[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9460 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 9460
To amend the Federal Home Loan Mortgage Corporation Act and the Federal
National Mortgage Association Charter Act to specify requirements with
respect to the ownership of certain mortgage assets for the Federal
Home Loan Mortgage Corporation and the Federal National Mortgage
Association, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 25, 2026
Mr. Fitzgerald introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Federal Home Loan Mortgage Corporation Act and the Federal
National Mortgage Association Charter Act to specify requirements with
respect to the ownership of certain mortgage assets for the Federal
Home Loan Mortgage Corporation and the Federal National Mortgage
Association, 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.
This Act may be cited as the ``Sustainable Homeownership Act''.
SEC. 2. REQUIREMENTS OF OWNERSHIP OF CERTAIN MORTGAGE ASSETS.
(a) Freddie Mac.--
(1) Mortgage operations.--Section 305 of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C. 1454) is amended--
(A) in subsection (a)(2)--
(i) by striking ``No conventional'' and
inserting the following: ``Limits on purchases
of high loan-to-value mortgages--
``(A) In general.--No conventional'';
(ii) in subparagraph (A), as amended by
clause (i)--
(I) by striking ``value of'' and
inserting ``lesser of appraised value
or purchase price of'';
(II) by striking ``not less than 10
per centum in the mortgage'' and
inserting ``not less than the same
percentage of the first-loss portion of
the unpaid principal balance of the
mortgage that is required to be insured
or guaranteed as described in
subsection (e)(1)'';
(III) by striking ``for such period
and'';
(IV) by inserting ``not later than
120 days after the default of such
mortgage'' after ``is in default''; and
(V) by striking ``as determined by
the Corporation'' and inserting ``,
subject to the coverage and the
qualified insurer requirements
described in subsection (e)''; and
(iii) by adding at the end the following:
``(B) Exception for refinancing.--Notwithstanding
the first sentence of subparagraph (A), the Corporation
may purchase a conventional mortgage with an
outstanding principal balance exceeding 97 percent of
the value of the property securing the mortgage if the
Corporation or the Federal National Mortgage
Association, during the 30 day period before the
origination of such mortgage, replaced a mortgage with
the same borrower secured by the same property and the
new conventional mortgage--
``(i) reduces payment amounts for the
borrower;
``(ii) shortens the amortization term of
the mortgage; or
``(iii) replaces variable rate mortgage
with fixed rate mortgage for a minimum of a 60
month term.''; and
(B) by adding at the end the following:
``(e) Insurance or Guarantee on Unpaid Principal Balance of a
Mortgage.--
``(1) Requirements.--
``(A) In general.--With respect to the insurance or
guarantee on the portion of the unpaid principal
balance at the time of purchase of a mortgage which is
in excess of 80 percent of the value of the property
securing the mortgage that is required under subsection
(a)(2)(A), the following requirements apply:
``(i) For a mortgage with an unpaid
principal balance that is equal to an amount
that is above 80 percent and not more than 85
percent of the value of the property--
``(I) an amount that is not less
than 12 percent of the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer; or
``(II) if the mortgage is a fixed-
rate mortgage with a fully amortizing
term of less than or equal to 20 years,
an amount that is not less than 6
percent of the portion of the unpaid
principal balance of the mortgage shall
be guaranteed or insured by a qualified
insurer.
``(ii) For a mortgage with an unpaid
principal balance that is equal to an amount
that is above 85 percent and not more than 90
percent of the value of the property--
``(I) an amount that is not less
than 25 percent of the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer; or
``(II) if the mortgage is a fixed-
rate mortgage with a fully amortizing
term of less than or equal to 20 years,
an amount that is not less than 12
percent the portion of the unpaid
principal balance of the mortgage shall
be guaranteed or insured by a qualified
insurer.
``(iii) For a mortgage with an unpaid
principal balance that is equal to an amount
that is above 90 percent and not more than 95
percent of the value of the property--
``(I) an amount that is not less
than 30 percent the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer; or
``(II) if the mortgage is a fixed-
rate mortgage with a fully amortizing
term of less than or equal to 20 years,
an amount that is not less than 25
percent the portion of the unpaid
principal balance of the mortgage shall
be guaranteed or insured by a qualified
insurer.
``(iv) For a mortgage with an unpaid
principal balance that is equal to an amount
that is above 95 percent and not more than 97
percent of the value of the property, an amount
that is not less than 35 percent of the portion
of the unpaid principal balance of the mortgage
shall be guaranteed or insured by a qualified
insurer.
``(B) Exceptions.--
``(i) State agencies and certain mortgage
programs.--With respect to a seller that is a
State or political subdivision thereof, for
mortgages purchased on behalf of a State or
political subdivision thereof, and for
mortgages acquired under section 1335 of the
Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4565), the
following coverage requirements apply for
unpaid principal balances at the time of
purchase:
``(I) For a mortgage with an unpaid
principal balance that is equal to an
amount that is above 80 percent and not
more than 85 percent of the value of
the property, an amount that is not
less than 6 percent the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer.
``(II) For a mortgage with an
unpaid principal balance that is equal
to an amount that is above 85 percent
and not more than 90 percent of the
value of the property, an amount that
is not less than 12 percent the portion
of the unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer.
``(III) For a mortgage with an
unpaid principal balance that is equal
to an amount that is above 90 percent
and not more than 95 percent of the
value of the property, an amount that
is not less than 16 percent of the
portion of the unpaid principal balance
of the mortgage shall be guaranteed or
insured by a qualified insurer.
``(IV) For a mortgage with an
unpaid principal balance that is equal
to an amount that is above 95 percent
and not more than 97 percent of the
value of the property, an amount that
is not less than 18 percent the portion
of the unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer.
``(ii) Low income mortgagor.--
``(I) In general.--For a mortgage
with an unpaid principal balance at the
time of purchase that is equal to an
amount that is above 90 percent and not
more than 97 percent of the value of
the property, and for which the
mortgagor of the mortgage is a low-
income mortgagor, the Director of the
Federal Housing Finance Agency may
permit that an amount that is not less
than 25 percent of the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer.
``(II) Low-income mortgagor
defined.--
``(aa) In general.--The
term `low-income mortgagor'
means a mortgagor with a
household income of not more
than 80 percent of the area
median income.
``(bb) Area median income
qualification.--The Director of
the Federal Housing Finance
Agency may adjust the area
median income qualification
described in item (aa).
``(2) Qualified insurer.--
``(A) In general.--To be a qualified insurer under
this subsection, an insurer shall--
``(i) be subject to any State insurance law
or regulations that are applicable to insurance
companies in the respective State in which the
insurer operates;
``(ii) be subject to any eligibility
standards as described in subparagraph (B); and
``(iii) be a private enterprise.
``(B) Eligibility standards from corporation.--
``(i) In general.--The Corporation may set
eligibility standards, as described in clause
(ii), for qualified insurers.
``(ii) Imposition of standards.--Any
eligibility standards imposed by the
Corporation on qualified insurers shall be
approved by the Director of the Federal Housing
Finance Agency and subject to a 30 day notice
and comment period for the public, including
insurers to provide input on the proposed
eligibility requirements or changes thereto.
The Director may only approve such proposed
eligibility requirements from the public
comment period.
``(f) Holding of Assets.--
``(1) In general.--The value of the covered assets held by
the Corporation at any time may not exceed the greater of--
``(A) 8 percent of the Corporation's total assets;
or
``(B) an amount that the Secretary of the Treasury
and the Director of the Federal Housing Finance Agency
determine is necessary on a quarterly basis to--
``(i) engage in the business of
securitizing mortgage-backed securities
guaranteed the Corporation; and
``(ii) comply with the liquidity
requirements prescribed by the Director.
``(2) Covered assets defined.--In this subsection, the term
`covered assets'--
``(A) means mortgages, mortgage loans, mortgage-
related securities, participation certificates,
mortgage-backed commercial paper, obligations of real
estate mortgage investment conduits, and any
substantially similar assets; and
``(B) does not include loans for the construction
of residential dwelling units.
``(g) Requirements Applying to the Purchase of Single-Family
Residential Mortgages.--
``(1) In general.--The Corporation may not vary the pricing
or any other contractual term of the acquisition by the
Corporation of any single-family residential mortgage
(including by granting any variance) based on the size, charter
type, or volume of business of the seller of such mortgage.
``(2) Equivalent offers.--The Corporation shall offer to
purchase at all times, for equivalent cash consideration
(subject to an appropriate adjustment for the value of any
servicing rights retained by an approved seller-servicer and
for the cost of bearing or otherwise managing any incremental
credit, market, operational, liquidity, or other risk
associated with the cash window), and on substantially similar
terms, including pricing, any single-family residential
mortgage that--
``(A) is of a class of single-family residential
mortgages that the Corporation offers to acquire for
mortgage-backed securities guaranteed by the
Corporation or other noncash consideration;
``(B) is offered for sale to the Corporation by a
seller that has been approved to do business with the
Corporation; and
``(C) has been originated and, if sold, sold in
compliance with any underwriting or other similar
restrictions prescribed by the Corporation or the
Director of the Federal Housing Finance Agency as a
conservator;
``(3) Simultaneous mortgage leins.--The Corporation may not
purchase a single-family residential mortgage that was
originated in combination with a subordinate lien secured
against the same property if at the time of origination, such
mortgage or such subordinate lien provided access to a home
equity line of credit that, if used by the mortgagor could, in
combination with the original principal obligation of such
mortgage and the original principal obligation of such
subordinate lien, exceed 80 percent of the value of such
property.''.
(2) Obligations and securities.--Section 306(l)(2)(C)(i) of
the Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1455(l)(2)(C)(i)) is amended to read as follows:
``(i) dedicated for--
``(I) the purpose of deficit
reduction; or
``(II) the purpose of supporting
housing supply initiatives, including
affordable and middle-income housing
developments, as defined by the
Secretary of the Treasury; and''.
(3) Effective dates.--The amendments made by--
(A) paragraph (1) shall take effect on the date
that is 180 days after the date of the enactment of
this section; and
(B) paragraph (2) shall take effect on the date of
the enactment of this section.
(b) Fannie Mae.--
(1) Mortgage operations.--Section 302 of the National
Housing Act (12 U.S.C. 1717(b)(2))--
(A) in subsection (b)(2)--
(i) by striking ``For the'' and inserting
the following: ``Limits on purchases of high
loan-to-value mortgages--
``(A) In general.--For the'';
(ii) in subparagraph (A), as amended by
clause (i)--
(I) by striking ``value of'' and
inserting ``lesser of appraised value
or purchase price of'';
(II) by striking ``not less than 10
per centum in the mortgage'' and
inserting ``not less than the same
percentage of the first-loss portion of
the unpaid principal balance of the
mortgage that is required to be insured
or guaranteed as described in
subsection (d)(1)'';
(III) by striking ``for such period
and'';
(IV) by inserting ``not later than
120 days after the default of such
mortgage'' after ``is in default''; and
(V) by striking ``as determined by
the corporation'' and inserting ``,
subject to the coverage and the
qualified insurer requirements
described in subsection (d)''; and
(iii) by adding at the end the following:
``(B) Exception for refinancing.--Notwithstanding
the second sentence of subparagraph (A), the
corporation may purchase a conventional mortgage with
an outstanding principal balance exceeding 97 percent
of the value of the property securing the mortgage if
the corporation or the Federal Home Loan Mortgage
Corporation, during the 30 day period before the
origination of such mortgage, replaced a mortgage with
the same borrower secured by the same property and the
new conventional mortgage--
``(i) reduces payment amounts for the
borrower;
``(ii) shortens the amortization term of
the mortgage; or
``(iii) replaces variable rate mortgage
with fixed rate mortgage for a minimum of a 60
month term.''; and
(B) by adding at the end the following:
``(d) Insurance or Guarantee on Unpaid Principal Balance of a
Mortgage.--
``(1) Requirements.--
``(A) In general.--With respect to the insurance or
guarantee on the portion of the unpaid principal
balance at the time of purchase of a mortgage which is
in excess of 80 percent of the value of the property
securing the mortgage that is required under subsection
(b)(2)(A), the following requirements apply:
``(i) For a mortgage with an unpaid
principal balance that is equal to an amount
that is above 80 percent and not more than 85
percent of the value of the property--
``(I) an amount that is not less
than 12 percent of the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer; or
``(II) if the mortgage is a fixed-
rate mortgage with a fully amortizing
term of less than or equal to 20 years,
an amount that is not less than 6
percent of the portion of the unpaid
principal balance of the mortgage shall
be guaranteed or insured by a qualified
insurer.
``(ii) For a mortgage with an unpaid
principal balance that is equal to an amount
that is above 85 percent and not more than 90
percent of the value of the property--
``(I) an amount that is not less
than 25 percent of the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer; or
``(II) if the mortgage is a fixed-
rate mortgage with a fully amortizing
term of less than or equal to 20 years,
an amount that is not less than 12
percent the portion of the unpaid
principal balance of the mortgage shall
be guaranteed or insured by a qualified
insurer.
``(iii) For a mortgage with an unpaid
principal balance that is equal to an amount
that is above 90 percent and not more than 95
percent of the value of the property--
``(I) an amount that is not less
than 30 percent the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer; or
``(II) if the mortgage is a fixed-
rate mortgage with a fully amortizing
term of less than or equal to 20 years,
an amount that is not less than 25
percent the portion of the unpaid
principal balance of the mortgage shall
be guaranteed or insured by a qualified
insurer.
``(iv) For a mortgage with an unpaid
principal balance that is equal to an amount
that is above 95 percent and not more than 97
percent of the value of the property, an amount
that is not less than 35 percent of the portion
of the unpaid principal balance of the mortgage
shall be guaranteed or insured by a qualified
insurer.
``(B) Exceptions.--
``(i) State agencies and certain mortgage
programs.--With respect to a seller that is a
State or political subdivision thereof, for
mortgages purchased on behalf of a State or
political subdivision thereof, and for
mortgages acquired under section 1335 of the
Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4565), the
following coverage requirements apply for
unpaid principal balances at the time of
purchase:
``(I) For a mortgage with an unpaid
principal balance that is equal to an
amount that is above 80 percent and not
more than 85 percent of the value of
the property, an amount that is not
less than 6 percent the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer.
``(II) For a mortgage with an
unpaid principal balance that is equal
to an amount that is above 85 percent
and not more than 90 percent of the
value of the property, an amount that
is not less than 12 percent the portion
of the unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer.
``(III) For a mortgage with an
unpaid principal balance that is equal
to an amount that is above 90 percent
and not more than 95 percent of the
value of the property, an amount that
is not less than 16 percent of the
portion of the unpaid principal balance
of the mortgage shall be guaranteed or
insured by a qualified insurer.
``(IV) For a mortgage with an
unpaid principal balance that is equal
to an amount that is above 95 percent
and not more than 97 percent of the
value of the property, an amount that
is not less than 18 percent the portion
of the unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer.
``(ii) Low income mortgagor.--
``(I) In general.--For a mortgage
with an unpaid principal balance at the
time of purchase that is equal to an
amount that is above 90 percent and not
more than 97 percent of the value of
the property, and for which the
mortgagor of the mortgage is a low-
income mortgagor, the Director of the
Federal Housing Finance Agency may
permit that an amount that is not less
than 25 percent of the portion of the
unpaid principal balance of the
mortgage shall be guaranteed or insured
by a qualified insurer.
``(II) Low-income mortgagor
defined.--
``(aa) In general.--The
term `low-income mortgagor'
means a mortgagor with a
household income of not more
than 80 percent of the area
median income.
``(bb) Area median income
qualification.--The Director of
the Federal Housing Finance
Agency may adjust the area
median income qualification
described in item (aa).
``(2) Qualified insurer.--
``(A) In general.--To be a qualified insurer under
this subsection, an insurer shall--
``(i) be subject to any State insurance law
or regulations that are applicable to insurance
companies in the respective State in which the
insurer operates;
``(ii) be subject to any eligibility
standards as described in subparagraph (B); and
``(iii) be a private enterprise.
``(B) Eligibility standards from corporation.--
``(i) In general.--The corporation may set
eligibility standards, as described in clause
(ii), for qualified insurers.
``(ii) Imposition of standards.--Any
eligibility standards imposed by the
corporation on qualified insurers shall be
approved by the Director of the Federal Housing
Finance Agency and subject to a 30 day notice
and comment period for the public, including
insurers to provide input on the proposed
eligibility requirements or changes thereto.
The Director may only approve such proposed
eligibility requirements from the public
comment period.
``(e) Holding of Assets.--
``(1) In general.--The value of the covered assets held by
the corporation at any time may not exceed the greater of--
``(A) 8 percent of the corporation's total assets;
or
``(B) an amount that the Secretary of the Treasury
and the Director of the Federal Housing Finance Agency
determine is necessary on a quarterly basis to--
``(i) engage in the business of
securitizing mortgage-backed securities
guaranteed the corporation; and
``(ii) comply with the liquidity
requirements prescribed by the Director.
``(2) Covered assets defined.--In this subsection, the term
`covered assets'--
``(A) means mortgages, mortgage loans, mortgage-
related securities, participation certificates,
mortgage-backed commercial paper, obligations of real
estate mortgage investment conduits, and any
substantially similar assets; and
``(B) does not include loans for the construction
of residential dwelling units.
``(f) Requirements Applying to the Purchase of Single-Family
Residential Mortgages.--
``(1) In general.--The corporation may not vary the pricing
or any other contractual term of the acquisition by the
corporation of any single-family residential mortgage
(including by granting any variance) based on the size, charter
type, or volume of business of the seller of such mortgage.
``(2) Equivalent offers.--The corporation shall offer to
purchase at all times, for equivalent cash consideration
(subject to an appropriate adjustment for the value of any
servicing rights retained by an approved seller-servicer and
for the cost of bearing or otherwise managing any incremental
credit, market, operational, liquidity, or other risk
associated with the cash window), and on substantially similar
terms, including pricing, any single-family residential
mortgage that--
``(A) is of a class of single-family residential
mortgages that the corporation offers to acquire for
mortgage-backed securities guaranteed by the
corporation or other noncash consideration;
``(B) is offered for sale to the corporation by a
seller that has been approved to do business with the
corporation; and
``(C) has been originated and, if sold, sold in
compliance with any underwriting or other similar
restrictions prescribed by the corporation or the
Director of the Federal Housing Finance Agency as a
conservator;
``(3) Simultaneous mortgage leins.--The corporation may not
purchase a single-family residential mortgage that was
originated in combination with a subordinate lien secured
against the same property if at the time of origination, such
mortgage or such subordinate lien provided access to a home
equity line of credit that, if used by the mortgagor could, in
combination with the original principal obligation of such
mortgage and the original principal obligation of such
subordinate lien, exceed 80 percent of the value of such
property.''.
(2) Obligations and securities.--Section 304(g)(2)(C)(i) of
the National Housing Act (12 U.S.C. 1719(g)(2)(C)(i)) is
amended to read as follows:
``(i) dedicated for--
``(I) the purpose of deficit
reduction; or
``(II) the purpose of supporting
housing supply initiatives, including
affordable and middle-income housing
developments, as defined by the
Secretary of the Treasury; and''.
(3) Effective dates.--The amendments made by--
(A) paragraph (1) shall take effect on the date
that is 180 days after the date of the enactment of
this section; and
(B) paragraph (2) shall take effect on the date of
the enactment of this section.
SEC. 3. ADJUSTMENTS TO LIMITATIONS OF MAXIMUM ORIGINAL PRINCIPAL
OBLIGATION OF CONVENTIONAL MORTGAGES.
(a) Freddie Mac.--Section 305(a)(2)(A) of the Federal Home Loan
Mortgage Corporation Act, as amended by section 2, is further amended
by striking ``Each adjustment'' and all that follows through ``exceed
prior declines.'' and inserting the following: ``Each adjustment shall
be made by adding each such amount (as it may have been previously
adjusted) a percentage thereof equal to the lower of the percentage
increase, during the most recent 12-month period ending before the time
of determining such annual adjustment, in median household income
published by the Bureau of the Census or the housing price index as
determined by the Director of the Federal Housing Finance Agency.''.
(b) Fannie Mae.--Section 302(b)(2)(A) of the National Housing Act,
as amended by section 2, is further amended by striking ``Each
adjustment'' and all that follows through ``exceed prior declines.''
and inserting the following: ``Each adjustment shall be made by adding
each such amount (as it may have been previously adjusted) a percentage
thereof equal to the lower of the percentage increase, during the most
recent 12-month period ending before the time of determining such
annual adjustment, in median household income published by the Bureau
of the Census or the housing price index as determined by the Director
of the Federal Housing Finance Agency.''.
(c) FHA Loans.--Section 203(b)(2)(A) of the National Housing Act
(12 U.S.C. 1709(b)(2)) is amended--
(1) by striking ``not to exceed the lesser of--'' and
inserting the following: ``not to exceed 115 percent of the
median house price in the area in 2026, as determined by the
Secretary, which the Secretary shall adjust the maximum
principal obligation permitted on an annual basis by adding to
the amount described in the previous sentence a percentage
thereof equal to the lower of the percentage increase, during
the most recent 12-month period ending before the time of
determining such annual adjustment, in median household income
published by the Bureau of the Census or the housing price
index as determined by the Director of the Federal Housing
Finance Agency;''; and
(2) by striking clauses (i) and (ii);
SEC. 4. PRIOR APPROVAL OF ENTERPRISE PRODUCTS.
(a) In General.--Section 1321 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541) is
amended--
(1) in subsection (c)--
(A) in paragraph (3)--
(i) by striking ``30-day'' and inserting
``60-day'';
(ii) by striking ``During'' and inserting
the following:
``(A) In general.--During''; and
(iii) by adding at the end the following:
``(B) Extension of public comment period.--The
Director may extend the public comment period described
in subparagraph (A) by 30 days.''; and
(B) in paragraph (4)--
(i) in subparagraph (A), by striking ``30''
and inserting ``60'';
(ii) in subparagraph (B), by striking ``30-
day'' and all that follows through ``product''
and inserting ``60-day period described in
subparagraph (A), then the product is
denied.''; and
(iii) by striking subparagraph (C);
(2) in subsection (e)(1)(C)--
(A) by striking ``to--'' and inserting ``to the
activities described in subparagraphs (A) and (B).'';
and
(B) by striking clauses (i) and (ii); and
(3) by adding at the end the following:
``(g) Public Disclosure of Determination.--In addition to
information disclosed in the request for public comment under
subsection (c), the Director shall publish on a public website and in
the Federal Register any non-proprietary information related to a
determination with respect a new product or new activity submission not
later than 30 days after making such determination, including
information related to the criteria for such determination.''.
(b) Rulemaking.--Not later than 90 days after the date of the
enactment of this section, the Director of the Federal Housing Finance
Agency shall issue or revise rules to carry out the amendments of this
section.
SEC. 5. CORE CAPITAL DEFINITION.
Section 1303(7) of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4502(7)) is amended by inserting
after subparagraph (D) the following:
``(E) Any other components or adjustments as
determined appropriate by the Director for the purposes
of--
``(i) ensuring safety and soundness of an
enterprise; and
``(ii) enhancing transparency and
consistency with respect to financial industry
standards.''.
SEC. 6. RISK TRANSFER REQUIREMENTS.
(a) Transfer of Risk.--Subpart A of part 2 of subtitle A of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4541 et seq.) is amended by adding at the end the following:
``SEC. 1329. TRANSFER OF RISK.
``(a) In General.--Not later than 2 years after the date of the
enactment of this section, the Director shall require each enterprise
to transfer the vast majority of credit risk on single-family
residential mortgages, as determined by the Director, starting at the
first dollar after expected losses, using the most economically
feasible mechanism to ensure that credit risk is transferred at all
tranches of risk, as prompt as the market conditions will facilitate,
to a diversified pool of investors and insurers, all on a safe and
sound basis, to reduce the mortgage credit risk concentration at the
enterprises at a cost that is considered reasonable and consistent with
the level of guarantee fees being charged.
``(b) Credit Risk Transfer Targets and Publication.--
``(1) Targets.--The Director shall, on an annual basis,
issue and publish guidance that describes targets for credit
risk transfer transactions.
``(2) Report to congress.--The Director shall, on an annual
basis, submit to the Congress a report that describes the
results of the previous year's credit risk transfers.
``(c) Credit Risk Transfer Structures.--The Federal Home Loan
Mortgage Corporation and the Federal National Mortgage Association may
use existing Credit Risk Transfer structures, including Credit
Insurance Risk Transfer (`CIRT'), Agency Credit Insurance Structure
(`ACIS'), Connecticut Avenue Security (`CAS'), or Structured Agency
Credit Risk (`STACR'), and Seller/Servicer Risk Share arrangements, for
the risk transfer that is required under subsection (a).
``(d) Economically Feasible Defined.--In this section, the term
`economically feasible' means the ability to consummate a risk-transfer
trade in a manner that results in the enterprise remaining profitable
on its acquisition of the underlying collateral in which the risk is
transferred.''.
(b) Risk Based Capital Levels.--Section 1361(a)(1) of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4611(a)(1)) is amended to read as follows:
``(1) Enterprises.--The Director shall, by regulation,
establish risk-based capital requirements for the enterprises
to ensure that the enterprises operate in a safe and sound
manner, maintaining sufficient capital and reserves to support
the risks that arise in the operations and management of the
enterprises, and promote consistency between the capital
treatment of credit risk transfer and comparable risk-transfer
mechanism used by federally regulated financial institutions.
The capital requirements shall align with the actual credit
risk characteristics of mortgages and mortgage-backed
securities, including loan-to-value ratios, borrower credit
scores, debt-to-income ratios, and product structure, and avoid
capital treatment that discourages or penalizes the use of
prudent credit risk transfer mechanisms.''.
SEC. 7. CAPITAL FRAMEWORK AND RETURN REGULATION FOR GOVERNMENT-
SPONSORED ENTERPRISES.
(a) Treasury Line of Credit and Periodic Commitment Fee.--
(1) Continuation of treasury support.--Notwithstanding
section 8 of this Act, the lines of credit established under
section 2.1 of the Senior Preferred Stock Purchase Agreements
for each enterprise shall remain in effect.
(2) Availability of unused credit facility.--Each
enterprise shall retain access to any unused and outstanding
balances of the lines of credit described in paragraph (1),
which shall serve exclusively as a catastrophic risk backstop
subordinate to any capital requirements made by the Director
pursuant to section 1313B of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513b).
(3) Commitment fee structure.--To retain access to the line
of credit described in paragraph (1), each enterprise shall pay
an annual commitment fee, the cost of which shall be determined
by the Secretary of the Treasury, in consultation with the
Director, based on prevailing market risk indicators,
including--
(A) credit default swap spreads of comparable
financial institutions; and
(B) implied risk pricing in systemic risk
assessments determined by the Board of Governors of the
Federal Reserve System and the Director.
(b) Establishment of Allowable Return on Equity Range.--
(1) Purpose of return on equity range.--For the purposes of
ensuring financial stability and preventing excessive risk-
taking, the Director, in consultation with the Secretary of the
Treasury, shall establish a return on equity range requirement
for the enterprises.
(2) Return on equity range determination.--The Director
shall initially establish the return on equity range between 9
and 13 percent, as determined through an economic assessment of
financial market conditions.
(3) Review and adjustments on return on equity range.--Not
later than 5 years after the date of the enactment of this
section, and not later than every 5 years thereafter, the
Director--
(A) shall review and adjust as necessary the return
on equity range established under this section;
(B) may make adjustments to the range to a
percentage that is outside the percentage range
described in paragraph (2); and
(C) shall make the adjustments through rulemaking.
(c) Commitment Fee Adjustments and Capital Retention.--
(1) Commitment fee in normal operating conditions.--In any
fiscal year in which an enterprise reports a return on equity
range within the established range, the enterprise shall pay
the commitment fee as determined under subsection (a)(3).
(2) Capital retention when return on equity falls below the
lower bound.--In any fiscal year in which an enterprise reports
a return on equity range below the lower bound of the
established range, the enterprise shall--
(A) be exempt from paying the commitment fee for
such year; and
(B) prioritize the retention of earnings to bolster
capital reserves, unless the core capital levels of the
enterprise meet or exceed the minimum requirements
under any capital requirements made by the Director
pursuant to section 1313B of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4513b).
(3) Excess earnings remittance when roe exceeds upper
bound.--In any fiscal year in which an enterprise reports a
return on equity range above the upper bound of the established
range, the enterprise shall--
(A) pay the commitment fee as determined under
subsection (a)(3); and
(B) remit all net earnings exceeding the upper
bound to the Secretary of the Treasury to compensate
the Federal Government for its implicit risk-bearing
role.
(d) Dividend Restrictions Based on Capital Adequacy.--
(1) Dividend restriction for capital deficiency.--An
enterprise may not issue dividends in any fiscal year in which
the core capital of the enterprise falls below the minimum
levels required under any capital requirements made by the
Director pursuant to section 1313B of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4513b).
(2) Dividend allowance in low return on equity years with
adequate capital.--If an enterprise core capital meets or
exceeds the minimum capital requirements made by the Director
pursuant to section 1313B of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513b),
dividend payments may not be restricted, notwithstanding years
in which the return on equity falls below the lower bound of
the established range.
(e) Implementation and Regulatory Oversight.--
(1) Rulemaking and oversight.--The Director, in
consultation with the Secretary of the Treasury, shall issue
rules to implement this section, including--
(A) the methodologies for calculating the
commitment fee described in subsection (a)(3);
(B) the procedures for setting and adjusting the
return on equity range described in subsection (b);
(C) the capital retention requirements described in
subsection (c)(2); and
(D) the mechanisms for remittances of excess
earnings described in subsection (c)(3)(B).
(2) Annual reporting to congress.--Not later than 1 year
after the date of the enactment of this section, and annually
thereafter, the Director shall submit to the Financial Services
Committee of the House of Representatives and the Banking,
Housing, and Urban Affairs Committee of the Senate a report
that details--
(A) the financial performance of each enterprise;
(B) the status of the lines of credit described in
subsection (a), including the amount of unused credit
available;
(C) the effect of the return on equity range on
housing finance stability and affordability; and
(D) any recommendation for legislative or
regulatory adjustments to enhance the oversight and
risk management of the enterprises.
(f) Definitions.--In this section:
(1) Director.--The term ``Director'' means the Director of
the Federal Housing Finance Agency.
(2) Enterprise.--The term ``enterprise'' has the meaning
given such term in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502).
(3) Established range.--The term ``established range''
means the return on equity range established under subsection
(b) and any adjustments made to such range under subsection
(b)(3).
(4) Return on equity.--The term ``return on equity'' means
the annual net income of the enterprise divided by value of
total shareholder equity of the enterprise, expressed as a
percentage.
(5) Senior preferred stock purchase agreement.--The term
``Senior Preferred Stock Purchase Agreement'' means, with
respect to an enterprise, the Amended and Restated Senior
Preferred Stock Purchase Agreements, dated September 26, 2008,
amended May 6, 2009, further amended December 24, 2009, and
further amended August 17, 2012, between the Secretary of the
Treasury and such enterprise.
SEC. 8. STOCK OF EACH ENTERPRISE; PLAN TO TERMINATE CONSERVATORSHIP.
(a) Senior Preferred Stock Conversion.--The Secretary of the
Treasury may convert the Senior Preferred Stocks of each enterprise
into common equity.
(b) No Resumption of Periodic Commitment Fee.--The Secretary of the
Treasury shall not require the enterprises to adhere to the periodic
commitment fee described in section 3.2 of the Senior Preferred Stock
Purchase Agreements.
(c) Exercise of Warrants for Common Stock.--The Secretary of the
Treasury shall exercise the warrants for the purchase of common stock
of the enterprises provided to the Secretary under the Senior Preferred
Stock Purchase Agreements.
(d) Preparation To Terminate Conservatorship.--
(1) Capital standards.--Not later than 90 after the date of
the enactment of this section, the Director of the Federal
Housing Finance Agency shall make a determination with respect
to necessary capital standards for each enterprise to exit
conservatorship.
(2) Insufficient capital.--If an enterprise does not meet
the capital standards described in paragraph (1), the Director
of the Federal Housing Finance Agency shall--
(A) direct the enterprise to sell stock to meet
capital standards;
(B) define capital thresholds that determine the
level of intervention by the Director; and
(C) determine a timeline for the enterprise to
reach necessary capital standards.
(3) Commitment to restructure.--Not later than 1 year after
the date of the enactment of this section, the Secretary of the
Treasury and each enterprise shall restructure the investment
and dividend amount of the Department of the Treasury with
respect to each enterprise in a manner that facilitates the
orderly exit from conservatorship.
(e) Sale of Stocks.--Not later than 2 years after the date of the
enactment of this section, the Secretary of the Treasury shall sell the
stock from exercising its warrants described in subsection (c).
(f) Definitions.--In this section:
(1) Enterprise.--The term ``enterprise'' has the meaning
given such term in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502).
(2) Senior preferred stock purchase agreement.--The term
``Senior Preferred Stock Purchase Agreement'' means, with
respect to an enterprise, the Amended and Restated Senior
Preferred Stock Purchase Agreements, dated September 26, 2008,
amended May 6, 2009, further amended December 24, 2009, and
further amended August 17, 2012, between the Secretary of the
Treasury and such enterprise.
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