113 S1048 IS: Mortgage Finance Act of 2013
U.S. Senate
2013-05-23
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.
(a)This Act may be cited
as the Mortgage Finance Act of
2013
.
(b)Congress
finds that—
(1)dependable,
transparent, and liquid primary and secondary markets for high-quality
residential and multifamily mortgages are critical to a safe and sound housing
market;
(2)Congress wishes
to terminate the Congressional charters and operations of the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation, and to
wind them down through an orderly receivership process, without disrupting the
housing markets;
(3)taxpayers have
expended billions of dollars on behalf of the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation during the period of
their conservatorship, and such expenditures should be recouped;
(4)increased
participation by the private sector to provide mortgage market liquidity and
credit risk mitigation is necessary and desirable to reduce dependence on
Government guarantees, and to make remote any future needs for taxpayer
assistance;
(5)this Act creates
a new transitional facility to guarantee securitizations of high-quality
residential mortgages, to ensure a sound and stable housing market;
(6)multiple layers
of private capital and the creation of an industry-funded Catastrophic Fund
will make future risk to taxpayers highly remote; and
(7)this Act provides
for the privatization of the transitional facility after 10 years, with
proceeds being paid to the United States Treasury.
2.For purposes of this Act, unless the context
otherwise requires, the following definitions shall apply:
(1)The term
Board of Directors means the Board of Directors of the Mortgage
Finance Agency.
(2)The term charter means—
(A)with respect to the Federal National
Mortgage Association, the Federal National Mortgage Association Charter Act (12
U.S.C. 1716 et seq.); and
(B)with respect to the Federal Home Loan
Mortgage Corporation, the Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1451 et seq.).
(3)The term Director, other than
in the context of the Director of the Federal Housing Finance Agency, means the
Director of the Mortgage Finance Agency.
(4)The term enterprise
means—
(A)the Federal National Mortgage Association;
and
(B)the Federal Home Loan Mortgage
Corporation.
(5)The term FHFA means the
Federal Housing Finance Agency.
(6)Mortgage
Finance Agency; MFAThe terms Mortgage Finance
Agency and MFA mean the agency established under title
II.
(7)The term MFA certification date
means the date on which the Director certifies that the MFA is operational and
able to perform the guarantee function for qualified mortgage-backed securities
collateralized by qualified residential mortgages, as provided in this Act,
which date shall be not later than 18 months after the date of enactment of
this Act.
(8)The term qualified issuer means a person who
originates or purchases, and services, a qualified residential mortgage or a
qualified multifamily mortgage, and is approved to issue securities guaranteed
by the MFA, in accordance with this Act and with the guidelines issued by the
MFA under section 302.
(9)Qualified
mortgage-backed securitiesThe term qualified
mortgage-backed securities means securities collateralized by qualified
residential mortgages or qualified multifamily mortgages, as the case may be,
issued by a qualified issuer and guaranteed by the MFA with respect to the
timely payment of principal and interest, all in accordance with this
Act.
(10)Qualified
multifamily mortgageThe term qualified multifamily
mortgage means a commercial real estate loan secured by a property with
5 or more single family units, the primary source of repayment for which is
expected to be derived from the proceeds of the sale, refinancing, or permanent
financing of the property, or rental income generated by the property,
that—
(A)has been
originated with an initial loan to value ratio of not more than 75 percent and
with an initial debt service coverage ratio of at least 1.25; or
(B)with respect to
which, the mortgage lender retains a pro rata vertical slice of credit risk in
an amount to be determined by the MFA.
(11)Qualified
residential mortgageThe term
qualified residential mortgage means a residential real estate
loan secured by a property with 1 to 4 single family units that has been
originated in compliance with the following underwriting standards and product
features:
(A)Documentation and
verification of the financial resources relied upon to qualify the
mortgagor.
(B)Standards with
respect to the income and scheduled debt payments of the mortgagor,
including—
(i)one
or more of—
(I)the residual
income of the mortgagor after all monthly obligations;
(II)the ratio of the
housing payments of the mortgagor to the monthly income of the mortgagor;
and
(III)the ratio of
total monthly installment payments of the mortgagor to the income of the
mortgagor; and
(ii)mitigation of
the potential for payment shock on adjustable rate mortgages.
(C)Downpayments
which shall be equal to not less than 5 percent of purchase price, and—
(i)in
the case of such mortgages with downpayments equal to not less than 5 percent
but less than 30 percent of the purchase price, the mortgage is covered by
private mortgage insurance purchased at the time of origination in an amount
sufficient to cover each loan to the equivalent of not less than a 30 percent
downpayment; and
(ii)such mortgage
insurance is issued by an entity that is subject to regulation as a mortgage
guaranty insurer by the State of domicile of such entity or by the Federal
Insurance Office (which regulation includes risk-based capital and reserve
requirements).
(D)Prohibition of or
restrictions on the use of balloon payments, negative amortization, prepayment
penalties, interest-only payments, and other features that have been
demonstrated to exhibit a higher risk of borrower default.
(12)The
term Secretary means the Secretary of the Treasury.
<enum>I</enum><header>Termination of
Fannie Mae and Freddie Mac Charters</header>
<section id="id87739CB5EEF24CE190F0647AD98FE6B4"><enum>101.</enum><header>Receivership
of the enterprises</header>
<subsection id="idBB4B02B60AEB47CEB612480BC0E08812"><enum>(a)</enum><header>Irrevocable
receivership</header>
<paragraph id="id9676952E09364C4D8921DCA3F1E9E535"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Effective on the MFA
certification date, the FHFA is appointed receiver of the enterprises, and the
enterprises shall be placed into irrevocable receivership by the FHFA, in
accordance with section 1367 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (<external-xref legal-doc="usc" parsable-cite="usc/12/4617">12 U.S.C. 4617</external-xref>), except that—</text>
<subparagraph id="id9F8CF8E487D948FBA33A28321E4E7DDB"><enum>(A)</enum><text display-inline="yes-display-inline">paragraphs (1) through (5) of subsection
(a) of that section 1367 do not apply with respect to such appointment;
and</text>
</subparagraph><subparagraph id="ID7637dfb85c5849f3bcfe6ab09301aa39"><enum>(B)</enum><text>prior to the MFA
certification date, the enterprises shall be permitted to engage in the
business of guaranteeing the timely payment of principal and interest on
qualified mortgage-backed securities and to undertake all functions necessary
to carry out such business, to the extent that such guarantees are necessary to
provide a dependable, transparent, and liquid market for high quality mortgages
for securitization.</text>
</subparagraph></paragraph><paragraph id="idC7CBAB22D55943BF82F14E84D9F53446"><enum>(2)</enum><header>Commencement of
liquidation</header><text>Immediately upon placement of the enterprises into
receivership, the FHFA shall commence liquidation of the enterprises.</text>
</paragraph></subsection><subsection id="id1EC58A4CE8BC4086B110C7823EEBDEF5"><enum>(b)</enum><header>Repeal of GSE
charters</header>
<paragraph id="idECB8A4E3560B4A1F81DADEB3DD0ACB89"><enum>(1)</enum><header>Fannie
Mae</header><text>The charter of the Federal National Mortgage Association, is
repealed, effective 90 days after the date on which liquidation thereof is
complete, in accordance with this Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idBEB6186311384D4185CDF99E1EF7A251"><enum>(2)</enum><header>Freddie
Mac</header><text>The charter of the Federal Home Loan Mortgage Corporation, is
repealed, effective 90 days after the date on which liquidation thereof is
complete, in accordance with this Act.</text>
</paragraph></subsection><subsection commented="no" id="id7704798D302745CC88A9B11EF1105F1C"><enum>(c)</enum><header>Rule of
construction</header><text>For purposes of any provision of Federal law that
refers to or relies on a decision by the Director of the FHFA to place an
enterprise into receivership, such determination shall be deemed to have been
made by operation of the placement of the enterprises into receivership under
subsection (a).</text>
</subsection></section><section commented="no" id="id5A94007C0C6E4AC1AE81E9BA9D0EDF9D"><enum>102.</enum><header>Repayment of
Government assistance; maximizing return to taxpayers</header>
<subsection commented="no" id="idF5DA327E8D614EEFAE6FCDF88C235294"><enum>(a)</enum><header>In
general</header><text>After fully satisfying the outstanding obligations of the
enterprises in a manner consistent with their receivership status, all
remaining proceeds from the operations of the enterprises in receivership shall
be paid by the FHFA to the General Fund of the United States Treasury in
repayment of Government assistance provided in connection with ensuring the
solvency and resolution of the enterprises prior to the date of enactment of
this Act.</text>
</subsection><subsection commented="no" id="id7FB266F174594D5F929D9A0F480ADF53"><enum>(b)</enum><header>Maximum return
to taxpayer</header><text>The combined assets of the enterprises, including
on-balance sheet portfolios, shall be managed by the FHFA as receiver to obtain
resolutions that maximize the return for the taxpayer, to the extent
that—</text>
<paragraph commented="no" id="id7A1283CC5A84411093BEBEE3424C631C"><enum>(1)</enum><text>such resolutions
are consistent with the goal of supporting a sound, stable, and liquid housing
market; and</text>
</paragraph><paragraph commented="no" id="idFED8816E0D2B49F690ACAA8B4307ADA6"><enum>(2)</enum><text>such resolutions
are consistent with applicable law.</text>
</paragraph></subsection><subsection id="ID0d9b9572c7ff4683b0f9787519c0ed73"><enum>(c)</enum><header>Transfer of
proceeds of privatization and catastrophic fund</header><text>The proceeds from
privatization of the MFA upon termination of its authority in accordance with
section 304 shall be deposited into the General Fund of the United States
Treasury. Upon such termination of the authority of the MFA, the Catastrophic
Fund shall be transferred to the General Fund of the United States Treasury,
and the United States Treasury shall assume responsibility for and honor any
remaining obligations of the MFA, of whatever nature and until such time as
they are extinguished.</text>
</subsection></section><section id="IDa82593f0366c434a98c39ec5a371342d"><enum>103.</enum><header>Report to
Congress</header><text display-inline="no-display-inline">Upon the resolution
of all valid claims of the enterprises, the Director of the FHFA shall submit a
report by the FHFA as receiver of the enterprises to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives, certifying the completion of the
receivership.</text>
</section><enum>II</enum><header>Mortgage Finance
Agency</header>
<section id="IDd8a3fc5e1f7a458faa4481d92bb247a6"><enum>201.</enum><header>Establishment
of MFA</header><text display-inline="no-display-inline">There is established
the Mortgage Finance Agency, which shall be an independent agency of the
Federal Government.</text>
</section><section id="id2ED3BE3FAA7E4B65B63979A0EBCA58FC"><enum>202.</enum><header>Governance</header>
<subsection id="ID0d3f3b6724824cb999dcf080a4660f58"><enum>(a)</enum><header>Director</header>
<paragraph id="idE090842365DA48D78AA9E5D139223FF9"><enum>(1)</enum><header>In
general</header><text>The MFA shall be headed, on a day-to-day basis, by a
Director, appointed by the President, by and with the advice and consent of the
Senate. Such appointment shall be made not later than 6 months after the date
of enactment of this Act.</text>
</paragraph><paragraph commented="no" id="id56EA1F2977EA48B896B8C79E0A5C816C"><enum>(2)</enum><header>Regulatory
authority</header><text>The Director shall have general regulatory authority
over the MFA, and shall exercise such general regulatory authority as necessary
to carry out this Act.</text>
</paragraph><paragraph id="idAE8537D8E0974DC0B4CEDE65A6803514"><enum>(3)</enum><header>Term</header><text>The
Director shall serve for a term of 5 years. An individual may serve as Director
after the expiration of the term for which appointed, until a successor has
been appointed and qualified.</text>
</paragraph><paragraph id="id926907E973D041669D11D3B2566F5A14"><enum>(4)</enum><header>Vacancies</header><text>A
vacancy in the office of the Director shall be filled in the same manner as the
original appointment.</text>
</paragraph><paragraph id="IDaaf94ca4b38840f5b5818a7b4e07054d"><enum>(5)</enum><header>Compensation</header><text>The
Director shall be compensated at the rate prescribed for level II of the
Executive Schedule under <external-xref legal-doc="usc" parsable-cite="usc/5/5313">section 5313</external-xref> of title 5, United States Code.</text>
</paragraph></subsection><subsection id="id5DFC3AF03F3846E0B07B85661B8080A7"><enum>(b)</enum><header>Board of
directors</header>
<paragraph id="id491C677C466446DD82EB0C751A4996E2"><enum>(1)</enum><header>Members</header><text>The
operations of the MFA shall be directed by a 5-member Board of Directors,
including the Director, who shall serve as the chairperson of the Board of
Directors, a Vice Chairman, who shall be appointed by the President, the
Chairman of the Securities and Exchange Commission, or a designee thereof, the
Secretary of Housing and Urban Development, or a designee thereof, and the
Chairman of the Board of Governors of the Federal Reserve System, or a designee
thereof.</text>
</paragraph><paragraph id="id9350CD13116B413C920ACDB17EB21CC0"><enum>(2)</enum><header>Majority
vote</header><text>A majority vote of all members of the Board of Directors is
necessary to resolve all voting issues of the MFA.</text>
</paragraph><paragraph id="id525AB03952C54297985188084EF31BAF"><enum>(3)</enum><header>Meetings</header><text>The
Board of Directors shall meet at the call of the Director, but in no event less
frequently than once in each calendar quarter.</text>
</paragraph><paragraph id="id6E95DC07D7CD4D3DA897139EBCEE039E"><enum>(4)</enum><header>Federal
employees</header><text>The members of the Board of Directors shall serve
without additional pay (or benefits in the nature of compensation) for service
as a member of the Board of Directors.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id7D6C4F8C2D5849F48B223F8B1ED05B5B"><enum>(5)</enum><header>Travel
expenses</header><text>Members of the Board of Directors shall be entitled to
receive travel expenses, including per diem in lieu of subsistence, equivalent
to those set forth in subchapter I of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/57">chapter 57</external-xref> of title 5, United States
Code.</text>
</paragraph><paragraph id="IDdfa8cb5646f84c4898b8e9ea92bec63b"><enum>(6)</enum><header>Bylaws</header><text>The
Board of Directors may prescribe, amend, and repeal such bylaws as may be
necessary for carrying out the functions of the Board of Directors.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDd73095c5778144918e7eeb22737b67b9"><enum>(7)</enum><header>Quorum</header><text>A
majority of the Board of Directors shall constitute a quorum.</text>
</paragraph></subsection><subsection id="ID32531f991d5448a7b1bf08601244a4b4"><enum>(c)</enum><header>Privatization
Advisory Board</header>
<paragraph id="ID0d6419b951204929aa525153a3945e40"><enum>(1)</enum><header>Members</header><text>There
shall be appointed by the President a 10-member privatization advisory board.
To the extent practicable, the President shall seek at all times to have
advisory board members with expertise in—</text>
<subparagraph id="id8EF9D41B670E4BFA84EA7741F9379D5E"><enum>(A)</enum><text>single family
housing finance;</text>
</subparagraph><subparagraph id="id13F6A05511AD436D80E234148A302BFB"><enum>(B)</enum><text>multifamily
housing finance;</text>
</subparagraph><subparagraph id="id3288C4768AA24CFB87638D8BE3265F8E"><enum>(C)</enum><text>residential real
estate development and sales;</text>
</subparagraph><subparagraph id="id04E86F276AAC4D9FAED1E7CB096B3819"><enum>(D)</enum><text>secondary market
structuring and pricing;</text>
</subparagraph><subparagraph id="id14FAB363667C48D2B38A3BC97EB5F04B"><enum>(E)</enum><text>private mortgage
insurance;</text>
</subparagraph><subparagraph id="id9BDE49CC8D224279903681B20445CD6B"><enum>(F)</enum><text>privatization
structuring and execution; and</text>
</subparagraph><subparagraph id="id72729FB603FC4A828EA1A2BCBEC312BC"><enum>(G)</enum><text>macroeconomic
policy.</text>
</subparagraph></paragraph><paragraph id="ID2b57f212101e4331be556d2f7464bc06"><enum>(2)</enum><header>Role</header><text>The
roles of the advisory board shall be—</text>
<subparagraph id="id68B33BC8E3EC4A3FB7A0A906E324FCB0"><enum>(A)</enum><text>to advise the
Board of Directors on the privatization of the MFA upon termination of its
authority under this Act, including how best to facilitate a smooth, efficient,
and orderly transition of the guarantee business;</text>
</subparagraph><subparagraph id="idCC67029F783E4624A82EBD235901A6A1"><enum>(B)</enum><text>to review and
opine on the status of the planning for privatization; and</text>
</subparagraph><subparagraph id="idB15660F7B48A4F6B9DE760BA577DFD7C"><enum>(C)</enum><text>concurrently with
the plan and annual and quarterly reports presented by the MFA to Congress
under section 304(c), to present to Congress its own independent reports on the
plan for privatization and the status thereof.</text>
</subparagraph></paragraph></subsection><subsection id="IDcc0788d6f28f4e24a8d257624674a525"><enum>(d)</enum><header>Inspector
general</header><text>There shall be within the MFA an Inspector General, who
shall be appointed by the President in accordance with section 3(a) of the
Inspector General Act of 1978 (5 U.S.C. App.) not later than 6 months after the
date of enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id4E4510AB9D85440C951A68D7E53369C7"><enum>203.</enum><header>Funding</header><text display-inline="no-display-inline">Annual appropriations to the MFA shall be
based upon a budget submitted to Congress by the MFA and approved by the Board
of Directors. In accordance with section 303(a)(2), amounts appropriated shall
be recouped through collection of the guarantee fee.</text>
</section><section commented="no" display-inline="no-display-inline" id="id19549FC29A7A4B888D741D7F59081516"><enum>204.</enum><header>Regulations;
reports</header>
<subsection id="ID5b3414dce7d44e81a9a636290954e627"><enum>(a)</enum><header>Startup</header><text>Not
later than 12 months after the date of the appointment of the Director, the MFA
shall issue such regulations, guidelines, orders, requirements, and standards
as may be necessary for the establishment and operation of the MFA.</text>
</subsection><subsection id="ID15255e9f33294699ad8d202f218d22cd"><enum>(b)</enum><header>Report to
Congress</header><text>Not later than 6 months after the date of the
appointment of the Director, the Board of Directors shall provide to Congress a
progress report on the drafting of regulations and other conditions precedent
to the MFA becoming fully operational.</text>
</subsection></section><section id="ID11abfcf61cda4b2a84d4978526c345cd"><enum>205.</enum><header>Appearances
before congress</header><text display-inline="no-display-inline">The Director
shall appear before Congress annually regarding—</text>
<paragraph id="idE423587D099F4BBA9F76DCFB33BEBBFC"><enum>(1)</enum><text>the safety and
soundness of the MFA and the Catastrophic Fund, including, beginning 1 year
after the date on which the MFA becomes operational, a report by the Inspector
General of the MFA, and a report of an independent actuary regarding the
adequacy of guarantee fees, the adequacy of the Catastrophic Fund, and the
adequacy of the percentage of the guarantee fee that is being allocated to the
Catastrophic Fund;</text>
</paragraph><paragraph id="id6BDA63F820C54E82BD0705DA8C62F2F5"><enum>(2)</enum><text>any material
deficiencies in the conduct of the operations of the MFA;</text>
</paragraph><paragraph id="idADD4F09E17B64830B4C71D5ED040E42F"><enum>(3)</enum><text>the overall
operational status of the MFA;</text>
</paragraph><paragraph id="idB31272349A394A679E365C37F9EB9DA6"><enum>(4)</enum><text>operations,
resources, and performance of the Board of Directors; and</text>
</paragraph><paragraph id="idA9B37CE53C1E4AFAABACB125815C7E44"><enum>(5)</enum><text>such other
relevant matters relating to the Board of Directors and the MFA.</text>
</paragraph></section><section id="ID2f191ec7fb6046c08ac3d36fd5b840a7"><enum>206.</enum><header>Staff,
experts, and consultants</header>
<subsection id="idCE56938BC6BA45D3998F0E7102F742E8"><enum>(a)</enum><header>Compensation</header>
<paragraph id="ID596faf352fef40fab23d6feef4b6179e"><enum>(1)</enum><header>In
general</header><text>The MFA may appoint and fix the compensation of such
officers, attorneys, economists, examiners, and other employees as may be
necessary for carrying out its functions. The MFA shall appoint a Chief Risk
Officer not later than 90 days after the date of the appointment of the
Director.</text>
</paragraph><paragraph id="ID5aae6f8c81a742238f844de61ae13c41"><enum>(2)</enum><header>Rates of
pay</header><text>Rates of basic pay for all employees of the MFA may be set
and adjusted by the MFA without regard to the provisions of chapter 51 or
subchapter III of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/53">chapter 53</external-xref> of title 5, United States Code.</text>
</paragraph><paragraph id="ID973c9f31b3244ce989964d89aadab609"><enum>(3)</enum><header>Parity</header><text>The
MFA may provide additional compensation and benefits to employees of the MFA,
if the same type of compensation or benefits are then being provided by any
agency referred to under section 1206 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (<external-xref legal-doc="usc" parsable-cite="usc/12/1833b">12 U.S.C. 1833b</external-xref>) or, if not then being
provided, could be provided by such an agency under applicable provisions of
law, rule, or regulation. In setting and adjusting the total amount of
compensation and benefits for employees, the MFA shall consult with, and seek
to maintain comparability with, the agencies referred to under section 1206 of
the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 1833b).</text>
</paragraph></subsection><subsection id="idE840636B7ACB4C428A8B83E833500298"><enum>(b)</enum><header>Detail of
government employees</header><text>Upon request of the Director, any Federal
Government employee may be detailed to the MFA or the Board of Directors
without reimbursement, and such detail shall be without interruption or loss of
civil service status or privilege.</text>
</subsection><subsection id="ID9894554e307648d6b8d8b64e39fa8fd6"><enum>(c)</enum><header>Experts and
consultants</header><text>The Director shall procure the services of experts
and consultants as the Director considers necessary or appropriate.</text>
</subsection></section><enum>III</enum><header>Duties and
responsibilities of the MFA</header>
<section id="id852B0A19427D425CBD48E19671DAF963"><enum>301.</enum><header>MFA
responsibilities</header><text display-inline="no-display-inline">The MFA is
authorized—</text>
<paragraph id="ID63d105c747114406ae7232c9cca2af7c"><enum>(1)</enum><text>to guarantee
securities issued by qualified issuers and collateralized by pools of qualified
residential mortgages in order to provide a dependable, transparent, and liquid
market for high quality mortgages for securitization;</text>
</paragraph><paragraph id="IDbe31b964a40d422ba4e4de0e1127c198"><enum>(2)</enum><text>to guarantee
securities issued by qualified issuers and collateralized by pools of qualified
multifamily mortgages, in order to provide a dependable, transparent, and
liquid market for high quality multifamily mortgages for securitization;</text>
</paragraph><paragraph id="ID0117f572a953410991ce3f71c3ad24a2"><enum>(3)</enum><text>to charge and
collect a guarantee fee sufficient to protect the MFA and the United States
Treasury from the risks of guaranteeing the timely payment of principal and
interest on qualified mortgage-backed securities;</text>
</paragraph><paragraph id="IDb013d5aa40b94687b59284d2c0a72939"><enum>(4)</enum><text>to establish and
maintain a Catastrophic Fund to minimize the burden on the Federal Government,
by setting aside amounts that will be available solely to pay obligations under
the MFA guarantee in the event of any future mortgage market collapse;
and</text>
</paragraph><paragraph id="ID7f7b4bda14de4c249b94267fbab2dafd"><enum>(5)</enum><text>to purchase
supplemental insurance coverage, as provided in section 303(d).</text>
</paragraph></section><section id="idE8B80B76466F42B0B5F9C5A4410434A6"><enum>302.</enum><header>MFA Guarantee
business</header>
<subsection id="ID38df41ad0bcb4dd1a25448da4e40489f"><enum>(a)</enum><header>In
general</header><text>The MFA shall guarantee the timely payment of principal
and interest to holders of qualified mortgage-backed securities. In the event
of a payment default on a mortgage that collateralizes a qualified
mortgage-backed security, the MFA guarantee shall cover any shortfalls to
security holders after giving effect to proceeds, if any, from liquidation of
the property securing the mortgage and from claims paid pursuant to any private
mortgage insurance coverage (including supplemental insurance coverage, if
any). The MFA guarantee of timely payment of principal and interest on
qualified mortgage-backed securities shall be backed by the full faith and
credit of the United States Government. The MFA shall charge a fee for such
guarantee in accordance with section 303.</text>
</subsection><subsection id="ID535778565f774c3f94f49a97390a9fac"><enum>(b)</enum><header>Qualified
Residential Mortgages and Qualified Multifamily Mortgages</header><text>The MFA
shall issue guidelines consistent with this Act specifying the terms and
conditions of mortgages that satisfy—</text>
<paragraph id="id39062C86F75C4E238CB7737D569DADC1"><enum>(1)</enum><text>the definition of
a qualified residential mortgage, not later than 6 months after the date of
confirmation of the Director; and</text>
</paragraph><paragraph id="id951DD74B792F475C886ED81E4CA90A11"><enum>(2)</enum><text>the definition of
a qualified multifamily mortgage, not later than 1 year after the date of
confirmation of the Director.</text>
</paragraph></subsection><subsection id="IDa8802b0580ff4ba3a9a0055e02aea74f"><enum>(c)</enum><header>Guidelines</header>
<paragraph commented="no" id="IDcd239aa5f80d4eb09b05e683944813b1"><enum>(1)</enum><header>In
general</header><text>Not later than 12 months after the date of confirmation
of the Director, the MFA shall issue guidelines designed to oversee the
financial condition and origination and servicing standards of qualified
issuers and servicers of qualified residential mortgages and qualified
multifamily mortgages that collateralize qualified mortgage-backed
securities.</text>
</paragraph><paragraph id="ID322c7a8c3ce04778a17f60574420341d"><enum>(2)</enum><header>Inclusions</header><text>Guidelines
issued under this subsection shall—</text>
<subparagraph id="ID64ccdeaf96b9473bb14fa461a2ce217a"><enum>(A)</enum><text>include specific
financial and operational standards for such qualified issuers and such
servicers; and</text>
</subparagraph><subparagraph id="IDa2ea567e8e054ec7b1c90cccb167a3d7"><enum>(B)</enum><text>ensure—</text>
<clause id="ID6fbe771023ac4af295759bd64ebb532e"><enum>(i)</enum><text>broad
participation in the issuance of qualified mortgage-backed securities by
community banks, credit unions, national banks, and State-licensed mortgage
lenders;</text>
</clause><clause id="IDd798a66b5f99441197737a3777125119"><enum>(ii)</enum><text>that qualified
issuers bear the risk of noncompliance with representations and warranties made
in connection with the issuance of qualified mortgage-backed securities;
and</text>
</clause><clause id="ID7fc3267fa60d414dae2b834d6a6378c7"><enum>(iii)</enum><text>that qualified
issuers have the financial resources to support any obligations arising from
any violations of representations and warranties made in connection with the
issuance of qualified mortgage-backed securities.</text>
</clause></subparagraph></paragraph></subsection><subsection id="ID91006e40b2254234bc46779e04698806"><enum>(d)</enum><header>Limitations</header>
<paragraph id="id07CDF3C1E54C442284BDB81F4C4AE936"><enum>(1)</enum><header>Qualified
residential mortgage loan limits</header><text>The MFA shall set loan limits
for qualified residential mortgages that secure qualified mortgage-backed
securities. Such loan limits shall be calculated and set annually, on a
county-by-county basis, at an amount equal to not more than 150 percent of the
area median home price for the preceding year, and not less than the national
median home price for such year, in each case calculated using home price data
compiled by the FHFA or, if the FHFA no longer compiles such data, by the MFA.
In no event shall the loan limits in effect under this section in any county be
lower than amounts applicable to single family mortgages insured by the Federal
Housing Administration under title II of the National Housing Act (12 U.S.C.
1707 et seq.) in such county.</text>
</paragraph><paragraph id="IDdfe5f47c36b143a3bf4e7beedcf20795"><enum>(2)</enum><header>Qualified
multifamily mortgage loan limits</header><text>The MFA, in consultation with
the Board of Directors, shall consider setting loan limits for qualified
multifamily mortgages that secure qualified mortgage-backed securities, if such
limits would foster competition between the MFA and private issuers in advance
of the privatization of the MFA.</text>
</paragraph><paragraph id="IDb182f81fa1ad4070934b265e7d1e3af0"><enum>(3)</enum><header>Prohibition on
investment portfolio</header><text>The MFA shall not invest in mortgage-backed
securities or otherwise maintain an investment portfolio, other than to the
extent necessary for the MFA to carry out its responsibilities as guarantor of
qualified mortgage-backed securities.</text>
</paragraph></subsection></section><section id="idF301F246BECC440EAFB8BED43BA4D5D5"><enum>303.</enum><header>Guarantee
fees; catastrophic fund; supplemental insurance</header>
<subsection id="idE5693FDF8747402894CF2F491AC8A9F9"><enum>(a)</enum><header>Guarantee
Fees</header>
<paragraph id="ID5834eb3589014d8c8054d616a674392a"><enum>(1)</enum><header>Guarantee
Fees</header><text>The MFA shall charge a guarantee fee under this section in
connection with any guarantee issued by the MFA of timely payment of principal
and interest on the qualified mortgage-backed securities. At all times, the
guarantee fee shall be set at an equal amount for all qualified issuers. The
amount of the guarantee fee shall be adjusted periodically, as necessary to
fulfill the purposes described in paragraph (2).</text>
</paragraph><paragraph id="ID3d3c7ba9c79049468fdb264de6b72844"><enum>(2)</enum><header>Purposes</header><text>The
purposes of the guarantee fees are—</text>
<subparagraph id="id74F02186E2A046FF843E90AC4C88A30A"><enum>(A)</enum><text>to fund the
operations of the MFA;</text>
</subparagraph><subparagraph id="id5D7812B4FD9943288CE7BF13BE4E8C9E"><enum>(B)</enum><text>to capitalize the
Catastrophic Fund;</text>
</subparagraph><subparagraph id="id019B323819674791A2668F3F4D779284"><enum>(C)</enum><text>to cover any
losses; and</text>
</subparagraph><subparagraph id="ID0ebd3ad8af7b4b0d89b00c256fa1ee78"><enum>(D)</enum><text>to purchase
supplemental insurance coverage, as provided in subsection (d).</text>
</subparagraph></paragraph><paragraph id="IDe0746e9704764ab6941cc3daea838add"><enum>(3)</enum><header>Approval</header><text>The
Board of Directors shall approve the amount of guarantee fees and any
adjustments thereto, and shall determine the percentage of the guarantee fees,
if any, that will be allocated to the Catastrophic Fund in accordance with
subsection (b). Such percentage may be adjusted by the Board of Directors
semiannually, as necessary to ensure that the Catastrophic Fund is adequately
capitalized.</text>
</paragraph></subsection><subsection id="IDc5f10175842044b2af6823e3028a759f"><enum>(b)</enum><header>Creation of
Catastrophic Fund</header>
<paragraph id="ID535cbc77e6404ae0b700cfc1323fdb55"><enum>(1)</enum><header>Establishment</header><text>There
is established in the Treasury of the United States a fund to be known as the
<quote>Catastrophic Fund</quote>, which the MFA shall—</text>
<subparagraph id="idC22D0BE4D15647DBA61CE0E8E6BD5434"><enum>(A)</enum><text>maintain and
administer;</text>
</subparagraph><subparagraph id="id49A18E7803CC495EAA5D1C3F18E9E922"><enum>(B)</enum><text>use to carry out
its insurance and guarantee functions, in the manner provided by this Act;
and</text>
</subparagraph><subparagraph id="id09BCAED59FD6488D899800279C21296C"><enum>(C)</enum><text display-inline="yes-display-inline">invest in accordance with subsection
(c).</text>
</subparagraph></paragraph><paragraph id="IDc70237f84d4843a3936e4ce345d7a506"><enum>(2)</enum><header>Deposits</header><text>The
Catastrophic Fund shall be credited with—</text>
<subparagraph id="ID9c9291e11c5141c5948474327a0d80cc"><enum>(A)</enum><text>the amount of
guarantee fees, if any, that the Board of Directors determines should be
allocated to the Catastrophic Fund to protect against catastrophic
losses;</text>
</subparagraph><subparagraph id="ID4cb507ad32bb4bab81c78a5d5a7b8412"><enum>(B)</enum><text>any amounts
earned on investments of the Catastrophic Fund, other than as needed in
connection with the routine operation of the guarantee business; and</text>
</subparagraph><subparagraph id="ID84050913ad3a4655a4d0ed6cffe1710e"><enum>(C)</enum><text>such other
amounts as may otherwise be credited to the Catastrophic Fund by the Board of
Directors.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDBA14C5F23EA343DFA1CB94C4E478280A"><enum>(3)</enum><header display-inline="yes-display-inline">Uses</header><text>The Catastrophic Fund
shall be solely available to the MFA for use by the MFA to satisfy obligations
under its guarantee in accordance with this Act. Amounts remaining in the
Catastrophic Fund following the repayment of all qualified mortgage-backed
securities shall be distributed to the United States Treasury in accordance
with section 102(c).</text>
</paragraph></subsection><subsection id="ID9277446882aa456ca509883cf22520fb"><enum>(c)</enum><header>Actuarial
review</header><text>Beginning 1 year after the date on which the MFA becomes
fully operational, and each year thereafter, the Board of Directors shall
commission an independent actuarial study to determine the adequacy of the
guarantee fees and of the capitalization of the Catastrophic Fund, the results
of which study shall be made available to the public by the Board of Directors.
The Board of Directors shall rely on such study to determine the amount of the
guarantee fee that shall be charged and the percentage of the guarantee fees
that shall be allocated to the Catastrophic Fund.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id20EE9EA413AA4DA58B19A0848CB3A70E"><enum>(d)</enum><header>Investments</header>
<paragraph commented="no" id="ID20D5B6DE97614889916A7F9A8A8C5D7C"><enum>(1)</enum><header>Authority</header><text>Amounts
in the Catastrophic Fund that are not otherwise employed shall be invested in
obligations of the United States or in obligations guaranteed as to principal
and interest by the United States.</text>
</paragraph><paragraph commented="no" id="ID5B03EA2D54DF4CBC9414DAFEDF059E46"><enum>(2)</enum><header>Limitation</header><text>The
MFA may not sell or purchase any obligations described in paragraph (1) for its
own account, at any one time aggregating in excess of $1,000,000, without the
approval of the Secretary. The Secretary may approve a transaction or class of
transactions subject to the provisions of this paragraph under such conditions
as the Secretary may determine.</text>
</paragraph></subsection><subsection id="ID03d530e33b88476380b0fef2632efc90"><enum>(e)</enum><header>Supplemental
coverage</header>
<paragraph id="ID0ec019537a634d398d989d1e3e7202b5"><enum>(1)</enum><header>In
general</header><text>The MFA may use a portion of the guarantee fee to
purchase supplemental insurance coverage on offerings of qualified
mortgage-backed securities. The guarantee fee shall be set in an amount that is
sufficient to cover the cost of such supplemental insurance, in addition to the
other purposes set forth in subsection (a)(2). The supplemental insurance shall
insure against losses, if any, after giving effect to the primary, first loss
mortgage insurance coverage on mortgages collateralizing the mortgage-backed
securities.</text>
</paragraph><paragraph id="IDd1b3c03d187e4a31951be0d9fbcff789"><enum>(2)</enum><header>Reduced
exposure</header><text>The supplemental insurance shall be structured to
further reduce the exposure of the United States Government to losses arising
under its guarantee on qualified mortgage-backed securities that are covered by
supplemental insurance. Separate insurance coverage shall be provided for each
new offering of qualified mortgage-backed securities.</text>
</paragraph><paragraph id="IDc85005c89a894a26817d167e2ec49898"><enum>(3)</enum><header>Purchase of
supplemental coverage required</header>
<subparagraph id="id0E090501D30142DA9A7A7F9BEED0ABFB"><enum>(A)</enum><header>In
general</header><text>Not later than 1 year after the MFA certification date,
the Board of Directors shall issue guidelines to determine whether supplemental
coverage—</text>
<clause id="id503AFDB24A6F443492421D678D07C33B"><enum>(i)</enum><text>is
being offered on commercially reasonable terms; and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idFBE97BEA878C40338A1BCB0B4F096085"><enum>(ii)</enum><text>is reasonably
likely to mitigate the risk that the MFA will have to make any payment pursuant
to its guarantee.</text>
</clause></subparagraph><subparagraph id="id1C8AFD591266406FBE66E19327F2E0F6"><enum>(B)</enum><header>Coverage
required</header><text>Beginning not later than 3 years after the MFA
certification date, the MFA shall purchase supplemental coverage for each
offering of qualified mortgage-backed securities if the MFA determines that the
supplemental coverage meets the guidelines issued by the Board of Directors
under subparagraph (A).</text>
</subparagraph></paragraph><paragraph id="ID104b344470cc46f8abab2cc461b4a964"><enum>(4)</enum><header>Authority to
purchase supplemental coverage</header><text>The MFA may purchase supplemental
coverage from any mortgage insurance company authorized to provide mortgage
insurance on a qualified residential mortgage, or from any other licensed
insurance company with comparable regulatory oversight, capital, and reserve
requirements.</text>
</paragraph></subsection></section><section id="ID04cb04b72caf48468464b88898801d63"><enum>304.</enum><header>No limit on
private sector involvement; termination of authority</header>
<subsection id="id1914B738C9BE4A36AE9B5CE1BD1037BC"><enum>(a)</enum><header>Private
entities encouraged</header><text display-inline="yes-display-inline">Nothing
in this Act shall be construed as preventing the private sector from
securitizing qualified residential mortgages, qualified multifamily mortgages,
or other non-qualified residential single family or multifamily mortgages. The
MFA shall encourage robust competition between the MFA and private issuers to
facilitate the soonest possible privatization of the MFA.</text>
</subsection><subsection id="ID1104901c8ea6494aa4735bb22f952057"><enum>(b)</enum><header>Termination of
authority</header><text>The authority granted to the MFA under this Act shall
expire 10 years after the date of enactment of this Act, and the MFA shall be
terminated on that date. The MFA, in consultation with the Board of Directors,
shall begin planning for such termination during the third year following the
date of enactment of this Act.</text>
</subsection><subsection id="ID3c55f5fa32c34d12bc59be1664b25431"><enum>(c)</enum><header>Periodic
Reports on Privatization</header>
<paragraph id="id38135A530CD84A5A9150F9C155E483D0"><enum>(1)</enum><header>Initial
report</header><text>During the fifth year following the date of enactment of
this Act, the MFA shall present to Congress a detailed plan for privatization
of the MFA upon termination of its authority in accordance with subsection
(b).</text>
</paragraph><paragraph id="id8955696FAA1247528599294DB9E351AA"><enum>(2)</enum><header>Regular
reports</header><text>To ensure the transfer to privatization, the MFA shall
report to Congress on the implementation of the detailed plan for privatization
submitted under paragraph (1)—</text>
<subparagraph id="id0D134AF359F04B8CB67C8C69E23ABD30"><enum>(A)</enum><text>annually through
the seventh year following the date of enactment of this Act; and</text>
</subparagraph><subparagraph id="idD70ABE3E69834B3FAB8CB235BC33B10B"><enum>(B)</enum><text>quarterly,
beginning in the eighth year following the date of enactment of this
Act.</text>
</subparagraph></paragraph></subsection></section><enum>IV</enum><header>Conforming
amendments</header>
<section id="id5DD029A6286F4633A87939365DC7D950"><enum>401.</enum><header>Amendments to
Dodd-Frank Act</header><text display-inline="no-display-inline">Section 15G of
the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78o-11">15 U.S.C. 78o–11</external-xref>) is amended—</text>
<paragraph id="id7A02CE5720664E2884E697B76CB3092C"><enum>(1)</enum><text>in subsection
(a)—</text>
<subparagraph id="id5EB486CA1E5E4003A0406982FF929A0A"><enum>(A)</enum><text>by redesignating
paragraphs (3) and (4) as paragraphs (4) and (5), respectively; and</text>
</subparagraph><subparagraph id="id2A49250D614342EB800C17881F92C15F"><enum>(B)</enum><text>by inserting
after paragraph (2) the following:</text>
<quoted-block display-inline="no-display-inline" id="idC6CAFACD828A4260B71F5F4C6C16BE43" style="OLC">
<paragraph id="id873F784A8F4E4507BF7B15271ED740ED"><enum>(3)</enum><text>the term
<term>qualified residential mortgage</term> has the same meaning as in section
2 of the Mortgage Finance Act of 2013;</text>
</paragraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="id4FB25F47CAAB46CA98EAE7BA2110F206"><enum>(2)</enum><text>by adding at the
end the following:</text>
<quoted-block display-inline="no-display-inline" id="id9FC6BFCAC27044378EEEE9F8C30AE6FB" style="OLC">
<subsection id="id2726EDA85184454D95324912EEACD722"><enum>(j)</enum><header>Exemption for
qualified mortgage-Backed securities</header><text>Qualified mortgage-backed
securities, as defined in section 2 of the Mortgage Finance Act of 2013, and
any other securitizations of qualified residential mortgages, shall be exempt
from the risk retention provisions of subsection
(c)(1)(B)(i).</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="id09464FA974C0472CA5721189F599BA3B"><enum>402.</enum><header>Federal
Housing Enterprises Financial Safety and Soundness Act of 1992</header>
<subsection id="IDc8c44dfefb544af485230997bf5be64e"><enum>(a)</enum><header>Definitions</header><text>Section
1303(20) of the Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (<external-xref legal-doc="usc" parsable-cite="usc/12/4502">12 U.S.C. 4502(20)</external-xref>) is amended by striking <quote>means—</quote> and
all that follows through <quote>(C) any</quote> and inserting <quote>means
any</quote>.</text>
</subsection><subsection id="idB519896E204F45EE82E08119D61CBB27"><enum>(b)</enum><header>Transfer of
functions</header><text>All functions of the FHFA with respect to the
enterprises, as that term is defined in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (<external-xref legal-doc="usc" parsable-cite="usc/12/4502">12 U.S.C. 4502</external-xref>), other
than any function related to receivership of the enterprises, are transferred
to the MFA, effective 90 days after the date on which liquidation of the
enterprises is complete, in accordance with this Act.</text>
</subsection></section>