Amendments to TARP

(a)

Family Foreclosure Rescue Corporation Program under TARP

Title I of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211) is amended— (1)by inserting after the title designation and heading the following:

Program for purchases of troubled assets

; and

(2)by adding at the end the following new subtitle:

Family Foreclosure Rescue Corporation Program

150.

Authority under TARP Program

The authority of the Secretary to take any action under this title includes the authority to take the actions authorized under this subtitle and to use amounts made available under subtitle A under the provisions of this subtitle.

151.

Purchases of home mortgages

(a)

Offices; authority

(1)

Authority

The Secretary is authorized to establish a Family Foreclosure Rescue Corporation program (or FFRC program) to purchase, and to make and fund commitments to purchase, home mortgage loans from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this subtitle and the policies and procedures developed and published by the Secretary. (2)

Commencement of program

Establishment of the policies and procedures and other similar administrative requirements imposed on the Secretary by this subtitle are not intended to delay the commencement of the FFRC program. (3)

Establishment of the family foreclosure rescue corporation

The Family Foreclosure Rescue Corporation is hereby established as an independent office within the Treasury, which office shall be headed by Chairman, who shall report to the Secretary, and shall be appointed by the President, by and with the advice and consent of the Senate, except that an interim Chairman may serve pending confirmation by the Senate. (b)

Consultation

In exercising the authority under this section, the Secretary shall consult with the Board of Governors of the Federal Reserve System, the Corporation, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, and the Secretary of Housing and Urban Development. (c)

Necessary actions

The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this subtitle, including, without limitation, the following: (1)The Secretary shall have direct hiring authority with respect to the appointment of employees to administer this subtitle. (2)Entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code. (3)Designating financial institutions, the Corporation, the Board, the Federal Housing Administration, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation, as financial agents of the Federal Government for purposes of implementing the provisions of this subtitle, and such institutions shall perform all such reasonable duties related to this subtitle as financial agents of the Federal Government as may be required (4)In order to provide the Secretary with the flexibility to manage home mortgages in a manner designed to minimize cost to the taxpayers, establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase, hold, guarantee and sell home mortgages and to issue obligations. (5)Issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities or purposes of this subtitle. (6)Entering into indemnity agreements with servicers or trustees that would indemnify the servicer or trustees for legal liability to investors arising from sale, disposition or modification of home mortgages if— (A)the servicer or trustee has acted reasonably in selling, disposing of or modifying the mortgage; and (B)the servicer or trustee has acted in accordance with a request for sale, modification or disposition from the Secretary or his designee under the FFRC program established by this subtitle. (7)Developing a program, with respect to first-lien home mortgage loans purchased by the Secretary, through which the security interests of second lien-holders with respect to the residential property securing the first-lien home mortgage loan purchased by the Secretary, are extinguished in exchange for partial payment. (d)

Program guidelines

Before the earlier of the end of the 2-business-day period beginning on the date of the first purchase of home mortgages pursuant to the authority under this section or the end of the 45-day period beginning on the date of enactment of this subtitle, the Secretary shall publish program guidelines, including the following: (1)Mechanisms for purchasing home mortgages in exchange for cash, Treasury securities or other assets. (2)Methods for pricing and valuing home mortgages. (3)Procedures for selecting home mortgage asset managers. (4)Criteria for identifying home mortgages for purchase. Such criteria shall include(A)loan-to-value ratio,(B)debt-to-income ratio; and(C)such other criteria as the Secretary may prescribe. (e)

Preventing unjust enrichment

In making purchases under the authority of this subtitle, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions and home owners participating in a program established under this subtitle.

152.

Insurance of home mortgages

(a)

Authority

(1)

In general

The Secretary shall establish a program to guarantee home mortgages consistent with section 159(b) and the purposes of this subtitle. (2)

Guarantees

In establishing any program under this subsection, the Secretary shall develop guarantees of home mortgages and the associated premiums for such guarantees. Such guarantees and premiums may be determined by category or class of the home mortgages to be guaranteed. (3)

Extent of guarantee

The Secretary may guarantee the timely payment of principal of, and interest on, home mortgages in amounts not to exceed 100 percent of such payments. Such guarantee may be on such terms and conditions as are determined by the Secretary, provided that such terms and conditions are consistent with section 159(b) and the purposes of this subtitle. (b)

Reports

Not later than 90 days after the date of enactment of this subtitle, the Secretary shall report to the appropriate committees of Congress on the program established under subsection (a). (c)

Premiums

(1)

In general

The Secretary shall collect premiums from any financial institution and any borrower participating in the program established under subsection (a). Such premiums shall be in an amount that the Secretary determines necessary to meet the purposes of this subtitle and to provide sufficient reserves pursuant to paragraph (3). (2)

Authority to base premiums on product risk

In establishing any premium under paragraph (1), the Secretary may provide for variations in such rates according to the credit risks and other risks associated with the particular home mortgage that is being guaranteed. The Secretary shall publish the methodology for setting the premium for a class of home mortgages together with an explanation of the appropriateness of the class of home mortgages for participation the program established under this section. The methodology shall ensure that the premium is consistent with paragraph (3). (3)

Minimum level

The premiums referred to in paragraph (1) shall be set by the Secretary at a level necessary to create reserves sufficient to meet anticipated claims, based on an actuarial analysis, and to ensure that taxpayers are fully protected, unless the Secretary determines that a lower premium combined with other protections for taxpayers, including but not limited to provisions for shared equity mortgages would more fully meet the purposes of this subtitle. (d)

Home mortgage insurance financing fund

(1)

Deposits

The Secretary shall deposit fees collected under this section into the Fund established under paragraph (2) (2)

Establishment

There is established a Home Mortgage Insurance Financing Fund within the Family Foreclosure Rescue Corporation that shall consist of the amounts collected pursuant to paragraph (1), and any balance in such fund shall be invested by the Secretary in United States Treasury securities, or kept in cash on hand or on deposit, as necessary. (3)

Payments from fund

The Secretary shall make payments from amounts deposited in the Fund and from other sums authorized by this subtitle to fulfill obligations of the guarantees provided to financial institutions under subsection (a). (4)

Termination of fund

The Fund shall be terminated by the period ending one year after the repayment of the last home mortgage loan insured or guaranteed by the Secretary and any amounts remaining in the Fund shall be deposited as provided in section 156(e).

153.

Considerations

In exercising the authorities granted in this subtitle, the Secretary shall take into consideration— (1)providing mechanisms for families to keep their homes and to stabilize communities; (2)ensuring stability and preventing disruption to financial market in order to limit the impact of the financial crisis on the economy and protect American jobs, savings, and retirement security; (3)protecting the interests of taxpayers by maximizing overall returns and minimizing the impact on the national debt; (4)determining the most efficient use of funds under this subtitle; (5)ensuring that all financial institutions are eligible to participate in the program, without discrimination based on size, geography, form of organization, or the size, type, and number of assets eligible for purchase under this subtitle; (6)paying due attention to financial institutions, including those serving low- and moderate-income populations and other underserved communities, and that have assets less than $1,000,000,000; (7)stabilizing United States public instrumentalities, such as counties and cities, which may have suffered significant increased costs or losses in the current market turmoil; (8)protecting the retirement security of Americans by purchasing home mortgages by or on behalf of an eligible retirement plan described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B) of the Internal Revenue Code of 1986, except that such authority shall not extend to any compensation arrangements subject to section 409A of such Code; and (9)purchasing home mortgage loans, residential other real estate owned by financial institutions and mortgages on multifamily properties.

154.

FFRC Oversight Board

(a)

Establishment

There is established the Family Foreclosure Rescue Corporation Oversight Board, which shall be responsible for— (1)reviewing the exercise of authority under a program developed in accordance with this subtitle, including (A)policies implemented by the Secretary and the Family Foreclosure Rescue Corporation created under sections 151 and 152, including the appointment of financial agents, the designation of asset classes to be purchased, and plans for the structure of vehicles used to purchase home mortgages; and (B)the effect of such actions in assisting American families in preserving home ownership, stabilizing financial markets, and protecting taxpayers; (2)making recommendations, as appropriate, to the Secretary regarding use of the authority under this subtitle; and (3)reporting any suspected fraud, misrepresentation, or malfeasance to the Special Inspector General for the FFRC Program or the Attorney General of the United States, consistent with section 535(b) of title 28, United States Code. (b)

Membership

The Oversight Board shall be comprised of— (1)the Chairman of the Board of Governors of the Federal Reserve System; (2)the Secretary; (3)the Director of the Federal Home Finance Agency; (4)the Chairman of the Securities Exchange Commission; (5)the Chairman of the Corporation; and (6)the Secretary of Housing and Urban Development. (c)

Chairperson

The chairperson of the Oversight Board shall be the Chairman of the Corporation. (d)

Meetings

The Oversight Board shall meet 2 weeks after the first exercise of the purchase authority of the Secretary under this subtitle, and at least monthly thereafter. (e)

Additional authorities

In addition to responsibilities described in subsection (a), the Oversight Board shall have the authority to ensure that the policies implemented the Secretary are— (1)in accordance with the purposes of this subtitle; (2)in the economic interests of the United States; and (3)consistent with protecting taxpayers, in accordance with section 161(a). (f)

Credit review committee

The Oversight Board may appoint a credit review committee for the purpose of evaluating the exercise of the purchase authority provided under this subtitle and the assets acquired through the exercise of such authority, as the Oversight Board determines appropriate. (g)

Reports

The Oversight Board shall report to the appropriate committees of Congress and the Congressional Oversight Panel established under section 125, semiannually, on the matters described under subsection (a)(1). (h)

Termination

The Oversight Board, and the authority of the Oversight Board under this section, shall terminate on the expiration of the 15-day period beginning upon the later of— (1)the date that the last home mortgage loan acquired by the Secretary under section 151 has been sold or transferred out of the ownership or control of the Federal Government; or (2)the date of expiration of the last insurance contract issued under section 152.

155.

Reports

(a)

In general

Before the expiration of the 60-day period beginning on the date of the first exercise of the authority granted in section 151(a), or of the first exercise of the authority granted in section 152, whichever occurs first, and every 30-day period thereafter, the Secretary shall report to the appropriate committees of Congress, with respect to each such period— (1)an overview of actions taken by the Secretary, including the factors to be taken in consideration in section 153; (2)the actual obligation and expenditure of the funds provided for administrative expenses by section 164 during such period and the expected expenditure of such funds in the subsequent period; and (3)a detailed financial statement with respect to the exercise of authority under this subtitle, including— (A)all agreements made or renewed; (B)all insurance contracts entered into pursuant to section 152; (C)all transactions occurring during such period, including the types of parties involved; (D)the nature of the assets purchased; (E)all projected costs and liabilities; (F)operating expenses, including compensation for financial agents; (G)the valuation or pricing method used for each transaction; and (H)a description of the vehicles established to exercise such authority. (b)

Tranche reports to congress

(1)

Reports

The Secretary shall provide to the appropriate committees of Congress, at the times specified in paragraph (2), a written report, including— (A)a description of all of the transactions made during the reporting period; (B)a description of the pricing mechanism for the transactions; (C)a justification of the price paid for and other financial terms associated with the transactions; (D)a description of the impact of the exercise of such authority on the financial system, supported to the extent possible, by specific data; (E)a description of challenges that remain in the financial system, including any benchmarks yet to be achieved; and (F)an estimate of additional actions under the authority provided under this subtitle that may be necessary to address such challenges. (2)

Timing

The report required by this subsection shall be submitted not later than 7 days after the date on which commitments to purchase home mortgages under the authorities provided in this subtitle first reach an aggregate of $50,000,000,000 and not later than 7 days after each $50,000,000,000 interval of such commitments is reached thereafter. (c)

Sharing of information

Any report required under this section shall also be submitted to the Congressional Oversight Panel established under section 125. (d)

Sunset

The reporting requirements under this section shall terminate on the later of— (1)the date that the last home mortgage acquired by the Secretary under section101 has been sold or transferred out of the ownership or control of the Federal Government; or (2)the date of expiration of the last insurance contract issued under section 152.

156.

Rights; management; sale of home mortgages; revenues and sale proceeds

(a)

Exercise of rights

The Secretary may, at any time, exercise any rights received in connection with home mortgages purchased under this subtitle (b)

Management of home mortgages

(1)

In general

The Secretary shall have authority to manage home mortgages purchased under this subtitle, including revenues and portfolio risks therefrom. (2)In managing home mortgages purchased under the authorities of this subtitle, the Secretary shall implement a systematic plan to maximize loan modifications in order to minimize foreclosures, including by reducing interest rates, writing down principal sums owed, providing guarantees, and other measures. (3)With respect to loans not eligible for modification, and with respect to loans that enter into default, the Secretary shall implement a plan to minimize foreclosures, through short sales or by other means, and to reduce negative impacts on communities from foreclosures, short sales or other dispositions, consistent with the purposes of this subtitle. (4)With respect to loans modified by the Secretary, the Secretary shall implement a program of shared equity mortgages such that upon any sale or disposition within five years from the date of loan modification any increases in the equity of any home securing a loan modified by the Secretary are shared between the home owner and the Family Foreclosure Rescue Corporation, based upon a schedule to be issued by the Secretary, such schedule to provide for an increasingly smaller share of such equity increase to be payable to the Secretary over that five-year period. (c)

Sale of home mortgages

The Secretary may, at any time, upon terms and conditions and at a price determined by the Secretary, guarantee, sell, or enter into securities loans, repurchase transactions, or other financial transactions in regard to, any home mortgages purchased under this subtitle. (d)

Proceeds of sales and other revenues

Revenues of, and proceeds from the sale of home mortgages purchased under this subtitle, or from any shared equity home mortgage program established by the Secretary under this subtitle, or from the sale, exercise, or surrender of warrants or senior debt instruments acquired under section 161, and any amounts remaining in the Fund upon its termination, shall be paid into the general fund of the Treasury for reduction of the public debt except as provided in section (e). (e)

Transfer of a percentage of profits

(1)

Deposits

Not less than 20 percent of any revenues of, and proceeds from the sale of home mortgages purchased under this subtitle, or from any shared equity home mortgage program established by the Secretary under this subtitle, or from the sale, exercise, or surrender of warrants or senior debt instruments acquired under section 161, and not less than 20 percent of any amounts remaining in the Fund upon its termination, shall be deposited as provided in paragraph (2). (2)

Use of deposits

Of the amount referred to in paragraph (1)— (A)65 percent shall be deposited into the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568); (B)35 percent shall be deposited into the Capital Magnet Fund established under section 1339 of that Act (12 U.S.C. 4569). (3)

Remainder deposited in the treasury

All amounts remaining after payments under paragraph (1) shall be paid into the General Fund of the Treasury for reduction of the public debt. (f)

Application of sunset to home mortgages

The authority of the Secretary to hold, guarantee, sell or dispose of any home mortgage purchased under this subtitle before the termination date in section 165, or to purchase or fund the purchase of a home mortgage under a commitment entered into before the termination date in section 165, is not subject to the provisions of section 165.

157.

Contracting procedures

(a)

Streamlined process

For purposes of this subtitle, the Secretary may waive specific provisions of the Federal Acquisition Regulation upon a determination that urgent and compelling circumstances make compliance with such provisions contrary to the public interest. Any such determination, and the justification for such determination, shall be submitted to the Committees on Oversight and Government Reform and Financial Services of the House of Representatives and the Committees on Homeland Security and Governmental Affairs and Banking, Housing, and Urban Affairs of the Senate within 7 days. (b)

Additional contracting requirements

In any solicitation or contract where the Secretary has, pursuant to subsection (a), waived any provision of the Federal Acquisition Regulation pertaining to minority contracting, the Secretary shall develop and implement standards and procedures to ensure, to the maximum extent practicable, the inclusion and utilization of minorities (as such term is defined in section 1204(c) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note)) and women, and minority and women-owned businesses (as such terms are defined in section 21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)), in that solicitation or contract, including contracts to asset managers, servicers, property managers, and other service providers or expert consultants. (c)

Eligibility of FDIC, board, federal housing administration, Federal national mortgage association and the federal home loan mortgage corporation

Notwithstanding subsections (a) and (b), the Corporation, Board, Federal Housing Administration, Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation— (1)shall be eligible for, and shall be considered in, the selection of financial agents to perform any duty assigned to the Secretary by this subtitle; (2)in performing such duties shall report to the Chairman of the Family Foreclosure Rescue Corporation; and (3)shall be reimbursed by the Secretary for any services provided.

158.

Conflicts of interest

(a)

Standards required

The Secretary shall issue regulations or guidelines necessary to address and manage or to prohibit conflicts of interest that may arise in connection with the administration and execution of the authorities provided under this subtitle, including conflicts arising in— (1)the selection or hiring of contractors or advisors, including asset managers; (2)the purchase of home mortgages; (3)the management of the assets held; (4)post-employment restrictions on employees; and (5)any other potential conflict of interest, as the Secretary deems necessary or appropriate in the public interest. (b)

Timing

Regulations or guidelines required by this section shall be issued as soon as practicable after the date of enactment of this subtitle.

159.

Foreclosure mitigation efforts

(a)

Residential mortgage loan servicing standards

To the extent that the Secretary acquires home mortgages, including mortgages securing loans for multifamily housing, the Secretary shall implement a plan within 60 days of enactment of this subtitle that seeks to maximize loan restructuring on a sustainable basis and to minimize foreclosures. (b)

Loan guarantees

(1)

In general

The Secretary may use loan guarantees and other credit enhancements to facilitate loan modifications, to prevent avoidable foreclosures, and to provide necessary liquidity to home mortgage markets. (2)Such loan guarantee authority may be used by the Secretary with respect to any and all classes of home mortgage loans the Secretary has acquired and wishes to sell. (3)Such loan guarantee authority may be used by the Secretary with respect to other home mortgage loans not acquired by the Secretary provided that the holder, servicer, or trustee with respect to such home mortgage loan to be guaranteed by the Secretary shall through modification, refinancing, or otherwise write down the principal amount owed and reduce the interest rate charged such that the new loan amount does not exceed 90 percent of the home’s currently and independently appraised value and loan payments to be made by the borrower do not exceed 38 percent of the borrower’s currently documented and verified income. (4)The percentage requirements with respect to the result of loan modifications specified in the immediately preceding sentence of paragraph (3) may be altered upon request of the Secretary by unanimous vote of the Oversight Board and upon 60 days notice to the appropriate Committees of Congress. (c)

Coordination

The Secretary shall coordinate with the Corporation, the Board, the Federal Housing Finance Agency, the Secretary of Housing and Urban Development, and other Federal Government entities that hold assets to attempt to identify opportunities for the acquisition of classes of home mortgages that will improve the ability of the Secretary to improve the loan modification and restructuring process. (d)

Tenants

The Secretary shall, where permissible, permit bona fide tenants who are current on their rent to remain in their homes under the terms of the lease. In the case of a mortgage on a residential rental property, the plan required under this section shall include protecting Federal, State, and local rental subsidies and protections, and ensuring any modification takes into account the need for operating funds to maintain decent and safe conditions at the property. (e)

Consent to reasonable loan modification requests

The Secretary shall consent, where appropriate, and considering net present value to the taxpayer, to reasonable requests for loss mitigation measures, including term extensions, rate reductions, principal write downs, increases in the proportion of loans within a trust or other structure allowed to be modified, or removal of other limitations on modifications.

160.

Assistance to homeowners

(a)

Definitions

As used in this section— (1)the term Federal property manager means— (A)the Federal Housing Finance Agency, in its capacity as conservator of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation; (B)the Corporation, with respect to residential mortgage loans and mortgage-backed securities held by any bridge depository institution pursuant to section 11(n) of the Federal Deposit Insurance Act (12 U.S.C. 1821(n)); and (C)the Board, with respect to any mortgage or mortgage-backed securities or pool of securities held, owned, or controlled by or on behalf of a Federal reserve bank, other than mortgages or securities held, owned, or controlled in connection with open market operations under section 14 of the Federal Reserve Act (12 U.S.C. 353), or as collateral for an advance or discount that is not in default; (2)the term consumer has the same meaning as in section 103 of the Truth in Lending Act (15 U.S.C. 1602); (3)the term insured depository institution has the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and (4)the term servicer has the same meaning as in section 6(i)(2) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(i)(2)). (b)

Homeowner assistance by agencies

(1)

In general

To the extent that the Federal property manager holds, owns, or controls mortgages, mortgage backed securities, and other assets secured by residential real estate, including multifamily housing, the Federal property manager shall implement a systematic plan that seeks to maximize assistance for homeowners and minimize foreclosures, to use its authority to modify mortgage loans held by the Federal property manager, and to provide incentives to the servicers of other mortgage loans to take advantage of the HOPE for Homeowners Program under section 257 of the National Housing Act, the authorities provided under this subtitle, and other available programs to minimize foreclosures. (2)

Modifications

In the case of a residential mortgage loan, modifications made under paragraph (1) may include— (A)reduction in interest rates; (B)reduction of loan principal; and (C)other similar modifications. (3)

Tenant protections

In the case of mortgages on residential rental properties, modifications made under paragraph (1) shall ensure— (A)the continuation of any existing Federal, State, and local rental subsidies and protections; and (B)that modifications take into account the need for operating funds to maintain decent and safe conditions at the property. (4)

Timing

Each Federal property manager shall develop and begin implementation of the plan required by this subsection not later than 60 days after the date of enactment of this subtitle. (5)

Reports to congress

Each Federal property manager shall, 60 days after the date of enactment of this subtitle and every 30 days thereafter, report to Congress specific information on the number and types of loan modifications made and the number of actual foreclosures occurring during the reporting period in accordance with this section. (6)

Consultation

In developing the plan required by this subsection, the Federal property managers shall consult with one another and, to the extent possible, utilize consistent approaches to the requirements of this subsection. (c)

Actions with respect to servicers

In any case in which a Federal property manager is not the owner of a residential mortgage loan, but holds an interest in obligations or pools of obligations secured by residential mortgage loans, the Federal property manager shall— (1)encourage implementation by the loan servicers of loan modifications developed under subsection (b); (2)assist in facilitating any such modifications, to the extent possible; and (3)encourage loan servicers to make foreclosed properties available for sale to State and local governments at a discount. (d)

Availability of foreclosed properties to State and localities

(1)

In general

Each Federal property manager shall make available to any State or local government that is receiving emergency assistance under section 2301 of the Foreclosure Prevention Act of 2008 (Division B of Public Law 110–289) for purchase, at a discount, residential properties that it owns through foreclosure in that State or locality, in order to facilitate the sale of such properties and to stabilize neighborhoods affected by foreclosures. (2)

Information clearinghouse

(A)

Provision of information to the Secretary

Each Federal property manager shall make available to the Secretary of Housing and Urban Development information on properties available for purchase under this subsection. (B)

Clearinghouse

The Secretary of Housing and Urban Development and the Federal property managers shall develop a clearinghouse for the information compiled under this paragraph, and make such clearinghouse easily accessible by States and local governments described in paragraph (1). (e)

Limitation

The requirements of this section shall be in addition to any other duty or requirement imposed on the Federal property managers under otherwise applicable law.

161.

Minimization of long-term costs and maximization of benefits for taxpayers

(a)

Long-term costs and benefits

(1)

Minimizing negative impact

The Secretary shall use the authority under this subtitle in a manner that will minimize any potential long-term negative impact on the taxpayer, taking into account the direct outlays, potential long-term returns on assets purchased, and the overall economic benefits of the program, including economic benefits due to reduced foreclosures and defaults, reduced bankruptcies, neighborhood impacts, improvements in economic activity and the availability of credit, the impact on the savings and pensions of individuals, reductions in losses to the Federal Government, and other factors. (2)

Authority

In carrying out paragraph (1), the Secretary shall— (A)hold the assets to maturity or for resale for and until such time as the Secretary determines that the market is appropriate for selling such assets, in order to maximize the value for taxpayers; (B)issue loan guarantees or credit enhancements on loans to be sold, where appropriate; and (C)sell such assets at a price that the Secretary determines, based on available financial analysis, will maximize return on investment for the Federal Government. (3)

Private sector participation

The Secretary shall encourage the private sector to participate in purchases of home mortgage loans consistent with the provisions of this subtitle. (b)

Use of market mechanisms

In making purchases under this subtitle, the Secretary shall— (1)make such purchases at the lowest price that the Secretary determines to be consistent with the purposes of this subtitle; (2)maximize the efficiency of the use of taxpayer resources by using market mechanisms, including auctions or reverse auctions, where appropriate; and (3)encourage private sector participation in purchases of home mortgage loans through auctions, reverse auctions and direct purchases as authorized by this subtitle. (c)

Direct purchases

If the Secretary determines that use of a market mechanism under subsection (b) is not feasible or appropriate, and the purposes of the subtitle are best met through direct purchases by the Secretary from an individual financial institution, the Secretary shall pursue additional measures to ensure that prices paid for assets are reasonable and reflect the underlying value of the asset. (d)

Purchase authority for warrants and debt instruments

(1)

In general

In exchange for asset purchases, guarantees or capital infusions, the Secretary may receive from any financial institution— (A)in the case of a financial institution that is registered (or approved for registration) and traded on a national securities exchange or a national securities association registered pursuant to section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3), a warrant giving the right to the Secretary to receive nonvoting common stock or preferred stock in such financial institution, as the Secretary determines appropriate; or (B)in the case of any financial institution other than one described in subparagraph (A), a senior debt instrument from such financial institution, as described in paragraph (2)(C). (2)

Terms and conditions

The terms and conditions of any warrant or senior debt instrument acquired under paragraph (1) shall meet the following requirements: (A)

Purposes

Such terms and conditions shall, at a minimum, be designed— (i)to provide for reasonable participation by the Secretary, for the benefit of taxpayers, in equity appreciation in the case of a warrant, or a reasonable interest rate premium, in the case of a debt instrument; and (ii)to provide additional protection for the taxpayer and stability to the financial system. (B)

Authority to sell, exercise, surrender

The Secretary may sell, exercise, or surrender a warrant or any senior debt instrument received under this subsection, based on the conditions established under subparagraph (A). (C)

Conversion

The warrant shall provide that if, after the warrant is received by the Secretary under this subsection, the financial institution that issued the warrant is no longer listed or traded on a national securities exchange or securities association, as described in paragraph (1)(A), such warrants shall convert to senior debt, in an amount determined by the Secretary and subject to such other conditions as are determined by the Secretary. (D)

Protections

Any warrant representing securities to be received by the Secretary under this subsection shall contain antidilution provisions of the type employed in capital market transactions, as determined by the Secretary. Such provisions shall protect the value of the securities from market transactions such as stock splits, stock distributions, dividends, and other distributions, mergers, and other forms of reorganization or recapitalization. (E)

Exercise price

The exercise price for any warrant issued pursuant to this subsection shall be set by the Secretary, in the interest of the taxpayers. (F)

Sufficiency

The financial institution shall guarantee to the Secretary that it has authorized shares of nonvoting stock available to fulfill its obligations under this subsection. Should the financial institution not have sufficient authorized shares, including preferred shares that may carry dividend rights equal to a multiple number of common shares, the Secretary may, to the extent necessary, accept a senior debt note in an amount, and on such terms, as will compensate the Secretary equivalently, in the event that a sufficient shareholder vote to authorize the necessary additional shares cannot be obtained.

162.

Market transparency

(a)

Pricing

To facilitate market transparency, the Secretary shall make available to the public, in electronic form, a description, the amounts, and the pricing of assets acquired under this subtitle, within 2 business days of purchase, trade, or other disposition. (b)

Disclosure

For each type of financial institutions that sells home mortgages to the Secretary under this subtitle, the Secretary shall determine whether the public disclosure required for such financial institutions with respect to off-balance sheet transactions, derivatives instruments, contingent liabilities, and similar sources of potential exposure is adequate to provide to the public sufficient information as to the true financial position of the institutions. If such disclosure is not adequate for that purpose, the Secretary shall make recommendations for additional disclosure requirements to the relevant regulators.

163.

Oversight and audits

(a)

Comptroller general oversight

(1)

Scope of oversight

The Comptroller General of the United States shall, upon enactment of this subtitle, commence ongoing oversight of the activities and performance of the Secretary and of any agents and representatives the Secretary (as related to the agent or representative’s activities on behalf of or under the authority of the Secretary), including vehicles established by the Secretary under this subtitle. The subjects of oversight shall include the following: (A)The performance of the Secretary in meeting the purposes of this subtitle, particularly those involving— (i)foreclosure mitigation; (ii)cost reduction; (iii)financial market stability; (iv)neighborhood stabilization; and (v)taxpayer protection. (B)The financial condition and internal controls of the Secretary’s programs, representatives and agents. (C)Characteristics of transactions and commitments entered into, including transaction type, frequency, size, price paid, and all other relevant terms and conditions, and the timing, duration and terms of any future commitments to purchase assets. (D)Characteristics and disposition of acquired assets, including type, acquisition price, current market value, sale prices and terms, and use of proceeds from sales. (E)Efficiency of the operations of the Secretary in the use of appropriated funds. (F)Compliance with all applicable laws and regulation by the Secretary, its agents and representatives. (G)The efforts of the Secretary to prevent, identify, and minimize conflicts of interest involving any agent or representative performing activities on behalf of or under the authority of the Secretary. (H)The efficacy of contracting procedures pursuant to section 157(b), including, as applicable, the efforts of the Secretary in evaluating proposals for inclusion and contracting to the maximum extent possible of minorities (as such term is defined in 1204(c) of the Financial Institutions Reform, Recovery, and Enhancement Act of 1989 (12 U.S.C. 1811 note), women, and minority- and women-owned businesses, including ascertaining and reporting the total amount of fees paid and other value delivered by the Secretary to all of his agents and representatives, and such amounts paid or delivered to such firms that are minority- and women-owned businesses (as such terms are defined in section 21A of the Federal Home Loan Bank Act (12 U.S.C. 1441a)). (2)

Conduct and administration of oversight

(A)

GAO presence

The Secretary shall provide the Comptroller General with appropriate space and facilities in the Department of the Treasury as necessary to facilitate oversight until the termination date established in section 165. (B)

Access to records

To the extent otherwise consistent with law, the Comptroller General shall have access, upon request, to any information, data, schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things or property belonging to or in use by the Secretary, or any vehicles established by the Secretary under this subtitle, and to the officers, directors, employees, independent public accountants, financial advisors, and other agents and representatives of the Secretary (as related to the agent or representative’s activities on behalf of or under the authority of the Secretary) or any such vehicle at such reasonable time as the Comptroller General may request. The Comptroller General shall be shall be afforded full facilities for verifying transactions with the balances or securities held transactions with the balances or securities held by depositaries, fiscal agents, and custodians. The Comptroller General may make and retain copies of such books, accounts, and other records as the Comptroller General appropriate. (C)

Reimbursement of costs

The Treasury shall reimburse the Government Accountability Office for the full cost of any such oversight activities as billed therefore by the Comptroller General of the United States. Such reimbursements shall be credited to the appropriation account Salaries and Expenses, Government received and remain available until expended. (3)

Reporting

The Comptroller General shall submit reports of findings under this section, regularly and no less frequently than once every 60 days, to the appropriate committees of Congress, and the Special Inspector General for the Home Mortgage Program established under this subtitle on activities and performance of the Secretary. The Comptroller may also submit special reports under may also submit special reports under this subsection as warranted by the findings of its oversight activities. (b)

Comptroller general audits

(1)

Annual audit

The Secretary shall annually prepare and issue to the appropriate committees of Congress and the public audited financial statements prepared in accordance with generally accepted accounting principles, and the Comptroller General shall annually audit such statements in accordance with generally accepted auditing standards. The Treasury shall reimburse the Government Accountability Office for the full cost of any such audit as billed therefore by the Comptroller General. Such reimbursements shall be credited to the appropriation account Salaries and Expenses, Government Accountability Office current when payment is received and remain available until expended. The financial statements under this paragraph shall be on the fiscal year basis prescribed under section 1102 of title 31, United States Code. (2)

Authority

The Comptroller General may audit the programs, activities, receipts, expenditures, and financial transactions of the Secretary and any agents and representatives of the Secretary (as related to the agent or representative’s activities on behalf of or under the authority of the Secretary), including vehicles established by the Secretary under this subtitle. (3)

Corrective responses to audit problems

The Secretary shall— (A)take action to address deficiencies identified by the Comptroller General or other auditor engaged by the Secretary; or (B)certify to appropriate committees of Congress that no action is necessary or appropriate. (c)

Internal control

(1)

Establishment

The Secretary shall establish and maintain an effective system of internal control, consistent with the standards prescribed under section 3512(c) of title 31, United States Code, that provides reasonable assurance of— (A)the effectiveness and efficiency of operations, including the use of the resources of the Secretary; (B)the reliability of financial reporting, including financial statements and other reports for internal and external use; and (C)compliance with applicable laws and regulations. (2)

Reporting

In conjunction with each annual financial statement issued under this section, the Secretary shall— (A)state the responsibility of management for establishing and maintaining adequate internal control over financial reporting; and (B)state its assessment, as of the end of the most recent year covered by such financial statement of the Secretary, of the effectiveness of the internal control over financial reporting. (d)

Sharing of information

Any report or audit required under this section shall also be submitted to the Congressional Oversight Panel established under section 125. (e)

Termination

Any oversight, reporting, or audit requirement under this section shall terminate on the later of— (1)the date that the last asset acquired by the Secretary under section; or (2)the date of expiration of the last insurance contract issued under section 152.

164.

Judicial review and related matters

(a)

Judicial review

(1)

Standard

Actions by the Secretary pursuant to the authority of this subtitle shall be subject to chapter 7 of title 5, United States Code, including that such final actions shall be held unlawful and set aside if found to be arbitrary, capricious, an abuse of discretion, or not in accordance with law. (2)

Limitations on equitable relief

(A)

Injunction

No injunction or other form of equitable relief shall be issued against the Secretary for actions pursuant to section 151, 152, 156, and 159, other than to remedy a violation of the Constitution. (B)

Temporary restraining order

Any request for a temporary restraining order against the Secretary for actions pursuant to this subtitle shall be considered and granted or denied by the court within 3 days of the date of the request. (C)

Preliminary injunction

Any request for a preliminary injunction against the Secretary for actions pursuant to this subtitle shall be considered and granted or denied by the court on an expedited basis consistent with the provisions of rule 65(b)(3) of the Federal Rules of Civil Procedure, or any successor thereto. (D)

Permanent injunction

Any request for a permanent injunction against the Secretary for actions pursuant to this subtitle shall be considered and granted or denied by the court on an expedited basis. Whenever possible, the court shall consolidate trial on the merits with any hearing on a request for a preliminary injunction, consistent with the provisions of rule 65(a)(2) of the Federal Rules of Civil Procedure, or any successor thereto. (3)

Limitation on actions by participating companies

Unless expressly provided in a written contract with the Secretary, no action or claim, other than one brought under chapter 7 of Title 5, United States Code, may be brought against the Secretary by any person that divests its assets under a program under this subtitle. (4)

Stays

Any injunction or other form of equitable relief issued against the Secretary for actions pursuant to section 151, 152, 156, and 159, shall be automatically stayed. The stay shall be lifted unless the Secretary seeks a stay from a higher court within 3 calendar days after the date on which the relief is issued. (b)

Related matters

(1)

Treatment of homeowners’ rights

The terms of any residential mortgage loan that is part of any purchase by the Secretary under this subtitle shall remain subject to all claims and defenses that would otherwise apply, notwithstanding the exercise of authority by the Secretary under this subtitle. (2)

Savings clause

Any exercise of the authority of the Secretary pursuant to this subtitle shall not impair the claims or defenses that would otherwise apply with respect to persons other than the Secretary. (3)

Treatment of investors’ rights

(A)Under existing standard industry practice, if a servicer of pooled residential mortgages owes a duty to determine whether the net present value of the payments on a mortgage loan, as modified, sold, refinanced or otherwise disposed of, is likely to be greater than the anticipated net recovery that would result from default or foreclosure, such servicer owes such duty to all investors and holders of beneficial interests in such loan, but not to any individual or group of investors or beneficial interest holders. (B)Any servicer of pooled residential mortgages shall be deemed to have satisfied the duty specified in subsection (A) if the servicer agrees to or implements a modification, sale, refinancing, or other disposition, including acceptance of partial payments, interest rate reductions, principal write downs, short sales, and other measures to mitigate loss, so long as the servicer reasonably determines that the net present value of the payments on a mortgage loan, as modified, sold, refinanced or otherwise disposed of, is likely to be greater than the anticipated net recovery that would result from default or foreclosure.

165.

Termination of authority

(a)

Termination

The authorities provided under sections 151(a) and 152 shall terminate on December 31, 2009. (b)

Extension upon certification

The Secretary, upon submission of a written certification to Congress, may extend the authority provided under this subtitle to expire not later than 2 years from the date of enactment of this subtitle. Such certification shall include a justification of why the extension is necessary to assist American families and stabilize financial markets, as well as the expected cost to the taxpayers for such an extension.

166.

Credit reform

(a)

In general

Subject to subsection (b), the costs of purchases of assets made under section 151(a) and guarantees of assets under section 152, and any cash flows associated with the activities authorized in section 102 and subsections (a), (b), and (c) of section 156 shall be determined as provided under the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), as applicable. (b)

Costs

For the purposes of section 502(5) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5))— (1)the cost of assets and guarantees of assets shall be calculated by adjusting the discount rate in section 502(5)(E) (2 U.S.C. 661a(5)(E)) for market risks; and (2)the cost of a modification of a asset or guarantee of a asset shall be the difference between the current estimate consistent with paragraph (1) under the terms of the asset or guarantee of the asset and the current estimate consistent with paragraph (1) under the terms of the asset or guarantee of the asset, as modified.

167.

Preservation of qualified special purpose entity status

Notwithstanding Statement Number 140 of the Financial Accounting Standards Board or and any other provision of law, a Qualified Special Purpose Entity (in this section referred to as a QSPE) may participate in a program established by the Secretary under this subtitle, in the discretion of the servicer or trustee of the QSPE, by selling, disposing of or modifying any home mortgage loan from the assets of the QSPE, as provided by the Secretary, and such participation shall not alter the status of the entity selling, modifying or disposing of such loans as a QSPE for purposes of Statement 140 or any other provision of law.

168.

Definitions

For purposes of this subtitle, the following definitions shall apply: (1)

Appropriate committees of congress

The term appropriate committees of Congress means— (A)the Committee on Banking, Housing, and Urban Affairs, the Committee on Finance, the Committee on the Budget, and the Committee on Appropriations of the Senate; and (B)the Committee on Financial Services, the Committee on Ways and Means, the Committee on the Budget, and the Committee on Appropriations of the House of Representatives. (2)

Board

The term Board means the Board of Governors of the Federal Reserve System. (3)

Congressional support agencies

The term congressional support agencies means the Congressional Budget Office and the Joint Committee on Taxation. (4)

Corporation

The term Corporation means the Federal Deposit Insurance Corporation. (5)

Family Foreclosure Rescue Corporation

The term Family Foreclosure Rescue Corporation mean the entity established by the Secretary under section 151. (6)

Financial institution

The term financial institution means any institution, trust, partnership, incorporated entity or other legal form, including but not limited to, any bank, savings association, credit union, security broker or dealer, insurance company, or securitization trust. (7)

Fund

The term Fund means the Home Mortgage Insurance Financing Fund established under section 102. (8)

Home mortgages

The term home mortgages means residential mortgages originated on or before the date of enactment of this subtitle, including residential mortgages held in securitization trusts, residential mortgages held by financial institutions, mortgages supporting multifamily housing, servicing rights with respect to home mortgages, other real estate owned by financial institutions, and residential mortgage-backed securities, the purchase, guarantee, modification or disposition of which the Secretary determines promotes financial market stability. (9)

Secretary

The term Secretary means the Secretary of the Treasury. (10)

FFRC program

The term FFRC program means the home mortgage relief program established under section 151(a)(3). (11)

Shared equity mortgage

The term shared equity mortgage means a mortgage product through which increases in the equity in a home realized upon sale or disposition are shared among the homeowner, the Secretary, or other parties.

169.

Preservation of authority

Nothing in this subtitle may be construed to limit the authority of the Secretary under any other provision of law.

(b)

Clerical amendments

(1)

Title 5

Section 5314 of title 5, United States Code, is amended by adding at the end the following new item:

Chairman, Family Foreclosure Rescue Corporation.

(2)

Title 31

Section 301 of title 31, United States Code, is amended by adding at the end the following new subsection:

(h)The Department has one Chairman of the Family Foreclosure Rescue Corporation, appointed by the President, by and with the advice and consent of the Senate, who reports to the Secretary .

(3)

Table of contents amendment

The table of contents in section (1)(b) of the Emergency Economic Stabilization Act of 2008 (Public Law 110–343; 122 Stat. 3765) is amended— (A)by adding after the item relating to title I the following:

Subtitle A—Program for Purchases of Troubled Assets

;

and

(B)by adding after the item relating to section 136 the following:

Subtitle B—Family Foreclosure Rescue Corporation Program

Sec. 150. Authority under TARP Program.

Sec. 151. Purchases of home mortgages.

Sec. 152. Insurance of home mortgages.

Sec. 153. Considerations.

Sec. 154. FFRC Oversight Board.

Sec. 155. Reports.

Sec. 156. Rights; management; sale of home mortgages; revenues and sale proceeds.

Sec. 157. Contracting procedures.

Sec. 158. Conflicts of interest.

Sec. 159. Foreclosure mitigation efforts.

Sec. 160. Assistance to homeowners.

Sec. 161. Minimization of long-term costs and maximization of benefits for taxpayers.

Sec. 162. Market transparency.

Sec. 163. Oversight and audits.

Sec. 164. Judicial review and related matters.

Sec. 165. Termination of authority.

Sec. 166. Credit reform.

Sec. 167. Preservation of qualified special purpose entity status.

Sec. 168. Definitions.

Sec. 169. Preservation of authority.