATION
CONSERVATORSHIP
OR
RE-
CEIVERSHIP.— 
(A) IN GENERAL.—If the Corporation is ap-
pointed as conservator or receiver for an issuer 
of covered bonds before an uncured default results 
in the creation of an estate under subsection (b), 
the Corporation as conservator or receiver shall 
have an exclusive right, during the 1-year period 
beginning on the date of the appointment, to 
transfer any cover pool owned by the issuer in 
its entirety, together with all covered bonds and 
related obligations that are secured by a per-
fected security interest in or other perfected lien 
on the cover pool, to another eligible issuer that 
meets all conditions and requirements specified 
in the related transaction documents. The Cor-
poration as conservator or receiver may not re-
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move any asset from the cover pool, except to the 
extent otherwise agreed by a transferee that has 
assumed the covered bond program pursuant to 
subparagraph (C). 
(B) OBLIGATIONS
DURING
1-YEAR
PE-
RIOD.—During the 1-year period described in 
subparagraph (A), the Corporation as conser-
vator or receiver shall fully and timely satisfy 
all monetary and nonmonetary obligations of the 
issuer under all covered bonds and the related 
transaction documents and shall fully and time-
ly cure all defaults by the issuer (other than its 
conservatorship or receivership) under the appli-
cable covered bond program, in each case, until 
the earlier of— 
(i) the transfer of the applicable cov-
ered bond program to another eligible issuer 
as provided in subparagraph (A); or 
(ii) the delivery to the Secretary, the 
applicable covered bond regulator, the ap-
plicable indenture trustee, and the applica-
ble covered bondholders of a written notice 
from the Corporation as conservator or re-
ceiver electing to cease further performance 
under the applicable covered bond program. 
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(C) ASSUMPTION BY TRANSFEREE.—If the 
Corporation as conservator or receiver transfers 
a covered bond program to another eligible issuer 
within the 1-year period as provided in subpara-
graph (A), the transferee shall take ownership of 
the applicable cover pool and shall become fully 
liable on all covered bonds and related obliga-
tions of the issuer that are secured by a perfected 
security interest in or other perfected lien on the 
cover pool. 
(2) OTHER CIRCUMSTANCES.—An estate shall be 
immediately and automatically created by operation 
of law and shall exist and be administered separate 
and apart from an issuer of covered bonds and any 
conservatorship, receivership, liquidating agency, or 
estate in bankruptcy for the issuer or any other assets 
of the issuer, if— 
(A) a conservator, receiver, liquidating 
agent, or trustee in bankruptcy, other than the 
Corporation, is appointed for the issuer before an 
uncured default results in the creation of an es-
tate under subsection (b); or 
(B) in the case of the appointment of the 
Corporation as conservator or receiver as de-
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scribed in paragraph (1)(A), the Corporation as 
conservator or receiver— 
(i) does not complete the transfer of the 
applicable covered bond program to another 
eligible issuer within the 1-year period as 
provided in paragraph (1)(A); 
(ii) delivers to the Secretary, the appli-
cable covered bond regulator, the applicable 
indenture trustee, and the applicable cov-
ered bondholders a written notice electing to 
cease further performance under the appli-
cable covered bond program; or 
(iii) fails to fully and timely satisfy all 
monetary and nonmonetary obligations of 
the issuer under the covered bonds and the 
related transaction documents or to fully 
and timely cure all defaults by the issuer 
(other than its conservatorship or receiver-
ship) under the applicable covered bond 
program. 
A separate estate shall be created for each affected cov-
ered bond program. 
(3) ASSETS AND LIABILITIES OF ESTATE.—Any 
estate created under paragraph (2) shall be comprised 
of the cover pool (including over-collateralization in 
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the cover pool) that secures the covered bonds. The 
cover pool shall be immediately and automatically re-
leased to and held by the estate free and clear of any 
right, title, interest, or claim of the issuer or any con-
servator, receiver, liquidating agent, or trustee in 
bankruptcy for the issuer or any other assets of the 
issuer. The estate shall be fully liable on the covered 
bonds and all other covered bonds and related obliga-
tions of the issuer (including obligations under re-
lated derivative transactions) that are secured by a 
perfected security interest in or other perfected lien on 
the cover pool when the estate is created. The estate 
shall not be liable on any obligation of the issuer that 
is not secured by a perfected security interest in or 
other perfected lien on the cover pool when the estate 
is created. No conservator, receiver, liquidating agent, 
or trustee in bankruptcy for the issuer may charge or 
assess the estate for any claim of the conservator, re-
ceiver, liquidating agent, or trustee in bankruptcy or 
the conservatorship, receivership, liquidating agency, 
or estate in bankruptcy and may not obtain or perfect 
a security interest in or other lien on the cover pool 
to secure such a claim. 
(4) CONTINGENT CLAIM.—Any contingent claim 
against an issuer for a deficiency with respect to a 
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covered bond or related obligation for which an estate 
has become liable under paragraph (3) shall be al-
lowed as a provable claim in the conservatorship, re-
ceivership, liquidating agency, or bankruptcy case for 
the issuer. The contingent claim shall be estimated by 
the conservator, receiver, liquidating agent, or bank-
ruptcy court for purposes of allowing the claim as a 
provable claim if awaiting the fixing of the contin-
gent claim would unduly delay the resolution of the 
conservatorship, receivership, liquidating agency, or 
bankruptcy case. 
(5) RESIDUAL INTEREST.— 
(A) ISSUANCE OF RESIDUAL INTEREST.— 
Upon the creation of an estate under paragraph 
(2), and regardless of whether any contingent 
claim described in paragraph (4) becomes fixed 
or is estimated, a residual interest in the estate 
shall be immediately and automatically issued 
by operation of law to the conservator, receiver, 
liquidating agent, or trustee in bankruptcy for 
the issuer. 
(B) NATURE OF RESIDUAL INTEREST.—The 
residual interest under subparagraph (A) shall— 
(i) be an exempted security as de-
scribed in section 5; 
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(ii) represent the right to any surplus 
from the cover pool after the covered bonds 
and all other liabilities of the estate have 
been fully and irrevocably paid; and 
(iii) be evidenced by a certificate exe-
cuted by the trustee of the estate. 
(6) OBLIGATIONS OF ISSUER.— 
(A) IN GENERAL.—After the creation of an 
estate under paragraph (2), the issuer and its 
conservator, receiver, liquidating agent, or trust-
ee in bankruptcy shall— 
(i) transfer to or at the direction of the 
trustee for the estate all property of the es-
tate that is in the possession or under the 
control of the issuer or its conservator, re-
ceiver, liquidating agent, or trustee in bank-
ruptcy, including all tangible or electronic 
books, records, files, and other documents or 
materials relating to the assets and liabil-
ities of the estate; and 
(ii) at the election of the trustee or a 
servicer or administrator for the estate, con-
tinue servicing the applicable cover pool for 
120 days after the creation of the estate in 
return for a fair-market-value fee, as deter-
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mined by the trustee in consultation with 
the applicable covered bond regulator, that 
shall be payable from the estate as an ad-
ministrative expense. 
(B) OBLIGATIONS ABSOLUTE.—Neither the 
issuer, whether acting as debtor in possession or 
in any other capacity, nor any conservator, re-
ceiver, liquidating agent, or trustee in bank-
ruptcy for the issuer or any other assets of the 
issuer may disaffirm, repudiate, or reject the ob-
ligation to turn over property or to continue 
servicing the cover pool as provided in subpara-
graph (A). 
(d) ADMINISTRATION
AND
RESOLUTION
OF
ES-
TATES.— 
(1) TRUSTEE, SERVICER, AND ADMINISTRATOR.— 
(A) IN
GENERAL.—Upon the creation of 
any estate under subsection (b)(1) or (c)(2), the 
applicable covered bond regulator shall— 
(i) appoint the trustee for the estate; 
(ii) appoint 1 or more servicers or ad-
ministrators for the cover pool held by the 
estate; and 
(iii) give the Secretary, the applicable 
indenture trustee, the applicable covered 
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bondholders, and the owner of the residual 
interest written notice of the creation of the 
estate. 
(B) TERMS AND CONDITIONS OF APPOINT-
MENT.—All terms and conditions of any ap-
pointment under paragraph (1), including the 
terms and conditions relating to compensation, 
shall conform to the requirements of this Act and 
the oversight program and otherwise shall be de-
termined by the applicable covered bond regu-
lator. 
(C) QUALIFICATION.—The applicable cov-
ered bond regulator may require the trustee or 
any servicer or administrator for an estate to 
post in favor of the United States, for the benefit 
of the estate, a bond that is conditioned on the 
faithful performance of the duties of the trustee 
or the servicer or administrator. The covered 
bond regulator shall determine the amount of 
any bond required under this subparagraph and 
the sufficiency of the surety on the bond. A pro-
ceeding on a bond required under this subpara-
graph may not be commenced after two years 
after the date on which the trustee or the servicer 
or administrator was discharged. 
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(D) POWERS AND DUTIES OF TRUSTEE.— 
The trustee for an estate is the representative of 
the estate and, subject to the provisions of this 
Act, has capacity to sue and be sued. The trustee 
shall— 
(i) administer the estate in compliance 
with this Act, the oversight program, and 
the related transaction documents; 
(ii) be accountable for all property of 
the estate that is received by the trustee; 
(iii) make a final report and file a 
final account of the administration of the 
estate with the applicable covered bond reg-
ulator; and 
(iv) after the estate has been fully ad-
ministered, close the estate. 
(E) POWERS AND DUTIES OF SERVICER OR 
ADMINISTRATOR.—Any servicer or administrator 
for an estate— 
(i) shall— 
(I) collect, realize on (by liquida-
tion or other means), and otherwise 
manage the cover pool held by the es-
tate in compliance with this Act, the 
oversight program, and the related 
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transaction documents and in a man-
ner consistent with maximizing the 
value and the proceeds of the cover 
pool; 
(II) deposit or invest all proceeds 
and funds received in compliance with 
this Act, the oversight program, and 
the related transaction documents and 
in a manner consistent with maxi-
mizing the net return to the estate, tak-
ing into account the safety of the de-
posit or investment; and 
(III) apply, or direct the trustee 
for the estate to apply, all proceeds and 
funds received and the net return on 
any deposit or investment to make dis-
tributions in compliance with para-
graphs (3) and (4); 
(ii) may borrow funds or otherwise ob-
tain credit, for the benefit of the estate, in 
compliance with paragraph (2) on a se-
cured or unsecured basis and on a priority, 
pari passu, or subordinated basis; 
(iii) shall, at the times and in the 
manner required by the applicable covered 
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bond regulator, submit to the covered bond 
regulator, the Secretary, the applicable in-
denture trustee, the applicable covered bond-
holders, the owner of the residual interest, 
and any other person designated by the cov-
ered bond regulator, reports that describe 
the activities of the servicer or adminis-
trator on behalf of the estate, the perform-
ance of the cover pool held by the estate, and 
distributions made by the estate; and 
(iv) shall assist the trustee in pre-
paring the final report and the final ac-
count of the administration of the estate. 
(F) SUPERVISION OF TRUSTEE, SERVICER, 
AND
ADMINISTRATOR.—The applicable covered 
bond regulator shall supervise the trustee and 
any servicer or administrator for an estate. The 
covered bond regulator shall require that all re-
ports submitted under subparagraph (E)(iii) do 
not contain any untrue statement of a material 
fact and do not omit to state a material fact nec-
essary in order to make the statements made, in 
light of the circumstances under which they are 
made, not misleading. 
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(G) 
REMOVAL
AND
REPLACEMENT
OF 
TRUSTEE, SERVICER, AND
ADMINISTRATOR.—If 
the covered bond regulator determines that it is 
in the best interests of an estate, the covered bond 
regulator may remove or replace the trustee or 
any servicer or administrator for the estate. The 
removal of the trustee or any servicer or admin-
istrator does not abate any pending action or 
proceeding involving the estate, and any suc-
cessor or other trustee, servicer, or administrator 
shall be substituted as a party in the action or 
proceeding. 
(H) PROFESSIONALS.—The trustee or any 
servicer or administrator for an estate may em-
ploy 1 or more attorneys, accountants, apprais-
ers, auctioneers, or other professional persons to 
represent or assist the trustee or the servicer or 
administrator in carrying out its duties. The 
employment of any professional person and all 
terms and conditions of employment, including 
the terms and conditions relating to compensa-
tion, shall conform to the requirements of this 
Act and the oversight program and otherwise 
shall be subject to the approval of the applicable 
covered bond regulator. 
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(I) APPROVED FEES AND EXPENSES.—Un-
less otherwise provided in the applicable terms 
and conditions of appointment or employment, 
all approved fees and expenses of the trustee, any 
servicer or administrator, or any professional 
person employed by the trustee or any servicer or 
administrator shall be payable from the estate as 
administrative expenses. 
(J) ACTIONS
BY
OR
ON
BEHALF
OF
ES-
TATE.—The trustee or any servicer or adminis-
trator for an estate may commence or continue 
judicial, administrative, or other actions, in the 
name of the estate or in its own name on behalf 
of the estate, for the purpose of collecting, real-
izing on, or otherwise managing the cover pool 
held by the estate or exercising its other powers 
or duties on behalf of the estate. 
(K) ACTIONS AGAINST ESTATE.—No court 
may issue an attachment or execution on any 
property of an estate. Except at the request of the 
applicable covered bond regulator or as otherwise 
provided in this subparagraph or subparagraph 
(J), no court may take any action to restrain or 
affect the resolution of an estate under this Act. 
No person (including the applicable indenture 
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trustee and any applicable covered bondholder) 
may commence or continue any judicial, admin-
istrative, or other action against the estate, the 
trustee, or any servicer or administrator or take 
any other act to affect the estate, the trustee, or 
any servicer or administrator that is not ex-
pressly permitted by this Act, the oversight pro-
gram, and the related transaction documents, ex-
cept for a judicial or administrative action to 
compel the release of funds that— 
(i) are available to the estate; 
(ii) are permitted to be distributed 
under this Act and the oversight program; 
and 
(iii) are permitted and required to be 
distributed under the related transaction 
documents and any contracts executed by or 
on behalf of the estate. 
(L) SOVEREIGN IMMUNITY.—Except in con-
nection with a guarantee provided under para-
graph (4) or any other contract executed by the 
applicable covered bond regulator under this sec-
tion 4, the Secretary and the covered bond regu-
lator shall be entitled to sovereign immunity in 
carrying out the provisions of this Act. 
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(2) BORROWINGS AND CREDIT.— 
(A) IN GENERAL.—Any servicer or adminis-
trator for an estate created under subsection 
(b)(1) or (c)(2) may borrow funds or otherwise 
obtain credit, on behalf of and for the benefit of 
the estate, from any person in compliance with 
this paragraph (2) solely for the purpose of pro-
viding 
liquidity 
in 
the 
case 
of 
timing 
mismatches among the assets and the liabilities 
of the estate. Except with respect to an under-
writer, section 5 of the Securities Act of 1933, 
the Trust Indenture Act of 1939, and any State 
or local law requiring registration for an offer or 
sale of a security or registration or licensing of 
an issuer of, underwriter of, or broker or dealer 
in a security does not apply to the offer or sale 
under this paragraph (2) of a security that is 
not an equity security. 
(B) CONDITIONS.—A servicer or adminis-
trator may borrow funds or otherwise obtain 
credit under subparagraph (A)— 
(i) on terms affording the lender only 
claims or liens that are fully subordinated 
to the claims and interests of the applicable 
indenture trustee and the applicable covered 
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bondholders and all other claims against 
and interests in the estate, except for the re-
sidual interest, if the servicer or adminis-
trator certifies to the applicable covered 
bond regulator that, in the business judg-
ment of the servicer or administrator, the 
borrowing or credit is in the best interests 
of the estate and is expected to maximize the 
value and the proceeds of the cover pool held 
by the estate; or 
(ii) on terms affording the lender 
claims or liens that have priority over or 
are pari passu with the claims or interests 
of the applicable indenture trustee or the 
applicable covered bondholders or other 
claims against or interests in the estate, 
if— 
(I) the servicer or administrator 
certifies to the applicable covered bond 
regulator that, in the business judg-
ment of the servicer or administrator, 
the borrowing or credit is in the best 
interests of the estate and is expected to 
maximize the value and the proceeds of 
the cover pool held by the estate; and 
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