1.Short title; Table of
contents
(a)This Act may be cited
as the Private Mortgage Market
Investment Act
.
(b)The table of
contents for this Act is as follows:
Sec. 1. Short title; Table of contents.
Title I—Standardization and uniformity
Sec. 101. Facilitating continued standardization and
uniformity.
Sec. 102. Repeal of credit risk retention
provisions.
Sec. 103. Exemption from registration of certain securities
conforming to standard securitization agreements.
Sec. 104. Judicial review.
Sec. 105. Liability for misleading statements.
Sec. 106. Unlawful representation.
Sec. 107. Penalties.
Sec. 108. Contrary stipulations void.
Title II—Transparency
Sec. 201. Requirements for the disclosure of loan-level
information to investors, rating agencies, and regulators.
Sec. 202. Mandatory period for review of loan-level information
prior to investment.
Sec. 203. Dissemination of pricing information of asset-backed
securities.
Sec. 204. Alphanumeric identification of residential mortgage
loans in asset-backed securities.
Title III—Ensuring the rule of law
Sec. 301. Ensure rule of law and legal certainty.
Sec. 302. Limitation on mortgages held by loan
servicers.
Sec. 303. Clarification of qualified mortgage
exception.
Sec. 304. FDIC safe harbor.
Sec. 305. Effective date.
<enum>I</enum><header>Standardization
and uniformity</header>
<section id="H1C5FA7807243405388AF1F0E25A8FFF5" section-type="subsequent-section"><enum>101.</enum><header>Facilitating
continued standardization and uniformity</header>
<subsection id="HC18DFC5B215B4C61B0F9A57513A5FA07"><enum>(a)</enum><header>Establishment of
standard mortgage classifications</header>
<paragraph id="H22140185600B43FBB02D73421B92C024"><enum>(1)</enum><header>Establishment</header><text display-inline="yes-display-inline">The Director of the Federal Housing Finance
Agency (hereinafter in this Act referred to as the <quote>Director</quote>)
shall, for purposes of this section, prescribe classifications for mortgages
having various degrees of credit risk, ranging from a classification of
mortgages having little to no credit risk to a classification of mortgages
having higher credit risk, with the goals of maximizing the pricing of credit
risk, allowing for the trading of securities collateralized by the
classifications of mortgages established pursuant to this section in a forward
market, and maintaining well functioning liquid markets in securities
collateralized by each of the classifications of mortgages established pursuant
to this section.</text>
</paragraph><paragraph id="H203DBCB8D1B441B49136685C5A324C32"><enum>(2)</enum><header>Underwriting
criteria standards</header>
<subparagraph id="H7A6BB71D67144B568B6F795A68588EE2"><enum>(A)</enum><header>Underwriting
criteria</header><text display-inline="yes-display-inline">For each of the
classifications of mortgages established under paragraph (1), the Director
shall establish standards for each of the following underwriting
criteria:</text>
<clause id="H5345C0D13B084FD184E6B6C1D1D2EAF8"><enum>(i)</enum><header>Debt-to-income
ratio</header><text>The ratio of the amount of the total monthly debt of the
mortgagor to the amount of the monthly income of the mortgagor.</text>
</clause><clause id="HBB2CA881E8C64BF08418F5D812C27619"><enum>(ii)</enum><header>Loan-to-value
ratio</header><text>The ratio of the original principal obligation under the
mortgage to the original value of the residence subject to the mortgage.</text>
</clause><clause id="H5320315A9C8142CCAB3D1B7606EFDFA4"><enum>(iii)</enum><header>Credit
history</header><text>Information on the credit history of the mortgagor,
including the credit score of the mortgagor.</text>
</clause><clause id="H1DD6325B904A4FE8BF866640C97E73C7"><enum>(iv)</enum><header>Loan
documentation</header><text>The extent of loan documentation and verification
of the financial resources of the mortgagor used to qualify the mortgagor for
the mortgage.</text>
</clause><clause id="H1322616F06D04FA2AAD3CC17FD9D522A"><enum>(v)</enum><header>Occupancy</header><text>Whether
the residence subject to the mortgage is occupied by the mortgagor.</text>
</clause><clause id="H0DC145DC468147C3A4110DCBC41DD500"><enum>(vi)</enum><header>Credit
enhancement</header><text>Whether any mortgage insurance or other type of
insurance or credit enhancement was obtained at the time of origination.</text>
</clause><clause id="H8102D76CE5FB4056B1D7BED37B7E4AE1"><enum>(vii)</enum><header>Loan payment
terms</header>
<subclause id="HD0982050247D473E9FB0FC6CA884DEB8"><enum>(I)</enum><header>In
general</header><text>The terms of the mortgage that determine the magnitude
and timing of payments due from the mortgagor, including the term to maturity
of the mortgage, the frequency of payment, the type of amortization, any
prepayment penalties, and whether the interest rate is fixed or may
vary.</text>
</subclause><subclause id="H1484FFE1031149EC992D2F5903E98D37"><enum>(II)</enum><header>Inclusion of
30-year fixed interest rate</header><text>Terms established under subclause (I)
shall include a 30-year fixed interest rate mortgage.</text>
</subclause></clause><clause id="HB42BEB1A08304F58B86882A7BE46348F"><enum>(viii)</enum><header>Other</header><text>Such
other underwriting criteria as the Director may establish consistent with the
goals of this title.</text>
</clause></subparagraph><subparagraph id="H6F66A16AD9D443F3A21AE83EC9F70AED"><enum>(B)</enum><header>Objective</header><text display-inline="yes-display-inline">In developing the underwriting criteria
standards under subparagraph (A), the Director shall seek to ensure that such
standards are readily identifiable to sponsors of, and investors in, securities
collateralized by mortgages so that such sponsors and investors can clearly
determine the classification to which a mortgage belongs.</text>
</subparagraph></paragraph><paragraph id="HB768C89511E04BC68C44695FE78C5374"><enum>(3)</enum><header>Definitions</header><text display-inline="yes-display-inline">The Director shall, for purposes of this
subsection, prescribe definitions for each of the following terms:</text>
<subparagraph id="HA4E6B3AD7B1D4E32B20F57A3A00770D8"><enum>(A)</enum><header>Mortgage</header><text display-inline="yes-display-inline">The term <quote>mortgage</quote>, which
definition shall include only mortgages on residential properties.</text>
</subparagraph><subparagraph id="HDC63F8D41FE24451AB416DD67EB1887A"><enum>(B)</enum><header>Default</header><text>The
term <quote>default</quote>, with respect to a mortgage.</text>
</subparagraph><subparagraph id="H5587E950C25340A69A468C458A2ADE4B"><enum>(C)</enum><header>Delinquency</header><text>The
term <quote>delinquency</quote>, with respect to a mortgage.</text>
</subparagraph><subparagraph id="H13B55A8C88754531BEC3B83B0B983FBF"><enum>(D)</enum><header>Loan
documentation</header><text>The term <quote>loan documentation</quote>, with
respect to a mortgage.</text>
</subparagraph><subparagraph id="HDA502BBA38474A04924C6766CC915314"><enum>(E)</enum><header>Additional
terms</header><text>Such other terms as the Director may establish.</text>
</subparagraph></paragraph></subsection><subsection id="HC82E5F6BB2A642EABD30C8DCC7E28716"><enum>(b)</enum><header>Standard form
securitization agreements</header>
<paragraph id="H477679B2D17F448CBBE7E7CB9F987825"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The Director shall
develop, adopt, and publish standard form securitization agreements for
mortgages established under subsection (a).</text>
</paragraph><paragraph id="HFDF074A9BED8452B8902AD54FFA1841A"><enum>(2)</enum><header>Required
content</header><text>The standard form securitization agreements to be
developed under paragraph (1) shall only include terms relating to—</text>
<subparagraph id="HA6C979379DAC4DE5AF85E79D54A51CF4"><enum>(A)</enum><text>pooling and
servicing;</text>
</subparagraph><subparagraph id="HD1DE4DBABBC849B182C307AACB016616"><enum>(B)</enum><text>purchase and
sale;</text>
</subparagraph><subparagraph id="HC96A95461E7C4CD7B2EC4C62AAD44253"><enum>(C)</enum><text>representations
and warranties, including representations and warranties as to compliance or
conformity with standards established by the Director pursuant to subsections
(c), (d), (e), and (f), as appropriate;</text>
</subparagraph><subparagraph id="HE904EFE2847D4B77A160DC652589A5DC"><enum>(D)</enum><text display-inline="yes-display-inline">indemnification and remedies, including
principles of a repurchase program that will ensure an appropriate amount of
risk retention under the representations and warranties set forth under
subparagraph (C); and</text>
</subparagraph><subparagraph id="H5D62B26DE144469A9AF6D4CB9C9ACAC1"><enum>(E)</enum><text>the qualification,
responsibilities, and duties of trustees.</text>
</subparagraph></paragraph><paragraph commented="no" id="H94C8CDF0D0FA4097B6440FD5D18890F9"><enum>(3)</enum><header>Public
involvement</header><text display-inline="yes-display-inline">In issuing rules
and regulations under this section, the Director shall allow appropriate notice
and comment in accordance with the chapter 5 of title 5, United States Code
(commonly referred to as the <quote>Administrative Procedures Act</quote>). The
Director shall work with industry groups, including servicers, originators, and
mortgage investors to develop the standards under this title.</text>
</paragraph><paragraph commented="no" id="HF66B9DCBB90B4C48AC66307116A08C1A"><enum>(4)</enum><header>Qualified
security</header><text>For purposes of this title, the term <quote>qualified
security</quote> means a security that—</text>
<subparagraph id="H4D5AB812C2E74F62AFCE45028BAE382B"><enum>(A)</enum><text>is issued in
accordance with a standard form securitization agreement;</text>
</subparagraph><subparagraph id="HFA864106F1074B7DB63CBDDFFC701879"><enum>(B)</enum><text>is issued by a
qualified sponsor;</text>
</subparagraph><subparagraph id="H30B11C2706EF428F8EDE393A7792E106"><enum>(C)</enum><text>is collateralized
by a class, or multiple classes, of mortgages established under this title;
and</text>
</subparagraph><subparagraph id="H334D9739B11740C6B331EA51A4D9EB8C"><enum>(D)</enum><text>is not guaranteed,
in whole or in part, by the United States Government.</text>
</subparagraph></paragraph></subsection><subsection id="HE10569BAB75D4DE88CD43E07E485D6E7"><enum>(c)</enum><header>Standards for
servicer reporting</header><text display-inline="yes-display-inline">The
Director shall develop, adopt, and publish standards for the reporting
obligations of servicers of any mortgage that serves as collateral for a
qualified security.</text>
</subsection><subsection id="H9A7F394AA65245BCA77E9A98DCD4F09F"><enum>(d)</enum><header>Standards for
servicing</header><text display-inline="yes-display-inline">The Director shall
develop, adopt, and publish—</text>
<paragraph id="H4EF8DF4324BC4FB39D850273134E9A09"><enum>(1)</enum><text>servicing
standards, including for the modification, restructuring, or work-out of any
mortgage that serves as collateral for a qualified security; and</text>
</paragraph><paragraph id="H73465664F4204263BAD435A73BA6AB4D"><enum>(2)</enum><text>a
servicer succession plan which may include provisions for—</text>
<subparagraph id="H028016B97A25480892DF5C30BE196D18"><enum>(A)</enum><text>a specialty
servicer that can replace the existing servicer if the performance of the
mortgage pool deteriorates to specified levels; and</text>
</subparagraph><subparagraph id="H610D5CAF49864A9592730093E97760C4"><enum>(B)</enum><text>a plan to achieve
consistency in servicing systems related to systematic note-taking, consistent
mailing addresses, and other points of contact for borrowers to use, among
other items.</text>
</subparagraph></paragraph></subsection><subsection id="HD65A902E253E451DA57325BBA0EE6D1B"><enum>(e)</enum><header>Standards for
documentation</header><text display-inline="yes-display-inline">The Director
shall develop, adopt and publish standards for documentation used to verify the
financial resources of a mortgagor and to qualify the mortgagor for any
mortgage that may become collateral for any qualified security, including the
form, content, and method of documentation of any such mortgage. Such standards
shall also address any custodial or delivery obligations related to such
documents.</text>
</subsection><subsection id="HF908862FC767432C8613F8FEDF325183"><enum>(f)</enum><header>Standards for
qualified sponsors</header>
<paragraph id="H4764423996884E64BCC81DD0E66CCA65"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The Director shall
develop, adopt, and publish standards for a sponsor to qualify as a qualified
sponsor. Such standards shall only include—</text>
<subparagraph id="H35D48A7C420A41AB9959C8FC1E83297A"><enum>(A)</enum><text>the experience and
integrity of the sponsor and its principals, including compliance history with
Federal and State laws;</text>
</subparagraph><subparagraph id="H5F48FC8598F44E6F8A73164C09586B5E"><enum>(B)</enum><text>the adequacy of
insurance and fidelity coverage of the sponsor with respect to errors and
omissions; and</text>
</subparagraph><subparagraph commented="no" id="H634F9F2031F44B5595F165B273641F9B"><enum>(C)</enum><text display-inline="yes-display-inline">a requirement that the sponsor submit
audited financial statements to the Director, who shall make such statements
publicly available through the Federal Housing Finance Agency’s website.</text>
</subparagraph></paragraph><paragraph id="HC1CBD1D10DF445C88688DE233152302B"><enum>(2)</enum><header>Application
process</header>
<subparagraph id="H6DE2555CB2CA45D68B4FAE457EA31F74"><enum>(A)</enum><header>In
general</header><text>The Director shall establish an application process for
the qualification of sponsors, in such form and manner and requiring such
information as the Director may require, in accordance with standards adopted
under paragraph (1).</text>
</subparagraph><subparagraph id="HB37F43518AD84220B77AA02F930E4257"><enum>(B)</enum><header>Approval</header><text>The
Director shall approve any application made pursuant to subparagraph (A) unless
the sponsor does not meet the standards adopted under paragraph (1).</text>
</subparagraph><subparagraph id="H563541D54E044626BEE51554819FC850"><enum>(C)</enum><header>Publication</header><text display-inline="yes-display-inline">The Director shall publish a list of newly
qualified sponsors in the Federal Register and maintain an updated list of
qualified sponsors on the Federal Housing Finance Agency’s website.</text>
</subparagraph></paragraph><paragraph id="H70F8A41F35BA4F19866BF61852FF1547"><enum>(3)</enum><header>Review and
revocation of qualified status</header>
<subparagraph id="H90263DD0105C458181E6F53A9239AEE5"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">The Director may only
review the status of a qualified sponsor if the Director is notified that a
claim has been made against the sponsor by a trustee with respect to a
violation of a contractual term in a securitization document of the
sponsor.</text>
</subparagraph><subparagraph id="H40C524DC44E64ECCA2AB4F2819E89E54"><enum>(B)</enum><header>Revocation</header>
<clause id="HC8671FAAC5124225B6941B6DC5DCCDDF"><enum>(i)</enum><header>In
general</header><text>Subject to subparagraph (C), if the Director determines,
in a review pursuant to subparagraph (A), that a sponsor no longer meets the
standards for qualification, the Director shall revoke the sponsor’s qualified
status.</text>
</clause><clause id="HD255D900C4B94978B9D4EF59051BE909"><enum>(ii)</enum><header>Construction</header><text>The
revocation of a sponsor’s qualified status under this subparagraph
shall—</text>
<subclause id="HD450D30177C640A6AE495D54EA2B7983"><enum>(I)</enum><text>have no effect on
the qualified status of any security; and</text>
</subclause><subclause id="H915A793158B04C9E9A6FBE5E1CA490C6"><enum>(II)</enum><text>not relieve the
sponsor of any representations, warranties, or repurchase obligations related
to any qualified security issued before such revocation.</text>
</subclause></clause></subparagraph><subparagraph id="HBE4460C84F3B4080BDCF070CDAE87D28"><enum>(C)</enum><header>Grace
period</header><text display-inline="yes-display-inline">The Director shall
issue regulations that permit a qualified sponsor who no longer meets the
standards for qualification to have a grace period during which the sponsor can
work to meet such standards without losing the sponsor’s qualified
status.</text>
</subparagraph><subparagraph id="HE70ABF56E14B4BA68683BBDE12A3EBD5"><enum>(D)</enum><header>Publication</header><text display-inline="yes-display-inline">The Director shall publish a list of
sponsors who lost their qualified status in the Federal Register and maintain
an updated list of such sponsors on the Federal Housing Finance Agency’s
website.</text>
</subparagraph></paragraph></subsection><subsection commented="no" id="HB7465144669842B79DD1941B77905CB2"><enum>(g)</enum><header>Standards for
trustees</header>
<paragraph commented="no" id="H17741E7BFEF540AFBB3F1A6A930C437C"><enum>(1)</enum><header>In
general</header><text>There shall at all times be one or more trustee for each
pool of mortgages that acts as collateral for a qualified security.</text>
</paragraph><paragraph commented="no" id="HE4667B7D7B974005AAEEEE9844CB2FF7"><enum>(2)</enum><header>Rulemaking</header><text display-inline="yes-display-inline">The Director shall issue regulations
regarding the qualifications of trustees under paragraph (1) that shall, to the
extent practicable, be the same as the qualification provisions applicable to
trustees under section 310(a) of the Trust Indenture Act of 1934 (15 U.S.C.
77jjj(a)).</text>
</paragraph><paragraph id="H1F2038FBC45A46AB8E164329CA919EFC"><enum>(3)</enum><header>Conflicts of
interest</header><text display-inline="yes-display-inline">The Director shall
issue conflict of interest regulations that apply to a qualified trustee. Such
regulations shall, to the extent practicable, be the same as those conflict of
interest provisions applicable to an indenture trustee under section 310(b) of
the Trust Indenture Act of 1934 (15 U.S.C. 77jjj(b)).</text>
</paragraph><paragraph id="H53FA7053B6B24AE19BE50BE9E7C6F0E4"><enum>(4)</enum><header>Reporting of
claims</header><text>Any time a trustee brings a claim against a qualified
sponsor on behalf of investors with respect to a standard form securitization
agreement, the trustee shall notify the Director of such claim.</text>
</paragraph><paragraph commented="no" id="H674E5CE7088347DBAD3348E719DB540C"><enum>(5)</enum><header>Protection of
investor rights</header><text>For the purpose of protecting investor rights,
each trustee shall—</text>
<subparagraph id="H6EFCF7AB9F124CC3BE33AE3B615F65D8"><enum>(A)</enum><text>maintain a list of
all investors (beneficial owners) in a qualified security;</text>
</subparagraph><subparagraph id="H09884CBCD0B8433997A4C4B314B0256B"><enum>(B)</enum><text>update such list
from time to time;</text>
</subparagraph><subparagraph id="HB24883D3650F429F9A425C5C36627CE5"><enum>(C)</enum><text display-inline="yes-display-inline">not make such list available to investors
(beneficial owners); and</text>
</subparagraph><subparagraph id="H4A8BC367827548A9918F1B7B270AB8E9"><enum>(D)</enum><text display-inline="yes-display-inline">act as a means to communicate information
about the qualified security to investors (beneficial owners) and act as a
means for investors (beneficial owners) to communicate with each other.</text>
</subparagraph></paragraph><paragraph id="H82169F9F64504CD496955D6E11EC69ED"><enum>(6)</enum><header>No liability for
certain communications</header><text display-inline="yes-display-inline">A
trustee shall not be liable for the content of any information provided to the
trustee by an investor (beneficial owner) that the trustee communicates to
another investor (beneficial owner).</text>
</paragraph><paragraph id="H32D6B78301694FCA950B77881D44879C"><enum>(7)</enum><header>Investor
(beneficial owner) notification of trustee</header><text>A person who becomes
an investor (beneficial owner) in a qualified security shall promptly notify
the trustee of such security of the change in ownership.</text>
</paragraph></subsection><subsection id="H06D542345CF7499EBA43C81CB5D16481"><enum>(h)</enum><header>Independent
third party</header><text>If the majority of investors in a pool of qualified
securities choose to hire an independent third party to act on behalf of the
best interests of the investors (beneficial owners), such party shall—</text>
<paragraph id="H853437C64A11460C915BB513D6363AAC"><enum>(1)</enum><text>be granted access
to the loan documents for the mortgage loans backing such security and all
servicing reports the servicer provides to investors (beneficial owners) or the
trustee;</text>
</paragraph><paragraph commented="no" id="H5170DAFD579A40E3A2DB596A20FDF24A"><enum>(2)</enum><text display-inline="yes-display-inline">be granted access to the list of investors
(beneficial owners) maintained by the trustee, on the condition that the
independent third party will not make the list available to the investors
(beneficial owners); and</text>
</paragraph><paragraph id="H5F602F2AF10F4F44BD82C7A36BEB22A8"><enum>(3)</enum><text display-inline="yes-display-inline">have the right, on behalf of the investors
(beneficial owners), to inform the trustee of such securities of any breach of
the securitization agreement identified by the third party.</text>
</paragraph></subsection><subsection id="HE9A9930F63CD492AA6B442D4B2BCCF46"><enum>(i)</enum><header>Timing;
Authority To revise standards</header>
<paragraph commented="no" id="H22199B2A438C495D813DCB595E2B8069"><enum>(1)</enum><header>Timing</header><text display-inline="yes-display-inline">The Director shall develop, adopt, and
publish the standards required under this title, not later than the expiration
of the 12-month period beginning upon the date of the enactment of this
title.</text>
</paragraph><paragraph id="H40DB9DBA25AB46D690F05A8B41353E56"><enum>(2)</enum><header>Authority to
revise</header>
<subparagraph id="HECD771E852864305B7BC8182D42AF574"><enum>(A)</enum><header>In
general</header><text>The Director may review, revise and, if revised,
re-publish any standard form securitization agreement or other standard
required to be developed under this section if the Director determines review
or revision to be necessary or appropriate to satisfy the goals of this
title.</text>
</subparagraph><subparagraph id="H347D3312E7AB479C8EB24B97E5284BC4"><enum>(B)</enum><header>Application of
revisions</header><text display-inline="yes-display-inline">Any revision made
pursuant to subparagraph (A) shall only apply to securitizations made after the
date of such revision.</text>
</subparagraph></paragraph></subsection><subsection commented="no" id="H90DECCD6EF9843019581424C19D988B5"><enum>(j)</enum><header>Mandatory
arbitration</header>
<paragraph commented="no" id="HEF3155788B9C4577B4346628AB644E86"><enum>(1)</enum><header>In
general</header><text>All disputes between an owner of a qualified security and
the qualified sponsor of such security relating to representations and
warranties shall be subject to mandatory arbitration procedures established by
the Director, in accordance with current market practices.</text>
</paragraph><paragraph commented="no" id="H7EDA1D9D7A1340CE8B4254D46BF98B04"><enum>(2)</enum><header>Selection of
arbitrator</header><text>Investors (beneficial owners) and sponsors subject to
a dispute described under paragraph (1) shall have the right to agree on an
independent arbitrator. If the parties cannot agree on an independent
arbitrator, the Director shall select an independent arbitrator for the
parties.</text>
</paragraph><paragraph commented="no" id="H95A329E305F8428C8349F0401FC6480C"><enum>(3)</enum><header>Reporting duty
of arbitrator</header>
<subparagraph commented="no" id="H3ABB76D89F554A64A1CBB2C1CC59AA5A"><enum>(A)</enum><header>Upon
commencement</header><text display-inline="yes-display-inline">The arbitrator
shall provide the Federal Housing Finance Agency with notice upon the
commencement of any arbitration under this subsection.</text>
</subparagraph><subparagraph commented="no" id="HA3C882250AFF434D9FBFA9EDBE3F048C"><enum>(B)</enum><header>Upon
conclusion</header><text display-inline="yes-display-inline">Upon the
conclusion of any arbitration under this subsection, the arbitrator shall
provide the Federal Housing Finance Agency with—</text>
<clause commented="no" id="HF771D46CF03144F5AEFC30ECE32ECDFF"><enum>(i)</enum><text>the decision
reached by the arbitrator; and</text>
</clause><clause commented="no" id="H3EA4295DC0B64E13BA1F275C794CD6B4"><enum>(ii)</enum><text>the basis for the
arbitrator’s decision, including any evidence or testimony received during the
arbitration process.</text>
</clause></subparagraph></paragraph></subsection><subsection id="HFDC5537A6BCE4017801F3A4B182FC2FD"><enum>(k)</enum><header>Disclosure of
information</header>
<paragraph id="H630EAE0723634BD7BC96BE68A90B7A65"><enum>(1)</enum><header>In
general</header>
<subparagraph id="HD8980D0BBAC04ED39EDA8FA538A21BD6"><enum>(A)</enum><header>In
general</header><text>Not later than 6 months after the date of the enactment
of this Act, the Director shall, by rule—</text>
<clause id="H320448C2EFA4450491853010692D83D9"><enum>(i)</enum><text>require sponsors
of qualified securities to disclose all pertinent information relating to the
residential mortgage loans that comprise such securities, including information
set forth in the underwriting standards established under subsection (a);
and</text>
</clause><clause id="HD552EFB39CAA44119D4A3A0791F0CDCF"><enum>(ii)</enum><text>allow for the
trading of qualified securities under this title in a forward market.</text>
</clause></subparagraph><subparagraph id="H3765FBB5CCF643B2A758A953E1565ECE"><enum>(B)</enum><header>Privacy
protections</header><text display-inline="yes-display-inline">In prescribing
the rules required under this paragraph, the Director shall take into
consideration issues of consumer privacy and all statutes, rules, and
regulations related to privacy of consumer credit information and personally
identifiable information. Such rules shall expressly prohibit the
identification of specific borrowers.</text>
</subparagraph></paragraph><paragraph id="H91F3C69026F94F829EB715EBF76CCF24"><enum>(2)</enum><header>Consultation</header><text>In
issuing any rules or regulations under this subsection, the Director shall
consult with the Securities and Exchange Commission.</text>
</paragraph></subsection></section><section id="H629FF1EFBFA74D83B04FEFE89BB26A8B" section-type="subsequent-section"><enum>102.</enum><header>Repeal of credit
risk retention provisions</header>
<subsection id="H9B69EE47AFA34DBE9B080100D7EEF401"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 15G of the
Securities Exchange Act of 1934 (15 U.S.C. 78o–11) is repealed and any
regulations promulgated under such section shall have no force or
effect.</text>
</subsection><subsection id="HA5AF540D7A3C4F5389FF6CB9BA574418"><enum>(b)</enum><header>Conforming
amendment</header><text display-inline="yes-display-inline">Section 27B of the
Securities Act of 1933 is amended by striking subsection (d).</text>
</subsection><subsection id="HC8E060B4E017423DBD9ADFDC1702BD3B"><enum>(c)</enum><header>Prohibition</header><text display-inline="yes-display-inline">The Office of the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Bureau of Consumer Financial Protection, and
the Securities and Exchange Commission shall not issue any rule or regulation
to require risk retention, any premium capture cash reserve account, or any
similar mechanism, unless directly authorized by an Act of Congress.</text>
</subsection></section><section id="H8FD8E4F77CB849358F1D38784A56592A"><enum>103.</enum><header>Exemption from
registration of certain securities conforming to standard securitization
agreements</header><text display-inline="no-display-inline">Section 3(a) of the
Securities Act of 1933 (15 U.S.C. 77c(a)) is amended by adding at the end the
following:</text>
<quoted-block display-inline="no-display-inline" id="H3424BB0E6C184B40961767BE7D11F368" style="traditional">
<paragraph commented="no" id="HCCCD88A137604957B7F5A351C1ECAA52"><enum>(14)</enum><text display-inline="yes-display-inline">Any qualified security, as such term is
defined under section 101(b)(4) of the Private Mortgage Market Investment
Act.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H162C2F671B6242289126061AEB2C0AC2"><enum>104.</enum><header>Judicial
review</header>
<subsection display-inline="no-display-inline" id="HD38680D29C1446FD8B597BAB678F40EA"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Orders of the Federal
Housing Finance Agency under this title shall be subject to review in the same
manner, upon the same conditions, and to the same extent, as provided in
section 9 of the Securities Act of 1933, with respect to orders of the
Securities and Exchange Commission under such title.</text>
</subsection><subsection id="HD53B88BF091946578553ECCD4AB7B953"><enum>(b)</enum><header>Jurisdiction</header><text display-inline="yes-display-inline">Jurisdiction of offenses and violations
under, and jurisdiction and venue of suits and actions brought to enforce any
liability or duty created by, this Act, or any rules or regulations or orders
prescribed under the authority thereof, shall be as provided in section 22(a)
of the Securities Act of 1933.</text>
</subsection></section><section id="H6367F3305D204FAC8C34549EB6D3A376"><enum>105.</enum><header>Liability for
misleading statements</header>
<subsection display-inline="no-display-inline" id="H6520E95C4760418A95928BBB3893FE59"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Any person who shall
make or cause to be made any statement in any application, report, or document
filed with the Federal Housing Finance Agency pursuant to any provisions of
this title, or any rule, regulation, or order thereunder, which statement was
at the time and in the light of the circumstances under which it was made false
or misleading with respect to any material fact, or who shall omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, shall be liable to any person (not knowing that such
statement was false or misleading or of such omission) who, in reliance upon
such statement or omission, shall have purchased or sold a security issued
under the indenture to which such application, report, or document relates, for
damages caused by such reliance, unless the person sued shall prove that he
acted in good faith and had no knowledge that such statement was false or
misleading or of such omission. A person seeking to enforce such liability may
sue at law or in equity in any court of competent jurisdiction. In any such
suit the court may, in its discretion, require an undertaking for the payment
of the costs of such suit and assess reasonable costs, including reasonable
attorneys' fees, against either party litigant, having due regard to the merits
and good faith of the suit or defense. No action shall be maintained to enforce
any liability created under this section unless brought within one year after
the discovery of the facts constituting the cause of action and within three
years after such cause of action accrued.</text>
</subsection><subsection id="H3296B12DD376446D89B05FC373709669"><enum>(b)</enum><header>Rights and
remedies under other law</header><text display-inline="yes-display-inline">The
rights and remedies provided by this title shall be in addition to any and all
other rights and remedies that may exist under the Securities Act of 1933 or
the Securities Exchange Act of 1934 or otherwise at law or in equity; but no
person permitted to maintain a suit for damages under the provisions of this
title shall recover, through satisfaction of judgment in one or more actions, a
total amount in excess of his actual damages on account of the act complained
of.</text>
</subsection></section><section id="HB2B8D895CE084B8C919CC584941FA441"><enum>106.</enum><header>Unlawful
representation</header><text display-inline="no-display-inline">It shall be
unlawful for any person in offering, selling, or issuing any security pursuant
to this title to represent or imply in any manner whatsoever that any action or
failure to act by the Federal Housing Finance Agency in the administration of
this title means that the Federal Housing Finance Agency has in any way passed
upon the merits of, or given approval to, any trustee, indenture, or security,
or any transaction or transactions therein, or that any such action or failure
to act with regard to any statement or report filed with or examined by the
Federal Housing Finance Agency pursuant to this title or any rule, regulation,
or order thereunder, has the effect of a finding by the Federal Housing Finance
Agency that such statement or report is true and accurate on its face or that
it is not false or misleading.</text>
</section><section id="HA33A131006C54D5FAC913DB4F0951F74"><enum>107.</enum><header>Penalties</header><text display-inline="no-display-inline">Any person who willfully violates any
provision of this title or any rule, regulation, or order thereunder, or any
person who willfully, in any application, report, or document filed or required
to be filed under the provisions of this title or any rule, regulation, or
order thereunder, makes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, shall be subject to the penalties set forth
under section 325 of the Trust Indenture Act of 1934 (15 U.S.C. 77yyy).</text>
</section><section id="H3832E3F14613440890F7451F917DAAFE"><enum>108.</enum><header>Contrary
stipulations void</header><text display-inline="no-display-inline">Any
condition, stipulation, or provision binding any person to waive compliance
with any provision of this title or with any rule, regulation, or order
thereunder shall be void.</text>
</section><enum>II</enum><header>Transparency</header>
<section commented="no" id="H2B0F20C1EEFB49E4998298A1D9316837"><enum>201.</enum><header>Requirements
for the disclosure of loan-level information to investors, rating agencies, and
regulators</header>
<subsection commented="no" id="H8A2A21EFE95C4597BC4DD546C7ABC63B"><enum>(a)</enum><header>Rules</header><text display-inline="yes-display-inline">Not later than 6 months after the date of
the enactment of this title, the Securities and Exchange Commission shall, by
rule, require sponsors of residential mortgage-backed securities to disclose
all pertinent information relating to the residential mortgage loans that
comprise such securities, including information regarding the income and credit
score of borrowers, the loan to value ratios, the remaining term to maturity of
the loans, and require loan-level data to be updated on a monthly basis. Such
rules shall apply to residential mortgage-backed securities that—</text>
<paragraph commented="no" id="HE86287C91CCC4DB4908CBD739F419AAE"><enum>(1)</enum><text>are registered
pursuant to section 6 of the Securities Act of 1933 (15 U.S.C. 77f); and</text>
</paragraph><paragraph commented="no" id="H49A49CA791F0425BBD226B642DA23E1E"><enum>(2)</enum><text>are offered or
sold in reliance on Regulation D (17 CFR 230.506) and Rule 144A (17 CFR
230.144A) of the Commission.</text>
</paragraph></subsection><subsection commented="no" id="H1A4012CDF9194423B94BF0F03D59C52E"><enum>(b)</enum><header>Privacy
Protections</header><text>In prescribing the rules required under subsection
(a), the Commission shall take into consideration issues of consumer privacy
and all statutes, rules, and regulations related to privacy of consumer credit
information and personally identifiable information. Such rules shall expressly
prohibit the identification of specific borrowers.</text>
</subsection><subsection id="H3A7180F1A9B94AB29FD8566EF94C9B0D"><enum>(c)</enum><header>Rules not
applicable to qualified securities</header><text>The rules prescribed under
subsection (a) shall not apply to any qualified security, as such term is
defined under section 101(b)(4).</text>
</subsection></section><section id="HC62BBD119A8547ED9E1BBB8034E47356"><enum>202.</enum><header>Mandatory
period for review of loan-level information prior to investment</header><text display-inline="no-display-inline">Not later than 6 months after the date of
the enactment of this title, the Securities and Exchange Commission shall
revise its rules and regulations to require sponsors of asset-backed securities
under section 5 of the Securities Act of 1933 (15 U.S.C. 77e) to file a
preliminary prospectus containing all material terms of the transaction at
least 5 days before investors make an investment decision.</text>
</section><section id="H9D77DE1FCB3447F59D861084C62C244C"><enum>203.</enum><header>Dissemination
of pricing information of asset-backed securities</header><text display-inline="no-display-inline">Not later than 6 months after the date of
the enactment of this title, the Securities and Exchange Commission shall, by
rule, require the dissemination of transaction, volume, and pricing information
of trades in asset-backed securities. Such rules shall require the
dissemination of such information, with exceptions as may be prescribed by the
Commission in the public interest, while taking into consideration the effect
of such dissemination on market liquidity, through the Financial Industry
Regulatory Authority’s fixed income transparency facility, referred to as Trade
Reporting and Compliance Engine (TRACE), or through a similar vehicle.</text>
</section><section id="H817D0E77412E4D51B35BE817E5435462"><enum>204.</enum><header>Alphanumeric
identification of residential mortgage loans in asset-backed
securities</header><text display-inline="no-display-inline">Not later than 6
months after the date of the enactment of this title, the Securities and
Exchange Commission shall, by rule, require that each mortgage loan comprising
a residential mortgage-backed security be assigned and carry with it a unique
alphanumeric code that identifies the loan in order to facilitate ascertaining
relevant information about the loan.</text>
</section><enum>III</enum><header>Ensuring the
rule of law</header>
<section id="HB6D5A3BDA64B4C6C8E440E57EE44E210" section-type="subsequent-section"><enum>301.</enum><header>Ensure rule of law
and legal certainty</header>
<subsection id="H62C898B7D3834908A6690B4828C5051E"><enum>(a)</enum><header>Junior mortgage
or lien</header><text display-inline="yes-display-inline">With respect to the
dwelling of a borrower that serves as security for a securitized senior
mortgage loan, if the borrower enters into any credit transaction that would
result in the creation of a new mortgage or other lien on such dwelling where
the loan-to-value ratio of such credit transaction amount is 80 percent or
more, the servicer of the senior mortgage loan shall have the right to charge
the borrower an additional monthly fee in an amount sufficient to offset the
increased risk to repayment of such loan because of the creation of the new
mortgage or other lien.</text>
</subsection><subsection id="H615F8F5D4B2040A9859D68E7103DB54A"><enum>(b)</enum><header>Notice of junior
mortgage or lien</header><text display-inline="yes-display-inline">With respect
to the dwelling of a borrower that serves as security for a securitized senior
mortgage loan, if the borrower enters into any credit transaction that would
result in the creation of a new mortgage or other lien on such dwelling, the
creditor of such new mortgage or other lien shall notify the servicer of the
senior mortgage loan of the existence of the new mortgage or other lien.</text>
</subsection><subsection id="H9F11E4E0373A4CDABB581CF794948E3C"><enum>(c)</enum><header>Prevention of
forced principal write-Downs</header><text>With respect to a securitized
mortgage loan, no Federal department or agency, including the Board of
Governors of the Federal Reserve System and the Bureau of Consumer Financial
Protection, may require a reduction in the principal amount owed on such
mortgage loan.</text>
</subsection></section><section display-inline="no-display-inline" id="H6B0122C649B646AF83CA40E59AD77CB3" section-type="subsequent-section"><enum>302.</enum><header>Limitation on
mortgages held by loan servicers</header>
<subsection id="H797DA25D78AC438EAAA23C0569076026"><enum>(a)</enum><header>Limitation</header><text display-inline="yes-display-inline">Neither the servicer of a residential
mortgage loan, nor any affiliate of such servicer, may own, or hold any
interest in, any other residential mortgage loan that is secured by a mortgage,
deed of trust, or other equivalent consensual security interest on the same
dwelling or residential real property that is subject to the mortgage, deed of
trust, or other security interest that secures the residential mortgage loan
serviced by the servicer.</text>
</subsection><subsection id="H46BD72EFDE764B83A50932CD3D1CB13F"><enum>(b)</enum><header>Definitions</header><text display-inline="yes-display-inline">For purposes of this section, the following
definitions shall apply:</text>
<paragraph id="HFEC7DC7FF1134CEB9B78619382F5C0C0"><enum>(1)</enum><header>Affiliate</header><text display-inline="yes-display-inline">The term <quote>affiliate</quote> means,
with respect to a servicer, any person or entity that controls, is controlled
by, or is under common control with such servicer, as the Director shall
prescribe by regulation.</text>
</paragraph><paragraph id="H2E20DD5A75D94FC2B9D79D4F885230EC"><enum>(2)</enum><header>Residential
mortgage loan</header><text display-inline="yes-display-inline">The term
<quote>residential mortgage loan</quote> means any consumer credit transaction
that is secured by a mortgage, deed of trust, or other equivalent consensual
security interest on a dwelling or on residential real property that includes a
dwelling, other than a consumer credit transaction under an open end credit
plan or an extension of credit relating to a plan described in
<external-xref legal-doc="usc" parsable-cite="usc/11/101">section
101(53D)</external-xref> of title 11, United States Code.</text>
</paragraph><paragraph id="H290A346378724112BF8D178E1D10A533"><enum>(3)</enum><header>Servicer</header><text>The
term <quote>servicer</quote> has the meaning provided in section 129A of the
Truth in Lending Act, except that such term includes a person who makes or
holds a residential mortgage loan (including a pool of residential mortgage
loans) if such person also services the loan.</text>
</paragraph></subsection><subsection id="H4B2095AE76F44DE49D6F66A4DD3CF272"><enum>(c)</enum><header>Interests</header><text display-inline="yes-display-inline">For purposes of subsection (a), ownership
of, or holding an interest in a residential mortgage loan includes ownership
of, or holding an interest in—</text>
<paragraph id="H968C0D6185874FF7B0F5F2DE2F79790A"><enum>(1)</enum><text>a
pool of residential mortgage loans that contains such residential mortgage
loan; or</text>
</paragraph><paragraph id="H5ED09FA0522B4C968D5728BCC37BD6C1"><enum>(2)</enum><text>any security based
on or backed by a pool of residential mortgage loans that contains such
residential mortgage loan.</text>
</paragraph></subsection><subsection id="H685601F592994921B14FB8C67E5D4E2A"><enum>(d)</enum><header>Effective
date</header><text>This section shall apply—</text>
<paragraph id="HA682582316364E4BA7EF96EFDB3C372B"><enum>(1)</enum><text>with respect to
the servicer (or affiliate of the servicer) of a residential mortgage loan that
is originated after the date of the enactment of this Act, on such date of
enactment; and</text>
</paragraph><paragraph id="H0B5D43873AC04EDA919E29502C9191C5"><enum>(2)</enum><text>with respect to
the servicer (or affiliate of the servicer) of a residential mortgage loan that
is originated on or before the date of the enactment of this Act, upon the
expiration of the 12-month period beginning upon such date of enactment.</text>
</paragraph></subsection></section><section id="H9FD59B5D19534F378721353DC9771FB7" section-type="subsequent-section"><enum>303.</enum><header>Clarification of
qualified mortgage exception</header><text display-inline="no-display-inline">Subsection (b) of section 129C of the Truth
in Lending Act is amended—</text>
<paragraph id="H34E668D16E224B919F651654D53CA1C5"><enum>(1)</enum><text>in the heading of
such subsection, by striking <quote><header-in-text level="subsection" style="OLC">Presumption of Ability To Repay</header-in-text></quote> and
inserting <quote><header-in-text level="subsection" style="OLC">Exception for
qualified mortgages</header-in-text></quote>;</text>
</paragraph><paragraph id="H607EF08ECDC24164BB4F91B27B256BC4"><enum>(2)</enum><text>by amending
paragraph (1) to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="HCC6D7BF3B5A044F185C977417D68D7E3" style="OLC">
<paragraph id="H6FFD0474B43D460285D3AE8E8A1F948B"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (a) shall
not apply to a residential mortgage loan that is a qualified
mortgage.</text>
</paragraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="HD27B537732464D2EB9B97343118E70EB"><enum>(3)</enum><text>in paragraph (3),
by amending subparagraph (B) to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="HDEC10E2F1C0044DB8C1C36883A257594" style="OLC">
<subparagraph id="H0F57421680664B0FA12D19873404C7F2"><enum>(B)</enum><header>Loan
definition</header><text display-inline="yes-display-inline">The following
agencies shall, in consultation with the Bureau, prescribe rules defining the
types of loans they insure, guarantee, or administer, as the case may be, that
are qualified mortgages for purposes of paragraph (2)(A):</text>
<clause id="H086765107CF14D78B42CA39D5B603502"><enum>(i)</enum><text>The Department of
Housing and Urban Development, with regard to mortgages insured under the
National Housing Act (12 U.S.C. 1707 et seq.).</text>
</clause><clause id="H8D2B5F0AFE1649379F7CC8FA560438C8"><enum>(ii)</enum><text>The Department of
Veterans Affairs, with regard to a loan made or guaranteed by the Secretary of
Veterans Affairs.</text>
</clause><clause id="H831035E8CED043AFB979BDE058B2B7B8"><enum>(iii)</enum><text>The Department
of Agriculture, with regards to loans guaranteed by the Secretary of
Agriculture pursuant to section 502(h) of the Housing Act of 1949 (42 U.S.C.
1472(h)).</text>
</clause><clause id="HDA9092B2CC6B483BA838EE134C3EAC2A"><enum>(iv)</enum><text>The Rural Housing
Service, with regards to loans insured by the Rural Housing
Service.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="HA1AE187A864E4585B993316A2080208C"><enum>304.</enum><header>FDIC safe
harbor</header><text display-inline="no-display-inline">If a pool of mortgages
meets the standards set forth by the Federal Housing Finance Agency pursuant to
title I and is securitized in accordance with the standards set forth under
title I, then the Federal Deposit Insurance Corporation safe harbor rule under
section 360.6 of title 12, Code of Federal Regulations, shall apply to the pool
of mortgages.</text>
</section><section id="H33C7271467C248038C95BB7148CFAE8B"><enum>305.</enum><header>Effective
date</header><text display-inline="no-display-inline">Except as otherwise
specifically provided, this title and the amendments made by this title shall
take effect on the date of the enactment of this Act.</text>
</section>