121 
and the Committee on Banking, Housing, and 
Urban Affairs of the Senate a report making 
recommendations on whether the program 
under this section, including the requirement 
for the enterprises to make allocations to the 
affordable housing fund, should be extended 
and on any modifications for the program. 
‘‘(c) AFFORDABLE HOUSING NEEDS FORMULAS.— 
‘‘(1) ALLOCATION FOR 2007.— 
‘‘(A) 
ALLOCATION
PERCENTAGES
FOR 
LOUISIANA AND MISSISSIPPI.—For purposes of 
subsection (d)(1)(A), the allocation percentages 
for 2007 for the grantees under this section for 
such year shall be as follows: 
‘‘(i) The allocation percentage for the 
Louisiana Housing Finance Agency shall 
be 75 percent. 
‘‘(ii) The allocation percentage for the 
Mississippi Development Authority shall be 
25 percent. 
‘‘(B) USE
IN
DISASTER
AREAS.—Afford-
able housing grant amounts for 2007 shall be 
used only as provided in subsection (g) only for 
such eligible activities in areas that were sub-
ject to a declaration by the President of a 
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122 
major disaster or emergency under the Robert 
T. Stafford Disaster Relief and Emergency As-
sistance Act (42 U.S.C. 5121 et seq.) in con-
nection with Hurricane Katrina or Rita of 
2005. 
‘‘(2) 
ALLOCATION
FORMULA
FOR
OTHER 
YEARS.—The Secretary of Housing and Urban De-
velopment shall, by regulation, establish a formula to 
allocate, among the States (as such term is defined 
in section 1303) and federally recognized Indian 
tribes, the amounts provided by the enterprises in 
each year referred to subsection (b)(1), other than 
2007, to the affordable housing fund established 
under this section. The formula shall be based on 
the following factors, with respect to each State and 
tribe: 
‘‘(A) The ratio of the population of the 
State or federally recognized Indian tribe to the 
aggregate population of all the States and 
tribes. 
‘‘(B) The percentage of families in the 
State or federally recognized Indian tribe that 
pay more than 50 percent of their annual in-
come for housing costs. 
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123 
‘‘(C) The percentage of persons in the 
State or federally recognized Indian tribe that 
are members of extremely low- or very low-in-
come families. 
‘‘(D) The cost of developing or carrying 
out rehabilitation of housing in the State or for 
the federally recognized Indian tribe. 
‘‘(E) The percentage of families in the 
State or federally recognized Indian tribe that 
live in substandard housing. 
‘‘(F) The percentage of housing stock in 
the State or for the federally recognized Indian 
tribe that is extremely old housing. 
‘‘(G) Any other factors that the Secretary 
determines to be appropriate. 
‘‘(3) FAILURE TO ESTABLISH.—If, in any year 
referred to in subsection (b)(1), other than 2007, 
the regulations establishing the formula required 
under paragraph (2) of this subsection have not 
been issued by the date that the Director determines 
the amounts described in subsection (d)(1) to be 
available for affordable housing fund grants in such 
year, for purposes of such year any amounts for a 
State (as such term is defined in section 1303 of 
this Act) that would otherwise be determined under 
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124 
subsection (d) by applying the formula established 
pursuant to paragraph (2) of this subsection shall be 
determined instead by applying, for such State, the 
percentage that is equal to the percentage of the 
total amounts made available for such year for allo-
cation under subtitle A of title II of the Cranston- 
Gonzalez National Affordable Housing Act (42 
U.S.C. 12741 et seq.) that are allocated in such 
year, pursuant to such subtitle, to such State (in-
cluding any insular area or unit of general local gov-
ernment, as such terms are defined in section 104 
of such Act (42 U.S.C. 12704), that is treated as a 
State under section 1303 of this Act) and to partici-
pating jurisdictions and other eligible entities within 
such State. 
‘‘(d) 
ALLOCATION
OF
FORMULA
AMOUNT; 
GRANTS.— 
‘‘(1) FORMULA
AMOUNT.—For each year re-
ferred to in subsection (b)(1), the Director shall de-
termine the formula amount under this section for 
each grantee, which shall be the amount determined 
for such grantee— 
‘‘(A) for 2007, by applying the allocation 
percentages under subparagraph (A) of sub-
section (c)(1) to the sum of the total amounts 
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125 
allocated by the enterprises to the affordable 
housing fund for such year, less any amounts 
used pursuant to subsection (i)(1); and 
‘‘(B) for any other year referred to in sub-
section (b)(1) (other than 2007), by applying 
the formula established pursuant to paragraph 
(2) of subsection (c) to the sum of the total 
amounts allocated by the enterprises to the af-
fordable housing fund for such year and any re-
captured amounts available pursuant to sub-
section (i)(4), less any amounts used pursuant 
to subsection (i)(1). 
‘‘(2) NOTICE.—In each year referred to in sub-
section (b)(1), not later than 60 days after the date 
that the Director determines the amounts described 
in paragraph (1) to be available for affordable hous-
ing fund grants to grantees in such year, the Direc-
tor shall cause to be published in the Federal Reg-
ister a notice that such amounts shall be so avail-
able. 
‘‘(3) GRANT AMOUNT.— 
‘‘(A) IN
GENERAL.—For each year re-
ferred to in subsection (b)(1), the Director shall 
make a grant from amounts in the affordable 
housing fund to each grantee in an amount that 
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126 
is, except as provided in subparagraph (B), 
equal to the formula amount under this section 
for the grantee. A grantee may designate a 
State housing finance agency, housing and com-
munity development entity, tribally designated 
housing entity (as such term is defined in sec-
tion 4 of the Native American Housing Assist-
ance and Self-Determination Act of 1997 (25 
U.S.C. 4103)) or other qualified instrumentality 
of the grantee to receive such grant amounts. 
‘‘(B) REDUCTION FOR FAILURE TO OBTAIN 
RETURN OF MISUSED FUNDS.—If in any year a 
grantee, fails to obtain reimbursement or return 
of the full amount required under subsection 
(j)(1)(B) to be reimbursed or returned to the 
grantee during such year— 
‘‘(i) except as provided in clause (ii)— 
‘‘(I) the amount of the grant for 
the grantee for the succeeding year, 
as determined pursuant to subpara-
graph (A), shall be reduced by the 
amount by which such amounts re-
quired to be reimbursed or returned 
exceed the amount actually reim-
bursed or returned; and 
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127 
‘‘(II) the amount of the grant for 
the succeeding year for each other 
grantee whose grant is not reduced 
pursuant to clause (i) shall be in-
creased by the amount determined by 
applying the formula established pur-
suant to subsection (c)(2) to the total 
amount of all reductions for all grant-
ees for such year pursuant to clause 
(i); or 
‘‘(ii) in any case in which such failure 
to obtain reimbursement or return occurs 
during a year immediately preceding a 
year in which grants under this subsection 
will not be made, the grantee shall pay to 
the Director for reallocation among the 
other grantees an amount equal to the 
amount of the reduction for the grantee 
that would otherwise apply under clause 
(i)(I). 
‘‘(e) GRANTEE ALLOCATION PLANS.— 
‘‘(1) IN GENERAL.—For each year that a grant-
ee receives affordable housing fund grant amounts, 
the grantee shall establish an allocation plan in ac-
cordance with this subsection, which shall be a plan 
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128 
for the distribution of such grant amounts of the 
grantee for such year that— 
‘‘(A) is based on priority housing needs, as 
determined by the grantee in accordance with 
the regulations established under subsection 
(m)(2)(C); and 
‘‘(B) complies with subsection (f). 
‘‘(2) ESTABLISHMENT.—In establishing an allo-
cation plan, a grantee shall notify the public of the 
establishment of the plan, provide an opportunity for 
public comments regarding the plan, consider any 
public comments received, and make the completed 
plan available to the public. 
‘‘(3) CONTENTS.—An allocation plan of a 
grantee shall set forth the requirements for eligible 
recipients under subsection (h) to apply to the 
grantee to receive assistance from affordable housing 
fund grant amounts, including a requirement that 
each such application include— 
‘‘(A) a description of the eligible activities 
to be conducted using such assistance; and 
‘‘(B) a certification by the eligible recipient 
applying for such assistance that any housing 
units assisted with such assistance will comply 
with the requirements under this section. 
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129 
‘‘(f) SELECTION OF ACTIVITIES FUNDED USING AF-
FORDABLE HOUSING FUND GRANT AMOUNTS.—Afford-
able housing fund grant amounts of a grantee may be 
used, or committed for use, only for activities that— 
‘‘(1) are eligible under subsection (g) for such 
use; 
‘‘(2) comply with the applicable allocation plan 
under subsection (e) of the grantee; and 
‘‘(3) are selected for funding by the grantee in 
accordance with the process and criteria for such se-
lection established pursuant to subsection (m)(2)(C). 
‘‘(g) ELIGIBLE
ACTIVITIES.—Affordable housing 
fund grant amounts of a grantee shall be eligible for use, 
or for commitment for use, only for assistance for— 
‘‘(1) the production, preservation, and rehabili-
tation of rental housing, including housing under the 
programs identified in section 1335(a)(2)(B), except 
that such grant amounts may be used for the benefit 
only of extremely low- and very low-income families; 
‘‘(2) the production, preservation, and rehabili-
tation of housing for homeownership, including such 
forms as downpayment assistance, closing cost as-
sistance, and assistance for interest-rate buy-downs, 
that— 
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130 
‘‘(A) is available for purchase only for use 
as a principal residence by families that qualify 
both as— 
‘‘(i) extremely low- and very-low in-
come families at the times described in 
subparagraphs (A) through (C) of section 
215(b)(2) of the Cranston-Gonzalez Na-
tional Affordable Housing Act (42 U.S.C. 
12745(b)(2)); and 
‘‘(ii) first-time homebuyers, as such 
term is defined in section 104 of the Cran-
ston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12704), except that any 
reference in such section to assistance 
under title II of such Act shall for pur-
poses of this section be considered to refer 
to assistance from affordable housing fund 
grant amounts; 
‘‘(B) has an initial purchase price that 
meets the requirements of section 215(b)(1) of 
the Cranston-Gonzalez National Affordable 
Housing Act; and 
‘‘(C) is subject to the same resale restric-
tions established under section 215(b)(3) of the 
Cranston-Gonzalez National Affordable Hous-
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131 
ing Act and applicable to the participating ju-
risdiction that is the State in which such hous-
ing is located; and 
‘‘(3) public infrastructure development activities 
in connection with housing activities funded under 
paragraph (1) or (2). 
‘‘(h) ELIGIBLE
RECIPIENTS.—Affordable housing 
fund grant amounts of a grantee may be provided only 
to a recipient that is an organization, agency, or other en-
tity (including a for-profit entity, a nonprofit entity, and 
a faith-based organization) that 
‘‘(1) has a demonstrated capacity for carrying 
out activities of the type that are to be funded with 
such grant amounts; and 
‘‘(2) makes such assurances to the grantee as 
the Director shall, by regulation, require to ensure 
that the recipient will comply with the requirements 
of this section during the entire period that begins 
upon selection of the recipient to receive such grant 
amounts and ending upon the conclusion of all ac-
tivities under subsection (g) that are engaged in by 
the recipient and funded with such grant amounts. 
‘‘(i) LIMITATIONS ON USE.— 
‘‘(1) REQUIRED
AMOUNT
FOR
REFCORP.—Of 
the aggregate amount allocated pursuant to sub-
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132 
section (b) in each year to the affordable housing 
fund, 25 percent shall be used as provided in section 
21B(f)(2)(E) of the Federal Home Loan Bank Act 
(12 U.S.C. 1441b(f)(2)(E)). 
‘‘(2) REQUIRED AMOUNT FOR HOMEOWNERSHIP 
ACTIVITIES.—Of the aggregate amount of affordable 
housing fund grant amounts provided in each year 
to a grantee, not less than 10 percent shall be used 
for activities under paragraph (2) of subsection (g). 
‘‘(3) MAXIMUM
AMOUNT
FOR
PUBLIC
INFRA-
STRUCTURE DEVELOPMENT ACTIVITIES IN CONNEC-
TION WITH AFFORDABLE HOUSING ACTIVITIES.—Of 
the aggregate amount of affordable housing fund 
grant amounts provided in each year to a grantee, 
not more than 12.5 percent may be used for activi-
ties under paragraph (3) of subsection (g). 
‘‘(4) DEADLINE FOR COMMITMENT OR USE.— 
Any affordable housing fund grant amounts of a 
grantee shall be used or committed for use within 
two years of the date of that such grant amounts 
are made available to the grantee. The Director shall 
recapture into the affordable housing fund any such 
amounts not so used or committed for use and allo-
cate such amounts under subsection (d)(1) in the 
first year after such recapture. 
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133 
‘‘(5) USE OF RETURNS.—The Director shall, by 
regulation provide that any return on a loan or other 
investment of any affordable housing fund grant 
amounts of a grantee shall be treated, for purposes 
of availability to and use by the grantee, as afford-
able housing fund grant amounts. 
‘‘(6) PROHIBITED USES.—The Director shall— 
‘‘(A) by regulation, set forth prohibited 
uses of affordable housing fund grant amounts, 
which shall include use for— 
‘‘(i) political activities; 
‘‘(ii) advocacy; 
‘‘(iii) lobbying, whether directly or 
through other parties; 
‘‘(iv) counseling services; 
‘‘(v) travel expenses; and 
‘‘(vi) preparing or providing advice on 
tax returns; 
‘‘(B) by regulation, provide that, except as 
provided in subparagraph (C), affordable hous-
ing fund grant amounts of a grantee may not 
be used for administrative, outreach, or other 
costs of— 
‘‘(i) the grantee; or 
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134 
‘‘(ii) any recipient of such grant 
amounts; and 
‘‘(C) by regulation, limit the amount of 
any affordable housing fund grant amounts 
that may be used for administrative costs of the 
grantee of carrying out the program required 
under this section. 
‘‘(7) PROHIBITION OF CONSIDERATION OF USE 
FOR
MEETING
HOUSING
GOALS
OR
DUTY
TO 
SERVE.—In determining compliance with the hous-
ing goals under this subpart and the duty to serve 
underserved markets under section 1335, the Direc-
tor may not consider any affordable housing fund 
grant amounts used under this section for eligible 
activities under subsection (g). The Director shall 
give credit toward the achievement of such housing 
goals and such duty to serve underserved markets to 
purchases by the enterprises of mortgages for hous-
ing that receives funding from affordable housing 
fund grant amounts, but only to the extent that 
such purchases by the enterprises are funded other 
than with such grant amounts. 
‘‘(j) ACCOUNTABILITY OF RECIPIENTS AND GRANT-
EES.— 
‘‘(1) RECIPIENTS.— 
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135 
‘‘(A) TRACKING OF FUNDS.—The Director 
shall— 
‘‘(i) require each grantee to develop 
and maintain a system to ensure that each 
recipient of assistance from affordable 
housing fund grant amounts of the grantee 
uses such amounts in accordance with this 
section, the regulations issued under this 
section, and any requirements or condi-
tions under which such amounts were pro-
vided; and— 
‘‘(ii) establish minimum requirements 
for agreements, between the grantee and 
recipients, regarding assistance from the 
affordable housing fund grant amounts of 
the grantee, which shall include— 
‘‘(I) appropriate continuing fi-
nancial and project reporting, record 
retention, and audit requirements for 
the duration of the grant to the re-
cipient to ensure compliance with the 
limitations and requirements of this 
section and the regulations under this 
section; and 
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136 
‘‘(II) any other requirements that 
the Director determines are necessary 
to ensure appropriate grant adminis-
tration and compliance. 
‘‘(B) MISUSE OF FUNDS.— 
‘‘(i) 
REIMBURSEMENT
REQUIRE-
MENT.—If any recipient of assistance from 
affordable housing fund grant amounts of 
a grantee is determined, in accordance 
with clause (ii), to have used any such 
amounts in a manner that is materially in 
violation of this section, the regulations 
issued under this section, or any require-
ments or conditions under which such 
amounts were provided, the grantee shall 
require that, within 12 months after the 
determination of such misuse, the recipient 
shall reimburse the grantee for such mis-
used amounts and return to the grantee 
any amounts from the affordable housing 
fund grant amounts of the grantee that re-
main unused or uncommitted for use. The 
remedies under this clause are in addition 
to any other remedies that may be avail-
able under law. 
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137 
‘‘(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 sub-
sequently reverse the determination. 
‘‘(2) GRANTEES.— 
‘‘(A) REPORT.— 
‘‘(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 Di-
rector that— 
‘‘(I) describes the activities fund-
ed 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 
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138 
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— 
‘‘(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 accord-
ance with this section; 
‘‘(iii) limit the availability of assist-
ance under this section to the grantee to 
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139 
activities 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 fund established under subsection (a) that 
are provided to a grantee pursuant to subsection 
(d)(3). 
‘‘(2) GRANTEE.—The term ‘grantee’ means— 
‘‘(A) with respect to 2007, 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 2007, each 
State (as such term is defined in section 1303) 
and each federally recognized Indian tribe. 
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140 
‘‘(3) RECIPIENT.—The term ‘recipient’ means 
an entity meeting the requirements under subsection 
(h) that receives assistance from a grantee from af-
fordable 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 prin-
ciple balances under such mortgages. Such term in-
cludes all such mortgages or securitized obligations, 
whether retained in portfolio, or sold in any form. 
The Director is authorized to promulgate rules fur-
ther defining such term as necessary to implement 
this section and to address market developments. 
‘‘(m) REGULATIONS.— 
‘‘(1) IN GENERAL.—The Director, in consulta-
tion with the Secretary of Housing and Urban De-
velopment, shall issue regulations to carry out this 
section. 
‘‘(2) REQUIRED
CONTENTS.—The regulations 
issued under this subsection shall include— 
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141 
‘‘(A) a requirement that the Director en-
sure that the program of each grantee for use 
of affordable housing fund grant amounts of 
the grantee is audited not less than annually to 
ensure compliance with this section; 
‘‘(B) authority for the Director to audit, 
provide for an audit, or otherwise verify a 
grantee’s activities, to ensure compliance with 
this section; 
‘‘(C) requirements for a process for appli-
cation to, and selection by, each grantee for ac-
tivities 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 
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142 
funded are affordable, especially for ex-
tremely low-income families; and 
‘‘(v) in the case of rental housing 
projects under subsection (g)(1), the extent 
of the duration for which such rents will 
remain affordable; and 
‘‘(D) requirements to ensure that amounts 
provided to a grantee from the affordable hous-
ing fund that are used for rental housing under 
subsection (g)(1) are used only for the benefit 
of extremely low- and very-low income families; 
and 
‘‘(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). 
‘‘(n) ENFORCEMENT OF REQUIREMENTS ON ENTER-
PRISE.—Compliance by the enterprises with the require-
ments under this section shall be enforceable under sub-
part C. Any reference in such subpart to this part or to 
an order, rule, or regulation under this part specifically 
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143 
includes this section and any order, rule, or regulation 
under this section.’’. 
(b) TIMELY
ESTABLISHMENT
OF
AFFORDABLE 
HOUSING NEEDS FORMULA.— 
(1) IN GENERAL.—The Secretary of Housing 
and Urban Development shall, not later than the ef-
fective date under section 185 of this Act, issue the 
regulations establishing the affordable housing needs 
formulas in accordance with the provisions of para-
graphs (1)(B) and (2) of section 1337(c) of the 
Housing and Community Development Act of 1992, 
as such section is amended by subsection (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: 
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144 
‘‘(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 enter-
prise (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 Corporation in each calendar year 
the amounts allocated for use under this sub-
paragraph pursuant to section 1337(i)(1) of 
such Act.’’. 
SEC. 129. 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 section 127 of this Act, the following 
new section: 
‘‘SEC. 1338. CONSISTENCY WITH MISSION. 
‘‘This subpart may not be construed to authorize an 
enterprise to engage in any program or activity that con-
travenes or is inconsistent with the Federal National 
Mortgage Association Charter Act or the Federal Home 
Loan Mortgage Corporation Act.’’. 
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145 
SEC. 130. ENFORCEMENT. 
(a) 
CEASE-AND-DESIST
PROCEEDINGS.—Section 
1341 of the Housing and Community Development Act 
of 1992 (12 U.S.C. 4581) is amended— 
(1) by striking subsection (a) and inserting the 
following new subsection: 
‘‘(a) GROUNDS FOR ISSUANCE.—The Director may 
issue and serve a notice of charges under this section upon 
an enterprise if the Director determines— 
‘‘(1) the enterprise has failed to meet any hous-
ing goal established under subpart B, following a 
written notice and determination of such failure in 
accordance with section 1336; 
‘‘(2) the enterprise has failed to submit a report 
under section 1314, following a notice of such fail-
ure, an opportunity for comment by the enterprise, 
and a final determination by the Director; 
‘‘(3) the enterprise has failed to submit the in-
formation required under subsection (m) or (n) of 
section 309 of the Federal National Mortgage Asso-
ciation Charter Act, or subsection (e) or (f) of sec-
tion 307 of the Federal Home Loan Mortgage Cor-
poration Act; 
‘‘(4) the enterprise has violated any provision of 
this part or any order, rule or regulation under this 
part; 
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146 
‘‘(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: 
‘‘requiring 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 Act or subsection (e) or (f) of section 
307 of the Federal Home Loan Mortgage Cor-
poration Act, as applicable.’’; 
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147 
(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 NO-
TICES AND ORDERS.—Section 1344 of the Housing and 
Community 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 re-
quire compliance 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— 
(1) by striking subsections (a) and (b) and in-
serting the following new subsections: 
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148 
‘‘(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 determina-
tion by the Director; 
‘‘(3) submit the information required under 
subsection (m) or (n) of section 309 of the Federal 
National 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). 
‘‘(b) AMOUNT OF PENALTY.—The amount of the 
penalty, as determined by the Director, may not exceed— 
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149 
‘‘(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 deter-
mining 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)— 
(A) by striking ‘‘request the Attorney Gen-
eral of the United States to’’ and inserting ‘‘, 
in the discretion of the Director,’’; and 
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150 
(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 sub-
section (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 dis-
cretion 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 
subpart C of part 2 of subtitle A of the Housing and Com-
munity Development Act of 1992 is amended to read as 
follows: 
‘‘Subpart C—Enforcement’’. 
SEC. 131. 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— 
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151 
(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) in sections 1345(c)(1)(A) and 1346(b) (12 
U.S.C. 4585(c)(1)(A), 4586(b)), by striking ‘‘Sec-
retary’s’’ each place such term appears and inserting 
‘‘Director’s’’; and 
(6) by striking section 1349 (12 U.S.C. 4589). 
Subtitle C—Prompt Corrective 
Action 
SEC. 141. CAPITAL CLASSIFICATIONS. 
(a) IN GENERAL.—Section 1364 of the Housing and 
Community Development 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 in-
serting ‘‘subsection (c)’’; 
(B) by striking ‘‘enterprises’’ and inserting 
‘‘regulated entities’’; and 
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152 
(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 
purposes of this subtitle, the Director shall, by regu-
lation— 
‘‘(A) establish the capital classifications 
specified under paragraph (2) for the Federal 
home loan banks; 
‘‘(B) establish criteria for each such cap-
ital classification based on the amount and 
types of capital held by a bank and the risk- 
based, minimum, and critical capital levels for 
the banks and taking due consideration of the 
capital classifications established under sub-
section (a) for the enterprises, with such modi-
fications as the Director determines to be ap-
propriate 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. 
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153 
‘‘(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 enter-
prise has decreased significantly; 
‘‘(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 Di-
rector deems the regulated entity to be engag-
ing in an unsafe or unsound practice. 
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154 
‘‘(2) RECLASSIFICATION.—In addition to any 
other action authorized under this title, including 
the reclassification of a regulated entity for any rea-
son not specified in this subsection, if the Director 
takes any action described in paragraph (1) the Di-
rector 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 sig-
nificantly undercapitalized.’’; and 
(5) by inserting after subsection (d) (as so re-
designated by paragraph (3) of this subsection), the 
following new subsection: 
‘‘(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 under-
capitalized. 
‘‘(2) EXCEPTION.—Notwithstanding paragraph 
(1), the Director may permit a regulated entity, to 
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155 
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 185, 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. 
SEC. 142. SUPERVISORY ACTIONS APPLICABLE TO UNDER-
CAPITALIZED REGULATED ENTITIES. 
Section 1365 of the Housing and Community Devel-
opment 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)— 
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156 
(A) by redesignating paragraphs (1) and 
(2) as paragraphs (2) and (3), respectively; 
(B) by inserting before paragraph (2) 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 wheth-
er the plan, restrictions, and requirements are 
achieving the purpose of this section.’’; and 
(C) by inserting at the end the following 
new paragraphs: 
‘‘(4) RESTRICTION OF ASSET GROWTH.—A reg-
ulated entity that is classified as undercapitalized 
shall not permit its average total assets (as such 
term is defined in section 1316(b) during any cal-
endar quarter to exceed its average total assets dur-
ing the preceding calendar quarter unless— 
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157 
‘‘(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 enti-
ty that is classified as undercapitalized shall not, di-
rectly or indirectly, acquire any interest in any entity 
or initially offer any new product (as such term is 
defined in section 1321(f)) or engage in any new ac-
tivity, service, undertaking, or offering unless— 
‘‘(A) the Director has accepted the capital 
restoration plan of the regulated entity, the en-
tity is implementing the plan, and the Director 
determines that the proposed action is con-
sistent with and will further the achievement of 
the plan; or 
‘‘(B) the Director determines that the pro-
posed action will further the purpose of this 
section.’’; 
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158 
(3) in the subsection heading for subsection (b), 
by striking ‘‘FROM UNDERCAPITALIZED TO SIGNIFI-
CANTLY UNDERCAPITALIZED’’; and 
(4) by striking subsection (c) and inserting the 
following new subsection: 
‘‘(c) OTHER DISCRETIONARY SAFEGUARDS.—The 
Director may take, with respect to a regulated entity that 
is classified as undercapitalized, any of the actions author-
ized to be taken under section 1366 with respect to a regu-
lated entity that is classified as significantly undercapital-
ized, if the Director determines that such actions are nec-
essary to carry out the purpose of this subtitle.’’. 
SEC. 143. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFI-
CANTLY 
UNDERCAPITALIZED 
REGULATED 
ENTITIES. 
Section 1366 of the Housing and Community Devel-
opment Act of 1992 (12 U.S.C. 4616) is amended— 
(1) in the section heading, by striking ‘‘ENTER-
PRISES’’ and inserting ‘‘ENTITIES’’; 
(2) in subsection (a)(2)(A), by striking ‘‘enter-
prise’’ the last place such term appears; 
(3) in subsection (b)— 
(A) in the subsection heading, by striking 
‘‘Discretionary Supervisory Actions’’ and insert-
ing ‘‘Specific Actions’’; 
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159 
(B) in the matter preceding paragraph (1), 
by striking ‘‘may, at any time, take any’’ and 
inserting ‘‘shall carry out this section by taking, 
at any time, one or more’’; 
(C) by redesignating paragraphs (5) and 
(6) as paragraphs (6) and (7), respectively; 
(D) by inserting after paragraph (4) the 
following new paragraph: 
‘‘(5) IMPROVEMENT
OF
MANAGEMENT.—Take 
one or more of the following actions: 
‘‘(A) NEW ELECTION OF BOARD.—Order a 
new election for the board of directors of the 
regulated entity. 
‘‘(B) DISMISSAL OF DIRECTORS OR EXECU-
TIVE OFFICERS.—Require the regulated entity 
to dismiss from office any director or executive 
officer who had held office for more than 180 
days immediately before the entity became 
undercapitalized. Dismissal under this subpara-
graph shall not be construed to be a removal 
pursuant to the Director’s enforcement powers 
provided in section 1377. 
‘‘(C) EMPLOY QUALIFIED EXECUTIVE OF-
FICERS.—Require the regulated entity to em-
ploy qualified executive officers (who, if the Di-
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160 
rector so specifies, shall be subject to approval 
by the Director).’’; and 
(E) by inserting at the end the following 
new paragraph: 
‘‘(8) OTHER
ACTION.—Require the regulated 
entity to take any other action that the Director de-
termines will better carry out the purpose of this 
section than any of the actions specified in this 
paragraph.’’; 
(4) by redesignating subsection (c) as sub-
section (d); and 
(5) by inserting after subsection (b) the fol-
lowing new subsection: 
‘‘(c) RESTRICTION ON COMPENSATION OF EXECU-
TIVE OFFICERS.—A regulated entity that is classified as 
significantly undercapitalized may not, without prior writ-
ten approval by the Director— 
‘‘(1) pay any bonus to any executive officer; or 
‘‘(2) provide compensation to any executive offi-
cer at a rate exceeding that officer’s average rate of 
compensation (excluding bonuses, stock options, and 
profit sharing) during the 12 calendar months pre-
ceding the calendar month in which the regulated 
entity became undercapitalized.’’. 
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161 
SEC. 144. AUTHORITY OVER CRITICALLY UNDERCAPITAL-
IZED REGULATED ENTITIES. 
(a) IN GENERAL.—Section 1367 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4617) 
is amended to read as follows: 
‘‘SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITAL-
IZED REGULATED ENTITIES. 
‘‘(a) APPOINTMENT OF AGENCY AS CONSERVATOR 
OR RECEIVER.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of Federal or State law, if any of the 
grounds under paragraph (3) exist, at the discretion 
of the Director, the Director may establish a con-
servatorship or receivership, as appropriate, for the 
purpose of reorganizing, rehabilitating, or winding 
up the affairs of a regulated entity. 
‘‘(2) APPOINTMENT.—In any conservatorship or 
receivership established under this section, the Di-
rector shall appoint the Agency as conservator or re-
ceiver. 
‘‘(3) 
GROUNDS
FOR
APPOINTMENT.—The 
grounds for appointing a conservator or receiver for 
a regulated entity are as follows: 
‘‘(A) ASSETS INSUFFICIENT FOR OBLIGA-
TIONS.—The assets of the regulated entity are 
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162 
less than the obligations of the regulated entity 
to its creditors and others. 
‘‘(B) SUBSTANTIAL
DISSIPATION.—Sub-
stantial dissipation of assets or earnings due 
to— 
‘‘(i) any violation of any provision of 
Federal or State law; or 
‘‘(ii) any unsafe or unsound practice. 
‘‘(C) UNSAFE OR UNSOUND CONDITION.— 
An unsafe or unsound condition to transact 
business. 
‘‘(D) CEASE-AND-DESIST
ORDERS.—Any 
willful violation of a cease-and-desist order that 
has become final. 
‘‘(E) CONCEALMENT.—Any concealment of 
the books, papers, records, or assets of the reg-
ulated entity, or any refusal to submit the 
books, papers, records, or affairs of the regu-
lated 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 
creditors in the normal course of business. 
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163 
‘‘(G) LOSSES.—The regulated entity has 
incurred 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 regu-
lated entity to become adequately capitalized 
(as defined 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. 
‘‘(I) CONSENT.—The regulated entity, by 
resolution of its board of directors or its share-
holders or members, consents to the appoint-
ment. 
‘‘(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; 
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164 
‘‘(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. 
‘‘(K) CRITICAL UNDERCAPITALIZATION.— 
The regulated entity is critically undercapital-
ized, as defined in section 1364(a)(4) or in reg-
ulations 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 
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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 en-
tity 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 
others; 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 
the subject of a bona fide dispute) as such 
debts become due. 
‘‘(B) 
PERIODIC
DETERMINATION
RE-
QUIRED FOR CRITICALLY UNDER CAPITALIZED 
REGULATED ENTITY.—If a regulated entity is 
critically undercapitalized, the Director shall 
make a determination, in writing, as to whether 
the regulated entity meets the criteria specified 
in clause (i) or (ii) of subparagraph (A)— 
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‘‘(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 reg-
ulated entity in any period during which the 
Agency serves as receiver for the regulated enti-
ty. 
‘‘(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. 
‘‘(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 regulated entity is located, or in the 
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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
ACQUI-
ESCING IN APPOINTMENT OF CONSERVATOR OR RE-
CEIVER.—The members of the board of directors of 
a regulated entity shall not be liable to the share-
holders or creditors of the regulated entity for acqui-
escing in or consenting in good faith to the appoint-
ment of the Agency as conservator or receiver for 
that regulated entity. 
‘‘(7) AGENCY
NOT
SUBJECT
TO
ANY
OTHER 
FEDERAL AGENCY.—When acting as conservator or 
receiver, the Agency shall not be subject to the di-
rection or supervision of any other agency of the 
United States or any State in the exercise of the 
rights, powers, and privileges of the Agency. 
‘‘(b) POWERS AND DUTIES OF THE AGENCY AS CON-
SERVATOR OR RECEIVER.— 
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168 
‘‘(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
ENTI-
TY.—The Agency shall, as conservator or re-
ceiver, 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 
assets of any other legal custodian of such 
regulated entity. 
‘‘(B) OPERATE
THE
REGULATED
ENTI-
TY.—The Agency may, as conservator or re-
ceiver— 
‘‘(i) take over the assets of and oper-
ate the regulated entity with all the powers 
of the shareholders, the directors, and the 
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169 
officers 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 reg-
ulated entity in the name of the regulated 
entity which are consistent with the ap-
pointment as conservator or receiver; and 
‘‘(iv) preserve and conserve the assets 
and property of such regulated entity. 
‘‘(C) FUNCTIONS
OF
OFFICERS, DIREC-
TORS, AND SHAREHOLDERS OF A REGULATED 
ENTITY.—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 conservator 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 
‘‘(ii) appropriate to carry on the busi-
ness of the regulated entity and preserve 
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and conserve the assets and property of 
the regulated entity. 
‘‘(E) 
ADDITIONAL
POWERS
AS
RE-
CEIVER.—The Agency may, as receiver, place 
the regulated entity in liquidation and proceed 
to realize upon the assets of the regulated enti-
ty, having due regard 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 reg-
ulated entity in default without any approval, 
assignment, or consent with respect to such 
transfer. Any Federal home loan bank may, 
with the approval of the Agency, acquire the as-
sets of any Bank in conservatorship or receiver-
ship, and assume 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 per-
formance of contracts or sale of the assets of a 
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171 
regulated entity, pay all valid obligations of the 
regulated entity in accordance with the pre-
scriptions 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 
any power exercised under this sub-
paragraph in the same manner as 
such provisions apply under that sec-
tion. 
‘‘(ii) AUTHORITY
OF
DIRECTOR.—A 
subpoena or subpoena duces tecum may be 
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172 
issued under clause (i) only by, or with the 
written approval of, the Director, or the 
designee 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 con-
servator or receiver. 
‘‘(K) INCIDENTAL POWERS.—The Agency 
may, as conservator or receiver— 
‘‘(i) exercise all powers and authori-
ties specifically granted to conservators or 
receivers, respectively, under this section, 
and such incidental powers as shall be nec-
essary to carry out such powers; and 
‘‘(ii) take any action authorized by 
this section, which the Agency determines 
is in the best interests of the regulated en-
tity or the Agency. 
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173 
‘‘(3) AUTHORITY OF RECEIVER TO DETERMINE 
CLAIMS.— 
‘‘(A) IN GENERAL.—The Agency may, as 
receiver, determine claims in accordance with 
the requirements of this subsection and any 
regulations 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, respec-
tively, after the publication under clause 
(i). 
‘‘(C) MAILING
REQUIRED.—The receiver 
shall mail a notice similar to the notice pub-
lished under subparagraph (B)(i) at the time of 
such publication to any creditor shown on the 
books of the regulated entity— 
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174 
‘‘(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 
address. 
‘‘(4) RULEMAKING
AUTHORITY
RELATING
TO 
DETERMINATION OF CLAIMS.—Subject to subsection 
(c), the Director may prescribe regulations regarding 
the allowance or disallowance of claims by the re-
ceiver and providing for administrative determina-
tion 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 en-
tity is filed with the Agency as receiver, 
the Agency shall determine whether to 
allow or disallow the claim and shall notify 
the claimant of any determination with re-
spect to such claim. 
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175 
‘‘(ii) EXTENSION OF TIME.—The pe-
riod described in clause (i) may be ex-
tended by a written agreement between the 
claimant 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 re-
spect to any claim is mailed to the last ad-
dress of the claimant which appears— 
‘‘(I) on the books of the regu-
lated 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 
‘‘(II) the procedures available for 
obtaining agency review of the deter-
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176 
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 before the date specified in the notice pub-
lished 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 
entity which is secured by any property or 
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177 
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 
property or other asset as an unse-
cured claim against the regulated en-
tity; and 
‘‘(II) may not make any payment 
with respect to such unsecured por-
tion of the claim other than in connec-
tion with the disposition of all claims 
of unsecured creditors of the regu-
lated entity. 
‘‘(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
DETER-
MINATION
PURSUANT
TO
SUBPARAGRAPH 
(D).—No court may review the determination 
of the Agency under subparagraph (D) to dis-
allow a claim. This subparagraph shall not ef-
fect the authority of a claimant to obtain de 
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178 
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, 
subject 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 prin-
cipal place of business of the regulated entity is 
located or the United States District Court for 
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the District of Columbia (and such court shall 
have jurisdiction to hear such claim), before the 
end of the 60-day period beginning on the ear-
lier of— 
‘‘(i) the end of the period described in 
paragraph (5)(A)(i) with respect to any 
claim against a regulated entity for which 
the Agency is receiver; or 
‘‘(ii) the date of any notice of dis-
allowance of such claim pursuant to para-
graph (5)(A)(i). 
‘‘(B) STATUTE OF LIMITATIONS.—A claim 
shall be deemed to be disallowed (other than 
any portion of such claim which was allowed by 
the receiver), and such disallowance shall be 
final, and the claimant shall have no further 
rights or remedies with respect to such claim, 
if the claimant fails, before the end of the 60- 
day period described under subparagraph (A), 
to file suit on such claim (or continue an action 
commenced before the appointment of the re-
ceiver). 
‘‘(7) REVIEW OF CLAIMS.— 
‘‘(A) OTHER REVIEW PROCEDURES.— 
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180 
‘‘(i) IN GENERAL.—The Agency shall 
establish such alternative dispute resolu-
tion processes as may be appropriate for 
the resolution of claims filed under para-
graph (5)(A)(i). 
‘‘(ii) CRITERIA.—In establishing alter-
native dispute resolution processes, the 
Agency shall strive for procedures which 
are expeditious, fair, independent, and low 
cost. 
‘‘(iii) VOLUNTARY BINDING OR NON-
BINDING PROCEDURES.—The Agency may 
establish both binding and nonbinding 
processes, which may be conducted by any 
government or private party. All parties, 
including the claimant and the Agency, 
must agree to the use of the process in a 
particular case. 
‘‘(B) CONSIDERATION
OF
INCENTIVES.— 
The Agency shall seek to develop incentives for 
claimants to participate in the alternative dis-
pute resolution process. 
‘‘(8) 
EXPEDITED
DETERMINATION
OF 
CLAIMS.— 
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181 
‘‘(A) ESTABLISHMENT
REQUIRED.—The 
Agency shall establish a procedure for expedited 
relief outside of the routine claims process es-
tablished under paragraph (5) for claimants 
who— 
‘‘(i) allege the existence of legally 
valid and enforceable or perfected security 
interests in assets of any regulated entity 
for which the Agency has been appointed 
receiver; and 
‘‘(ii) allege that irreparable injury will 
occur if the routine claims procedure is fol-
lowed. 
‘‘(B) DETERMINATION
PERIOD.—Before 
the end of the 90-day period beginning on the 
date any claim is filed in accordance with the 
procedures established under subparagraph (A), 
the Director shall— 
‘‘(i) determine— 
‘‘(I) whether to allow or disallow 
such claim; or 
‘‘(II) whether such claim should 
be determined pursuant to the proce-
dures established under paragraph 
(5); and 
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182 
‘‘(ii) notify the claimant of the deter-
mination, and if the claim is disallowed, 
provide a statement of each reason for the 
disallowance and the procedure for obtain-
ing agency review or judicial determina-
tion. 
‘‘(C) PERIOD FOR FILING OR RENEWING 
SUIT.—Any claimant who files a request for ex-
pedited relief shall be permitted to file a suit, 
or to continue a suit filed before the appoint-
ment of the receiver, seeking a determination of 
the rights of the claimant with respect to such 
security interest after the earlier of— 
‘‘(i) the end of the 90-day period be-
ginning on the date of the filing of a re-
quest for expedited relief; or 
‘‘(ii) the date the Agency denies the 
claim. 
‘‘(D) STATUTE
OF
LIMITATIONS.—If an 
action described under subparagraph (C) is not 
filed, or the motion to renew a previously filed 
suit is not made, before the end of the 30-day 
period beginning on the date on which such ac-
tion or motion may be filed under subparagraph 
(B), the claim shall be deemed to be disallowed 
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183 
as of the end of such period (other than any 
portion of such claim which was allowed by the 
receiver), such disallowance shall be final, and 
the claimant shall have no further rights or 
remedies with respect to such claim. 
‘‘(E) 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 that was filed before the 
appointment of the receiver, subject to the 
determination of claims by the receiver. 
‘‘(9) PAYMENT OF CLAIMS.— 
‘‘(A) IN GENERAL.—The receiver may, in 
the discretion of the receiver, and to the extent 
funds are available from the assets of the regu-
lated entity, pay creditor claims, in such man-
ner and amounts as are authorized under this 
section, which are— 
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184 
‘‘(i) allowed by the receiver; 
‘‘(ii) approved by the Agency pursuant 
to a final determination pursuant to para-
graph (7) or (8); or 
‘‘(iii) determined by the final judg-
ment of any court of competent jurisdic-
tion. 
‘‘(B) AGREEMENTS AGAINST THE INTER-
EST
OF
THE
AGENCY.—No agreement that 
tends to diminish or defeat the interest of the 
Agency in any asset acquired by the Agency as 
receiver under this section shall be valid against 
the Agency unless such agreement is in writing, 
and executed by an authorized official of the 
regulated entity, except that such requirements 
for qualified financial contracts shall be applied 
in a manner consistent with reasonable business 
trading practices in the financial contracts mar-
ket. 
‘‘(C) 
PAYMENT
OF
DIVIDENDS
ON 
CLAIMS.—The receiver may, in the sole discre-
tion of the receiver, pay from the assets of the 
regulated entity dividends on proved claims at 
any time, and no liability shall attach to the 
Agency, by reason of any such payment, for 
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185 
failure to pay dividends to a claimant whose 
claim is not proved at the time of any such pay-
ment. 
‘‘(D) RULEMAKING
AUTHORITY
OF
THE 
DIRECTOR.—The Director may prescribe such 
rules, including definitions of terms, as the Di-
rector deems appropriate to establish a single 
uniform interest rate for, or to make payments 
of post-insolvency interest to creditors holding 
proven claims against the receivership estates of 
regulated entities following satisfaction by the 
receiver of the principal amount of all creditor 
claims. 
‘‘(10) SUSPENSION OF LEGAL ACTIONS.— 
‘‘(A) IN GENERAL.—After the appointment 
of a conservator or receiver for a regulated enti-
ty, the conservator or receiver may, in any judi-
cial action or proceeding to which such regu-
lated entity is or becomes a party, request a 
stay for a period not to exceed— 
‘‘(i) 45 days, in the case of any con-
servator; and 
‘‘(ii) 90 days, in the case of any re-
ceiver. 
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‘‘(B) GRANT OF STAY BY ALL COURTS RE-
QUIRED.—Upon receipt of a request by any 
conservator or receiver under subparagraph (A) 
for a stay of any judicial action or proceeding 
in any court with jurisdiction of such action or 
proceeding, the court shall grant such stay as 
to all parties. 
‘‘(11) ADDITIONAL RIGHTS AND DUTIES.— 
‘‘(A) PRIOR
FINAL
ADJUDICATION.—The 
Agency shall abide by any final unappealable 
judgment of any court of competent jurisdiction 
which was rendered before the appointment of 
the Agency as conservator or receiver. 
‘‘(B) RIGHTS AND REMEDIES OF CONSER-
VATOR OR RECEIVER.—In the event of any ap-
pealable judgment, the Agency as conservator 
or receiver shall— 
‘‘(i) have all the rights and remedies 
available to the regulated entity (before the 
appointment of such conservator or re-
ceiver) and the Agency, including removal 
to Federal court and all appellate rights; 
and 
‘‘(ii) not be required to post any bond 
in order to pursue such remedies. 
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‘‘(C) NO ATTACHMENT OR EXECUTION.— 
No attachment or execution may issue by any 
court upon assets in the possession of the re-
ceiver. 
‘‘(D) LIMITATION ON JUDICIAL REVIEW.— 
Except as otherwise provided in this subsection, 
no court shall have jurisdiction over— 
‘‘(i) any claim or action for payment 
from, or any action seeking a determina-
tion of rights with respect to, the assets of 
any regulated entity for which the Agency 
has been appointed receiver; or 
‘‘(ii) any claim relating to any act or 
omission of such regulated entity or the 
Agency as receiver. 
‘‘(E) DISPOSITION OF ASSETS.—In exer-
cising any right, power, privilege, or authority 
as conservator or receiver in connection with 
any sale or disposition of assets of a regulated 
entity for which the Agency has been appointed 
conservator or receiver, the Agency shall con-
duct its operations in a manner which main-
tains stability in the housing finance markets 
and, to the extent consistent with that goal— 
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‘‘(i) maximizes the net present value 
return from the sale or disposition of such 
assets; 
‘‘(ii) minimizes the amount of any loss 
realized in the resolution of cases; and 
‘‘(iii) ensures adequate competition 
and fair and consistent treatment of 
offerors. 
‘‘(12) STATUTE OF LIMITATIONS FOR ACTIONS 
BROUGHT BY CONSERVATOR OR RECEIVER.— 
‘‘(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 
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‘‘(II) the period applicable under 
State law. 
‘‘(B) DETERMINATION OF THE DATE ON 
WHICH
A
CLAIM
ACCRUES.—For purposes of 
subparagraph (A), the date on which the stat-
ute 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 
‘‘(ii) the date on which the cause of 
action accrues. 
‘‘(13) REVIVAL OF EXPIRED STATE CAUSES OF 
ACTION.— 
‘‘(A) IN GENERAL.—In the case of any tort 
claim described under subparagraph (B) for 
which the statute of limitations applicable 
under State law with respect to such claim has 
expired not more than 5 years before the ap-
pointment of the Agency as conservator or re-
ceiver, the Agency may bring an action as con-
servator or receiver on such claim without re-
gard to the expiration of the statute of limita-
tion applicable under State law. 
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190 
‘‘(B) CLAIMS
DESCRIBED.—A tort claim 
referred to under subparagraph (A) is a claim 
arising from fraud, intentional misconduct re-
sulting in unjust enrichment, or intentional mis-
conduct resulting in substantial loss to the reg-
ulated entity. 
‘‘(14) ACCOUNTING AND RECORDKEEPING RE-
QUIREMENTS.— 
‘‘(A) IN GENERAL.—The Agency as conser-
vator or receiver shall, consistent with the ac-
counting and reporting practices and proce-
dures established by the Agency, maintain a full 
accounting of each conservatorship and receiv-
ership or other disposition of a regulated entity 
in default. 
‘‘(B) ANNUAL ACCOUNTING OR REPORT.— 
With respect to each conservatorship or receiv-
ership, the Agency shall make an annual ac-
counting or report available to the Board, the 
Comptroller General of the United States, the 
Committee on Banking, Housing, and Urban 
Affairs of the Senate, and the Committee on 
Financial Services of the House of Representa-
tives. 
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191 
‘‘(C) AVAILABILITY OF REPORTS.—Any re-
port prepared under subparagraph (B) shall be 
made available by the Agency upon request to 
any shareholder of a regulated entity or any 
member of the public. 
‘‘(D) RECORDKEEPING
REQUIREMENT.— 
After the end of the 6-year period beginning on 
the date that the conservatorship or receiver-
ship is terminated by the Director, the Agency 
may destroy any records of such regulated enti-
ty which the Agency, in the discretion of the 
Agency, determines to be unnecessary unless di-
rected not to do so by a court of competent ju-
risdiction or governmental agency, or prohibited 
by law. 
‘‘(15) FRAUDULENT TRANSFERS.— 
‘‘(A) IN GENERAL.—The Agency, as con-
servator or receiver, may avoid a transfer of 
any interest of a regulated entity-affiliated 
party, or any person who the conservator or re-
ceiver determines is a debtor of the regulated 
entity, in property, or any obligation incurred 
by such party or person, that was made within 
5 years of the date on which the Agency was 
appointed conservator or receiver, if such party 
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or person voluntarily or involuntarily made such 
transfer or incurred such liability with the in-
tent to hinder, delay, or defraud the regulated 
entity, the Agency, the conservator, or receiver. 
‘‘(B) RIGHT OF RECOVERY.—To the extent 
a transfer is avoided under subparagraph (A), 
the conservator or receiver may recover, for the 
benefit of the regulated entity, the property 
transferred, or, if a court so orders, the value 
of such property (at the time of such transfer) 
from— 
‘‘(i) the initial transferee of such 
transfer or the regulated entity-affiliated 
party or person for whose benefit such 
transfer was made; or 
‘‘(ii) any immediate or mediate trans-
feree of any such initial transferee. 
‘‘(C) RIGHTS OF TRANSFEREE OR OBLI-
GEE.—The conservator or receiver may not re-
cover under subparagraph (B) from— 
‘‘(i) any transferee that takes for 
value, including satisfaction or securing of 
a present or antecedent debt, in good faith; 
or 
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193 
‘‘(ii) any immediate or mediate good 
faith transferee of such transferee. 
‘‘(D) RIGHTS UNDER THIS PARAGRAPH.— 
The rights under this paragraph of the conser-
vator or receiver described under subparagraph 
(A) shall be superior to any rights of a trustee 
or any other party (other than any party which 
is a Federal agency) under title 11, United 
States Code. 
‘‘(16) ATTACHMENT OF ASSETS AND OTHER IN-
JUNCTIVE RELIEF.—Subject to paragraph (17), any 
court of competent jurisdiction may, at the request 
of the conservator or receiver, issue an order in ac-
cordance with Rule 65 of the Federal Rules of Civil 
Procedure, including an order placing the assets of 
any person designated by the Agency or such conser-
vator under the control of the court, and appointing 
a trustee to hold such assets. 
‘‘(17) STANDARDS OF PROOF.—Rule 65 of the 
Federal Rules of Civil Procedure shall apply with re-
spect to any proceeding under paragraph (16) with-
out regard to the requirement of such rule that the 
applicant show that the injury, loss, or damage is ir-
reparable and immediate. 
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194 
‘‘(18) TREATMENT OF CLAIMS ARISING FROM 
BREACH
OF
CONTRACTS
EXECUTED
BY
THE
RE-
CEIVER OR CONSERVATOR.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of this subsection, any final and 
unappealable judgment for monetary damages 
entered against a receiver or conservator for the 
breach of an agreement executed or approved in 
writing by such receiver or conservator after the 
date of its appointment, shall be paid as an ad-
ministrative expense of the receiver or conser-
vator. 
‘‘(B) NO LIMITATION OF POWER.—Nothing 
in this paragraph shall be construed to limit the 
power of a receiver or conservator to exercise 
any rights under contract or law, including to 
terminate, breach, cancel, or otherwise dis-
continue such agreement. 
‘‘(19) GENERAL EXCEPTIONS.— 
‘‘(A) LIMITATIONS.—The rights of a con-
servator or receiver appointed under this section 
shall be subject to the limitations on the powers 
of a receiver under sections 402 through 407 of 
the Federal Deposit Insurance Corporation Im-
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provement Act of 1991 (12 U.S.C. 4402 
through 4407). 
‘‘(B) MORTGAGES HELD IN TRUST.— 
‘‘(i) IN
GENERAL.—Any mortgage, 
pool of mortgages, or interest in a pool of 
mortgages, held in trust, custodial, or 
agency capacity by a regulated entity for 
the benefit of persons other than the regu-
lated entity shall not be available to satisfy 
the claims of creditors generally. 
‘‘(ii) HOLDING OF MORTGAGES.—Any 
mortgage, pool of mortgages, or interest in 
a pool of mortgages, described under 
clause (i) shall be held by the conservator 
or receiver appointed under this section for 
the beneficial owners of such mortgage, 
pool of mortgages, or interest in a pool of 
mortgages in accordance with the terms of 
the agreement creating such trust, custo-
dial, or other agency arrangement. 
‘‘(iii) LIABILITY OF RECEIVER.—The 
liability of a receiver appointed under this 
section for damages shall, in the case of 
any contingent or unliquidated claim relat-
ing to the mortgages held in trust, be esti-
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196 
mated in accordance set forth in the regu-
lations of the Director. 
‘‘(c) PRIORITY
OF EXPENSES
AND UNSECURED 
CLAIMS.— 
‘‘(1) IN GENERAL.—Unsecured claims against a 
regulated entity, or a receiver, that are proven to the 
satisfaction of the receiver shall have priority in the 
following order: 
‘‘(A) Administrative expenses of the re-
ceiver. 
‘‘(B) Any other general or senior liability 
of the regulated entity and claims of other Fed-
eral home loan banks arising from their pay-
ment obligations (including joint and several 
payment obligations). 
‘‘(C) Any obligation subordinated to gen-
eral creditors. 
‘‘(D) Any obligation to shareholders or 
members arising as a result of their status as 
shareholder or members. 
‘‘(2) CREDITORS
SIMILARLY
SITUATED.—All 
creditors that are similarly situated under paragraph 
(1) shall be treated in a similar manner, except that 
the Agency may make such other payments to credi-
tors necessary to maximize the present value return 
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from the sale or disposition or such regulated enti-
ty’s assets or to minimize the amount of any loss re-
alized in the resolution of cases so long as all credi-
tors similarly situated receive not less than the 
amount provided under subsection (e)(2). 
‘‘(3) DEFINITION.—The term ‘administrative 
expenses of the receiver’ shall include the actual, 
necessary costs and expenses incurred by the re-
ceiver in preserving the assets of the regulated entity 
or liquidating or otherwise resolving the affairs of 
the regulated entity. Such expenses shall include ob-
ligations that are incurred by the receiver after ap-
pointment as receiver that the Director determines 
are necessary and appropriate to facilitate the 
smooth and orderly liquidation or other resolution of 
the regulated entity. 
‘‘(d) PROVISIONS RELATING
TO CONTRACTS EN-
TERED INTO BEFORE APPOINTMENT OF CONSERVATOR 
OR RECEIVER.— 
‘‘(1) AUTHORITY TO REPUDIATE CONTRACTS.— 
In addition to any other rights a conservator or re-
ceiver may have, the conservator or receiver for any 
regulated entity may disaffirm or repudiate any con-
tract or lease— 
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198 
‘‘(A) to which such regulated entity is a 
party; 
‘‘(B) the performance of which the conser-
vator or receiver, in its sole discretion, deter-
mines to be burdensome; and 
‘‘(C) the disaffirmance or repudiation of 
which the conservator or receiver determines, in 
its sole discretion, will promote the orderly ad-
ministration of the affairs of the regulated enti-
ty. 
‘‘(2) TIMING
OF
REPUDIATION.—The conser-
vator or receiver shall determine whether or not to 
exercise the rights of repudiation under this sub-
section within a reasonable period following such ap-
pointment. 
‘‘(3) CLAIMS
FOR
DAMAGES
FOR
REPUDI-
ATION.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided under subparagraph (C) and para-
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 
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‘‘(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 
repudiation of such contract or agree-
ment. 
‘‘(B) NO
LIABILITY
FOR
OTHER
DAM-
AGES.—For purposes of subparagraph (A), the 
term ‘actual direct compensatory damages’ shall 
not include— 
‘‘(i) punitive or exemplary damages; 
‘‘(ii) damages for lost profits or op-
portunity; 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 which paragraph (8) applies, compensatory 
damages shall be— 
‘‘(i) deemed to include normal and 
reasonable costs of cover or other reason-
able measures of damages utilized in the 
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200 
industries 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 
receiver disaffirms or repudiates a lease under 
which the regulated entity was the lessee, the 
conservator or receiver shall not be liable for 
any damages (other than damages determined 
under subparagraph (B)) for the disaffirmance 
or repudiation 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— 
‘‘(I) the notice of disaffirmance 
or repudiation is mailed; or 
‘‘(II) the disaffirmance or repudi-
ation becomes effective, unless the les-
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