1.This Act may be cited as the
Federal Board of Certification Act of
2008
.
2.It is the purpose of this Act to establish a
Federal Board of Certification, which shall certify that the mortgages within a
security instrument meet the underlying standards they claim to meet with
regards to mortgage characteristics including but not limited to:
documentation, loan to value ratios, debt service to income ratios, and
borrower credit standards and geographic concentration. The purpose of this
certification process is to increase the transparency, predictability and
reliability of securitized mortgage products.
3.As used in this Act—
(1)the term Board
means the
Federal Board of Certification established under this Act;
(2)the term
mortgage security
means an investment instrument that represents
ownership of an undivided interest in a group of mortgages;
(3)the term
insured depository institution
has the same meaning as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1803); and
(4)the term
Federal financial institutions regulatory agency
has the same
meaning as in section 1003 of the Federal Financial Institutions Examination
Council Act of 1978 (12 U.S.C. 3302).
4.Market
participants, including firms that package mortgage loans into mortgage
securities, may elect to have their mortgage securities evaluated by the
Board.
5.The Board is authorized to promulgate
regulations establishing enumerated security standards which the Board shall
use to certify mortgage securities. The Board shall promulgate standards which
shall certify that the mortgages within a security instrument meet the
underlying standards they claim to meet with regards to documentation, loan to
value ratios, debt service to income rations and borrower credit standards. The
standards should protect settled investor expectations, and increase the
transparency, predictability and reliability of securitized mortgage
products.
6.
(a)Establishment;
compositionThere is established the Federal Board of
Certification, which shall consist of—
(1)the Comptroller
of the Currency;
(2)the Secretary of
Housing and Urban Development;
(3)a Governor of the
Board of Governors of the Federal Reserve System designated by the Chairman of
the Board;
(4)the
Undersecretary of the Treasury for Domestic Finance; and
(5)the Chairman of
the Securities and Exchange Commission.
(b)The
members of the Board shall select the first chairperson of the Board.
Thereafter the position of chairperson shall rotate among the members of the
Board.
(c)The term of each chairperson of the Board shall be 2
years.
(d)Designation of
officers and employeesThe members of the Board may, from time to
time, designate other officers or employees of their respective agencies to
carry out their duties on the Board.
(e)Compensation
and expensesEach member of the Board shall serve without
additional compensation, but shall be entitled to reasonable expenses incurred
in carrying out official duties as such a member.
7.The costs and expenses of the Board,
including the salaries of its employees, shall be paid for by excise fees
collected from applicants for security certification from the Board, according
to fee scales set by the Board.
8.
(a)Establishment
of principles and standardsThe Board shall establish, by rule,
uniform principles and standards and report forms for the regular examination
of mortgage securities.
(b)Development of
uniform reporting systemThe Board shall develop uniform
reporting systems for use by the Board in ascertaining mortgage security risk.
The Board shall assess, and publicly publish, how it evaluates and certifies
the composition of mortgage securities.
(c)Affect on
Federal regulatory agency research and development of new financial
institutions supervisory agenciesNothing in this Act shall be
construed to limit or discourage Federal regulatory agency research and
development of new financial institutions supervisory methods and tools, nor to
preclude the field testing of any innovation devised by any Federal regulatory
agency.
(d)Not later than April 1 of each year, the Board shall
prepare and submit to Congress an annual report covering its activities during
the preceding year.
(e)The Board shall determine whether it wants to evaluate
mortgage securities at issuance, on a regular basis, or upon request.
9.
(a)The chairperson of the Board is authorized to carry
out and to delegate the authority to carry out the internal administration of
the Board, including the appointment and supervision of employees and the
distribution of business among members, employees, and administrative
units.
(b)Use of
personnel, services, and facilities of Federal financial institutions
regulatory agencies, and Federal Reserve banksIn addition to any
other authority conferred upon it by this Act, in carrying out its functions
under this Act, the Board may utilize, with their consent and to the extent
practical, the personnel, services, and facilities of the Federal financial
institutions regulatory agencies, and Federal Reserve banks, with or without
reimbursement therefor.
(c)Compensation,
authority, and duties of officers and employees; experts and
consultantsThe Board
may—
(1)subject to the
provisions of title 5, United States Code, relating to the competitive service,
classification, and General Schedule pay rates, appoint and fix the
compensation of such officers and employees as are necessary to carry out the
provisions of this Act, and to prescribe the authority and duties of such
officers and employees; and
(2)obtain the
services of such experts and consultants as are necessary to carry out this
Act.
10.Board access to
informationFor the purpose of
carrying out this Act, the Board shall have access to all books, accounts,
records, reports, files, memorandums, papers, things, and property belonging to
or in use by Federal financial institutions regulatory agencies, including
reports of examination of financial institutions, their holding companies, or
mortgage lending entities from whatever source, together with work papers and
correspondence files related to such reports, whether or not a part of the
report, and all without any deletions.
11.
(a)Not less frequently than once every 10 years, the Board
shall conduct a review of all regulations prescribed by the Board, in order to
identify outdated or otherwise unnecessary regulatory requirements imposed on
insured depository institutions.
(b)In
conducting the review under subsection (a), the Board shall—
(1)categorize the
regulations described in subsection (a) by type; and
(2)at regular
intervals, provide notice and solicit public comment on a particular category
or categories of regulations, requesting commentators to identify areas of the
regulations that are outdated, unnecessary, or unduly burdensome.
(c)The Board shall ensure that the notice and comment period
described in subsection (b)(2) is conducted with respect to all regulations
described in subsection (a), not less frequently than once every 10
years.
(d)The Board shall—
(1)publish in the
Federal Register a summary of the comments received under this section,
identifying significant issues raised and providing comment on such issues;
and
(2)eliminate
unnecessary regulations to the extent that such action is appropriate.
(e)Not later than 30 days after carrying out subsection
(d)(1) of this section, the Board shall submit to the Congress a report, which
shall include a summary of any significant issues raised by public comments
received by the Board under this section and the relative merits of such
issues.
12.Any publication, transmission, or webpage
containing an advertisement for or invitation to buy a mortgage security shall
include the following notice, in conspicuous type: Certification by the
Federal Board of Certification can in no way be considered a guarantee of the
mortgage security. Certification is merely a judgment by the Federal Board of
Certification of the degree of risk offered by the security in question. The
Federal Board of Certification is not liable for any actions taken in reliance
on such judgment of risk.
.