[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2975 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 2975

To establish the Federal Housing Corporation to provide mortgage credit 
 to families, communities, and markets underserved by the conventional 
 mortgage markets and ensure the stability of the national system for 
               mortgage finance, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 8, 1997

  Mr. Vento introduced the following bill; which was referred to the 
              Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL


 
To establish the Federal Housing Corporation to provide mortgage credit 
 to families, communities, and markets underserved by the conventional 
 mortgage markets and ensure the stability of the national system for 
               mortgage finance, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Federal Housing 
Corporation Charter Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Congressional findings.
Sec. 3. Definitions.
                  TITLE I--ORGANIZATION OF CORPORATION

Sec. 101. Establishment.
Sec. 102. Purposes.
Sec. 103. General powers.
Sec. 104. Board of directors.
Sec. 105. Officers and employees.
Sec. 106. Procurement.
Sec. 107. Financial safety and soundness.
Sec. 108. Annual budget, annual business plan, and Federal credit 
                            reform procedures.
Sec. 109. Inspector general.
Sec. 110. Applicability of laws.
Sec. 111. GAO evaluation.
Sec. 112. Authorization of appropriations.
                   TITLE II--BUSINESS OF CORPORATION

Sec. 201. Transfer of FHA single family housing business.
Sec. 202. New lines of business.
Sec. 203. Limitations on mortgage amounts and aggregate business 
                            activity.
Sec. 204. Public purpose performance requirements.
                         TITLE III--TRANSITION

Sec. 301. Transition date and transition period.
Sec. 302. Authority during transition period.
Sec. 303. Repeal of FHA insurance authority.
     TITLE IV--PROVISIONS RELATING TO GOVERNMENT NATIONAL MORTGAGE 
     ASSOCIATION AND OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT

Sec. 401. GNMA authority.
Sec. 402. Safety and soundness oversight of corporation by OFHEO.

SEC. 2. CONGRESSIONAL FINDINGS.

    The Congress finds that--
            (1) although the United States today has the world's most 
        efficient system for the delivery of home mortgage finance, too 
        many hard-working Americans--especially younger families, low-
        income families, and residents of inner cities and high-cost 
        areas--are unable to attain the American dream of 
        homeownership, often because they are unable to accumulate the 
        savings necessary to buy a home or to qualify for conventional 
        mortgage financing;
            (2) despite the entry of the private sector into the rental 
        housing mortgage capital delivery system, that system generally 
        fails to meet the needs of many rental housing market niches, 
        including the needs of providers of affordable rental housing;
            (3) for the past 60 years, the Federal Housing 
        Administration has made mortgage credit available to families 
        and communities typically underserved by the conventional 
        mortgage markets by pioneering new products to supplement and 
        expand the reach of the private sector and by stabilizing 
        regional and capital markets during economic downturns;
            (4) after 60 years of operating, the FHA is a Fortune 100-
        sized operation that has over $380,000,000,000 of current 
        outstanding insurance-in-force, yet its effectiveness currently 
        is limited by inflexibility in products and pricing, overly 
        bureaucratic structures and processes, inefficient resource 
        allocation, and outdated technology, systems, and market 
        strategies;
            (5) there continues to be a need for a Federal 
        instrumentality to provide mortgage credit to families, 
        communities, and markets underserved by the conventional 
        mortgage markets and to ensure the stability of this Nation's 
        system of housing finance;
            (6) there continues to be a need for a Federal 
        instrumentality to facilitate private financing for home 
        ownership on reservations and in other Indian areas and to 
        assist in eliminating barriers to primary mortgage lending for 
        housing on Native American lands, including resolving issues 
        regarding the trust lands, discrimination, and inapplicability 
        of standard underwriting criteria, must be eliminated; and
            (7) to operate effectively in the fast-paced housing 
        finance industry, this instrumentality must be organized as a 
        streamlined, business-oriented, self-sustaining, and 
        accountable government corporation, structured to achieve 
        public purpose and safety and soundness performance goals.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Corporation.--The term ``Corporation'' means the 
        Federal Housing Corporation established under this Act.
            (2) Health care facility.--The term ``health care 
        facility'' means a hospital, nursing home, or intermediate care 
        facility.
            (3) Hospital.--The term ``hospital'' means a facility--
                    (A) which provides community service for inpatient 
                medical care of the sick or injured (including 
                obstetric care);
                    (B) not more than 50 percent of the total patient 
                days of which during any year are customarily 
                assignable to the categories of chronic convalescent 
                and rest, drug and alcoholic, epileptic, mentally 
                deficient, mental, nervous and mental, and 
                tuberculosis; and
                    (C) that is a public facility, proprietary 
                facility, or facility of a private nonprofit 
                corporation, or association, licensed or regulated by 
                the State in which it is located (or, if there is no 
                State law providing for such licensing or regulation by 
                the State, by the municipality or other political 
                subdivision in which the facility is located).
            (4) Intermediate care facility.--The term ``intermediate 
        care facility'' means a proprietary facility or facility of a 
        private nonprofit corporation or association licensed or 
        regulated by the State in which it is located (or, if there is 
        no State law providing for such licensing and regulation by the 
        State, by the municipality or other political subdivision in 
        which it is located) for the accommodation of persons who, 
        because of incapacitating infirmities, require minimum but 
        continuous care but are not in need of continuous medical or 
        nursing services. The term includes additional facilities as 
        may be authorized by the Secretary for the nonresident care of 
        elderly individuals and others who are able to live 
        independently but who require care during the day.
            (5) Multifamily housing.--The term ``multifamily housing'' 
        means a property on which there is located a residence or 
        project consisting of 5 or more dwelling units.
            (6) Native american government.--The term ``Native American 
        government'' means the government of any Indian or Alaska 
        native tribe, band, nation, pueblo, village or community that 
        the Secretary of the Interior acknowledges to exist as an 
        Indian tribe, pursuant to the Federally Recognized Indian Tribe 
        List Act of 1994.
            (7) Nursing home.--The term ``nursing home'' means a public 
        facility, proprietary facility, or facility of a private 
        nonprofit corporation or association, licensed or regulated by 
        the State in which it is located (or, if there is no State law 
        providing for such licensing and regulation by the State, by 
        the municipality or other political subdivision in which it is 
        located), for the accommodation of convalescents or other 
        persons who are not acutely ill and not in need of hospital 
        care but who require skilled nursing care and related medical 
        services, in which such nursing care and medical services are 
        prescribed by, or are performed under the general direction of, 
        persons licensed to provide such care or services in accordance 
        with the laws of the State where the facility is located. The 
        term includes additional facilities as may be authorized by the 
        Secretary for the nonresident care of elderly individuals and 
        others who are able to live independently but who require care 
        during the day.
            (8) Single family housing.--The term ``single family 
        housing'' means a property on which there is located a 1- to 4-
        family residence.
            (9) State.--The term ``State'' means the States of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Commonwealth of the Northern Mariana Islands, 
        Guam, the Virgin Islands, American Samoa, and Native American 
        governments (and lands subject to the jurisdiction of such 
        governments).

                  TITLE I--ORGANIZATION OF CORPORATION

SEC. 101. ESTABLISHMENT.

    (a) In General.--There is hereby established within the Department 
of Housing and Urban Development a body corporate without capital stock 
to be known as the Federal Housing Corporation, which shall have 
succession until dissolved by Act of Congress.
    (b) Government Corporation.--The Corporation is established as a 
wholly owned Government corporation subject to chapter 91 of title 31, 
United States Code (commonly referred to as the Government Corporation 
Control Act), except as otherwise provided in this Act.
    (c) Federal Agency.--
            (1) In general.--The Corporation shall be an agency of the 
        United States, except that the Corporation shall not be 
        considered an agency for purposes of holding, managing, and 
        disposing of assets acquired by the Corporation under the 
        provisions of this title or title II.
            (2) Property disposition authority.--For purposes of this 
        subsection, the term ``holding, managing, and disposing of 
        assets'' includes the powers to--
                    (A) deal with, complete, reconstruct, rent, 
                renovate, modernize, insure, make contracts for the 
                management of, establish suitable agencies for the 
                management of, or exercise discretion to sell for cash 
                or credit or lease, any acquired property;
                    (B) pursue collection by way of compromise or 
                otherwise all assigned and transferred claims; and
                    (C) at any time, upon default, foreclose on any 
                property secured by any assigned or transferred 
                mortgage.
    (d) Self-Supporting Entity.--The Corporation shall operate and 
conduct its business as a self-supporting entity.
    (e) Corporate Offices and Residency.--The Corporation shall 
maintain its principal office in the District of Columbia and shall be 
deemed, for purposes of venue in civil actions, to be a resident of the 
District of Columbia. The Corporation may establish other officers in 
such other places as the Corporation considers appropriate in the 
conduct of its business.
    (f) Tax Status.--The Corporation, including its franchise, 
activities, income, and assets, shall be exempt from all taxation now 
or hereafter imposed by any taxing authority in the United States, 
except that any real property of the Corporation (other than real 
property that the Corporation uses as an office) shall be subject to 
taxation to the same extent according to its value as any taxing 
authority taxes other real property.
    (g) Protection of Name.--
            (1) In general.--Except as provided in paragraph (2), no 
        person, except the body corporate established under this 
        section shall, after the date of the enactment of this Act, use 
        the words ``Federal Housing Corporation'' or the initials 
        ``FHC'' as the name or part thereof under which such person 
        shall do business.
            (2) Exception.--Paragraph (1) shall not apply to any name 
        under which business is being done on the date of the enactment 
        of this Act.
            (3) Jurisdiction and remedies.--Violations of paragraph (1) 
        may be enjoined by any court of general jurisdiction at the 
        suit of the Corporation. In any such suit, the Corporation may 
        recover any actual damages flowing from such violation, and, in 
        addition, shall be entitled to punitive damages (regardless of 
        the existence or nonexistence of actual damages) of not more 
        than $100 for each day during which such violation is committed 
        or repeated.

 SEC. 102. PURPOSES.

    The Corporation is established for the following purposes:
            (1) To expand the opportunities in the States for single 
        family homeownership and affordable rental housing through the 
        provision of mortgage insurance and credit enhancement products 
        and related activities, which may include full or partial 
        insurance and insurance under risk-sharing agreements.
            (2) To address the unmet single family and multifamily 
        housing credit needs of families and communities in the States.
            (3) To address the unmet health care facility credit needs 
        of families and communities in the States.
            (4) To supplement and expand private sector housing and 
        health care facility activity in the States by better serving 
        underserved markets, testing new products, and filling gaps in 
        the provision and delivery of mortgage credit.
            (5) To deliver mortgage insurance and credit enhancement 
        products and provide other services in the States in a non-
        discriminatory manner and to administer its business in a 
        manner that affirmatively furthers fair housing.
            (6) To engage in research, development, and testing of new 
        products designed to make housing and health care facility 
        credit available to underserved markets in the States, 
        including primary mortgage lending for dwellings located on 
        Native American lands.
            (7) To promote liquidity and provide stability to the 
        housing and health care facility finance markets, by continuing 
        to provide mortgage insurance and credit enhancement products 
        in the States on a sound basis during times of regional and 
        national economic downturn.
            (8) To increase the capacity of localities, States, and 
        private and nonprofit entities to expand access to decent and 
        affordable housing and health care facilities and to deliver 
        credit for housing and health care facility financing to 
        families and communities in the United States.

SEC. 103. GENERAL POWERS.

    To further the purposes of this Act, in accordance with chapter 91 
of title 31 of the United States Code (relating to government 
corporations), the Corporation--
            (1) may adopt, amend, and repeal bylaws, and other written 
        administrative guidance;
            (2) may adopt, alter, and use a corporate seal, which shall 
        be judicially noted;
            (3) may enhance and make commitments to enhance credit to 
        the extent authorized under this Act, including commitments to 
        insure, reinsure, advance, incur liabilities, pool loans, and 
        enter into risk-sharing arrangements to the extent provided in 
        title II;
            (4) may acquire, hold, use, improve, deal in, or dispose 
        of, by any means, any interests in any real property or any 
        personal property;
            (5) may execute contracts, make grants, and make other 
        agreements in its own name, with any agency, public or private 
        entity, or person, and carry out any lawful requirement of such 
        contracts, grants, or other agreements;
            (6) may take any actions (including the restructuring of 
        debt) that the Corporation determines are necessary to manage 
        the Corporation's portfolio of property, assets, and 
        obligations;
            (7) may, to the extent authorized under this Act--
                    (A) create and supply any product or service 
                consistent with its corporate purposes;
                    (B) collect, generate, and make available any 
                information relevant to the provision of single family 
                and multifamily housing credit and health care facility 
                credit; and
                    (C) assess fees and charges for such products, 
                information, and services in an amount, as determined 
                by the Corporation, that does not exceed their value in 
                the market and that permits the Corporation to comply 
                with the requirements under section 101(d) (regarding 
                self-supporting operation), section 204 (regarding 
                public purposes), and subtitle F of the Housing and 
                Community Development Act of 1992 (regarding safety and 
                soundness);
            (8) may, in connection with supplying products and services 
        of the Corporation, provide or arrange for pre- and post-
        purchase foreclosure prevention counseling as determined 
        appropriate by the Corporation;
            (9) may insulate any product, line, or service from any 
        other, by creating distinct insurance funds or other devices to 
        segregate or permit limitations on liability for business 
        activities or accounts;
            (10) shall require, to the extent determined appropriate by 
        the Secretary, that each structure subject to a mortgage for 
        which mortgage insurance is provided by the Corporation be 
        inspected to ensure the structure does not pose health and 
        safety risks;
            (11) may qualify any person or entity to engage in business 
        with the Corporation and enforce and impose penalties for the 
        breach of any duties, obligations, and other commitments made 
        by such persons or entities;
            (12) shall take actions necessary to administer its 
        business in a manner which is nondiscriminatory and which 
        affirmatively furthers fair housing;
            (13) shall have the power, in its corporate name, to sue 
        and be sued, and to complain and defend, in any court of 
        competent jurisdiction, State or Federal, but no attachment, 
        garnishment, injunction, or other similar process, mesne or 
        final, shall be issued against the property of the Corporation 
        or against the Corporation with respect to its property, and 
        the Corporation shall not be liable for interest prior to 
        judgment, for punitive or exemplary damages, for penalties, or 
        for claims based upon unjust enrichment, quasi-contract, or 
        contracts implied-in-law, nor shall the Corporation be subject 
        to trial by jury;
            (14) notwithstanding any other provision of law--
                    (A) shall be an agency of the Federal Government, 
                and the officers and employees of the Corporation shall 
                be officers and employees of the Federal Government, 
                for purposes of part IV of title 28, United States 
                Code;
                    (B) shall have all civil actions to which the 
                Corporation is a party deemed to arise under the laws 
                of the United States; and
                    (C) may, at any time before trial and without bond 
                or security, remove any civil or criminal action or 
                proceeding in a State court to which the Corporation is 
                a party to the United States district court for the 
                District of Columbia or to the United States district 
                court with jurisdiction over the place where the civil 
                action or proceeding is pending, by following any 
                procedure for removal of actions in effect at the time 
                of such removal;
            (15) may--
                    (A) accept and use voluntary and uncompensated 
                services and accept, hold, administer, and use gifts 
                and bequests of property, both real and personal, for 
                the purpose of aiding or facilitating the work of the 
                Corporation; and
                    (B) hold gifts and bequests of money and the 
                proceeds from sales of other property received as gifts 
                or bequests in a separate account, and such amounts 
                shall be disbursed as determined by the Corporation:
        except that property accepted pursuant to this paragraph, and 
        the proceeds thereof, shall be used as nearly as possible in 
        accordance with the terms of the gift or bequest and, for the 
        purpose of Federal income, estate, and gift taxes, property 
        accepted under this paragraph shall be considered as a gift or 
        bequest to or for the use of the United States;
            (16) shall have any transaction in which it participates be 
        exempt from the terms of any State or other law or prohibition 
        against payment of usurious interest;
            (17) may act as a fiduciary in connection with any of its 
        undertakings;
            (18) may foreclose any single family and multifamily 
        housing mortgages held by the Corporation pursuant to the same 
        procedures applicable to the Secretary under the Single Family 
        Mortgage Foreclosure Act of 1994 and the Multifamily Mortgage 
        Foreclosure Act of 1981, respectively;
            (19) shall have the priority of the United States with 
        respect to the payment of debts out of bankrupt, insolvent, and 
        decedents' estates;
            (20) may invest in systems, technology, or other capital 
        resources, to enhance its ability to carry out the purposes of 
        this Act; and
            (21) shall have and exercise all powers necessary or 
        appropriate to effect any purposes of this Act, including the 
        power to carry out any authority transferred to the Corporation 
        under this Act or otherwise transferred to the Corporation by 
        the Secretary.

 SEC. 104. BOARD OF DIRECTORS.

    (a) In General.--The powers of the Corporation shall be vested in 
the Board of Directors of the Corporation.
    (b) Appointment.--The Board of Directors shall consist of--
            (1) the Secretary of Housing and Urban Development (or the 
        designee of the Secretary); and
            (2) 8 other individuals appointed by the President by and 
        with the advise and consent of the Senate.
The Secretary shall be the chairperson of the Board.
    (c) Qualifications.--Members of the Board of Directors appointed 
under subsection (b)(2) shall be citizens of the United States. The 
Board of Directors shall at all times include as members not less 
than--
            (1) 1 individual from the mortgage finance industry;
            (2) 1 individual from the housing development industry;
            (3) 1 individual with knowledge and experience regarding 
        secondary mortgage market activities;
            (4) 1 individual with knowledge and experience regarding 
        home sales;
            (5) 1 individual with knowledge and experience regarding 
        housing asset management;
            (6) 1 individual from a State or local housing agency 
        engaged in housing activities;
            (7) 1 individual who represents consumer or community 
        interests in housing; and
            (8) 1 individual who represents or resides in an urban or 
        rural neighborhood whose population consists predominantly of 
        members of minorities.
The members of the Board shall be selected so that at all times the 
membership of the Board includes a reasonably equivalent number of 
members with experience regarding single family housing and multifamily 
housing.
    (d) Terms.--
            (1) In general.--Each member of the Board of Directors 
        under subsection (b)(2) shall be appointed for a term of 6 
        years, except as provided in paragraphs (2) and (3).
            (2) Terms of initial appointees.--As designated by the 
        President at the time of appointment, of the members first 
        appointed--
                    (A) 3 shall be appointed for terms of 2 years; and
                    (B) 3 shall be appointed for terms of 4 years.
            (3) Vacancies.--Any member appointed to fill a vacancy 
        occurring before the expiration of the term for which the 
        member's predecessor was appointed shall be appointed only for 
        the remainder of that term. A member may serve after the 
        expiration of that member's term until a successor has taken 
        office. A vacancy in the Board shall be filled in the manner in 
        which the original appointment was made.
    (e) Meetings and Quorum.--The Board of Directors shall meet at any 
time pursuant to the call of the Chairperson or a majority of its 
members and as provided by the bylaws of the Corporation, but not less 
than quarterly. 6 members of the Board shall constitute a quorum.
    (f) Powers.--The Board of Directors shall be responsible for the 
general management of the Corporation and shall have the same 
authority, privileges, and responsibilities as the board of directors 
of a private corporation incorporated under the District of Columbia 
Business Corporation Act.
    (g) Compensation.--Members of the Board of Directors shall serve on 
a part-time basis and shall serve without pay.
    (h) Travel Expenses.--Each member shall receive travel expenses, 
including per diem in lieu of subsistence, in accordance with sections 
5702 and 5703 of title 5, United States Code.

SEC. 105. OFFICERS AND EMPLOYEES.

    (a) Appointment of Officers.--The Board of Directors of the 
Corporation shall appoint a president and vice president of the 
Corporation, and such other officers as are provided for in the bylaws 
of the Corporation.
    (b) Appointment of Employees.--The Board of Directors shall appoint 
such other employees of the Corporation as the Board considers 
necessary for the transaction of its business.
    (c) Compensation, Duties, and Removal.--
            (1) In general.--The Board of Directors shall fix the 
        compensation of all officers and employees of the Corporation, 
        define their duties, and provide a system of management and 
        organization to fix responsibility and promote efficiency.
            (2) Considerations in fixing compensation.--No officer or 
        employee of the Corporation may receive pay in excess of the 
        annual rate of basic pay payable for level III of the Executive 
        Schedule.
    (d) Principles Governing Personnel Management.--The Board shall 
ensure that the system of organization, compensation, and management 
for personnel is consistent with the principles under section 2301(b) 
of title 5, United States Code (regarding merit system principles).
    (e) Applicability of Certain Civil Service Laws.--The officers and 
employees of the Corporation shall be appointed without regard to the 
provisions of title 5, United States Code, governing appointments in 
the competitive service, and may be paid without regard to the 
provisions of chapter 51 and subchapter III of chapter 53 of that title 
relating to classification and General Schedule pay rates.
    (f) Use of Federal Agencies.--In carrying out its purposes, the 
Corporation may use information, services, staff, and facilities of any 
executive agency, independent agency, or department (including the 
Department of Housing and Urban Development), with the consent of the 
agency or department, and shall reimburse the agency or department for 
the cost of such information, services, staff, and facilities.
    (g) Indemnification.--The Corporation may provide for the 
indemnification of any officer, employee, contractor, or agent of the 
Corporation on such terms as the Corporation determines proper, except 
that, to the extent that the Corporation self-insures for any 
indemnification--
            (1) the aggregate maximum amount of all indemnifications 
        outstanding at any time shall not exceed 5 percent of the 
        required capital level determined under section 1393 of the 
        Federal Housing Enterprises Financial Safety and Soundness Act 
        of 1992 by the Director of the Office of Federal Housing 
        Enterprise Oversight; and
            (2) no more than $1,000,000 may be paid as an indemnity for 
        any single event.

 SEC. 106. PROCUREMENT.

    (a) In General.--The Board shall establish an economical and 
results-oriented system for procurement, supply, and disposition by the 
Corporation of personal property and nonpersonal services, which shall 
include performance measures and standards for determining the extent 
to which the Corporation's procurement of property and services 
satisfies the objective for which the procurement was undertaken. The 
system shall be consistent with the principles of impartiality and 
competitiveness.
    (b) Consideration of Federal Procurement System.--In establishing 
the system for procurement, supply, and disposition under this 
subsection, the Board shall take into consideration--
            (1) the requirements under the Federal Property and 
        Administrative Services Act of 1949 and the appropriateness or 
        inappropriateness of adopting identical or similar procedures 
        for the Corporation; and
            (2) any experience of the Department of Housing and Urban 
        Development in complying with such Act in procurement, supply, 
        and disposition activities relating to the single family and 
        multifamily mortgage insurance programs and health care 
        facility mortgage insurance programs under the National Housing 
        Act.
    (c) Exemption From Federal Property and Administrative Service Act 
Provisions.--Section 602(d) of the Federal Property and Administrative 
Services Act of 1949 (40 U.S.C. 474) is amended--
            (1) in paragraph (20), by striking ``and'' at the end;
            (2) in paragraph (21), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(22) The Federal Housing Corporation.''.
    (d) Exemption From Procurement Protest System.--Subchapter V of 
chapter 35 of title 31, United States Code, relating to the procurement 
protest system, shall not apply to the Corporation.

 SEC. 107. FINANCIAL SAFETY AND SOUNDNESS.

    The Director of the Office of Federal Housing Enterprise Oversight 
shall oversee the financial safety and soundness of the Corporation, 
pursuant to subtitle F of the Federal Housing Enterprises Financial 
Safety and Soundness Act of 1992.

 SEC. 108. ANNUAL BUDGET, ANNUAL BUSINESS PLAN, AND FEDERAL CREDIT 
              REFORM PROCEDURES.

    (a) Annual Business Plan.--The Corporation shall establish a 
business plan on an annual basis and shall make such plan available for 
review by the Congress and the President. Such plan shall specify the 
product and operational strategy of the Corporation, including plans to 
address compliance with the safety and soundness requirements 
applicable to the Corporation.
    (b) Submission to OFHEO.--For each year, the Corporation shall 
submit the annual budget for the Corporation prepared pursuant to 
section 9103 of title 31, United States Code, and its annual business 
plan to the Director of the Office of Federal Housing Enterprise 
Oversight. Such submission shall be made by a date sufficient to enable 
the Director to produce, pursuant to section 1392(c) of the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992, the 
credit subsidy cost estimates that are required for the budget of the 
United States Government under section 1105(a) of title 31, United 
States Code.
    (c) Submission to OMB.--For purposes of inclusion in annual United 
States Government budget referred to in subsection (b), the Corporation 
shall submit its annual budget and annual credit subsidy cost estimates 
produced pursuant to section 1392(c) of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 to the Director of the 
Office of Management and Budget.
    (d) Reserves.--
            (1) Establishment.--The Corporation may establish any 
        reserve that the Corporation determines is necessary for the 
        business operations of the Corporation.
            (2) Amounts.--The Corporation may hold as a reserve in any 
        financing account, as defined in section 502 of the 
        Congressional Budget Act of 1974, such amounts as the 
        Corporation considers necessary to comply with the capital 
        requirements established for the Corporation under subtitle F 
        of the Federal Housing Enterprises Financial Safety and 
        Soundness Act of 1992 and to fulfill the purposes of this Act.

 SEC. 109. INSPECTOR GENERAL.

    Section 11 of the Inspector General Act of 1978 (5 U.S.C. App.) is 
amended--
            (1) in paragraph (1), by inserting after ``Federal Deposit 
        Insurance Corporation;'' the following: ``the president of the 
        Federal Housing Corporation;''; and
            (2) in paragraph (2)--
                    (A) by inserting after ``Housing and Urban 
                Development (excluding the Federal Housing 
                Corporation)''; and
                    (B) by inserting after ``United States Information 
                Agency,'' the following: ``the Federal Housing 
                Corporation,''.

SEC. 110. APPLICABILITY OF LAWS.

    (a) Government Corporation Control Act.--Section 9101(3) of title 
31, United States Code, is amended by adding at the end the following 
new subparagraph:
                    ``(R) the Federal Housing Corporation.''.
    (b) Tax Exempt Status of Corporation.--Section 501(l) of the 
Internal Revenue Code of 1986 (26 U.S.C. 501(l)) is amended by adding 
at the end the following new paragraph:
            ``(4) The Federal Housing Corporation established under the 
        Federal Housing Corporation Charter Act.''.
    (c) Exemption From Notice and Comment Rulemaking.--Any matter 
relating to mortgage insurance, credit enhancement, or other business 
activities of the Corporation authorized under this Act shall be 
considered a matter relating to agency management or personnel or to 
public property, loans, grants, benefits, or contracts, for purposes of 
section 553(a) of title 5, United States Code.
    (d) Subsidy Layering.--For purposes of section 102(d) of the 
Department of Housing and Urban Development Reform Act of 1989, 
mortgage insurance and credit enhancement under this Act may not be 
construed as assistance within the jurisdiction of the Department.
    (e) Conforming Amendment Relating to Usury Exemption for Veterans 
Loans.--Section 3728 of title 38, United States Code, is amended by 
inserting after ``National Housing Act'' the following: ``, or are 
insured or credit-enhanced under the Federal Housing Corporation 
Charter Act,''.

 SEC. 111. GAO EVALUATION.

    (a) In General.--The Comptroller General of the United States shall 
conduct a study and submit a report to the President and the Congress 
on--
            (1) whether this Act provides sufficient authority to 
        permit the Corporation to accomplish its public purposes 
        efficiently and effectively, and in a safe and sound manner;
            (2) the impact of the limitations on business activities as 
        to mortgage amounts and aggregate commitments, and any other 
        statutory limitations, on the current and anticipated business 
        activity of the Corporation; and
            (3) whether the safety and soundness and other requirements 
        under this Act and the Federal Housing Enterprises Financial 
        Safety and Soundness Act of 1992 appropriately provide that the 
        Corporation will be operated in a safe and sound manner and 
        will fulfill the public purposes of its establishment.
    (b) Timing.--The report required by this section shall be submitted 
on the third January 1st occurring after the transition date under 
section 301.

SEC. 112. AUTHORIZATION OF APPROPRIATIONS.

    (a) Initial Capitalization.--There is authorized to be appropriated 
to the Corporation such sums as may be necessary for the initial 
capitalization of the Corporation. Any amounts appropriated pursuant to 
this subsection shall remain available until expended.
    (b) Operations.--There is authorized to be appropriated for each 
fiscal year to the Corporation, for the conduct of the operations of 
the Corporation under this title--
            (1) an amount not exceeding the amount of the negative 
        subsidy credited to the negative subsidy receipt account for 
        the Corporation; and
            (2) in addition to the amount under paragraph (1), to the 
        extent such amount is not sufficient for such operations, such 
        additional sums as may be necessary.
Any amounts appropriated pursuant to this subsection are authorized to 
remain available until expended.
    (c) Separate Appropriations for Separately Authorized Activities.--
            (1) In general.--There are authorized to be appropriated 
        such sums as may be necessary, which are authorized to remain 
        available without fiscal year limitation, for the Corporation 
        to carry out any program or activity the conduct of which is 
        separately authorized under a Federal law.
            (2) Limitation of activities.--The Corporation may not 
        undertake any program or activity described in paragraph (1) if 
        the Corporation has not been appropriated amounts that the 
        Secretary determines are sufficient to carry out such program 
        or activity.
            (3) Budget act compliance.--Any appropriations of amounts 
        necessary to comply with the Federal Credit Reform Act of 1990 
        for the Corporation to conduct any separately authorized 
        program or activity shall be enacted in appropriation laws.
            (4) Treatment of fha authority.--Any program or activity 
        carried out by the Corporation pursuant to transfer by the 
        Secretary of Housing and Urban Development of authority 
        existing under a provision of law that was enacted before the 
        date of the enactment of this Act shall be considered a 
        separately authorized program or activity for purposes of this 
        subsection; except that the programs referred to in section 
        201(d) shall not be considered a separately authorized program.
    (b) Funding of Claims.--Amounts credited to the financing account 
of the Corporation, established pursuant to title V of the 
Congressional Budget Act of 1974, shall be permanently and indefinitely 
available for payment of any claim that the Corporation approves under 
a contract of insurance or other credit enhancement instrument under 
this Act. To the extent that such amounts are insufficient for such 
purpose, the Corporation may borrow from the Treasury pursuant to title 
V of the Congressional Budget Act of 1974.

                   TITLE II--BUSINESS OF CORPORATION

SEC. 201. TRANSFER OF FHA SINGLE FAMILY HOUSING BUSINESS.

    (a) In General.--After the transition date under section 301--
            (1) the Corporation shall carry out programs to insure 
        mortgages on single family and multifamily housing and health 
        care facilities, which shall be subject to the same limitations 
        under the National Housing Act that are applicable to the 
        mortgage insurance programs for such housing and facilities 
        carried out under such Act by the Secretary of Housing and 
        Urban Development;
            (2) the Corporation may exercise any authority and 
        undertake any responsibility of the Secretary of Housing and 
        Urban Development under the National Housing Act relating to 
        providing mortgage insurance described in paragraph (1), except 
        that any authority that requires an appropriation may be 
        conducted only to the extent that amounts are so appropriated; 
        and
            (3) the Corporation shall manage any assets and obligations 
        transferred under subsection (b) subject to the same 
        limitations applicable to the Secretary of Housing and Urban 
        Development under the National Housing Act (as amended by title 
        IV of this Act).
    (b) Transfer of Assets and Obligations.--The Secretary of Housing 
and Urban Development, in consultation with the Secretary of the 
Treasury, shall, to the extent approved in appropriation Acts, transfer 
to the Corporation, on or before the transition date, all assets and 
obligations of the Secretary of Housing and Urban Development relating 
to the programs for mortgage insurance described in subsection (a)(1), 
including all assets and obligations of the Mutual Mortgage Insurance 
Fund under section 202 of the National Housing Act, the General 
Insurance Fund under section 519 of such Act, the Special Risk 
Insurance Fund under section 238(b) of such Act, and the Cooperative 
Management Housing Insurance Fund under section 213(k) of such Act that 
are attributable to mortgage insurance for such housing and facilities.
    (c) Continuation of Contracts.--This Act may not be construed to 
affect the validity of any right, duty, or obligation of the United 
States or other person arising under or pursuant to any commitment or 
agreement lawfully entered into under the National Housing Act before 
the enactment of this Act. The provisions of this Act and the National 
Housing Act shall continue to apply to any such obligations to the same 
extent such provisions were applicable before such enactment, except 
only that any obligation of the Secretary of Housing and Urban 
Development transferred to the Corporation pursuant to subsection (b) 
shall be an obligation of the Corporation to the same extent as if the 
Corporation had originally executed such obligation.
    (d) Self-Sustaining Operation of MMIF Programs.--The Corporation 
shall take any actions necessary to operate the mortgage insurance 
programs for mortgages on single family housing that, under the 
National Housing Act (as in effect on the date of the enactment of this 
Act) are obligations of the Mutual Mortgage Insurance Fund under 
section 202 of the National Housing Act, on a separate and insulated 
basis from other programs of the Corporation and in a manner that is 
self-sustaining and does not require appropriations from the Treasury.
    (e) Termination of HUD Mortgage Insurance Authority.--
Notwithstanding any other provision of law, after the transition date 
the Secretary of Housing and Urban Development may not provide any 
insurance or make any commitment to insure any mortgage for single 
family or multifamily housing, or for health care facilities, pursuant 
to title II of the National Housing Act.

SEC. 202. NEW LINES OF BUSINESS.

    (a) Authority.--After the transition date the Corporation may, 
subject to the requirements of this section, section 203, and section 
204 and only to the extent that any amounts are made available in 
advance in appropriation Acts specifically for carrying out such 
activities--
            (1) provide mortgage insurance for mortgages on single 
        family housing and multifamily housing and health care 
facilities that is not subject to the limitations under the National 
Housing Act; and
            (2) engage in any other method of enhancing credit for 
        mortgages involving single family or multifamily housing or 
        health care facilities.
In providing mortgage insurance and credit enhancement under this 
subsection, the Corporation may provide full or partial mortgage 
insurance and may enter into risk-sharing agreements to apportion any 
losses under such activities.
    (b) Approval.--The Corporation may not engage in any activity under 
subsection (a) unless--
            (1) such activity is within the authority provided under 
        this Act for the Corporation and is specifically approved, as 
        to the nature of the activity and the scope of such activity, 
        by a majority vote of the Board of Directors; and
            (2) the Director of the Office of Federal Housing 
        Enterprise Oversight has specifically determined, and notified 
        the Board of Directors in writing, that engaging in such 
        activity will not cause the Corporation to violate the 
        requirement under section 101(d) and such activity is not 
        likely to result in the Corporation being classified as 
        undercapitalized or significantly undercapitalized, pursuant to 
        section 1386 of the Federal Housing Enterprises Financial 
        Safety and Soundness Act of 1992.

SEC. 203. LIMITATIONS ON MORTGAGE AMOUNTS AND AGGREGATE BUSINESS 
              ACTIVITY.

    The Corporation shall be subject to the following limitations on 
business activity:
            (1) Mortgage amount limitation for single family housing.--
                    (A) In general.--To be eligible for mortgage 
                insurance or other credit enhancement under this Act, a 
                mortgage shall involve a principal obligation in an 
                amount that does not exceed the lesser of--
                            (i) in the case of a 1-family residence, 95 
                        percent of the median 1-family house price in 
                        the area, as determined by the Corporation; in 
                        the case of a 2-family residence, 107 percent 
                        of such median price; in the case of a 3-family 
                        residence, 130 percent of such median price; or 
                        in the case of a 4-family residence, 150 
                        percent of such median price; or
                            (ii) in the case of any residence for fewer 
                        than five families, 100 percent of the dollar 
                        amount limitation determined under section 
                        305(a)(2) of the Federal Home Loan Mortgage 
                        Corporation Act for a residence of the 
                        applicable size.
                    (B) Minimum area limitation.--Notwithstanding 
                subparagraph (A), the principal obligation limitation 
                in effect for any area under this paragraph may not be 
                less than the greater of (i) the dollar amount 
                limitation in effect under section 203(b)(2) of the 
                National Housing Act for the area on September 27, 
                1994, or (ii) 50 percent of the dollar amount 
                limitation determined under section 305(a)(2) of the 
                Federal Home Loan Mortgage Corporation Act for a 
                residence of the applicable size.
                    (C) Applicability of exceptions.--Any exceptions to 
                the limit on principal obligations set forth in section 
                203(b)(2)(A) of the National Housing Act, as such 
                section and such exceptions exist as of the date of the 
                enactment of this Act, shall apply to the limitations 
                set forth in subparagraphs (A) and (B) of this 
                paragraph.
            (2) Mortgage amount limitations for multifamily housing and 
        health care facilities.--To be eligible for mortgage insurance 
        or other credit enhancement under this Act, a mortgage shall 
        involve a principal obligation in an amount that does not 
        exceed--
                    (A) in the case of multifamily housing, the amount 
                of the appropriate limitation under section 207(c)(3) 
                of the National Housing Act (as in effect on October 
                31, 1997); and
                    (B) in the case of nursing homes and intermediate 
                care facilities, the amount determined under section 
                232(d)(2) of the National Housing Act (as in effect on 
                October 31, 1997).
            (3) Aggregate mortgage amount of new business.--The 
        aggregate principal amount of mortgages that, during any fiscal 
        year concluding before the expiration of the 5-year period 
        described in section 303, are insured or provided other credit 
        enhancement by the Corporation pursuant to authority under 
        section 202 may not exceed 15 percent of the aggregate 
        principal amount of all mortgages insured or provided other 
        credit enhancement by the Corporation during such fiscal year.
            (4) Aggregate new mortgage commitment limitation.--The 
        Corporation may not, during the 5-year period beginning upon 
        the commencement of the transition period under section 301, 
        enter into commitments to insure mortgages or provide other 
credit enhancement for mortgages with an aggregate principal amount 
that exceeds $520,000,000,000.

SEC. 204. PUBLIC PURPOSE PERFORMANCE REQUIREMENTS.

    (a) In General.--In carrying out its business and functions, the 
Corporation shall comply with the performance measures established 
under subsection (b).
    (b) Establishment.--The Secretary shall establish public purpose 
performance requirements that measure the Corporation's annual 
contribution to fulfilling its public purposes. In establishing the 
requirements, the Secretary shall determine the focus of each 
performance requirement and the required level of performance.
    (c) Content.--The public purpose performance requirements developed 
by the Secretary shall require the Corporation to carry out its 
business in accordance with following requirements:
            (1) Underserved homebuyers.--A portion of the single family 
        business of the Corporation (as determined by the Secretary) 
        shall benefit homebuyers underserved by the conventional 
        mortgage markets.
            (2) Underserved areas.--A portion of the total business of 
        the Corporation (as determined by the Secretary) shall benefit 
        geographic areas underserved by the conventional mortgage 
        markets.
            (3) Underserved rental markets and related community 
        needs.--A portion of the total business of the Corporation (as 
        determined by the Secretary) shall benefit renters, rental 
        markets, and health care facility financing needs underserved 
        by the conventional mortgage markets.
            (4) Low- and moderate-income families.--A portion of the 
        total business of the Corporation (as determined by the 
        Secretary) shall benefit families with incomes at or below 100 
        percent of the median income for the area.
    (d) Factors To Be Considered in Development.--In developing and 
modifying the permanent public purpose performance requirements under 
this section, the Secretary shall consider the following factors:
            (1) National housing needs.
            (2) Economic, housing, and demographic conditions.
            (3) The past performance of the mortgage insurance programs 
        under the National Housing Act.
            (4) The size of the conventional mortgage market that is 
        eligible for mortgage insurance under the programs under the 
        National Housing Act, and the performance of such programs in 
        connection with families and markets historically underserved.
            (5) The ability of the Corporation to lead the industry in 
        making mortgage credit available to families, communities, and 
        markets underserved by the conventional mortgage markets.
            (6) The need to maintain the sound financial condition of 
        the Corporation.
            (7) The relationship between the Corporation and other 
        public and private participants in the mortgage credit market, 
        their ability to meet unmet housing needs, and how the 
        Corporation can help such participants to fulfill an increasing 
        portion such needs.
    (e) Interim public purpose performance requirements.--During the 
period beginning on the date of the organization of the Corporation 
pursuant to this Act and ending upon the applicability of the public 
purpose performance requirements established under this section, the 
Corporation shall comply with the following interim public purpose 
performance requirements:
            (1) Underserved borrowers.--The Corporation shall ensure 
        that not less than 67 percent of the total business of the 
        Corporation in home purchase mortgages in each fiscal year 
        benefits first-time homebuyers.
            (2) Underserved areas.--
                    (A) In general.--The Corporation shall ensure that 
                not less than 28 percent of the total business of the 
                Corporation in each fiscal year benefits underserved 
                areas in rural areas, central cities, Native American 
                lands, and other areas.
                    (B) Definition.--For purposes of this paragraph, 
                the term ``underserved area'' means a census tract 
                having--
                            (i) a median income equal to or less than 
                        80 percent of the area median income; or
                            (ii) a median income equal to or less than 
                        120 percent of the area median income and a 
                        minority population of 30 percent or greater.
            (3) Underserved rental markets and related community 
        needs.--The Corporation shall ensure that not less than 6 
        percent of the total business of the Corporation in each fiscal 
        year benefits underserved renters, rental markets, and related 
        community needs, including--
                    (A) rental units for families with incomes equal to 
                or less than 60 percent of the area median income;
                    (B) single-room occupancy developments;
                    (C) assisted living developments;
                    (D) mixed-income developments;
                    (E) community health care centers and hospitals;
                    (F) nursing homes; and
                    (G) small rental properties located in disinvested 
                areas.
            (4) Low- and moderate-income families.--The Corporation 
        shall ensure that not less than 64 percent of the total 
        business of the Corporation in each fiscal year benefits low- 
        and moderate-income families.
For purposes of this subsection, percentages of the business of the 
Corporation shall be determined based on the number of units that are 
financed with credit enhancement provided by the Corporation. The 
Corporation shall be given partial credit toward compliance with the 
performance requirements under this subsection, where appropriate, to 
the extent that the financing of a mortgage meeting a particular 
requirement is only partially attributable to credit enhancement 
provided by the Corporation.
    (f) Compliance.--
            (1) Monitoring.--The Secretary shall monitor the compliance 
        of the Corporation with the permanent and interim performance 
        requirements to assess the Corporation's public purpose 
        performance.
            (2) Measurement.--In determining compliance with the public 
        purpose performance requirements under this section, the 
        Secretary--
                    (A) shall consider any single mortgage or other 
                instrument that is provided credit enhancement by the 
                Corporation as contributing to the achievement of each 
                public purpose performance requirement for which such 
                mortgage or other credit enhancement instrument may 
                qualify; and
                    (B) may take into consideration the number of 
                housing units financed by any mortgage or other 
                instrument on housing that is provided credit 
                enhancement by the Corporation.
    (g) Authority of the Secretary.--In connection with overseeing the 
compliance of Corporation with the permanent and interim public purpose 
performance requirements of the Corporation, the Secretary may--
            (1) obtain information from the Corporation necessary to 
        develop the public purpose performance requirements under this 
        section;
            (2) modify the interim and permanent public purpose 
        performance requirements, as needed, based upon the Secretary's 
        determination that macroeconomic or other conditions justify 
        such modification;
            (3) obtain information from the Corporation necessary to 
        carry out the function under subsection (f)(1) (relating to 
        monitoring); and
            (4) take appropriate actions if the Corporation fails to 
        comply with the requirements of this section, taking into 
        account the feasibility of compliance, given macroeconomic or 
        other circumstances justifying the Corporation's failure to 
        comply.
    (h) Annual Report.--The Secretary shall submit a report to Congress 
annually regarding the Corporation's performance as measured by the 
public purpose performance requirements.

                         TITLE III--TRANSITION

SEC. 301. TRANSITION DATE AND TRANSITION PERIOD.

    For purposes of this Act, the following definitions shall apply:
            (1) Transition date.--The term ``transition date'' means 
        the latter of the following dates:
                    (A) Earliest date.--The date that occurs 1 year 
                after the date of the enactment of this Act.
                    (B) Required actions.--The first date by which all 
                of the following have occurred:
                            (i) The Corporation has submitted an 
                        initial annual budget and business plan to the 
                        Congress and the President that have been 
                        approved by the President.
                            (ii) The Director of the Office of Federal 
                        Housing Enterprise Oversight has certified to 
                        the Congress and the President that the 
                        Director has developed an interim model under 
                        section 1393(a)(2) of the Federal Housing 
                        Enterprises Financial Safety and Soundness Act 
                        of 1992 that is sufficient for the Director's 
                        purposes.
                            (iii) The Director of the Office of 
                        Management and Budget has certified to the 
                        Congress and the President that the application 
                        of such interim model is consistent with the 
                        Federal Credit Reform Act of 1990.
                            (iv) The Director of the Office of 
                        Management and Budget determines that the 
                        staff, systems, and administrative 
                        infrastructure of the Corporation are 
                        sufficient to permit the Corporation to fully 
                        conduct the operation of its business.
            (2) Transition period.--The term ``transition period'' 
        means the period beginning upon the organization of the 
        Corporation under this Act and ending upon the transition date.

SEC. 302. AUTHORITY DURING TRANSITION PERIOD.

    During the transition period--
            (1) the Secretary of Housing and Urban Development shall, 
        in consultation with the Corporation and the Director of the 
        Office of Management and Budget, transfer to the Corporation 
        such powers and responsibilities of the Secretary to carry out 
        the mortgage insurance programs under the National Housing Act 
        relating to single family and multifamily housing and health 
        care facilities, at such times as are appropriate for the 
        Corporation to assume such powers and responsibilities;
            (2) the Corporation may carry out any power or 
        responsibility that the Secretary of Housing and Urban 
        Development transfers to the Corporation consistent with 
        paragraph (1) using the staff, systems, and administrative 
        infrastructure that the Corporation engages or acquires during 
        the transition period, or the personnel and other resources of 
        the Secretary;
            (3) the Corporation may incur any obligation consistent 
        with--
                    (A) the carrying out of a power transferred to the 
                Corporation pursuant to this Act or a responsibility 
                assigned to the Corporation under this Act; or
                    (B) the acquisition, engagement, or development of 
                staff, systems (including technology to enhance its 
                ability to engage in the business of the Corporation 
                authorized by the Act), and administrative structure; 
                and
            (4) the Corporation may engage in any other activity or 
        undertake any responsibility (not including any authority under 
        section 202 (relating to new lines of business)) that the Board 
        of Directors determines to be consistent with the start-up of 
        the Corporation and the authority of the Corporation under this 
        Act.

SEC. 303. REPEAL OF FHA INSURANCE AUTHORITY.

    Effective upon the expiration of the 5-year period that begins upon 
the transition date, the following provisions of law are repealed:
            (1) Titles I and II of the National Housing Act.
            (2) Section 801 of the Housing Act of 1954.
The repeal by this section of any provision of law shall not affect any 
legally binding obligations entered into before the effective date of 
such repeal. Any funds or activities subject to a provision of law 
repealed by this section shall continue to be governed by such 
provision as it was in effect immediately before such repeal.

     TITLE IV--PROVISIONS RELATING TO GOVERNMENT NATIONAL MORTGAGE 
     ASSOCIATION AND OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT

 SEC. 401. GNMA AUTHORITY.

    Title III of the National Housing Act (12 U.S.C. 1716 et seq.) is 
amended--
            (1) in section 301(5), by inserting after ``federally owned 
        mortgage portfolios'' the following: ``(including any owned by 
        the Federal Housing Corporation)'';
            (2) in the first sentence of section 306(g)(1)--
                    (A) by inserting ``the Association, or by'' after 
                ``shall (i) be issued by''; and
                    (B) by striking ``which are insured under the 
                National Housing Act'' and all that follows through the 
                period and inserting ``which are guaranteed or insured 
                under the National Housing Act, the Federal Housing 
                Corporation Charter Act, title V of the Housing Act of 
                1949, section 184 of the Housing and Community 
                Development Act of 1992, the Servicemen's Readjustment 
                Act of 1944, or chapter 37 of title 38, United States 
                Code.''; and
            (3) in section 306(g)(3)(A)(i), by inserting after 
        ``National Housing Act'' the following: ``or the Federal 
        Housing Corporation Charter Act''.

 SEC. 402. SAFETY AND SOUNDNESS OVERSIGHT OF CORPORATION BY OFHEO.

    (a) In General.--Title XIII of the Housing and Community 
Development Act of 1992 (Public Law 102-550; 106 Stat. 4009) is 
amended--
            (1) by redesignating sections 1391 through 1395 as sections 
        1385 through 1389, respectively; and
            (2) by adding at the end the following new subtitle:

``SUBTITLE F--SUPERVISION AND REGULATION OF FEDERAL HOUSING CORPORATION

``SEC. 1391. AUTHORITY OF DIRECTOR.

    ``(a) In General.--The Director of the Office of Federal Housing 
Enterprise Oversight shall supervise and regulate the safety and 
soundness of the Federal Housing Corporation (in this subtitle referred 
to as the `Corporation').
    ``(b) Authority Exclusive of Secretary.--The Director is 
authorized, without the review or approval of the Secretary of Housing 
and Urban Development, to make such determinations, take such actions, 
and perform such functions as the Director determines necessary to meet 
the responsibilities of the Director under this subtitle.
    ``(c) Review of New Business of Corporation.--The Director shall 
review any proposed new business activity of the Corporation authorized 
under section 202(d) of the Federal Housing Corporation Charter Act 
(relating to approval) by the Board of Directors of the Corporation to 
determine whether such activity will cause the Corporation to violate 
the requirement under section 101(d) of such Act (relating to self-
supporting operation) or is likely to result in the Corporation being 
classified as undercapitalized or significantly undercapitalized, 
pursuant to section 1393 of this Act. The Director shall submit written 
notice of the results of any such determination to the Board of 
Directors.

``SEC. 1392. EXAMINATIONS, REPORTS, AND COST ESTIMATES.

    ``(a) Annual Examinations.--The Director shall conduct such 
examinations of the Corporation as the Director determines necessary, 
but not less than annually, to evaluate the safety and soundness of the 
Corporation. Such examinations shall be subject to and governed by 
subsections (c) through (f) of section 1317.
    ``(b) Reports.--The Director may require the Corporation to submit, 
within a reasonable period of time, any regular or special report, 
data, or other information whenever, in the judgment of the Director, 
such report, data, or information is necessary to carry out the 
Director's responsibilities under this subtitle and the Federal Housing 
Corporation Charter Act.
    ``(c) Credit Subsidy Cost Estimates.--
            ``(1) In general.--The Director shall produce and submit to 
        the Corporation the annual credit subsidy cost estimates for 
        the Corporation that are required for the President's budget. 
        Such estimates shall be consistent with the estimates of 
        performance generated by the risk-based capital model or the 
        interim model, as appropriate, developed in accordance with 
        section 1393(a), and with the President's economic forecast.
            ``(2) Unified estimates.--The annual credit subsidy cost 
        estimates produced under this subsection by the Director shall 
        be reported on a unified basis, which shall be based upon the 
        Corporation's business as a whole.
    ``(d) Annual Report on Safety and Soundness.--The Director shall 
submit an annual report to Congress and the Director of the Office of 
Management and Budget on the Corporation's financial safety and 
soundness, as measured pursuant to this subtitle.

``SEC. 1393. CAPITAL REQUIREMENTS.

    ``(a) Required Capital Level.--
            ``(1) Stress test.--
                    ``(A) In general.--The Director shall develop a 
                risk-based capital model to determine the amount of 
                capital that is sufficient for the Corporation to 
                maintain positive capital during a stressful period. 
                The model shall incorporate the assumptions under 
                subparagraphs (B) and (C). The required capital level 
                for the Corporation shall be equal to twice the amount 
                of capital so determined.
                    ``(B) Credit risk.--For purposes of subparagraph 
                (A), the Director shall assume that, during the 
                stressful period referred to in subparagraph (A), 
                credit losses occur at a rate consistent with a 
                nationwide economic recession of average severity based 
                on nationwide economic recessions since 1950.
                    ``(C) Other risks.--For purposes of subparagraph 
                (A), the Director shall make assumptions about such 
                other aspects of the stressful period as the Director 
                determines are appropriate and consistent.
            ``(2) Interim requirements.--Until the Director has 
        established a risk-based capital test as described in paragraph 
        (1), the Director may establish a required capital level for 
        the Corporation based on consideration of such factors as the 
        Director considers appropriate.
            ``(3) Capital classification.--
                    ``(A) Adequately capitalized.--The Corporation 
                shall be classified as adequately capitalized if the 
                capital of the Corporation equals or exceeds the 
                required capital level.
                    ``(B) Undercapitalized.--The Corporation shall be 
                classified as undercapitalized if the capital of the 
                Corporation does not equal or exceed the required 
                capital level, but does equal or exceed 50 percent of 
                the required capital level.
                    ``(C) Significantly undercapital- ized.--The 
                Corporation shall be classified as significantly 
                undercapitalized if the capital of the Corporation does 
                not equal or exceed 50 percent of the required capital 
                level.
            ``(4) Quarterly determination.--The Director shall 
        determine the capital classification of the Corporation not 
        less frequently than once every calendar quarter.
    ``(b) Capital Restoration Plans.--
            ``(1) Requirement.--If the Corporation is classified as 
        undercapitalized or significantly undercapitalized, the 
        Corporation shall submit to the Director a capital restoration 
        plan that complies with this subsection and carry out the plan 
        unless it is disapproved. The plan shall be submitted to the 
        Director within 45 days from the date of notification, or if 
        the Director determines that an extension is necessary, within 
        such additional time as the Director so determines.
            ``(2) Contents.--Each capital restoration plan submitted 
        under this section shall set forth a feasible plan for raising 
        or restoring the capital of the Corporation to an amount not 
        less than the required capital level for the Corporation. Each 
        capital restoration plan shall--
                    ``(A) specify the level of capital the Corporation 
                shall achieve and maintain;
                    ``(B) describe the actions that the Corporation 
                shall take to become classified as adequately 
                capitalized;
                    ``(C) establish a schedule for completing the 
                actions set forth in the plan; and
                    ``(D) specify the types and levels of activities 
                (including existing and new business activities) in 
                which the Corporation shall engage during the term of 
                the plan.

``SEC. 1394. ENFORCEMENT.

    ``(a) Grounds.--The Director may take actions under subsection (b) 
only if--
            ``(1) the Corporation is significantly undercapitalized;
            ``(2) the Corporation is undercapitalized and--
                    ``(A) does not submit a capital restoration plan 
                that is substantially in compliance with section 
                1393(b) within the applicable period, or the Director 
                disapproves the capital restoration plan submitted by 
                the Corporation; or
                    ``(B) has failed to make, in good faith, reasonable 
                efforts necessary to comply with the capital 
                restoration plan; or
            ``(3) the Corporation is engaging or has engaged, or the 
        Director has reasonable cause to believe that the Corporation 
        is about to engage in--
                    ``(A) any conduct that is likely to threaten the 
                adequacy of the capital of the Corporation;
                    ``(B) any failure to comply with any written 
                agreement entered into by the Corporation with the 
                Director; or
                    ``(C) any failure to comply with any request by the 
                Director for a report, data, or information under 
                section 1392(b).
    ``(b) Actions.--The Director may, under this subsection require the 
Corporation--
            ``(1) to cease and desist from any conduct or activity that 
        is described in subsection (a)(2) and (3), or that contributes 
        to the condition described in subsection (a)(1); and
            ``(2) to take corrective or remedial action, including--
                    ``(A) restricting the growth of, or contracting, 
                any category of assets or liabilities;
                    ``(B) reducing, modifying, or terminating any 
                activity that the Director determines creates excessive 
                risk to the Corporation;
                    ``(C) terminating agreements or contracts;
                    ``(D) engaging or employing qualified employees 
                (who may be subject to approval by the Director at the 
                direction of the Director); or
                    ``(E) submitting to the Director for review and 
                approval a detailed and complete operating plan.
    ``(c) Reports.--If the Director is authorized under subsection (a) 
to take action under subsection (b) and determines not to take any such 
action, the Director shall prepare a report detailing the basis of the 
Director's decision not to take such action and shall, within 30 days 
of the decision, submit the report to the President, the Director of 
the Office of Management and Budget, the Comptroller General of the 
United States, the Committee on Banking and Financial Services of the 
House of Representatives, and the Committee on Banking, Housing, and 
Urban Affairs of the Senate.

``SEC. 1395. REIMBURSEMENT OF COSTS.

    ``(a) Assessment and Collection.--The Director shall assess and 
collect from the Corporation such amounts determined by the Director as 
necessary to reimburse the Office of Federal Housing Enterprise 
Oversight for the reasonable costs and expenses of the activities 
undertaken by such Office to carry out the duties of the Director under 
this subtitle, including the costs of examination, enforcement, and 
oversight expenses.
    ``(b) Requirements.--Annual assessments imposed by the Director 
shall be--
            ``(1) imposed prior to October 1 of each year;
            ``(2) collected at such time or times during each 
        assessment year as determined necessary or appropriate by the 
        Director;
            ``(3) deposited into the Federal Housing Enterprise Fund 
        established by section 1316(f); and
            ``(4) available, to the extent provided in appropriation 
        Acts, for carrying out the responsibilities of the Director 
        under this subtitle.''.
    (b) Clerical Amendment.--The table of contents in section 1(b) of 
the Housing and Community Development Act of 1992 (Public Law 102-550; 
106 Stat. 3679) is amended--
            (1) by redesignating the items relating to sections 1391 
        through 1395 as relating to sections 1385 through 1389, 
        respectively; and
            (2) by inserting before the item relating to title XIV the 
        following new items:

``SUBTITLE F--SUPERVISION AND REGULATION OF FEDERAL HOUSING CORPORATION

        ``Sec. 1391. Authority of Director.
        ``Sec. 1392. Examinations, reports, and cost estimates.
        ``Sec. 1393. Capital requirements.
        ``Sec. 1394. Enforcement.
        ``Sec. 1395. Reimbursement of costs.''.
                                 <all>