[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1859 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 1859

To ensure the availability of reasonably priced conventional mortgages 
   to borrowers in all economic cycles by encouraging private sector 
capital to support the secondary mortgage market, limiting the role of 
    the Federal government and the exposure of taxpayers, and other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 12, 2011

  Mr. Campbell (for himself and Mr. Peters) introduced the following 
    bill; which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To ensure the availability of reasonably priced conventional mortgages 
   to borrowers in all economic cycles by encouraging private sector 
capital to support the secondary mortgage market, limiting the role of 
    the Federal government and the exposure of taxpayers, and 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.

    This Act may be cited as the ``Housing Finance Reform Act of 
2011''.

SEC. 2. STATEMENT OF PURPOSES.

    The purposes of this Act are to--
            (1) ensure the availability of reasonably priced 
        conventional residential mortgages to qualified borrowers in 
        all economic cycles;
            (2) provide incentives for private sector capital to 
        support the secondary market for residential mortgages;
            (3) limit the role of the Federal Government in the 
        secondary market for residential mortgages and the exposure of 
        taxpayers to the operations of the secondary markets for 
        residential mortgages; and
            (4) provide for the orderly wind down of the Federal 
        National Mortgage Association and the Federal Home Loan 
        Mortgage Corporation.

SEC. 3. ESTABLISHMENT, OPERATION, SUPERVISION, AND REGULATION OF 
              HOUSING FINANCE GUARANTY ASSOCIATIONS.

    The Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting the following 
new subtitle D, and designating the existing subtitles D and E as 
subtitles E and F, respectively, and renumbering the sections of those 
subtitles accordingly:

``Subtitle D--Establishment, Operation, Supervision, and Regulation of 
                 Housing Finance Guarantee Associations

``SEC. 1381. DEFINITIONS.

    ``For purposes of this subtitle, the following definitions shall 
apply:
            ``(1) Association.--The term `association' means a housing 
        finance guarantee association chartered by the Director 
        pursuant to section 1382.
            ``(2) Association-affiliated party.--The term `association-
        affiliated party' means--
                    ``(A) any director, officer, employee, or 
                controlling stockholder of, or agent for, an 
                association;
                    ``(B) any shareholder, affiliate, consultant, or 
                joint venture partner of an association, and any other 
                person, as determined by the Director (by regulation or 
                on a case-by-case basis) that participates in the 
                conduct of the affairs of an association;
                    ``(C) any independent contractor for an association 
                (including any attorney, appraiser, or accountant), 
                if--
                            ``(i) the independent contractor knowingly 
                        or recklessly participates in--
                                    ``(I) any violation of any law or 
                                regulation;
                                    ``(II) any breach of fiduciary 
                                duty; or
                                    ``(III) any unsafe or unsound 
                                practice; and
                            ``(ii) such violation, breach, or practice 
                        caused, or is likely to cause, more than a 
                        minimal financial loss to, or a significant 
                        adverse effect on, the association.
            ``(3) Conventional mortgage.--The term `conventional 
        mortgage' means a mortgage loan as defined in section 
        1390(e)(2).
            ``(4) Federal housing finance agency security.--The term 
        `Federal Housing Finance Agency security' means a security 
        issued by an association through the Office of Securitization 
        that conforms to the terms and conditions of section 1387.
            ``(5) Limited-life association.--The term `limited-life 
        association' means, with respect to an association in default 
        or in danger of default, an entity organized by the Agency 
        under section 1367(i) with respect to such association.
            ``(6) Office of securitization.--The term `Office of 
        Securitization' means the Office established by section 1386.
            ``(7) Organizer.--The term `organizer' means the person or 
        group of persons seeking to organize an association.
            ``(8) Person.--The term `person' means any natural person 
        or business entity.

``SEC. 1382. ESTABLISHMENT OF HOUSING FINANCE GUARANTY ASSOCIATIONS.

    ``(a) Director's Authority.--The Director is authorized, under such 
regulations as the Director may prescribe, to provide for the 
organization, incorporation, examination, operation, and regulation of 
housing finance guaranty associations, and to issue charters for such 
entities.
    ``(b) Formation of Associations; Articles of Association.--Subject 
to the terms of this Act and regulations issued by the Director, an 
organizer may file an application with the Director to establish an 
association. The association may be chartered as a corporation, mutual 
association, partnership, limited liability corporation, cooperative, 
or any other organizational form that the organizer may deem 
appropriate. The Director may not require the organizer to adopt any 
particular organizational form.
    ``(c) Contents of the Application.--An application for 
establishment of an association shall include--
            ``(1) the proposed articles of association;
            ``(2) a statement of the general object and purposes of the 
        association;
            ``(3) the proposed capitalization and business plan for the 
        association;
            ``(4) information on the financial resources of the 
        organizers;
            ``(5) a statement of the relevant housing finance 
        experience of the organizers;
            ``(6) identification of the proposed senior managers of the 
        association and the relevant experience of such individuals; 
        and
            ``(7) any other information the Director determines may be 
        necessary to evaluate the background, experience, and integrity 
        of the organizers and the proposed senior managers, or 
        information otherwise necessary to determine the likely success 
        of the proposed association.
    ``(d) Issuance of Charters and Chartering Criteria.--
            ``(1) In general.--The Director may issue a charter for an 
        association to commence business if the Director determines 
        that the proposed association would be consistent with the 
        purposes of this Act and the Housing Finance Reform Act of 
        2011, and that the association would have the managerial and 
        financial resources to succeed.
            ``(2) Chartering criteria.--In making the determination 
        under paragraph (1), the Director shall consider the 
        competence, experience, and integrity of the organizer and 
        proposed senior managers of the association, and the financial 
        resources and future prospects of the proposed association. The 
        Director may not issue a charter if the organizer fails to--
                    ``(A) comply with all applicable formation 
                requirements;
                    ``(B) provide all information requested by the 
                Director;
                    ``(C) demonstrate the competence, experience, and 
                integrity necessary to operate the association in a 
                safe or sound manner;
                    ``(D) demonstrate sufficient financial resources 
                necessary to operate the association in a safe or sound 
                manner; or
                    ``(E) provide the Director with assurances that the 
                association will make available to the Director, on an 
                on-going basis, such information on the operations or 
                activities of the association, or any affiliate of the 
                association, that the Director deems necessary to 
                ensure the safe and sound operation of the association 
                and to enforce compliance with this Act.
            ``(3) Explanation for denial.--Within 30 days of denying 
        any application for the issuance of a charter under this 
        section, the Director shall provide the organizer with a 
        written explanation of the basis for the denial.
    ``(e) Special Purpose Associations.--
            ``(1) In general.--The Director may issue a special purpose 
        charter to the organizer of an association if the operations of 
        the proposed association would be limited to serving a 
        particular mortgage market, such as multifamily housing, or a 
        particular category of mortgage lenders, such as community 
        banks. All provisions of this Act that apply to associations 
        shall apply to special purpose associations, including the 
        criteria for obtaining a charter.
            ``(2) Nondiscrimination.--The operation of a special 
        purpose association shall not be considered discriminatory for 
        purposes of section 1385(a)(9).
    ``(f) Investments by Banking Organizations.--A national bank, State 
bank, trust company, Federal or State credit union, or other banking 
organization, including a bank holding company and a savings and loan 
holding company, may acquire an interest in an association, and hold or 
dispose of such interest, subject to the provisions of this Act, and 
subject to the approval by the appropriate Federal banking agency for 
such institution.

``SEC. 1383. GENERAL POWERS OF ASSOCIATIONS.

    ``An association may--
            ``(1) adopt and use a corporate seal;
            ``(2) adopt, amend, and repeal by-laws;
            ``(3) sue or be sued;
            ``(4) make contracts and guarantees, incur liabilities, 
        borrow money, issue notes, bonds, and other obligations;
            ``(5) purchase, receive, hold, and use real and personal 
        property and other assets necessary for the conduct of its 
        operations;
            ``(6) lend money;
            ``(7) invest, and reinvest funds, subject to the 
        limitations of sections 1384 and 1385;
            ``(8) elect or appoint directors, officers, employees, and 
        agents; and
            ``(9) issue securities, membership certificates, and other 
        forms of ownership interests.

``SEC. 1384. HOUSING FINANCE RELATED POWERS OF ASSOCIATIONS.

    ``In addition to its general powers under section 1383, an 
association may--
            ``(1) purchase, hold, sell, and otherwise deal in 
        conventional mortgages only for the purpose of--
                    ``(A) creating a secondary market for such 
                mortgages, including new conventional mortgage 
                products;
                    ``(B) facilitating the securitization of 
                conventional mortgages; and
                    ``(C) supporting multifamily housing;
            ``(2) issue, through the Office of Securitization, Federal 
        Housing Finance Agency securities;
            ``(3) establish a trust or similar entity that shall not be 
        subject to the claims made by creditors of the association in 
        order to provide for the sale of beneficial interests in pools 
        of mortgage loans or the right to receive interest and 
        principal from such pools;
            ``(4) guarantee the timely payment of principal and 
        interest on Federal Housing Finance Agency securities and 
        charge a fee for such guarantee;
            ``(5) ensure that Federal Housing Finance Agency securities 
        are properly serviced, which shall include the right to remove 
        a mortgage servicer in the event the association determines 
        that such servicer fails to perform contractual servicing 
        obligations or other legal requirements imposed on mortgage 
        servicers; and
            ``(6) hedge credit, interest rate and other risks 
        associated with the purchase and sale of conventional 
        mortgages.

``SEC. 1385. PROHIBITED ACTIVITIES.

    ``(a) In General.--An association may not--
            ``(1) originate a mortgage;
            ``(2) service a mortgage;
            ``(3) guarantee timely payment of principal or interest on 
        any mortgage-related security other than a Federal Housing 
        Finance Agency security;
            ``(4) invest in securities other than Federal Housing 
        Finance Agency securities, securities issued by the Federal 
        Government or any agency of the Federal Government, and any 
        other securities deemed appropriate by the Director;
            ``(5) speculate on credit, interest rate, and other risks;
            ``(6) underwrite, offer, sell, or solicit any form of 
        insurance;
            ``(7) purchase any mortgage from an institution that holds 
        a voting interest in the association;
            ``(8) purchase a conventional mortgage secured by a 
        property comprised of one-to-four family dwelling units if the 
        outstanding principal balance of the mortgage at the time of 
        purchase exceeds 80 percent of the value of the property 
        securing the mortgage, unless--
                    ``(A) the seller retains a participation of not 
                less than 10 percent in the mortgage;
                    ``(B) for such period and under such circumstances 
                as the Director may require, the seller agrees to 
                repurchase or replace the mortgage upon demand of the 
                association in the event that the mortgage is in 
                default; or
                    ``(C) that portion of the unpaid principal balance 
                of the mortgage which is in excess of such 80 percent 
                is guaranteed or insured by a qualified insurer, as 
                determined by the Director.
            ``(9) discriminate against, or provide a preference to, any 
        mortgage originator on the basis of the charter or license of 
        such originator, the asset size of the originator, or the 
        existence any ownership interest in the association by the 
        originator; or
            ``(10) engage in any activity that is not authorized by 
        this Act.
    ``(b) Rule of Construction.--Subsection (a)(8) shall not be 
construed to prevent an association from setting standards related to 
the financial condition of originators from which it may acquire a 
conventional mortgage or prevent an association from setting guarantee 
fees based upon the volume of mortgages an originator sells to the 
association.

``SEC. 1386. OFFICE OF SECURITIZATION.

    ``(a) In General.--The Director shall establish an Office of 
Securitization within the Agency to facilitate the securitization of 
conventional mortgages.
    ``(b) Functions of Office.--The Office of Securitization shall--
            ``(1) subject to section 1387, create and label Federal 
        Housing Finance Agency securities;
            ``(2) take such actions as may be necessary to issue the 
        catastrophic federal guarantee described in section 1388 with 
        respect to Federal Housing Finance Agency securities;
            ``(3) impose and collect the fee for the catastrophic 
        federal guarantee;
            ``(4) administer and service Federal Housing Finance Agency 
        securities, including acting as trustee for any trust 
        established by an association for purposes of facilitating the 
        securitization of conventional mortgages; and
            ``(5) engage in such other activities the Director 
        determines to be incidental to the securitization of 
        conventional mortgages.
    ``(c) Management of the Office.--The Office of Securitization shall 
be managed by the Deputy Director of the Agency for Housing Finance 
Guarantee Association, who shall be designated by the Director in 
accordance with section 1391 and shall be subject to the direction and 
control of the Director.
    ``(d) No Economic Interest.--In the performance of its functions, 
the Office of Securitization shall not assume any economic interest in 
the securities issued by an association.
    ``(e) Contracting Authority.--The Director may contract with the 
Government National Mortgage Association to perform any or all of the 
functions of the Office of Securitization specified in subsection (b).

``SEC. 1387. FEDERAL HOUSING FINANCE AGENCY SECURITIES.

    ``(a) In General.--The Director shall establish, by regulation, one 
or more standard forms for Federal Housing Finance Agency securities 
issued by associations.
    ``(b) Common Label; Standard Terms and Conditions.--The forms 
required by subsection (a) shall--
            ``(1) identify the securities as Federal Housing Finance 
        Agency securities;
            ``(2) set forth the terms and conditions for the payment of 
        interest and principal on such securities;
            ``(3) state that such securities are guaranteed by the full 
        faith and credit of the United States, subject to the 
        limitations of section 1388(b);
            ``(4) address the servicing of Federal Housing Finance 
        Agency securities; and
            ``(5) include such other standardized terms and conditions 
        that the Director deems appropriate to enhance the liquidity of 
        the securities, and shall include a representation and warranty 
        certifying that a policy of a title insurance be in place to 
        transfer title-related risks to State licensed title insurance 
        companies for all conventional mortgages collateralizing a 
        Federal Housing Finance Agency security.
    ``(c) Limitation.--The forms established by the Director pursuant 
to subsection (a) shall not prevent Federal Housing Finance Agency 
securities to vary based upon--
            ``(1) the maturity of the securities;
            ``(2) the yield of the securities;
            ``(3) the type of conventional mortgages that serve as 
        collateral for the securities; or
            ``(4) such other terms and conditions that the Director 
        deems appropriate.
    ``(d) Temporary Regulation of Guarantee Fees.--
            ``(1) GAO study.--Not later than the expiration of the 12-
        month period beginning upon the date of the enactment of the 
        Housing Finance Reform Act of 2011, the Comptroller General of 
        the United States shall conduct a study to determine the market 
        value of the catastrophic guarantee under section 1388 and 
        submit to the Director a report setting forth the findings of 
        such study.
            ``(2) Amount.--Taking into consideration the findings of 
        the study pursuant to paragraph (1), the Director shall 
        establish a pricing structure for guarantee fees by 
        associations that provides for a reasonable rate of return to 
        associations.
            ``(3) Quarterly adjustment.--After initially establishing 
        the pricing structure pursuant to paragraph (2), the Director 
        shall, on a calendar quarterly basis, review such prices and 
        adjust the pricing structure as appropriate.
            ``(4) Emergency adjustment.--The Director may, at any time, 
        adjust the prices and pricing structure under this subsection 
        if the Director determines that market conditions or other 
        factors require such adjustment.
            ``(5) Termination of pricing structure.--The Director shall 
        monitor competition between associations to determine the first 
        time at which both are the following conditions exist:
                    ``(A) There is sufficient competition between the 
                associations.
                    ``(B) The associations, individually and 
                collectively, are stable and sufficient to serve the 
                market.
        Upon such a determination, the Director shall provide for the 
        termination of the applicability and adjustment of pricing 
        structure under this subsection upon a date certain and shall 
        terminate the pricing structure on such date. On and after such 
        date, each association shall establish guarantee fees to be 
        charged by the association.
    ``(e) Disclosure Requirement.--
            ``(1) In general.--Federal Housing Finance Agency 
        securities shall not be registered securities under the terms 
        of the Securities Act of 1933 (15 U.S.C. 77a et seq.) and shall 
        be exempt securities for purposes of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78a et seq.).
            ``(2) Disclosure regulation.--Notwithstanding paragraph 
        (1), the Director shall, by regulation, ensure transparency of 
        Federal Housing Finance Agency securities by requiring each 
        association to publicly disclose information about the 
        composition of each pool of mortgages backing the security, 
        including the average loan-to-value ratio, the average debt-to-
        income ratio, the average payment history of the mortgagors, 
        the number and value of mortgages from each State, the 
        distribution of mortgage coupon rates, and whether the 
        mortgages were originated in broker or non-broker channels.

``SEC. 1388. CATASTROPHIC FEDERAL GUARANTEE.

    ``(a) Authorization.--Subject to the limitations in subsection (b), 
and such other terms and conditions that the Director deems 
appropriate, the Director shall guarantee the timely payment of the 
principal and interest of Federal Housing Finance Agency securities, 
and the full faith and credit of the United States is hereby pledged to 
the payment of all amounts which may be required to be paid as a result 
of such guarantee.
    ``(b) Limitations.--A guarantee under this section shall apply only 
if--
            ``(1) the association that issued the securities has been 
        placed into conservatorship or receivership by the Director; 
        and
            ``(2) the Reserve Fund established by section 1389 lacks 
        sufficient funds to make the required principal and interest 
        payments.
    ``(c) Fee.--
            ``(1) Establishment.--The Director shall establish, on an 
        annual basis, a fee to be paid by associations for a guarantee 
        issued under this section in connection with Federal Housing 
        Finance Agency securities issued by such associations.
            ``(2) Administration.--The Director shall impose and 
        collect such fee through the Office of Securitization.
            ``(3) Amount.--The Director shall establish the fee at a 
        level to ensure that amounts in the Reserve Fund are sufficient 
        to cover potential claims on such Fund, taking into 
        consideration--
                    ``(A) general economic conditions;
                    ``(B) trends in housing prices; and
                    ``(C) such other factors that the Director deems 
                appropriate.
    ``(d) Special Assessment To Repay Cost of Federal Guarantee.--
            ``(1) In general.--If the Director is required to make 
        payments pursuant to the catastrophic Federal guarantee 
        authorized under subsection (a) in excess of the amounts in the 
        Reserve Fund, the Director shall impose a special assessment on 
        associations to recoup all costs associated with the guarantee.
            ``(2) Criteria.--The Director, by regulation, shall 
        establish criteria for the imposition of a special assessment. 
        Such criteria shall--
                    ``(A) apportion the assessment equally among all 
                associations; and
                    ``(B) to the extent feasible and prudent, permit 
                associations to pay the assessment over a period of 
                time so that the assessment does not cause an 
                association to be undercapitalized or otherwise 
                materially impair the operations of an association.
    ``(e) No Federal Support for Other Securities or Obligations of 
Associations.--This Act may not be construed to authorize or provide 
any guarantee of any security or obligation of an association by the 
United States or any agency or instrumentality of the United States, 
other than Federal Housing Finance Agency securities issued by an 
association.

``SEC. 1389. RESERVE FUND.

    ``(a) Establishment; Credits.--The Director shall establish a 
Reserve Fund, which shall be credited with all fees imposed and 
collected pursuant to section 1388(c).
    ``(b) Organization.--The Reserve Fund shall be maintained with a 
Federal Reserve Bank or with a depository institution designated as a 
depository or fiscal agent of the United States.
    ``(c) Use.--Amounts in the Reserve Fund shall be used by the 
Director, through the Office of Securitization, to make principal and 
interest payments to the owners of Federal Housing Finance Agency 
securities issued by an association that has been placed into 
conservatorship or receivership--
            ``(1) for payment under guarantees issued under subsection 
        (a) of section 1388 only under the terms provided in subsection 
        (b) of such section; and
            ``(2) to the extent such amounts are not otherwise needed, 
        for investment in obligations of the United States or in 
        obligations guaranteed as to principal and interest by the 
        United States.
    ``(d) Treasury Advance.--
            ``(1) In general.--If amounts in the Reserve Fund are 
        insufficient to satisfy the liabilities of the Fund, the 
        Secretary of the Treasury shall advance to the Fund such 
        amounts as may be necessary to meet the obligations of the 
        Fund, as determined by the Director and the Secretary, and the 
        Director shall agree to repay such advance on such terms and 
        conditions as required by the Secretary.
            ``(2) Authorization of appropriations.--There are 
        authorized to be appropriated to the Secretary, without fiscal 
        year limitation, such sums as may be necessary to carry out 
        this subsection.

``SEC. 1390. SUPERVISION OF ASSOCIATIONS.

    ``(a) General Supervisory Authority of Director.--
            ``(1) In general.--The Director shall have supervisory 
        authority over associations, and may issue such regulations, 
        orders, and interpretations as the Director determines 
        necessary to ensure that an association operates in a safe and 
        sound manner.
            ``(2) Use of existing authority.--Except as provided in 
        this section, an association, an association-affiliated party, 
        and a limited-life association shall be subject to the same 
        supervisory and enforcement powers of the Director to the same 
        extent as if an association was a regulated entity, the 
        association-affiliated party was an entity-affiliated party, 
        and the limited-life association was a limited-life entity, 
        including--
                    ``(A) the enforcement powers under sections 1371 
                through 1379 (12 U.S.C. 4631-9);
                    ``(B) authority to reclassify a capital 
                classification (as established pursuant to subsection 
                (h)(2) of this section) as provided in section 1364(c) 
                (12 U.S.C. 4614(c));
                    ``(C) authority to restrict capital distributions 
                in accordance with section 1364(e) (12 U.S.C. 4614(e));
                    ``(D) authority to take prompt corrective 
                supervisory actions in response to capital 
                classifications as provided for in sections 1365 and 
                1366 (12 U.S.C. 4615, 4616); and
                    ``(E) authority to appoint the Agency as the 
                conservator or a receiver in accordance with section 
                1367 (12 U.S.C. 4617).
    ``(b) Examinations.--The Director shall conduct a full-scope 
examination of an association not less frequently than once every 12 
months, and shall have real-time access to all data and information 
related to the activities and operations of an association.
    ``(c) Capital Standards.--
            ``(1) Establishment.--The Director shall establish, by 
        regulation, risk-based and leverage capital standards for 
        associations.
            ``(2) Criteria.--In setting the capital standards required 
        by paragraph (1), the Director shall take into consideration--
                    ``(A) the risk associated with conventional 
                mortgages;
                    ``(B) underwriting standards that apply to 
                conventional mortgages; and
                    ``(C) such other factors as the Director deems 
                appropriate.
    ``(d) Management and Operational Standards.--The Director shall 
establish, by regulation, standards for the management and operations 
of associations, including standards related to--
            ``(1) adequacy of internal controls and information systems 
        taking into account the nature and scale of business 
        operations;
            ``(2) independence and adequacy of internal audit systems;
            ``(3) management of interest rate risk exposure;
            ``(4) management of market risk, including standards that 
        provide for systems that accurately measure, monitor, and 
        control market risks and, as warranted, that establish 
        limitations on market risk;
            ``(5) adequacy and maintenance of liquidity and reserves;
            ``(6) management of asset growth;
            ``(7) investments and acquisitions of assets consistent 
        with this Act;
            ``(8) overall risk management processes, including adequacy 
        of oversight by senior management and the board of directors 
        and of processes and policies to identify, measure, monitor, 
        and control material risks, including reputational risks, and 
        for adequate, well-tested business resumption plans for all 
        major systems with remote site facilities to protect against 
        disruptive events;
            ``(9) management of credit and counterparty risk, including 
        systems to identify concentrations of credit risk and 
        prudential limits to restrict exposure of the association to a 
        single counterparty or groups of related counterparties;
            ``(10) maintenance of adequate records, in accordance with 
        consistent accounting policies and practices that enable the 
        Director to evaluate the financial condition of the 
        association; and
            ``(11) such other operational and management standards as 
        the Director determines to be appropriate.
    ``(e) Underwriting Standards for Conventional Mortgages.--
            ``(1) Regulation required.--The Director shall establish, 
        by regulation, underwriting standards for conventional mortgage 
        purchased by an association. Such standards shall be the same 
        as the standards established by the Bureau for Consumer 
        Financial Protection of the Federal Reserve System for 
        qualified mortgages pursuant to section 129C(b) of the Truth in 
        Lending Act (15 U.S.C. 1639c(b); as added by section 1412 of 
        the Dodd-Frank Wall Street Reform and Consumer Protection Act 
        (124 Stat. 2145)).
            ``(2) Definition.--For purposes of this subsection, the 
        term `conventional mortgage' means a loan that--
                    ``(A) is secured by a mortgage, lien, or other 
                security interest on a--
                            ``(i) a one-to-four family residence that 
                        is the principal residence of the mortgagor,
                            ``(ii) a property comprising five or more 
                        family dwelling units;
                            ``(iii) a manufactured home that is the 
                        principal residence of the mortgagor; or
                            ``(iv) the stock or membership interest or 
                        certificate issued to a tenant-stockholder or 
                        resident-member of a cooperative housing 
                        corporation, as defined in section 216 of the 
                        Internal Revenue Code of 1986, and in the 
                        proprietary lease, occupancy agreement, or 
                        right of tenancy in the dwelling union of the 
                        tenant-stockholder or resident-member in such 
                        cooperative housing corporation;
                    ``(B) is a subordinate mortgage or lien on--
                            ``(i) a one-to-four family residence that 
                        is the principal residence of the mortgage; or
                            ``(ii) a property that comprises five or 
                        more family dwelling units:
                    ``(C) is not insured or guaranteed under--
                            ``(i) the National Housing Act (12 U.S.C. 
                        1701 et seq.);
                            ``(ii) title V of the Housing Act of 1949 
                        (42 U.S.C. 1471 et seq.);
                            ``(iii) chapter 37 of title 38, United 
                        States Code; or
                    ``(D) meets the underwriting standards set by the 
                Director pursuant to paragraph (1).
    ``(f) Limitation on Maximum Original Principal Amount.--The 
Director shall prohibit any association from purchasing any 
conventional mortgage for which the maximum original principal 
obligation exceeds the greater of--
            ``(1) 150 percent of the average home price in the United 
        States for a residence having the same number of dwelling units 
        as the residence subject to the mortgage; or
            ``(2) 150 percent of the median price, for the area in 
        which the residence subject the mortgage is located for a 
        residence having the same number of dwelling units as the 
        residence subject to the mortgage.
    ``(g) Reporting Requirements.--
            ``(1) In general.--An association shall submit to the 
        Director such reports, containing such information and in such 
        form and at such times, as the Director deems necessary to 
        assess the condition, operations and activities of the 
        association.
            ``(2) Information regarding areas and markets served.--
                    ``(A) Submission of information.--The Director 
                shall require each association to submit data annually 
                to the Director that the Director determines is 
                sufficient to indicate the geographic areas and market 
                segments being served by the association.
                    ``(B) Public availability.--Upon receipt of 
                information submitted pursuant to subparagraph (A), the 
                Director shall make such information available to the 
                public in a form and manner determined appropriate by 
                the Director.
    ``(h) Prompt Corrective Actions.--
            ``(1) Establishment and criteria.--The Director, by 
        regulation, shall--
                    ``(A) establish the capital classifications 
                specified under paragraph (2) for associations;
                    ``(B) establish criteria for each such capital 
                classification based upon the amount and types of 
                capital held by an association; and
                    ``(C) classify each association according to such 
                capital classifications.
            ``(2) Capital classifications.--The capital classifications 
        specified under this paragraph are--
                    ``(A) adequately capitalized;
                    ``(B) undercapitalized;
                    ``(C) significantly undercapitalized; and
                    ``(D) critically undercapitalized.
    ``(i) Conservatorship and Receivership.--
            ``(1) Additional grounds for appointment.--In addition to 
        the grounds for the appointment of conservator or receiver 
        under section 1367(a)(3) (12 U.S.C. 4617(a)(3)), the Director 
        shall appoint the Agency as the conservator or receiver of an 
        association if the association fails to make a timely payment 
        of principal or interest on a Federal Housing Finance Agency 
        security issued by the association.
            ``(2) Limited-life association.--If the Agency is appointed 
        as receiver for an association, the Agency, as receiver, may 
        organize a limited life association to assume the assets and 
        purchase the liabilities of the association subject to the same 
        provisions applicable under section 1367(i) to a limited-life 
        regulated entity appointed for a regulated entity, and such 
        limited-life association shall, by operation of law and 
        immediately upon its organization, succeed to the charter of 
        the association and operate in accordance with such charter, 
        this Act, and any other provision of law to which the 
        association is subject.

``SEC. 1391. AGENCY OPERATIONS.

    ``(a) Applications Processing Division.--The Director shall 
establish a division within the Agency to accept and process 
applications for the formation of associations, and shall employ 
accountants, financial analysts, lawyers, and such other personnel as 
the Director determines necessary to evaluate the qualifications of the 
organizer or organizers and the financial prospects of a proposed 
association.
    ``(b) Auditing Division.--The Director shall establish a division 
within the Agency to conduct regular audits of the processes and 
systems used by associations. Such audits shall include a review of 
loan files and systems for tracking loan documents.
    ``(c) Deputy Director for Housing Finance Guarantee Associations.--
            ``(1) In general.--The Agency shall have a Deputy Director 
        for Housing Finance Guarantee Associations, who shall be 
        designated by the Director from among individuals with 
        demonstrated understanding of housing markets and housing 
        finance.
            ``(2) Functions.--The Deputy Director for Housing Finance 
        Guarantee Associations shall have such functions, powers, and 
        duties with respect to the formation, regulation, and 
        supervision of associations and the operations of the Office of 
        Securitization as the Director shall prescribe.
            ``(3) Limitations.--The Deputy Director for Housing Finance 
        Guarantee Associations may not--
                    ``(A) have any direct or indirect financial 
                interest in any association or regulated entity;
                    ``(B) hold any office, position, or employment in 
                any association or regulated entity; or
                    ``(C) have served as an executive officer or 
                director of any association or regulated entity at any 
                time during the 3-year period preceding the date of the 
                designation of such individual by the Director.
    ``(d) Annual Assessment of Agency Operations.--In addition to the 
general authority of the Federal Housing Finance Oversight Board 
provided under section 1313A (12 U.S.C. 4513a), the Board, annually, 
shall--
            ``(1) conduct an assessment of the operations and resources 
        of the Agency to determine whether the Director and the Agency 
        have the powers, systems, personnel, and other resources 
        necessary to charter, supervise, and regulate associations;
            ``(2) make recommendations to the Director based upon the 
        assessment required in paragraph (1); and
            ``(3) report the results of the assessment under this 
        subsection and any recommendations pursuant to such assessment 
        to the Congress.
    ``(e) Assessments and Other Fees.--The Director shall establish, by 
regulation, such assessments and fees the Director deems necessary to 
cover the Agency's direct and indirect costs for chartering, 
supervising, and regulating associations under this subtitle, including 
all costs associated with the establishment and operation of the Office 
of Securitization.

``SEC. 1392. APPLICABLE LAW.

    ``(a) In General.--All authorized activities of an association 
shall be governed by Federal law and subject to exclusive regulation 
and supervision by the Agency. No State may prevent or restrict an 
association from engaging directly or indirectly in any activity 
authorized under or pursuant to this subtitle.
    ``(b) Limitation.--Subsection (a) may not be construed to prevent 
the application of nondiscriminatory State laws that apply to all 
businesses operating in a State, including criminal, tax, and zoning 
laws.

``SEC. 1393. JUDICIAL REVIEW.

    ``(a) In General.--An association affected by an action of the 
Director may seek review of such action in an appropriate Federal 
court.
    ``(b) Private Rights of Action.--Nothing in this Act may be 
construed to create a private right of action on behalf of any person 
against an association, or any officer or director of an association.

``SEC. 1394. BUDGET NEUTRALITY.

    ``The Director shall exercise the authority provided in this 
subtitle over the formation, regulation, and supervision of 
associations and the operations of the Office of Securitization so as 
to ensure that associations and the Office of Securitization operate in 
a manner that does not increase the budget deficit, or debt, of the 
Federal Government.''.

SEC. 4. TRANSITION.

    (a) Transition Plan.--Not later than six months after the date of 
the enactment of this Act, the Director of the Federal Housing Finance 
Agency shall submit to the Congress a plan that provides for--
            (1) the winding down of the enterprises; and
            (2) the formation, supervision, and regulation of 
        associations as provided in subtitle D of the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992, as 
        added by the amendment made by section 3 of this Act.
    (b) Contents of Plan.--The plan required by subsection (a) shall 
provide for--
            (1) measures to ensure the continued operation of the 
        enterprises during the transition period, including the 
        retention of qualified personnel;
            (2) the transfer of qualified personnel and systems from 
        the enterprises to associations;
            (3) the implementation of the transitional actions required 
        by subsections (b) through (m) of this section; and
            (4) such other matters as the Director deems appropriate.
    (c) Repeal of Affordable Housing Goals.--
            (1) Repeal.--The Federal Housing Enterprises Financial 
        Safety and Soundness Act of 1992 is amended by striking 
        sections 1331 through 1336 (12 U.S.C. 4561-6).
            (2) Conforming amendments.--Federal Housing Enterprises 
        Financial Safety and Soundness Act of 1992 is amended--
                    (A) in section 1303(28) (12 U.S.C. 4502(28)), by 
                striking ``and, for the purposes'' and all that follows 
                through ``designated disaster areas'';
                    (B) in section 1324(b)(1)(A) (12 U.S.C. 
                4544(b)(1)(A))--
                            (i) by striking clauses (i), (ii), and 
                        (iv);
                            (ii) in clause (iii), by inserting ``and'' 
                        after the semicolon at the end; and
                            (iii) by redesignating clauses (iii) and 
                        (v) as clauses (i) and (ii), respectively;
                    (C) in section 1338(c)(10) (12 U.S.C. 4568(c)(10)), 
                by striking subparagraph (E);
                    (D) in section 1339(h) (12 U.S.C. 4569), by 
                striking paragraph (7);
                    (E) in section 1341 (12 U.S.C. 4581)--
                            (i) in subsection (a)--
                                    (I) in paragraph (1), by inserting 
                                ``or'' after the semicolon at the end;
                                    (II) in paragraph (2), by striking 
                                the semicolon at the end and inserting 
                                a period; and
                                    (III) by striking paragraphs (3) 
                                and (4); and
                            (ii) in subsection (b)(2)--
                                    (I) in subparagraph (A), by 
                                inserting ``or'' after the semicolon at 
                                the end;
                                    (II) by striking subparagraphs (B) 
                                and (C); and
                                    (III) by redesignating subparagraph 
                                (D) as subparagraph (B);
                    (F) in section 1345(a) (12 U.S.C. 4585(a))--
                            (i) in paragraph (1), by inserting ``or'' 
                        after the semicolon at the end;
                            (ii) in paragraph (2), by striking the 
                        semicolon at the end and inserting a period; 
                        and
                            (iii) by striking paragraphs (3) and (4); 
                        and
                    (G) in section 1371(a)(2) (12 U.S.C. 4631(a)(2))--
                            (i) by striking ``with any housing goal 
                        established under subpart B of part 2 of 
                        subtitle A of this title,''; and
                            (ii) by striking ``section 1336 or''.
    (d) Requirement for Enterprises To Pay State and Local Taxes.--
            (1) Fannie mae.--Effective on the date of the enactment of 
        this Act, paragraph (2) of section 309(c) of the Federal 
        National Mortgage Association Charter Act (12 U.S.C. 
        1723a(c)(2)) is amended--
                    (A) by striking ``shall be exempt from'' and 
                inserting ``shall be subject to''; and
                    (B) by striking ``except that any'' and inserting 
                ``and any''.
            (2) Freddie mac.--Effective on the date of the enactment of 
        this Act, section 303(e) of the Federal Home Loan Mortgage 
        Corporation Act (12 U.S.C. 1452(e)) is amended--
                    (A) by striking ``shall be exempt from'' and 
                inserting ``shall be subject to''; and
                    (B) by striking ``except that any'' and inserting 
                ``and any''.
    (e) Designation of Deputy Director for Housing Finance Guarantee 
Associations.--Not later than six months after the date of the 
enactment of this Act, the Director shall designate the Deputy Director 
for Housing Finance Guarantee Associations authorized by section 
1391(c) of the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992, as added by the amendment made by section 3 of 
this Act.
    (f) Establishment of Office of Securitization and Creation of 
Standardized Mortgage Security.--Not later than 12 months after the 
date of the enactment of this Act, the Director shall--
            (1) provide for the establishment of the Office of 
        Securitization, as authorized by section 1386 of the Federal 
        Housing Enterprises Financial Safety and Soundness Act of 1992, 
        as added by the amendment made by section 3 of this Act;
            (2) create the standardized mortgage security forms 
        required by section 1387 of the Federal Housing Enterprises 
        Financial Safety and Soundness Act of 1992, as added by the 
        amendment made by section 3 of this Act; and
            (3) require, in a manner that does not disrupt or impair 
        trading in existing mortgage securities issued by the 
        enterprises, that the enterprises use the standardized mortgage 
        security forms when issuing new mortgage securities.
    (g) Reduction in Mortgage Asset Portfolios of Enterprises.--
            (1) In general.--Not later than 12 months after the date of 
        enactment of this Act, the Director shall publish, in final 
        form, a regulation that requires each enterprise to reduce its 
        total mortgage assets to not more than $250,000,000,000, within 
        5 years of the date of the enactment of this Act.
            (2) Definition.--For purposes of this paragraph, the term 
        ``total mortgage assets'' means, with respect to an enterprise, 
        mortgages, mortgage loans, mortgage-related securities, 
        participation certificates, mortgage-backed commercial paper, 
        obligations of real estate investment conduits and similar 
        assets, in each case to the extent that such assets would 
        appear on the balance sheet of the enterprise in accordance 
        with generally accepted accounting principles in effect in the 
        United States as of September 7, 2008.
    (h) Increase in Guarantee Fees Charged by Enterprises.--
            (1) In general.--Not later than 12 months after the date of 
        the enactment of this Act, the Director shall, taking into 
        consideration the study under section 1387(d)(1) of the Federal 
        Housing Enterprises Financial Safety and Soundness Act of 1992, 
        as added by the amendment made by section 3 of this Act, issue 
        in final form a regulation that directs the enterprises to 
        increase, over a three-year period, guarantee fees to more 
        accurately reflect the risk assumed by the guarantee.
            (2) Definition.--For purposes of this subsection, the term 
        ``guarantee fee'' means a fee charged by an enterprise in 
        connection with any guarantee, issued by the enterprise, of the 
        timely payment of principal and interest on securities, notes, 
        and other obligations based on or backed by mortgages on 
        residential real property. Such term includes--
                    (A) the guarantee fee charged by the Federal 
                National Mortgage Association with respect to mortgage-
                backed securities; and
                    (B) the management and guarantee fee charged by the 
                Federal Home Loan Mortgage Corporation with respect to 
                participation certificates.
    (i) Conforming Loan Limits.--Effective upon the date of the 
enactment of this Act, section 146 of the Continuing Appropriations 
Act, 2011 (Public Law 111-242; 124 Stat. 2615) is amended by adding at 
the end the following new subsection:
    ``(c) Extension Until End of Conservatorships.--Notwithstanding any 
provision of subsection (a) or (b), such subsections shall apply with 
respect to mortgages originated during the period that begins at the 
conclusion of fiscal year 2011 and ends upon the termination of the 
conservatorship of the Federal National Mortgage Association or the 
Federal Home Loan Mortgage Corporation, as applicable, pursuant to 
section 4(l) of the Housing Finance Reform Act of 2011.''.
    (j) Finalization of Regulations Governing Associations, Formation 
the Applications and Auditing Divisions.--Not later than 12 months 
after the date of the enactment of this Act, the Director shall--
            (1) issue, in final form regulations governing the 
        chartering, operations, and supervision of associations, 
        including required capital and other prudential standards; and
            (2) establish the applications and auditing divisions 
        required by section 1391 of the Federal Housing Enterprises 
        Financial Safety and Soundness Act of 1992, as added by the 
        amendment made by section 3 of this Act.
    (k) Notification to Congress and Acceptance of Charter 
Applications.--Following the completion of the actions required under 
subsection (j), the Director shall--
            (1) notify the Congress that the Agency has taken all 
        appropriate actions to begin the process of chartering, 
        supervising and regulating associations, and
            (2) may commence accepting, and acting upon, applications 
        for the chartering of associations.
    (l) Mandatory Receivership.--The Director shall place the 
enterprises into receivership no later than one year after five or more 
associations, two of which are not special purpose associations, have 
been chartered.
    (m) Federal Support for Existing Obligations of Fannie Mae and 
Freddie Mac.--The full faith and credit of the United States is hereby 
pledged to the payment of all debt obligations of the enterprises and 
all mortgage-backed securities issued by the enterprises, until such 
obligations and securities mature or are redeemed.
    (n) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Agency.--The term ``Agency'' means the Federal Housing 
        Finance Agency.
            (2) Association; conventional mortgage; office of 
        securitization; regulated entity.--The terms ``association'', 
        ``conventional mortgage'', ``Office of Securitization'', and 
        ``regulated entity'' have the meanings given such terms in 
        section 1381 of the Federal Housing Enterprises Financial 
        Safety and Soundness Act of 1992.
            (3) Director.--The term ``Director'' means the Director of 
        the Agency.
            (4) Enterprise.--The term ``enterprise'' has the meaning 
        given such term in section 1303 of the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992 (12 
        U.S.C. 4502).
            (5) Transition period.--The term ``transition period'' 
        means the period that begins upon the date of the enactment of 
        this Act and ends upon appointment of receivers for both 
        enterprises pursuant to subsection (m).

SEC. 5. TECHNICAL AND CONFORMING AMENDMENTS.

    Federal Housing Enterprises Financial Safety and Soundness Act of 
1992 is amended--
            (1) in section 1303(28) (12 U.S.C. 4502(28)), by striking 
        ``and, for the purposes'' and all that follows through 
        ``designated disaster areas'';
            (2) in section 1324(b)(1)(A) (12 U.S.C. 4544(b)(1)(A))--
                    (A) by striking clauses (i), (ii), and (iv);
                    (B) in clause (iii), by inserting ``and'' after the 
                semicolon at the end; and
                    (C) by redesignating clauses (iii) and (v) as 
                clauses (i) and (ii), respectively;
            (3) in section 1338(c)(10) (12 U.S.C. 4568(c)(10)), by 
        striking subparagraph (E);
            (4) in section 1339(h) (12 U.S.C. 4569), by striking 
        paragraph (7);
            (5) in section 1341 (12 U.S.C. 4581)--
                    (A) in subsection (a)--
                            (i) in paragraph (1), by inserting ``or'' 
                        after the semicolon at the end;
                            (ii) in paragraph (2), by striking the 
                        semicolon at the end and inserting a period; 
                        and
                            (iii) by striking paragraphs (3) and (4); 
                        and
                    (B) in subsection (b)(2)--
                            (i) in subparagraph (A), by inserting 
                        ``or'' after the semicolon at the end;
                            (ii) by striking subparagraphs (B) and (C); 
                        and
                            (iii) by redesignating subparagraph (D) as 
                        subparagraph (B);
            (6) in section 1345(a) (12 U.S.C. 4585(a))--
                    (A) in paragraph (1), by inserting ``or'' after the 
                semicolon at the end;
                    (B) in paragraph (2), by striking the semicolon at 
                the end and inserting a period; and
                    (C) by striking paragraphs (3) and (4); and
            (7) in section 1371(a)(2) (12 U.S.C. 4631(a)(2))--
                    (A) by striking ``with any housing goal established 
                under subpart B of part 2 of subtitle A of this 
                title,''; and
                    (B) by striking ``section 1336 or''.
                                 <all>