[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6746 Introduced in House (IH)]

<DOC>






115th CONGRESS
  2d Session
                                H. R. 6746

To protect American taxpayers and homeowners by creating a sustainable 
  housing finance system for the 21st century, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 7, 2018

Mr. Hensarling introduced the following bill; which was referred to the 
 Committee on Financial Services, and in addition to the Committee on 
   Ways and Means, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To protect American taxpayers and homeowners by creating a sustainable 
  housing finance system for the 21st century, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Protecting 
American Taxpayers and Homeowners Act of 2018''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
            TITLE I--WIND-DOWN OF FANNIE MAE AND FREDDIE MAC

Sec. 101. Definitions.
Sec. 102. Termination of current conservatorship; mandatory 
                            receivership.
Sec. 103. Limitations on enterprise authority.
Sec. 104. Modifications to increases in conforming loan limits.
Sec. 105. Mandatory risk-sharing.
Sec. 106. Limitation of enterprise mortgage purchases to qualified 
                            mortgages.
Sec. 107. Prohibition relating to use of power of eminent domain.
Sec. 108. Receiver's discretionary authority to create receivership 
                            entity.
Sec. 109. Authority of receiver to repeal enterprise charter.
                          TITLE II--FHA REFORM

            Subtitle A--Business Authority and Requirements

Sec. 201. Authority to carry out FHA and other business.
Sec. 202. Eligible single-family mortgages.
Sec. 203. Risk transfer.
Sec. 204. Premiums.
Sec. 205. Affordability requirements for multifamily mortgage 
                            insurance.
Sec. 206. Effective date.
               Subtitle B--Financial Safety and Soundness

Sec. 211. Authority of Director.
Sec. 212. Budgets and business plans.
Sec. 213. Annual business plan.
Sec. 214. Examinations, reports, and cost estimates.
Sec. 215. Reimbursement of costs.
Sec. 216. Mutual Mortgage Insurance Fund capital reserve.
Sec. 217. Capital classifications and performance measures for Mutual 
                            Mortgage Insurance Fund.
Sec. 218. Enforcement.
Sec. 219. Capital reserve requirements for other funds.
Sec. 220. Authority to establish temporary capital ratios in cases of 
                            nationwide countercyclical market 
                            adjustment.
Sec. 221. 7-year borrower suspension for foreclosure.
Sec. 222. Borrower ineligibility upon second foreclosure.
Sec. 223. Limitation on seller concessions.
Sec. 224. Lender repurchase requirement.
Sec. 225. Indemnification by mortgagees.
Sec. 226. Prohibitions relating to use of power of eminent domain.
Sec. 227. Residual income requirement.
Sec. 228. Effective date.
                       Subtitle C--Miscellaneous

Sec. 241. Rule of construction.
Sec. 242. Definitions.
  TITLE III--DEVELOPMENT AND DEPLOYMENT OF A MORTGAGE SECURITY MARKET 
           EXCHANGE, DATA REPOSITORY, AND COVERED BOND MARKET

Sec. 301. Purposes.
Sec. 302. Definitions.
        Subtitle A--Establishment and Authority of the Exchange

Sec. 311. Establishment.
Sec. 312. General powers; authorized and prohibited activities.
Sec. 313. Mission and structure of Common Securitization Solutions.
Sec. 314. Transition period.
Sec. 315. Transfer date.
Sec. 316. Repayment of cost.
Sec. 317. Regulation, supervision, and enforcement.
             Subtitle B--Standards for Qualified Securities

Sec. 321. Qualified securities.
Sec. 322. Standards for qualified securities.
Sec. 323. Conforming amendments to Securities Act of 1933.
             Subtitle C--National Mortgage Data Repository

Sec. 331. Organization and operation.
Sec. 332. Legal effect of registration with Repository.
Sec. 333. Grants to States; repayment.
Sec. 334. Judicial review.
Sec. 335. Transition provisions.
                       Subtitle D--Covered Bonds

Sec. 341. Definitions.
Sec. 342. Regulatory oversight of covered bond programs established.
Sec. 343. Resolution upon default or insolvency.
Sec. 344. Securities law provisions.
Sec. 345. Miscellaneous provisions.
             TITLE IV--REMOVING BARRIERS TO NEW INVESTMENT

Sec. 401. Basel III Liquidity Coverage Ratio amendments.
Sec. 402. Definition of points and fees.
Sec. 403. Exclusion of issuers of asset-backed securities from covered 
                            funds.
Sec. 404. Mortgages in qualified securities.
Sec. 405. Mortgage loans held in portfolio.
Sec. 406. Repeal of certain mortgage-related provisions.
Sec. 407. Amendments to the Truth in Lending Act.
Sec. 408. Financial Institutions Examination Fairness and Reform.
Sec. 409. Notice of junior mortgage or lien.
Sec. 410. Limitation on mortgages held by loan servicers.
                     TITLE V--REGULATORY STRUCTURE

                         Subtitle A--Ginnie Mae

Sec. 501. Removal from HUD; establishment as independent entity.
Sec. 502. Guarantee fees.
                            Subtitle B--FHA

Sec. 511. Definitions.
                          Part 1--Organization

Sec. 521. Establishment.
Sec. 522. Purposes.
Sec. 523. General powers.
Sec. 524. Board of Directors.
Sec. 525. Officers and personnel.
Sec. 526. Financial, underwriting, and operations systems.
Sec. 527. Procurement.
Sec. 528. Applicability of laws.
Sec. 529. Evaluation.
Sec. 530. Funding.
    Part 2--Authority Over Rural Housing Programs of Department of 
                              Agriculture

Sec. 541. Authority over Rural Housing Service programs.
Sec. 542. Termination of Secretary of Agriculture's rural housing 
                            authority.
Sec. 543. Continuation of Obligations.
Sec. 544. Status of employees.
                           Part 3--Transition

Sec. 551. Transition period.
Sec. 552. Authority during transition period.
Sec. 553. Advisory Board.
Sec. 554. Transfer of HUD authority.
Sec. 555. Wind-up of HUD affairs.
Sec. 556. Continuation and coordination of certain actions.
Sec. 557. Transfer and rights of HUD employees.
Sec. 558. Transfer of property and facilities.
Sec. 559. Effective Date.
                   TITLE VI--MISCELLANEOUS PROVISIONS

Sec. 601. Preservation of attorney-client privilege for information 
                            provided to FHFA.
Sec. 602. FHFA Liaison Membership in Federal Financial Institutions 
                            Examination Council.
Sec. 603. Recognition of FHFA enforcement authority with regard to 
                            regulated entities.
Sec. 604. Exception from Right to Financial Privacy Act for FHFA as 
                            conservator or receiver.
Sec. 605. Technical amendment to Federal Housing Enterprises Financial 
                            Safety and Soundness Act of 1992.
Sec. 606. Application of presumption to enterprise streamlined 
                            refinancings.
Sec. 607. FHFA authority to regulate and examine contractual 
                            counterparties.
Sec. 608. Election of directors of a merged Federal Home Loan Bank.
Sec. 609. Home equity conversion mortgage program.
Sec. 610. FHA-related conforming amendments.

            TITLE I--WIND-DOWN OF FANNIE MAE AND FREDDIE MAC

SEC. 101. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Charter.--The term ``charter'' means--
                    (A) with respect to the Federal National Mortgage 
                Association, the Federal National Mortgage Association 
                Charter Act (12 U.S.C. 1716 et seq.); and
                    (B) with respect to the Federal Home Loan Mortgage 
                Corporation, the Federal Home Loan Mortgage Corporation 
                Act (12 U.S.C. 1451 et seq.).
            (2) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency.
            (3) Enterprise.--The term ``enterprise'' means--
                    (A) the Federal National Mortgage Association; and
                    (B) the Federal Home Loan Mortgage Corporation.

SEC. 102. TERMINATION OF CURRENT CONSERVATORSHIP; MANDATORY 
              RECEIVERSHIP.

    Upon the expiration of the 5-year period beginning upon the date of 
the enactment of this Act, the Director shall, with respect to each 
enterprise, immediately appoint the Federal Housing Finance Agency as 
receiver under section 1367 of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 and carry out such 
receivership under the authority of such section.

SEC. 103. LIMITATIONS ON ENTERPRISE AUTHORITY.

    (a) Portfolio Limitations.--Subtitle B of title XIII of the Housing 
and Community Development Act of 1992 (12 U.S.C. 4611 et seq.) is 
amended by adding at the end the following new section:

``SEC. 1369F. RESTRICTION ON MORTGAGE ASSETS OF ENTERPRISES.

    ``(a) Restriction.--No enterprise shall own, at any time, mortgage 
assets in excess of $250,000,000,000.
    ``(b) Definition of Mortgage Assets.--For purposes of this section, 
the term `mortgage assets' means, with respect to an enterprise, assets 
of such enterprise consisting of mortgages, mortgage loans, mortgage-
related securities, participation certificates, mortgage-backed 
commercial paper, obligations of real estate mortgage investment 
conduits and similar assets, in each case to the extent such assets 
would appear on the balance sheet of such enterprise in accordance with 
generally accepted accounting principles in effect in the United States 
as of September 7, 2008 (as set forth in the opinions and 
pronouncements of the Accounting Principles Board and the American 
Institute of Certified Public Accountants and statements and 
pronouncements of the Financial Accounting Standards Board from time to 
time; and without giving any effect to any change that may be made 
after September 7, 2008, in respect of Statement of Financial 
Accounting Standards No. 140 or any similar accounting standard).''.
    (b) Equitability in Guarantee Fees.--Section 1327 of Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4547) is amended by adding at the end the following new 
subsection:
    ``(f) Equitability in Guarantee Fees.--
            ``(1) Requirement.--Notwithstanding any other provision of 
        this section, the Director shall ensure, pursuant to the annual 
        review conducted under paragraph (2), that each enterprise 
        charges a guarantee fee, in connection with any mortgage 
        guaranteed after the date of the enactment of the Protecting 
        American Taxpayers and Homeowners Act of 2018, in an amount 
        that the Director determines is equivalent to the amount that 
        the enterprise would charge if the enterprise were held to the 
        same capital standards as private banks or financial 
        institutions.
            ``(2) Annual determination.--Not less often than annually, 
        the Director shall review the guarantee fees charged by each 
        enterprise and determine how such fees compare to the amount 
        determined by the Director under paragraph (1). If the Director 
        determines that such fees charged by an enterprise are less 
        than such amount, the Director shall, by order, require the 
        enterprise to increase such fees in such amount as the Director 
        determines necessary to comply with paragraph (1).
            ``(3) Flexibility in determination of increase.--To 
        determine the amount of any increase under this subsection, the 
        Director shall establish a pricing mechanism as the Director 
        considers appropriate, taking into consideration current market 
        conditions, including the current market share of an 
        enterprise, and any data collected pursuant to section 1601 of 
        the Housing and Economic Recovery Act of 2008 (12 U.S.C. 
        4514a).''.
    (c) Repeal of Mandatory Housing Activities.--
            (1) Repeal of housing goals.--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)), by striking clauses (i), (ii), and 
                (iv);
                    (C) in section 1339(h) (12 U.S.C. 4569(h)), by 
                striking paragraph (7);
                    (D) 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);
                    (E) 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
                    (F) in section 1371(a)(2) (12 U.S.C. 4631(a)(2)), 
                by striking ``with any housing goal established under 
                subpart B of part 2 of subtitle A of this title, with 
                section 1336 or 1337 of this title,''.
            (3) Repeal of housing trust fund.--
                    (A) Repeal.--The Federal Housing Enterprises 
                Financial Safety and Soundness Act of 1992 is amended 
                by striking sections 1337 and 1338 (12 U.S.C. 4567, 
                4568).
                    (B) Conforming amendments.--The Federal Housing 
                Enterprises Financial Safety and Soundness Act of 1992 
                is amended--
                            (i) in section 1303(24)(B) (12 U.S.C. 
                        4502(24)(B)), by striking ``1338 and'';
                            (ii) in section 1324(b)(1)(A) (12 U.S.C. 
                        4544(b)(1)(A)), as amended by the preceding 
                        provisions of this Act--
                                    (I) by striking clause (iii);
                                    (II) by striking the dash after 
                                ``which'' and inserting the text of 
                                clause (v) and a period; and
                                    (III) by striking clause (v);
                            (iii) in section 1339(b)--
                                    (I) by striking paragraph (1);
                                    (II) by striking the dash after 
                                ``consist of'' and inserting the text 
                                of paragraph (2) and a period; and
                                    (III) by striking paragraph (2); 
                                and
                            (iv) in section 1345 (12 U.S.C. 4585), by 
                        striking subsection (f).

SEC. 104. MODIFICATIONS TO INCREASES IN CONFORMING LOAN LIMITS.

    (a) Fannie Mae.--Section 302(b)(2) of the Federal National Mortgage 
Association Charter Act (12 U.S.C. 1717(b)(2)) is amended--
            (1) in the 8th sentence--
                    (A) in inserting ``or subtracting from'' after 
                ``adding to''; and
                    (B) by inserting ``or decrease, respectively'' 
                before the first comma;
            (2) by striking the 9th and 10th sentences;
            (3) by striking the last sentence;
            (4) by inserting ``(A)'' after the paragraph designation; 
        and
            (5) by adding at the end the following new subparagraph:
    ``(B) High-Cost Areas.--
            ``(i) Maximum original principal limitation.--Subject to 
        clause (ii), the limitations established pursuant to 
        subparagraph (A) shall also be increased, with respect to 
        properties of a particular size located in any area for which 
        115 percent of the median house price for such size residence 
        exceeds the limitation under subparagraph (A) for such size 
        residence, to the lesser of--
                    ``(I)(aa) for the first year beginning after the 
                date of the enactment of the Protecting American 
                Taxpayers and Homeowners Act of 2018, the difference 
                between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $20,000 in the case of a 1-family 
                        residence, $25,604 in the case of a 2-family 
                        residence, $30,950 in the case of a 3-family 
                        residence, and $38,463 in the case of a 4-
                        family residence;
                    ``(bb) for the second year beginning after the date 
                of the enactment of the Protecting American Taxpayers 
                and Homeowners Act of 2018, the difference between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $40,000 in the case of a 1-family 
                        residence, $51,208 in the case of a 2-family 
                        residence, $61,900 in the case of a 3-family 
                        residence, and $76,926 in the case of a 4-
                        family residence;
                    ``(cc) for the third year beginning after the date 
                of the enactment of the Protecting American Taxpayers 
                and Homeowners Act of 2018, the difference between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $60,000 in the case of a 1-family 
                        residence, $76,812 in the case of a 2-family 
                        residence, $92,850 in the case of a 3-family 
                        residence, and $103,389 in the case of a 4-
                        family residence;
                    ``(dd) for the fourth year beginning after the date 
                of the enactment of the Protecting American Taxpayers 
                and Homeowners Act of 2018, the difference between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $80,000 in the case of a 1-family 
                        residence, $102,416 in the case of a 2-family 
                        residence, $123,800 in the case of a 3-family 
                        residence, and $153,852 in the case of a 4-
                        family residence; and
                    ``(ee) for the fifth year beginning after the date 
                of the enactment of the Protecting American Taxpayers 
                and Homeowners Act of 2018, the difference between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $100,000 in the case of a 1-family 
                        residence, $128,020 in the case of a 2-family 
                        residence, $154,750 in the case of a 3-family 
                        residence, and $192,315 in the case of a 4-
                        family residence;
                    ``(II) the amount that is equal to 115 percent of 
                the median house price in such area for such size 
                residence; or
                    ``(III) the limitation in effect for such size 
                residence for such area, pursuant to the last sentence 
                of this paragraph as in effect immediately before the 
                enactment of the Protecting American Taxpayers and 
                Homeowners Act of 2018, as of the date of such 
                enactment.
            ``(ii) Prohibition on new high-cost areas.--The limitations 
        established pursuant to subparagraph (A) may not be increased, 
        with respect to properties of any size located in a particular 
        area unless, as of the date of the enactment of the Protecting 
        American Taxpayers and Homeowners Act of 2018, such foregoing 
        limitations in effect for such area for any size residence were 
        determined under the authority provided in the last sentence of 
        this paragraph, as in effect immediately before such 
        enactment.''.
    (b) Freddie Mac.--Section 305(a)(2) of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) is amended--
            (1) in the 7th sentence--
                    (A) in inserting ``or subtracting from'' after 
                ``adding to''; and
                    (B) by inserting ``or decrease, respectively'' 
                before the first comma;
            (2) by striking the 8th and 9th sentences;
            (3) by striking the last sentence;
            (4) by inserting ``(A)'' after the paragraph designation; 
        and
            (5) by adding at the end the following new subparagraph:
    ``(B) High-Cost Areas.--
            ``(i) Maximum original principal limitation.--Subject to 
        clause (ii), the limitations established pursuant to 
        subparagraph (A) shall also be increased, with respect to 
        properties of a particular size located in any area for which 
        115 percent of the median house price for such size residence 
        exceeds the limitation under subparagraph (A) for such size 
        residence, to the lesser of--
                    ``(I)(aa) for the first year beginning after the 
                date of the enactment of the Protecting American 
                Taxpayers and Homeowners Act of 2018, the difference 
                between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $20,000 in the case of a 1-family 
                        residence, $25,604 in the case of a 2-family 
                        residence, $30,950 in the case of a 3-family 
                        residence, and $38,463 in the case of a 4-
                        family residence;
                    ``(bb) for the second year beginning after the date 
                of the enactment of the Protecting American Taxpayers 
                and Homeowners Act of 2018, the difference between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $40,000 in the case of a 1-family 
                        residence, $51,208 in the case of a 2-family 
                        residence, $61,900 in the case of a 3-family 
                        residence, and $76,926 in the case of a 4-
                        family residence;
                    ``(cc) for the third year beginning after the date 
                of the enactment of the Protecting American Taxpayers 
                and Homeowners Act of 2018, the difference between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $60,000 in the case of a 1-family 
                        residence, $76,812 in the case of a 2-family 
                        residence, $92,850 in the case of a 3-family 
                        residence, and $103,389 in the case of a 4-
                        family residence;
                    ``(dd) for the fourth year beginning after the date 
                of the enactment of the Protecting American Taxpayers 
                and Homeowners Act of 2018, the difference between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $80,000 in the case of a 1-family 
                        residence, $102,416 in the case of a 2-family 
                        residence, $123,800 in the case of a 3-family 
                        residence, and $153,852 in the case of a 4-
                        family residence; and
                    ``(ee) for the fifth year beginning after the date 
                of the enactment of the Protecting American Taxpayers 
                and Homeowners Act of 2018, the difference between--
                            ``(AA) 150 percent of the limitation under 
                        subparagraph (A) for such size residence; and
                            ``(BB) $100,000 in the case of a 1-family 
                        residence, $128,020 in the case of a 2-family 
                        residence, $154,750 in the case of a 3-family 
                        residence, and $192,315 in the case of a 4-
                        family residence;
                    ``(II) the amount that is equal to 115 percent of 
                the median house price in such area for such size 
                residence; or
                    ``(III) the limitation in effect for such size 
                residence for such area, pursuant to the last sentence 
                of this paragraph as in effect immediately before the 
                enactment of the Protecting American Taxpayers and 
                Homeowners Act of 2018, as of the date of such 
                enactment.
            ``(ii) Prohibition on new high-cost areas.--The limitations 
        established pursuant to subparagraph (A) may not be increased, 
        with respect to properties of any size located in a particular 
        area unless, as of the date of the enactment of the Protecting 
        American Taxpayers and Homeowners Act of 2018, such foregoing 
        limitations in effect for such area for any size residence were 
        determined under the authority provided in the last sentence of 
        this paragraph, as in effect immediately before such 
        enactment.''.

SEC. 105. MANDATORY RISK-SHARING.

    Subpart A of part 2 of subtitle A of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 is amended by 
adding after section 1327 (12 U.S.C. 4547) the following new section:

``SEC. 1328. MANDATORY RISK-SHARING TRANSACTIONS.

    ``(a) In General.--The Director shall require each enterprise to 
develop and undertake transactions involving the guarantee by the 
enterprises of securities and obligations based on or backed by 
mortgages on residential real properties designed principally for 
occupancy of from 1 to 4 families that provide for private market 
participants to share or assume credit risk associated with such 
mortgages, as follows:
            ``(1) Required percentage of business.--The Director shall 
        require that not less than 10 percent of the annual business of 
        each enterprise (as measured in such manner as the Director 
        shall determine) in guaranteeing such securities and 
        obligations involve such transactions.
            ``(2) Multiple types of transactions.--The Director shall 
        require that in complying with paragraph (1), each enterprise 
        undertake multiple types of the various transactions and 
        structures described in subsection (b).
    ``(b) Types of Transactions.--The risk-sharing transactions 
referred to in subsection (a) may include transactions involving 
increased mortgage insurance requirements, credit-linked notes and 
securities, senior and subordinated security structures, and such other 
structures and transactions as the Director considers appropriate to 
increase private market assumption of credit risk.''.

SEC. 106. LIMITATION OF ENTERPRISE MORTGAGE PURCHASES TO QUALIFIED 
              MORTGAGES.

    (a) Fannie Mae.--Section 302(b) of the Federal National Mortgage 
Association Charter Act (12 U.S.C. 1717(b)) is amended by adding at the 
end the following new paragraph:
    ``(7) Effective for mortgages with application dates on or after 
January 10, 2019, the corporation may only purchase, make commitments 
to purchase, service, sell, lend on the security of, or otherwise deal 
in a mortgage that is a qualified mortgage (as such term is defined in 
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)), in accordance with the regulations 
issued by the Bureau of Consumer Financial Protection to carry out such 
section.''.
    (b) Freddie Mac.--Section 305(a) of the Federal Home Loan Mortgage 
Corporation Act (12 U.S.C. 1454(a)) is amended by adding at the end the 
following new paragraph:
    ``(6) Effective for mortgages with application dates on or after 
January 10, 2019, the Corporation may only purchase, make commitments 
to purchase, service, sell, lend on the security of, or otherwise deal 
in a mortgage that is a qualified mortgage (as such term is defined in 
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)), in accordance with the regulations 
issued by the Bureau of Consumer Financial Protection to carry out such 
section.''.

SEC. 107. PROHIBITION RELATING TO USE OF POWER OF EMINENT DOMAIN.

    (a) Fannie Mae.--Subsection (b) of section 302 of the Federal 
National Mortgage Association Charter Act (12 U.S.C. 1717(b)) is 
amended by adding at the end the following new paragraph:
    ``(7)(A) Notwithstanding any other provision of law, the 
corporation may not purchase or guarantee any mortgage that is secured 
by a structure or dwelling unit that is located within a county that 
contains any structure or dwelling unit that secures or secured a 
residential mortgage loan which mortgage loan was obtained by the State 
during the preceding 120 months by exercise of the power of eminent 
domain.
    ``(B) For purposes of this paragraph, the following definitions 
shall apply:
            ``(i) The term `residential mortgage loan' means a mortgage 
        loan that is evidenced by a promissory note and secured by a 
        mortgage, deed of trust, or other security instrument on a 
        residential structure or a dwelling unit in a residential 
        structure. Such term includes a first mortgage loan or any 
        subordinate mortgage loan.
            ``(ii) The term `State' includes the District of Columbia, 
        the Commonwealth of Puerto Rico, and any territory or 
        possession of the United States, and includes any agency or 
        political subdivision of a State.''.
    (b) Freddie Mac.--Subsection (a) of section 305 of the Federal Home 
Loan Mortgage Corporation Act (12 U.S.C. 1454(a)) is amended by adding 
at the end the following new paragraph:
    ``(6)(A) Notwithstanding any other provision of law, the 
Corporation may not purchase or guarantee any mortgage that is secured 
by a structure or dwelling unit that is located within a county that 
contains any structure or dwelling unit that secures or secured a 
residential mortgage loan which mortgage loan was obtained by the State 
during the preceding 120 months by exercise of the power of eminent 
domain.
    ``(B) For purposes of this paragraph, the following definitions 
shall apply:
            ``(i) The term `residential mortgage loan' means a mortgage 
        loan that is evidenced by a promissory note and secured by a 
        mortgage, deed of trust, or other security instrument on a 
        residential structure or a dwelling unit in a residential 
        structure. Such term includes a first mortgage or any 
        subordinate mortgage.
            ``(ii) The term `State' includes the District of Columbia, 
        the Commonwealth of Puerto Rico, and any territory or 
        possession of the United States, and includes any agency or 
        political subdivision of a State.''.

SEC. 108. RECEIVER'S DISCRETIONARY AUTHORITY TO CREATE RECEIVERSHIP 
              ENTITY.

    Section 1367 of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (12 U.S.C. 4617) is amended by striking 
subsection (i) and inserting the following:
    ``(i) Receivership Entity.--
            ``(1) Authority; organization.--The Agency, as receiver 
        appointed pursuant to subsection (a), may establish a 
        receivership entity in such form or structure as the Agency 
        deems appropriate to meet the purposes of receivership and this 
        section.
            ``(2) Powers.--Upon creation of such receivership entity, 
        the Agency may transfer to it any assets or liabilities of the 
        regulated entity in default as the Agency, in its discretion, 
        determines to be appropriate, and may authorize the 
        receivership entity to perform any temporary function that the 
        Agency, in its discretion, prescribes in accordance with this 
        section. The transfer of any assets or liabilities of a 
        regulated entity for which the Agency has been appointed 
        receiver shall be effective without any further approval under 
        Federal or State law, assignment, or consent with respect 
        thereto. Such authority is in addition to any other power the 
        Agency may have as receiver or may confer on the receivership 
        entity.
            ``(3) Exemption from taxation.--Notwithstanding any other 
        provision of Federal or State law, any receivership entity 
        established by the Agency pursuant to this section, its 
        franchise, property and income, shall be exempt from all 
        taxation now or hereafter imposed by the United States, by any 
        territory, dependency, or possession thereof, or by any State, 
        county, municipality, or local taxing authority.
            ``(4) Regulations.--The Agency may promulgate such 
        regulations as the Agency determines to be necessary or 
        appropriate to implement this subsection.
            ``(5) No federal status.--A receivership entity established 
        pursuant to this section shall not be an agency, establishment, 
        or instrumentality of the United States.''.

SEC. 109. AUTHORITY OF RECEIVER TO REPEAL ENTERPRISE CHARTER.

    Section 1367 of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (12 U.S.C. 4617) is amended by striking 
subsection (k) and inserting the following new subsection:
    ``(k) Repeal of Enterprise Charters.--
            ``(1) Fannie mae.--Effective five years after the date of 
        the enactment of the Protecting American Taxpayers and 
        Homeowners Act of 2018, the charter of the Federal National 
        Mortgage Association is repealed and the Federal National 
        Mortgage Association shall have no authority to conduct new 
        business under such charter, except that the provisions of such 
        charter in effect immediately before such repeal shall continue 
        to apply with respect to the rights and obligations of any 
        holders of--
                    ``(A) outstanding debt obligations of the Federal 
                National Mortgage Association, including any--
                            ``(i) bonds, debentures, notes, or other 
                        similar instruments;
                            ``(ii) capital lease obligations; or
                            ``(iii) obligations in respect of letters 
                        of credit, bankers' acceptances, or other 
                        similar instruments; or
                    ``(B) mortgage-backed securities guaranteed by the 
                Federal National Mortgage Association.
            ``(2) Freddie mac.--Effective five years after the date of 
        the enactment of the Protecting American Taxpayers and 
        Homeowners Act of 2018, the charter of the Federal Home Loan 
        Mortgage Corporation is repealed and the Federal Home Loan 
        Mortgage Corporation shall have no authority to conduct new 
        business under such charter, except that the provisions of such 
        charter in effect immediately before such repeal shall continue 
        to apply with respect to the rights and obligations of any 
        holders of--
                    ``(A) outstanding debt obligations of the Federal 
                Home Loan Mortgage Corporation, including any--
                            ``(i) bonds, debentures, notes, or other 
                        similar instruments;
                            ``(ii) capital lease obligations; or
                            ``(iii) obligations in respect of letters 
                        of credit, bankers' acceptances, or other 
                        similar instruments; or
                    ``(B) mortgage-backed securities guaranteed by the 
                Federal Home Loan Mortgage Corporation.
            ``(3) Existing guarantee obligations.--
                    ``(A) Explicit guarantee.--The full faith and 
                credit of the United States is pledged to the payment 
                of all amounts which may be required to be paid under 
                any obligation described in paragraph (1) or (2).
                    ``(B) Continued dividend payments.--Notwithstanding 
                any other provision of law, provision 2(a) (relating to 
                Dividend Payment Dates and Dividend Periods) and 
                provision 2(c) (relating to Dividend Rates and Dividend 
                Amount) of the Senior Preferred Stock Purchase 
                Agreement, or any provision of any certificate in 
                connection with such Agreement creating or designating 
                the terms, powers, preferences, privileges, 
                limitations, or any other conditions of the Variable 
                Liquidation Preference Senior Preferred Stock of an 
                enterprise issued pursuant to such Agreement--
                            ``(i) shall not be amended, restated, or 
                        otherwise changed to reduce the rate or amount 
                        of dividends in effect pursuant to such 
                        Agreement as of the Letter Agreements between 
                        the Secretary of the Treasury and the 
                        conservator of the enterprises dated December 
                        21, 2017, except that any amendment to such 
                        Agreement to facilitate the sale of assets of 
                        the enterprises shall be permitted; and
                            ``(ii) shall remain in effect until the 
                        guarantee obligations described under 
                        paragraphs (1)(B) and (2)(B) of this subsection 
                        are fully extinguished.
                    ``(C) Applicability.--All guarantee fee amounts 
                derived from the single-family mortgage guarantee 
                business of the enterprises in existence as of five 
                years after the date of the enactment of the Protecting 
                American Taxpayers and Homeowners Act of 2018 shall be 
                deposited into the United States Treasury, for purposes 
                of deficit reduction.
                    ``(D) Senior preferred stock purchase agreement 
                defined.--For purposes of this paragraph, the term 
                `Senior Preferred Stock Purchase Agreement' means--
                            ``(i) the Amended and Restated Senior 
                        Preferred Stock Purchase Agreement, dated 
                        September 26, 2008, as such Agreement has been 
                        amended on May 6, 2009, December 24, 2009, and 
                        August 17, 2012, respectively, as such 
                        Agreement has been modified by the Letter 
                        Agreements between the Secretary of the 
                        Treasury and the conservator of the enterprises 
                        dated December 21, 2017, and as such Agreement 
                        may be further amended and restated, entered 
                        into between the Department of the Treasury and 
                        each enterprise, as applicable; and
                            ``(ii) any provision of any certificate in 
                        connection with such Agreement creating or 
                        designating the terms, powers, preferences, 
                        privileges, limitations, or any other 
                        conditions of the Variable Liquidation 
                        Preference Senior Preferred Stock of an 
                        enterprise issued or sold pursuant to such 
                        Agreement.''.

                          TITLE II--FHA REFORM

            Subtitle A--Business Authority and Requirements

SEC. 201. AUTHORITY TO CARRY OUT FHA AND OTHER BUSINESS.

    (a) In General.--After the expiration of the transition period 
under section 551--
            (1) the FHA may exercise (in addition to powers set forth 
        in section 552) any authority and undertake any 
        responsibilities of the Secretary of Housing and Urban 
        Development under the National Housing Act (as amended by this 
        title) relating to mortgage insurance, except as otherwise 
        provided in this title and except that any authority that 
        requires an appropriation may be conducted only to the extent 
        that amounts are so appropriated;
            (2) any amounts in the Mutual Mortgage Insurance Fund under 
        section 202(a) of the National Housing Act (12 U.S.C. 1708(a)), 
        any amounts in the General Insurance Fund and Special Risk 
        Insurance Fund under sections 519 and 238(b), respectively, of 
        such Act (12 U.S.C. 1735c, 1715z-3(b)), and any amounts in the 
        Cooperative Management Housing Insurance Fund under section 
        213(k) of such Act (12 U.S.C. 1715e(k)), shall be used by the 
        FHA only--
                    (A) for meeting any obligations of such Funds 
                entered into before such transition date; and
                    (B) for carrying out the mortgage insurance 
                obligations of the FHA pursuant to section 662(1) and 
                paragraph (1) of this section; and
            (3) the FHA may exercise any authority of the FHA under 
        this title.
    (b) Termination of Secretary of HUD's FHA Authority.--After the 
expiration of the transition period under section 551, the Secretary of 
Housing and Urban Development may not exercise any authority under the 
National Housing Act relating to mortgage insurance. This subsection 
may not be construed to limit or otherwise affect the Secretary's 
authority under title I of the National Housing Act (12 U.S.C. 1702 et 
seq.).
    (c) Continuation of Obligations.--This section and section 552(1) 
may not be construed to affect the validity of any right, duty, or 
obligation of the United States or other person arising under or 
pursuant to any commitment or agreement lawfully entered into with the 
Secretary of Housing and Urban Development under the National Housing 
Act.

SEC. 202. ELIGIBLE SINGLE-FAMILY MORTGAGES.

    (a) In General.--Notwithstanding section 203 of the National 
Housing Act (12 U.S.C. 1709) or any other provision of law, the FHA may 
insure, and make commitments to insure, a mortgage on a 1- to 4-family 
residential property only if the mortgage complies with the following 
requirements:
            (1) Mortgage amount.--The mortgage shall involve a 
        principal obligation (including such initial service charges, 
        appraisal, inspection, and other fees as the FHA shall approve) 
        in an amount not to exceed the following amounts:
                    (A) Appraised value.--100 percent of the appraised 
                value of the property.
                    (B) Area limitation.--
                            (i) Maximum limit.--The lesser of the 
                        following amounts:
                                    (I) In the case of--
                                            (aa) a 1-family residence, 
                                        100 percent of the median 1-
                                        family house price in the area 
                                        in which such residence is 
                                        located, as determined by the 
                                        FHA; and
                                            (bb) in the case of a 2-, 
                                        3-, or 4-family residence, the 
                                        percentage of such median price 
                                        that bears the same ratio to 
                                        such median price as the dollar 
                                        amount limitation determined 
                                        under the sixth sentence of 
                                        section 305(a)(2) of the 
                                        Federal Home Loan Mortgage 
                                        Corporation Act (12 U.S.C. 
                                        1454(a)(2)) for a 2-, 3-, or 4-
                                        family residence, respectively, 
                                        bears to the dollar amount 
                                        limitation determined under 
                                        such section for a 1-family 
                                        residence; or
                                    (II) 150 percent of the dollar 
                                amount limitation determined under the 
                                sixth sentence of such section 
                                305(a)(2) for a residence of the 
                                applicable size.
                        For purposes of the preceding sentence, the 
                        term ``area'' means, for any property located 
                        within a metropolitan statistical area as 
                        established by the Office of Management and 
                        Budget, the zip code within which the property 
                        is located, and for any property not located 
                        within a metropolitan statistical area, the 
                        county within which the property is located. 
                        The dollar amount limitations referred to in 
                        this clause shall remain in effect for purposes 
                        of this clause notwithstanding the receivership 
                        or dissolution of the Federal Home Loan 
                        Mortgage Corporation.
                            (ii) Minimum limit.--Notwithstanding clause 
                        (i), the principal obligation limitation in 
                        effect for any area under this subparagraph may 
                        not be less than $200,000.
            (2) Downpayment.--The mortgage shall be executed by a 
        mortgagor who shall have paid on account of the property 
        subject to the mortgage an amount, in cash or its equivalent, 
        equal to or exceeding 3.5 percent of the appraised value of the 
        property, as determined by the FHA.
            (3) Prohibited mortgages.--The mortgage is not--
                    (A) a mortgage the proceeds of which are used to 
                prepay or pay off an existing loan that is not--
                            (i) a loan insured under the National 
                        Housing Act or under this title; or
                            (ii) a loan insured, made, or guaranteed 
                        under title V of the Housing Act of 1949; or
                    (B) a mortgage under which a portion of the 
                proceeds of the mortgage are used to prepay or pay off 
                the outstanding principal and interest owed on an 
                existing loan and a portion of such proceeds are made 
                available to or on behalf of the borrower.
            (4) Public purpose requirement.--The mortgage shall meet 
        the requirements of any one of the following subparagraphs:
                    (A) First-time homebuyer.--The mortgagor under the 
                mortgage is a first-time homebuyer (as such term is 
                defined in section 242) of the property subject to the 
                mortgage and the property is used as the principal 
                residence of the mortgagor.
                    (B) Low- or moderate-income mortgagor.--The 
                mortgagor under the mortgage is a member of a family as 
                follows:
                            (i) In general.--A family having an income 
                        that is less than 115 percent of the median 
                        income, as determined by the FHA, for the area 
                        in which the property subject to the mortgage 
                        is located, except that the FHA may establish 
                        income ceilings higher or lower than 115 
                        percent of the median for the area to take into 
                        consideration various sizes of families.
                            (ii) High-cost areas.--A family that--
                                    (I) resides in any area for which 
                                the median 1-family house price exceeds 
                                the maximum dollar amount limitation in 
                                effect for that year on the original 
                                principal obligation of a mortgage on a 
                                1-family residence that may be 
                                purchased by the Federal Home Loan 
                                Mortgage Corporation, as determined 
                                under section 305(a)(2) of the Federal 
                                Home Loan Mortgage Corporation Act (12 
                                U.S.C. 1454(a)(2)); and
                                    (II) has an income that is less 
                                than 150 percent of the median income, 
                                as determined by the FHA, for the area 
                                in which the property subject to the 
                                mortgage is located, except that the 
                                FHA may establish income ceilings 
                                higher or lower than 150 percent of the 
                                median for the area to take into 
                                consideration various sizes of 
                                families.
                For purposes of this subparagraph, the term ``area'' 
                has the meaning given such term in the last sentence of 
                paragraph (1)(B)(i).
                    (C) Counter-cyclical market adjustment.--The 
                property subject to the mortgage is located in a county 
                or counties for which a determination under this 
                subparagraph has been made, as follows:
                            (i) Determination.--A mortgage may be 
                        insured pursuant to this subparagraph only upon 
                        a determination by the Board, in consultation 
                        with the Chief Risk Officer that--
                                    (I) available credit for the 
                                purchase of 1- to 4-family homes 
                                located in such county or counties has 
                                contracted significantly, as measured 
                                by the credit availability measure of 
                                the Office of the Comptroller of the 
                                Currency;
                                    (II) housing prices in such county 
                                or counties have declined 
                                significantly, as measured by the 
                                applicable housing price index of the 
                                Federal Housing Finance Agency; or
                                    (III) available credit for the 
                                purchase of housing or such other 
                                economic conditions exist sufficient to 
                                evidence a significant contraction of 
                                capital in such county or counties, as 
                                measured by a metric identified by the 
                                Board, in consultation with the Chief 
                                Risk Officer, in a written notice made 
                                publicly available, and provided to the 
                                Congress, in advance of such 
                                determination.
                            (ii) Conditions of termination.--Upon 
                        making a determination under clause (i), the 
                        Board, in consultation with the Chief Risk 
                        Officer, shall also identify measurable 
                        criteria for determining that the conditions 
                        determined under clause (i) for such county or 
                        counties have ceased to exist.
                            (iii) Notice to congress.--Upon making a 
                        determination under clause (i), the Board shall 
                        provide written notice to the Congress of such 
                        determination and the specific measurable 
                        criteria identified pursuant to clause (ii).
                            (iv) Limitation.--The Board may not, 
                        pursuant to the authority under this 
                        subparagraph--
                                    (I) reduce premiums required to be 
                                paid for mortgage insurance under this 
                                title by more than 50 basis points from 
                                the premiums charged, immediately 
                                before the determination under this 
                                subparagraph was made for such county 
                                or counties, for mortgage insurance for 
                                mortgages on properties located in such 
                                county or counties;
                                    (II) increase the limitation under 
                                this title on the amount of the maximum 
                                principal obligation of a mortgage that 
                                may be insured; or
                                    (III) decrease the amount required 
                                to be paid, in cash or its equivalent, 
                                on account of a property subject to a 
                                mortgage insured under this title.
                            (v) Termination.--The authority to insure 
                        mortgages pursuant to this subparagraph on 
                        properties located in a county or counties 
                        shall terminate upon the earlier of--
                                    (I) the expiration of the 18-month 
                                period beginning upon the date that 
                                notification under clause (iii) is 
                                provided to the Congress of the 
                                determination under clause (i) with 
                                respect to such county or counties; or
                                    (II) the occurrence of the 
                                conditions identified pursuant to 
                                clause (ii) with respect to such county 
                                or counties.
                            (vi) Multiple determinations.--Nothing in 
                        this subparagraph may be construed to prevent 
                        multiple or consecutive periods for a county or 
                        counties during which mortgages on properties 
                        located in such county or counties may be 
                        insured pursuant to this subparagraph.
                    (D) Disaster area.--The Board of Directors 
                exercises the authority to insure mortgages under this 
                subparagraph, subject to the following requirements:
                            (i) Implementation.--The Board of Directors 
                        may implement authority to insure mortgages 
                        under this subparagraph only if the Board--
                                    (I) by a vote of the majority of 
                                its members, approves such 
                                implementation for a specific disaster 
                                area under clause (iii) and a specific 
                                disaster period under clause (iv); and
                                    (II) notifies the Congress and the 
                                President in writing of such approval, 
                                such disaster period, and such disaster 
                                area not less than 30 days before the 
                                commencement of the disaster period.
                            (ii) Eligible mortgages.--The FHA may 
                        insure, or make a commitment to insure, a 
                        mortgage under authority under this 
                        subparagraph only if--
                                    (I) the mortgage is made for the 
                                purchase of a principal residence by a 
                                mortgagor whose home (that the 
                                mortgagor occupied as an owner or 
                                tenant) was located in a disaster area 
                                described under clause (iii) and was 
                                destroyed or damaged to such an extent 
                                that reconstruction is required, as a 
                                result of a major disaster declared by 
                                the President under the Robert T. 
                                Stafford Disaster Relief and Emergency 
                                Assistance Act; and
                                    (II) the commitment for mortgage 
                                insurance is made during the disaster 
                                period established under clause (iv) 
                                for such disaster area.
                            (iii) Disaster area.--A disaster area may 
                        be established for purposes of this 
                        subparagraph only for the area affected by a 
                        major disaster, as declared by the President 
                        under the Robert T. Stafford Disaster Relief 
                        and Emergency Assistance Act, or a portion of 
                        such area, as determined by the FHA.
                            (iv) Disaster period.--A disaster period 
                        established for purposes of this subparagraph 
                        shall--
                                    (I) commence upon or after the 
                                declaration of the major disaster 
                                referred to in clause (iii); and
                                    (v) terminate on the date certain 
                                approved by the Board of Directors 
                                under clause (i)(I) and contained in 
                                the notice under clause (i)(II), which 
                                shall not be later than 18 months after 
                                the commencement of the period.
    (b) Conforming Amendments.--Section 203(b) of the National Housing 
Act (12 U.S.C. 1709(b)) is amended--
            (1) by striking paragraph (2); and
            (2) in paragraph (9)--
                    (A) by striking subparagraph (A); and
                    (B) in subparagraph (B), by striking ``this 
                paragraph'' and inserting ``section 242(a)(2) of the 
                Protecting American Taxpayers and Homeowners Act of 
                2018''.

SEC. 203. RISK TRANSFER.

    (a) Demonstration Model.--
            (1) In general.--The Administrator shall annually cede a 
        portion of the risk with respect to the mortgages insured by 
        the FHA to the private reinsurance or capital markets, or any 
        combination thereof, and at rates and terms that the 
        Administrator determines to be reasonable and appropriate, in 
        an amount that--
                    (A) is sufficient to maintain the ability of FHA to 
                pay claims;
                    (B) manages and limits the annual exposure of the 
                funds managed by FHA; and
                    (C) is subject to market conditions.
            (2) Development and implementation.--
                    (A) Timing.--The Administrator shall develop and 
                implement models and standards for ceding of risk as 
                required under paragraph (1) not later than the 
                expiration of the 24-month period beginning upon the 
                date of the enactment of this Act.
                    (B) Consultation with ginnie mae.--In developing 
                the models and standards under subparagraph (A), the 
                FHA shall consult with the Government National Mortgage 
                Association and shall review such Association's 
                guidelines relating to risk-sharing and other credit 
                enhancement activities.
    (b) Qualifications of Risk Transfer Partners.--
            (1) Establishment.--The model and standards established 
        under this section shall include guidelines for the 
        qualification of persons or entities to participate in risk 
        transfer and other credit enhancement activities with the FHA.
            (2) Procedures.--In establishing such guidelines, the FHA 
        shall review the guidelines established by the Director for 
        qualification of persons or entities to participate in risk 
        transfer, risk-sharing, and other credit enhancement activities 
        with the Federal National Mortgage Association or the Federal 
        Home Loan Mortgage Corporation. The FHA shall determine whether 
        such guidelines for such enterprises are sufficient for 
        purposes of the FHA, including whether such guidelines meet the 
        requirements under paragraph (3), and--
                    (A) if the FHA determines that such guidelines are 
                so sufficient, the FHA shall adopt such guidelines for 
                purposes of this section, to the extent appropriate, 
                with any changes necessary to account for differences 
                between the mortgages insured under this title and the 
                National Housing Act and the business under such 
                provisions and the business of such enterprises; or
                    (B) if the FHA determines that such guidelines are 
                not so sufficient, the FHA shall adopt such guidelines 
                for purposes of this section, to the extent appropriate 
                and with changes referred to in subparagraph (A), 
                together with additional criteria sufficient to address 
                any such insufficiency.
            (3) Content.--Such guidelines shall ensure that--
                    (A) persons or entities participating in risk 
                transfer, risk-sharing, and other credit enhancement 
                activities pursuant to this section have sufficient 
                capital, credit worthiness, and liquidity, and are 
                otherwise capable of fulfilling their obligations to 
                the FHA;
                    (B) such persons or entities and their principals 
                or officers are not engaged in a business the goals of 
                which would conflict with the purposes of the FHA or 
                the National Housing Act; for purposes of this section, 
                private mortgage insurance is not considered a business 
                the goals of which conflict with the purposes of the 
                FHA or the National Housing Act; and
                    (C) product or service delivery will be conducted 
                in a manner that is efficient and effective, and that 
                will comply with the requirement under section 521(d).
    (c) Risk Transfer Requirement.--
            (1) Requirement.--After the expiration of the 24-month 
        period referred to in subsection (a)(2)(A), the FHA shall 
        ensure that, in each fiscal year, not less than 10 percent of 
        any new business in mortgages on 1- to 4-family residential 
        property is insured pursuant to a risk transfer agreement with 
        respect to such mortgage that complies with the standards 
        established pursuant to subsection (a).
            (2) Limitation.--In any fiscal year, the FHA may not comply 
        with paragraph (1) by entering into risk transfer agreements 
        with respect only to one or a limited number of types or 
        categories of mortgages, or mortgages having only particular, 
        or a particular range of, original principal obligation 
        amounts, but shall enter into risk transfer agreements for all 
        types and amounts of mortgages insured by the FHA, to the 
        extent required under paragraph (1).
            (3) New business.--For purposes of this subsection, with 
        respect to a fiscal year, the term ``new business'' means the 
        aggregate dollar amount of the principal obligations of 
        mortgages for which a commitment to insure is made pursuant to 
        the National Housing Act or this title, as applicable, during 
        such fiscal year.
    (d) Reports to Congress.--Upon the expiration of each of the 3- and 
5-year periods beginning on the date of the enactment of this Act, the 
FHA shall submit a report to the Congress on the findings and results 
of risk transfer activities under this section. Such reports shall 
describe the model and standards for entering into risk transfer 
agreements, analyze appropriate dollar amount limits for the original 
principal obligations of mortgages that should be subject to a risk 
transfer requirement, identify the effects of such risk transfer 
activities on the Mutual Mortgage Insurance Fund, identify the effects 
of such risk transfer activities with respect to the Government 
National Mortgage Association, and make recommendations regarding 
expanding the risk transfer requirement under subsection (c).
    (e) Effective Date.--This section shall take effect on the date of 
the enactment of this Act. During the transition period under section 
551, any reference in this section to the FHA shall be construed to 
refer to the Secretary of Housing and Urban Development to the extent 
the Secretary has not delegated authority under this section to the FHA 
pursuant to section 552(1).

SEC. 204. PREMIUMS.

    (a) Establishment.--The FHA shall establish and collect premium 
payments for mortgage insurance provided pursuant to this title and the 
amendments made by this title, and shall provide for sharing of 
premiums with entities entering into risk transfer agreements with the 
FHA pursuant to section 203 based on the relative portion of the 
mortgage insured and the risk of loss borne.
    (b) Minimum Premiums.--In the case of mortgages on 1- to 4-family 
residential properties insured by the FHA, the premiums established and 
collected by the FHA shall include an annual premium payment payable 
during the entire term of the mortgage, in the following amounts:
            (1) LTV equal to or exceeding 80 percent.--In the case of a 
        mortgage for which the outstanding principal obligation is 
        equal to or exceeds 80 percent of the appraised value of the 
        property, the annual premium payment shall be an amount that is 
        not less than 0.55 percent of the remaining insured principal 
        balance (excluding the portion of the remaining balance 
        attributable to any premium collected at the time of insurance 
        and without taking into account delinquent payments or 
        prepayments), as the FHA shall establish.
            (2) LTV less than 80 percent.--In the case of a mortgage 
        for which the outstanding principal obligation is less than 80 
        percent of the appraised value of the property, the annual 
        premium payment shall be an amount that is less than the amount 
        of the annual premium payment established pursuant to paragraph 
        (1), as the FHA shall establish.
    (c) Procedures.--The FHA shall establish guidelines and procedures 
for mortgagors to apply for reductions of premiums pursuant to 
subsection (b)(2) and to submit evidence regarding the appraised value 
of the property subject to the mortgage.
    (d) Self-Sufficient Operations.--Notwithstanding section 203(c) of 
the National Housing Act (12 U.S.C. 1709(c)) or any other provision of 
law, premium rates established under this section shall be established 
in amounts sufficient to cover--
            (1) costs of providing mortgage insurance coverage under 
        this title;
            (2) costs for administration, operations, management, and 
        technology systems for the FHA for carrying out this title;
            (3) the capital ratio required for the Mutual Mortgage 
        Insurance Fund under section 216(b) and under section 219 with 
        respect to mortgage insurance for mortgages on multifamily 
        properties; and
            (4) salaries and expenses for officers and personnel of the 
        FHA.
    (e) Risk-Based Premiums.--The FHA may, with respect to mortgages on 
1- to 4-family residential properties insured by the FHA, establish a 
mortgage insurance premium structure involving a single premium payment 
collected prior to the insurance of the mortgage or annual payments 
(which may be collected on a periodic basis), or both.
    (f) Distributive Shares.--
            (1) Requirement.--Upon any termination of the insurance 
        obligation of the Mutual Mortgage Insurance Fund by payment of 
        any mortgage insured thereunder, which termination occurs after 
        the expiration of the 24-month period beginning on the date of 
        the enactment of this Act, the FHA shall distribute to the 
        mortgagor a share of the Participating Reserve Account of the 
        Mutual Mortgage Insurance Fund in such manner and amount as the 
        Secretary shall determine to be equitable and in accordance 
        with sound actuarial and accounting practice.
            (2) Amount.--In no event shall any distributable share 
        pursuant to paragraph (1) exceed the aggregate scheduled annual 
        premiums of the mortgagor to the year of termination of the 
        insurance.
            (3) Statute of limitations.--The Secretary shall not 
        distribute any share to an eligible mortgagor under this 
        subsection beginning on the date which is 6 years after the 
        date the Secretary first transmitted written notification of 
        eligibility to the last known address of the mortgagor, unless 
        the mortgagor has applied in accordance with procedures 
        prescribed by the Secretary for payment of the share within the 
        6-year period.
            (4) Applicability.--This subsection shall apply with 
        respect only to mortgages insured under the Mutual Mortgage 
        Insurance Fund after the date of the enactment of this Act.
    (g) Savings Provision.--Nothing in this section may be construed to 
affect premiums charged for mortgage insurance provided for mortgages 
insured before the date of the enactment of this Act.
    (h) Limitation.--Nothing in this section shall permit or be 
construed to permit the FHA to apply different premium rates to the 
same mortgage product during the same time period based solely on the 
characteristics of the mortgagor.

SEC. 205. AFFORDABILITY REQUIREMENTS FOR MULTIFAMILY MORTGAGE 
              INSURANCE.

    (a) In General.--Notwithstanding any provision of the National 
Housing Act or any other provision of law, the FHA may not insure any 
mortgage on a residential property having 5 or more dwelling units 
unless the property complies with such affordability requirements as 
the FHA shall establish to ensure that each such insured mortgage 
contributes to the financing of affordable housing for low- and 
moderate-income families, including such families in areas that the FHA 
determines to have high housing costs.
    (b) Limitation.--This section may not be construed to require the 
FHA to establish or enforce annual income verification or rent 
certification requirements for residential properties referred to in 
subsection (a).

SEC. 206. EFFECTIVE DATE.

    This subtitle and the amendments made by this subtitle, except for 
section 203, shall take effect upon the expiration of the transition 
period under section 551.

               Subtitle B--Financial Safety and Soundness

SEC. 211. AUTHORITY OF DIRECTOR.

    (a) Duty.--The Director of the Federal Housing Finance Agency shall 
supervise and regulate the safety and soundness of the FHA and the 
programs of the Rural Housing Service of the Department of Agriculture 
for housing loans made, insured, or guaranteed under title V of the 
Housing Act of 1949, and it shall be the duty of the Director to ensure 
that the FHA and such Rural Housing Service programs are adequately 
capitalized and operating safely.
    (b) Authority.--The Director may make such determinations, take 
such actions, and perform such functions as the Director determines 
necessary to meet the responsibilities of the Director under this 
subtitle.

SEC. 212. BUDGETS AND BUSINESS PLANS.

    (a) Submission of Business-Type Budget.--In each year, the FHA 
shall prepare and submit an annual budget as required under section 
9103 of title 31, United States Code, and shall submit such budget to 
the Director by a date sufficient to enable the Director to produce, 
pursuant to section 215(c) of this title, the credit subsidy cost 
estimates that are required for the budget of the United States 
Government under section 1105(a) of title 31, United States Code.
    (b) Submission of Budget and Credit Cost Estimates to OMB.--For 
purposes of inclusion in the budget of the United States Government, 
the FHA shall submit the annual budget of the FHA and the annual credit 
subsidy cost estimates produced pursuant to section 215(c) of this 
title to the Director of the Office of Management and Budget.
    (c) Reserves.--
            (1) Establishment.--Subject to sections 216 and 219, the 
        FHA may establish any reserve that the FHA determines is 
        necessary for the business operations of the FHA.
            (2) Amounts.--The FHA may hold as a reserve in any 
        financing account, as defined in section 502 of the 
        Congressional Budget Act of 1974 (2 U.S.C. 661a), such amounts 
        as the FHA considers necessary to comply with the capital 
        requirements established for the FHA under sections 216 and 219 
        of this title and to fulfill the purposes of this title.

SEC. 213. ANNUAL BUSINESS PLAN.

    The FHA shall establish a business plan on an annual basis and 
shall make such plan available for review by the Director. Such plan 
shall specify the products and operational strategy of the FHA, 
including plans to address compliance with the safety and soundness 
requirements applicable to the FHA.

SEC. 214. EXAMINATIONS, REPORTS, AND COST ESTIMATES.

    (a) Examinations.--The Director shall conduct such examinations of 
the FHA and the Rural Housing Service programs referred to in section 
211(a) as the Director determines necessary to evaluate the safety and 
soundness of the FHA and such programs. Such examinations shall be 
subject to and governed by subsections (c) through (h) of section 1317 
of the Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992 (12 U.S.C. 4517), except that the last sentence of subsection 
(c) shall not apply and any reimbursements referred to in such sentence 
shall be made from amounts collected under section 215 of this title.
    (b) Reports.--The Director may require the FHA and the Rural 
Housing Service to submit, within a reasonable period of time, any 
regular or special report, data, or other information whenever, in the 
judgment of the Director, such report, data, or information is 
necessary to carry out the Director's responsibilities under this 
title.
    (c) Credit Subsidy Cost Estimates.--
            (1) In general.--The Director shall produce and submit to 
        the Director of the Office of Management and Budget the annual 
        credit subsidy cost estimates for the FHA and the Rural Housing 
        Service programs referred to in section 211(a) required for the 
        President's budget. Such estimates shall be consistent with the 
        estimates of performance generated by the risk-based capital 
        model developed in accordance with section 217(b), and with the 
        President's economic forecast.
            (2) Unified estimates.--The annual credit subsidy cost 
        estimates produced under this subsection by the Director shall 
        be reported on a unified basis, which shall be based upon the 
        business of the FHA, and the Rural Housing Service programs 
        referred to in section 211(a), as a whole.
    (d) Annual Report on Safety and Soundness.--The Director shall 
submit an annual report to Congress and the Director of the Office of 
Management and Budget on the financial safety and soundness of the FHA 
and the Rural Housing Service programs referred to in section 211(a), 
as measured pursuant to this subtitle.

SEC. 215. REIMBURSEMENT OF COSTS.

    (a) Assessment and Collection.--The Director shall assess and 
collect from the FHA and the Secretary of Agriculture annual 
assessments in such amounts determined by the Director as necessary to 
reimburse the Federal Housing Finance Agency for the reasonable costs 
and expenses of the activities undertaken by such Agency to carry out 
the duties of the Director under this subtitle, including the costs of 
examination, enforcement, and oversight expenses.
    (b) Requirements.--Annual assessments imposed by the Director shall 
be--
            (1) imposed prior to October 1 of each year;
            (2) allocated among the FHA and the Secretary of 
        Agriculture proportionally based on the costs and expenses of 
        the Agency of carrying out the duties under this subtitle with 
        respect to FHA and the Rural Housing Service program referred 
        to in section 211(a), respectively;
            (3) collected at such time or times during each assessment 
        year as determined necessary or appropriate by the Director; 
        and
            (4) treated in the same manner as provided under section 
        1316(f) of the Federal Housing Enterprises Financial Safety and 
        Soundness Act of 1992(12 U.S.C. 4516(f)) with respect to 
        amounts received by the Director from assessments under section 
        1316 of such Act, except that amounts from assessments under 
        this section may be used only for expenses of the Director and 
        the Agency relating to the functions and responsibilities under 
        this subtitle.

SEC. 216. MUTUAL MORTGAGE INSURANCE FUND CAPITAL RESERVE.

    (a) Segregation of Books.--To ensure accurate determinations of the 
capital ratio under subsection (b) of this section and such ratio under 
section 205(f) of the National Housing Act, as amended by subsection 
(d) of this section, the FHA shall establish separate accounts in the 
Mutual Mortgage Insurance Fund and take such other actions as may be 
necessary to segregate the following amounts:
            (1) Capital attributable to new business.
            (2) Capital attributable to mortgages that become insured 
        before the expiration of the transition period under section 
        551.
    (b) Capital Ratio for New Business.--The FHA shall ensure that the 
account for the Mutual Mortgage Insurance Fund that is established 
pursuant to subsection (a)(1) of this section at all times maintains a 
capital ratio of not less than 4.0 percent.
    (c) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Capital.--The term ``capital'' means the economic net 
        worth of the account of the Fund that is established pursuant 
        to subsection (a)(1) of this section, as determined by the FHA 
        under the annual audit required under section 538 of the 
        National Housing Act (12 U.S.C. 1735f-16).
            (2) Capital ratio.--The term ``capital ratio'' means the 
        ratio of capital to unamortized insurance-in-force.
            (3) Economic net worth.--The term ``economic net worth'' 
        means the current cash available to the account of the Fund 
        that is established pursuant to subsection (a)(1) of this 
        section, plus the net present value of all future cash inflows 
        and outflows expected to result from outstanding new business.
            (4) Fund.--The term ``Fund'' means the Mutual Mortgage 
        Insurance Fund established under section 205 of the National 
        Housing Act (12 U.S.C. 1711).
            (5) New business.--The term ``new business'' means 
        mortgages that are obligations of the Mutual Mortgage Insurance 
        Fund that become insured by the FHA after the expiration of the 
        transition period under section 551.
            (6) Unamortized insurance in force.--The term ``unamortized 
        insurance-in-force'' means the remaining obligation on 
        outstanding new business, as estimated by the FHA.
    (d) Treatment of Existing Capital Ratio.--Paragraph (4) of section 
205(f) of the National Housing Act (12 U.S.C. 1711(f)(4)) is amended--
            (1) in subparagraph (A), by striking ``Mutual Mortgage 
        Insurance Fund'' and inserting ``account of the Mutual Mortgage 
        Insurance Fund that is established pursuant to section 
        216(a)(2) of the Protecting American Taxpayers and Homeowners 
        Act of 2018'';
            (2) in subparagraph (C)--
                    (A) by striking ``Fund'' the first place such term 
                appears and inserting ``account of the Mutual Mortgage 
                Insurance Fund that is established pursuant to section 
                216(a)(2) of the Protecting American Taxpayers and 
                Homeowners Act of 2018''; and
                    (B) by striking ``the Fund.'' and inserting the 
                following: ``such account that become insured by the 
                Secretary of Housing and Urban Development (or the FHA, 
                pursuant to subtitle B of title II of the Protecting 
                American Taxpayers and Homeowners Act of 2018) before 
                the expiration of the transition period under section 
                551 of such Act.''; and
            (3) in subparagraph (D), by inserting before the comma the 
        following: ``and become insured before the expiration of the 
        transition period under section 551 of the Protecting American 
        Taxpayers and Homeowners Act of 2018''.

SEC. 217. CAPITAL CLASSIFICATIONS AND PERFORMANCE MEASURES FOR MUTUAL 
              MORTGAGE INSURANCE FUND.

    (a) Capital Classification; Effect on Insurance Authority.--
            (1) Adequately capitalized.--At any time that the capital 
        ratio (as such term is defined in section 216(c)(2) of this 
        title) is greater than 4.0 percent, the account for the Mutual 
        Mortgage Insurance Fund established pursuant to section 
        216(a)(1) shall be classified as adequately capitalized for 
        purposes of this subtitle.
            (2) Undercapitalized.--At any time that the capital ratio 
        is greater than 0.0 percent and is less than 4.0 percent, the 
        account for the Mutual Mortgage Insurance Fund established 
        pursuant to section 216(a)(1) shall be classified as 
        undercapitalized for purposes of this subtitle.
            (3) Significantly undercapitalized.--At any time that the 
        capital ratio is less than 0.0 percent--
                    (A) the account for the Mutual Mortgage Insurance 
                Fund established pursuant to section 216(a)(1) shall be 
                classified as significantly undercapitalized for 
                purposes of this subtitle; and
                    (B) the Director may, pursuant to section 
                218(a)(1), take actions under section 218(b).
            (4) Quarterly determination of capital ratio.--The Director 
        shall determine the capital ratio and the capital 
        classification of the account for the Mutual Mortgage Insurance 
        Fund established pursuant to section 216(a)(1) for purposes of 
        this subtitle not less frequently than each calendar quarter.
    (b) Stress Test.--
            (1) In general.--The Director shall develop a risk-based 
        capital model to determine the amount of capital that is 
        sufficient for the FHA to maintain positive capital during a 
        period of economic stress. The model shall incorporate the 
        assumptions under paragraphs (2) and (3).
            (2) Credit risk.--For purposes of paragraph (1), the 
        Director shall assume that, during the period of economic 
        stress referred to in paragraph (1), credit losses occur at a 
        rate consistent with a nationwide economic recession of average 
        severity based on nationwide economic recessions since 1950.
            (3) Other risks.--For purposes of paragraph (1), the 
        Director shall make assumptions about such other aspects of the 
        period of economic stress as the Director determines are 
        appropriate and consistent.
            (4) Timing.--Not later than the expiration of the 180-day 
        period beginning on the date of the enactment of this Act, the 
        Director shall submit the risk-based capital model developed 
        pursuant to this to the Congress. The Director may not 
        implement or otherwise employ such risk-based capital model 
        before the expiration of the 120-day period beginning upon the 
        submission of such model to the Congress.
    (c) Capital Restoration Plan Requirement.--If the account for the 
Mutual Mortgage Insurance Fund established pursuant to section 
216(a)(1) is classified as undercapitalized or significantly 
undercapitalized, the FHA shall--
            (1) submit to the Director a capital restoration plan 
        meeting the requirements of section 218(d) for raising or 
        restoring the capital of such account to an amount not less 
        than the amount required for such account to be classified as 
        adequately capitalized; and
            (2) upon approval by the Director, carry out such plan.
If the Director disapproves a capital restoration plan submitted under 
this subsection, the Director shall convey in writing reasons for such 
disapproval and shall provide for the FHA to resubmit a revised plan 
for approval by the Director.

SEC. 218. ENFORCEMENT.

    (a) Grounds.--The Director may take actions under subsection (b) 
only if--
            (1) the account for the Mutual Mortgage Insurance Fund 
        established pursuant to section 216(a)(1) is classified under 
        section 217(a) as significantly undercapitalized;
            (2) the account for the Mutual Mortgage Insurance Fund 
        established pursuant to section 216(a)(1) is classified under 
        section 217(a) as undercapitalized and--
                    (A) the FHA does not submit a capital restoration 
                plan that is substantially in compliance with section 
                217(c) within the applicable period, or the Director 
                disapproves the capital restoration plan submitted by 
                the FHA; or
                    (B) the FHA has failed to make, in good faith, 
                reasonable efforts necessary to comply with the capital 
                restoration plan; or
            (3) the FHA is engaging or has engaged, or the Director has 
        reasonable cause to believe that the FHA is about to engage 
        in--
                    (A) any conduct that is likely to threaten the 
                adequacy of the capital of the account for the Mutual 
                Mortgage Insurance Fund established pursuant to section 
                216(a)(1);
                    (B) any failure to comply with any written 
                agreement entered into by the FHA with the Director; or
                    (C) any failure to comply with any request by the 
                Director for a report, data, or information under 
                section 214(b).
    (b) Actions.--The Director may, under this subsection, require the 
FHA--
            (1) to cease and desist from any conduct or activity that--
                    (A) with respect to the account for the Mutual 
                Mortgage Insurance Fund established pursuant to section 
                216(a)(1), is described in paragraph (2) or (3) of 
                subsection (a), or that contributes to the condition 
                described in subsection (a)(1); and
                    (B) with respect to any other Fund, contributes to 
                a failure to meet a capital reserve requirement 
                established pursuant to section 219(a) or is likely to 
                threaten the adequacy of the capital of such Fund; and
            (2) to take corrective or remedial action, including--
                    (A) restricting the growth of, or contracting, any 
                category of assets or liabilities;
                    (B) reducing, modifying, or terminating any 
                activity that the Director determines creates excessive 
                risk to the FHA;
                    (C) terminating agreements or contracts;
                    (D) engaging or employing qualified employees (who 
                may be subject to approval by the Director at the 
                direction of the Director); or
                    (E) submitting to the Director for review and 
                approval a detailed and complete operating plan.
    (c) Reports.--If the Director is authorized under subsection (a) of 
this section or section 219(b) to take action under subsection (b) of 
this section and determines not to take any such action, the Director 
shall prepare a report detailing the basis of the Director's decision 
not to take such action and shall, within 30 days of the decision, 
submit the report to the President, the Director of the Office of 
Management and Budget, the Comptroller General of the United States, 
the Committee on Financial Services of the House of Representatives, 
and the Committee on Banking, Housing, and Urban Affairs of the Senate.
    (d) Capital Restoration Plans.--A capital restoration plan 
submitted pursuant to section 217(c), 219(b), or 220(d)(3) shall--
            (1) set forth a feasible plan for raising or restoring the 
        capital of the Fund for which it is prepared;
            (2) specify the level of capital to be achieved and 
        maintained;
            (3) be submitted to the Director within 45 days from the 
        date of notification, or if the Director determines that an 
        extension is necessary, within such additional time as the 
        Director so determines;
            (4) describe the actions that the FHA shall take for such 
        Fund to become classified as adequately capitalized;
            (5) establish a schedule for completing the actions set 
        forth in the plan; and
            (6) specify the types and levels of activities (including 
        existing and new business activities) in which the FHA shall 
        engage during the term of the plan.

SEC. 219. CAPITAL RESERVE REQUIREMENTS FOR OTHER FUNDS.

    (a) Requirements.--The Director shall establish capital reserve 
requirements for--
            (1) the General Insurance Fund established under section 
        519 of the National Housing Act (12 U.S.C. 1735c);
            (2) the Special Risk Insurance Fund established under 
        section 238(b) of such Act (12 U.S.C. 1715z-3(b));
            (3) the Cooperative Management Housing Insurance Fund 
        established under section 213(k) of such Act (12 U.S.C. 
        1715e(k));
            (4) the Rural Housing Insurance Fund established under 
        title V of the Housing Act of 1949 (42 U.S.C. 1471), or the 
        various accounts of such Fund; and
            (5) the Home Equity Conversion Insurance Fund established 
        under section 255(s) of the National Housing Act (12 U.S.C. 
        1715-20(s)).
    (b) Enforcement.--The Director may enforce compliance with the 
requirements under subsection (a) of this section with respect to a 
Fund by taking action under section 218(b) or by requiring submission 
of a capital restoration plan for such Fund meeting the requirements of 
section 218(d).

SEC. 220. AUTHORITY TO ESTABLISH TEMPORARY CAPITAL RATIOS IN CASES OF 
              NATIONWIDE COUNTERCYCLICAL MARKET ADJUSTMENT.

    (a) Authority; Determination.--The Director may suspend the 
applicability of the capital ratio under section 716(b) for the Mutual 
Mortgage Insurance Fund or any capital reserve requirement established 
pursuant to section 219 for any Fund specified under such section and 
establish a temporary alternative capital ratio with respect to such 
Fund for a specified period of time, but only upon a determination by 
the Board, in consultation with the Chief Risk Officer, that--
            (1) available credit throughout the United States or a 
        significant portion of the United States for the purchase of 
        the types of residences for which mortgages that obligations of 
        such Fund are made has contracted significantly, as measured by 
        the credit availability measure of the Office of the 
        Comptroller of the Currency;
            (2) housing prices throughout the United States or a 
        significant portion of the United States have declined 
        significantly, as measured by the applicable housing price 
        index of the Federal Housing Finance Agency; or
            (3) available credit for the purchase of housing or such 
        other economic conditions exist sufficient to evidence a 
        significant contraction of capital throughout the United States 
        or a significant portion of the United States, as measured by a 
        metric identified by the Director and the Chief Risk Officer in 
        a written notice made publicly available, and provided to the 
        Congress, in advance of such determination.
    (b) Conditions of Termination.--Upon making a determination under 
subsection (a), the Board, after consultation with the Chief Risk 
Officer, shall also identify measurable criteria for determining that 
the conditions determined under subsection (a) have ceased to exist.
    (c) Notice to Congress.--Upon making a determination under 
subsection (a), the Board, after consultation with the Chief Risk 
Officer, shall provide written notice to the Congress of such 
determination and the specific measurable criteria identified pursuant 
to subsection (b).
    (d) Effect of Temporary Alternative Capital Ratio.--During any 
period that a temporary alternative capital ratio is in effect pursuant 
to subsection (a) with respect to any Fund--
            (1) in the case of a temporary capital ratio for the Mutual 
        Mortgage Insurance Fund, subsections (a) and (c) of section 217 
        and section 218 shall not apply;
            (2) such temporary and alternative capital classifications 
        as the Director shall establish shall be in effect with respect 
        to such Fund; and
            (3) the Director shall require the FHA to submit and carry 
        out a capital restoration plan for such Fund meeting the 
        requirements under section 218(d) and may take actions under 
        section 218(b) with respect to such Fund only in accordance 
        with such standards relating to such temporary and alternative 
        capital classifications for such Fund as the Director shall 
        establish.
    (e) Termination.--Any temporary alternative capital ratio 
established pursuant to subsection (a) shall terminate upon the earlier 
of--
            (1) the expiration of the 18-month period beginning upon 
        the date that notification under subsection (c) is provided to 
        the Congress of the determination under subsection (a); or
            (2) the occurrence of the conditions identified pursuant to 
        subsection (b).
    (f) Multiple Determinations.--Nothing in this section may be 
construed to prevent multiple or consecutive periods during which 
temporary alternative capital ratios are in effect pursuant to this 
section.

SEC. 221. 7-YEAR BORROWER SUSPENSION FOR FORECLOSURE.

    (a) FHA.--
            (1) In general.--Except as provided in paragraph (2), with 
        respect to any mortgage on a 1- to 4-family residential 
        property that is foreclosed upon, during the 7-year period 
        beginning upon the date of such foreclosure, the FHA may not 
        newly insure, under any provision of this title, the National 
        Housing Act, or any FHA program, any other mortgage under which 
        the mortgagor is the individual who was the mortgagor under the 
        mortgage that was foreclosed upon.
            (2) Waiver.--The FHA shall provide, by regulation, for the 
        FHA to waive the applicability of paragraph (1) with respect to 
        a mortgagor in cases in which hardship circumstances materially 
        contributed to the default and foreclosure of the mortgage. For 
        purposes of this subsection, such hardship circumstances may 
        include divorce, job or other income loss, health problems, 
        death in the family, and such other situations as the FHA may 
        prescribe.
    (b) Rural Housing.--Section 505 of the Housing Act of 1949 (42 
U.S.C. 1475) is amended by adding at the end the following new 
subsection:
    ``(c) 7-year Borrower Suspension for Foreclosure.--
            ``(1) In general.--Except as provided in paragraph (2), 
        with respect to any mortgage on a 1- to 4-family residential 
        property that is foreclosed upon, during the 7-year period 
        beginning upon the date of such foreclosure, the Secretary may 
        not newly make, insure, or guarantee, under any provision of 
        this title, any other loan under which the borrower is 
        individual who was the mortgagor under the mortgage that was 
        foreclosed upon.
            ``(2) Waiver.--The Secretary shall provide, by regulation, 
        for waiver of the applicability of paragraph (1) with respect 
        to a borrower in cases in which hardship circumstances 
        materially contributed to the default and foreclosure of the 
        mortgage. For purposes of this subsection, such hardship 
        circumstances may include divorce, job or other income loss, 
        health problems, death in the family, and such other situations 
        as the Secretary may prescribe.''.
    (c) Regulations.--The FHA and the Secretary of Agriculture shall 
jointly issue regulations required under subsection (a) of this section 
and section 505(c) of the Housing Act of 1949, as added by subsection 
(b) of this section.

SEC. 222. BORROWER INELIGIBILITY UPON SECOND FORECLOSURE.

    (a) FHA.--If any individual is the mortgagor under any two 
mortgages on 1- to 4-family residential properties that have been 
foreclosed upon, the FHA may not newly insure, under any provision of 
this title, the National Housing Act, or any FHA program, any other 
mortgage under which such individual is the mortgagor.
    (b) Rural Housing.--Section 505 of the Housing Act of 1949 (42 
U.S.C. 1475), as amended by the preceding provisions of this title, is 
further amended by adding at the end the following new subsection:
    ``(d) Borrower Ineligibility Upon Second Foreclosure.--If any 
individual is the mortgagor under any two mortgages for 1- to 4-family 
residential properties that have been foreclosed upon, the Secretary 
may not newly make, insure, or guarantee, under any provision of this 
title, any other loan under which such individual is the borrower.''.

SEC. 223. LIMITATION ON SELLER CONCESSIONS.

    (a) FHA.--The FHA may not newly insure, under any provision of this 
title, the National Housing Act, or any FHA program, any mortgage on a 
1- to 4-family residential property with respect to which the seller of 
the property subject to such mortgage (or any third party or entity 
that is reimbursed directly or indirectly by the seller) contributes 
toward the acquisition of the property by the mortgagor any amount in 
excess of 3 percent of the lesser of the sale price of the property or 
the appraised value of the property as of the time of such sale.
    (b) Rural Housing.--Section 501 of the Housing Act of 1949 (42 
U.S.C. 1471), as amended by the preceding provisions of this title, is 
further amended by adding at the end the following new subsection:
    ``(n) Limitation on Seller Concessions.--The Secretary may not 
newly make, insure, or guarantee, under any provision of this title, 
any loan for a 1- to 4-family residential property with respect to 
which the seller of the property for which the loan is made (or any 
third party or entity that is reimbursed directly or indirectly by the 
seller) contributes toward the acquisition of the property by the 
borrower any amount in excess of 3 percent of the lesser of the sale 
price of the property or the appraised value of the property as of the 
time of such sale.''.

SEC. 224. LENDER REPURCHASE REQUIREMENT.

    (a) Requirement.--The FHA may not newly insure, under any provision 
of this title, the National Housing Act, or any FHA program, any 
mortgage on a 1- to 4-family residential property unless the mortgagee 
under such mortgage enters into such binding agreements as the FHA 
considers necessary to ensure that, if the mortgagor is in default with 
respect to the mortgagor's obligation to make payments under the 
mortgage for 60 or more consecutive days during the 6-month period 
beginning upon origination of the mortgage, the mortgagee will, except 
as provided pursuant to subsection (b) and upon notice by the FHA, 
repurchase such mortgage in an amount equal to the remaining principal 
obligation under the mortgage, as determined in accordance with 
guidelines issued by the FHA.
    (b) Exception.--The FHA shall provide, by regulation, for the FHA 
to waive the applicability of any binding agreements regarding 
repurchase of a mortgage entered into by a mortgagee pursuant to 
subsection (a) in cases in which hardship circumstances for the 
mortgagor materially contributed to the default of the mortgage. For 
purposes of this subsection, such hardship circumstances may include 
divorce, job or other income loss, health problems, death in the 
family, and such other situations as the FHA may prescribe.
    (c) Effective Date.--This section shall take effect on the date of 
the enactment of this Act. During the transition period under section 
551, any reference in this section to the FHA shall be construed to 
refer to the Secretary of Housing and Urban Development to the extent 
the Secretary has not delegated authority under this section to the FHA 
pursuant to section 552(1).

SEC. 225. INDEMNIFICATION BY MORTGAGEES.

    (a) In General.--If the FHA determines that at or before the time 
of loan closing the mortgagee knew, or should have known based on the 
information then reasonably available to the mortgagee, of a serious 
and material violation of the requirements established by the FHA with 
respect to a mortgage executed after the date of the enactment of this 
Act by such mortgagee approved by the FHA under the direct endorsement 
program or insured by a mortgagee pursuant to the delegation of 
authority under section 256 of the National Housing Act (12 U.S.C. 
1715z-21) such that the mortgage loan should not have been approved and 
endorsed for insurance, and the FHA pays an insurance claim with 
respect to the mortgage within a reasonable period specified by the 
FHA, the FHA may require the mortgagee approved by the FHA under the 
direct endorsement program or the mortgagee delegated authority under 
such section 256 to indemnify the FHA for the loss, or any portion 
thereof, if the violation was a materially contributing factor to the 
cause of the mortgage default.
    (b) Fraud or Material Misrepresentation.--If fraud or material 
misrepresentation was involved in connection with the origination or 
underwriting of a mortgage executed after enactment by the mortgagee 
and the FHA determines that at or before the time of loan closing such 
mortgagee knew or should have known, based on the information then 
reasonably available to such mortgagee, of the fraud or material 
misrepresentation such that the mortgage loan should not have been 
approved and endorsed for insurance, the FHA shall require the 
mortgagee approved by the FHA under the direct endorsement program or 
the mortgagee delegated authority under such section 256 to indemnify 
the FHA for the loss, or any portion thereof, if the fraud or material 
misrepresentation was a materially contributing factor to the cause of 
the mortgage default.
    (c) Appeals Process.--The FHA shall, by regulation, establish an 
appeals process for mortgagees to appeal indemnification determinations 
made pursuant to subsection (a) or (b).
    (d) Requirements and Procedures.--The FHA shall issue regulations 
establishing appropriate requirements and procedures governing the 
indemnification of the FHA by the mortgagee, including public reporting 
on--
            (1) the number of loans that--
                    (A) were not originated or underwritten in 
                accordance with the requirements established by the 
                FHA;
                    (B) involved fraud or material misrepresentation in 
                connection with the origination or underwriting that 
                was a material contributing factor to the cause of the 
                mortgage default; and
                    (C) the financial impact on the Mutual Mortgage 
                Insurance Fund when indemnification is required.
    (e) Quality Control and Assurance.--
            (1) Manual.--The FHA shall, pursuant to its existing 
        regulatory authority, issue and update annually a manual, 
        handbook, or guide that collects all of the origination and 
        underwriting requirements that a mortgagee must follow to make 
        residential mortgage loans eligible for insurance by the FHA 
        which shall--
                    (A) provide clear and concise directions so that a 
                mortgagee can reasonably know what is expected of it;
                    (B) identify examples of specific serious and 
                material violations that could be the basis for an 
                indemnification demand under this section;
                    (C) apply nationally and be interpreted by the FHA 
                uniformly with respect to all mortgages endorsed for 
                insurance; and
                    (D) permit prospective changes with reasonable 
                advance notice to mortgagees, which such changes must 
                be incorporated into the following year's revised 
                version of the manual, handbook, or guide and may not 
                provide for retroactive changes to mortgages previously 
                endorsed for insurance.
            (2) Requirements.--The FHA shall--
                    (A) make prompt initial determinations of a 
                mortgagee's potential liability for either 
                indemnification under this section or other 
                administrative remedies or sanctions that may be 
                available under the National Housing Act or other 
                applicable laws, based on either self-reports by the 
                mortgagee or other findings by the FHA through its 
                examination processes of potential serious and material 
                violations of such origination and underwriting 
                requirements established under paragraph (1) or other 
                fraud and material misrepresentations;
                    (B) promptly notify the mortgagee of such initial 
                determination and afford the lender the opportunity to 
                provide additional information and analysis before a 
                final determination is made; and
                    (C) not pursue indemnification under subsections 
                (a) and (b) with respect to those mortgages reviewed 
                under this subsection unless an initial determination 
                of mortgagee liability is made and communicated to the 
                mortgagee within six months of the FHA's receipt of 
                information that is reasonably sufficient to enable the 
                FHA to determine initially that a serious and material 
                violation or fraud or material misrepresentation may 
                have occurred.
    (f) Effective Date.--This section shall take effect on the date of 
the enactment of this Act. During the transition period under section 
551, any reference in this section to the FHA shall be construed to 
refer to the Secretary of Housing and Urban Development to the extent 
the Secretary has not delegated authority under this section to the FHA 
pursuant to section 552(1).

SEC. 226. PROHIBITIONS RELATING TO USE OF POWER OF EMINENT DOMAIN.

    (a) FHA.--
            (1) In general.--Notwithstanding any other provision of 
        law, the FHA may not newly insure, under any provision of this 
        title, the National Housing Act, or any FHA program, any 
        mortgage that is secured by a structure or dwelling unit that 
        is located within a county that contains any structure or 
        dwelling unit that secures or secured a residential mortgage 
        loan which mortgage loan was obtained by the State during the 
        preceding 120 months by exercise of the power of eminent 
        domain.
            (2) Definitions.--For purposes of this paragraph, the 
        following definitions shall apply:
                    (A) Residential mortgage loan.--The term 
                ``residential mortgage loan'' means a mortgage loan 
                that is evidenced by a promissory note and secured by a 
                mortgage, deed of trust, or other security instrument 
                on a residential structure or a dwelling unit in a 
                residential structure. Such term includes a first 
                mortgage or any subordinate mortgage.
                    (B) State.--The term ``State'' includes the 
                District of Columbia, the Commonwealth of Puerto Rico, 
                and any territory or possession of the United States, 
                and includes any agency or political subdivision of a 
                State.
    (b) Rural Housing.--Section 501 of the Housing Act of 1949 (42 
U.S.C. 1471), as amended by the preceding provisions of this title, is 
further amended by adding at the end the following new subsection:
    ``(o) Prohibition Relating to Use of Power of Eminent Domain.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the Secretary may not newly guarantee, make, or insure 
        under this title any mortgage that is secured by a structure or 
        dwelling unit that is located within a county that contains any 
        structure or dwelling unit that secures or secured a 
        residential mortgage loan which mortgage loan was obtained by 
        the State during the preceding 120 months by exercise of the 
        power of eminent domain.
            ``(2) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Residential mortgage loan.--The term 
                `residential mortgage loan' means a mortgage loan that 
                is evidenced by a promissory note and secured by a 
                mortgage, deed of trust, or other security instrument 
                on a residential structure or a dwelling unit in a 
                residential structure. Such term includes a first 
                mortgage or any subordinate mortgage.
                    ``(B) State.--The term `State' has the meaning 
                given such term in section 502(h)(12), and includes any 
                agency or political subdivision of a State.''.
    (c) Effective Date.--
            (1) In general.--This section and the amendment made by 
        this section shall take effect on the date of the enactment of 
        this Act.
            (2) Transition period.--During the transition period under 
        section 551--
                    (A) any reference in subsection (a) to the FHA 
                shall be construed to refer to the Secretary of Housing 
                and Urban Development to the extent such Secretary has 
                not delegated authority under subsection (a) to the FHA 
                pursuant to section 552(1); and
                    (B) any reference in section 501(o) of the Housing 
                Act of 1949 to the Secretary shall be construed to 
                refer to the FHA to the extent the Secretary has 
                delegated authority under such section 501(o) pursuant 
                to section 552(4).

SEC. 227. RESIDUAL INCOME REQUIREMENT.

    (a) In General.--The FHA may not newly insure, under any provision 
of this title, the National Housing Act, or title V of the Housing Act 
of 1949, or under any FHA program, any mortgage on a 1- to 4-family 
residential property unless the mortgagor under such mortgage meets 
such requirements as the FHA shall, by regulation, establish to ensure 
that the mortgagor has sufficient residual income.
    (b) Residual Income.--For purposes of this section, the term 
``residual income'' means, with respect to a mortgagor, the net monthly 
income of the mortgagor, as provided by regulation by the FHA, after 
taking into consideration--
            (1) any assets of the mortgagor other than the property 
        subject to such mortgage; and
            (2) any monthly obligations of the mortgagor with respect 
        to mortgage payments, insurance payment, and taxes for the 
        property subject to the mortgage, income and other taxes, 
        maintenance, and utility expenses for the property, child care 
        expenses, auto, consumer, and any other debt obligations, 
        alimony and child support expenses, and such other expenses as 
        the FHA may provide.
    (c) Effective Date.--This section shall take effect on the date of 
the enactment of this Act. During the transition period under section 
551, any reference in this section to the FHA shall be construed to 
refer to the Secretary of Housing and Urban Development to the extent 
the Secretary has not delegated authority under this section to the FHA 
pursuant to section 552(1).

SEC. 228. EFFECTIVE DATE.

    This subtitle and the amendments made by this subtitle (except for 
sections 224, 225, 226, and 227, and any amendments made by such 
sections) shall take effect upon the expiration of the transition 
period under section 661.

                       Subtitle C--Miscellaneous

SEC. 241. RULE OF CONSTRUCTION.

    Notwithstanding any other evidence of the intent of the Congress, 
it is hereby declared to be the intent of Congress that the provisions 
of this title shall be construed broadly to achieve the purposes of the 
title, and the provisions of any other Act that must be construed with 
any provision of this title shall similarly be construed to achieve the 
purposes of this title to the extent reasonably possible. This section 
shall take effect on the date of the enactment of this Act.

SEC. 242. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Board.--The term ``Board'' means the Board of Directors 
        of the FHA established under section 524.
            (2) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency.
            (3) FHA.--The term ``FHA'' means the Federal Housing 
        Administration established under this title.
            (4) First-time homebuyer.--The term ``first-time 
        homebuyer'' means an individual who meets any of the following 
        criteria:
                    (A) An individual, and his or her spouse, who has 
                never had ownership in a principal residence, as 
                evidenced by inclusion of such individual's name on a 
                mortgage, title, or deed in connection with such 
                ownership.
                    (B) A single parent (as such term is defined in 
                section 956 of the Cranston-Gonzalez National 
                Affordable Housing Act (42 U.S.C. 12713)) who has only 
                owned a principal residence with a former spouse while 
                married.
                    (C) An individual who is divorced, whose only 
                ownership in a principal residence was together with a 
                previous spouse, as evidenced by inclusion of such 
                individual's name on a mortgage, title, or deed in 
                connection with such ownership.
                    (D) An individual who is a displaced homemaker (as 
                such term is defined in such section 956 of the 
                Cranston-Gonzalez National Affordable Housing Act) and 
                has only owned a principal residence with a spouse.
                    (E) An individual who has only owned a principal 
                residence not permanently affixed to a permanent 
                foundation in accordance with applicable regulations.
                    (F) An individual who has only owned a property 
                that was not in compliance with state, local or model 
                building codes and which cannot be brought into 
                compliance for less than the cost of constructing a 
                permanent structure.
            (5) Native american government.--The term ``Native American 
        government'' means the government of any Indian or Alaska 
        native tribe, band, nation, pueblo, village or community that 
        the Secretary of the Interior acknowledges to exist as an 
        Indian Tribe, pursuant to the Federally Recognized Indian Tribe 
        List Act of 1994.
            (6) United states.--The term ``United States'' includes the 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Commonwealth of the Northern Mariana Islands, Guam, 
        the Virgin Islands, American Samoa, and Native American 
        governments.

  TITLE III--DEVELOPMENT AND DEPLOYMENT OF A MORTGAGE SECURITY MARKET 
           EXCHANGE, DATA REPOSITORY, AND COVERED BOND MARKET

SEC. 301. PURPOSES.

    The purposes of the national mortgage security market exchange 
created by this title are--
            (1) to enhance efficiency, liquidity, and security in the 
        secondary market for residential mortgages, including mortgage-
        backed securities;
            (2) to establish standards related to originating and 
        servicing eligible collateral and for issuers and trustees of 
        qualified securities, which would be exempt from the Securities 
        Act of 1933;
            (3) to improve uniformity, quality and accessibility of 
        information related to the performance of residential mortgage 
        loans;
            (4) to operate a common securitization platform that could 
        be available to issuers of residential mortgage-backed 
        securities;
            (5) to foster the use and uniformity of electronic methods 
        for the creation, authentication, transmission, storage, and 
        availability of materials relating to mortgages;
            (6) to provide a central repository for notes, mortgages, 
        and other mortgage-related information, and address problems 
        that can arise when paper notes cannot be produced, due to loss 
        or destruction as a result of natural disaster or other causes; 
        and
            (7) to provide a uniform procedure for demonstrating the 
        right to act with regard to such notes or other registered data 
        for all actions in any State or Federal proceeding, judicial or 
        nonjudicial, involving such notes or other data.

SEC. 302. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Affiliate.--With respect to the Exchange, the term 
        ``affiliate'' means any entity that controls, is controlled by, 
        or is under common control with, the Exchange.
            (2) Agency.--The term ``Agency'' means the Federal Housing 
        Finance Agency.
            (3) Common securitization platform; platform.--The terms 
        ``Common Securitization Platform'' and ``Platform'' mean the 
        securitization platform first described by the paper issued by 
        the Agency on October 4, 2012, entitled ``Building a New 
        Infrastructure for the Secondary Mortgage Market'', and updated 
        in subsequent documents released by the Agency, including 
        annual strategic plans for the conservatorship of the 
        enterprises and annual conservatorship scorecards.
            (4) Common securitization solutions.--The term ``Common 
        Securitization Solutions'' means Common Securitization 
        Solutions, LLC, the joint venture formed by the enterprises in 
        October 2013, or any successor to Common Securitization 
        Solutions, LLC, that is a joint venture of the enterprises.
            (5) Depositor.--The term ``depositor'' means--
                    (A) any person authorized to submit documents or 
                data for registration with the Repository; and
                    (B) any person qualified pursuant to section 331 
                (relating to organization and operation of the 
                Repository) to inform the Repository of--
                            (i) newly identified interest holders, 
                        whether through creation, assignment, or 
                        transfer; or
                            (ii) changes to interests of existing 
                        holders, including through modification, 
                        amendment, or restatement of, or discharge 
                        related to, any registered mortgage-related 
                        document.
            (6) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency.
            (7) Eligible collateral.--The term ``eligible collateral'' 
        means a residential mortgage loan that meets any standard for 
        mortgage classification established pursuant to section 322 
        (relating to standards for qualified securities).
            (8) Enterprise.--The term ``enterprise'' means--
                    (A) the Federal National Mortgage Association and 
                any affiliate thereof, and
                    (B) the Federal Home Loan Mortgage Corporation and 
                any affiliate thereof.
            (9) Exchange.--The term ``Exchange'' means the mortgage 
        security market exchange established under section 311.
            (10) Exchange-affiliated party.--The term ``exchange-
        affiliated party'' means--
                    (A) any director, officer, employee or controlling 
                shareholder of, or agent for, the Exchange;
                    (B) any shareholder, affiliate, consultant, or 
                joint venture partner of the Exchange, 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 the Exchange; and
                    (C) any independent contractor of the Exchange 
                (including any attorney, appraiser or accountant) if--
                            (i) the independent contractor knowingly or 
                        recklessly participates in any violation of law 
                        or regulation, any breach of fiduciary duty, or 
                        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 Exchange.
            (11) Mortgage-related document.--The term ``mortgage-
        related document'' means any document or other information or 
        data related to the use of residential real estate as security 
        for a loan, including documents establishing an obligation to 
        repay a loan secured by residential real estate, establishing a 
        security interest in real estate (so long as such security 
        interest has first been recorded or registered under State law 
        to establish the priority of such interest), establishing the 
        value of the real estate at the time the security interest is 
        created, and insuring clear title to residential real estate 
        pledged as security, or as the Director by regulation may 
        define. Such documents may include electronic documents.
            (12) Organizer.--The term ``organizer'' means the person or 
        entity that establishes the Exchange.
            (13) Participant.--The term ``participant'' means any 
        person authorized to use data maintained or created by the 
        Repository that is not otherwise available to the public.
            (14) Repository.--The term ``Repository'' means the 
        national mortgage data repository organized under section 331.
            (15) Transfer date.--The term ``Transfer Date'' means the 
        date established under section 315(b).
            (16) Transition period.--The term ``Transition Period'' 
        means the period beginning on the date of the enactment of this 
        Act and ending on the Transfer Date.

        Subtitle A--Establishment and Authority of the Exchange

SEC. 311. ESTABLISHMENT.

    (a) Authority of Director.--Under such regulations as the Director 
may prescribe, the Director shall provide for the organization, 
incorporation, examination, operation, and regulation of a Mortgage 
Security Market Exchange (``Exchange''). The Exchange shall be 
organized, operated, and managed as a not-for-profit entity.
    (b) Formation of Exchange; Application.--
            (1) Formation.--Subject to the terms of this subtitle and 
        any regulations issued by the Director, a person or entity may 
        file an application with the Director to establish the 
        Exchange. The Exchange may be established as a corporation, 
        mutual association, partnership, limited liability corporation, 
        cooperative, or any other organizational form that the 
        applicant may deem appropriate.
            (2) Contents of application.--An application for 
        establishment of the Exchange shall include--
                    (A) the proposed articles of association;
                    (B) a statement of the general object and purpose 
                of the Exchange, consistent with the provisions of this 
                subtitle;
                    (C) the proposed capitalization and business plan 
                for the Exchange;
                    (D) the proposed State whose law would govern, by 
                election of the applicant, the operation of the 
                Exchange to the extent not otherwise covered by this 
                subtitle;
                    (E) information on the financial resources of the 
                applicant;
                    (F) a statement of the relevant housing finance 
                experience of the applicant;
                    (G) identification of the proposed senior managers 
                of the Exchange, and the relevant experience of such 
                individuals; and
                    (H) any other information the Director determines 
                to be necessary to evaluate the background, experience, 
                and integrity of the applicant and the proposed senior 
                managers, or information otherwise relevant to 
                determine the likely success of the proposed Exchange.
            (3) Directors.--The Exchange shall be governed by a board 
        of directors--
                    (A) a majority of which have experience in housing 
                and housing finance businesses;
                    (B) at least one of which shall have knowledge of 
                smaller financial institutions; and
                    (C) at least one of which shall have knowledge of 
                residential mortgage securitization investing.
            (4) Selection of applicant.--The Director shall select the 
        applicant to establish the Exchange that the Director 
        determines, in the Director's sole discretion, has the 
        managerial, financial, and operational resources to succeed, 
        consistent with the purposes of this subtitle
    (c) Status.--
            (1) Not a federal government instrumentality.--The Exchange 
        is not, and shall not be deemed to be, a department, agency, or 
        instrumentality of the United States Government.
            (2) Supervision.--Notwithstanding any other provision of 
        law--
                    (A) the Exchange shall be subject to exclusive 
                supervision by the Agency, and the Agency shall have 
                sole enforcement authority with respect to the Exchange 
                for any violation of Federal law;
                    (B) the Exchange shall not be subject to 
                designation under the Payment, Clearing, and Settlement 
                Supervision Act of 2010; and
                    (C) the Exchange is authorized to conduct its 
                business without regard to any qualification or similar 
                statute in any State.
            (3) Exemption from taxation.--The Exchange shall be exempt 
        from all taxation imposed by the United States, any territory, 
        dependency, or possession of the United States or any State, 
        county, municipality, or local taxing authority, except that 
        any real property of the Repository shall be subject to State, 
        territorial, county, municipal, or local taxation to the same 
        extent according to its value as other real property.
    (d) Reports to Congress.--Commencing with the first annual report 
of the Director following the date of the enactment of this Act, the 
annual report of the Director under section 1319B of the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4521) shall include a description of the Agency's activities 
with regard to organization, incorporation, examination, operation, and 
regulation of the Exchange.

SEC. 312. GENERAL POWERS; AUTHORIZED AND PROHIBITED ACTIVITIES.

    (a) General Powers.--The Exchange may--
            (1) adopt and use a corporate seal;
            (2) determine a State whose law will govern the corporate 
        business activities of the Exchange;
            (3) adopt, amend, and repeal by-laws;
            (4) sue or be sued, subject to section 334 (relating to 
        judicial review);
            (5) make contracts, incur liabilities, and borrow money;
            (6) purchase, receive, hold, and use real and personal 
        property and other assets necessary for the conduct of its 
        operations;
            (7) elect or appoint directors, officers, employees and 
        agents, subject to section 311(d); and
            (8) upon receipt of the Director's prior written approval, 
        establish subsidiaries or affiliates that shall be subject to 
        the same rights, duties and responsibilities as the Exchange.
    (b) Authorized Activities.--In addition to the general powers under 
subsection (a), the Exchange shall--
            (1) develop standards and disclosures related to 
        originating, pooling, and securitizing residential mortgage 
        loans in accordance with subtitle B;
            (2) develop standards and disclosures related to servicing 
        residential mortgage loans in accordance with subtitle B;
            (3) operate and maintain the Platform and establish fees 
        for use of the Platform;
            (4) establish basic rules for use of the Platform;
            (5) establish the Repository and establish fees for 
        registration of mortgage-related documents and maintenance and 
        use of data of the Repository, in accordance with subtitle C;
            (6) perform any other service or engage in any other 
        activity that the Director determines, by regulation or order, 
        to be incidental to the activities enumerated in this 
        subsection; and
            (7) establish fees for the provision of other related or 
        incidental services not inconsistent with the purposes of this 
        subtitle.
    (c) Prohibited Activities.--The Exchange may not--
            (1) own, originate, aggregate, issue, service, insure, or 
        guarantee any residential mortgage or other financial 
        instrument that is associated with a residential mortgage;
            (2) guarantee timely payment of principal or interest on 
        any mortgage-related security;
            (3) adopt access rules or fees for the Platform the effect 
        of which is to discriminate against loan originators, 
        aggregators, or issuers based on size, composition, business 
        line, or loan volume; or
            (4) perform any service or engage in any activity other 
        than those authorized under this subtitle, unless such activity 
        has been determined by the Director to be incidental to an 
        authorized activity.

SEC. 313. MISSION AND STRUCTURE OF COMMON SECURITIZATION SOLUTIONS.

    (a) Mission.--Prior to the Transfer Date, the mission of Common 
Securitization Solutions shall be to accomplish the following goals:
            (1) Developing a Common Securitization Platform--
                    (A) that is based upon interoperable technology and 
                standards that can accommodate all platform users; and
                    (B) that ensures fair and non-discriminatory access 
                for any issuer, enterprise, servicer, agency, or other 
                counterparty.
            (2) Developing a uniform contractual and disclosure 
        framework that facilitates a deep, liquid, and resilient 
        secondary mortgage market for mortgage-backed securities.
            (3) Developing functions to support the non-Government 
        guaranteed securitization market.
            (4) Continuing, advancing, or developing any other 
        initiative as authorized by the CSS Board of Managers, with the 
        approval of the Director, to enhance efficiency, liquidity, and 
        security in the secondary market for residential mortgage 
        loans, provided such initiative does not conflict with or 
        unreasonably delay the completion of the goals described under 
        paragraph (1), (2), or (3).
    (b) CSS Board of Managers.--
            (1) Size.--The size of the membership of the CSS Board of 
        Managers shall be fixed at:
                    (A) For the one-year period beginning upon 
                commencement of the Transition Period, four members.
                    (B) For the one-year period following the period 
                described under subparagraph (A), seven members.
                    (C) After the end of the one-year period described 
                under subparagraph (B), nine members.
            (2) Appointment and qualifications.--The Director shall 
        appoint the additional members required under paragraph (1) 
        from among individuals that--
                    (A) have demonstrated knowledge of, or experience 
                in, financial management, financial services, risk 
                management, information technology, mortgage 
                securitization, secondary mortgage markets, or housing 
                finance; and
                    (B) will not be simultaneously employed by an 
                enterprise or serving as a director of an enterprise.
            (3) Fiduciary duty.--All members of CSS Board of Managers 
        shall owe a fiduciary duty to the enterprises prior to the 
        Transfer Date.

SEC. 314. TRANSITION PERIOD.

    (a) Required Activities Prior to the Transfer Date.--
            (1) In general.--Prior to the Transfer Date, Common 
        Securitization Solutions shall develop, promulgate, and 
        finalize standards that--
                    (A) develop a uniform contractual and disclosure 
                framework for issuers, including issuers other than the 
                enterprises;
                    (B) specify the requirements for loans that may 
                serve as collateral for mortgage-backed securities 
                issued through the Common Securitization Platform, 
                including securities that will be issued by issuers 
                other than the enterprises; and
                    (C) specify the requirements for operating and 
                maintaining the Common Securitization Platform and the 
                establishment of reasonable fees for use of the Common 
                Securitization Platform.
            (2) Approval and modifications of standards.--
                    (A) Initial standards.--In establishing the 
                standards described under paragraph (1), Common 
                Securitization Solutions shall use established industry 
                standards as a basis for standardization requirements 
                for the issuance of such securities through the Common 
                Securitization Platform.
                    (B) Approval of standards.--The standards developed 
                pursuant to paragraph (1) shall be subject to approval 
                by a \2/3\ vote of the CSS Board of Managers and by the 
                Director.
                    (C) Revisions to standards.--Common Securitization 
                Solutions or the Exchange, as applicable, may revise 
                the standards established pursuant to paragraph (1) 
                from time to time as may be necessary. Material 
                revisions to such standards shall require a \2/3\ vote 
                of the CSS Board of Managers or the board of directors 
                of the Exchange, as applicable, and approval of the 
                Director.
            (3) Issuing securities and ensuring capabilities.--
                    (A) In general.--The Director shall establish a 
                date or dates, not later than 2 years after the date of 
                enactment of this Act, by which Common Securitization 
                Solutions shall facilitate the issuance of securities 
                by issuers other than the enterprises to issue 
                mortgage-backed securities.
                    (B) Exception.--The Director may delay a date 
                established under subparagraph (A) for 1 year if the 
                Director, in consultation with the Federal Housing 
                Finance Oversight Board--
                            (i) determines that--
                                    (I) facilitation of such securities 
                                is not feasible within that period of 
                                time and could adversely impact the 
                                housing market; or
                                    (II) the capabilities of other 
                                entities is not feasible within that 
                                period of time and could adversely 
                                impact facilitating the issuance of 
                                securities by the enterprises; and
                            (ii) submits to Congress a report 
                        describing the justification for the 
                        determinations made under clause (i).
            (4) Transfer of funds from the enterprises.--At a time 
        established by the Director, but not later than the Transfer 
        Date, the Agency shall transfer to Common Securitization 
        Solutions such funds from the enterprises as the Director, 
        after consultation with the CSS Board of Managers, determines 
        may be reasonably necessary for Common Securitization Solutions 
        to begin carrying out the operations and activities of the 
        Common Securitization Platform and the contractual and 
        disclosure framework.
    (b) Reports on Development and Transition.--
            (1) Quarterly report on development.--Not later than 1 year 
        after the date of enactment of this Act, and every quarter 
        thereafter until the Transfer Date, the Director shall submit 
        to Congress a report on the status of the development of the 
        Common Securitization Platform and the contractual and 
        disclosure framework, which shall include--
                    (A) the projected timelines, including issues and 
                impediments, for--
                            (i) completing development of the Common 
                        Securitization Platform to support the 
                        securitization needs of the enterprises; and
                            (ii) completing development of the Common 
                        Securitization Platform and the contractual and 
                        disclosure framework to support the 
                        securitization needs of issuers other than the 
                        enterprises; and
                    (B) the projected budget, including costs incurred 
                by Common Securitization Solutions and the enterprises, 
                for the development of the Common Securitization 
                Platform and the contractual and disclosure framework.
            (2) Report on transition.--Not later than 2 years after the 
        date of enactment of this Act, the Director shall develop a 
        plan, and submit to the Committee on Banking, Housing, and 
        Urban Affairs of the Senate and the Committee on Financial 
        Services of the House of Representatives a report on such plan, 
        to transition, by the Transfer Date, the Common Securitization 
        Platform and the contractual and disclosure framework from 
        Common Securitization Solutions into a private, nonprofit 
        entity that best facilitates a deep, liquid, and resilient 
        secondary mortgage market for mortgage-backed securities.
            (3) Annual report on the common securitization platform.--
        The Inspector General of the Agency shall issue an annual 
        report to the Congress on the status of the Common 
        Securitization Platform until the Transfer Date.

SEC. 315. TRANSFER DATE.

    (a) Transfer of Platform to Exchange.--Common Securitization 
Solutions shall transition the Common Securitization Platform and the 
contractual and disclosure framework, including any associated 
intellectual property, technology, systems, and infrastructure, at the 
Transfer Date, to the Exchange, in accordance with this Act.
    (b) Transfer Date.--
            (1) Designated transfer date.--The Director shall establish 
        a Transfer Date for the transition of ownership of the Common 
        Securitization Platform and the contractual disclosure 
        framework, including any associated intellectual property, 
        technology, systems, and infrastructure, from the enterprises 
        and Common Securitization Solutions to the Exchange.
            (2) Public notice.--In establishing the Transfer Date under 
        paragraph (1), the Director shall provide notice to the public 
        of such date, including on the website of the Agency.
            (3) Deadline.--The Transfer Date established under 
        paragraph (1) shall be no earlier than 2 years after the date 
        of the enactment of this Act and no later than the date on 
        which both charters of the enterprises are terminated pursuant 
        to section 1367(k) of the Federal Housing Enterprises Financial 
        Safety and Soundness Act of 1992.
    (c) Transfer of Property.--
            (1) In general.--At a time established by the Director, but 
        not later than the Transfer Date, the Director shall direct the 
        enterprises or Common Securitization Solutions to transfer or 
        sell to the Exchange any property, including intellectual 
        property, technology, systems, and infrastructure (including 
        technology, systems, and infrastructure developed by the 
        enterprises for the Common Securitization Platform), as well as 
        any other legacy systems, infrastructure, and processes that 
        may be necessary to carry out their operations and activities.
            (2) Contractual and other legal obligations.--As may be 
        necessary for the Agency and the enterprises to comply with 
        legal, contractual, or other obligations, the Director shall 
        have the authority to require that any transfer authorized 
        under paragraph (1) occurs as an exchange for value, including 
        through the provision of appropriate compensation to the 
        enterprises or other entities responsible for creating, or 
        contracting with, the Exchange.

SEC. 316. REPAYMENT OF COST.

    (a) In General.--Not later than 10 years after the Transfer Date, 
the total cost of the property transferred in accordance with section 
315(c) at the time of the transition, as determined by the Director, in 
consultation with the Federal Housing Finance Oversight Board, shall be 
repaid by the Exchange to the entity that owned the property prior to 
the time of transfer.
    (b) Third-Party Valuation.--Before the repayment required under 
subsection (a), the Director shall contract with a third-party to 
provide a valuation of the total cost of the property transferred in 
accordance with section 315(c) at the time of the transition.
    (c) Fees Permitted.--The Exchange may charge a reasonable fee for 
the use of the Common Securitization Platform and other services, for 
the purpose of making the repayment described under subsection (a).

SEC. 317. REGULATION, SUPERVISION, AND ENFORCEMENT.

    (a) General Oversight.--The Director shall exercise, by rule, 
order, or guidance, oversight of the Exchange, which shall include the 
authority to regulate, supervise, and examine the Exchange and take 
enforcement actions against the Exchange or any Exchange-affiliated 
party, consistent with the provisions of the Federal Housing Enterprise 
Financial Safety and Soundness Act of 1992.
    (b) Scope of Authority.--The authority of the Director under this 
section shall include the authority to exercise such incidental powers 
as may be necessary or appropriate to fulfill the duties and 
responsibilities of the Director in the oversight, supervision, and 
regulation of the Exchange.
    (c) Consultation With Other Agencies.--In exercising authority to 
regulate and supervise the Exchange, the Director shall consult with 
other Federal departments and agencies that regulate or supervise 
entities, institutions, or companies that are or may become subject to 
standards, rules, processes, or procedures developed by the Exchange 
(including issuers through the Platform and depositors or participants 
in the Repository), including the Government National Mortgage 
Association, the Bureau of Consumer Financial Protection, any Federal 
banking agency (as defined under section 3 of the Federal Deposit 
Insurance Act), and the National Credit Union Administration.
    (d) Annual Assessment.--The Director shall establish and collect 
from the Exchange an annual assessment in an amount not exceeding the 
amount sufficient to provide for reasonable costs (including 
administrative costs) and expenses of the Agency related to its 
oversight of the Exchange. The amounts received by the Director from 
assessments under this section shall not be construed to be Government 
or public funds or appropriated money. Notwithstanding any other 
provision of law, the amounts received by the Director from assessments 
under this section shall not be subject to apportionment for the 
purpose of chapter 15 of title 31, United States Code, or under any 
other authority.

             Subtitle B--Standards for Qualified Securities

SEC. 321. QUALIFIED SECURITIES.

    For purposes of this subtitle, the term ``qualified security'' 
means a security that--
            (1) is collateralized by a class, or multiple classes, of 
        residential mortgages established under section 322(a);
            (2) is issued in accordance with a standard form 
        securitization agreement under section 322(d);
            (3) is issued in accordance with section 322(c);
            (4) is issued through the Platform; and
            (5) is not guaranteed, in whole or in part, by the United 
        States Government.

SEC. 322. STANDARDS FOR QUALIFIED SECURITIES.

    (a) Standard Mortgage Classifications.--
            (1) Establishment of mortgage classifications.--The 
        Exchange shall prescribe classifications for residential 
        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. In 
        prescribing such classifications the Exchange shall seek to 
        allow for the pricing of credit risk, allow for the trading of 
        securities collateralized by each classification of mortgages 
        established pursuant to this subsection in the forward market, 
        and maintain well-functioning liquid markets in securities 
        collateralized by each of the classifications of mortgages 
        established pursuant to this subsection.
            (2) Underwriting criteria.--For each classification of 
        mortgages established under paragraph (1), the Exchange shall 
        establish standards for each of the following underwriting 
        criteria:
                    (A) Debt-to-income ratio.--The ratio of the amount 
                of the total monthly debt of the mortgagor to the 
                amount of the monthly income of the mortgagor.
                    (B) Loan-to-value ratio.--The ratio of the 
                principal obligation under the mortgage to the value of 
                the residence subject to the mortgage, at the time of 
                mortgage origination.
                    (C) Credit history.--Information on the credit 
                history of the mortgagor, including credit scores of 
                the mortgagor.
                    (D) Loan documentation.--The extent of loan 
                documentation and verification of the financial 
                resources of the mortgagor used to qualify the 
                mortgagor for the mortgage, including any appraisal.
                    (E) Occupancy.--Whether the residence subject to 
                the mortgage is occupied by the mortgagor.
                    (F) Credit enhancement.--Whether any mortgage 
                insurance or other type of insurance or credit 
                enhancement was obtained at the time of origination.
                    (G) Loan payment terms.--
                            (i) In general.--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.
                            (ii) Inclusion of 30-year fixed interest 
                        rate.--Terms established under clause (i) shall 
                        include a 30-year fixed interest rate mortgage.
                    (H) Other.--Such other underwriting criteria as the 
                Exchange may establish, consistent with the goals of 
                this subtitle.
            (3) Definitions.--The Exchange shall, for purposes of this 
        subsection, prescribe definitions for each of the following 
        terms:
                    (A) Mortgage.--The term ``mortgage'', which 
                definition shall include only mortgages on residential 
                properties.
                    (B) Default.--The term ``default'', with respect to 
                a mortgage.
                    (C) Delinquency.--The term ``delinquency'', with 
                respect to a mortgage.
                    (D) Loan documentation.--The term ``loan 
                documentation'', with respect to a mortgage.
                    (E) Additional terms.--Such other terms as the 
                Exchange may establish.
    (b) Standards for Aggregators.--The Exchange may develop, adopt, 
and publish standards for aggregation of eligible collateral by 
entities, institutions, or companies other than an issuer. 
Notwithstanding any such standards developed by the Exchange, any 
Federal Home Loan Bank may act as an aggregator and offer the service 
of aggregation to any member of such Bank, subject to regulations 
prescribed by the Director.
    (c) Standards for Qualified Issuers.--
            (1) In general.--The Exchange shall develop, adopt, and 
        publish standards for an issuer to qualify as a qualified 
        issuer. Such standards shall only include--
                    (A) the experience, financial resources, and 
                integrity of the issuer and its principals, including 
                compliance history with Federal and State laws;
                    (B) the adequacy of insurance and fidelity coverage 
                of the issuer with respect to errors and omissions; and
                    (C) a requirement that the issuer submit audited 
                financial statements to the Exchange, who shall make 
                such statements publicly available through the 
                Exchange's Web site.
            (2) Application process.--
                    (A) In general.--The Exchange shall establish an 
                application process for the qualification of issuers, 
                in such form and manner and requiring such information 
                as the Exchange may prescribe, in accordance with 
                standards adopted under paragraph (1).
                    (B) Approval.--The Exchange shall approve any 
                application made pursuant to subparagraph (A) unless 
                the issuer does not meet the standards adopted under 
                paragraph (1).
                    (C) Publication.--The Agency shall publish a list 
                of newly qualified issuers in the Federal Register and 
                the Exchange shall maintain an updated list of 
                qualified issuers on the Exchange's Web site.
            (3) Review and revocation of qualified status.--
                    (A) In general.--The Exchange may review the status 
                of a qualified issuer if the Exchange is notified that 
                a claim has been made against the issuer by a trustee 
                with respect to a violation of a contractual term in a 
                securitization document of the issuer.
                    (B) Revocation.--
                            (i) In general.--Subject to subparagraph 
                        (C), if the Exchange determines, subject to the 
                        approval of the Director, in a review pursuant 
                        to subparagraph (A), that an issuer no longer 
                        meets the standards for qualification, the 
                        Exchange shall revoke the issuer's qualified 
                        status.
                            (ii) Construction.--The revocation of an 
                        issuer's qualified status under this 
                        subparagraph shall--
                                    (I) have no effect on the qualified 
                                status of any security issued before 
                                such revocation; and
                                    (II) not relieve the issuer of any 
                                obligation associated with any 
                                representation or warranty or any 
                                repurchase obligations related to any 
                                qualified security issued before such 
                                revocation.
                    (C) Grace period.--The Exchange shall establish 
                standards by which a qualified issuer who no longer 
                meets the standards for qualification may remediate and 
                return to meeting the standards, without losing the 
                issuer's qualified status.
                    (D) Publication.--The Agency shall publish a list 
                of issuers who are no longer qualified in the Federal 
                Register and the Exchange shall maintain an updated 
                list of such issuers on the Exchange's Web site.
    (d) Standard Form Securitization Agreements.--
            (1) In general.--The Exchange shall develop, adopt, and 
        publish standard form securitization agreements for collateral 
        that will be used to back qualified securities.
            (2) Required content.--The standard form securitization 
        agreements to be developed under paragraph (1) shall include 
        terms relating to--
                    (A) pooling and servicing;
                    (B) purchase and sale;
                    (C) representations and warranties, including 
                representations and warranties as to compliance or 
                conformity with standards established by the Exchange, 
                as appropriate;
                    (D) 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
                    (E) the qualification, responsibilities, and duties 
                of trustees.
    (e) Registration With the Repository.--The Exchange shall require 
that any mortgage-related document associated with collateral for 
qualified securities be registered with the Repository.
    (f) Standards for Servicing.--The Exchange shall develop, adopt, 
and publish--
            (1) servicing standards, including for the modification, 
        restructuring, or work-out of any mortgage that serves as 
        collateral for a qualified security; and
            (2) a servicer succession plan, which may include 
        provisions for--
                    (A) a specialty servicer that can replace the 
                existing servicer if the performance of the mortgage 
                pool deteriorates to specified levels; and
                    (B) 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.
    (g) Standards for Servicer Reporting.--The Exchange shall develop, 
adopt, and publish standards for the reporting obligations of servicers 
of any mortgage that serves as collateral for a qualified security.
    (h) Data Standards; Disclosure Standards.--
            (1) Data standards.--The Exchange shall develop, adopt, and 
        publish standard data definitions for all aspects of loan 
        origination, appraisals, and servicing. In developing such 
        definitions, the Exchange shall consider the data standard-
        setting work undertaken by the Mortgage Industry Standards 
        Maintenance Organization through the enterprises' Uniform 
        Mortgage Data Program announced by the Agency on May 24, 2010.
            (2) Disclosure standards.--The Exchange shall develop, 
        adopt, and publish standards for disclosure of loan 
        origination, appraisal, and servicing data, including data 
        required in subsection (a)(2) (relating to underwriting 
        criteria) for residential mortgage loans that comprise 
        qualified securities.
            (3) Coordination.--In developing the data and disclosure 
        standards required by this subsection, the Exchange shall 
        ensure that such standards are coordinated.
            (4) Privacy protections.--In prescribing the definitions 
        and standards required under this subsection, the Exchange 
        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 standards shall expressly prohibit the 
        identification of specific borrowers.
            (5) Consultation.--When reviewing any disclosure standards 
        established under this subsection, the Director shall consult 
        with the Securities and Exchange Commission.
    (i) Standards for Trustees.--
            (1) In general.--There shall at all times be one or more 
        trustee for each pool of mortgages that acts as collateral for 
        a qualified security.
            (2) Rulemaking.--The Director shall issue regulations 
        regarding the qualifications of trustees under paragraph (1) 
        that shall, to the extent practicable, be consistent with the 
        qualification provisions applicable to trustees under section 
        310(a) of the Trust Indenture Act of 1939 (15 U.S.C. 77jjj(a)).
            (3) Conflicts of interest.--The Director shall issue 
        conflicts of interest regulations that apply to a qualified 
        trustee. Such regulations shall, to the extent practicable, be 
        consistent with those conflicts of interest provisions 
        applicable to an indenture trustee under section 310(b) of the 
        Trust Indenture Act of 1939 (15 U.S.C. 77jjj(b)).
            (4) Reporting of claims.--Any time a trustee brings a claim 
        against a qualified issuer on behalf of investors with respect 
        to a standard form securitization agreement, the trustee shall 
        notify the Director of such claim.
            (5) Protection of investor rights.--For the purpose of 
        protecting investor rights, each trustee shall--
                    (A) maintain a list of all investors (beneficial 
                owners) in a qualified security;
                    (B) update such list from time to time;
                    (C) not make such list available to investors 
                (beneficial owners); and
                    (D) 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.
            (6) No liability for certain communications.--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).
            (7) Investor (beneficial owner) notification of trustee.--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.
    (j) Independent Third Party.--If the majority of investors 
(beneficial owners) in a pool of qualified securities chooses to hire 
an independent third party to act on behalf of the best interests of 
the investors (beneficial owners), such party shall--
            (1) 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;
            (2) 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
            (3) 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.
    (k) Mandatory Arbitration.--
            (1) In general.--All disputes between an owner of a 
        qualified security and the qualified issuer of such security 
        relating to representations and warranties shall be subject to 
        mandatory arbitration procedures established by the Exchange, 
        in accordance with current market practices.
            (2) Selection of arbitrator.--Investors (beneficial owners) 
        and issuers 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 
        Exchange shall select an independent arbitrator for the 
        parties.
            (3) Reporting duty of arbitrator.--
                    (A) Upon commencement.--The arbitrator shall 
                provide the Exchange with notice upon commencement of 
                any arbitration under this subsection.
                    (B) Upon conclusion.--Upon conclusion of any 
                arbitration under this subsection, the arbitrator shall 
                provide the Exchange with--
                            (i) the decision reached by the arbitrator; 
                        and
                            (ii) the basis for the arbitrator's 
                        decision, including any evidence or testimony 
                        received during the arbitration process.
    (l) Use of Standards.--In developing, adopting, and publishing the 
initial standards required under this section, the Exchange shall, to 
the extent practicable, utilize the standards finalized by Common 
Securitization Solutions pursuant to section 314(a).
    (m) Timing of Issuance; Agency Review; Authority To Revise 
Standards.--
            (1) Timing.--The Director shall issue any regulations 
        required by this section not later than the end of the 12-month 
        period beginning on the date of the enactment of this Act. The 
        Exchange shall issue any definitions, standards, rules, 
        processes, or procedures required by this section not later 
        than the end of the 12-month period beginning on the date of 
        the establishment of the Exchange.
            (2) Agency review.--Any definition, standard, rule, process 
        or procedure established by the Exchange shall be submitted to 
        the Director for review and approval prior to its 
        implementation if, in the Director's discretion, the Director 
        requires such submission. Any definition, standard, rule, 
        process or procedure that the Director requires be submitted to 
        the Agency for review and approval shall be reviewed within 
        three months of submission.
            (3) Authority to revise.--
                    (A) In general.--The Exchange may review, revise, 
                and, if revised, re-publish any standard form 
                securitization agreement or other definition, standard, 
                rule, process, or procedure required to be developed by 
                this subtitle if the Exchange determines review or 
                revision to be necessary or appropriate to satisfy the 
                goals of this subtitle.
                    (B) Application of revisions.--Any revisions made 
                pursuant to subparagraph (A) shall apply only to 
                securitizations made after the date of such revision.
    (n) Effect of Conflict.--In the event a definition, standard, rule, 
process, or procedure established by the Exchange is in conflict with 
any definition, standard, rule, process, or procedure established by 
another Federal department or agency, the Director shall consult with 
the other Federal department or agency, and provide prompt written 
notification to the Committee on Banking, Housing, and Urban Affairs of 
the Senate and the Committee on Financial Services of the House of 
Representatives, of the conflict.
    (o) Public Involvement.--In developing definitions, standards, 
rules, processes, and procedures required by this subtitle, the 
Exchange shall work with market participants, including servicers, 
originators, and mortgage investors, and develop methods for gathering 
information and comment from such groups.

SEC. 323. CONFORMING AMENDMENTS TO SECURITIES ACT OF 1933.

    (a) Exempted Securities.--Section 3(a) of the Securities Act of 
1933 (15 U.S.C. 77c(a)) is amended by adding at the end the following 
new paragraph:
            ``(15) Any qualified security, as such term is defined in 
        section 321 of the Protecting American Taxpayers and Homeowners 
        Act of 2018.''.
    (b) Removal of Credit Risk Retention Reference.--Section 27B of the 
Securities Act of 1933 (15 U.S.C. 77z-2a) is amended by striking 
subsection (d).

             Subtitle C--National Mortgage Data Repository

SEC. 331. ORGANIZATION AND OPERATION.

    (a) Organization and Operation.--Under such regulations as the 
Director may prescribe, the Exchange shall organize and operate a 
national mortgage data repository (``Repository'').
    (b) Authorized Activities.--In addition to organizing and operating 
the Repository, the Exchange shall--
            (1) establish and operate a repository for mortgage-related 
        documents;
            (2) establish standards for qualification of any depositor 
        of mortgage-related documents to the Repository;
            (3) establish standards and procedures for submission of 
        mortgage-related documents to the Repository, including 
        required information and the type and format of information and 
        data;
            (4) establish procedures for validation of mortgage-related 
        documents and the data contained in the Repository;
            (5) establish standards and procedures for acceptance of 
        mortgage-related documents (including electronic copies), and 
        notice of acceptance, by the Repository;
            (6) establish standards and procedures for registration of 
        any mortgage-related document with the Repository, including 
        notice of registration and the assignment of a unique 
        identifier, where such standards and procedures include a 
        requirement that any such mortgage-related document must first 
        be recorded in the appropriate local jurisdiction, as may be 
        required under State or local law;
            (7) establish standards and procedures for recording the 
        creation, assignment, or transfer of an interest in any 
        registered mortgage-related document and for requiring the 
        Repository to notify the appropriate local jurisdiction of such 
        creation, assignment, or transfer;
            (8) establish standards and procedures for qualification of 
        depositors and participants in the Repository;
            (9) establish procedures for proper demonstration of 
        registration of mortgage-related documents with the Repository 
        and recordation of an interest by the holder of an interest in 
        any such document, subject to regulations issued by the 
        Director in accordance with section 332 (relating to legal 
        effect of registration with the Repository);
            (10) establish and maintain a catalog of the mortgage-
        related documents registered with the Repository;
            (11) establish standards and procedures for disposition of 
        mortgage-related documents, including safekeeping, long-term 
        storage, or destruction of paper documents;
            (12) establish standards and procedures for making data 
        publicly available;
            (13) ensure that data collected and maintained by the 
        Repository are kept secure and protected against unauthorized 
        disclosure, taking into consideration issues of consumer 
        privacy and all statutes, rules, and regulations related to 
        privacy of consumer credit information and personally 
        identifiable information, and prohibit the identification of 
        specific borrowers;
            (14) establish a process, including notification from the 
        public, for identification and correction of incorrect 
        information submitted to or maintained by the Repository;
            (15) establish fees for registration of mortgage-related 
        documents and maintenance and use of data, and for the 
        provision of other related services not inconsistent with the 
        purposes of this subtitle; and
            (16) perform any other service or engage in any other 
        activity that the Director determines, by regulation or order, 
        to be incidental to the activities enumerated in this 
        subsection.
    (c) Prohibited Activities.--The Exchange may not--
            (1) transfer or sell data maintained by the Repository to 
        the parent or affiliated companies of the operator of the 
        Exchange; and
            (2) use data maintained by the Repository for marketing or 
        any other purpose not directly associated with the operation of 
        the Exchange.
    (d) Requirements on Participants.--Each participant shall--
            (1) comply with such requirements as may be set by the 
        Repository for using data maintained or created by the 
        Repository; and
            (2) use such designation as the Repository may provide, 
        such as a unique identifier.

SEC. 332. LEGAL EFFECT OF REGISTRATION WITH REPOSITORY.

    Notwithstanding any provision of State or Federal law to the 
contrary, by proper demonstration of registration with the Repository, 
any holder of an interest in any mortgage-related note shall satisfy 
any requirement for demonstration of a right to act regarding such note 
or other registered data that exists in State or Federal law, including 
any obligation to produce or possess an original note. The Director 
shall provide for the establishment of procedures for proper 
demonstration of registration of any mortgage-related document and of 
an interest by the holder of an interest in any such document with the 
Repository. Once registered with the Repository, such registration 
shall be a legal right enforceable in any judicial or nonjudicial 
process. Nothing in this section shall be construed as preempting any 
State or local law requiring a mortgage-related document to be recorded 
in the appropriate local jurisdiction.

SEC. 333. GRANTS TO STATES; REPAYMENT.

    (a) Grants to States.--There is hereby authorized to be 
appropriated $50,000,000 to the Director for the establishment of a 
fund to be administered by the Agency for providing grants to States, 
on application to the Agency, to facilitate participation in the 
Repository by any depositor or participant or class of depositors or 
participants, or any other person upon appropriate demonstration to the 
Agency that such a grant would assist in the accomplishment of the 
purposes of this subtitle. Any such amounts appropriated and not 
granted by the Agency within five years of the date of the enactment of 
this Act shall be returned to the Treasury of the United States.
    (b) Repayment.--The Director shall cause to be collected from the 
Exchange and deposit in the Treasury of the United States an amount 
equal to the aggregate amount provided as grants to States pursuant to 
subsection (a) within the 10-year period beginning on the date that the 
first grant is made pursuant to subsection (a).

SEC. 334. JUDICIAL REVIEW.

    Except as otherwise expressly provided under this subtitle, no 
person other than the Director or the Attorney General of the United 
States, or any duly authorized representative of the Director or the 
Attorney General, may proceed against the Repository in any State or 
Federal court. The prohibition in the preceding sentence shall not 
apply to a civil action against the Repository or any duly authorized 
agent thereof for breach of a contract, including breach of a 
representation or warranty, or breach of privacy related to data 
collected and maintained by the Repository or any duly authorized agent 
thereof.

SEC. 335. TRANSITION PROVISIONS.

    (a) In General.--The Agency shall provide for a transition period 
to permit the efficient implementation of the provisions of this 
subtitle. Such transition may include periods for testing, early 
adoption, and final mandatory adoption for all recorded mortgages.
    (b) Electronic Submissions.--The Repository shall accept electronic 
submissions and paper-based documents submitted electronically subject 
to rules of the Repository. After the expiration of the 10-year period 
that begins upon the date of the enactment of this Act, subject to an 
extension of such period for up to 5 additional years if the Director 
determines appropriate, the Repository shall require only electronic 
submission.

                       Subtitle D--Covered Bonds

SEC. 341. DEFINITIONS.

    For purposes of this subtitle, the following definitions shall 
apply:
            (1) Ancillary asset.--The term ``ancillary asset'' means--
                    (A) any interest rate or currency swap associated 
                with 1 or more eligible assets, substitute assets, or 
                other assets in a cover pool;
                    (B) any credit enhancement or liquidity arrangement 
                associated with 1 or more eligible assets, substitute 
                assets, or other assets in a cover pool;
                    (C) any guarantee, letter-of-credit right, or other 
                secondary obligation that supports any payment or 
                performance of 1 or more eligible assets, substitute 
                assets, or other assets in a cover pool; and
                    (D) any proceeds of, or other property incident to, 
                1 or more eligible assets, substitute assets, or other 
                assets in a cover pool.
            (2) Corporation.--The term ``Corporation'' means the 
        Federal Deposit Insurance Corporation.
            (3) Cover pool.--The term ``cover pool'' means a dynamic 
        pool of assets that is comprised of--
                    (A) in the case of any eligible issuer described in 
                subparagraph (A), (B), or (C) of paragraph (9)--
                            (i) 1 or more eligible assets from a single 
                        eligible asset class; and
                            (ii) 1 or more substitute assets or 
                        ancillary assets; and
                    (B) in the case of any eligible issuer described in 
                paragraph (9)(D)--
                            (i) the covered bonds issued by each 
                        sponsoring eligible issuer; and
                            (ii) 1 or more substitute assets or 
                        ancillary assets.
            (4) Covered bond.--The term ``covered bond'' means any 
        recourse debt obligation of an eligible issuer that--
                    (A) has an original term to maturity of not less 
                than 1 year;
                    (B) is secured by a perfected security interest in 
                or other perfected lien on a cover pool that is owned 
                directly or indirectly by the issuer of the obligation;
                    (C) is issued under a covered bond program that has 
                been approved by the applicable covered bond regulator;
                    (D) is identified in a register of covered bonds 
                that is maintained by the Secretary; and
                    (E) is not a deposit (as defined in section 3(l) of 
                the Federal Deposit Insurance Act (12 U.S.C. 1813(l))).
            (5) Covered bond program.--The term ``covered bond 
        program'' means any program of an eligible issuer under which, 
        on the security of a single cover pool, 1 or more series of 
        covered bonds may be issued.
            (6) Covered bond regulator.--The term ``covered bond 
        regulator'' means--
                    (A) for any eligible issuer that is subject to the 
                jurisdiction of an appropriate Federal banking agency 
                (as defined in section 3(q) of the Federal Deposit 
                Insurance Act (12 U.S.C. 1813(q))), the appropriate 
                Federal banking agency;
                    (B) for any eligible issuer that is described in 
                paragraph (9)(D), that is not subject to the 
                jurisdiction of an appropriate Federal banking agency, 
                and that is sponsored by only 1 eligible issuer, the 
                covered bond regulator for the sponsor;
                    (C) for any eligible issuer that is described in 
                paragraph (9)(D), that is not subject to the 
                jurisdiction of an appropriate Federal banking agency, 
                and that is sponsored by more than 1 eligible issuer, 
                the covered bond regulator for the sponsor whose 
                covered bonds constitute the largest share of the cover 
                pool of the issuer; and
                    (D) for any other eligible issuer that is not 
                subject to the jurisdiction of an appropriate Federal 
                banking agency, the Secretary.
            (7) Eligible asset.--The term ``eligible asset'' means--
                    (A) in the case of the residential mortgage asset 
                class, any first-lien mortgage loan that--
                            (i) is secured by 1-to-4 family residential 
                        property; and
                            (ii) is not made, insured, or guaranteed by 
                        the Government;
                    (B) in the case of the commercial mortgage asset 
                class, any commercial mortgage loan (including any 
                multifamily mortgage loan);
                    (C) in the case of the public sector asset class--
                            (i) any security issued by a State, 
                        municipality, or other governmental authority;
                            (ii) any loan made to a State, 
                        municipality, or other governmental authority; 
                        and
                            (iii) any loan, security, or other 
                        obligation that is insured or guaranteed, in 
                        full or substantially in full, by the full 
                        faith and credit of the United States 
                        Government (whether or not such loan, security, 
                        or other obligation is also part of another 
                        eligible asset class);
                    (D) in the case of the auto asset class, any auto 
                loan or lease;
                    (E) in the case of the student loan asset class, 
                any student loan (whether guaranteed or nonguaranteed);
                    (F) in the case of the credit or charge card asset 
                class, any extension of credit to a person under an 
                open-end credit plan;
                    (G) in the case of the small business asset class, 
                any loan that is made or guaranteed under a program of 
                the Small Business Administration; and
                    (H) in the case of any other eligible asset class, 
                any asset designated by the Secretary, by rule and in 
                consultation with the covered bond regulators, as an 
                eligible asset for purposes of such class.
            (8) Eligible asset class.--The term ``eligible asset 
        class'' means--
                    (A) a residential mortgage asset class;
                    (B) a commercial mortgage asset class;
                    (C) a public sector asset class;
                    (D) an auto asset class;
                    (E) a student loan asset class;
                    (F) a credit or charge card asset class;
                    (G) a small business asset class; and
                    (H) any other eligible asset class designated by 
                the Secretary, by rule and in consultation with the 
                covered bond regulators.
            (9) Eligible issuer.--The term ``eligible issuer'' means--
                    (A) any insured depository institution and any 
                subsidiary of such institution;
                    (B) any bank holding company, any savings and loan 
                holding company, and any subsidiary of any of such 
                companies;
                    (C) any nonbank financial company (as defined in 
                section 102(a)(4) of the Dodd-Frank Wall Street Reform 
                and Consumer Protection Act (12 U.S.C. 5311(a)(4))) 
                that is supervised by the Board of Governors of the 
                Federal Reserve System under section 113 of the Dodd-
                Frank Wall Street Reform and Consumer Protection Act 
                (12 U.S.C. 5323), including any intermediate holding 
                company supervised as a nonbank financial company, and 
                any subsidiary of such a nonbank financial company; and
                    (D) any issuer that is sponsored by 1 or more 
                eligible issuers for the sole purpose of issuing 
                covered bonds on a pooled basis.
            (10) Oversight program.--The term ``oversight program'' 
        means the covered bond regulatory oversight program established 
        under section 342(a).
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of the Department of the Treasury.
            (12) Substitute asset.--The term ``substitute asset'' 
        means--
                    (A) cash;
                    (B) any direct obligation of the United States 
                Government, and any security or other obligation whose 
                full principal and interest are insured or guaranteed 
                by the full faith and credit of the United States 
                Government;
                    (C) any direct obligation of a United States 
                Government corporation or Government-sponsored 
                enterprise of the highest credit quality, and any other 
                security or other obligation of the highest credit 
                quality whose full principal and interest are insured 
                or guaranteed by such corporation or enterprise, except 
                that the outstanding principal amount of these 
                obligations in any cover pool may not exceed an amount 
                equal to 20 percent of the outstanding principal amount 
                of all assets in the cover pool without the approval of 
                the applicable covered bond regulator;
                    (D) any overnight investment in Federal funds;
                    (E) any other substitute asset designated by the 
                Secretary, by rule and in consultation with the covered 
                bond regulators; and
                    (F) any deposit account or securities account into 
                which only an asset described in subparagraph (A), (B), 
                (C), (D), or (E) may be deposited or credited.

SEC. 342. REGULATORY OVERSIGHT OF COVERED BOND PROGRAMS ESTABLISHED.

    (a) Establishment.--
            (1) In general.--Not later than 180 days after the date of 
        the enactment of this Act, the Secretary shall, by rule and in 
        consultation with the covered bond regulators, establish a 
        covered bond regulatory oversight program that provides for--
                    (A) covered bond programs to be evaluated according 
                to reasonable and objective standards in order to be 
                approved under paragraph (2), including any additional 
                eligibility standards for eligible assets and any other 
                criteria determined appropriate by the Secretary to 
                further the purposes of this subtitle;
                    (B) covered bond programs to be maintained in a 
                manner that is consistent with this subtitle and safe 
                and sound asset-liability management and other 
                financial practices; and
                    (C) any estate created under section 343 to be 
                administered in a manner that is consistent with 
                maximizing the value and the proceeds of the related 
                cover pool in a resolution under this subtitle.
            (2) Approval of each covered bond program.--
                    (A) In general.--A covered bond shall be subject to 
                this subtitle only if the covered bond is issued by an 
                eligible issuer under a covered bond program that is 
                approved by the applicable covered bond regulator.
                    (B) Approval process.--Each covered bond regulator 
                shall apply the standards established by the Secretary 
                under the oversight program to evaluate a covered bond 
                program that has been submitted by an eligible issuer 
                for approval. Each covered bond regulator also shall 
                take into account relevant supervisory factors, 
                including safety and soundness considerations, in 
                evaluating a covered bond program that has been 
                submitted for approval. Each covered bond regulator, 
                promptly after approving a covered bond program, shall 
                provide the Secretary with the name of the covered bond 
                program, the name of the eligible issuer, and all other 
                information reasonably requested by the Secretary in 
                order to update the registry under paragraph (3)(A). 
                Each eligible issuer, promptly after issuing a covered 
                bond under an approved covered bond program, shall 
                provide the Secretary with all information reasonably 
                requested by the Secretary in order to update the 
                registry under paragraph (3)(B).
                    (C) Existing covered bond programs.--A covered bond 
                regulator may approve a covered bond program that is in 
                existence on the date of the enactment of this Act. 
                Upon such approval, each covered bond under the covered 
                bond program shall be subject to this subtitle, 
                regardless of when the covered bond was issued.
                    (D) Multiple covered bond programs permitted.--An 
                eligible issuer may have more than 1 covered bond 
                program.
                    (E) Cease and desist authority.--The applicable 
                covered bond regulator may direct an eligible issuer to 
                cease issuing covered bonds under an approved covered 
                bond program if the covered bond program is not 
                maintained in a manner that is consistent with this 
                subtitle and the oversight program and if, after notice 
                that is reasonable under the circumstances, the issuer 
                does not remedy all deficiencies identified by the 
                applicable covered bond regulator.
                    (F) Cap on the amount of outstanding covered 
                bonds.--
                            (i) In general.--With respect to each 
                        eligible issuer that submits a covered bond 
                        program for approval, the applicable covered 
                        bond regulator shall set, consistent with 
                        safety and soundness considerations and the 
                        financial condition of the eligible issuer, the 
                        maximum amount, as a percentage of the eligible 
                        issuer's total assets, of outstanding covered 
                        bonds that the eligible issuer may issue.
                            (ii) Review of cap.--The applicable covered 
                        bond regulator may, not more frequently than 
                        quarterly, review the percentage set under 
                        clause (i) and, if safety and soundness 
                        considerations or the financial condition of 
                        the eligible issuer has changed, increase or 
                        decrease such percentage. Any decrease made 
                        pursuant to this clause shall have no effect on 
                        existing covered bonds issued by the eligible 
                        issuer.
            (3) Registry.--Under the oversight program, the Secretary 
        shall maintain a registry that is published on a Web site 
        available to the public and that, for each covered bond program 
        approved by a covered bond regulator, contains--
                    (A) the name of the covered bond program, the name 
                of the eligible issuer, and all other information that 
                the Secretary considers necessary to adequately 
                identify the covered bond program and the eligible 
                issuer; and
                    (B) all information that the Secretary considers 
                necessary to adequately identify all outstanding 
                covered bonds issued under the covered bond program 
                (including the reports described in paragraphs (3) and 
                (4) of subsection (b)).
            (4) Fees.--Each covered bond regulator may levy, on the 
        issuers of covered bonds under the primary supervision of such 
        covered bond regulator, reasonably apportioned fees that such 
        covered bond regulator considers necessary, in the aggregate, 
        to defray the costs of such covered bond regulator carrying out 
        the provisions of this subtitle. Such funds shall not be 
        construed to be Government funds or appropriated monies and 
        shall not be subject to apportionment for purposes of chapter 
        15 of title 31, United States Code, or any other provision of 
        law.
    (b) Minimum Over-Collateralization Requirements.--
            (1) Requirements established.--The Secretary, by rule and 
        in consultation with the covered bond regulators, shall 
        establish minimum over-collateralization requirements for 
        covered bonds backed by each of the eligible asset classes. The 
        minimum over-collateralization requirements shall be designed 
        to ensure that sufficient eligible assets and substitute assets 
        are maintained in the cover pool to satisfy all principal and 
        interest payments on the covered bonds when due through 
        maturity and shall be based on the credit, collection, and 
        interest rate risks (excluding the liquidity risks) associated 
        with the eligible asset class.
            (2) Asset coverage test.--The eligible assets and the 
        substitute assets in any cover pool shall be required, in the 
        aggregate, to meet at all times the applicable minimum over-
        collateralization requirements.
            (3) Monthly reporting.--On a monthly basis, each issuer of 
        covered bonds shall submit a report on whether the cover pool 
        that secures the covered bonds meets the applicable minimum 
        over-collateralization requirements to--
                    (A) the Secretary;
                    (B) the applicable covered bond regulator;
                    (C) the applicable indenture trustee;
                    (D) the applicable covered bondholders; and
                    (E) the applicable independent asset monitor.
            (4) Independent asset monitor.--
                    (A) Appointment.--Each issuer of covered bonds 
                shall appoint the indenture trustee for the covered 
                bonds, or another unaffiliated entity, as an 
                independent asset monitor for the applicable cover 
                pool.
                    (B) Duties.--An independent asset monitor appointed 
                under subparagraph (A) shall, on an annual or other 
                more frequent periodic basis determined by the 
                Secretary under the oversight program--
                            (i) verify whether the cover pool meets the 
                        applicable minimum over-collateralization 
                        requirements; and
                            (ii) report to the Secretary, the 
                        applicable covered bond regulator, the 
                        applicable indenture trustee, and the 
                        applicable covered bondholders on whether the 
                        cover pool meets the applicable minimum over-
                        collateralization requirements.
            (5) No loss of status.--Covered bonds shall remain subject 
        to this subtitle regardless of whether the applicable cover 
        pool ceases to meet the applicable minimum over-
        collateralization requirements.
            (6) Failure to meet requirements.--
                    (A) In general.--If a cover pool fails to meet the 
                applicable minimum over-collateralization requirements, 
                and if the failure is not cured within the time 
                specified in the related transaction documents, the 
                failure shall be an uncured default for purposes of 
                section 343(a).
                    (B) Notice required.--An issuer of covered bonds 
                shall promptly give the Secretary and the applicable 
                covered bond regulator written notice if the cover pool 
                securing the covered bonds fails to meet the applicable 
                minimum over-collateralization requirements, if the 
                failure is cured within the time specified in the 
                related transaction documents, or if the failure is not 
                so cured.
    (c) Requirements for Eligible Assets.--
            (1) Requirements.--
                    (A) Loans.--A loan shall not qualify as an eligible 
                asset for so long as the loan is delinquent for more 
                than 60 consecutive days.
                    (B) Securities.--A security shall not qualify as an 
                eligible asset for so long as the security does not 
                meet any credit-quality requirement under this 
                subtitle.
                    (C) Origination.--An asset shall not qualify as an 
                eligible asset if the asset was not originated in 
                compliance with any rule or supervisory guidance of a 
                Federal agency applicable to the asset at the time of 
                origination.
                    (D) No double pledge.--An asset shall not qualify 
                as an eligible asset for so long as the asset is 
                subject to a prior perfected security interest or other 
                prior perfected lien that has been granted in an 
                unrelated transaction. Nothing in this subtitle shall 
                affect such a prior perfected security interest or 
                other prior perfected lien, and the rights of such lien 
                holders.
            (2) Failure to meet requirements.--Subject to paragraph 
        (1)(D), if an asset in a cover pool does not satisfy any 
        applicable requirement described in paragraph (1) or any other 
        applicable standard or criterion described in this subtitle, 
        the oversight program, or the related transaction documents, 
        the asset shall not qualify as an eligible asset for purposes 
        of the asset coverage test described in subsection (b)(2). A 
        disqualified asset shall remain in the cover pool unless and 
        until removed by the issuer in compliance with the provisions 
        of this subtitle, the oversight program, and the related 
        transaction documents. No disqualified asset may be removed 
        from the cover pool after an estate has been created for the 
        related covered bond program under section 343(b)(1) or 
        343(c)(2), except in connection with the management of the 
        cover pool under section 343(d)(1)(E).
    (d) Other Requirements.--
            (1) Books and records of issuer.--Each issuer of covered 
        bonds shall clearly mark its books and records to identify the 
        assets that comprise the cover pool securing the covered bonds.
            (2) Schedule of eligible assets and substitute assets.--
        Each issuer of covered bonds shall deliver to the applicable 
        indenture trustee and the applicable independent asset monitor, 
        on at least a monthly basis, a schedule that identifies all 
        eligible assets and substitute assets in the cover pool 
        securing the covered bonds.
            (3) Single eligible asset class.--No cover pool described 
        in section 341(3)(A) may include eligible assets from more than 
        1 eligible asset class. No cover pool described in section 
        341(3)(B) may include covered bonds backed by more than 1 
        eligible asset class.

SEC. 343. RESOLUTION UPON DEFAULT OR INSOLVENCY.

    (a) Uncured Default Defined.--For purposes of this section, the 
term ``uncured default'' means a default on a covered bond that has not 
been cured within the time, if any, specified in the related 
transaction documents.
    (b) Default on Covered Bonds Prior to Conservatorship, 
Receivership, Liquidation, or Bankruptcy.--
            (1) Creation of separate estate.--If an uncured default 
        occurs on a covered bond before the issuer of the covered bond 
        enters conservatorship, receivership, liquidation, or 
        bankruptcy, an estate shall be immediately and automatically 
        created by operation of law and shall exist and be administered 
        separate and apart from the issuer or any subsequent 
        conservatorship, receivership, liquidating agency, or estate in 
        bankruptcy for the issuer or any other assets of the issuer. A 
        separate estate shall be created for each affected covered bond 
        program.
            (2) Assets and liabilities of estate.--Any estate created 
        under paragraph (1) shall be comprised of the cover pool 
        (including over-collateralization in the cover pool) that 
        secures the covered bond. The cover pool shall be immediately 
        and automatically released to and held by the estate free and 
        clear of any right, title, interest, or claim of the issuer or 
        any conservator, receiver, liquidating agent, or trustee in 
        bankruptcy for the issuer or any other assets of the issuer. 
        Assets disqualified under section 342(c)(1)(D) shall not be 
        released to the estate. The estate shall be fully liable on the 
        covered bond and all other covered bonds and related 
        obligations of the issuer (including obligations under related 
        derivative transactions) that are secured by a perfected 
        security interest in or other perfected lien on the cover pool 
        when the estate is created. The estate shall not be liable on 
        any obligation of the issuer that is not secured by a perfected 
        security interest in or other perfected lien on the cover pool 
        when the estate is created. No conservator, receiver, 
        liquidating agent, or trustee in bankruptcy for the issuer may 
        charge or assess the estate for any claim of the conservator, 
        receiver, liquidating agent, or trustee in bankruptcy or the 
        conservatorship, receivership, liquidating agency, or estate in 
        bankruptcy and may not obtain or perfect a security interest in 
        or other lien on the cover pool to secure such a claim.
            (3) Retention of claims.--Any holder of a covered bond or 
        related obligation for which an estate has become liable under 
        paragraph (2) shall retain a claim against the issuer for any 
        deficiency with respect to the covered bond or related 
        obligation. If the issuer enters conservatorship, receivership, 
        liquidation, or bankruptcy, any contingent claim for such a 
        deficiency shall be allowed as a provable claim in the 
        conservatorship, receivership, liquidating agency, or 
        bankruptcy case. The contingent claim shall be estimated by the 
        conservator, receiver, liquidating agent, or bankruptcy court 
        for purposes of allowing the claim as a provable claim if 
        awaiting the fixing of the contingent claim would unduly delay 
        the resolution of the conservatorship, receivership, 
        liquidating agency, or bankruptcy case.
            (4) Residual interest.--
                    (A) Issuance of residual interest.--Upon the 
                creation of an estate under paragraph (1), a residual 
                interest in the estate shall be immediately and 
                automatically issued by operation of law to the issuer.
                    (B) Nature of residual interest.--The residual 
                interest under subparagraph (A) shall--
                            (i) be an exempted security as described in 
                        section 344;
                            (ii) represent the right to any surplus 
                        from the cover pool after the covered bonds and 
                        all other liabilities of the estate have been 
                        fully and irrevocably paid; and
                            (iii) be evidenced by a certificate 
                        executed by the trustee of the estate.
            (5) Obligations of issuer.--
                    (A) In general.--After the creation of an estate 
                under paragraph (1), the issuer shall--
                            (i) transfer to or at the direction of the 
                        trustee for the estate all property of the 
                        estate that is in the possession or under the 
                        control of the issuer, including all tangible 
                        or electronic books, records, files, and other 
                        documents or materials relating to the assets 
                        and liabilities of the estate; and
                            (ii) at the election of the trustee or a 
                        servicer or administrator for the estate, 
                        continue servicing the applicable cover pool 
                        for 120 days after the creation of the estate 
                        in return for a fair-market-value fee, as 
                        determined by the trustee in consultation with 
                        the applicable covered bond regulator, that 
                        shall be payable from the estate as an 
                        administrative expense.
                    (B) Obligations absolute.--Neither the issuer, 
                whether acting as debtor in possession or in any other 
                capacity, nor any conservator, receiver, liquidating 
                agent, or trustee in bankruptcy for the issuer or any 
                other assets of the issuer may disaffirm, repudiate, or 
                reject the obligation to turn over property or to 
                continue servicing the cover pool as provided in 
                subparagraph (A).
    (c) Default on Covered Bonds Upon Conservatorship, Receivership, 
Liquidation, or Bankruptcy.--
            (1) Corporation conservatorship or receivership.--
                    (A) In general.--If the Corporation is appointed as 
                conservator or receiver for an issuer of covered bonds 
                before an uncured default results in the creation of an 
                estate under subsection (b), the Corporation as 
                conservator or receiver shall have an exclusive right, 
                during the 1-year period beginning on the date of the 
                appointment, to transfer any cover pool owned by the 
                issuer in its entirety, together with all covered bonds 
                and related obligations that are secured by a perfected 
                security interest in or other perfected lien on the 
                cover pool, to another eligible issuer that meets all 
                conditions and requirements specified in the related 
                transaction documents. The Corporation as conservator 
                or receiver may not remove any asset from the cover 
                pool, except to the extent otherwise agreed by a 
                transferee that has assumed the covered bond program 
                pursuant to subparagraph (C).
                    (B) Obligations during 1-year period.--During the 
                1-year period described in subparagraph (A), the 
                Corporation as conservator or receiver shall fully and 
                timely satisfy all monetary and nonmonetary obligations 
                of the issuer under all covered bonds and the related 
                transaction documents and shall fully and timely cure 
                all defaults by the issuer (other than its 
                conservatorship or receivership) under the applicable 
                covered bond program, in each case, until the earlier 
                of--
                            (i) the transfer of the applicable covered 
                        bond program to another eligible issuer as 
                        provided in subparagraph (A); or
                            (ii) the delivery to the Secretary, the 
                        applicable covered bond regulator, the 
                        applicable indenture trustee, and the 
                        applicable covered bondholders of a written 
                        notice from the Corporation as conservator or 
                        receiver electing to cease further performance 
                        under the applicable covered bond program.
                    (C) Assumption by transferee.--If the Corporation 
                as conservator or receiver transfers a covered bond 
                program to another eligible issuer within the 1-year 
                period as provided in subparagraph (A), the transferee 
                shall take ownership of the applicable cover pool and 
                shall become fully liable on all covered bonds and 
                related obligations of the issuer that are secured by a 
                perfected security interest in or other perfected lien 
                on the cover pool.
            (2) Other circumstances.--An estate shall be immediately 
        and automatically created by operation of law and shall exist 
        and be administered separate and apart from an issuer of 
        covered bonds and any conservatorship, receivership, 
        liquidating agency, or estate in bankruptcy for the issuer or 
        any other assets of the issuer, if--
                    (A) a conservator, receiver, liquidating agent, or 
                trustee in bankruptcy, other than the Corporation, is 
                appointed for the issuer before an uncured default 
                results in the creation of an estate under subsection 
                (b); or
                    (B) in the case of the appointment of the 
                Corporation as conservator or receiver as described in 
                paragraph (1)(A), the Corporation as conservator or 
                receiver--
                            (i) does not complete the transfer of the 
                        applicable covered bond program to another 
                        eligible issuer within the 1-year period as 
                        provided in paragraph (1)(A);
                            (ii) delivers to the Secretary, the 
                        applicable covered bond regulator, the 
                        applicable indenture trustee, and the 
                        applicable covered bondholders a written notice 
                        electing to cease further performance under the 
                        applicable covered bond program; or
                            (iii) fails to fully and timely satisfy all 
                        monetary and nonmonetary obligations of the 
                        issuer under the covered bonds and the related 
                        transaction documents or to fully and timely 
                        cure all defaults by the issuer (other than its 
                        conservatorship or receivership) under the 
                        applicable covered bond program.
        A separate estate shall be created for each affected covered 
        bond program.
            (3) Assets and liabilities of estate.--Any estate created 
        under paragraph (2) shall be comprised of the cover pool 
        (including over-collateralization in the cover pool) that 
        secures the covered bonds. The cover pool shall be immediately 
        and automatically released to and held by the estate free and 
        clear of any right, title, interest, or claim of the issuer or 
        any conservator, receiver, liquidating agent, or trustee in 
        bankruptcy for the issuer or any other assets of the issuer. 
        The estate shall be fully liable on the covered bonds and all 
        other covered bonds and related obligations of the issuer 
        (including obligations under related derivative transactions) 
        that are secured by a perfected security interest in or other 
        perfected lien on the cover pool when the estate is created. 
        The estate shall not be liable on any obligation of the issuer 
        that is not secured by a perfected security interest in or 
        other perfected lien on the cover pool when the estate is 
        created. No conservator, receiver, liquidating agent, or 
        trustee in bankruptcy for the issuer may charge or assess the 
        estate for any claim of the conservator, receiver, liquidating 
        agent, or trustee in bankruptcy or the conservatorship, 
        receivership, liquidating agency, or estate in bankruptcy and 
        may not obtain or perfect a security interest in or other lien 
        on the cover pool to secure such a claim.
            (4) Contingent claim.--Any contingent claim against an 
        issuer for a deficiency with respect to a covered bond or 
        related obligation for which an estate has become liable under 
        paragraph (3) shall be allowed as a provable claim in the 
        conservatorship, receivership, liquidating agency, or 
        bankruptcy case for the issuer. The contingent claim shall be 
        estimated by the conservator, receiver, liquidating agent, or 
        bankruptcy court for purposes of allowing the claim as a 
        provable claim if awaiting the fixing of the contingent claim 
        would unduly delay the resolution of the conservatorship, 
        receivership, liquidating agency, or bankruptcy case.
            (5) Residual interest.--
                    (A) Issuance of residual interest.--Upon the 
                creation of an estate under paragraph (2), and 
                regardless of whether any contingent claim described in 
                paragraph (4) becomes fixed or is estimated, a residual 
                interest in the estate shall be immediately and 
                automatically issued by operation of law to the 
                conservator, receiver, liquidating agent, or trustee in 
                bankruptcy for the issuer.
                    (B) Nature of residual interest.--The residual 
                interest under subparagraph (A) shall--
                            (i) be an exempted security as described in 
                        section 344;
                            (ii) represent the right to any surplus 
                        from the cover pool after the covered bonds and 
                        all other liabilities of the estate have been 
                        fully and irrevocably paid; and
                            (iii) be evidenced by a certificate 
                        executed by the trustee of the estate.
            (6) Obligations of issuer.--
                    (A) In general.--After the creation of an estate 
                under paragraph (2), the issuer and its conservator, 
                receiver, liquidating agent, or trustee in bankruptcy 
                shall--
                            (i) transfer to or at the direction of the 
                        trustee for the estate all property of the 
                        estate that is in the possession or under the 
                        control of the issuer or its conservator, 
                        receiver, liquidating agent, or trustee in 
                        bankruptcy, including all tangible or 
                        electronic books, records, files, and other 
                        documents or materials relating to the assets 
                        and liabilities of the estate; and
                            (ii) at the election of the trustee or a 
                        servicer or administrator for the estate, 
                        continue servicing the applicable cover pool 
                        for 120 days after the creation of the estate 
                        in return for a fair-market-value fee, as 
                        determined by the trustee in consultation with 
                        the applicable covered bond regulator, that 
                        shall be payable from the estate as an 
                        administrative expense.
                    (B) Obligations absolute.--Neither the issuer, 
                whether acting as debtor in possession or in any other 
                capacity, nor any conservator, receiver, liquidating 
                agent, or trustee in bankruptcy for the issuer or any 
                other assets of the issuer may disaffirm, repudiate, or 
                reject the obligation to turn over property or to 
                continue servicing the cover pool as provided in 
                subparagraph (A).
    (d) Administration and Resolution of Estates.--
            (1) Trustee, servicer, and administrator.--
                    (A) In general.--Upon the creation of any estate 
                under subsection (b)(1) or (c)(2), the applicable 
                covered bond regulator shall--
                            (i) appoint the trustee for the estate;
                            (ii) appoint 1 or more servicers or 
                        administrators for the cover pool held by the 
                        estate; and
                            (iii) give the Secretary, the applicable 
                        indenture trustee, the applicable covered 
                        bondholders, and the owner of the residual 
                        interest written notice of the creation of the 
                        estate.
                    (B) Terms and conditions of appointment.--All terms 
                and conditions of any appointment under paragraph (1), 
                including the terms and conditions relating to 
                compensation, shall conform to the requirements of this 
                subtitle and the oversight program and otherwise shall 
                be determined by the applicable covered bond regulator.
                    (C) Qualification.--The applicable covered bond 
                regulator may require the trustee or any servicer or 
                administrator for an estate to post in favor of the 
                United States, for the benefit of the estate, a bond 
                that is conditioned on the faithful performance of the 
                duties of the trustee or the servicer or administrator. 
                The covered bond regulator shall determine the amount 
                of any bond required under this subparagraph and the 
                sufficiency of the surety on the bond. A proceeding on 
                a bond required under this subparagraph may not be 
                commenced after two years after the date on which the 
                trustee or the servicer or administrator was 
                discharged.
                    (D) Powers and duties of trustee.--The trustee for 
                an estate is the representative of the estate and, 
                subject to the provisions of this subtitle, has 
                capacity to sue and be sued. The trustee shall--
                            (i) administer the estate in compliance 
                        with this subtitle, the oversight program, and 
                        the related transaction documents;
                            (ii) be accountable for all property of the 
                        estate that is received by the trustee;
                            (iii) make a final report and file a final 
                        account of the administration of the estate 
                        with the applicable covered bond regulator; and
                            (iv) after the estate has been fully 
                        administered, close the estate.
                    (E) Powers and duties of servicer or 
                administrator.--Any servicer or administrator for an 
                estate--
                            (i) shall--
                                    (I) collect, realize on (by 
                                liquidation or other means), and 
                                otherwise manage the cover pool held by 
                                the estate for the purpose of winding 
                                down the related cover bond program in 
                                compliance with this subtitle, the 
                                oversight program, and the related 
                                transaction documents and in a manner 
                                consistent with maximizing the value 
                                and the proceeds of the cover pool;
                                    (II) deposit or invest all proceeds 
                                and funds received in compliance with 
                                this subtitle, the oversight program, 
                                and the related transaction documents 
                                and in a manner consistent with 
                                maximizing the net return to the 
                                estate, taking into account the safety 
                                of the deposit or investment; and
                                    (III) apply, or direct the trustee 
                                for the estate to apply, all proceeds 
                                and funds received and the net return 
                                on any deposit or investment to make 
                                distributions in compliance with 
                                paragraphs (3) and (4);
                            (ii) may borrow funds or otherwise obtain 
                        credit, for the benefit of the estate, in 
                        compliance with paragraph (2) on a secured or 
                        unsecured basis and on a priority, pari passu, 
                        or subordinated basis;
                            (iii) shall, at the times and in the manner 
                        required by the applicable covered bond 
                        regulator, submit to the covered bond 
                        regulator, the Secretary, the applicable 
                        indenture trustee, the applicable covered 
                        bondholders, the owner of the residual 
                        interest, and any other person designated by 
                        the covered bond regulator, reports that 
                        describe the activities of the servicer or 
                        administrator on behalf of the estate, the 
                        performance of the cover pool held by the 
                        estate, and distributions made by the estate; 
                        and
                            (iv) shall assist the trustee in preparing 
                        the final report and the final account of the 
                        administration of the estate.
                    (F) Supervision of trustee, servicer, and 
                administrator.--The applicable covered bond regulator 
                shall supervise the trustee and any servicer or 
                administrator for an estate. The covered bond regulator 
                shall require that all reports submitted under 
                subparagraph (E)(iii) do not contain any untrue 
                statement of a material fact and do not omit to state a 
                material fact necessary in order to make the statements 
                made, in light of the circumstances under which they 
                are made, not misleading.
                    (G) Removal and replacement of trustee, servicer, 
                and administrator.--If the covered bond regulator 
                determines that it is in the best interests of an 
                estate, the covered bond regulator may remove or 
                replace the trustee or any servicer or administrator 
                for the estate. The removal of the trustee or any 
                servicer or administrator does not abate any pending 
                action or proceeding involving the estate, and any 
                successor or other trustee, servicer, or administrator 
                shall be substituted as a party in the action or 
                proceeding.
                    (H) Professionals.--The trustee or any servicer or 
                administrator for an estate may employ 1 or more 
                attorneys, accountants, appraisers, auctioneers, or 
                other professional persons to represent or assist the 
                trustee or the servicer or administrator in carrying 
                out its duties. The employment of any professional 
                person and all terms and conditions of employment, 
                including the terms and conditions relating to 
                compensation, shall conform to the requirements of this 
                subtitle and the oversight program and otherwise shall 
                be subject to the approval of the applicable covered 
                bond regulator.
                    (I) Approved fees and expenses.--Unless otherwise 
                provided in the applicable terms and conditions of 
                appointment or employment, all approved fees and 
                expenses of the trustee, any servicer or administrator, 
                or any professional person employed by the trustee or 
                any servicer or administrator shall be payable from the 
                estate as administrative expenses.
                    (J) Actions by or on behalf of estate.--The trustee 
                or any servicer or administrator for an estate may 
                commence or continue judicial, administrative, or other 
                actions, in the name of the estate or in its own name 
                on behalf of the estate, for the purpose of collecting, 
                realizing on, or otherwise managing the cover pool held 
                by the estate or exercising its other powers or duties 
                on behalf of the estate.
                    (K) Actions against estate.--No court may issue an 
                attachment or execution on any property of an estate. 
                Except at the request of the applicable covered bond 
                regulator or as otherwise provided in this subparagraph 
                or subparagraph (J), no court may take any action to 
                restrain or affect the resolution of an estate under 
                this subtitle. No person (including the applicable 
                indenture trustee and any applicable covered 
                bondholder) may commence or continue any judicial, 
                administrative, or other action against the estate, the 
                trustee, or any servicer or administrator or take any 
                other act to affect the estate, the trustee, or any 
                servicer or administrator that is not expressly 
                permitted by this subtitle, the oversight program, and 
                the related transaction documents, except for a 
                judicial or administrative action to compel the release 
                of funds that--
                            (i) are available to the estate;
                            (ii) are permitted to be distributed under 
                        this subtitle and the oversight program; and
                            (iii) are permitted and required to be 
                        distributed under the related transaction 
                        documents and any contracts executed by or on 
                        behalf of the estate.
                    (L) Sovereign immunity.--Except in connection with 
                a guarantee provided under paragraph (4) or any other 
                contract executed by the applicable covered bond 
                regulator under this section 343, the Secretary and the 
                covered bond regulator shall be entitled to sovereign 
                immunity in carrying out the provisions of this 
                subtitle.
            (2) Borrowings and credit.--
                    (A) In general.--Any servicer or administrator for 
                an estate created under subsection (b)(1) or (c)(2) may 
                borrow funds or otherwise obtain credit, on behalf of 
                and for the benefit of the estate, from any person in 
                compliance with this paragraph (2) solely for the 
                purpose of providing liquidity in the case of timing 
                mismatches among the assets and the liabilities of the 
                estate. Except with respect to an underwriter, section 
                5 of the Securities Act of 1933, the Trust Indenture 
                Act of 1939, and any State or local law requiring 
                registration for an offer or sale of a security or 
                registration or licensing of an issuer of, underwriter 
                of, or broker or dealer in a security does not apply to 
                the offer or sale under this paragraph (2) of a 
                security that is not an equity security.
                    (B) Conditions.--A servicer or administrator may 
                borrow funds or otherwise obtain credit under 
                subparagraph (A)--
                            (i) on terms affording the lender only 
                        claims or liens that are fully subordinated to 
                        the claims and interests of the applicable 
                        indenture trustee and the applicable covered 
                        bondholders and all other claims against and 
                        interests in the estate, except for the 
                        residual interest, if the servicer or 
                        administrator certifies to the applicable 
                        covered bond regulator that, in the business 
                        judgment of the servicer or administrator, the 
                        borrowing or credit is in the best interests of 
                        the estate and is expected to maximize the 
                        value and the proceeds of the cover pool held 
                        by the estate; or
                            (ii) on terms affording the lender claims 
                        or liens that have priority over or are pari 
                        passu with the claims or interests of the 
                        applicable indenture trustee or the applicable 
                        covered bondholders or other claims against or 
                        interests in the estate, if--
                                    (I) the servicer or administrator 
                                certifies to the applicable covered 
                                bond regulator that, in the business 
                                judgment of the servicer or 
                                administrator, the borrowing or credit 
                                is in the best interests of the estate 
                                and is expected to maximize the value 
                                and the proceeds of the cover pool held 
                                by the estate; and
                                    (II) the applicable covered bond 
                                regulator authorizes the borrowing or 
                                credit.
                    (C) Limited liability.--A servicer or administrator 
                shall not be liable for any error in business judgment 
                when borrowing funds or otherwise obtaining credit 
                under this paragraph (2) unless the servicer or 
                administrator acted in bad faith or in willful 
                disregard of its duties.
                    (D) Limits on borrowings and credit.--Funds may not 
                be borrowed or credit otherwise obtained under 
                subparagraph (A)--
                            (i) for the purpose of investing in 
                        additional portfolios of eligible assets 
                        through the issuance of new covered bonds; or
                            (ii) otherwise for a purpose other than 
                        winding down the related covered bond program 
                        in compliance with this Act, the oversight 
                        program, and the related transaction documents.
                    (E) Study on borrowings and credit.--The 
                Comptroller General of the United States shall conduct 
                a study on whether the Federal reserve banks should be 
                authorized to lend funds or otherwise extend credit to 
                an estate under this paragraph (2) and, if so, what 
                conditions and limits should be established to mitigate 
                any risk that the United States Government could absorb 
                credit losses on the cover pool held by the estate. The 
                Comptroller General shall submit a report to the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services of the 
                House of Representatives on the results of the study 
                not later than 6 months after the date of enactment of 
                this Act.
            (3) Distributions by estate.--All payments or other 
        distributions by an estate shall be made at the times, in the 
        amounts, and in the manner set forth in the covered bonds, the 
        related transaction documents, and any contracts executed by or 
        on behalf of the estate in compliance with this subtitle and 
        the oversight program. To the extent that the relative priority 
        of the liabilities of the estate are not specified in or 
        otherwise ascertainable from their terms, distributions shall 
        be made on each distribution date under the covered bonds, the 
        related transaction documents, or any contracts executed by or 
        on behalf of the estate--
                    (A) first, to pay accrued and unpaid superpriority 
                claims under paragraph (2)(B)(ii);
                    (B) second, to pay accrued and unpaid 
                administrative expense claims under paragraph (1)(I), 
                paragraph (2)(B)(ii), section 343(b)(5)(A), or section 
                343(c)(6)(A);
                    (C) third, to pay--
                            (i) accrued and unpaid claims under the 
                        covered bonds and the related transaction 
                        documents according to their terms; and
                            (ii) accrued and unpaid pari passu claims 
                        under paragraph (2)(B)(ii); and
                    (D) fourth, to pay accrued and unpaid subordinated 
                claims under paragraph (2)(B)(i).
            (4) Distributions on residual interest.--After all other 
        claims against and interests in an estate have been fully and 
        irrevocably paid or defeased, the trustee shall or shall cause 
        a servicer or administrator to distribute the remainder of the 
        estate to or at the direction of the owner of the residual 
        interest. No interim distribution on the residual interest may 
        be made before that time, unless the applicable covered bond 
        regulator--
                    (A) approves the distribution after determining 
                that all other claims against and interests in the 
                estate will be fully, timely, and irrevocably paid 
                according to their terms; and
                    (B) provides an indemnity, for the benefit of the 
                estate, assuring that all other claims against and 
                interests in the estate will be fully, timely, and 
                irrevocably paid according to their terms.
            (5) Closing of estate.--After an estate has been fully 
        administered, the trustee shall close the estate and, except as 
        otherwise directed by the applicable covered bond regulator, 
        shall destroy all records of the estate.
            (6) No loss to taxpayers.--Taxpayers shall bear no losses 
        from the resolution of an estate under this subtitle. To the 
        extent that the Secretary and the Corporation jointly determine 
        that the Deposit Insurance Fund incurred actual losses that are 
        higher because the covered bond program of an insured 
        depository institution was subject to resolution under this 
        subtitle rather than as part of the receivership of the 
        institution under the Federal Deposit Insurance Act (12 U.S.C. 
        1811 et seq.), the Corporation may exercise the powers 
        available under section 7(b) of the Federal Deposit Insurance 
        Act (12 U.S.C. 1817(b)) to recover an amount equal to those 
        losses after consulting with the Secretary.

SEC. 344. SECURITIES LAW PROVISIONS.

    (a) Existing Exemptions Applicable to Covered Bonds.--
            (1) Treatment of certain banks and other entities.--Any 
        covered bond issued or guaranteed by a bank or by an eligible 
        issuer described in section 341(9)(D) and sponsored solely by 1 
        or more banks for the sole purpose of issuing covered bonds is 
        and shall be treated as a security issued or guaranteed by a 
        bank under section 3(a)(2) of the Securities Act of 1933 (15 
        U.S.C. 77c(a)(2)), section 3(c)(3) of the Investment Company 
        Act of 1940 (15 U.S.C. 80a-3(c)(3)), and section 304(a)(4)(A) 
        of the Trust Indenture Act of 1939 (15 U.S.C. 77ddd(a)(4)(A)). 
        No covered bond issued or guaranteed by a bank or by an 
        eligible issuer described in section 341(9)(D) and sponsored 
        solely by 1 or more banks for the sole purpose of issuing 
        covered bonds shall be treated as an asset-backed security (as 
        defined in section 3 of the Securities and Exchange Act of 1934 
        (15 U.S.C. 78c)). Each covered bond regulator for 1 or more 
        banks shall adopt disclosure and reporting regulations for 
        offers or sales of covered bonds by a bank or an eligible 
        issuer described in this paragraph. Such regulations shall 
        provide for uniform and consistent standards for such covered 
        bond issuers, to the extent possible, and shall be consistent 
        with existing regulations governing offers or sales of 
        nonconvertible debt.
            (2) Treatment of certain associations and cooperative 
        banks.--Any covered bond issued by an entity described in 
        section 3(a)(5)(A) of the Securities Act of 1933 (15 U.S.C. 
        77c(a)(5)(A)) or by an eligible issuer described in section 
        341(9)(D) and sponsored solely by 1 or more such entities for 
        the sole purpose of issuing covered bonds is and shall be 
        treated as a security issued by such an entity under section 
        3(a)(5)(A) of the Securities Act of 1933 (15 U.S.C. 
        77c(a)(5)(A)), section 3(c)(3) of the Investment Company Act of 
        1940 (15 U.S.C. 80a-3(c)(3)), and section 304(a)(4)(A) of the 
        Trust Indenture Act of 1939 (15 U.S.C. 77ddd(a)(4)(A)). No 
        covered bond issued by an entity described in section 
        3(a)(5)(A) of the Securities Act of 1933 (15 U.S.C. 
        77c(a)(5)(A)) or by an eligible issuer described in section 
        341(9)(D) and sponsored solely by 1 or more such entities for 
        the sole purpose of issuing covered bonds shall be treated as 
        an asset-backed security (as defined in section 3 of the 
        Securities and Exchange Act of 1934 (15 U.S.C. 78c)). Each 
        covered bond regulator for 1 or more entities described in 
        section 3(a)(5)(A) of the Securities Act of 1933 (15 U.S.C. 
        77c(a)(5)(A)) shall adopt, as part of the securities 
        regulations of the covered bond regulator, a separate scheme of 
        registration, disclosure, and reporting obligations and 
        exemptions for offers or sales of covered bonds that are 
        described in this paragraph. Such regulations shall provide for 
        uniform and consistent standards for such covered bond issuers, 
        to the extent possible, and shall be consistent with 
        regulations governing offers or sales of similar securities.
            (3) Construction.--No provision of this subtitle, including 
        paragraph (1) or (2), may be construed or applied in a manner 
        that impairs or limits any other exemption that is available 
        under applicable securities laws.
    (b) Exemptions for Estates.--Any estate that is or may be created 
under section 343(b)(1) or 343(c)(2) shall be exempt from all 
securities laws but--
            (1) shall be subject to the reporting requirements 
        established by the applicable covered bond regulator under 
        section 343(d)(1)(E)(iii); and
            (2) shall succeed to any requirement of the issuer to file 
        such periodic information, documents, and reports in respect of 
        the covered bonds as specified in section 13(a) of the 
        Securities and Exchange Act of 1934 (15 U.S.C. 78m(a)) or rules 
        established by an appropriate Federal banking agency.
    (c) Exemptions for Residual Interests.--Any residual interest in an 
estate that is or may be created under section 343(b)(1) or 343(c)(2) 
shall be exempt from all securities laws.

SEC. 345. MISCELLANEOUS PROVISIONS.

    (a) Domestic Securities.--Section 106(a)(1) of the Secondary 
Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1(a)(1)) is 
amended--
            (1) in subparagraph (C), by striking ``or'' at the end;
            (2) in subparagraph (D), by adding ``or'' at the end; and
            (3) by inserting after subparagraph (D) the following:
            ``(E) covered bonds (as defined in section 341 of the 
        Protecting American Taxpayers and Homeowners Act of 2018),''.
    (b) Tax Treatment of Covered Bond Programs.--
            (1) Treatment of estates created under covered bond 
        programs.--Section 7701 of the Internal Revenue Code of 1986 is 
        amended by redesignating subsection (p) as subsection (q) and 
        by inserting after subsection (o) the following new subsection:
    ``(p) Treatment of Estates Created Under Covered Bond Programs.--
For purposes of this title--
            ``(1) Treatment as disregarded entity.--Any estate created 
        with respect to a covered bond program--
                    ``(A) shall not be treated as an entity subject to 
                taxation separate from the owner of the residual 
                interest with respect to such estate, and
                    ``(B) shall be treated as a disregarded entity that 
                is owned by the owner of such residual interest.
            ``(2) Limitations on treatment as disregarded entity.--
                    ``(A) Maximum duration.--Paragraph (1) shall not 
                apply with respect to an estate after the earlier of--
                            ``(i) the end of the 30-year period 
                        beginning on the date of the creation of such 
                        estate, or
                            ``(ii) the end of the 180-day period 
                        beginning on the date of the final payment on 
                        the last outstanding covered bond that is 
                        secured by the cover pool held by such estate.
                    ``(B) Restrictions on owner of residual interest.--
                Paragraph (1) shall apply with respect to an estate for 
                any period only if--
                            ``(i) at no time during such period does 
                        more than one person hold a residual interest 
                        with respect to such estate,
                            ``(ii) such person is--
                                    ``(I) subject to tax under subtitle 
                                A on the net income of such estate for 
                                the taxable year of such person which 
                                includes such period, or
                                    ``(II) a conservator, receiver, 
                                liquidating agent, or trustee in 
                                bankruptcy with respect to the issuer 
                                for such period, and
                            ``(iii) such person is not a regulated 
                        investment company (as defined in section 851) 
                        or real estate investment trust (as defined in 
                        section 856) for the taxable year which 
                        includes such period.
            ``(3) Treatment as corporation.--With respect to any period 
        for which paragraph (1) does not apply to an estate created 
        with respect to a covered bond program, such estate shall be 
        treated as a corporation.
            ``(4) Coordination with rules for taxable mortgage pools.--
        No portion of any estate created with respect to a covered bond 
        program shall be treated as a taxable mortgage pool for 
        purposes of subsection (i) during any period for which 
        paragraph (1) applies to such estate.
            ``(5) Definitions.--For purposes of this subsection, the 
        terms `covered bond program', `cover pool', `estate', and 
        `residual interest' shall each have the same respective 
        meanings as when used for purposes of subtitle D of title III 
        of the Protecting American Taxpayers and Homeowners Act of 
        2018.
            ``(6) Cross references.--
                    ``(A) For nonrecognition with respect to certain 
                transfers under covered bond programs, see section 
                1001(f).
                    ``(B) For excise tax on estates created under 
                covered bond programs by reason of default, see section 
                4475.''.
            (2) Treatment of certain transfers under covered bond 
        programs.--Section 1001 of such Code is amended by adding at 
        the end the following new subsection:
    ``(f) Certain Transfers Under Covered Bond Programs.--
            ``(1) In general.--With respect to any covered bond 
        program, none of the following shall be treated as a taxable 
        exchange of a covered bond to a covered bond holder or to a 
        notional principal contract counterparty:
                    ``(A) The transfer of all of the assets and 
                liabilities of such program.
                    ``(B) The creation of an estate with respect to 
                such program.
                    ``(C) The transfer of the residual interest in such 
                estate.
            ``(2) Definitions.--For purposes of this subsection, the 
        terms `covered bond program', `estate', and `residual interest' 
        shall each have the same respective meanings as when used for 
        purposes of subtitle D of title III of the Protecting American 
        Taxpayers and Homeowners Act of 2018.''.
            (3) Excise tax on estates created under covered bond 
        programs by reason of default.--
                    (A) In general.--Chapter 36 of such Code is amended 
                by inserting after subchapter B the following new 
                subchapter:

   ``Subchapter C--Tax on Certain Estates Created Under Covered Bond 
                                Programs

``Sec. 4475. Tax on estates created under covered bond programs by 
                            reason of default.

``SEC. 4475. TAX ON ESTATES CREATED UNDER COVERED BOND PROGRAMS BY 
              REASON OF DEFAULT.

    ``(a) Imposition of Tax.--A tax is hereby imposed on the creation 
of an estate by operation of section 343(b)(1) of the Protecting 
American Taxpayers and Homeowners Act of 2018.
    ``(b) Amount of Tax.--The tax imposed under subsection (a) with 
respect to the creation of any estate shall be equal to 1 percent of 
the principal amount of the covered bonds secured by the cover pool 
with respect to such estate determined as of the close of the day 
before the creation of such estate.
    ``(c) By Whom Paid.--The tax imposed under subsection (a) shall be 
paid by the issuer of the covered bonds with respect to the covered 
bond program with respect to which the estate referred to in subsection 
(a) is created.
    ``(d) No Effect on Cover Pool.--The tax imposed under subsection 
(a) shall not reduce the assets of the cover pool and no liability for 
such tax shall attach to the estate or to the assets of the cover pool.
    ``(e) Refund in Case of Bankruptcy, etc.--If an issuer liable for 
the tax imposed under subsection (a) enters conservatorship, 
receivership, liquidation, or bankruptcy during the 5-year period 
beginning on the date of the creation of the estate referred to in 
subsection (a), such liability shall be extinguished and any such tax 
paid shall refunded to the issuer immediately upon such event.
    ``(f) Definitions.--For purposes of this section, the terms 
`covered bond program', `cover pool', and `estate' shall each have the 
same respective meanings as when used for purposes of subtitle D of 
title III of the Protecting American Taxpayers and Homeowners Act of 
2018.''.
                    (B) Clerical amendment.--The table of subchapters 
                for chapter 36 of such Code is amended by inserting 
                after the item relating to subchapter B the following 
                new item:

   ``subchapter c--tax on certain estates created under covered bond 
                              programs''.

            (4) Effective date.--The amendments made by this subsection 
        shall apply to estates created, and transfers made, after the 
        date of the enactment of this Act.
    (c) State and Local Taxes.--The Secretary may promulgate 
regulations under this subtitle that are similar to the provisions of 
section 346 of title 11, United States Code, including regulations to 
provide that--
            (1) if an estate created under section 343(b)(1) or 
        343(c)(2) is not treated as an entity subject to taxation 
        separate from the owner of the residual interest for purposes 
        of the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.), no 
        separate taxable entity shall be created with respect to the 
        estate for purposes of any State or local law imposing a tax on 
        or measured by income; and
            (2) if a transfer or assumption of an asset or liability to 
        or by an estate or an eligible issuer under section 343(b) or 
        343(c) does not cause or constitute an event in which gain or 
        loss is recognized under section 1001 of the Internal Revenue 
        Code of 1986 (26 U.S.C. 1001), the transfer or assumption shall 
        not cause or constitute a disposition for purposes of any 
        provision assigning tax consequences to a disposition in 
        connection with any State or local law imposing a tax on or 
        measured by income.
    (d) No Conflict.--The provisions of this subtitle shall apply, 
notwithstanding any provision of the Federal Deposit Insurance Act (12 
U.S.C. 1811 et seq.), title 11, United States Code, title II of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 
5381 et seq.), or any other provision of Federal law with respect to 
conservatorship, receivership, liquidation, or bankruptcy. No provision 
of the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), title 
11, United States Code, title II of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5381 et seq.), or any other 
provision of Federal law with respect to conservatorship, receivership, 
liquidation, or bankruptcy may be construed or applied in a manner that 
defeats or interferes with the purpose or operation of this subtitle.
    (e) Annual Report to Congress.--The covered bond regulators shall, 
annually--
            (1) submit a joint report to the Congress describing the 
        current state of the covered bond market in the United States; 
        and
            (2) testify on the current state of the covered bond market 
        in the United States before the Committee on Financial Services 
        of the House of Representatives and the Committee on Banking, 
        Housing, and Urban Affairs of the Senate.

             TITLE IV--REMOVING BARRIERS TO NEW INVESTMENT

SEC. 401. BASEL III LIQUIDITY COVERAGE RATIO AMENDMENTS.

    (a) In General.--In implementing the Basel III Liquidity Coverage 
Ratio amendments, the Board of Governors of the Federal Reserve System, 
the Federal Deposit Insurance Corporation, and the Office of the 
Comptroller of the Currency may not require, as a condition for status 
as a high quality liquid asset, that residential mortgage-backed 
securities be collateralized only by (or be collateralized by a certain 
percentage of) full recourse mortgage loans.
    (b) Definition.--The term ``Basel III Liquidity Coverage Ratio 
amendments'' means the final rule issued by the Comptroller of the 
Currency, the Board of Governors of the Federal Reserve System, and the 
Federal Deposit Insurance Corporation titled ``Liquidity Coverage 
Ratio: Liquidity Risk Measurement Standards'', published October 10, 
2014 (79 Fed. Reg. 61439).

SEC. 402. DEFINITION OF POINTS AND FEES.

    (a) Amendment to Section 103 of TILA.--Section 103(bb)(4) of the 
Truth in Lending Act (15 U.S.C. 1602(bb)(4)) is amended--
            (1) by striking ``paragraph (1)(B)'' and inserting 
        ``paragraph (1)(A) and section 129C'';
            (2) in subparagraph (C)--
                    (A) by inserting ``and insurance'' after ``taxes'';
                    (B) in clause (ii), by inserting ``, except as 
                retained by a creditor or its affiliate as a result of 
                their participation in an affiliated business 
                arrangement (as defined in section 2(7) of the Real 
                Estate Settlement Procedures Act of 1974 (12 U.S.C. 
                2602(7))'' after ``compensation''; and
                    (C) by striking clause (iii) and inserting the 
                following:
                    ``(iii) the charge is--
                            ``(I) a bona fide third-party charge not 
                        retained by the mortgage originator, creditor, 
                        or an affiliate of the creditor or mortgage 
                        originator; or
                            ``(II) a charge set forth in section 
                        106(e)(1);''; and
            (3) in subparagraph (D)--
                    (A) by striking ``accident,''; and
                    (B) by striking ``or any payments'' and inserting 
                ``and any payments''.
    (b) Amendment to Section 129C of TILA.--Section 129C of the Truth 
in Lending Act (15 U.S.C. 1639c) is amended--
            (1) in subsection (a)(5)(C), by striking ``103'' and all 
        that follows through ``or mortgage originator'' and inserting 
        ``103(bb)(4)''; and
            (2) in subsection (b)(2)(C)(i), by striking ``103'' and all 
        that follows through ``or mortgage originator)'' and inserting 
        ``103(bb)(4)''.
    (c) Rulemaking.--Not later than the end of the 90-day period 
beginning on the date of the enactment of this Act, the Bureau of 
Consumer Financial Protection shall issue final regulations to carry 
out the amendments made by this section, and such regulations shall be 
effective upon issuance.

SEC. 403. EXCLUSION OF ISSUERS OF ASSET-BACKED SECURITIES FROM COVERED 
              FUNDS.

    Section 13(h)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1851(h)(2)) is amended--
            (1) by striking ```private equity fund' mean an issuer'' 
        and inserting the following: ```private equity fund'--
                    ``(A) mean an issuer'';
            (2) by striking the period and inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(B) does not include an issuer, if such issuer is 
                described under subparagraph (A) solely because such 
                issuer issues asset-backed securities (as such term is 
                defined under section 3(a) of the Securities Exchange 
                Act of 1934 (15 U.S.C. 78c(a))).''.

SEC. 404. MORTGAGES IN QUALIFIED SECURITIES.

    Section 129C of the Truth in Lending Act (15 U.S.C. 1639c) is 
amended by adding at the end the following:
    ``(j) Mortgages in Qualified Securities.--This section and any 
regulations promulgated under this section do not apply to a mortgage 
serving as collateral for a qualified security, as such term is defined 
under section 321 of the Protecting American Taxpayers and Homeowners 
Act of 2018.''.

SEC. 405. MORTGAGE LOANS HELD IN PORTFOLIO.

    (a) Home Mortgage Disclosure Act of 1975.--Section 304(g) of the 
Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(g)) is amended--
            (1) in paragraph (1), by striking ``and'' at the end;
            (2) in paragraph (2), by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(3) made by the creditor, so long as such loan appears on 
        the balance sheet of such creditor.''.
    (b) Truth in Lending Act.--The Truth in Lending Act (15 U.S.C. 1601 
et seq.), as amended by the preceding provisions of this Act, is 
further amended--
            (1) in section 129C (15 U.S.C. 1639c), by adding at the end 
        the following:
    ``(k) Mortgage Loans Held in Portfolio.--This section and any 
regulations promulgated under this section do not apply to a 
residential mortgage loan made by the creditor so long as such loan 
appears on the balance sheet of such creditor.''; and
            (2) in section 129D (15 U.S.C. 1639d), by adding at the end 
        the following:
    ``(k) Mortgage Loans Held in Portfolio.--This section and any 
regulations promulgated under this section do not apply to a 
residential mortgage loan made by the creditor so long as such loan 
appears on the balance sheet of such creditor.''.

SEC. 406. REPEAL OF CERTAIN MORTGAGE-RELATED PROVISIONS.

    (a) Repeal.--Sections 1413, 1431, and 1432 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act are hereby repealed, and the 
provisions of law amended or repealed by such sections are restored or 
revived as if such sections had not been enacted.
    (b) Clerical Amendment.--The table of contents for the Dodd-Frank 
Wall Street Reform and Consumer Protection Act is amended by striking 
the items relating to sections 1413, 1431, and 1432.

SEC. 407. AMENDMENTS TO THE TRUTH IN LENDING ACT.

    The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended--
            (1) in section 129 (15 U.S.C. 1639)--
                    (A) in subsection (b)(3), by adding at the end the 
                following: ``The Bureau may not, by regulation or 
                otherwise, prohibit a consumer from modifying or 
                waiving the rights provided to the consumer under this 
                subsection.''; and
                    (B) in subsection (u), by adding at the end the 
                following:
            ``(4) Ensuring access to counseling services for rural 
        communities.--Certification described under paragraph (1) may 
        be provided by a person who operates an online or telephone-
        operated counseling service approved by the Secretary of 
        Housing and Urban Development or by an online or telephone-
        operated counseling service operated by the Department of 
        Housing and Urban Development.
            ``(5) Effective date.--Notwithstanding section 1400(c) of 
        the Mortgage Reform and Anti-Predatory Lending Act, this 
        subsection shall take effect after the end of the 1-year period 
        beginning on the earlier of--
                    ``(A) the date on which the first online or 
                telephone-operated counseling service is approved under 
                paragraph (4); and
                    ``(B) the date on which the Department of Housing 
                and Urban Development begins providing online or 
                telephone-operated counseling services described under 
                paragraph (4).'';
            (2) in section 129C (15 U.S.C. 1639c)--
                    (A) in subsection (b)(2)(A)(viii), by striking 
                ``30'' and inserting ``40'';
                    (B) by striking subsections (c), (d), and (e); and
                    (C) by redesignating subsections (f), (g), (h), and 
                (i) as subsections (c), (d), (e), and (f), 
                respectively; and
            (3) in section 129E(k)(1) (15 U.S.C. 1639e(k)(1)) by 
        inserting after ``this section'' the following: ``, other than 
        subsection (e),''.

SEC. 408. FINANCIAL INSTITUTIONS EXAMINATION FAIRNESS AND REFORM.

    (a) Amendment to Definition of Financial Institution.--Section 
1003(3) of the Federal Financial Institutions Examination Council Act 
of 1978 (12 U.S.C. 3302(3)) is amended to read as follows:
            ``(3) the term `financial institution'--
                    ``(A) means a commercial bank, a savings bank, a 
                trust company, a savings association, a building and 
                loan association, a homestead association, a 
                cooperative bank, or a credit union; and
                    ``(B) for purposes of sections 1012, 1013, and 
                1014, includes a nondepository covered person subject 
                to supervision by the Bureau of Consumer Financial 
                Protection under section 1024 of the Consumer Financial 
                Protection Act of 2010 (12 U.S.C. 5514).''.
    (b) Timeliness of Examination Reports.--The Federal Financial 
Institutions Examination Council Act of 1978 (12 U.S.C. 3301 et seq.) 
is amended by adding at the end the following:

``SEC. 1012. TIMELINESS OF EXAMINATION REPORTS.

    ``(a) In General.--
            ``(1) Final examination report.--A Federal financial 
        institutions regulatory agency shall provide a final 
        examination report to a financial institution not later than 60 
        days after the later of--
                    ``(A) the exit interview for an examination of the 
                institution; or
                    ``(B) the provision of additional information by 
                the institution relating to the examination.
            ``(2) Exit interview.--If a financial institution is not 
        subject to a resident examiner program, the exit interview 
        shall occur not later than the end of the 9-month period 
        beginning on the commencement of the examination, except that 
        such period may be extended by the Federal financial 
        institutions regulatory agency by providing written notice to 
        the institution and the Independent Examination Review Director 
        describing with particularity the reasons that a longer period 
        is needed to complete the examination.
    ``(b) Examination Materials.--Upon the request of a financial 
institution, the Federal financial institutions regulatory agency shall 
include with the final report an appendix listing all examination or 
other factual information relied upon by the agency in support of a 
material supervisory determination.''.
    (c) Independent Examination Review Director.--The Federal Financial 
Institutions Examination Council Act of 1978 (12 U.S.C. 3301 et seq.), 
as amended by subsection (b) of this section, is further amended by 
adding at the end the following:

``SEC. 1013. OFFICE OF INDEPENDENT EXAMINATION REVIEW.

    ``(a) Establishment.--There is established in the Council an Office 
of Independent Examination Review (the `Office').
    ``(b) Head of Office.--There is established the position of the 
Independent Examination Review Director (the `Director'), as the head 
of the Office. The Director shall be appointed by the Council and shall 
be independent from any member agency of the Council.
    ``(c) Term.--The Director shall serve for a term of 5 years, and 
may be appointed to serve a subsequent 5-year term.
    ``(d) Staffing.--The Director is authorized to hire staff to 
support the activities of the Office.
    ``(e) Duties.--The Director shall--
            ``(1) receive and, at the Director's discretion, 
        investigate complaints from financial institutions, their 
        representatives, or another entity acting on behalf of such 
        institutions, concerning examinations, examination practices, 
        or examination reports;
            ``(2) hold meetings, at least once every three months and 
        in locations designed to encourage participation from all 
        sections of the United States, with financial institutions, 
        their representatives, or another entity acting on behalf of 
        such institutions, to discuss examination procedures, 
        examination practices, or examination policies;
            ``(3) in accordance with subsection (f), review examination 
        procedures of the Federal financial institutions regulatory 
        agencies to ensure that the written examination policies of 
        those agencies are being followed in practice and adhere to the 
        standards for consistency established by the Council;
            ``(4) conduct a continuing and regular review of 
        examination quality assurance for all examination types 
        conducted by the Federal financial institutions regulatory 
        agencies;
            ``(5) adjudicate any supervisory appeal initiated under 
        section 1014; and
            ``(6) report annually to the Committee on Financial 
        Services of the House of Representatives, the Committee on 
        Banking, Housing, and Urban Affairs of the Senate, and the 
        Council, on the reviews carried out pursuant to paragraphs (3) 
        and (4), including compliance with the requirements set forth 
        in section 1012 regarding timeliness of examination reports, 
        and the Council's recommendations for improvements in 
        examination procedures, practices, and policies.
    ``(f) Standard for Reviewing Examination Procedures.--In conducting 
reviews pursuant to subsection (e)(4), the Director shall prioritize 
factors relating to the safety and soundness of the financial system of 
the United States.
    ``(g) Removal.--If the Director is removed from office, the Council 
shall communicate in writing the reasons for any such removal to the 
Committee on Financial Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs of the Senate not 
later than 30 days before the removal.
    ``(h) Confidentiality.--The Director shall keep confidential all 
meetings with, discussions with, and information provided by financial 
institutions.''.
    (d) Right to Independent Review of Material Supervisory 
Determinations.--The Federal Financial Institutions Examination Council 
Act of 1978 (12 U.S.C. 3301 et seq.), as amended by subsection (c) of 
this section, is further amended by adding at the end the following:

``SEC. 1014. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SUPERVISORY 
              DETERMINATIONS.

    ``(a) In General.--A financial institution shall have the right to 
obtain an independent review of a material supervisory determination 
contained in a final report of examination.
    ``(b) Notice.--
            ``(1) Timing.--A financial institution seeking review of a 
        material supervisory determination under this section shall 
        file a written notice with the Independent Examination Review 
        Director (the `Director') within 60 days after receiving the 
        final report of examination that is the subject of such review.
            ``(2) Identification of determination.--The written notice 
        shall identify the material supervisory determination that is 
        the subject of the independent examination review, and a 
        statement of the reasons why the institution believes that the 
        determination is incorrect or should otherwise be modified.
            ``(3) Information to be provided to institution.--Any 
        information relied upon by the agency in the final report that 
        is not in the possession of the financial institution may be 
        requested by the financial institution and shall be delivered 
        promptly by the agency to the financial institution.
    ``(c) Right to Hearing.--
            ``(1) In general.--The Director shall determine the merits 
        of the appeal on the record or, at the financial institution's 
        election, shall refer the appeal to an Administrative Law Judge 
        to conduct a confidential hearing pursuant to the procedures 
        set forth under sections 556 and 557 of title 5, United States 
        Code, which hearing shall take place not later than 60 days 
        after the petition for review was received by the Director, and 
        to issue a proposed decision to the Director based upon the 
        record established at such hearing.
            ``(2) Standard of review.--In rendering a determination or 
        recommendation under this subsection, neither the 
        Administrative Law Judge nor the Director shall defer to the 
        opinions of the examiner or agency, but shall conduct a de novo 
        review to independently determine the appropriateness of the 
        agency's decision based upon the relevant statutes, 
        regulations, and other appropriate guidance, as well as 
        evidence adduced at any hearing.
    ``(d) Final Decision.--A decision by the Director on an independent 
review under this section shall--
            ``(1) be made not later than 60 days after the record has 
        been closed; and
            ``(2) subject to subsection (e), be deemed a final agency 
        action and shall bind the agency whose supervisory 
        determination was the subject of the review and the financial 
        institution requesting the review.
    ``(e) Limited Review by FFIEC.--
            ``(1) In general.--If the agency whose supervisory 
        determination was the subject of the review believes that the 
        Director's decision under subsection (d) would pose an imminent 
        threat to the safety and soundness of the financial 
        institution, such agency may file a written notice seeking 
        review of the Director's decision with the Council within 10 
        days of receiving the Director's decision.
            ``(2) Standard of review.--In making a determination under 
        this subsection, the Council shall conduct a review to 
        determine whether there is substantial evidence that the 
        Director's decision would pose an imminent threat to the safety 
        and soundness of the financial institution.
            ``(3) Final determination.--A determination by the Council 
        shall--
                    ``(A) be made not later than 30 days after the 
                filing of the notice pursuant to paragraph (1); and
                    ``(B) be deemed a final agency action and shall 
                bind the agency whose supervisory determination was the 
                subject of the review and the financial institution 
                requesting the review.
    ``(f) Right to Judicial Review.--A financial institution shall have 
the right to petition for review of final agency action under this 
section by filing a Petition for Review within 60 days of the 
Director's decision or the Council's decision in the United States 
Court of Appeals for the District of Columbia Circuit or the Circuit in 
which the financial institution is located.
    ``(g) Report.--The Director shall report annually to the Committee 
on Financial Services of the House of Representatives and the Committee 
on Banking, Housing, and Urban Affairs of the Senate on actions taken 
under this section, including the types of issues that the Director has 
reviewed and the results of those reviews. In no case shall such a 
report contain information about individual financial institutions or 
any confidential or privileged information shared by financial 
institutions.
    ``(h) Retaliation Prohibited.--A Federal financial institutions 
regulatory agency may not--
            ``(1) retaliate against a financial institution, including 
        service providers, or any institution-affiliated party (as 
        defined under section 3 of the Federal Deposit Insurance Act), 
        for exercising appellate rights under this section; or
            ``(2) delay or deny any agency action that would benefit a 
        financial institution or any institution-affiliated party on 
        the basis that an appeal under this section is pending under 
        this section.
    ``(i) Rule of Construction.--Nothing in this section may be 
construed--
            ``(1) to affect the right of a Federal financial 
        institutions regulatory agency to take enforcement or other 
        supervisory actions related to a material supervisory 
        determination under review under this section; or
            ``(2) to prohibit the review under this section of a 
        material supervisory determination with respect to which there 
        is an ongoing enforcement or other supervisory action.''.
    (e) Additional Amendments.--
            (1) Riegle community development and regulatory improvement 
        act of 1994.--Section 309 of the Riegle Community Development 
        and Regulatory Improvement Act of 1994 (12 U.S.C. 4806) is 
        amended--
                    (A) in subsection (a), by inserting after 
                ``appropriate Federal banking agency'' the following: 
                ``, the Bureau of Consumer Financial Protection,'';
                    (B) in subsection (b)--
                            (i) in paragraph (2), by striking ``the 
                        appellant from retaliation by agency 
                        examiners'' and inserting ``the insured 
                        depository institution or insured credit union 
                        from retaliation by the agencies referred to in 
                        subsection (a)''; and
                            (ii) by adding at the end the following 
                        flush-left text:
``For purposes of this subsection and subsection (e), retaliation 
includes delaying consideration of, or withholding approval of, any 
request, notice, or application that otherwise would have been 
approved, but for the exercise of the institution's or credit union's 
rights under this section.'';
                    (C) in subsection (e)(2)--
                            (i) in subparagraph (B), by striking 
                        ``and'' at the end;
                            (ii) in subparagraph (C), by striking the 
                        period and inserting ``; and''; and
                            (iii) by adding at the end the following:
                    ``(D) ensure that appropriate safeguards exist for 
                protecting the insured depository institution or 
                insured credit union from retaliation by any agency 
                referred to in subsection (a) for exercising its rights 
                under this subsection.''; and
                    (D) in subsection (f)(1)(A)--
                            (i) in clause (ii), by striking ``and'' at 
                        the end;
                            (ii) in clause (iii), by striking ``and'' 
                        at the end; and
                            (iii) by adding at the end the following:
                            ``(iv) any issue specifically listed in an 
                        exam report as a matter requiring attention by 
                        the institution's management or board of 
                        directors; and
                            ``(v) any suspension or removal of an 
                        institution's status as eligible for expedited 
                        processing of applications, requests, notices, 
                        or filings on the grounds of a supervisory or 
                        compliance concern, regardless of whether that 
                        concern has been cited as a basis for another 
                        material supervisory determination or matter 
                        requiring attention in an examination report, 
                        provided that the conduct at issue did not 
                        involve violation of any criminal law; and''.
            (2) Federal credit union act.--Section 205(j) of the 
        Federal Credit Union Act (12 U.S.C. 1785(j)) is amended by 
        inserting ``the Bureau of Consumer Financial Protection,'' 
        before ``the Administration'' each place such term appears.
            (3) Federal financial institutions examination council act 
        of 1978.--The Federal Financial Institutions Examination 
        Council Act of 1978 (12 U.S.C. 3301 et seq.) is amended--
                    (A) in section 1003, by amending paragraph (1) to 
                read as follows:
            ``(1) the term `Federal financial institutions regulatory 
        agencies'--
                    ``(A) means the Office of the Comptroller of the 
                Currency, the Board of Governors of the Federal Reserve 
                System, the Federal Deposit Insurance Corporation, and 
                the National Credit Union Administration; and
                    ``(B) for purposes of sections 1012, 1013, and 
                1014, includes the Bureau of Consumer Financial 
                Protection;''; and
                    (B) in section 1005, by striking ``One-fifth'' and 
                inserting ``One-fourth''.
    (f) Reduction of Surplus Funds of Federal Reserve Banks.--
            (1) In general.--Section 7(a)(3)(A) of the Federal Reserve 
        Act (12 U.S.C. 289(a)(3)(A)) is amended by striking 
        ``$7,500,000,000'' and inserting ``$7,324,285,000''.
            (2) Effective date.--Paragraph (1) shall take effect on 
        June 1, 2018.

SEC. 409. NOTICE OF JUNIOR MORTGAGE OR LIEN.

    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.

SEC. 410. LIMITATION ON MORTGAGES HELD BY LOAN SERVICERS.

    (a) Limitation.--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.
    (b) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Affiliate.--The term ``affiliate'' has the meaning 
        given such term under section 104(g) of the Gramm-Leach-Bliley 
        Act (15 U.S.C. 6701(g)).
            (2) Residential mortgage loan.--The term ``residential 
        mortgage loan'' 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 section 
        101(53D) of title 11, United States Code.
            (3) Servicer.--The term ``servicer'' has the meaning 
        provided such term 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.
    (c) Interests.--For purposes of subsection (a), ownership of, or 
holding an interest in, a residential mortgage loan includes ownership 
of, or holding an interest in--
            (1) a pool of residential mortgage loans that contains such 
        residential mortgage loan; or
            (2) any security based on or backed by a pool of 
        residential mortgage loans that contains such residential 
        mortgage loan.
    (d) Effective Date.--This section shall apply--
            (1) 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
            (2) 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.

                     TITLE V--REGULATORY STRUCTURE

                         Subtitle A--Ginnie Mae

SEC. 501. REMOVAL FROM HUD; ESTABLISHMENT AS INDEPENDENT ENTITY.

    (a) In General.--Paragraph (2) of section 302(a) of the National 
Housing Act (12 U.S.C. 1717(a)(2)) is amended by striking ``in the 
Department of Housing and Urban Development'' and inserting 
``independent of any other agency or office in the Federal 
Government''.
    (b) Conforming Amendments.--Title III of the National Housing Act 
(12 U.S.C. 1716 et seq.) is amended--
            (1) in section 306(g)(3)(D) (12 U.S.C. 1721(g)(3)(D)), by 
        striking ``Secretary'' and inserting ``Association'';
            (2) in section 307 (12 U.S.C. 1722), by striking 
        ``Secretary of Housing and Urban Development'' and inserting 
        ``Association''; and
            (3) in section 317 (12 U.S.C. 1723i)--
                    (A) in subsection (a)(1), by striking ``Secretary 
                of Housing and Urban Development'' and inserting 
                ``Administrator of the Association'';
                    (B) in subsection (c)(4), by striking 
                ``Secretary's'' and inserting ``Administrator of the 
                Association's'';
                    (C) in subsection (d)(1), by striking 
                ``Secretary's'' and inserting ``Administrator of the 
                Association's'';
                    (D) in the heading for subsection (f), by striking 
                ``by Secretary''; and
                    (E) by striking ``Secretary'' each place such term 
                appears and inserting ``Administrator of the 
                Association''.
    (c) Management; Board of Directors.--
            (1) In general.--Section 308 of the National Housing Act 
        (12 U.S.C. 1723(a)) is amended by striking subsection (a) and 
        inserting the following new subsection:
    ``(a) Management.--
            ``(1) Board of directors.--
                    ``(A) Number and appointment.--The Association 
                shall be governed by a Board of Directors consisting of 
                5 members, who shall be appointed by the President, by 
                and with the advice and consent of the Senate, from 
                among individuals who--
                            ``(i) are citizens of the United States; 
                        and
                            ``(ii) have demonstrated technical 
                        expertise in the mortgage market and one of 
                        whom has technical expertise in the secondary 
                        mortgage market.
                    ``(B) Political affiliation.--Not more than 3 
                members of the Board of Directors may be members of the 
                same political party.
                    ``(C) Terms.--
                            ``(i) In general.--Each member of the Board 
                        of Directors shall be appointed for a term of 5 
                        years, except as provided in clauses (ii) and 
                        (iii).
                            ``(ii) Terms of initial appointees.--As 
                        designated by the President at the time of 
                        appointment, of the members first appointed to 
                        the Board of Directors pursuant to subparagraph 
                        (A)--
                                    ``(I) 1 shall be appointed for a 
                                term of 1 year;
                                    ``(II) 1 shall be appointed for a 
                                term of 2 years;
                                    ``(III) 1 shall be appointed for a 
                                term of 3 years; and
                                    ``(IV) 1 shall be appointed for a 
                                term of 4 years.
                            ``(iii) Interim appointments.--Any member 
                        appointed to fill a vacancy occurring before 
                        the expiration of the term for which such 
                        member's predecessor was appointed shall be 
                        appointed only for the remainder of such term.
                            ``(iv) Continuation of service.--The 
                        Director and each member may continue to serve 
                        after the expiration of the term of office to 
                        which such member was appointed until a 
                        successor has been appointed and qualified.
            ``(2) Administrator; chairperson.--
                    ``(A) Designation; term.--One of the members of the 
                Board of Directors shall be designated by the 
                President, at the time of appointment, to serve as 
                Chairperson of the Board of Directors and Administrator 
                of the Association for a term of 5 years, unless 
                removed before the end of such term pursuant to 
                subparagraph (C).
                    ``(B) Advice.--The Board of Directors shall advise 
                the Administrator regarding overall strategies and 
                policies to carry out the duties and purposes of this 
                Act.
                    ``(C) Removal.--The President may remove the 
                Administrator for inefficiency, neglect of duty, or 
                malfeasance in office.
            ``(3) Operations.--
                    ``(A) Bylaws.--Within the limitations of law, the 
                Board of Directors shall determine the general policies 
                which shall govern the operations of the Association, 
                and shall have power to adopt, amend and repeal bylaws 
                governing the performance of the powers and duties 
                granted to or imposed upon it by law.
                    ``(B) Required votes.--At the first meeting of the 
                Board of Directors, the Board shall determine by 
                majority vote which actions of the Association shall 
                require a majority vote of the Board.
            ``(4) Officers.--The Director shall select and effect the 
        appointment of qualified persons to fill such offices of the 
        Association as may be provided for in the bylaws. Persons 
        appointed under the preceding sentence shall perform such 
        executive functions, powers, and duties as may be prescribed by 
        the bylaws or by the Board of Directors, and such persons shall 
        be executive officers of the Association and shall discharge 
        all such executive functions, powers, and duties.''.
            (2) Compensation.--
                    (A) Administrator.--Section 5314 of title 5, United 
                States Code, is amended by adding at the end the 
                following new item:
    ``Administrator, Government National Mortgage Association.''.
                    (B) Members of board of directors.--Section 5314 of 
                title 5, United States Code, is amended--
                            (i) by striking the item relating to the 
                        President of the Government National Mortgage 
                        Association, Department of Housing and Urban 
                        Development; and
                            (ii) by adding at the end the following new 
                        item:
    ``Members, Board of Directors of the Government National Mortgage 
Association.''.
    (d) Personnel.--Subsection (d) of section 309 of the National 
Housing Act (12 U.S.C. 1723a(d)) is amended by striking ``(d)(1)'' and 
all that follows through the end of paragraph (1) and inserting the 
following:
    ``(d) Personnel.--
            ``(1) Ginnie mae.--
                    ``(A) In general.--The Administrator of the 
                Association may appoint and fix the compensation of 
                such officers and employees of the Association as the 
                Administrator considers necessary to carry out the 
                functions of the Association. Officers and employees 
                may be paid without regard to the provisions of chapter 
                51 and subchapter III of chapter 53 of title 5, United 
                States Code, relating to classification and General 
                Schedule pay rates.
                    ``(B) Comparability of compensation with federal 
                banking agencies.--In fixing and directing compensation 
                under subparagraph (A), the Administrator of the 
                Association shall consult with, and maintain 
                comparability with, compensation of officers and 
                employees of the Office of the Comptroller of the 
                Currency, the Board of Governors of the Federal Reserve 
                System, and the Federal Deposit Insurance Corporation.
                    ``(C) Personnel of other federal agencies.--In 
                carrying out the duties of the Association, the 
                Administrator of the Association may use information, 
                services, staff, and facilities of any executive 
                agency, independent agency, or department on a 
                reimbursable basis, with the consent of such agency or 
                department.''.
    (e) Transitional Provision.--Notwithstanding this section and the 
amendments made by this section, during the period beginning on the 
date of the enactment of this Act, and ending on the date on which the 
Administrator of the Government National Mortgage Association is 
appointed and confirmed pursuant to section 308 of the National Housing 
Act, as amended by this section, the person serving as the President of 
the Government National Mortgage Association on that effective date 
shall act for all purposes as, and with the full powers of, the 
Administrator of the Association.
    (f) References.--On and after the date of the enactment of this 
Act, any reference in Federal law to the President of the Government 
National Mortgage Association or to such Association shall be deemed to 
be a reference to such Administrator of such Association or to such 
Association, as appropriate, as organized pursuant to this subsection 
and the amendments made by this section.

SEC. 502. GUARANTEE FEES.

    Paragraph (3) of section 306(g) of the National Housing Act (12 
U.S.C. 1721(g)(3)) is amended--
            (1) by striking ``(3)(A) No fee or charge in excess of 6 
        basis points'' and inserting ``(3)(A)(i) Except as provided in 
        clause (ii), no fee or charge'';
            (2) in subparagraph (A), by adding at the end the following 
        new clause:
    ``(ii) The Association shall establish a fee of not less than 6 
basis points for the guaranty of the timely payment of principal or 
interest on securities or notes based on or backed by mortgages 
described in clause (i), which shall be based on risks associated with 
issuer counterparties, market risks, and risk and cost of administering 
the program. The Association may adjust such fee annually but only to 
the extent necessary to conform such fee with such risks and costs and, 
before any such adjustment takes effect, shall submit to the Congress a 
report describing the justifications for the adjustment.'';
            (3) in subparagraph (B), by adding after the period at the 
        end the following: ```The Association may adjust such fee 
        annually but only to the extent necessary to conform such fee 
        with such anticipated claims.''';
            (4) in subparagraph (C)--
                    (A) by striking ``shall remain at the level set for 
                such fees or charges as of September 30, 1985, except 
                that'';
                    (B) by striking ``increased'' and inserting 
                ``adjusted pursuant subparagraph (D)''
                    (C) by inserting ``risk and'' before ``cost of 
                administering''; and
                    (D) by inserting ``or to the conditions of the 
                market,'' after ``the program,''; and
            (5) in subparagraph (D)--
                    (A) by striking ``increasing'' and inserting 
                ``adjusting''; and
                    (B) by striking ``increase'' and inserting 
                ``adjustment;''.

                            Subtitle B--FHA

SEC. 511. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Board.--The term ``Board'' means the Board of Directors 
        of the FHA established under section 524.
            (2) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency.
            (3) FHA.--The term ``FHA'' means the Federal Housing 
        Administration established under this title.
            (4) First-time homebuyer.--The term ``first-time 
        homebuyer'' means an individual who meets any of the following 
        criteria:
                    (A) An individual, and his or her spouse, who has 
                never had ownership in a principal residence, as 
                evidenced by inclusion of such individual's name on a 
                mortgage, title, or deed in connection with such 
                ownership.
                    (B) A single parent (as such term is defined in 
                section 956 of the Cranston-Gonzalez National 
                Affordable Housing Act (42 U.S.C. 12713)) who has only 
                owned a principal residence with a former spouse while 
                married.
                    (C) An individual who is divorced, whose only 
                ownership in a principal residence was together with a 
                previous spouse, as evidenced by inclusion of such 
                individual's name on a mortgage, title, or deed in 
                connection with such ownership.
                    (D) An individual who is a displaced homemaker (as 
                such term is defined in such section 956 of the 
                Cranston-Gonzalez National Affordable Housing Act) and 
                has only owned a principal residence with a spouse.
                    (E) An individual who has only owned a principal 
                residence not permanently affixed to a permanent 
                foundation in accordance with applicable regulations.
                    (F) An individual who has only owned a property 
                that was not in compliance with state, local or model 
                building codes and which cannot be brought into 
                compliance for less than the cost of constructing a 
                permanent structure.
            (5) United states.--The term ``United States'' includes the 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Commonwealth of the Northern Mariana Islands, Guam, 
        the Virgin Islands, American Samoa, and Native American 
        governments.

                          PART 1--ORGANIZATION

SEC. 521. ESTABLISHMENT.

    (a) In General.--There is hereby established the Federal Housing 
Administration, which shall be a body corporate without capital stock 
and shall have succession until dissolved by Act of Congress.
    (b) Government Corporation.--The FHA shall be established as a 
wholly owned Government corporation subject to chapter 91 of title 31, 
United States Code (commonly referred to as the Government Corporation 
Control Act), except as otherwise provided in this subtitle.
    (c) Federal Agency.--
            (1) In general.--The FHA shall be an agency of the United 
        States, except that the FHA shall not be considered an agency 
        for purposes of holding, managing, and disposing of assets 
        acquired by the FHA under the provisions of this title or the 
        National Housing Act.
            (2) Holding, management, and disposal authority.--For 
        purposes of this subsection, the term ``holding, managing, and 
        disposing of assets'' includes the powers to--
                    (A) deal with, complete, reconstruct, rent, 
                renovate, modernize, insure, make contracts for the 
                management of, establish suitable agencies for the 
                management of, or exercise discretion to sell for cash 
                or credit or lease, any acquired property;
                    (B) pursue collection by way of compromise or 
                otherwise all assigned and transferred claims; and
                    (C) at any time, upon default, foreclose on any 
                property secured by any assigned or transferred 
                mortgage.
    (d) Self-Sufficient Entity.--The FHA shall operate and conduct its 
business as a self-sufficient self-sufficient entity in accordance with 
section 204(d).
    (e) Corporate Offices and Residency.--The FHA shall maintain its 
principal office in the District of Columbia and shall be deemed, for 
purposes of venue in civil actions, to be a resident of the District of 
Columbia. The FHA may establish other offices in such other places as 
the FHA considers appropriate in the conduct of its business.
    (f) Tax Status.--The FHA, including its franchise, activities, 
income, and assets, shall be exempt from all taxation now or hereafter 
imposed by any taxing authority in the United States, except that any 
real property of the FHA (other than real property that the FHA uses as 
an office) shall be subject to taxation to the same extent according to 
its value as any taxing authority taxes other real property.
    (g) Protection of Name.--
            (1) Prohibition.--No person shall, except the body 
        corporate established under this section, after the date of the 
        enactment of this Act, use the words ``Federal Housing 
        Administration'' or the initials ``FHA'' as the name or part 
        thereof under which such person shall do business.
            (2) Enforcement.--Violations of paragraph (1) may be 
        enjoined by any court of general jurisdiction at the suit of 
        the FHA. In any such suit, the FHA may recover any actual 
        damages resulting from such violation, and, in addition, shall 
        be entitled to punitive damages (regardless of the existence or 
        nonexistence of actual damages) of not more than $100 for each 
        day during which such violation is committed or repeated.

SEC. 522. PURPOSES.

    The FHA is established for the following purposes:
            (1) To provide mortgage insurance and other credit 
        enhancement and related activities, for--
                    (A) single family homeownership to first-time 
                homebuyers, low- and moderate-income homebuyers, 
                homebuyers in areas subject to counter-cyclical markets 
                or Presidentially-declared disasters;
                    (B) the financing of affordable rental housing; and
                    (C) the provision of residential health care 
                facilities.
            (2) To supplement private sector activity by serving hard-
        to-serve markets, developing new mortgage products, and filling 
        gaps in the provision and delivery of mortgage credit.
            (3) To deliver housing mortgage insurance and credit 
        enhancement and provide other services in a non-discriminatory 
        manner.
            (4) To promote liquidity and provide stability to the 
        single family and multifamily housing finance market, by 
        continuing to provide mortgage insurance and credit enhancement 
        on a sound basis during times of regional and national economic 
        downturn.
            (5) To engage in research, development, and testing of new 
        products designed to make single family and multifamily housing 
        and residential health care facility credit available to hard-
        to-serve markets.
            (6) To establish uniformity in operations and risk 
        management and loss mitigation in housing mortgage insurance 
        and rural housing loan programs.
            (7) To administer the rural housing programs of the Rural 
        Housing Service of the Department of Agriculture.

SEC. 523. GENERAL POWERS.

    To further the purposes of this subtitle, in accordance with 
chapter 91 of title 31 of the United States Code (relating to 
government corporations), the FHA--
            (1) may adopt, amend, and repeal by-laws, and other written 
        administrative guidance;
            (2) may adopt, alter, and use a corporate seal, which shall 
        be judicially noted;
            (3) may insure, and make commitments to insure mortgages, 
        to the extent authorized under this title, and enhance and make 
        commitments to otherwise enhance credit, and in providing such 
        insurance may reinsure, advance, incur liabilities, pool loans, 
        and risk share;
            (4) shall provide, among other mortgage insurance products, 
        for the availability of a 30-year fixed-rate mortgage;
            (5) may acquire, hold, use, improve, deal in, or dispose 
        of, by any means, any interests in any real property or any 
        personal property;
            (6) may execute contracts, and make other agreements in its 
        own name, with any agency, public or private entity, or other 
        person, and carry out any lawful requirement of such contracts, 
        grants, or other agreements;
            (7) may take any actions, including the restructuring of 
        debt, that the FHA determines are necessary to manage any 
        portfolio (including the portfolio of the FHA and the Rural 
        Housing Service) of property, assets, and obligations;
            (8) may--
                    (A) create and supply, alone or in cooperation with 
                public or private entities or persons, any product or 
                service consistent with its corporate purposes; and
                    (B) assess fees and charges for such products, 
                information, and services in amounts, as determined by 
                the FHA, that--
                            (i) do not exceed their value in the 
                        market;
                            (ii) permit the FHA to recover its fully 
                        allocated long-term costs; and
                            (iii) permit the FHA to maintain the level 
                        of capital determined by the FHA to be 
                        necessary and sufficient to carry out the 
                        public purposes of the FHA and as required 
                        under subtitle C;
            (9) may create distinct insurance funds or other devices to 
        segregate or permit limitations on liability for business 
        activities or accounts;
            (10) may qualify any person or entity to engage in business 
        with the FHA and may enforce and impose penalties for the 
        breach of any duties, obligations, and other commitments made 
        by such persons or entities;
            (11) shall take actions necessary to administer its 
        business in a nondiscriminatory manner;
            (12) may use the services or obtain the goods of any 
        Federal agency, including the Department of Housing and Urban 
        Development and the Rural Housing Service of the Department of 
        Agriculture, under working or cooperation agreements or 
        contracts with such agencies and make or receive payment for 
        the cost of such activities;
            (13) shall have the power, in its corporate name, to sue 
        and be sued, and to complain and defend, in any court of 
        competent jurisdiction, State or Federal, but no attachment, 
        garnishment, injunction, or other similar process, mesne or 
        final, shall be issued against the property of the FHA or 
        against the FHA with respect to its property, and the FHA shall 
        not be liable for interest prior to judgment, for punitive or 
        exemplary damages, for penalties, or for claims based upon 
        unjust enrichment, quasi-contract, or contracts implied-in-law, 
        nor shall the FHA be subject to trial by jury;
            (14) notwithstanding any other provision of law--
                    (A) shall be an agency of the United States 
                Government and the officers and employees of the FHA 
                shall be officers and employees of the United States 
                Government for purposes of part IV of title 28, United 
                States Code;
                    (B) shall have all civil actions to which the FHA 
                is a party deemed to arise under the laws of the United 
                States; and
                    (C) may, at any time before trial and without bond 
                or security, remove any civil or criminal action or 
                proceeding in a State court to which the FHA is a party 
                to the United States district court for the District of 
                Columbia or to the United States district court with 
                jurisdiction over the place where the civil action or 
                proceeding is pending, by following any procedure for 
                removal of actions in effect at the time of such 
                removal;
            (15) may--
                    (A) accept and use voluntary and uncompensated 
                services and accept, hold, administer, and use gifts 
                and bequests of property, both real and personal, for 
                the purpose of aiding or facilitating the work of the 
                FHA, and
                    (B) hold gifts and bequests of money and the 
                proceeds from sales of other property received as gifts 
                or bequests in a separate account, and such amounts 
                shall be disbursed as provided by the FHA;
        except that property accepted pursuant to this paragraph, and 
        the proceeds thereof, shall be used as nearly as possible in 
        accordance with the terms of the gift or bequest and, for the 
        purpose of Federal income, estate, and gift taxes, property 
        accepted under this paragraph shall be considered as a gift or 
        bequest to or for the use of the United States;
            (16) shall have any transaction in which it participates be 
        exempt from the terms of any State or other law or prohibition 
        against payment of usurious interest;
            (17) may act as a fiduciary in connection with any of its 
        undertakings;
            (18) may foreclose any single family mortgages held by the 
        FHA pursuant to the same procedures and authority applicable to 
        the Secretary of Housing and Urban Development under the Single 
        Family Mortgage Foreclosure Act of 1994;
            (19) may foreclose any multifamily housing mortgages held 
        by the FHA pursuant to the same procedures and authority 
        applicable to the Secretary of Housing and Urban Development 
        under the Multifamily Mortgage Foreclosure Act of 1981;
            (20) may foreclose mortgages pursuant to the same 
        procedures and authority applicable to the Secretary of 
        Agriculture under the Housing Act of 1949;
            (21) shall have the priority of the United States with 
        respect to the payment of debts out of bankrupt, insolvent, and 
        decedents' estates;
            (22) may invest in the development of acquisition of 
        systems, technology, or other capital resources, to enhance its 
        ability to carry out the purposes of this title; and
            (23) shall have and exercise all powers necessary or 
        appropriate to effect any of the purposes of this title and 
        title II.

SEC. 524. BOARD OF DIRECTORS.

    (a) In General.--The powers of the FHA, including direction over 
policy and operations, shall be vested in the Board of Directors of the 
FHA.
    (b) Members and Appointment.--The Board of Directors shall consist 
of 7 members, as follows:
            (1) Voting members.--5 voting members appointed by the 
        President, by and with the advice and consent of the Senate, 
        who shall include--
                    (A) not less than one individual who has experience 
                in mortgage finance; and
                    (B) not less than one individual who has experience 
                in affordable housing serving low- and moderate-income 
                populations.
            (2) Non-voting members.--Two non-voting members, who shall 
        be--
                    (A) a representative of Department of Housing and 
                Urban Development, appointed by the Secretary of 
                Housing and Urban Development; and
                    (B) a representative of the Rural Housing Service, 
                appointed by the Secretary of Agriculture
    (c) Chairperson.--The Board shall elect a chairperson from among 
its members.
    (d) Terms.--
            (1) In general.--Each member of the Board appointed under 
        subsection (b)(1) shall be appointed for a term of 3 years, 
        except as provided in paragraphs (2) and (3) of this 
        subsection.
            (2) Terms of initial appointees.--As designated by the 
        President at the time of appointment, of the members first 
        appointed to the Board pursuant to paragraphs (3) and (4) of 
        subsection (b)--
                    (A) 1 shall be appointed for a term of 1 year; and
                    (B) 2 shall be appointed for terms of 2 years.
            (3) Vacancies.--Any member appointed to fill a vacancy on 
        the Board occurring before the expiration of the term for which 
        the member's predecessor was appointed shall be appointed only 
        for the remainder of that term. A member may serve after the 
        expiration of that member's term until a successor has taken 
        office. A vacancy on the Board shall be filled in the manner in 
        which the original appointment was made.
    (e) Meetings and Quorum.--The Board shall meet at any time pursuant 
to the call of the Chairperson or a majority of its members and as 
provided by the bylaws of the FHA, but not less than quarterly. A 
majority of the members of the Board shall constitute a quorum.
    (f) Powers.--The Board shall be responsible for the general 
management of the FHA and shall have the same authority, privileges, 
and responsibilities as the board of directors of a private corporation 
incorporated under the District of Columbia Business Corporation Act.
    (g) Duties.--In performing its duties, the Board shall--
            (1) obtain guidance from participants in the mortgage 
        markets served by the FHA;
            (2) assess the housing and mortgage insurance needs of 
        consumers and providers of single family and multifamily 
        housing and communities, and the mortgage insurance needs of 
        providers of residential health care facilities;
            (3) obtain information concerning housing finance markets 
        in order to better assess how the FHA can complement the roles 
        of public and private participants in such markets; and
            (4) assist the Secretary of Housing and Urban Development 
        and the Secretary of Agriculture in coordinating the roles of 
        Federal housing, banking, and credit agencies generally, and 
        particularly in the delivery of housing credit enhancement to 
        families, communities, and hard-to-serve markets.
    (h) Compensation.--Members of the Board shall serve on a part-time 
basis and shall serve without pay.
    (i) Travel Expenses.--Each member shall receive travel expenses, 
including per diem in lieu of subsistence, in accordance with sections 
5702 and 5703 of title 5, United States Code.

SEC. 525. OFFICERS AND PERSONNEL.

    (a) Administrator; Deputy Administrator.--
            (1) Appointment.--The Board shall appoint a Administrator 
        and Deputy Administrator of the FHA, and, except as provided in 
        subsections (b) and (c), such other officers as are provided 
        for in the bylaws of the FHA.
            (2) Executive officers.--The Administrator and Deputy 
        Administrator of the FHA shall be executive officers of the FHA 
        and shall discharge and perform all such executive functions, 
        powers, and duties as may be prescribed by the bylaws of the 
        FHA or by the Board of Directors.
    (b) Chief Risk Officer.--There shall be in the FHA a Chief Risk 
Officer, who--
            (1) shall be appointed by the Board of Directors of the 
        FHA;
            (2) shall be selected from among individuals who possess 
        demonstrated ability in the general management of, and 
        knowledge of and extensive practical experience in, risk 
        evaluation practices in large governmental or business 
        entities;
            (3) shall be--
                    (A) responsible for all matters relating to 
                managing and mitigating risk to the mortgage insurance 
                programs of the FHA and ensuring the performance of 
                mortgages insured by the FHA; and
                    (B) responsible for all matters relating to 
                managing and mitigating risk to the housing loans made, 
                insured, or guaranteed under title V of the Housing Act 
                of 1949 (42 U.S.C. 1471 et seq.) and ensuring the 
                performance of such housing loans;
            (4) shall not be subject to the review or approval of the 
        Board of Directors of the FHA or the Secretary of Agriculture 
        with respect to the exercise of the responsibilities under 
        subparagraph (A) or (B), respectively, of paragraph (3); and
            (5) shall not be required to obtain the prior approval, 
        comment, or review of any officer or agency of the United 
        States before submitting to the Congress, or any committee or 
        subcommittee thereof, any reports, recommendations, testimony, 
        or comments if such submissions include a statement indicating 
        that the views expressed therein are those of the Chief Risk 
        Officer of the FHA and do not necessarily represent the views 
        of the Board of Directors of the FHA or the Secretary of 
        Agriculture.
    (c) Chief Technology Officer.--There shall be in the FHA a Chief 
Technology Officer, who--
            (1) shall be appointed by the Board of Directors of the 
        FHA;
            (2) shall be selected from among individuals who possess 
        demonstrated ability in the general management of, and 
        knowledge of and extensive practical experience in, information 
        technology management practices in, large governmental or 
        business entities;
            (3) shall be--
                    (A) responsible for all matters relating to 
                information technology management relating to the 
                mortgage insurance programs of the FHA; and
                    (B) responsible for all matters relating to 
                information technology management relating to the 
                programs for making, insuring, and guaranteeing housing 
                loans under title V of the Housing Act of 1949 (42 
                U.S.C. 1471 et seq.);
        including analysis and assessment of the information technology 
        infrastructures, information technology strategy, and use of 
        information technology, ensuring the security and privacy of 
        information technology infrastructure and networks, and 
        promoting technological innovation;
            (4) shall not be subject to the review or approval of the 
        Board of Directors of the FHA or the Secretary of Agriculture 
        with respect to the exercise of the responsibilities under 
        subparagraph (A) or (B), respectively, of paragraph (3); and
            (5) shall not be required to obtain the prior approval, 
        comment, or review of any officer or agency of the United 
        States before submitting to the Congress, or any committee or 
        subcommittee thereof, any reports, recommendations, testimony, 
        or comments if such submissions include a statement indicating 
        that the views expressed therein are those of the Chief 
        Technology Officer of the FHA and do not necessarily represent 
        the views of the Board of Directors of the FHA, the Secretary 
        of Housing and Urban Development, or the Secretary of 
        Agriculture.
    (d) Appointment of Employees.--Subject to subtitle D, the Board 
shall appoint such other employees of the FHA as the Board considers 
necessary for the transaction of the FHA's business.
    (e) Compensation, Duties, and Removal.--
            (1) In general.--The Board shall fix the compensation of 
        all officers and employees of the FHA and define their duties. 
        Officers and employees shall be appointed, promoted, assigned, 
        and removed on the basis of qualifications, and any such 
        actions taken shall be consistent with the principles of 
        fairness, nondiscrimination, and due process.
            (2) Considerations in fixing compensation.--In fixing and 
        directing compensation for officers and employees of the FHA, 
        the Board shall consult and maintain comparability with the 
        compensation provided by the Government National Mortgage 
        Association, the Federal Housing Finance Agency, the 
        Comptroller of Currency, the Board of Governors of the Federal 
        Reserve System, and the Federal Deposit Insurance Corporation 
        to officers and employees of such entities.
    (f) Applicability of Certain Civil Service Laws.--The officers and 
employees of the FHA shall be appointed without regard to the 
provisions of title 5, United States Code, governing appointments in 
the competitive service, and may be paid without regard to the 
provisions of chapter 51 and subchapter III of chapter 53 of that title 
relating to classification and General Schedule pay rates.
    (g) Use of Federal Agencies.--In carrying out its purposes, the FHA 
may use information, services, staff, and facilities of any executive 
agency, independent agency, department (including the Department of 
Housing and Urban Development and the Department of Agriculture), or 
enterprise (as such term is defined in section 101 of the Protecting 
American Taxpayers and Homeowners Act of 2018) with the consent of the 
agency, department, or enterprise and shall reimburse the agency, 
department, or enterprise for the cost of such information, services, 
staff, and facilities.
    (h) Indemnification.--The FHA may provide for the indemnification 
of any officer, employee, contractor, or agent of the FHA on such terms 
as the FHA determines proper, except that, to the extent that the FHA 
self-insures for any indemnification--
            (1) the aggregate maximum amount of indemnification 
        outstanding at any time shall not exceed 5 percent of the 
        amount of capital required under section 216 to be maintained 
        by the Mutual Mortgage Insurance Fund; and
            (2) not more than $1,000,000 may be paid as an indemnity 
        for any single event.
    (i) Amendments to Housing Act of 1949.--Section 501 of the Housing 
Act of 1949 (42 U.S.C. 1471) is amended by adding at the end the 
following new subsections:
    ``(k) Authority of Chief Risk Officer of FHA.--The Chief Risk 
Officer of the FHA appointed pursuant to section 525(b) of the 
Protecting American Taxpayers and Homeowners Act of 2018 shall be 
solely responsible for all matters relating to evaluating, managing, 
and mitigating risk to the programs under this title for making, 
insuring, and guaranteeing housing loans and ensuring the performance 
of such housing loans.
    ``(l) Authority of Chief Technology Officer of FHA.--The Chief 
Technology Officer of the FHA appointed pursuant to section 525(c) of 
the Protecting American Taxpayers and Homeowners Act of 2018 shall be 
solely responsible for all matters relating to information technology 
management relating to the programs under this title for making, 
insuring, and guaranteeing housing loans.''.

SEC. 526. FINANCIAL, UNDERWRITING, AND OPERATIONS SYSTEMS.

    (a) In General.--The FHA shall develop, maintain, lease, or acquire 
such financial, underwriting, and operations systems as may be 
necessary to carry out the responsibilities of the FHA. Such systems 
shall be designed and developed in a manner so that such systems shall 
also be used for the financial, underwriting, and operations systems, 
respectively, of the programs under title V of the Housing Act of 1949 
for making, guaranteeing, and insuring rural housing loan programs.
    (b) Use by Rural Housing Service Programs.--
            (1) Availability.--All financial, underwriting, and 
        operations systems of the FHA shall be available for use by the 
        FHA to the extent necessary to ensure compliance with section 
        501(m) of the Housing Act of 1949 (42 U.S.C. 1471(l)).
            (2) Use.--Section 501 of the Housing Act of 1949 (42 U.S.C. 
        1471), as amended by the preceding provisions of this title, is 
        further amended by adding at the end the following new 
        subsection:
    ``(m) Use of FHA Systems.--The Administrator and Deputy 
Administrator of the FHA, the Chief Risk Officer of the FHA, and the 
Chief Technology Officer of the FHA shall utilize the financial, 
underwriting, and operations systems of the FHA in carrying out all 
financial, underwriting, and operations functions with respect to the 
programs under this title for making, insuring, or guaranteeing housing 
loans.''.

SEC. 527. PROCUREMENT.

    (a) In General.--The FHA shall establish an economical and results-
oriented system for the procurement, supply, and disposition by the FHA 
of personal property and services, which shall include performance 
measures and standards for determining the extent to which the FHA's 
procurement of property and services satisfies the objective for which 
the procurement was undertaken. The system shall be consistent with the 
principles of impartiality and competitiveness.
    (b) Exemption From Federal Property and Administrative Service Act 
Requirements.--Section 113(e) of title 40, United States Code, is 
amended--
            (1) in paragraph (19), by striking ``or'' at the end;
            (2) in paragraph (20), by striking the period at the end 
        and inserting ``; or''; and
            (3) by adding at the end the following new paragraph:
            ``(21) The Federal Housing Administration.''.
    (c) Exemption From Procurement Protest System.--Subchapter V of 
chapter 35 of title 31, United States Code, relating to the procurement 
protest system, shall not apply to the FHA.

SEC. 528. APPLICABILITY OF LAWS.

    (a) Subsidy Layering.--For purposes of section 102(d) of the 
Department of Housing and Urban Development Reform Act of 1989, 
mortgage insurance and other credit enhancement provided under this 
title shall not be considered assistance within the jurisdiction of the 
Department.
    (b) Government Corporation Control Act.--Section 9101(3) of title 
31, United States Code, is amended by adding at the end the following 
new subparagraph:
                    ``(S) the Federal Housing Administration.''.
    (c) Tax Exempt Status of FHA.--Section 501(l) of the Internal 
Revenue Code of 1986 (26 U.S.C. 501(l)) is amended by adding at the end 
the following new paragraph:
            ``(5) The Federal Housing Administration established under 
        subtitle C of title V of the Protecting American Taxpayers and 
        Homeowners Act of 2018.''.

SEC. 529. EVALUATION.

    (a) In General.--The Director shall conduct a study and submit a 
report to the President and the Congress on--
            (1) whether this title provides sufficient authority to 
        permit the FHA to accomplish its public purposes efficiently 
        and effectively, and in a safe and sound manner;
            (2) the impact of the limitations on business activities as 
        to mortgage amounts and aggregate commitments, and any other 
        statutory limitations, on the current and anticipated business 
        activity of the FHA; and
            (3) whether the provisions of subtitle C appropriately 
        provide that the FHA will be operated in a safe and sound 
        manner and will fulfill the public purposes of its 
        establishment.
    (b) Timing.--The report required by this section shall be submitted 
on the third January 1st occurring after the conclusion of the 
transition period under section 551.

SEC. 530. FUNDING.

    (a) Funding of Salaries and Expenses.--There is authorized to be 
appropriated for each fiscal year to the FHA, for salaries, expenses, 
and technology for the management and operations of the FHA an amount 
not exceeding the amount of the negative subsidy credited to the 
negative subsidy receipt account not needed for reserves of the funds 
of the FHA pursuant to sections 216 and 219.
    (b) Funding of Claims.--
            (1) Availability of funds.--Amounts credited to the 
        financing account of the FHA, established pursuant to title V 
        of the Congressional Budget Act of 1974, shall be permanently 
        and indefinitely available for payment of any claim that the 
        FHA approves under a contract of insurance or other credit 
        enhancement instrument pursuant to this title.
            (2) Borrowing authority.--
                    (A) In general.--To the extent that such amounts 
                are insufficient for such purpose, the FHA may borrow 
                from the Treasury pursuant to title V of the 
                Congressional Budget Act of 1974.
                    (B) Notice to congress.--Upon exercising the 
                authority referred to in subparagraph (A), the FHA 
                shall submit to the Congress--
                            (i) notice of such exercise of authority 
                        and the extent of the borrowing undertaken;
                            (ii) a plan for repayment to the Treasury 
                        of the amounts borrowed, specifying the time 
                        and amounts of such payments; and
                            (iii) if such borrowing is for the Mutual 
                        Mortgage Insurance Fund, how the FHA will 
                        comply with the capital restoration plan 
                        required under section 217(c).

    PART 2--AUTHORITY OVER RURAL HOUSING PROGRAMS OF DEPARTMENT OF 
                              AGRICULTURE

SEC. 541. AUTHORITY OVER RURAL HOUSING SERVICE PROGRAMS.

    After the expiration of the transition period under section 551--
            (1) the FHA shall exercise (in addition to powers set forth 
        in section 552) all authority and undertake all 
        responsibilities of the Secretary of Agriculture under title V 
        of the Housing Act of 1949 (as amended by this title), except 
        as otherwise provided in this title and except that any 
        authority that requires an appropriation may be conducted only 
        to the extent that amounts are so appropriated; and
            (2) such authority shall not be subject to the review or 
        approval of the Secretary of Agriculture.

SEC. 542. TERMINATION OF SECRETARY OF AGRICULTURE'S RURAL HOUSING 
              AUTHORITY.

    After the expiration of the transition period under section 551, 
the Secretary of Agriculture may not exercise any authority under title 
V of the Housing Act of 1949 and any reference to the Secretary in such 
title shall be construed to refer to the FHA.

SEC. 543. CONTINUATION OF OBLIGATIONS.

    This subtitle and section 552(4) may not be construed to affect the 
validity of any right, duty, or obligation of the United States or 
other person arising under or pursuant to any commitment or agreement 
lawfully entered into with the Secretary of Agriculture under title V 
of the Housing Act of 1949.

SEC. 544. STATUS OF EMPLOYEES.

    This subtitle may not be construed to transfer or otherwise affect 
the status of any employee of the Department of Agriculture.

                           PART 3--TRANSITION

SEC. 551. TRANSITION PERIOD.

    (a) In General.--For purposes of this subtitle, the term 
``transition period'' means the period that--
            (1) begins on the date of the enactment of this Act; and
            (2) ends upon the earlier of--
                    (A) the date that the Director publishes notice in 
                the Federal Register that the Director has determined 
                that all of the requirements under subsection (b) have 
                been completed, except that the Director may not 
                publish such notice before the expiration of the 2-year 
                period beginning on the date of the enactment of this 
                Act; or
                    (B) the expiration of the 5-year period beginning 
                on the date of the enactment of this Act.
    (b) Requirements for Ending Transition Period.--The requirements 
under this subsection are the following:
            (1) Approval of initial annual budget and business plan.--
        The FHA has submitted to the Director of the Federal Housing 
        Finance Agency an initial annual budget and business plan and 
        the Director has approved the budget and plan.
            (2) Determination of corporate capacity.--The Director of 
        the Office of Management and Budget has determined, and 
        notified the Director, that the staff, systems, and 
        administrative infrastructure of the FHA are sufficient to 
        permit the FHA to fully conduct the operation of its business.

SEC. 552. AUTHORITY DURING TRANSITION PERIOD.

    During the transition period the FHA may--
            (1) carry out any power or responsibility of the Secretary 
        of the Housing and Urban Development relating to mortgage 
        insurance programs under the National Housing Act that the 
        Secretary delegates to the FHA, using the staff, systems, and 
        administrative infrastructure that the FHA engages or acquires 
        during the transition period, or the personnel and other 
        resources of the Secretary;
            (2) incur any obligation consistent with--
                    (A) the carrying out of a power or responsibility 
                delegated under paragraph (1); or
                    (B) the acquisition, engagement, or development of 
                staff, systems (including technology to enhance the 
                ability of the FHA to engage in the business authorized 
                by the title), and administrative structure;
            (3) engage in any activity or undertake any responsibility 
        (not including entering into, or making any commitment to enter 
        into, any contract of insurance under this title) that the FHA 
        determines to be consistent with the establishment of the FHA; 
        and
            (4) carry out any power or responsibility of the Secretary 
        of Agriculture under title V of the Housing Act of 1949 that 
        the Secretary delegates to the FHA, using the staff, systems, 
        and administrative infrastructure that the FHA engages or 
        acquires during the transition period, and the personnel and 
        other resources of the Rural Housing Service.

SEC. 553. ADVISORY BOARD.

    (a) Establishment.--The Secretary of Housing and Urban Development 
and the Secretary of Agriculture shall jointly establish an advisory 
board to provide advice to the Board of Directors of the FHA regarding 
establishing and organizing the FHA and creating the business plan, 
premium structure, and product lines of the FHA.
    (b) Functions.--In carrying out its responsibilities under 
subsection (a) the advisory board may--
            (1) obtain guidance from participants in the mortgage 
        markets to be served by the FHA;
            (2) assess the housing and mortgage credit needs;
            (3) obtain information concerning single family housing 
        finance markets to assess how the FHA can complement the roles 
        of public and private participants in such markets; and
            (4) consult with the relevant Federal agencies generally 
        regarding how the FHA can improve the delivery of single family 
        housing credit enhancement to families, communities, and hard-
        to-serve markets.
    (c) Membership.--The advisory board shall consist of--
            (1) the Assistant Secretary of Housing and Urban 
        Development who is the Federal Housing Commissioner;
            (2) the Administrator of the Rural Housing Service of the 
        Department of Agriculture;
            (3) not less than 5 individuals appointed by the Secretary 
        of Housing and Urban Development who are representatives of the 
        mortgage finance industry; and
            (4) not less than 2 individuals who have expertise in 
        affordable housing serving low- and moderate-income 
        populations.
Members of the advisory board shall serve at the joint pleasure of the 
Secretary of Housing and Urban Development and the Secretary of 
Agriculture.
    (d) Termination.--The advisory board shall terminate upon the 
expiration of the transition period under section 551.

SEC. 554. TRANSFER OF HUD AUTHORITY.

    (a) Transfer.--Except as provided in subsections (c) and (d), 
effective upon the expiration of the transition period, the functions 
of, authority provided to, and the responsibilities of the Secretary of 
Housing and Urban Development and the Department of Housing and Urban 
Development under the following provisions of law are transferred to 
the FHA:
            (1) Titles II and V of the National Housing Act (12 U.S.C. 
        1707 et seq., 1735a et seq.).
            (2) Section 3 of Public Law 99-289 (12 U.S.C. 1721 note; 
        relating to estimates of use of insuring authority), except 
        that this paragraph shall not terminate or transfer any 
        authority of the Secretary under such section relating to 
        section 306(g) of the National Housing Act (12 U.S.C. 1721(g)).
            (3) Section 801 of the Housing Act of 1954 (12 U.S.C. 
        1701j-1; relating to builders warranties).
            (4) Section 424 of the Housing and Community Development 
        Act of 1987 (12 U.S.C. 1715z-1c; relating to residential water 
        treatment).
            (5) Section 328 of the Cranston-Gonzalez National 
        Affordable Housing Act (12 U.S.C. 1713 note; relating to 
        delegation of processing).
            (6) Section 106 of the Energy Policy Act of 1992 (12 U.S.C. 
        1701z-16; relating to energy efficient mortgages pilot 
        program).
            (7) Section 542 of the Housing and Community Development 
        Act of 1992 (12 U.S.C. 1715z-22; relating to multifamily 
        mortgage credit programs).
            (8) Section 103(h) of the Multifamily Housing Property 
        Disposition Reform Act of 1994 (12 U.S.C. 1715z-1a note; 
        relating to alternative uses of multifamily projects to prevent 
        default).
    (b) Repeal of Assignment Provisions.--Effective upon the date of 
the enactment of this Act, section 204(a)(1)(B) of the National Housing 
Act (12 U.S.C. 1710(a)) is amended by striking the last sentence.
    (c) Applicability.--The repeals under subsections (a) and (b) shall 
not affect any legally binding obligations entered into pursuant to the 
provisions repealed before the applicable effective date under such 
subsections. Any mortgage insurance, funds, or activities subject, 
before repeal, to a provision of law repealed by such subsections shall 
continue to be governed by the provision as it existed immediately 
before repeal, except that the FHA may exercise any authority under 
such provision otherwise transferred to the FHA by this title.
    (d) References.--After the expiration of the transition period, any 
reference in Federal law to the Secretary of Housing and Urban 
Development, in connection with any function of the Secretary 
transferred under subsection (a) or any other provision of this 
subtitle, shall be deemed to be a reference to the FHA.

SEC. 555. WIND-UP OF HUD AFFAIRS.

    (a) Abolishment of Positions.--Effective upon the expiration of the 
transition period, any offices of the Department of Housing and Urban 
Development responsible for functions transferred pursuant to section 
554(a), to the extent of such functions, and the position of the 
Federal Housing Commissioner in the Department of Housing and Urban 
Development, are abolished.
    (b) Disposition of Affairs.--During the transition period, the 
Secretary of Housing and Urban Development, solely for the purpose of 
winding up the affairs of the Department relating to the functions 
transferred under section 554--
            (1) shall manage the employees of the Department 
        responsible for such functions and provide for the payment of 
        the compensation and benefits of any such employee which accrue 
        before the effective date of the transfer of such employee 
        under section 557; and
            (2) may take any other action necessary for the purpose of 
        winding up the affairs of the Department relating to such 
        functions.
    (c) Status of Employees Before Transfer.--The provisions of and 
amendments made by this title and the abolishments under subsection (a) 
of this section may not be construed to affect the status of any 
employee of the Department as an employee of an agency of the United 
States for purposes of any other provision of law before the effective 
date of the transfer of any such employee under section 557.
    (d) Use of Property and Services.--
            (1) Property.--The FHA may use the property of the 
        Department of Housing and Urban Development to perform 
        functions which have been transferred to the FHA for such time 
        as is reasonable to facilitate the orderly transfer of 
        functions transferred under any other provision of this title 
        or any amendment made by this title to any other provision of 
        law.
            (2) Agency services.--Any agency, department, or other 
        instrumentality of the United States, and any successor to any 
        such agency, department, or instrumentality, which was 
        providing supporting services to the Department of Housing and 
        Urban Development before the expiration of the transition 
        period under subsection (a) in connection with functions that 
        are transferred under 554 to the FHA shall--
                    (A) continue to provide such services, on a 
                reimbursable basis, until the transfer of such 
                functions is complete; and
                    (B) consult with the FHA to coordinate and 
                facilitate a prompt and reasonable transition.
    (e) Continuation of Services.--The FHA may use the services of 
employees and other personnel of the Department of Housing and Urban 
Development relating to the functions transferred under section 554, on 
a reimbursable basis, to perform functions which have been transferred 
to the FHA for such time as is reasonable to facilitate the orderly 
transfer of functions pursuant to any other provision of this title or 
any amendment made by this title to any other provision of law.
    (f) Savings Provisions.--
            (1) Existing rights, duties, and obligations not 
        affected.--Subsection (a) shall not affect the validity of any 
        right, duty, or obligation of the United States, the Secretary 
        of Housing and Urban Development, or any other person, which--
                    (A) arises under--
                            (i) the National Housing Act; or
                            (ii) any other provision of law applicable 
                        with respect to the functions of the Department 
                        of Housing and Urban Development transferred 
                        under section 554; and
                    (B) existed on the day before the date of 
                abolishment under subsection (a).
            (2) Continuation of suits.--No action or other proceeding 
        commenced by or against the Secretary of Housing and Urban 
        Development in connection with functions transferred to the FHA 
        under section 554 shall abate by reason of the enactment of 
        this title, except that the FHA shall be substituted for the 
        Secretary as a party to any such action or proceeding.

SEC. 556. CONTINUATION AND COORDINATION OF CERTAIN ACTIONS.

    (a) In General.--All regulations, orders, and determinations 
described in subsection (b) shall remain in effect according to the 
terms of such regulations, orders, and determinations, and shall be 
enforceable by or against the FHA, until modified, terminated, set 
aside, or superseded in accordance with applicable law by the FHA, as 
the case may be, any court of competent jurisdiction, or operation of 
law.
    (b) Applicability.--A regulation, order, or determination is 
described in this subsection if it--
            (1) was issued, made, prescribed, or allowed to become 
        effective by--
                    (A) the Secretary of Housing and Urban Development 
                and relates to a function of the Secretary transferred 
                under section 554; or
                    (B) a court of competent jurisdiction, and relates 
                to functions transferred under section 554; and
            (2) is in effect upon the expiration of the transition 
        period.

SEC. 557. TRANSFER AND RIGHTS OF HUD EMPLOYEES.

    (a) Transfer.--Each employee of the Department of Housing and Urban 
Development who performs functions transferred under section 554 shall 
be transferred to the FHA for employment, not later than the date of 
the expiration of the transition period, and such transfer shall be 
deemed a transfer of function for purposes of section 3503 of title 5, 
United States Code.
    (b) Guaranteed Positions.--
            (1) In general.--Each employee transferred under subsection 
        (a) shall be guaranteed a position with the same status, 
        tenure, grade, and pay as the position held by such employee on 
        the day immediately preceding the transfer.
            (2) No involuntary separation or reduction.--An employee 
        transferred under subsection (a) holding a permanent position 
        on the day immediately preceding the transfer may not be 
        involuntarily separated or reduced in grade or compensation 
        during the 12-month period beginning on the date of transfer, 
        except for cause, or, in the case of a temporary employee, 
        separated in accordance with the terms of the appointment of 
        the employee.
    (c) Appointment Authority for Excepted and Senior Executive Service 
Employees.--
            (1) In general.--In the case of an employee occupying a 
        position in the excepted service or the Senior Executive 
        Service, any appointment authority established under law or by 
        regulations of the Office of Personnel Management for filling 
        such position shall be transferred, subject to paragraph (2).
            (2) Decline of transfer.--The FHA may decline a transfer of 
        authority under paragraph (1) to the extent that such authority 
        relates to--
                    (A) a position excepted from the competitive 
                service because of its confidential, policymaking, 
                policy-determining, or policy-advocating character; or
                    (B) a noncareer position in the Senior Executive 
                Service (within the meaning of section 3132(a)(7) of 
                title 5, United States Code).
    (d) Reorganization.--If the FHA determines, after the end of the 1-
year period beginning on the expiration of the transition period, that 
a reorganization of the combined workforce is required, that 
reorganization shall be deemed a major reorganization for purposes of 
affording affected employee retirement under section 8336(d)(2) or 
8414(b)(1)(B) of title 5, United States Code.
    (e) Employee Benefit Programs.--
            (1) In general.--Any employee of the Department of Housing 
        and Urban Development accepting employment with the FHA as a 
        result of a transfer under subsection (a) may retain, for 12 
        months after the date on which such transfer occurs, membership 
        in any employee benefit program of the FHA or the Department of 
        Housing and Urban Development, as applicable, including 
        insurance, to which such employee belongs on the date of the 
        expiration of the transition period, if--
                    (A) the employee does not elect to give up the 
                benefit or membership in the program; and
                    (B) the benefit or program is continued by the FHA.
            (2) Cost differential.--
                    (A) In general.--The difference in the costs 
                between the benefits which would have been provided by 
                the Department of Housing and Urban Development and 
                those provided by this section shall be paid by the 
                FHA.
                    (B) Health insurance.--If any employee elects to 
                give up membership in a health insurance program or the 
                health insurance program is not continued by the FHA, 
                the employee shall be permitted to select an alternate 
                Federal health insurance program not later than 30 days 
                after the date of such election or notice, without 
                regard to any other regularly scheduled open season.

SEC. 558. TRANSFER OF PROPERTY AND FACILITIES.

    Upon the expiration of the transition period, all property of the 
Department of Housing and Urban Development relating to the functions 
transferred under section 554 shall transfer to the FHA.

SEC. 559. EFFECTIVE DATE.

    This subtitle shall take effect on the date of the enactment of 
this Act.

                   TITLE VI--MISCELLANEOUS PROVISIONS

SEC. 601. PRESERVATION OF ATTORNEY-CLIENT PRIVILEGE FOR INFORMATION 
              PROVIDED TO FHFA.

    Section 1317 of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (12 U.S.C.4517) is amended by adding at the 
end the following new subsection:
    ``(j) Privileges Not Affected by Disclosure to Agency.--
            ``(1) In general.--The submission by any person of any 
        information to the Agency for any purpose in the course of any 
        supervisory or regulatory process of the Agency shall not be 
        construed as waiving, destroying, or otherwise affecting any 
        privilege such person may claim with respect to such 
        information under Federal or State law as to any person or 
        entity other than such Agency.
            ``(2) Rule of construction.--No provision of paragraph (1) 
        may be construed as implying or establishing that--
                    ``(A) any person waives any privilege applicable to 
                information that is submitted or transferred under any 
                circumstance to which paragraph (1) does not apply; or
                    ``(B) any person would waive any privilege 
                applicable to any information by submitting the 
                information to the Agency, but for this subsection.''.

SEC. 602. FHFA LIAISON MEMBERSHIP IN FEDERAL FINANCIAL INSTITUTIONS 
              EXAMINATION COUNCIL.

    Section 1007 of the Federal Financial Institutions Examination 
Council Act of 1978 (12 U.S.C. 3306) is amended--
            (1) in the section heading, by inserting after ``State'' 
        the following: ``and Federal Housing Finance Agency'';
            (2) in the first sentence, by inserting after ``financial 
        institutions'' the following: ``, and one representative of the 
        Federal Housing Finance Agency,''; and
            (3) in the last sentence, by inserting ``State'' after 
        ``among the''.

SEC. 603. RECOGNITION OF FHFA ENFORCEMENT AUTHORITY WITH REGARD TO 
              REGULATED ENTITIES.

    Section 1125(c) of the Financial Institution Reform, Recovery and 
Enforcement Act of 1989 (12 U.S.C. 3354(c); as added by section 1473(q) 
of the Dodd Frank Wall Street Reform and Consumer Protection Act) is 
amended--
            (1) in paragraph (1), by striking ``and'' at the end;
            (2) by redesignating paragraph (2) as paragraph (3); and
            (3) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) with respect to any regulated entity (as such term is 
        defined in section 1303 of the Federal Housing Enterprises 
        Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502)), 
        the Federal Housing Finance Agency; and''.

SEC. 604. EXCEPTION FROM RIGHT TO FINANCIAL PRIVACY ACT FOR FHFA AS 
              CONSERVATOR OR RECEIVER.

    Section 1113(o) of the Right to Financial Privacy Act of 1978 (12 
U.S.C. 3413(o)) is amended--
            (1) by striking ``(o)'' and inserting ``(o)(1)''; and
            (2) by adding at the end the following new paragraph:
    ``(2) This title shall not apply to the examination by or 
disclosure to the Federal Housing Finance Agency or its employees or 
agents of financial records or information in the exercise of its 
supervisory or regulatory functions, including conservatorship and 
receivership functions, with respect to any regulated entity or other 
person participating in the conduct of the affairs thereof.''.

SEC. 605. TECHNICAL AMENDMENT TO FEDERAL HOUSING ENTERPRISES FINANCIAL 
              SAFETY AND SOUNDNESS ACT OF 1992.

    Section 1368(d) of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (12 U.S.C. 4618(d)) is amended by striking 
``Committee on Banking, Finance and Urban Affairs'' and inserting 
``Committee on Financial Services''.

SEC. 606. APPLICATION OF PRESUMPTION TO ENTERPRISE STREAMLINED 
              REFINANCINGS.

    Section 129C(b)(3)(B)(ii) of the Truth in Lending Act (15 U.S.C. 
1639c(b)(3)(B)(ii); as added by section 1412 of the Dodd Frank Wall 
Street Reform and Consumer Protection Act) is amended--
            (1) by inserting after ``administer,'' the following: ``or 
        that are owned or guaranteed by an entity regulated or 
        supervised by such agency,''; and
            (2) by adding at the end the following new subclause:
                                    ``(V) The Federal Housing Finance 
                                Agency, with regard to mortgages owned 
                                or guaranteed by an entity regulated or 
                                supervised by such agency.''.

SEC. 607. FHFA AUTHORITY TO REGULATE AND EXAMINE CONTRACTUAL 
              COUNTERPARTIES.

    Section 1317 of the Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992, as amended by the preceding provisions of 
this Act, is further amended (12 U.S.C. 4517) by adding at the end the 
following new subsection:
    ``(k) Regulation and Examination of Contractual Counterparties.--
            ``(1) Authority.--When a regulated entity or the Office of 
        Finance causes to be performed for itself, by contract or 
        otherwise and whether on or off its premises, any services 
        authorized to that regulated entity or the Office of Finance by 
        its authorizing statute or the Federal Housing Enterprises 
        Financial Safety and Soundness Act of 1992--
                    ``(A) such performance shall be subject to 
                regulation and examination by the Federal Housing 
                Finance Agency to the same extent as if such services 
                were being performed by the regulated entity or the 
                Office of Finance itself on its own premises, and
                    ``(B) the regulated entity or the Office of Finance 
                shall notify the Director of the existence of the 
                service relationship within thirty days after the 
                making of such service contract or the performance of 
                the service, whichever occurs first.
            ``(2) Regulations and orders.--The Director may issue such 
        regulations and orders as may be necessary to enable the Agency 
        to administer and to carry out the purposes of this subsection 
        and to prevent evasions thereof.''.

SEC. 608. ELECTION OF DIRECTORS OF A MERGED FEDERAL HOME LOAN BANK.

    Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is 
amended--
            (1) in subsection (a)(1), by inserting ``and subsection 
        (d)'' after ``paragraphs (2) through (4)'';
            (2) in subsection (b)--
                    (A) in the matter preceding paragraph (2)--
                            (i) by striking ``Each'' and inserting 
                        ``(1)(A) Except as provided in subsection (d), 
                        each'';
                            (ii) by inserting ``(B)'' before ``No 
                        person'';
                            (iii) by inserting ``(C)'' before ``As 
                        used''; and
                            (iv) in the third sentence--
                                    (I) by striking ``this subsection'' 
                                and inserting ``subparagraph (A)''; and
                                    (II) by striking ``home loan bank'' 
                                and inserting ``Home Loan Bank''; and
                    (B) in paragraph (2)(A)(ii), by inserting ``or 
                subsection (d)(4), if applicable,'' after ``paragraph 
                (1)'';
            (3) by striking subsections (c), (d), and (h);
            (4) by redesignating subsections (d), (e), (f), and (g) as 
        subsections (e), (f), (g), and (h), respectively; and
            (5) by inserting after subsection (b) the following:
    ``(c) Allocation of Member Directorships Among States in Bank 
District.--
            ``(1) Designation of member location.--The Director shall 
        designate the State in which each member of each Federal Home 
        Loan Bank shall be deemed to be located for the purposes of 
        this subsection and subsections (b) and (d), and may from time 
        to time change any such designation. If the principal place of 
        business of any Bank member is located in a State within the 
        district of the Bank of which it is a member, the Director 
        shall designate that State as the State in which the member 
        shall be deemed to be located for those purposes.
            ``(2) Stock-based allocation of designated member 
        directorships.--The number of member directorships designated 
        as representing the members located in each separate State in a 
        Federal Home Loan Bank district shall be determined by the 
        Director in the approximate ratio of the percentage of the 
        required stock, as prescribed by regulation of the Director, of 
        the members located in that State at the end of the calendar 
        year next preceding the date of the election to the total 
        required stock, as so determined, of all members of the Bank as 
        of that same date.
            ``(3) Limitations on stock-based allocations.--Except as 
        provided in subsection (d), the following provisions shall 
        apply to the allocation of member directorships among the 
        States of a Bank district, notwithstanding the requirements of 
        paragraph (2):
                    ``(A) In the case of each State, the number of 
                member directorships designated as representing the 
                members located in that State shall not be less than 
                one and shall not be more than six.
                    ``(B) If at any time the number of member 
                directorships designated as representing the members 
                located in any State would not be at least equal to the 
                total number of member directorships which, on December 
                31, 1960, were filled by officers or directors of 
                members whose principal places of business were located 
                in that State, the Director shall add to the board of 
                directors of the Bank of the district in which that 
                State is located such number of member directorships, 
                and shall so designate the directorship or 
                directorships thus added, that the number of member 
                directorships designated as representing the members 
                located in that State will equal said total number. Any 
                member directorship so added shall exist only until the 
                expiration of its first term.
    ``(d) Board Size, Composition, and Elections for Combined Banks.--
Notwithstanding any other provision of this section, the following 
requirements shall apply to the size and composition of, and the 
election of directors to, the board of any Bank created as result of 
the combination of two or more Banks under section 26:
            ``(1) Board size.--The management of a combined Bank shall 
        be vested in a board of 15 directors, or such lesser number as 
        the Director determines appropriate, consistent with the safe 
        and sound operation of the combined Bank.
            ``(2) Board makeup.--The Director shall establish the 
        respective number of member directorships and independent 
        directorships for the board of the combined Bank such that--
                    ``(A) member directors shall comprise at least the 
                majority of the members of the board of directors; and
                    ``(B) independent directors shall comprise not 
                fewer than \2/5\ of the members of the board of 
                directors.
            ``(3) Allocation of member directorships.--The Director 
        shall allocate the member directorships of the board of a 
        combined Bank among the States of the Bank district in 
        accordance with the requirements of subsection (c)(2), except 
        that--
                    ``(A) no State shall be allocated more than two 
                member directorships until every state has been 
                allocated at least one member directorship; and
                    ``(B) if, after the Director has allocated all but 
                one of the member directorships, there remain any 
                States to which no member directorship has yet been 
                allocated, then the Director shall allocate the 
                remaining member directorship to represent the members 
                located in all of the States that have not otherwise 
                been allocated a member directorship.
            ``(4) Election of directors.--The directors of a combined 
        Bank shall be nominated and elected as provided in subsection 
        (b), except that, in the case of a member directorship that has 
        been designated as representing the members of two or more 
        States pursuant to paragraph (3)(B), the following requirements 
        shall apply in lieu of those set forth in subsection (b)(1)(A):
                    ``(A) The directorship shall be filled by a person 
                who is an officer or director of a member located in 
                one of the States represented.
                    ``(B) Each member located in each State represented 
                shall be entitled to nominate an eligible person to 
                fill the directorship, and the member director shall be 
                elected from persons so nominated by a plurality of the 
                votes that those members may cast under subparagraph 
                (C).
                    ``(C) Each member located in each State represented 
                may cast a number of votes equal to the number of 
                shares of stock in the Bank required to be held by the 
                member at the end of the calendar year next preceding 
                the election, but not in excess of the average number 
                of shares of stock in the Bank required to be held at 
                the end of that year by the respective members of the 
                Bank located in those States.
            ``(5) Initial directors for newly combined banks.--The 
        following requirements shall apply to the selection of the 
        individuals to serve as the initial directors of a combined 
        Bank as of the effective date of the combination:
                    ``(A) The terms of office of any directors of the 
                combining Banks who do not become directors of the 
                combined Bank shall terminate as of the effective date 
                of the combination.
                    ``(B) The individuals to serve as the initial 
                directors of a newly combined Bank shall be chosen from 
                among the incumbent directors of the predecessor Banks 
                serving immediately prior to the effective date of the 
                combination of those Banks and shall be--
                            ``(i) as designated by the Director in the 
                        case of a Bank created from a combination of 
                        two or more Banks pursuant to a reorganization 
                        under section 26(a); and
                            ``(ii) as agreed upon among the merging 
                        Banks and approved by the Director in the case 
                        of a Bank created from a voluntary merger of 
                        two or more Banks pursuant to section 26(b).
                    ``(C) Each initial director of the combined Bank 
                shall be entitled to serve for the remainder of the 
                term of office that the director had with the 
                predecessor Bank. Terms served as a director of a 
                predecessor Bank shall be counted as being served as a 
                director of the combined Bank for purposes of 
                determining term limits under subsection (e)(3).
                    ``(D) Beginning with the first election of 
                directors occurring after the combination of the 
                predecessor Banks, the Director shall adjust the term 
                of any directorship of the combined Bank as necessary 
                to achieve and maintain the staggering of terms that is 
                required under subsection (e)(2).
    ``(e) Terms; Rules and Regulations Governing Nominations and 
Elections.--
            ``(1) Terms.--Except as provided in paragraph (2), the term 
        of each Federal Home Loan Bank director shall be 4 years.
            ``(2) Adjustment of terms.--The Director shall adjust the 
        terms of members from time to time as necessary to ensure that 
        the terms of the members of the board of directors are 
        staggered with approximately \1/4\ of the terms expiring each 
        year.
            ``(3) Term limits.--If any person has been elected to each 
        of three consecutive full terms as a director of a Federal Home 
        Loan Bank and has served for all or part of each of those 
        terms, that person shall not be eligible for election to a 
        directorship of that Bank for a term which begins earlier than 
        two years after the expiration of the last expiring of the 
        three terms.
            ``(4) Rules and regulations governing nominations and 
        elections.--The Director is hereby authorized to prescribe such 
        rules and regulations as the Director may deem necessary or 
        appropriate for the nomination and election of directors of 
        Federal Home Loan Banks, including, without limitation on the 
        generality of the foregoing, rules and regulations with respect 
        to the breaking of ties and with respect to the inclusion of 
        more than one directorship on a single ballot and the methods 
        of voting and of determining the results of voting in such 
        cases.'';
            (6) in subsection (f), as so redesignated, by striking the 
        first and second sentences;
            (7) in subsection (h), as so redesignated--
                    (A) by striking ``home loan bank'' each place such 
                term appears and inserting ``Home Loan Bank''; and
                    (B) in paragraph (1), by striking ``such bank'' and 
                ``the bank'' and inserting ``such Bank'' and ``the 
                Bank'', respectively;
            (8) in subsection (i)(1)--
                    (A) by striking ``bank'' and inserting ``Bank''; 
                and
                    (B) by striking ``board'' and inserting 
                ``Director'';
            (9) in subsection (j), by striking ``bank'' and inserting 
        ``Bank''; and
            (10) by striking the second subsection (l), as added by 
        section 1202(8) of the Housing and Economic Recovery Act of 
        2008.

SEC. 609. HOME EQUITY CONVERSION MORTGAGE PROGRAM.

    (a) Establishment of Separate Mortgage Insurance Fund.--Section 255 
of the National Housing Act (12 U.S.C. 1715-20) is amended by adding at 
the end the following new subsection:
    ``(s) Home Equity Conversion Mortgage Insurance Fund.--
            ``(1) Establishment.--There is hereby created a Home Equity 
        Conversion Mortgage Insurance Fund (in this section referred to 
        as the `Fund'), which shall be used by the Secretary as a 
        revolving fund for carrying out the mortgage insurance 
        obligations of this section and for mortgages and commitments 
        transferred pursuant to paragraph (2).
            ``(2) Transfer of insurance and commitments.--The Secretary 
        shall transfer to the Fund all commitments for insurance issued 
        under this section before the date of the enactment of this 
        subsection and the insurance of any mortgage insured under this 
        section before such date of enactment.
            ``(3) Transfer of amounts.--The Secretary shall transfer to 
        the Fund from the Mutual Mortgage Insurance Fund an amount 
        equal to the total of the premium payments previously made with 
        respect to the insurance of mortgages transferred to the Fund 
        pursuant to paragraph (2) minus the total of any administrative 
        expenses previously incurred in connection with such mortgages, 
        plus such other amounts as the Secretary determines to be 
        necessary and appropriate.
            ``(4) Credits.--Premium charges, adjusted premium charges, 
        inspection and other fees, service charges, and any other 
        income received by the Secretary under this section, together 
        with all earnings on the assets of the Fund, shall be credited 
        to the Fund.
            ``(5) Payments.--All payments made pursuant to claims of 
        mortgagees with respect to mortgages insured under this 
        section, cash adjustments, the principal of and interest paid 
        on debentures which are the obligation of the Fund, expenses 
        incurred in connection with or as a consequence of the 
        acquisition and disposal of property acquired under such this 
        section, and all administrative expenses in connection with the 
        mortgage insurance operations under this section shall be paid 
        out of the Fund.
            ``(6) Investments.--Moneys in the Fund not needed for 
        current operations of the Fund shall be deposited with the 
        Treasurer of the United States to the credit of the Fund or 
        invested in bonds or other obligations of, or in bonds or other 
        obligations guaranteed by, the United States or any agency of 
        the United States, except that such moneys shall to the maximum 
        extent feasible be invested in such bonds or other obligations 
        the proceeds of which will be used to directly support the 
        residential mortgage market. The Secretary, with the approval 
        of the Secretary of the Treasury, may purchase in the open 
        market debentures which are the obligation of the Fund. Such 
        purchases shall be made at a price which will provide an 
        investment yield of not less than the yield obtained from other 
        investments authorized by this subsection. Debentures so 
        purchased shall be canceled and not reissued.''.
    (b) Disbursement of Funds To Protect Homeowner and Lender.--
Subparagraph (A) of section 255(i)(2) of the National Housing Act (12 
U.S.C. 1715z-20(i)(2)(A)) is amended by striking ``Mutual Mortgage 
Insurance Fund'' and inserting ``Home Equity Conversion Mortgage 
Insurance Fund established under subsection (s)''.

SEC. 610. FHA-RELATED CONFORMING AMENDMENTS.

    (a) Penalties for Equity Skimming.--Paragraph (1) of section 912 of 
the Housing and Urban Development Act of 1970 (12 U.S.C. 1709-2(1)) is 
amended by inserting ``or Federal Housing Administration'' after 
``Housing and Urban Development''.
    (b) Fraudulently Misappropriated Mortgage Proceeds.--Section 819 of 
the Housing and Community Development Act of 1974 (12 U.S.C. 1701l-1) 
is amended--
            (1) by inserting ``or the Federal Housing Administration'' 
        after ``Secretary of Housing and Urban Development''; and
            (2) by inserting ``or such Administration, as 
        appropriate,'' before ``has reason''.
    (c) Unauthorized Use of Multifamily Housing Assets and Income.--
Section 421 of the Housing and Community Development Act of 1987 (12 
U.S.C. 1715z-4a) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by inserting ``or the FHA, as 
                        applicable,'' after ``Secretary')'';
                            (ii) by inserting ``or by the FHA pursuant 
                        to title II of the Protecting American 
                        Taxpayers and Homeowners Act of 2018'' after 
                        ``National Housing Act''; and
                            (iii) in the last sentence, by inserting 
                        ``or the FHA'' after ``Secretary'' each place 
                        such term appears;
                    (B) in paragraph (2), by inserting ``or title II of 
                the Protecting American Taxpayers and Homeowners Act of 
                2018'' before the first comma; and
            (2) in subsections (b) through (e)--
                    (A) by inserting ``or the FHA, as applicable,'' 
                after ``Secretary,'' each place such term appears; and
                    (B) by inserting ``or the FHA, as applicable,'' 
                after ``Secretary'' each place such term appears 
                (except the penultimate occurrence in subsection (c)).
    (d) Single Family Mortgage Foreclosure.--The Single Family Mortgage 
Foreclosure Act of 1994 (12 U.S.C. 3751 et seq.) is amended--
            (1) in section 802(b)(1) (12 U.S.C. 3751(b)(1)), by 
        inserting ``or by the FHA pursuant to subtitle B of title V of 
        the Protecting American Taxpayers and Homeowners Act of 2018'' 
        before the semicolon;
            (2) in section 803(10)(A) (12 U.S.C. 3752(10)(A))--
                    (A) in subparagraph (A), by striking ``or'' at the 
                end;
                    (B) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (C) by inserting after subparagraph (A) the 
                following new subparagraph:
                    ``(B) is held by the FHA pursuant to subtitle B of 
                title V of the Protecting American Taxpayers and 
                Homeowners Act of 2018; or''; and
            (3) by adding at the end the following new section:

``SEC. 820. AUTHORITY OF FHA.

    ``After the expiration of the transition period under section 551 
of the Protecting American Taxpayers and Homeowners Act of 2018, any 
reference in sections 804 through 819 of this Act to the Secretary 
shall be considered to also refer to the FHA (as established pursuant 
to subtitle B of title V of such Act), but only with respect to single 
family mortgages described in section 803(10)(B).''.
    (e) Multifamily Mortgage Foreclosure.--The Multifamily Mortgage 
Foreclosure Act of 1981 (12 U.S.C. 3701 et seq.) is amended--
            (1) in section 363(2) (12 U.S.C. 3702(2)), by adding after 
        and below subparagraph (E) the following:
``Such term includes a mortgage on a property consisting of 5 or more 
dwelling units that is held by the FHA pursuant to subtitle B of title 
V of the Protecting American Taxpayers and Homeowners Act of 2018.''.
            (2) by adding at the end the following new section:

                           ``authority of fha

    ``Sec. 369J. After the expiration of the transition period under 
section 551 of the Protecting American Taxpayers and Homeowners Act of 
2018, any reference in sections 364 through 369I of this Act to the 
Secretary shall be considered to also refer to the FHA (as established 
pursuant to subtitle B of such Act), but only with respect to 
multifamily mortgages described in the last sentence of section 
363(2).''.
    (f) Effective Date.--The amendment made by this section shall be 
made, and shall apply beginning on, the expiration of the transition 
period under section 551.
                                 <all>