[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.
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