[Congressional Record Volume 154, Number 116 (Tuesday, July 15, 2008)]
[Senate]
[Pages S6735-S6797]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     AMERICAN HOUSING RESCUE AND FORECLOSURE PREVENTION ACT OF 2008

  On Friday, July 11, 2008, the Senate passed H.R. 3221, as amended, as 
follows:

                               H.R. 3221

    Resolved, That on June 25, 2008, the Senate concurs in the House 
amendment, striking section 1 through title V and inserting certain 
language, to the Senate amendment to the bill (H.R. 3221) entitled ``An 
Act moving the United States toward greater energy independence and 
security, developing innovative new technologies, reducing carbon 
emissions, creating green jobs, protecting consumers, increasing clean 
renewable energy production, and modernizing our energy infrastructure, 
and to amend the Internal Revenue Code of 1986 to provide tax 
incentives for the

[[Page S6736]]

production of renewable energy and energy conservation.'', with an 
amendment

        SENATE AMENDMENT TO HOUSE AMENDMENTS TO SENATE AMENDMENT

       In lieu of the matter proposed to be inserted, insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Housing 
     and Economic Recovery Act of 2008''.
       (b) Table of Content.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                   DIVISION A--HOUSING FINANCE REFORM

Sec. 1001. Short title.
Sec. 1002. Definitions.

              TITLE I--REFORM OF REGULATION OF ENTERPRISES

      Subtitle A--Improvement of Safety and Soundness Supervision

Sec. 1101. Establishment of the Federal Housing Finance Agency.
Sec. 1102. Duties and authorities of the Director.
Sec. 1103. Federal Housing Finance Oversight Board.
Sec. 1104. Authority to require reports by regulated entities.
Sec. 1105. Examiners and accountants; authority to contract for reviews 
              of regulated entities; ombudsman.
Sec. 1106. Assessments.
Sec. 1107. Regulations and orders.
Sec. 1108. Prudential management and operations standards.
Sec. 1109. Review of and authority over enterprise assets and 
              liabilities.
Sec. 1110. Risk-based capital requirements.
Sec. 1111. Minimum capital levels.
Sec. 1112. Registration under the securities laws.
Sec. 1113. Prohibition and withholding of executive compensation.
Sec. 1114. Limit on golden parachutes.
Sec. 1115. Reporting of fraudulent loans.

             Subtitle B--Improvement of Mission Supervision

Sec. 1121. Transfer of program approval and housing goal oversight.
Sec. 1122. Assumption by the Director of certain other HUD 
              responsibilities.
Sec. 1123. Review of enterprise products.
Sec. 1124. Conforming loan limits.
Sec. 1125. Annual housing report.
Sec. 1126. Public use database.
Sec. 1127. Reporting of mortgage data.
Sec. 1128. Revision of housing goals.
Sec. 1129. Duty to serve underserved markets.
Sec. 1130. Monitoring and enforcing compliance with housing goals.
Sec. 1131. Affordable housing programs.
Sec. 1132. Financial education and counseling.
Sec. 1133. Transfer and rights of certain HUD employees.

                  Subtitle C--Prompt Corrective Action

Sec. 1141. Critical capital levels.
Sec. 1142. Capital classifications.
Sec. 1143. Supervisory actions applicable to undercapitalized regulated 
              entities.
Sec. 1144. Supervisory actions applicable to significantly 
              undercapitalized regulated entities.
Sec. 1145. Authority over critically undercapitalized regulated 
              entities.

                    Subtitle D--Enforcement Actions

Sec. 1151. Cease and desist proceedings.
Sec. 1152. Temporary cease and desist proceedings.
Sec. 1153. Removal and prohibition authority.
Sec. 1154. Enforcement and jurisdiction.
Sec. 1155. Civil money penalties.
Sec. 1156. Criminal penalty.
Sec. 1157. Notice after separation from service.
Sec. 1158. Subpoena authority.

                     Subtitle E--General Provisions

Sec. 1161. Conforming and technical amendments.
Sec. 1162. Presidentially-appointed directors of enterprises.
Sec. 1163. Effective date.

                   TITLE II--FEDERAL HOME LOAN BANKS

Sec. 1201. Recognition of distinctions between the enterprises and the 
              Federal Home Loan Banks.
Sec. 1202. Directors.
Sec. 1203. Definitions.
Sec. 1204. Agency oversight of Federal Home Loan Banks.
Sec. 1205. Housing goals.
Sec. 1206. Community development financial institutions.
Sec. 1207. Sharing of information among Federal Home Loan Banks.
Sec. 1208. Exclusion from certain requirements.
Sec. 1209. Voluntary mergers.
Sec. 1210. Authority to reduce districts.
Sec. 1211. Community financial institution members.
Sec. 1212. Public use database; reports to Congress.
Sec. 1213. Semiannual reports.
Sec. 1214. Liquidation or reorganization of a Federal Home Loan Bank.
Sec. 1215. Study and report to Congress on securitization of acquired 
              member assets.
Sec. 1216. Technical and conforming amendments.
Sec. 1217. Study on Federal Home Loan Bank advances.
Sec. 1218. Federal Home Loan Bank refinancing authority for certain 
              residential mortgage loans.

TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND 
                   THE FEDERAL HOUSING FINANCE BOARD

                           Subtitle A--OFHEO

Sec. 1301. Abolishment of OFHEO.
Sec. 1302. Continuation and coordination of certain actions.
Sec. 1303. Transfer and rights of employees of OFHEO.
Sec. 1304. Transfer of property and facilities.

               Subtitle B--Federal Housing Finance Board

Sec. 1311. Abolishment of the Federal Housing Finance Board.
Sec. 1312. Continuation and coordination of certain actions.
Sec. 1313. Transfer and rights of employees of the Federal Housing 
              Finance Board.
Sec. 1314. Transfer of property and facilities.

                     TITLE IV--HOPE FOR HOMEOWNERS

Sec. 1401. Short title.
Sec. 1402. Establishment of HOPE for Homeowners Program.
Sec. 1403. Fiduciary duty of servicers of pooled residential mortgage 
              loans.
Sec. 1404. Revised standards for FHA appraisers.

                TITLE V--S.A.F.E. MORTGAGE LICENSING ACT

Sec. 1501. Short title.
Sec. 1502. Purposes and methods for establishing a mortgage licensing 
              system and registry.
Sec. 1503. Definitions.
Sec. 1504. License or registration required.
Sec. 1505. State license and registration application and issuance.
Sec. 1506. Standards for State license renewal.
Sec. 1507. System of registration administration by Federal agencies.
Sec. 1508. Secretary of Housing and Urban Development backup authority 
              to establish a loan originator licensing system.
Sec. 1509. Backup authority to establish a nationwide mortgage 
              licensing and registry system.
Sec. 1510. Fees.
Sec. 1511. Background checks of loan originators.
Sec. 1512. Confidentiality of information.
Sec. 1513. Liability provisions.
Sec. 1514. Enforcement under HUD backup licensing system.
Sec. 1515. State examination authority.
Sec. 1516. Reports and recommendations to Congress.
Sec. 1517. Study and reports on defaults and foreclosures.

                        TITLE VI--MISCELLANEOUS

Sec. 1601. Study and reports on guarantee fees.
Sec. 1602. Study and report on default risk evaluation.
Sec. 1603. Conversion of HUD contracts.
Sec. 1604. Bridge depository institutions.
Sec. 1605. Sense of the Senate.

                   DIVISION B--FORECLOSURE PREVENTION

Sec. 2001. Short title.
Sec. 2002. Emergency designation.

                 TITLE I--FHA MODERNIZATION ACT OF 2008

Sec. 2101. Short title.

              Subtitle A--Building American Homeownership

Sec. 2111. Short title.
Sec. 2112. Maximum principal loan obligation.
Sec. 2113. Cash investment requirement and prohibition of seller-funded 
              down payment assistance.
Sec. 2114. Mortgage insurance premiums.
Sec. 2115. Rehabilitation loans.
Sec. 2116. Discretionary action.
Sec. 2117. Insurance of condominiums.
Sec. 2118. Mutual Mortgage Insurance Fund.
Sec. 2119. Hawaiian home lands and Indian reservations.
Sec. 2120. Conforming and technical amendments.
Sec. 2121. Insurance of mortgages.
Sec. 2122. Home equity conversion mortgages.
Sec. 2123. Energy efficient mortgages program.
Sec. 2124. Pilot program for automated process for borrowers without 
              sufficient credit history.
Sec. 2125. Homeownership preservation.
Sec. 2126. Use of FHA savings for improvements in FHA technologies, 
              procedures, processes, program performance, staffing, and 
              salaries.
Sec. 2127. Post-purchase housing counseling eligibility improvements.
Sec. 2128. Pre-purchase homeownership counseling demonstration.
Sec. 2129. Fraud prevention.
Sec. 2130. Limitation on mortgage insurance premium increases.
Sec. 2131. Savings provision.
Sec. 2132. Implementation.
Sec. 2133. Moratorium on implementation of risk-based premiums.

          Subtitle B--Manufactured Housing Loan Modernization

Sec. 2141. Short title.
Sec. 2142. Purposes.
Sec. 2143. Exception to limitation on financial institution portfolio.
Sec. 2144. Insurance benefits.
Sec. 2145. Maximum loan limits.
Sec. 2146. Insurance premiums.
Sec. 2147. Technical corrections.
Sec. 2148. Revision of underwriting criteria.
Sec. 2149. Prohibition against kickbacks and unearned fees.
Sec. 2150. Leasehold requirements.

     TITLE II--MORTGAGE FORECLOSURE PROTECTIONS FOR SERVICEMEMBERS

Sec. 2201. Temporary increase in maximum loan guaranty amount for 
              certain housing loans guaranteed by the Secretary of 
              Veterans Affairs.
Sec. 2202. Counseling on mortgage foreclosures for members of the Armed 
              Forces returning from service abroad.

[[Page S6737]]

Sec. 2203. Enhancement of protections for servicemembers relating to 
              mortgages and mortgage foreclosures.

TITLE III--EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF ABANDONED AND 
                            FORECLOSED HOMES

Sec. 2301. Emergency assistance for the redevelopment of abandoned and 
              foreclosed homes.
Sec. 2302. Nationwide distribution of resources.
Sec. 2303. Limitation on use of funds with respect to eminent domain.
Sec. 2304. Limitation on distribution of funds.
Sec. 2305. Counseling intermediaries.

                 TITLE IV--HOUSING COUNSELING RESOURCES

Sec. 2401. Housing counseling resources.
Sec. 2402. Credit counseling.

              TITLE V--MORTGAGE DISCLOSURE IMPROVEMENT ACT

Sec. 2501. Short title.
Sec. 2502. Enhanced mortgage loan disclosures.
Sec. 2503. Community development investment authority for depository 
              institutions.

                   TITLE VI--VETERANS HOUSING MATTERS

Sec. 2601. Home improvements and structural alterations for totally 
              disabled members of the Armed Forces before discharge or 
              release from the Armed Forces.
Sec. 2602. Eligibility for specially adapted housing benefits and 
              assistance for members of the Armed Forces with service-
              connected disabilities and individuals residing outside 
              the United States.
Sec. 2603. Specially adapted housing assistance for individuals with 
              severe burn injuries.
Sec. 2604. Extension of assistance for individuals residing temporarily 
              in housing owned by a family member.
Sec. 2605. Increase in specially adapted housing benefits for disabled 
              veterans.
Sec. 2606. Report on specially adapted housing for disabled 
              individuals.
Sec. 2607. Report on specially adapted housing assistance for 
              individuals who reside in housing owned by a family 
              member on permanent basis.
Sec. 2608. Definition of annual income for purposes of section 8 and 
              other public housing programs.
Sec. 2609. Payment of transportation of baggage and household effects 
              for members of the Armed Forces who relocate due to 
              foreclosure of leased housing.

  TITLE VII--SMALL PUBLIC HOUSING AUTHORITIES PAPERWORK REDUCTION ACT

Sec. 2701. Short title.
Sec. 2702. Public housing agency plans for certain qualified public 
              housing agencies.

            TITLE VIII--FORECLOSURE RESCUE FRAUD PROTECTION

Sec. 2801. Short title.
Sec. 2802. Definitions.
Sec. 2803. Mortgage rescue fraud protection.
Sec. 2804. Warnings to homeowners of foreclosure rescue scams.
Sec. 2805. Civil liability.
Sec. 2806. Administrative enforcement.
Sec. 2807. Limitation.
Sec. 2808. Preemption.

                   DIVISION C--TAX-RELATED PROVISIONS

Sec. 3000. Short title; etc.

                    TITLE I--HOUSING TAX INCENTIVES

                    Subtitle A--Multi-Family Housing

                 PART I--Low-Income Housing Tax Credit

Sec. 3001. Temporary increase in volume cap for low-income housing tax 
              credit.
Sec. 3002. Determination of credit rate.
Sec. 3003. Modifications to definition of eligible basis.
Sec. 3004. Other simplification and reform of low-income housing tax 
              incentives.
Sec. 3005. Treatment of military basic pay.

        PART II--Modifications to Tax-Exempt Housing Bond Rules

Sec. 3007. Recycling of tax-exempt debt for financing residential 
              rental projects.
Sec. 3008. Coordination of certain rules applicable to low-income 
              housing credit and qualified residential rental project 
              exempt facility bonds.

  PART III--Reforms Related to the Low-Income Housing Credit and Tax-
                          Exempt Housing Bonds

Sec. 3009. Hold harmless for reductions in area median gross income.
Sec. 3010. Exception to annual current income determination requirement 
              where determination not relevant.

                   Subtitle B--Single Family Housing

Sec. 3011. First-time homebuyer credit.
Sec. 3012. Additional standard deduction for real property taxes for 
              nonitemizers.

                     Subtitle C--General Provisions

Sec. 3021. Temporary liberalization of tax-exempt housing bond rules.
Sec. 3022. Repeal of alternative minimum tax limitations on tax-exempt 
              housing bonds, low-income housing tax credit, and 
              rehabilitation credit.
Sec. 3023. Bonds guaranteed by Federal home loan banks eligible for 
              treatment as tax-exempt bonds.
Sec. 3024. Modification of rules pertaining to FIRPTA nonforeign 
              affidavits.
Sec. 3025. Modification of definition of tax-exempt use property for 
              purposes of the rehabilitation credit.
Sec. 3026. Extension of special rule for mortgage revenue bonds for 
              residences located in disaster areas.

       TITLE II--REFORMS RELATED TO REAL ESTATE INVESTMENT TRUSTS

      Subtitle A--Foreign Currency and Other Qualified Activities

Sec. 3031. Revisions to REIT income tests.
Sec. 3032. Revisions to REIT asset tests.
Sec. 3033. Conforming foreign currency revisions.

                 Subtitle B--Taxable REIT Subsidiaries

Sec. 3041. Conforming taxable REIT subsidiary asset test.

                        Subtitle C--Dealer Sales

Sec. 3051. Holding period under safe harbor.
Sec. 3052. Determining value of sales under safe harbor.

                     Subtitle D--Health Care REITs

Sec. 3061. Conformity for health care facilities.

                      Subtitle E--Effective Dates

Sec. 3071. Effective dates.

                     TITLE III--REVENUE PROVISIONS

                     Subtitle A--General Provisions

Sec. 3081. Election to accelerate amt and r and d credits in lieu of 
              bonus depreciation.
Sec. 3082. Certain GO Zone incentives.

                      Subtitle B--Revenue Offsets

Sec. 3091. Returns relating to payments made in settlement of payment 
              card and third party network transactions.
Sec. 3092. Gain from sale of principal residence allocated to 
              nonqualified use not excluded from income.
Sec. 3093. Increase in information return penalties.
Sec. 3094. Increase in penalty for failure to file S corporation 
              returns.
Sec. 3095. Increase in penalty for failure to file partnership returns.
Sec. 3096. Increase in minimum penalty on failure to file a return of 
              tax.

                   DIVISION A--HOUSING FINANCE REFORM

     SEC. 1001. SHORT TITLE.

       This division may be cited as the ``Federal Housing Finance 
     Regulatory Reform Act of 2008''.

     SEC. 1002. DEFINITIONS.

       (a) Federal Safety and Soundness Act Definitions.--Section 
     1303 of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4502) is amended--
       (1) in each of paragraphs (8), (9), (10), and (19), by 
     striking ``Secretary'' each place that term appears and 
     inserting ``Director'';
       (2) by redesignating paragraphs (16) through (19) as 
     paragraphs (21) through (24), respectively;
       (3) by striking paragraphs (13) through (15) and inserting 
     the following:
       ``(19) Office of finance.--The term `Office of Finance' 
     means the Office of Finance of the Federal Home Loan Bank 
     System (or any successor thereto).
       ``(20) Regulated entity.--The term `regulated entity' 
     means--
       ``(A) the Federal National Mortgage Association and any 
     affiliate thereof;
       ``(B) the Federal Home Loan Mortgage Corporation and any 
     affiliate thereof; and
       ``(C) any Federal Home Loan Bank.'';
       (4) by redesignating paragraphs (11) and (12) as paragraphs 
     (17) and (18), respectively;
       (5) by redesignating paragraph (7) as paragraph (12);
       (6) by redesignating paragraphs (8) through (10) as 
     paragraphs (14) through (16), respectively;
       (7) in paragraph (5)--
       (A) by striking ``(5)'' and inserting ``(9)''; and
       (B) by striking ``Office of Federal Housing Enterprise 
     Oversight of the Department of Housing and Urban 
     Development'' and inserting ``Federal Housing Finance 
     Agency'';
       (8) by redesignating paragraph (6) as paragraph (10);
       (9) by redesignating paragraphs (2) through (4) as 
     paragraphs (5) through (7), respectively;
       (10) by inserting after paragraph (7), as redesignated, the 
     following:
       ``(8) Default; in danger of default.--
       ``(A) Default.--The term `default' means, with respect to a 
     regulated entity, any adjudication or other official 
     determination by any court of competent jurisdiction, or the 
     Agency, pursuant to which a conservator, receiver, limited-
     life regulated entity, or legal custodian is appointed for a 
     regulated entity.
       ``(B) In danger of default.--The term `in danger of 
     default' means a regulated entity with respect to which, in 
     the opinion of the Agency--
       ``(i) the regulated entity is not likely to be able to pay 
     the obligations of the regulated entity in the normal course 
     of business; or
       ``(ii) the regulated entity--

       ``(I) has incurred or is likely to incur losses that will 
     deplete all or substantially all of its capital; and
       ``(II) there is no reasonable prospect that the capital of 
     the regulated entity will be replenished.'';

       (11) by inserting after paragraph (1) the following:
       ``(2) Agency.--The term `Agency' means the Federal Housing 
     Finance Agency established under section 1311.
       ``(3) Authorizing statutes.--The term `authorizing 
     statutes' means--
       ``(A) the Federal National Mortgage Association Charter 
     Act;
       ``(B) the Federal Home Loan Mortgage Corporation Act; and
       ``(C) the Federal Home Loan Bank Act.
       ``(4) Board.--The term `Board' means the Federal Housing 
     Finance Oversight Board established under section 1313A.'';

[[Page S6738]]

       (12) by inserting after paragraph (10), as redesignated by 
     this section, the following:
       ``(11) Entity-affiliated party.--The term `entity-
     affiliated party' means--
       ``(A) any director, officer, employee, or controlling 
     stockholder of, or agent for, a regulated entity;
       ``(B) any shareholder, affiliate, consultant, or joint 
     venture partner of a regulated entity, 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 a regulated entity, provided that a member of a Federal 
     Home Loan Bank shall not be deemed to have participated in 
     the affairs of that Bank solely by virtue of being a 
     shareholder of, and obtaining advances from, that Bank;
       ``(C) any independent contractor for a regulated entity 
     (including any attorney, appraiser, or accountant), if--
       ``(i) the independent contractor knowingly or recklessly 
     participates in--

       ``(I) any violation of any law or regulation;
       ``(II) any breach of fiduciary duty; or
       ``(III) any unsafe or unsound practice; and

       ``(ii) such violation, breach, or practice caused, or is 
     likely to cause, more than a minimal financial loss to, or a 
     significant adverse effect on, the regulated entity;
       ``(D) any not-for-profit corporation that receives its 
     principal funding, on an ongoing basis, from any regulated 
     entity; and
       ``(E) the Office of Finance.'';
       (13) by inserting after paragraph (12), as redesignated by 
     this section, the following:
       ``(13) Limited-life regulated entity.--The term `limited-
     life regulated entity' means an entity established by the 
     Agency under section 1367(i) with respect to a Federal Home 
     Loan Bank in default or in danger of default or with respect 
     to an enterprise in default or in danger of default.''; and
       (14) by adding at the end the following:
       ``(25) Violation.--The term `violation' includes any action 
     (alone or in combination with another or others) for or 
     toward causing, bringing about, participating in, counseling, 
     or aiding or abetting a violation.''.
       (b) References in This Act.--As used in this Act, unless 
     otherwise specified--
       (1) the term ``Agency'' means the Federal Housing Finance 
     Agency;
       (2) the term ``Director'' means the Director of the Agency; 
     and
       (3) the terms ``enterprise'', ``regulated entity'', and 
     ``authorizing statutes'' have the same meanings as in section 
     1303 of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992, as amended by this Act.

              TITLE I--REFORM OF REGULATION OF ENTERPRISES

      Subtitle A--Improvement of Safety and Soundness Supervision

     SEC. 1101. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE 
                   AGENCY.

       The Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by 
     striking sections 1311 and 1312 and inserting the following:

     ``SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE 
                   AGENCY.

       ``(a) Establishment.--There is established the Federal 
     Housing Finance Agency, which shall be an independent agency 
     of the Federal Government.
       ``(b) General Supervisory and Regulatory Authority.--
       ``(1) In general.--Each regulated entity shall, to the 
     extent provided in this title, be subject to the supervision 
     and regulation of the Agency.
       ``(2) Authority over fannie mae, freddie mac, the federal 
     home loan banks, and the office of finance.--The Director 
     shall have general regulatory authority over each regulated 
     entity and the Office of Finance, and shall exercise such 
     general regulatory authority, including such duties and 
     authorities set forth under section 1313, to ensure that the 
     purposes of this Act, the authorizing statutes, and any other 
     applicable law are carried out.
       ``(c) Savings Provision.--The authority of the Director to 
     take actions under subtitles B and C shall not in any way 
     limit the general supervisory and regulatory authority 
     granted to the Director under subsection (b).

     ``SEC. 1312. DIRECTOR.

       ``(a) Establishment of Position.--There is established the 
     position of the Director of the Agency, who shall be the head 
     of the Agency.
       ``(b) Appointment; Term.--
       ``(1) Appointment.--The Director shall be appointed by the 
     President, by and with the advice and consent of the Senate, 
     from among individuals who are citizens of the United States, 
     have a demonstrated understanding of financial management or 
     oversight, and have a demonstrated understanding of capital 
     markets, including the mortgage securities markets and 
     housing finance.
       ``(2) Term.--The Director shall be appointed for a term of 
     5 years, unless removed before the end of such term for cause 
     by the President.
       ``(3) Vacancy.--A vacancy in the position of Director that 
     occurs before the expiration of the term for which a Director 
     was appointed shall be filled in the manner established under 
     paragraph (1), and the Director appointed to fill such 
     vacancy shall be appointed only for the remainder of such 
     term.
       ``(4) Service after end of term.--An individual may serve 
     as the Director after the expiration of the term for which 
     appointed until a successor has been appointed.
       ``(5) Transitional provision.--Notwithstanding paragraphs 
     (1) and (2), during the period beginning on the effective 
     date of the Federal Housing Finance Regulatory Reform Act of 
     2008, and ending on the date on which the Director is 
     appointed and confirmed, the person serving as the Director 
     of the Office of Federal Housing Enterprise Oversight of the 
     Department of Housing and Urban Development on that effective 
     date shall act for all purposes as, and with the full powers 
     of, the Director.
       ``(c) Deputy Director of the Division of Enterprise 
     Regulation.--
       ``(1) In general.--The Agency shall have a Deputy Director 
     of the Division of Enterprise Regulation, who shall be 
     designated by the Director from among individuals who are 
     citizens of the United States, have a demonstrated 
     understanding of financial management or oversight, and have 
     a demonstrated understanding of mortgage securities markets 
     and housing finance.
       ``(2) Functions.--The Deputy Director of the Division of 
     Enterprise Regulation shall have such functions, powers, and 
     duties with respect to the oversight of the enterprises as 
     the Director shall prescribe.
       ``(d) Deputy Director Of The Division Of Federal Home Loan 
     Bank Regulation.--
       ``(1) In general.--The Agency shall have a Deputy Director 
     of the Division of Federal Home Loan Bank Regulation, who 
     shall be designated by the Director from among individuals 
     who are citizens of the United States, have a demonstrated 
     understanding of financial management or oversight, and have 
     a demonstrated understanding of the Federal Home Loan Bank 
     System and housing finance.
       ``(2) Functions.--The Deputy Director of the Division of 
     Federal Home Loan Bank Regulation shall have such functions, 
     powers, and duties with respect to the oversight of the 
     Federal Home Loan Banks as the Director shall prescribe.
       ``(e) Deputy Director for Housing Mission and Goals.--
       ``(1) In general.--The Agency shall have a Deputy Director 
     for Housing Mission and Goals, who shall be designated by the 
     Director from among individuals who are citizens of the 
     United States, and have a demonstrated understanding of the 
     housing markets and housing finance.
       ``(2) Functions.--The Deputy Director for Housing Mission 
     and Goals shall have such functions, powers, and duties with 
     respect to the oversight of the housing mission and goals of 
     the enterprises, and with respect to oversight of the housing 
     finance and community and economic development mission of the 
     Federal Home Loan Banks, as the Director shall prescribe.
       ``(3) Considerations.--In exercising such functions, 
     powers, and duties, the Deputy Director for Housing Mission 
     and Goals shall consider the differences between the 
     enterprises and the Federal Home Loan Banks, including those 
     described in section 1313(f).
       ``(f) Acting Director.--In the event of the death, 
     resignation, sickness, or absence of the Director, the 
     President shall designate either the Deputy Director of the 
     Division of Enterprise Regulation, the Deputy Director of the 
     Division of Federal Home Loan Bank Regulation, or the Deputy 
     Director for Housing Mission and Goals, to serve as acting 
     Director until the return of the Director, or the appointment 
     of a successor pursuant to subsection (b).
       ``(g) Limitations.--The Director and each of the Deputy 
     Directors may not--
       ``(1) have any direct or indirect financial interest in any 
     regulated entity or entity-affiliated party;
       ``(2) hold any office, position, or employment in any 
     regulated entity or entity-affiliated party; or
       ``(3) have served as an executive officer or director of 
     any regulated entity or entity-affiliated party at any time 
     during the 3-year period preceding the date of appointment or 
     designation of such individual as Director or Deputy 
     Director, as applicable.''.

     SEC. 1102. DUTIES AND AUTHORITIES OF THE DIRECTOR.

       (a) In General.--Section 1313 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4513) is amended to read as follows:

     ``SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR.

       ``(a) Duties.--
       ``(1) Principal duties.--The principal duties of the 
     Director shall be--
       ``(A) to oversee the prudential operations of each 
     regulated entity; and
       ``(B) to ensure that--
       ``(i) each regulated entity operates in a safe and sound 
     manner, including maintenance of adequate capital and 
     internal controls;
       ``(ii) the operations and activities of each regulated 
     entity foster liquid, efficient, competitive, and resilient 
     national housing finance markets (including activities 
     relating to mortgages on housing for low- and moderate-income 
     families involving a reasonable economic return that may be 
     less than the return earned on other activities);
       ``(iii) each regulated entity complies with this title and 
     the rules, regulations, guidelines, and orders issued under 
     this title and the authorizing statutes;
       ``(iv) each regulated entity carries out its statutory 
     mission only through activities that are authorized under and 
     consistent with this title and the authorizing statutes; and
       ``(v) the activities of each regulated entity and the 
     manner in which such regulated entity is operated are 
     consistent with the public interest.
       ``(2) Scope of authority.--The authority of the Director 
     shall include the authority--
       ``(A) to review and, if warranted based on the principal 
     duties described in paragraph (1), reject any acquisition or 
     transfer of a controlling interest in a regulated entity; and
       ``(B) to exercise such incidental powers as may be 
     necessary or appropriate to fulfill the duties and 
     responsibilities of the Director in the supervision and 
     regulation of each regulated entity.

[[Page S6739]]

       ``(b) Delegation of Authority.--The Director may delegate 
     to officers and employees of the Agency any of the functions, 
     powers, or duties of the Director, as the Director considers 
     appropriate.
       ``(c) Litigation Authority.--
       ``(1) In general.--In enforcing any provision of this 
     title, any regulation or order prescribed under this title, 
     or any other provision of law, rule, regulation, or order, or 
     in any other action, suit, or proceeding to which the 
     Director is a party or in which the Director is interested, 
     and in the administration of conservatorships and 
     receiverships, the Director may act in the Director's own 
     name and through the Director's own attorneys.
       ``(2) Subject to suit.--Except as otherwise provided by 
     law, the Director shall be subject to suit (other than suits 
     on claims for money damages) by a regulated entity with 
     respect to any matter under this title or any other 
     applicable provision of law, rule, order, or regulation under 
     this title, in the United States district court for the 
     judicial district in which the regulated entity has its 
     principal place of business, or in the United States District 
     Court for the District of Columbia, and the Director may be 
     served with process in the manner prescribed by the Federal 
     Rules of Civil Procedure.''.
       (b) Independence in Congressional Testimony and 
     Recommendations.--Section 111 of Public Law 93-495 (12 U.S.C. 
     250) is amended by striking ``the Federal Housing Finance 
     Board'' and inserting ``the Director of the Federal Housing 
     Finance Agency''.

     SEC. 1103. FEDERAL HOUSING FINANCE OVERSIGHT BOARD.

       (a) In General.--The Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is 
     amended by inserting after section 1313 the following:

     ``SEC. 1313A. FEDERAL HOUSING FINANCE OVERSIGHT BOARD.

       ``(a) In General.--There is established the Federal Housing 
     Finance Oversight Board, which shall advise the Director with 
     respect to overall strategies and policies in carrying out 
     the duties of the Director under this title.
       ``(b) Limitations.--The Board may not exercise any 
     executive authority, and the Director may not delegate to the 
     Board any of the functions, powers, or duties of the 
     Director.
       ``(c) Composition.--The Board shall be comprised of 4 
     members, of whom--
       ``(1) 1 member shall be the Secretary of the Treasury;
       ``(2) 1 member shall be the Secretary of Housing and Urban 
     Development;
       ``(3) 1 member shall be the Chairman of the Securities and 
     Exchange Commission; and
       ``(4) 1 member shall be the Director, who shall serve as 
     the Chairperson of the Board.
       ``(d) Meetings.--
       ``(1) In general.--The Board shall meet upon notice by the 
     Director, but in no event shall the Board meet less 
     frequently than once every 3 months.
       ``(2) Special meetings.--Either the Secretary of the 
     Treasury, the Secretary of Housing and Urban Development, or 
     the Chairman of the Securities and Exchange Commission may, 
     upon giving written notice to the Director, require a special 
     meeting of the Board.
       ``(e) Testimony.--On an annual basis, the Board shall 
     testify before Congress regarding--
       ``(1) the safety and soundness of the regulated entities;
       ``(2) any material deficiencies in the conduct of the 
     operations of the regulated entities;
       ``(3) the overall operational status of the regulated 
     entities;
       ``(4) an evaluation of the performance of the regulated 
     entities in carrying out their respective missions;
       ``(5) operations, resources, and performance of the Agency; 
     and
       ``(6) such other matters relating to the Agency and its 
     fulfillment of its mission, as the Board determines 
     appropriate.''.
       (b) Annual Report of the Director.--Section 1319B(a) of the 
     Federal Housing Enterprises Financial Safety and Soundness 
     Act of 1992 (12 U.S.C. 4521(a)) is amended--
       (1) by striking ``enterprise'' each place that term appears 
     and inserting ``regulated entity'';
       (2) by striking ``enterprises'' each place that term 
     appears and inserting ``regulated entities'';
       (3) in paragraph (3), by striking ``; and'' and inserting a 
     semicolon;
       (4) in paragraph (4), by striking ``1994.'' and inserting 
     ``1994; and''; and
       (5) by adding at the end the following:
       ``(5) the assessment of the Board or any of its members 
     with respect to--
       ``(A) the safety and soundness of the regulated entities;
       ``(B) any material deficiencies in the conduct of the 
     operations of the regulated entities;
       ``(C) the overall operational status of the regulated 
     entities; and
       ``(D) an evaluation of the performance of the regulated 
     entities in carrying out their respective missions;
       ``(6) operations, resources, and performance of the Agency; 
     and
       ``(7) such other matters relating to the Agency and the 
     fulfillment of its mission.''.

     SEC. 1104. AUTHORITY TO REQUIRE REPORTS BY REGULATED 
                   ENTITIES.

       (a) In General.--Section 1314 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4514) is amended--
       (1) in the section heading, by striking ``ENTERPRISES'' and 
     inserting ``REGULATED ENTITIES'';
       (2) by striking ``an enterprise'' each place that term 
     appears and inserting ``a regulated entity'';
       (3) by striking ``the enterprise'' and inserting ``the 
     regulated entity'';
       (4) in subsection (a)--
       (A) by striking the subsection heading and all that follows 
     through ``and operations'' in paragraph (1) and inserting the 
     following:
       ``(a) Regular and Special Reports.--
       ``(1) Regular reports.--The Director may require, by 
     general or specific orders, a regulated entity to submit 
     regular reports, including financial statements determined on 
     a fair value basis, on the condition (including financial 
     condition), management, activities, or operations of the 
     regulated entity, as the Director considers appropriate''; 
     and
       (B) in paragraph (2)--
       (i) by inserting ``, by general or specific orders,'' after 
     ``may also require''; and
       (ii) by striking ``whenever'' and inserting ``on any of the 
     topics specified in paragraph (1) or any other relevant 
     topics, if''; and
       (5) by adding at the end the following:
       ``(c) Penalties for Failure To Make Reports.--
       ``(1) Violations.--It shall be a violation of this section 
     for any regulated entity--
       ``(A) to fail to make, transmit, or publish any report or 
     obtain any information required by the Director under this 
     section, section 309(k) of the Federal National Mortgage 
     Association Charter Act, section 307(c) of the Federal Home 
     Loan Mortgage Corporation Act, or section 20 of the Federal 
     Home Loan Bank Act, within the period of time specified in 
     such provision of law or otherwise by the Director; or
       ``(B) to submit or publish any false or misleading report 
     or information under this section.
       ``(2) Penalties.--
       ``(A) First tier.--
       ``(i) In general.--A violation described in paragraph (1) 
     shall be subject to a penalty of not more than $2,000 for 
     each day during which such violation continues, in any case 
     in which--

       ``(I) the subject regulated entity maintains procedures 
     reasonably adapted to avoid any inadvertent error and the 
     violation was unintentional and a result of such an error; or
       ``(II) the violation was an inadvertent transmittal or 
     publication of any report which was minimally late.

       ``(ii) Burden of proof.--For purposes of this subparagraph, 
     the regulated entity shall have the burden of proving that 
     the error was inadvertent or that a report was inadvertently 
     transmitted or published late.
       ``(B) Second tier.--A violation described in paragraph (1) 
     shall be subject to a penalty of not more than $20,000 for 
     each day during which such violation continues or such false 
     or misleading information is not corrected, in any case that 
     is not addressed in subparagraph (A) or (C).
       ``(C) Third tier.--A violation described in paragraph (1) 
     shall be subject to a penalty of not more than $1,000,000 per 
     day for each day during which such violation continues or 
     such false or misleading information is not corrected, in any 
     case in which the subject regulated entity committed such 
     violation knowingly or with reckless disregard for the 
     accuracy of any such information or report.
       ``(3) Assessments.--Any penalty imposed under this 
     subsection shall be in lieu of a penalty under section 1376, 
     but shall be assessed and collected by the Director in the 
     manner provided in section 1376 for penalties imposed under 
     that section, and any such assessment (including the 
     determination of the amount of the penalty) shall be 
     otherwise subject to the provisions of section 1376.
       ``(4) Hearing.--A regulated entity against which a penalty 
     is assessed under this section shall be afforded an agency 
     hearing if the regulated entity submits a request for a 
     hearing not later than 20 days after the date of the issuance 
     of the notice of assessment. Section 1374 shall apply to any 
     such proceedings.''.
       (b) Conforming Amendment.--The Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et 
     seq.) is amended by striking sections 1327 and 1328.

     SEC. 1105. EXAMINERS AND ACCOUNTANTS; AUTHORITY TO CONTRACT 
                   FOR REVIEWS OF REGULATED ENTITIES; OMBUDSMAN.

       (a) In General.--Section 1317 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4517) is amended--
       (1) in subsection (a), by striking ``enterprise'' each 
     place that term appears and inserting ``regulated entity'';
       (2) in subsection (b)--
       (A) by inserting ``of a regulated entity'' after ``under 
     this section''; and
       (B) by striking ``to determine the condition of an 
     enterprise for the purpose of ensuring its financial safety 
     and soundness'' and inserting ``or appropriate'';
       (3) in subsection (c), in the second sentence, by inserting 
     before the period ``to conduct examinations under this 
     section'';
       (4) by redesignating subsections (d) through (f) as 
     subsections (e) through (g), respectively; and
       (5) by inserting after subsection (c) the following:
       ``(d) Inspector General.--There shall be within the Agency 
     an Inspector General, who shall be appointed in accordance 
     with section 3(a) of the Inspector General Act of 1978.''.
       (b) Direct Hire Authority To Hire Accountants, Economists, 
     and Examiners.--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:
       ``(h) Appointment of Accountants, Economists, and 
     Examiners.--
       ``(1) Applicability.--This section shall apply with respect 
     to any position of examiner, accountant, economist, and 
     specialist in financial markets and in technology at the 
     Agency, with respect to supervision and regulation of the 
     regulated entities, that is in the competitive service.
       ``(2) Appointment authority.--The Director may appoint 
     candidates to any position described in paragraph (1)--

[[Page S6740]]

       ``(A) in accordance with the statutes, rules, and 
     regulations governing appointments in the excepted service; 
     and
       ``(B) notwithstanding any statutes, rules, and regulations 
     governing appointments in the competitive service.''.
       (c) Amendments to Inspector General Act.--Section 11 of the 
     Inspector General Act of 1978 (5 U.S.C. App.) is amended--
       (1) in paragraph (1), by inserting ``; the Director of the 
     Federal Housing Finance Agency'' after ``Social Security 
     Administration''; and
       (2) in paragraph (2), by inserting ``, the Federal Housing 
     Finance Agency'' after ``Social Security Administration''.
       (d) Authority To Contract for Reviews of Regulated 
     Entities.--Section 1319 of the Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 (12 U.S.C. 4519) 
     is amended--
       (1) in the section heading, by striking ``ENTERPRISES BY 
     RATING ORGANIZATION'' and inserting ``REGULATED ENTITIES''; 
     and
       (2) by striking ``enterprises'' and inserting ``regulated 
     entities''.
       (e) Office of the Ombudsman.--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:
       ``(i) Ombudsman.--The Director shall establish, by 
     regulation, an Office of the Ombudsman within the Agency, 
     which shall be responsible for considering complaints and 
     appeals, from any regulated entity and any person that has a 
     business relationship with a regulated entity, regarding any 
     matter relating to the regulation and supervision of such 
     regulated entity by the Agency. The regulation issued by the 
     Director under this subsection shall specify the authority 
     and duties of the Office of the Ombudsman.''.

     SEC. 1106. ASSESSMENTS.

       Section 1316 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4516) is 
     amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) Annual Assessments.--The Director shall establish and 
     collect from the regulated entities annual assessments in an 
     amount not exceeding the amount sufficient to provide for 
     reasonable costs (including administrative costs) and 
     expenses of the Agency, including--
       ``(1) the expenses of any examinations under section 1317 
     of this Act and under section 20 of the Federal Home Loan 
     Bank Act;
       ``(2) the expenses of obtaining any reviews and credit 
     assessments under section 1319;
       ``(3) such amounts in excess of actual expenses for any 
     given year as deemed necessary by the Director to maintain a 
     working capital fund in accordance with subsection (e); and
       ``(4) the windup of the affairs of the Office of Federal 
     Housing Enterprise Oversight and the Federal Housing Finance 
     Board under title III of the Federal Housing Finance 
     Regulatory Reform Act of 2008.'';
       (2) in subsection (b)--
       (A) by realigning the margins of paragraph (2) two ems from 
     the left, so as to align the left margin of such paragraph 
     with the left margins of paragraph (1);
       (B) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively; and
       (C) by inserting after paragraph (1) the following:
       ``(2) Separate treatment of federal home loan bank and 
     enterprise assessments.--Assessments collected from the 
     enterprises shall not exceed the amounts sufficient to 
     provide for the costs and expenses described in subsection 
     (a) relating to the enterprises. Assessments collected from 
     the Federal Home Loan Banks shall not exceed the amounts 
     sufficient to provide for the costs and expenses described in 
     subsection (a) relating to the Federal Home Loan Banks.'';
       (3) by striking subsection (c) and inserting the following:
       ``(c) Increased Costs of Regulation.--
       ``(1) Increase for inadequate capitalization.--The 
     semiannual payments made pursuant to subsection (b) by any 
     regulated entity that is not classified (for purposes of 
     subtitle B) as adequately capitalized may be increased, as 
     necessary, in the discretion of the Director to pay 
     additional estimated costs of regulation of the regulated 
     entity.
       ``(2) Adjustment for enforcement activities.--The Director 
     may adjust the amounts of any semiannual payments for an 
     assessment under subsection (a) that are to be paid pursuant 
     to subsection (b) by a regulated entity, as necessary in the 
     discretion of the Director, to ensure that the costs of 
     enforcement activities under this Act for a regulated entity 
     are borne only by such regulated entity.
       ``(3) Additional assessment for deficiencies.--If at any 
     time, as a result of increased costs of regulation of a 
     regulated entity that is not classified (for purposes of 
     subtitle B) as adequately capitalized or as the result of 
     supervisory or enforcement activities under this Act for a 
     regulated entity, the amount available from any semiannual 
     payment made by such regulated entity pursuant to subsection 
     (b) is insufficient to cover the costs of the Agency with 
     respect to such entity, the Director may make and collect 
     from such regulated entity an immediate assessment to cover 
     the amount of such deficiency for the semiannual period. If, 
     at the end of any semiannual period during which such an 
     assessment is made, any amount remains from such assessment, 
     such remaining amount shall be deducted from the assessment 
     for such regulated entity for the following semiannual 
     period.'';
       (4) in subsection (d), by striking ``If'' and inserting 
     ``Except with respect to amounts collected pursuant to 
     subsection (a)(3), if''; and
       (5) by striking subsections (e) through (g) and inserting 
     the following:
       ``(e) Working Capital Fund.--At the end of each year for 
     which an assessment under this section is made, the Director 
     shall remit to each regulated entity any amount of assessment 
     collected from such regulated entity that is attributable to 
     subsection (a)(3) and is in excess of the amount the Director 
     deems necessary to maintain a working capital fund.
       ``(f) Treatment of Assessments.--
       ``(1) Deposit.--Amounts received by the Director from 
     assessments under this section may be deposited by the 
     Director in the manner provided in section 5234 of the 
     Revised Statutes of the United States (12 U.S.C. 192) for 
     monies deposited by the Comptroller of the Currency.
       ``(2) Not government funds.--The amounts received by the 
     Director from any assessment under this section shall not be 
     construed to be Government or public funds or appropriated 
     money.
       ``(3) No apportionment of funds.--Notwithstanding any other 
     provision of law, the amounts received by the Director from 
     any assessment 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.
       ``(4) Use of funds.--The Director may use any amounts 
     received by the Director from assessments under this section 
     for compensation of the Director and other employees of the 
     Agency and for all other expenses of the Director and the 
     Agency.
       ``(5) Availability of oversight fund amounts.--
     Notwithstanding any other provision of law, any amounts 
     remaining in the Federal Housing Enterprises Oversight Fund 
     established under this section (as in effect before the 
     effective date of the Federal Housing Finance Regulatory 
     Reform Act of 2008, and any amounts remaining from 
     assessments on the Federal Home Loan Banks pursuant to 
     section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 
     1438(b)), shall, upon such effective date, be treated for 
     purposes of this subsection as amounts received from 
     assessments under this section.
       ``(6) Treasury investments.--
       ``(A) Authority.--The Director may request the Secretary of 
     the Treasury to invest such portions of amounts received by 
     the Director from assessments paid under this section that, 
     in the Director's discretion, are not required to meet the 
     current working needs of the Agency.
       ``(B) Government obligations.--Pursuant to a request under 
     subparagraph (A), the Secretary of the Treasury shall invest 
     such amounts in Government obligations guaranteed as to 
     principal and interest by the United States with maturities 
     suitable to the needs of the Agency and bearing interest at a 
     rate determined by the Secretary of the Treasury taking into 
     consideration current market yields on outstanding marketable 
     obligations of the United States of comparable maturity.
       ``(g) Budget and Financial Management.--
       ``(1) Financial operating plans and forecasts.--The 
     Director shall provide to the Director of the Office of 
     Management and Budget copies of the Director's financial 
     operating plans and forecasts, as prepared by the Director in 
     the ordinary course of the Agency's operations, and copies of 
     the quarterly reports of the Agency's financial condition and 
     results of operations, as prepared by the Director in the 
     ordinary course of the Agency's operations.
       ``(2) Financial statements.--The Agency shall prepare 
     annually a statement of--
       ``(A) assets and liabilities and surplus or deficit;
       ``(B) income and expenses; and
       ``(C) sources and application of funds.
       ``(3) Financial management systems.--The Agency shall 
     implement and maintain financial management systems that--
       ``(A) comply substantially with Federal financial 
     management systems requirements and applicable Federal 
     accounting standards; and
       ``(B) use a general ledger system that accounts for 
     activity at the transaction level.
       ``(4) Assertion of internal controls.--The Director shall 
     provide to the Comptroller General of the United States an 
     assertion as to the effectiveness of the internal controls 
     that apply to financial reporting by the Agency, using the 
     standards established in section 3512(c) of title 31, United 
     States Code.
       ``(5) Rule of construction.--This subsection may not be 
     construed as implying any obligation on the part of the 
     Director to consult with or obtain the consent or approval of 
     the Director of the Office of Management and Budget with 
     respect to any report, plan, forecast, or other information 
     referred to in paragraph (1) or any jurisdiction or oversight 
     over the affairs or operations of the Agency.
       ``(h) Audit of Agency.--
       ``(1) In general.--The Comptroller General shall annually 
     audit the financial transactions of the Agency in accordance 
     with the United States generally accepted government auditing 
     standards as may be prescribed by the Comptroller General of 
     the United States. The audit shall be conducted at the place 
     or places where accounts of the Agency are normally kept. The 
     representatives of the Government Accountability Office shall 
     have access to the personnel and to all books, accounts, 
     documents, papers, records (including electronic records), 
     reports, files, and all other papers, automated data, things, 
     or property belonging to or under the control of or used or 
     employed by the Agency pertaining to its financial 
     transactions and necessary to facilitate the audit, and such 
     representatives shall be afforded full facilities for 
     verifying transactions with the balances or securities held 
     by depositories, fiscal agents, and custodians. All such 
     books, accounts, documents, records, reports, files, papers, 
     and property of the Agency shall remain in possession and 
     custody of the Agency. The Comptroller General may obtain and 
     duplicate any such books, accounts, documents, records, 
     working

[[Page S6741]]

     papers, automated data and files, or other information 
     relevant to such audit without cost to the Comptroller 
     General and the Comptroller General's right of access to such 
     information shall be enforceable pursuant to section 716(c) 
     of title 31, United States Code.
       ``(2) Report.--The Comptroller General shall submit to the 
     Congress a report of each annual audit conducted under this 
     subsection. The report to the Congress shall set forth the 
     scope of the audit and shall include the statement of assets 
     and liabilities and surplus or deficit, the statement of 
     income and expenses, the statement of sources and application 
     of funds, and such comments and information as may be deemed 
     necessary to inform Congress of the financial operations and 
     condition of the Agency, together with such recommendations 
     with respect thereto as the Comptroller General may deem 
     advisable. A copy of each report shall be furnished to the 
     President and to the Agency at the time submitted to the 
     Congress.
       ``(3) Assistance and costs.--For the purpose of conducting 
     an audit under this subsection, the Comptroller General may, 
     in the discretion of the Comptroller General, employ by 
     contract, without regard to section 3709 of the Revised 
     Statutes of the United States (41 U.S.C. 5), professional 
     services of firms and organizations of certified public 
     accountants for temporary periods or for special purposes. 
     Upon the request of the Comptroller General, the Director of 
     the Agency shall transfer to the Government Accountability 
     Office from funds available, the amount requested by the 
     Comptroller General to cover the full costs of any audit and 
     report conducted by the Comptroller General. The Comptroller 
     General shall credit funds transferred to the account 
     established for salaries and expenses of the Government 
     Accountability Office, and such amount shall be available 
     upon receipt and without fiscal year limitation to cover the 
     full costs of the audit and report.''.

     SEC. 1107. REGULATIONS AND ORDERS.

       Section 1319G of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4526) is 
     amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) Authority.--The Director shall issue any regulations, 
     guidelines, or orders necessary to carry out the duties of 
     the Director under this title or the authorizing statutes, 
     and to ensure that the purposes of this title and the 
     authorizing statutes are accomplished.''; and
       (2) by striking subsection (c).

     SEC. 1108. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.

       The Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by 
     inserting after section 1313A, as added by this Act, the 
     following new section:

     ``SEC. 1313B. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.

       ``(a) Standards.--The Director shall establish standards, 
     by regulation or guideline, for each regulated entity 
     relating to--
       ``(1) adequacy of internal controls and information systems 
     taking into account the nature and scale of business 
     operations;
       ``(2) independence and adequacy of internal audit systems;
       ``(3) management of interest rate risk exposure;
       ``(4) management of market risk, including standards that 
     provide for systems that accurately measure, monitor, and 
     control market risks and, as warranted, that establish 
     limitations on market risk;
       ``(5) adequacy and maintenance of liquidity and reserves;
       ``(6) management of asset and investment portfolio growth;
       ``(7) investments and acquisitions of assets by a regulated 
     entity, to ensure that they are consistent with the purposes 
     of this title and the authorizing statutes;
       ``(8) overall risk management processes, including adequacy 
     of oversight by senior management and the board of directors 
     and of processes and policies to identify, measure, monitor, 
     and control material risks, including reputational risks, and 
     for adequate, well-tested business resumption plans for all 
     major systems with remote site facilities to protect against 
     disruptive events;
       ``(9) management of credit and counterparty risk, including 
     systems to identify concentrations of credit risk and 
     prudential limits to restrict exposure of the regulated 
     entity to a single counterparty or groups of related 
     counterparties;
       ``(10) maintenance of adequate records, in accordance with 
     consistent accounting policies and practices that enable the 
     Director to evaluate the financial condition of the regulated 
     entity; and
       ``(11) such other operational and management standards as 
     the Director determines to be appropriate.
       ``(b) Failure To Meet Standards.--
       ``(1) Plan requirement.--
       ``(A) In general.--If the Director determines that a 
     regulated entity fails to meet any standard established under 
     subsection (a)--
       ``(i) if such standard is established by regulation, the 
     Director shall require the regulated entity to submit an 
     acceptable plan to the Director within the time allowed under 
     subparagraph (C); and
       ``(ii) if such standard is established by guideline, the 
     Director may require the regulated entity to submit a plan 
     described in clause (i).
       ``(B) Contents.--Any plan required under subparagraph (A) 
     shall specify the actions that the regulated entity will take 
     to correct the deficiency. If the regulated entity is 
     undercapitalized, the plan may be a part of the capital 
     restoration plan for the regulated entity under section 
     1369C.
       ``(C) Deadlines for submission and review.--The Director 
     shall by regulation establish deadlines that--
       ``(i) provide the regulated entities with reasonable time 
     to submit plans required under subparagraph (A), and 
     generally require a regulated entity to submit a plan not 
     later than 30 days after the Director determines that the 
     entity fails to meet any standard established under 
     subsection (a); and
       ``(ii) require the Director to act on plans expeditiously, 
     and generally not later than 30 days after the plan is 
     submitted.
       ``(2) Required order upon failure to submit or implement 
     plan.--If a regulated entity fails to submit an acceptable 
     plan within the time allowed under paragraph (1)(C), or fails 
     in any material respect to implement a plan accepted by the 
     Director, the following shall apply:
       ``(A) Required correction of deficiency.--The Director 
     shall, by order, require the regulated entity to correct the 
     deficiency.
       ``(B) Other authority.--The Director may, by order, take 
     one or more of the following actions until the deficiency is 
     corrected:
       ``(i) Prohibit the regulated entity from permitting its 
     average total assets (as such term is defined in section 
     1316(b)) during any calendar quarter to exceed its average 
     total assets during the preceding calendar quarter, or 
     restrict the rate at which the average total assets of the 
     entity may increase from one calendar quarter to another.
       ``(ii) Require the regulated entity--

       ``(I) in the case of an enterprise, to increase its ratio 
     of core capital to assets.
       ``(II) in the case of a Federal Home Loan Bank, to increase 
     its ratio of total capital (as such term is defined in 
     section 6(a)(5) of the Federal Home Loan Bank Act (12 U.S.C. 
     1426(a)(5)) to assets.

       ``(iii) Require the regulated entity to take any other 
     action that the Director determines will better carry out the 
     purposes of this section than any of the actions described in 
     this subparagraph.
       ``(3) Mandatory restrictions.--In complying with paragraph 
     (2), the Director shall take one or more of the actions 
     described in clauses (i) through (iii) of paragraph (2)(B) 
     if--
       ``(A) the Director determines that the regulated entity 
     fails to meet any standard prescribed under subsection (a);
       ``(B) the regulated entity has not corrected the 
     deficiency; and
       ``(C) during the 18-month period before the date on which 
     the regulated entity first failed to meet the standard, the 
     entity underwent extraordinary growth, as defined by the 
     Director.
       ``(c) Other Enforcement Authority Not Affected.--The 
     authority of the Director under this section is in addition 
     to any other authority of the Director.''.

     SEC. 1109. REVIEW OF AND AUTHORITY OVER ENTERPRISE ASSETS AND 
                   LIABILITIES.

       (a) In General.--Subtitle B of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4611 et seq.) is amended--
       (1) by striking the subtitle designation and heading and 
     inserting the following:

 ``Subtitle B--Required Capital Levels for Regulated Entities, Special 
      Enforcement Powers, and Reviews of Assets and Liabilities'';

     and
       (2) by adding at the end the following new section:

     ``SEC. 1369E. REVIEWS OF ENTERPRISE ASSETS AND LIABILITIES.

       ``(a) In General.--The Director shall, by regulation, 
     establish criteria governing the portfolio holdings of the 
     enterprises, to ensure that the holdings are backed by 
     sufficient capital and consistent with the mission and the 
     safe and sound operations of the enterprises. In establishing 
     such criteria, the Director shall consider the ability of the 
     enterprises to provide a liquid secondary market through 
     securitization activities, the portfolio holdings in relation 
     to the overall mortgage market, and adherence to the 
     standards specified in section 1313B.
       ``(b) Temporary Adjustments.--The Director may, by order, 
     make temporary adjustments to the established standards for 
     an enterprise or both enterprises, such as during times of 
     economic distress or market disruption.
       ``(c) Authority To Require Disposition or Acquisition.--The 
     Director shall monitor the portfolio of each enterprise. 
     Pursuant to subsection (a) and notwithstanding the capital 
     classifications of the enterprises, the Director may, by 
     order, require an enterprise, under such terms and conditions 
     as the Director determines to be appropriate, to dispose of 
     or acquire any asset, if the Director determines that such 
     action is consistent with the purposes of this Act or any of 
     the authorizing statutes.''.
       (b) Regulations.--Not later than the expiration of the 180-
     day period beginning on the effective date of this Act, the 
     Director shall issue regulations pursuant to section 1369E(a) 
     of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (as added by subsection (a) of this 
     section) establishing the portfolio holdings standards under 
     such section.

     SEC. 1110. RISK-BASED CAPITAL REQUIREMENTS.

       (a) In General.--Section 1361 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4611) is amended to read as follows:

     ``SEC. 1361. RISK-BASED CAPITAL LEVELS FOR REGULATED 
                   ENTITIES.

       ``(a) In General.--
       ``(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.
       ``(2) Federal home loan banks.--The Director shall 
     establish risk-based capital standards under section 6 of the 
     Federal Home Loan Bank Act for the Federal Home Loan Banks.

[[Page S6742]]

       ``(b) No Limitation.--Nothing in this section shall limit 
     the authority of the Director to require other reports or 
     undertakings, or take other action, in furtherance of the 
     responsibilities of the Director under this Act.''.
       (b) Federal Home Loan Banks Risk-Based Capital.--Section 
     6(a)(3) of the Federal Home Loan Bank Act (12 U.S.C. 
     1426(a)(3)) is amended--
       (1) by striking subparagraph (A) and inserting the 
     following:
       ``(A) Risk-based capital standards.--The Director shall, by 
     regulation, establish risk-based capital standards for the 
     Federal Home Loan Banks to ensure that the Federal Home Loan 
     Banks operate in a safe and sound manner, with sufficient 
     permanent capital and reserves to support the risks that 
     arise in the operations and management of the Federal Home 
     Loans Banks.''; and
       (2) in subparagraph (B), by striking ``(A)(ii)'' and 
     inserting ``(A)''.

     SEC. 1111. MINIMUM CAPITAL LEVELS.

       Section 1362 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4612) is 
     amended--
       (1) in subsection (a), by striking ``In General'' and 
     inserting ``Enterprises''; and
       (2) by striking subsection (b) and inserting the following:
       ``(b) Federal Home Loan Banks.--For purposes of this 
     subtitle, the minimum capital level for each Federal Home 
     Loan Bank shall be the minimum capital required to be 
     maintained to comply with the leverage requirement for the 
     bank established under section 6(a)(2) of the Federal Home 
     Loan Bank Act (12 U.S.C. 1426(a)(2)).
       ``(c) Establishment of Revised Minimum Capital Levels.--
     Notwithstanding subsections (a) and (b) and notwithstanding 
     the capital classifications of the regulated entities, the 
     Director may, by regulations issued under section 1319G, 
     establish a minimum capital level for the enterprises, for 
     the Federal Home Loan Banks, or for both the enterprises and 
     the banks, that is higher than the level specified in 
     subsection (a) for the enterprises or the level specified in 
     subsection (b) for the Federal Home Loan Banks, to the extent 
     needed to ensure that the regulated entities operate in a 
     safe and sound manner.
       ``(d) Authority To Require Temporary Increase.--
       ``(1) In general.--Notwithstanding subsections (a) and (b) 
     and any minimum capital level established pursuant to 
     subsection (c), the Director may, by order, increase the 
     minimum capital level for a regulated entity on a temporary 
     basis, when the Director determines that such an increase is 
     necessary and consistent with the prudential regulation and 
     the safe and sound operations of a regulated entity.
       ``(2) Rescission.--The Director shall rescind any temporary 
     minimum capital level established under paragraph (1) when 
     the Director determines that the circumstances or facts no 
     longer justify the temporary minimum capital level.
       ``(3) Regulations required.--The Director shall issue 
     regulations establishing--
       ``(A) standards for the imposition of a temporary increase 
     in minimum capital under paragraph (1);
       ``(B) the standards and procedures that the Director will 
     use to make the determination referred to in paragraph (2); 
     and
       ``(C) a reasonable time frame for periodic review of any 
     temporary increase in minimum capital for the purpose of 
     making the determination referred to in paragraph (2).
       ``(e) Authority To Establish Additional Capital and Reserve 
     Requirements for Particular Purposes.--The Director may, at 
     any time by order or regulation, establish such capital or 
     reserve requirements with respect to any product or activity 
     of a regulated entity, as the Director considers appropriate 
     to ensure that the regulated entity operates in a safe and 
     sound manner, with sufficient capital and reserves to support 
     the risks that arise in the operations and management of the 
     regulated entity.
       ``(f) Periodic Review.--The Director shall periodically 
     review the amount of core capital maintained by the 
     enterprises, the amount of capital retained by the Federal 
     Home Loan Banks, and the minimum capital levels established 
     for such regulated entities pursuant to this section.''.

     SEC. 1112. REGISTRATION UNDER THE SECURITIES LAWS.

       The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
     is amended by adding at the end the following:

     ``SEC. 38. FEDERAL NATIONAL MORTGAGE ASSOCIATION, FEDERAL 
                   HOME LOAN MORTGAGE CORPORATION, FEDERAL HOME 
                   LOAN BANKS.

       ``(a) Federal National Mortgage Association and Federal 
     Home Loan Mortgage Corporation.--No class of equity 
     securities of the Federal National Mortgage Association or 
     the Federal Home Loan Mortgage Corporation shall be treated 
     as an exempted security for purposes of section 12, 13, 14, 
     or 16.
       ``(b) Federal Home Loan Banks.--
       ``(1) Registration.--Each Federal Home Loan Bank shall 
     register a class of its common stock under section 12(g), not 
     later than 120 days after the date of enactment of the 
     Federal Housing Finance Regulatory Reform Act of 2008, and 
     shall thereafter maintain such registration and be treated 
     for purposes of this title as an `issuer', the securities of 
     which are required to be registered under section 12, 
     regardless of the number of members holding such stock at any 
     given time.
       ``(2) Standards relating to audit committees.--Each Federal 
     Home Loan Bank shall comply with the rules issued by the 
     Commission under section 10A(m).
       ``(c) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Federal home loan bank; member.--The terms `Federal 
     Home Loan Bank' and `member', have the same meanings as in 
     section 2 of the Federal Home Loan Bank Act.
       ``(2) Federal national mortgage association.--The term 
     `Federal National Mortgage Association' means the corporation 
     created by the Federal National Mortgage Association Charter 
     Act.
       ``(3) Federal home loan mortgage corporation.--The term 
     `Federal Home Loan Mortgage Corporation' means the 
     corporation created by the Federal Home Loan Mortgage 
     Corporation Act.''.

     SEC. 1113. PROHIBITION AND WITHHOLDING OF EXECUTIVE 
                   COMPENSATION.

       (a) In General.--Section 1318 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4518) is amended--
       (1) in the section heading, by striking ``OF EXCESSIVE'' 
     and inserting ``AND WITHHOLDING OF EXECUTIVE'';
       (2) by redesignating subsection (b) as subsection (d); and
       (3) by inserting after subsection (a) the following:
       ``(b) Factors.--In making any determination under 
     subsection (a), the Director may take into consideration any 
     factors the Director considers relevant, including any 
     wrongdoing on the part of the executive officer, and such 
     wrongdoing shall include any fraudulent act or omission, 
     breach of trust or fiduciary duty, violation of law, rule, 
     regulation, order, or written agreement, and insider abuse 
     with respect to the regulated entity. The approval of an 
     agreement or contract pursuant to section 309(d)(3)(B) of the 
     Federal National Mortgage Association Charter Act (12 U.S.C. 
     1723a(d)(3)(B)) or section 303(h)(2) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1452(h)(2)) shall not 
     preclude the Director from making any subsequent 
     determination under subsection (a).
       ``(c) Withholding of Compensation.--In carrying out 
     subsection (a), the Director may require a regulated entity 
     to withhold any payment, transfer, or disbursement of 
     compensation to an executive officer, or to place such 
     compensation in an escrow account, during the review of the 
     reasonableness and comparability of compensation.''.
       (b) Conforming Amendments.--
       (1) Fannie mae.--Section 309(d) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1723a(d)) is 
     amended by adding at the end the following new paragraph:
       ``(4) Notwithstanding any other provision of this section, 
     the corporation shall not transfer, disburse, or pay 
     compensation to any executive officer, or enter into an 
     agreement with such executive officer, without the approval 
     of the Director, for matters being reviewed under section 
     1318 of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4518).''.
       (2) Freddie mac.--Section 303(h) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1452(h)) is amended by 
     adding at the end the following new paragraph:
       ``(4) Notwithstanding any other provision of this section, 
     the Corporation shall not transfer, disburse, or pay 
     compensation to any executive officer, or enter into an 
     agreement with such executive officer, without the approval 
     of the Director, for matters being reviewed under section 
     1318 of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4518).''.
       (3) Federal home loan banks.--Section 7 of the Federal Home 
     Loan Bank Act (12 U.S.C. 1427) is amended by adding at the 
     end the following new subsection:
       ``(l) Withholding of Compensation.--Notwithstanding any 
     other provision of this section, a Federal Home Loan Bank 
     shall not transfer, disburse, or pay compensation to any 
     executive officer, or enter into an agreement with such 
     executive officer, without the approval of the Director, for 
     matters being reviewed under section 1318 of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (12 U.S.C. 4518).''.

     SEC. 1114. LIMIT ON GOLDEN PARACHUTES.

       Section 1318 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4518) is amended 
     by adding at the end the following:
       ``(e) Authority To Regulate or Prohibit Certain Forms of 
     Benefits to Affiliated Parties.--
       ``(1) Golden parachutes and indemnification payments.--The 
     Director may prohibit or limit, by regulation or order, any 
     golden parachute payment or indemnification payment.
       ``(2) Factors to be taken into account.--The Director shall 
     prescribe, by regulation, the factors to be considered by the 
     Director in taking any action pursuant to paragraph (1), 
     which may include such factors as--
       ``(A) whether there is a reasonable basis to believe that 
     the affiliated party has committed any fraudulent act or 
     omission, breach of trust or fiduciary duty, or insider abuse 
     with regard to the regulated entity that has had a material 
     effect on the financial condition of the regulated entity;
       ``(B) whether there is a reasonable basis to believe that 
     the affiliated party is substantially responsible for the 
     insolvency of the regulated entity, the appointment of a 
     conservator or receiver for the regulated entity, or the 
     troubled condition of the regulated entity (as defined in 
     regulations prescribed by the Director);
       ``(C) whether there is a reasonable basis to believe that 
     the affiliated party has materially violated any applicable 
     provision of Federal or State law or regulation that has had 
     a material effect on the financial condition of the regulated 
     entity;
       ``(D) whether the affiliated party was in a position of 
     managerial or fiduciary responsibility; and

[[Page S6743]]

       ``(E) the length of time that the party was affiliated with 
     the regulated entity, and the degree to which--
       ``(i) the payment reasonably reflects compensation earned 
     over the period of employment; and
       ``(ii) the compensation involved represents a reasonable 
     payment for services rendered.
       ``(3) Certain payments prohibited.--No regulated entity may 
     prepay the salary or any liability or legal expense of any 
     affiliated party if such payment is made--
       ``(A) in contemplation of the insolvency of such regulated 
     entity, or after the commission of an act of insolvency; and
       ``(B) with a view to, or having the result of--
       ``(i) preventing the proper application of the assets of 
     the regulated entity to creditors; or
       ``(ii) preferring one creditor over another.
       ``(4) Golden parachute payment defined.--
       ``(A) In general.--For purposes of this subsection, the 
     term `golden parachute payment' means any payment (or any 
     agreement to make any payment) in the nature of compensation 
     by any regulated entity for the benefit of any affiliated 
     party pursuant to an obligation of such regulated entity 
     that--
       ``(i) is contingent on the termination of such party's 
     affiliation with the regulated entity; and
       ``(ii) is received on or after the date on which--

       ``(I) the regulated entity became insolvent;
       ``(II) any conservator or receiver is appointed for such 
     regulated entity; or
       ``(III) the Director determines that the regulated entity 
     is in a troubled condition (as defined in the regulations of 
     the Director).

       ``(B) Certain payments in contemplation of an event.--Any 
     payment which would be a golden parachute payment but for the 
     fact that such payment was made before the date referred to 
     in subparagraph (A)(ii) shall be treated as a golden 
     parachute payment if the payment was made in contemplation of 
     the occurrence of an event described in any subclause of such 
     subparagraph.
       ``(C) Certain payments not included.--For purposes of this 
     subsection, the term `golden parachute payment' shall not 
     include--
       ``(i) any payment made pursuant to a retirement plan which 
     is qualified (or is intended to be qualified) under section 
     401 of the Internal Revenue Code of 1986, or other 
     nondiscriminatory benefit plan;
       ``(ii) any payment made pursuant to a bona fide deferred 
     compensation plan or arrangement which the Director 
     determines, by regulation or order, to be permissible; or
       ``(iii) any payment made by reason of the death or 
     disability of an affiliated party.
       ``(5) Other definitions.--For purposes of this subsection, 
     the following definitions shall apply:
       ``(A) Indemnification payment.--Subject to paragraph (6), 
     the term `indemnification payment' means any payment (or any 
     agreement to make any payment) by any regulated entity for 
     the benefit of any person who is or was an affiliated party, 
     to pay or reimburse such person for any liability or legal 
     expense with regard to any administrative proceeding or civil 
     action instituted by the Agency which results in a final 
     order under which such person--
       ``(i) is assessed a civil money penalty;
       ``(ii) is removed or prohibited from participating in 
     conduct of the affairs of the regulated entity; or
       ``(iii) is required to take any affirmative action to 
     correct certain conditions resulting from violations or 
     practices, by order of the Director.
       ``(B) Liability or legal expense.--The term `liability or 
     legal expense' means--
       ``(i) any legal or other professional expense incurred in 
     connection with any claim, proceeding, or action;
       ``(ii) the amount of, and any cost incurred in connection 
     with, any settlement of any claim, proceeding, or action; and
       ``(iii) the amount of, and any cost incurred in connection 
     with, any judgment or penalty imposed with respect to any 
     claim, proceeding, or action.
       ``(C) Payment.--The term `payment' includes--
       ``(i) any direct or indirect transfer of any funds or any 
     asset; and
       ``(ii) any segregation of any funds or assets for the 
     purpose of making, or pursuant to an agreement to make, any 
     payment after the date on which such funds or assets are 
     segregated, without regard to whether the obligation to make 
     such payment is contingent on--

       ``(I) the determination, after such date, of the liability 
     for the payment of such amount; or
       ``(II) the liquidation, after such date, of the amount of 
     such payment.

       ``(6) Certain commercial insurance coverage not treated as 
     covered benefit payment.--No provision of this subsection 
     shall be construed as prohibiting any regulated entity from 
     purchasing any commercial insurance policy or fidelity bond, 
     except that, subject to any requirement described in 
     paragraph (5)(A)(iii), such insurance policy or bond shall 
     not cover any legal or liability expense of the regulated 
     entity which is described in paragraph (5)(A).''.

     SEC. 1115. REPORTING OF FRAUDULENT LOANS.

       Part 1 of subtitle C of the Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 (12 U.S.C. 4631 et 
     seq.), as amended by this Act, is amended by adding at the 
     end the following:

     ``SEC. 1379E. REPORTING OF FRAUDULENT LOANS.

       ``(a) Requirement to Report.--The Director shall require a 
     regulated entity to submit to the Director a timely report 
     upon discovery by the regulated entity that it has purchased 
     or sold a fraudulent loan or financial instrument, or 
     suspects a possible fraud relating to the purchase or sale of 
     any loan or financial instrument. The Director shall require 
     each regulated entity to establish and maintain procedures 
     designed to discover any such transactions.
       ``(b) Protection From Liability for Reports.--Any regulated 
     entity that, in good faith, makes a report pursuant to 
     subsection (a), and any entity-affiliated party, that, in 
     good faith, makes or requires another to make any such 
     report, shall not be liable to any person under any provision 
     of law or regulation, any constitution, law, or regulation of 
     any State or political subdivision of any State, or under any 
     contract or other legally enforceable agreement (including 
     any arbitration agreement) for such report or for any failure 
     to provide notice of such report to the person who is the 
     subject of such report or any other persons identified in the 
     report.''.

             Subtitle B--Improvement of Mission Supervision

     SEC. 1121. TRANSFER OF PROGRAM APPROVAL AND HOUSING GOAL 
                   OVERSIGHT.

       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--
       (1) by striking the heading for the part and inserting the 
     following:

          ``PART 2--ADDITIONAL AUTHORITIES OF THE DIRECTOR'';

       and
       (2) by striking sections 1321 and 1322.

     SEC. 1122. ASSUMPTION BY THE DIRECTOR OF CERTAIN OTHER HUD 
                   RESPONSIBILITIES.

       (a) In General.--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--
       (1) by striking ``Secretary'' each place that term appears 
     and inserting ``Director'' in each of sections 1323, 1326, 
     1327, 1328, and 1336; and
       (2) by striking sections 1338 and 1349 (12 U.S.C. 4562 note 
     and 4589).
       (b) Retention of Fair Housing Responsibilities.--Section 
     1325 of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4545) is amended in the 
     matter preceding paragraph (1), by inserting ``of Housing and 
     Urban Development'' after ``The Secretary''.

     SEC. 1123. REVIEW OF ENTERPRISE PRODUCTS.

       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 inserting before section 1323 the 
     following:

     ``SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS.

       ``(a) In General.--The Director shall require each 
     enterprise to obtain the approval of the Director for any 
     product of the enterprise before initially offering the 
     product.
       ``(b) Standard for Approval.--In considering any request 
     for approval of a product pursuant to subsection (a), the 
     Director shall make a determination that--
       ``(1) in the case of a product of the Federal National 
     Mortgage Association, the product is authorized under 
     paragraph (2), (3), (4), or (5) of section 302(b) or section 
     304 of the Federal National Mortgage Association Charter Act 
     (12 U.S.C. 1717(b), 1719);
       ``(2) in the case of a product of the Federal Home Loan 
     Mortgage Corporation, the product is authorized under 
     paragraph (1), (4), or (5) of section 305(a) of the Federal 
     Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a));
       ``(3) the product is in the public interest; and
       ``(4) the product is consistent with the safety and 
     soundness of the enterprise or the mortgage finance system.
       ``(c) Procedure for Approval.--
       ``(1) Submission of request.--An enterprise shall submit to 
     the Director a written request for approval of a product that 
     describes the product in such form as prescribed by order or 
     regulation of the Director.
       ``(2) Request for public comment.--Immediately upon receipt 
     of a request for approval of a product, as required under 
     paragraph (1), the Director shall publish notice of such 
     request and of the period for public comment pursuant to 
     paragraph (3) regarding the product, and a description of the 
     product proposed by the request. The Director shall give 
     interested parties the opportunity to respond in writing to 
     the proposed product.
       ``(3) Public comment period.--During the 30-day period 
     beginning on the date of publication pursuant to paragraph 
     (2) of a request for approval of a product, the Director 
     shall receive public comments regarding the proposed product.
       ``(4) Offering of product.--
       ``(A) In general.--Not later than 30 days after the close 
     of the public comment period described in paragraph (3), the 
     Director shall approve or deny the product, specifying the 
     grounds for such decision in writing.
       ``(B) Failure to act.--If the Director fails to act within 
     the 30-day period described in subparagraph (A), then the 
     enterprise may offer the product.
       ``(C) Temporary approval.--The Director may, subject to the 
     rules of the Director, provide for temporary approval of the 
     offering of a product without a public comment period, if the 
     Director finds that the existence of exigent circumstances 
     makes such delay contrary to the public interest.
       ``(d) Conditional Approval.--If the Director approves the 
     offering of any product by an enterprise, the Director may 
     establish terms, conditions, or limitations with respect to 
     such product with which the enterprise must comply in order 
     to offer such product.
       ``(e) Exclusions.--
       ``(1) In general.--The requirements of subsections (a) 
     through (d) do not apply with respect to--
       ``(A) the automated loan underwriting system of an 
     enterprise in existence as of the date of

[[Page S6744]]

     enactment of the Federal Housing Finance Regulatory Reform 
     Act of 2008, including any upgrade to the technology, 
     operating system, or software to operate the underwriting 
     system;
       ``(B) any modification to the mortgage terms and conditions 
     or mortgage underwriting criteria relating to the mortgages 
     that are purchased or guaranteed by an enterprise, provided 
     that such modifications do not alter the underlying 
     transaction so as to include services or financing, other 
     than residential mortgage financing; or
       ``(C) any other activity that is substantially similar, as 
     determined by rule of the Director to--
       ``(i) the activities described in subparagraphs (A) and 
     (B); and
       ``(ii) other activities that have been approved by the 
     Director in accordance with this section.
       ``(2) Expedited review.--
       ``(A) Enterprise notice.--For any new activity that an 
     enterprise considers not to be a product, the enterprise 
     shall provide written notice to the Director of such 
     activity, and may not commence such activity until the date 
     of receipt of a notice under subparagraph (B) or the 
     expiration of the period described in subparagraph (C). The 
     Director shall establish, by regulation, the form and content 
     of such written notice.
       ``(B) Director determination.--Not later than 15 days after 
     the date of receipt of a notice under subparagraph (A), the 
     Director shall determine whether such activity is a product 
     subject to approval under this section. The Director shall, 
     immediately upon so determining, notify the enterprise.
       ``(C) Failure to act.--If the Director fails to determine 
     whether such activity is a product within the 15-day period 
     described in subparagraph (B), the enterprise may commence 
     the new activity in accordance with subparagraph (A).
       ``(f) No Limitation.--Nothing in this section may be 
     construed to restrict--
       ``(1) the safety and soundness authority of the Director 
     over all new and existing products or activities; or
       ``(2) the authority of the Director to review all new and 
     existing products or activities to determine that such 
     products or activities are consistent with the statutory 
     mission of an enterprise.''.

     SEC. 1124. CONFORMING LOAN LIMITS.

       (a) Fannie Mae.--
       (1) General limit.--Section 302(b)(2) of the Federal 
     National Mortgage Association Charter Act (12 U.S.C. 
     1717(b)(2)) is amended by striking the 7th and 8th sentences 
     and inserting the following new sentences: ``Such limitations 
     shall not exceed $417,000 for a mortgage secured by a single-
     family residence, $533,850 for a mortgage secured by a 2-
     family residence, $645,300 for a mortgage secured by a 3-
     family residence, and $801,950 for a mortgage secured by a 4-
     family residence, except that such maximum limitations shall 
     be adjusted effective January 1 of each year beginning after 
     the effective date of Federal Housing Finance Regulatory 
     Reform Act of 2008, subject to the limitations in this 
     paragraph. Each adjustment shall be made by adding to each 
     such amount (as it may have been previously adjusted) a 
     percentage thereof equal to the percentage increase, during 
     the most recent 12-month or 4th-quarter period ending before 
     the time of determining such annual adjustment, in the 
     housing price index maintained by the Director of the Federal 
     Housing Finance Agency (pursuant to section 1322 of the 
     Federal Housing Enterprises Financial Safety and Soundness 
     Act of 1992 (12 U.S.C. 4541)). If the change in such house 
     price index during the most recent 12-month or 4th-quarter 
     period ending before the time of determining such annual 
     adjustment is a decrease, then no adjustment shall be made 
     for the next year, and the next adjustment shall take into 
     account prior declines in the house price index, so that any 
     adjustment shall reflect the net change in the house price 
     index since the last adjustment. Declines in the house price 
     index shall be accumulated and then reduce increases until 
     subsequent increases exceed prior declines.''.
       (2) High-cost area limit.--Section 302(b)(2) of the Federal 
     National Mortgage Association Charter Act (12 U.S.C. 
     1717(b)(2)) is amended by adding after the period at the end 
     the following: ``Such foregoing limitations shall also be 
     increased with respect to properties of a particular size 
     located in any area for which the median price for such size 
     residence exceeds the foregoing limitation for such size 
     residence, to the lesser of 150 percent of such foregoing 
     limitation for such size residence or the amount that is 
     equal to the median price in such area for such size 
     residence.''.
       (3) Effective date.--The amendments made by paragraphs (1) 
     and (2) of this subsection shall take effect upon the 
     expiration of the date described in section 201(a) of the 
     Economic Stimulus Act of 2008 (Public Law 110-185).
       (b) Freddie Mac.--
       (1) General limit.--Section 305(a)(2) of the Federal Home 
     Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) is 
     amended by striking the 6th and 7th sentences and inserting 
     the following new sentences: ``Such limitations shall not 
     exceed $417,000 for a mortgage secured by a single-family 
     residence, $533,850 for a mortgage secured by a 2-family 
     residence, $645,300 for a mortgage secured by a 3-family 
     residence, and $801,950 for a mortgage secured by a 4-family 
     residence, except that such maximum limitations shall be 
     adjusted effective January 1 of each year beginning after the 
     effective date of the Federal Housing Finance Regulatory 
     Reform Act of 2008, subject to the limitations in this 
     paragraph. Each adjustment shall be made by adding to each 
     such amount (as it may have been previously adjusted) a 
     percentage thereof equal to the percentage increase, during 
     the most recent 12-month or fourth-quarter period ending 
     before the time of determining such annual adjustment, in the 
     housing price index maintained by the Director of the Federal 
     Housing Finance Agency (pursuant to section 1322 of the 
     Federal Housing Enterprises Financial Safety and Soundness 
     Act of 1992 (12 U.S.C. 4541)). If the change in such house 
     price index during the most recent 12-month or 4th-quarter 
     period ending before the time of determining such annual 
     adjustment is a decrease, then no adjustment shall be made 
     for the next year, and the next adjustment shall take into 
     account prior declines in the house price index, so that any 
     adjustment shall reflect the net change in the house price 
     index since the last adjustment. Declines in the house price 
     index shall be accumulated and then reduce increases until 
     subsequent increases exceed prior declines.''.
       (2) High-cost area limit.--Section 305(a)(2) of the Federal 
     Home Loan Mortgage Corporation Act is amended by adding after 
     the period at the end the following: ``Such foregoing 
     limitations shall also be increased with respect to 
     properties of a particular size located in any area for which 
     the median price for such size residence exceeds the 
     foregoing limitation for such size residence, to the lesser 
     of 150 percent of such foregoing limitation for such size 
     residence or the amount that is equal to the median price in 
     such area for such size residence.''.
       (3) Effective date.--The amendments made by paragraphs (1) 
     and (2) of this subsection shall take effect upon the 
     expiration of the date described in section 201(a) of the 
     Economic Stimulus Act of 2008 (Public Law 110-185).
       (c) Sense of Congress.--It is the sense of the Congress 
     that the securitization of mortgages by the Federal National 
     Mortgage Association and the Federal Home Loan Mortgage 
     Corporation plays an important role in providing liquidity to 
     the United States housing markets. Therefore, the Congress 
     encourages the Federal National Mortgage Association and the 
     Federal Home Loan Mortgage Corporation to securitize 
     mortgages acquired under the increased conforming loan limits 
     established under this Act.
       (d) Housing Price Index.--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 inserting 
     after section 1321 (as added by section 1123 of this Act) the 
     following new section:

     ``SEC. 1322. HOUSING PRICE INDEX.

       ``The Director shall establish and maintain a method of 
     assessing the national average 1-family house price for use 
     for adjusting the conforming loan limitations of the 
     enterprises. In establishing such method, the Director shall 
     take into consideration the monthly survey of all major 
     lenders conducted by the Federal Housing Finance Agency to 
     determine the national average 1-family house price, the 
     House Price Index maintained by the Office of Federal Housing 
     Enterprise Oversight of the Department of Housing and Urban 
     Development before the effective date of the Federal Housing 
     Finance Regulatory Reform Act of 2008, any appropriate house 
     price indexes of the Bureau of the Census of the Department 
     of Commerce, and any other indexes or measures that the 
     Director considers appropriate.''.

     SEC. 1125. ANNUAL HOUSING REPORT.

       (a) Repeal.--Section 1324 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4544) is hereby repealed.
       (b) Annual Housing Report.--The Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 is amended by 
     inserting after section 1323 the following:

     ``SEC. 1324. ANNUAL HOUSING REPORT.

       ``(a) In General.--After reviewing and analyzing the 
     reports submitted under section 309(n) of the Federal 
     National Mortgage Association Charter Act and section 307(f) 
     of the Federal Home Loan Mortgage Corporation Act, the 
     Director shall submit a report, not later than October 30 of 
     each year, 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 activities of each 
     enterprise.
       ``(b) Contents.--The report required under subsection (a) 
     shall--
       ``(1) discuss--
       ``(A) the extent to and manner in which--
       ``(i) each enterprise is achieving the annual housing goals 
     established under subpart B;
       ``(ii) each enterprise is complying with its duty to serve 
     underserved markets, as established under section 1335;
       ``(iii) each enterprise is complying with section 1337;
       ``(iv) each enterprise received credit towards achieving 
     each of its goals resulting from a transaction or activity 
     pursuant to section 1331(b)(2); and
       ``(v) each enterprise is achieving the purposes of the 
     enterprise established by law; and
       ``(B) the actions that each enterprise could undertake to 
     promote and expand the purposes of the enterprise;
       ``(2) aggregate and analyze relevant data on income to 
     assess the compliance of each enterprise with the housing 
     goals established under subpart B;
       ``(3) aggregate and analyze data on income, race, and 
     gender by census tract and other relevant classifications, 
     and compare such data with larger demographic, housing, and 
     economic trends;
       ``(4) identify the extent to which each enterprise is 
     involved in mortgage purchases and secondary market 
     activities involving subprime and nontraditional loans;
       ``(5) compare the characteristics of subprime and 
     nontraditional loans both purchased and securitized by each 
     enterprise to other loans purchased and securitized by each 
     enterprise; and

[[Page S6745]]

       ``(6) compare the characteristics of high-cost loans 
     purchased and securitized, where such securities are not held 
     on portfolio to loans purchased and securitized, where such 
     securities are either retained on portfolio or repurchased by 
     the enterprise, including such characteristics as--
       ``(A) the purchase price of the property that secures the 
     mortgage;
       ``(B) the loan-to-value ratio of the mortgage, which shall 
     reflect any secondary liens on the relevant property;
       ``(C) the terms of the mortgage;
       ``(D) the creditworthiness of the borrower; and
       ``(E) any other relevant data, as determined by the 
     Director.
       ``(c) Data Collection and Reporting.--
       ``(1) In general.--To assist the Director in analyzing the 
     matters described in subsection (b), the Director shall 
     conduct, on a monthly basis, a survey of mortgage markets in 
     accordance with this subsection.
       ``(2) Data points.--Each monthly survey conducted by the 
     Director under paragraph (1) shall collect data on--
       ``(A) the characteristics of individual mortgages that are 
     eligible for purchase by the enterprises and the 
     characteristics of individual mortgages that are not eligible 
     for purchase by the enterprises including, in both cases, 
     information concerning--
       ``(i) the price of the house that secures the mortgage;
       ``(ii) the loan-to-value ratio of the mortgage, which shall 
     reflect any secondary liens on the relevant property;
       ``(iii) the terms of the mortgage;
       ``(iv) the creditworthiness of the borrower or borrowers; 
     and
       ``(v) whether the mortgage, in the case of a conforming 
     mortgage, was purchased by an enterprise;
       ``(B) the characteristics of individual subprime and 
     nontraditional mortgages that are eligible for purchase by 
     the enterprises and the characteristics of borrowers under 
     such mortgages, including the creditworthiness of such 
     borrowers and determination whether such borrowers would 
     qualify for prime lending; and
       ``(C) such other matters as the Director determines to be 
     appropriate.
       ``(3) Public availability.--The Director shall make any 
     data collected by the Director in connection with the conduct 
     of a monthly survey available to the public in a timely 
     manner, provided that the Director may modify the data 
     released to the public to ensure that the data--
       ``(A) is not released in an identifiable form; and
       ``(B) is not otherwise obtainable from other publicly 
     available data sets.
       ``(4) Definition.--For purposes of this subsection, the 
     term `identifiable form' means any representation of 
     information that permits the identity of a borrower to which 
     the information relates to be reasonably inferred by either 
     direct or indirect means.''.

     SEC. 1126. PUBLIC USE DATABASE.

       Section 1323 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (42 U.S.C. 4543) is 
     amended--
       (1) in subsection (a)--
       (A) by striking ``(a) In General.--The Secretary'' and 
     inserting the following:
       ``(a) Availability.--
       ``(1) In general.--The Director''; and
       (B) by adding at the end the following new paragraph:
       ``(2) Census tract level reporting.--Such data shall 
     include the data elements required to be reported under the 
     Home Mortgage Disclosure Act of 1975, at the census tract 
     level.'';
       (2) in subsection (b)(2), by inserting before the period at 
     the end the following: ``or with subsection (a)(2)''; and
       (3) by adding at the end the following new subsection:
       ``(d) Timing.--Data submitted under this section by an 
     enterprise in connection with a provision referred to in 
     subsection (a) shall be made publicly available in accordance 
     with this section not later than September 30 of the year 
     following the year to which the data relates.''.

     SEC. 1127. REPORTING OF MORTGAGE DATA.

       Section 1326 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4546) is 
     amended--
       (1) in subsection (a), by striking ``The Director'' and 
     inserting ``Subject to subsection (d), the Director''; and
       (2) by adding at the end the following:
       ``(d) Mortgage Information.--Subject to privacy 
     considerations, as described in section 304(j) of the Home 
     Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(j)), the 
     Director shall, by regulation or order, provide that certain 
     information relating to single family mortgage data of the 
     enterprises shall be disclosed to the public, in order to 
     make available to the public--
       ``(1) the same data from the enterprises that is required 
     of insured depository institutions under the Home Mortgage 
     Disclosure Act of 1975; and
       ``(2) information collected by the Director under section 
     1324(b)(6).''.

     SEC. 1128. REVISION OF HOUSING GOALS.

       (a) Repeal.--Sections 1331 through 1334 of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (12 U.S.C. 4561 through 4564) are hereby repealed.
       (b) Housing Goal.--The Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 is amended by 
     inserting before section 1335 the following:

     ``SEC. 1331. ESTABLISHMENT OF HOUSING GOALS.

       ``(a) In General.--The Director shall, by regulation, 
     establish effective for the first calendar year that begins 
     after the date of enactment of the Federal Housing Finance 
     Regulatory Reform Act of 2008, and each year thereafter, 
     annual housing goals, as described under this subpart, with 
     respect to the mortgage purchases by the enterprises.
       ``(b) Special Counting Requirements.--
       ``(1) In general.--The Director shall determine whether an 
     enterprise shall receive full, partial, or no credit for a 
     transaction toward achievement of any of the housing goals 
     established pursuant to this section or sections 1332 through 
     1334.
       ``(2) Considerations.--In making any determination under 
     paragraph (1), the Director shall consider whether a 
     transaction or activity of an enterprise is substantially 
     equivalent to a mortgage purchase and either (A) creates a 
     new market, or (B) adds liquidity to an existing market, 
     provided however that the terms and conditions of such 
     mortgage purchase is neither determined to be unacceptable, 
     nor contrary to good lending practices, and otherwise 
     promotes sustainable homeownership and further, that such 
     mortgage purchase actually fulfills the purposes of the 
     enterprise and is in accordance with the chartering Act of 
     such enterprise.
       ``(c) Eliminating Interest Rate Disparities.--
       ``(1) In general.--In establishing and implementing the 
     housing goals under this subpart, the Director shall require 
     the enterprises to disclose appropriate information to allow 
     the Director to assess if there are any disparities in 
     interest rates charged on mortgages to borrowers who are 
     minorities, as compared with borrowers of similar 
     creditworthiness who are not minorities, as evidenced in 
     reports pursuant to the Home Mortgage Disclosure Act of 1975.
       ``(2) Report to congress on disparities.--Upon a finding by 
     the Director that a pattern of disparities in interest rates 
     exists pursuant to the information provided by an enterprise 
     under paragraph (1), the Director shall--
       ``(A) forward 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 detailing 
     the disparities; and
       ``(B) forward the report prepared under subparagraph (A) to 
     any other appropriate regulatory or enforcement agency.
       ``(3) Identity of individuals not disclosed.--In carrying 
     out this subsection, the Director shall ensure that no 
     personally identifiable financial information that would 
     enable an individual borrower to be reasonably identified 
     shall be made public.
       ``(d) Timing.--The Director shall establish an annual 
     deadline for the establishment of housing goals described in 
     subsection (a), taking into consideration the need for the 
     enterprises to reasonably and sufficiently plan their 
     operations and activities in advance, including operations 
     and activities necessary to meet such goals.

     ``SEC. 1331A. DISCRETIONARY ADJUSTMENT OF HOUSING GOALS.

       ``(a) Authority.--
       ``(1) Review.--The Director shall review the 
     appropriateness of each goal established pursuant to this 
     subpart at least once during each year to assure that given 
     current market conditions that each such goal is feasible.
       ``(2) Petition to reduce.--An enterprise may petition the 
     Director in writing at any time during a year to reduce the 
     level of any goal for such year established pursuant to this 
     subpart.
       ``(b) Standard for Reduction.--The Director may reduce the 
     level for a goal pursuant to such a petition only if--
       ``(1) market and economic conditions or the financial 
     condition of the enterprise require such action; or
       ``(2) efforts to meet the goal would result in the 
     constraint of liquidity, over-investment in certain market 
     segments, or other consequences contrary to the intent of 
     this subpart, section 301(3) of the Federal National Mortgage 
     Association Charter Act (12 U.S.C. 1716(3)), or section 
     301(b)(3) of the Federal Home Loan Mortgage Corporation Act 
     (12 U.S.C. 1451 note), as applicable.
       ``(c) Determination.--
       ``(1) 30-day period.--If an enterprise submits a petition 
     for reduction to the Director under subsection (a)(2), the 
     Director shall make a determination regarding any proposed 
     reduction within 30 days of receipt of the petition.
       ``(2) Extension.--The Director may extend the period 
     described in paragraph (1) for a single additional 15-day 
     period, but only if the Director requests additional 
     information from the enterprise.

     ``SEC. 1332. SINGLE-FAMILY HOUSING GOALS.

       ``(a) Establishment of Goals.--
       ``(1) In general.--The Director shall establish annual 
     goals for the purchase by each enterprise of conventional, 
     conforming, single-family, owner-occupied, purchase money 
     mortgages financing housing for each of the following:
       ``(A) Low-income families.
       ``(B) Families that reside in low-income areas.
       ``(C) Very low-income families.
       ``(2) Goals as percentage of total purchase money mortgage 
     purchases.--The goals established under paragraph (1) shall 
     be established as a percentage of the total number of single-
     family dwelling units financed by single-family purchase 
     money mortgage purchases of the enterprise.
       ``(b) Determination of Compliance.--
       ``(1) In general.--The Director shall determine, for each 
     year that the housing goals under this section are in effect 
     pursuant to section 1331(a), whether each enterprise has 
     complied with the single-family housing goals established 
     under this section for such year.
       ``(2) Compliance requirements.--An enterprise shall be 
     considered to be in compliance with a goal described under 
     subsection (a) for a year, only if, for each of the types of 
     families described in subsection (a), the percentage of the 
     number of conventional, conforming, single-family, owner-
     occupied, purchase money mortgages purchased by the 
     enterprise in such year that serve such families, meets or 
     exceeds the

[[Page S6746]]

     target established under subsection (c) for the year for such 
     type of family.
       ``(c) Annual Targets.--
       ``(1) In general.--The Director shall establish annual 
     targets for each goal described in subsection (a).
       ``(2) Considerations.--In establishing annual targets under 
     paragraph (1), the Director shall consider--
       ``(A) national housing needs;
       ``(B) economic, housing, and demographic conditions;
       ``(C) the performance and effort of the enterprises toward 
     achieving the housing goals under this section in previous 
     years;
       ``(D) the ability of the enterprise to lead the industry in 
     making mortgage credit available;
       ``(E) recent information submitted in compliance with the 
     Home Mortgage Disclosure Act of 1975 and such other reliable 
     mortgage data as may be available;
       ``(F) the size of the purchase money conventional mortgage 
     market serving each of the types of families described in 
     subsection (a), relative to the size of the overall purchase 
     money mortgage market; and
       ``(G) the need to maintain the sound financial condition of 
     the enterprises.
       ``(3) High-cost loans and inappropriate lending 
     practices.--In establishing annual targets under paragraph 
     (1), the Director shall not consider segments of the market 
     determined to be unacceptable or contrary to good lending 
     practices pursuant to section 1331(b)(2).
       ``(d) Notice of Determination and Enterprise Comment.--
       ``(1) Notice.--Within 30 days of making a determination 
     under subsection (b) regarding compliance of an enterprise 
     for a year with the housing goals established under this 
     section and before any public disclosure thereof, the 
     Director shall provide notice of the determination to the 
     enterprise, which shall include an analysis and comparison, 
     by the Director, of the performance of the enterprise for the 
     year and the targets for the year under subsection (c).
       ``(2) Comment period.--The Director shall provide each 
     enterprise and the public an opportunity to comment on the 
     determination during the 30-day period beginning upon receipt 
     by the enterprise of the notice.
       ``(e) Use of Borrower Income.--In monitoring the 
     performance of each enterprise pursuant to the housing goals 
     under this section and evaluating such performance (for 
     purposes of section 1336), the Director shall consider a 
     mortgagor's income to be the income of the mortgagor at the 
     time of origination of the mortgage.
       ``(f) Consideration of Properties With Rental Units.--
     Mortgages financing 1-to-4 unit owner-occupied properties 
     shall count toward the achievement of the single-family 
     housing goal under this section, if such properties otherwise 
     meet the requirements under this section notwithstanding the 
     use of 1 or more units for rental purposes.

     ``SEC. 1333. SINGLE-FAMILY HOUSING REFINANCE GOALS.

       ``(a) Prepayment of Existing Loans.--
       ``(1) In general.--The Director shall establish annual 
     goals for the purchase by each enterprise of mortgages on 
     conventional, conforming, single-family, owner-occupied 
     housing given to pay off or prepay an existing loan served by 
     the same property for each of the following:
       ``(A) Low-income families.
       ``(B) Families that reside in low-income areas.
       ``(C) Very low-income families.
       ``(2) Goals as percentage of total refinancing mortgage 
     purchases.--The goals described under paragraph (1) shall be 
     established as a percentage of the total number of single-
     family dwelling units refinanced by mortgage purchases of 
     each enterprise.
       ``(b) Determination of Compliance.--
       ``(1) In general.--The Director shall determine, for each 
     year that the housing goals under this section are in effect 
     pursuant to section 1331(a), whether each enterprise has 
     complied with the single-family housing refinance goals 
     established under this section for such year.
       ``(2) Compliance.--An enterprise shall be considered to be 
     in compliance with the goals of this section for a year, only 
     if, for each of the types of families described in subsection 
     (a), the percentage of the number of conventional, 
     conforming, single-family, owner-occupied refinancing 
     mortgages purchased by each enterprise in such year that 
     serve such families, meets or exceeds the target for the year 
     for such type of family that is established under subsection 
     (c).
       ``(c) Annual Targets.--
       ``(1) In general.--The Director shall establish annual 
     targets for each goal described in subsection (a).
       ``(2) Considerations.--In establishing annual targets under 
     paragraph (1), the Director shall consider--
       ``(A) national housing needs;
       ``(B) economic, housing, and demographic conditions;
       ``(C) the performance and effort of the enterprises toward 
     achieving the housing goals under this section in previous 
     years;
       ``(D) the ability of the enterprise to lead the industry in 
     making mortgage credit available;
       ``(E) recent information submitted in compliance with the 
     Home Mortgage Disclosure Act of 1975 and such other reliable 
     mortgage data as may be available;
       ``(F) the size of the purchase money conventional mortgage 
     market serving each of the types of families described in 
     subsection (a), relative to the size of the overall purchase 
     money mortgage market; and
       ``(G) the need to maintain the sound financial condition of 
     the enterprises.
       ``(d) Notice of Determination and Enterprise Comment.--
       ``(1) Notice.--Within 30 days of making a determination 
     under subsection (b) regarding compliance of an enterprise 
     for a year with the housing goals established under this 
     section and before any public disclosure thereof, the 
     Director shall provide notice of the determination to the 
     enterprise, which shall include an analysis and comparison, 
     by the Director, of the performance of the enterprise for the 
     year and the targets for the year under subsection (c).
       ``(2) Comment period.--The Director shall provide each 
     enterprise and the public an opportunity to comment on the 
     determination during the 30-day period beginning upon receipt 
     by the enterprise of the notice.
       ``(e) Use of Borrower Income.--In monitoring the 
     performance of each enterprise pursuant to the housing goals 
     under this section and evaluating such performance (for 
     purposes of section 1336), the Director shall consider a 
     mortgagor's income to be the income of the mortgagor at the 
     time of origination of the mortgage.

     ``SEC. 1334. MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL.

       ``(a) Establishment.--
       ``(1) In general.--The Director shall establish, by 
     regulation, by unit, dollar volume, or percentage of 
     multifamily activity, as determined by the Director, an 
     annual goal for the purchase by each enterprise of--
       ``(A) mortgages that finance dwelling units affordable to 
     very low-income families; and
       ``(B) mortgages that finance dwelling units assisted by the 
     low-income housing tax credit under section 42 of the 
     Internal Revenue Code of 1986.
       ``(2) Additional requirements for smaller projects.--The 
     Director shall establish, within the housing goal established 
     under this section, additional requirements for the purchase 
     by each enterprise of mortgages described in paragraph (1) 
     for multifamily housing projects of a smaller or limited 
     size, which may be based on the number of dwelling units in 
     the project or the amount of the mortgage, or both, and shall 
     include multifamily housing projects of 5 to 50 units (as 
     adjusted by the Director), or with mortgages of up to 
     $5,000,000 (as adjusted by the Director).
       ``(3) Factors.--The Director shall establish the goal and 
     additional requirements under this section taking into 
     consideration--
       ``(A) national multifamily mortgage credit needs;
       ``(B) the performance and effort of the enterprise in 
     making mortgage credit available for multifamily housing in 
     previous years;
       ``(C) the size of the multifamily mortgage market, 
     including the size of the small multifamily mortgage market;
       ``(D) the most recent information available for the 
     Residential Survey published by the Census Bureau, and such 
     other reliable data as may be available regarding multifamily 
     mortgages;
       ``(E) the ability of the enterprise to lead the industry in 
     expanding mortgage credit availability at favorable terms, 
     especially for underserved markets, such as for--
       ``(i) small multifamily projects;
       ``(ii) multifamily properties in need of preservation and 
     rehabilitation; and
       ``(iii) multifamily properties located in rural areas; and
       ``(F) the need to maintain the sound financial condition of 
     the enterprise.
       ``(b) Units Financed by Housing Finance Agency Bonds.--The 
     Director may give credit toward the achievement of the 
     multifamily special affordable housing goal under this 
     section (for purposes of section 1336) to dwelling units in 
     multifamily housing projects that otherwise qualify under 
     such goal and that are financed by tax-exempt or taxable 
     bonds issued by a State or local housing finance agency, but 
     only if such bonds--
       ``(1) are secured by a guarantee of the enterprise; or
       ``(2) are not investment grade and are purchased by the 
     enterprise.
       ``(c) Use of Tenant Rent Level.--
       ``(1) In general.--The Director shall monitor the 
     performance of each enterprise in meeting the goal 
     established under this section and shall evaluate such 
     performance (for purposes of section 1336) based on whether 
     the rent levels are affordable to low-income and very low-
     income families.
       ``(2) Rent level.--A rent level shall be considered to be 
     affordable for purposes of this subsection for an income 
     category referred to in this subsection if it does not exceed 
     30 percent of the maximum income level of such income 
     category, with appropriate adjustments for unit size as 
     measured by the number of bedrooms.
       ``(d) Determination of Compliance.--
       ``(1) In general.--The Director shall, for each year that 
     the housing goal under this section is in effect pursuant to 
     section 1331(a), determine whether each enterprise has 
     complied with such goal and the additional requirements under 
     subsection (a)(2).
       ``(2) Compliance.--An enterprise shall be considered to be 
     in compliance with the goal described under subsection (a) 
     for a year only if the multifamily mortgage purchases of the 
     enterprise meet or exceed the goal for the year established 
     under subsection (a).
       ``(e) Consideration of Units in Single-Family Rental 
     Housing.--In establishing the goal under this section, the 
     Director may take into consideration the number of housing 
     units financed by any mortgage purchased by an enterprise on 
     single-family rental housing that is not owner-occupied.
       ``(f) Removing Credit.--The Director shall subtract from 
     the units or mortgages counted toward the goal established 
     under this section in a current year any units or mortgages 
     credited toward such goal in a prior year if an enterprise 
     requires a lender to repurchase, or reimburse for losses, or 
     indemnify the enterprise against potential losses on such 
     units or mortgages.
       ``(g) Notice of Determination and Enterprise Comment.--

[[Page S6747]]

       ``(1) Notice.--Within 30 days of making a determination 
     under subsection (d) regarding compliance of an enterprise 
     for a year with the housing goal established under this 
     section and before any public disclosure thereof, the 
     Director shall provide notice of the determination to the 
     enterprise, which shall include an analysis and comparison, 
     by the Director, of the performance of the enterprise for the 
     year and the goal for the year under subsection (a).
       ``(2) Comment period.--The Director shall provide each 
     enterprise and the public an opportunity to comment on the 
     determination during the 30-day period beginning upon receipt 
     by the enterprise of the notice.''.
       (c) Conforming Amendments.--The Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 is amended--
       (1) in section 1335(a) (12 U.S.C. 4565(a)), in the matter 
     preceding paragraph (1), by striking ``low- and moderate-
     income housing goal'' and all that follows through ``section 
     1334'' and inserting ``housing goals established under this 
     subpart''; and
       (2) in section 1336(a)(1) (12 U.S.C. 4566(a)(1)), by 
     striking ``sections 1332, 1333, and 1334,'' and inserting 
     ``this subpart''.
       (d) Definitions.--Section 1303 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4502) is amended--
       (1) by striking paragraph (24), as so designated by section 
     1002 of this Act, and inserting the following:
       ``(24) Very low-income.--
       ``(A) In general.--The term `very low-income' means--
       ``(i) in the case of owner-occupied units, families having 
     incomes not greater than 50 percent of the area median 
     income; and
       ``(ii) in the case of rental units, families having incomes 
     not greater than 50 percent of the area median income, with 
     adjustments for smaller and larger families, as determined by 
     the Director.
       ``(B) Rule of construction.--For purposes of section 1338 
     and 1339, the term `very low-income' means--
       ``(i) in the case of owner-occupied units, income in excess 
     of 30 percent but not greater than 50 percent of the area 
     median income; and
       ``(ii) in the case of rental units, income in excess of 30 
     percent but not greater than 50 percent of the area median 
     income, with adjustments for smaller and larger families, as 
     determined by the Director.''; and
       (2) by adding at the end the following:
       ``(26) Conforming mortgage.--The term `conforming mortgage' 
     means, with respect to an enterprise, a conventional mortgage 
     having an original principal obligation that does not exceed 
     the applicable dollar limitation, in effect at the time of 
     such origination, under--
       ``(A) section 302(b)(2) of the Federal National Mortgage 
     Association Charter Act; or
       ``(B) section 305(a)(2) of the Federal Home Loan Mortgage 
     Corporation Act.
       ``(27) Extremely low-income.--The term `extremely low-
     income' means--
       ``(A) in the case of owner-occupied units, income not in 
     excess of 30 percent of the area median income; and
       ``(B) in the case of rental units, income not in excess of 
     30 percent of the area median income, with adjustments for 
     smaller and larger families, as determined by the Director.
       ``(28) Low-income area.--The term `low-income area' means a 
     census tract or block numbering area in which the median 
     income does not exceed 80 percent of the median income for 
     the area in which such census tract or block numbering area 
     is located, and, for the purposes of section 1332(a)(2), 
     shall include families having incomes not greater than 100 
     percent of the area median income who reside in minority 
     census tracts.
       ``(29) Minority census tract.--The term `minority census 
     tract' means a census tract that has a minority population of 
     at least 30 percent and a median family income of less than 
     100 percent of the area family median income.
       ``(30) Shortage of standard rental units both affordable 
     and available to extremely low-income renter households.--
       ``(A) In general.--The term `shortage of standard rental 
     units both affordable and available to extremely low-income 
     renter households' means the gap between--
       ``(i) the number of units with complete plumbing and 
     kitchen facilities with a rent that is 30 percent or less of 
     30 percent of the adjusted area median income as determined 
     by the Director that are occupied by extremely low-income 
     renter households or are vacant for rent; and
       ``(ii) the number of extremely low-income renter 
     households.
       ``(B) Rule of construction.--If the number of units 
     described in subparagraph (A)(i) exceeds the number of 
     extremely low-income households as described in subparagraph 
     (A)(ii), there is no shortage.
       ``(31) Shortage of standard rental units both affordable 
     and available to very low-income renter households.--
       ``(A) In general.--The term `shortage of standard rental 
     units both affordable and available to very low-income renter 
     households' means the gap between--
       ``(i) the number of units with complete plumbing and 
     kitchen facilities with a rent that is 30 percent or less of 
     50 percent of the adjusted area median income as determined 
     by the Director that are occupied by either extremely low- or 
     very low-income renter households or are vacant for rent; and
       ``(ii) the number of extremely low- and very low-income 
     renter households.
       ``(B) Rule of construction.--If the number of units 
     described in subparagraph (A)(i) exceeds the number of 
     extremely low- and very low-income households as described in 
     subparagraph (A)(ii), there is no shortage.''.

     SEC. 1129. DUTY TO SERVE UNDERSERVED MARKETS.

       (a) Establishment and Evaluation of Performance.--Section 
     1335 of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4565) is amended--
       (1) in the section heading, by inserting ``DUTY TO SERVE 
     UNDERSERVED MARKETS AND'' before ``OTHER'';
       (2) by striking subsection (b);
       (3) in subsection (a)--
       (A) in the matter preceding paragraph (1), by inserting 
     ``and to carry out the duty under subsection (a) of this 
     section'' before ``, each enterprise shall'';
       (B) in paragraph (3), by inserting ``and'' after the 
     semicolon at the end;
       (C) in paragraph (4), by striking ``; and'' and inserting a 
     period;
       (D) by striking paragraph (5); and
       (E) by redesignating such subsection as subsection (b);
       (4) by inserting before subsection (b) (as so redesignated 
     by paragraph (3)(E) of this subsection) the following new 
     subsection:
       ``(a) Duty to Serve Underserved Markets.--
       ``(1) Duty.--In accordance with the purpose of the 
     enterprises under section 301(3) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1716) and section 
     301(b)(3) of the Federal Home Loan Mortgage Corporation Act 
     (12 U.S.C. 1451 note) to undertake activities relating to 
     mortgages on housing for very low-, low-, and moderate-income 
     families involving a reasonable economic return that may be 
     less than the return earned on other activities, each 
     enterprise shall have the duty to increase the liquidity of 
     mortgage investments and improve the distribution of 
     investment capital available for mortgage financing for 
     underserved markets by purchasing or securitizing mortgage 
     investments.
       ``(2) Underserved markets.--To meet its duty under 
     paragraph (1), each enterprise shall comply with the 
     following requirements with respect to the following 
     underserved markets:
       ``(A) Manufactured housing.--The enterprise shall lead the 
     industry in developing loan products and flexible 
     underwriting guidelines to facilitate a secondary market for 
     mortgages on manufactured homes for very low-, low-, and 
     moderate-income families.
       ``(B) Affordable housing preservation.--The enterprise 
     shall lead the industry in developing loan products and 
     flexible underwriting guidelines to facilitate a secondary 
     market to preserve housing affordable to very 
     low-, low-, and moderate-income families, including housing 
     projects subsidized under--
       ``(i) the project-based and tenant-based rental assistance 
     programs under section 8 of the United States Housing Act of 
     1937;
       ``(ii) the program under section 236 of the National 
     Housing Act;
       ``(iii) the below-market interest rate mortgage program 
     under section 221(d)(4) of the National Housing Act;
       ``(iv) the supportive housing for the elderly program under 
     section 202 of the Housing Act of 1959;
       ``(v) the supportive housing program for persons with 
     disabilities under section 811 of the Cranston-Gonzalez 
     National Affordable Housing Act;
       ``(vi) the programs under title IV of the McKinney-Vento 
     Homeless Assistance Act (42 U.S.C. 11361 et seq.), but only 
     permanent supportive housing projects subsidized under such 
     programs; and
       ``(vii) the rural rental housing program under section 515 
     of the Housing Act of 1949.
       ``(C) Rural and other underserved markets.--The enterprise 
     shall lead the industry in developing loan products and 
     flexible underwriting guidelines to facilitate a secondary 
     market for mortgages on housing for very 
     low-, low-, and moderate-income families in rural areas, and 
     for mortgages for housing for any other underserved market 
     for very low-, low-, and moderate-income families that the 
     Director identifies as lacking adequate credit through 
     conventional lending sources. Such underserved markets may be 
     identified by borrower type, market segment, or geographic 
     area.''; and
       (5) by adding at the end the following new subsection:
       ``(c) Evaluation and Reporting of Compliance.--
       ``(1) In general.--Not later than 6 months after the 
     effective date of the Federal Housing Finance Regulatory 
     Reform Act of 2008, the Director shall establish a manner for 
     evaluating whether, and the extent to which, the enterprises 
     have complied with the duty under subsection (a) to serve 
     underserved markets and for rating the extent of such 
     compliance. Using such method, the Director shall, for each 
     year, evaluate such compliance and rate the performance of 
     each enterprise as to extent of compliance. The Director 
     shall include such evaluation and rating for each enterprise 
     for a year in the report for that year submitted pursuant to 
     section 1319B(a).
       ``(2) Separate evaluations.--In determining whether an 
     enterprise has complied with the duty referred to in 
     paragraph (1), the Director shall separately evaluate whether 
     the enterprise has complied with such duty with respect to 
     each of the underserved markets identified in subsection (a), 
     taking into consideration--
       ``(A) the development of loan products and more flexible 
     underwriting guidelines;
       ``(B) the extent of outreach to qualified loan sellers in 
     each of such underserved markets; and
       ``(C) the volume of loans purchased in each of such 
     underserved markets.
       ``(3) Manufactured housing market.--In determining whether 
     an enterprise has complied with the duty under subparagraph 
     (A) of subsection (a)(2), the Director may consider loans 
     secured by both real and personal property.''.

[[Page S6748]]

       (b) Enforcement.--Subsection (a) of section 1336 of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 
     4566(a)) is amended--
       (1) in paragraph (1), by inserting ``and with the duty 
     under section 1335(a) of each enterprise with respect to 
     underserved markets,'' before ``as provided in this 
     section''; and
       (2) by adding at the end of such subsection, as amended by 
     the preceding provisions of this subtitle, the following new 
     paragraph:
       ``(4) Enforcement of duty to provide mortgage credit to 
     underserved markets.--The duty under section 1335(a) of each 
     enterprise to serve underserved markets (as determined in 
     accordance with section 1335(c)) shall be enforceable under 
     this section to the same extent and under the same provisions 
     that the housing goals established under this subpart are 
     enforceable. Such duty shall not be enforceable under any 
     other provision of this title (including subpart C of this 
     part) other than this section or under any provision of the 
     Federal National Mortgage Association Charter Act or the 
     Federal Home Loan Mortgage Corporation Act.''.

     SEC. 1130. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING 
                   GOALS.

       (a) In General.--Section 1336 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4566) is amended by striking subsections (b) and (c) 
     and inserting the following:
       ``(b) Notice and Preliminary Determination of Failure To 
     Meet Goals.--
       ``(1) Notice.--If the Director preliminarily determines 
     that an enterprise has failed, or that there is a substantial 
     probability that an enterprise will fail, to meet any housing 
     goal under this subpart, the Director shall provide written 
     notice to the enterprise of such a preliminary determination, 
     the reasons for such determination, and the information on 
     which the Director based the determination.
       ``(2) Response period.--
       ``(A) In general.--During the 30-day period beginning on 
     the date on which an enterprise is provided notice under 
     paragraph (1), the enterprise may submit to the Director any 
     written information that the enterprise considers appropriate 
     for consideration by the Director in finally determining 
     whether such failure has occurred or whether the achievement 
     of such goal was or is feasible.
       ``(B) Extended period.--The Director may extend the period 
     under subparagraph (A) for good cause for not more than 30 
     additional days.
       ``(C) Shortened period.--The Director may shorten the 
     period under subparagraph (A) for good cause.
       ``(D) Failure to respond.--The failure of an enterprise to 
     provide information during the 30-day period under this 
     paragraph (as extended or shortened) shall waive any right of 
     the enterprise to comment on the proposed determination or 
     action of the Director.
       ``(3) Consideration of information and final 
     determination.--
       ``(A) In general.--After the expiration of the response 
     period under paragraph (2), or upon receipt of information 
     provided during such period by the enterprise, whichever 
     occurs earlier, the Director shall issue a final 
     determination on--
       ``(i) whether the enterprise has failed, or there is a 
     substantial probability that the enterprise will fail, to 
     meet the housing goal; and
       ``(ii) whether (taking into consideration market and 
     economic conditions and the financial condition of the 
     enterprise) the achievement of the housing goal was or is 
     feasible.
       ``(B) Considerations.--In making a final determination 
     under subparagraph (A), the Director shall take into 
     consideration any relevant information submitted by the 
     enterprise during the response period.
       ``(C) Notice.--The Director shall provide written notice, 
     including a response to any information submitted during the 
     response period, to the enterprise, the Committee on Banking, 
     Housing, and Urban Affairs of the Senate, and the Committee 
     on Financial Services of the House of Representatives, of--
       ``(i) each final determination under this paragraph that an 
     enterprise has failed, or that there is a substantial 
     probability that the enterprise will fail, to meet a housing 
     goal;
       ``(ii) each final determination that the achievement of a 
     housing goal was or is feasible; and
       ``(iii) the reasons for each such final determination.
       ``(c) Cease and Desist, Civil Money Penalties, and Remedies 
     Including Housing Plans.--
       ``(1) Requirement.--If the Director finds, pursuant to 
     subsection (b), that there is a substantial probability that 
     an enterprise will fail, or has actually failed, to meet any 
     housing goal under this subpart, and that the achievement of 
     the housing goal was or is feasible, the Director may require 
     that the enterprise submit a housing plan under this 
     subsection. If the Director makes such a finding and the 
     enterprise refuses to submit such a plan, submits an 
     unacceptable plan, fails to comply with the plan, or the 
     Director finds that the enterprise has failed to meet any 
     housing goal under this subpart, in addition to requiring an 
     enterprise to submit a housing plan, the Director may issue a 
     cease and desist order in accordance with section 1341, 
     impose civil money penalties in accordance with section 1345, 
     or order other remedies as set forth in paragraph (7).
       ``(2) Housing plan.--If the Director requires a housing 
     plan under this subsection, such a plan shall be--
       ``(A) a feasible plan describing the specific actions the 
     enterprise will take--
       ``(i) to achieve the goal for the next calendar year; and
       ``(ii) if the Director determines that there is a 
     substantial probability that the enterprise will fail to meet 
     a goal in the current year, to make such improvements and 
     changes in its operations as are reasonable in the remainder 
     of such year; and
       ``(B) sufficiently specific to enable the Director to 
     monitor compliance periodically.
       ``(3) Deadline for submission.--The Director shall 
     establish a deadline for an enterprise to comply with any 
     remedial action or submit a housing plan to the Director, 
     which may not be more than 45 days after the enterprise is 
     provided notice. The Director may extend the deadline to the 
     extent that the Director determines necessary. Any extension 
     of the deadline shall be in writing and for a time certain.
       ``(4) Approval.--The Director shall review each submission 
     by an enterprise, including a housing plan submitted under 
     this subsection, and, not later than 30 days after 
     submission, approve or disapprove the plan or other action. 
     The Director may extend the period for approval or 
     disapproval for a single additional 30-day period if the 
     Director determines it necessary. The Director shall approve 
     any plan that the Director determines is likely to succeed, 
     and conforms with the Federal National Mortgage Association 
     Charter Act or the Federal Home Loan Mortgage Corporation Act 
     (as applicable), this title, and any other applicable 
     provision of law.
       ``(5) Notice of approval and disapproval.--The Director 
     shall provide written notice to any enterprise submitting a 
     housing plan of the approval or disapproval of the plan 
     (which shall include the reasons for any disapproval of the 
     plan) and of any extension of the period for approval or 
     disapproval.
       ``(6) Resubmission.--If the initial housing plan submitted 
     by an enterprise under this section is disapproved, the 
     enterprise shall submit an amended plan acceptable to the 
     Director not later than 15 days after such disapproval, or 
     such longer period that the Director determines is in the 
     public interest.
       ``(7) Additional remedies for failure to meet goals.--In 
     addition to ordering a housing plan under this section, 
     issuing cease and desist orders under section 1341, and 
     ordering civil money penalties under section 1345, the 
     Director may--
       ``(A) seek other actions when an enterprise fails to meet a 
     goal; and
       ``(B) exercise appropriate enforcement authority available 
     to the Director under this Act.''.
       (b) Conforming Amendment.--The heading for subpart C of 
     part 2 of subtitle A of the Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 is amended to read 
     as follows:

                      ``Subpart C--Enforcement''.

       (c) Cease and Desist Proceedings .--
       (1) Repeal.--Section 1341 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4581) is hereby repealed.
       (2) Cease and desist proceedings.--The Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 is 
     amended by inserting before section 1342 the following:

     ``SEC. 1341. CEASE AND DESIST PROCEEDINGS.

       ``(a) Grounds for Issuance.--The Director may issue and 
     serve a notice of charges under this section upon an 
     enterprise if the Director determines that--
       ``(1) the enterprise has failed to meet any housing goal 
     established under subpart B, following a written notice and 
     determination of such failure in accordance with section 
     1336;
       ``(2) the enterprise has failed to submit a report under 
     section 1327, following a notice of such failure, an 
     opportunity for comment by the enterprise, and a final 
     determination by the Director;
       ``(3) the enterprise has failed to submit the information 
     required under subsection (m) or (n) of section 309 of the 
     Federal National Mortgage Association Charter Act, subsection 
     (e) or (f) of section 307 of the Federal Home Loan Mortgage 
     Corporation Act, or section 1337 of this title;
       ``(4) the enterprise has violated any provision of part 2 
     of this title or any order, rule, or regulation under part 2;
       ``(5) the enterprise has failed to submit a housing plan or 
     perform its responsibilities under a remedial order that 
     substantially complies with section 1336(c) within the 
     applicable period; or
       ``(6) the enterprise has failed to comply with a housing 
     plan under section 1336(c).
       ``(b) Procedure.--
       ``(1) Notice of charges.--Each notice of charges issued 
     under this section shall contain a statement of the facts 
     constituting the alleged conduct and shall fix a time and 
     place at which a hearing will be held to determine on the 
     record whether an order to cease and desist from such conduct 
     should issue.
       ``(2) Issuance of order.--If the Director finds on the 
     record made at a hearing described in paragraph (1) that any 
     conduct specified in the notice of charges has been 
     established (or the enterprise consents pursuant to section 
     1342(a)(4)), the Director may issue and serve upon the 
     enterprise an order requiring the enterprise to--
       ``(A) comply with the goals;
       ``(B) submit a report under section 1327;
       ``(C) comply with any provision of part 2 of this title or 
     any order, rule, or regulation under part 2;
       ``(D) submit a housing plan in compliance with section 
     1336(c);
       ``(E) comply with the housing plan in compliance with 
     section 1336(c); or
       ``(F) provide the information required under subsection (m) 
     or (n) of section 309 of the Federal National Mortgage 
     Association Charter Act, or subsection (e) or (f) of section 
     307 of the Federal Home Loan Mortgage Corporation Act.
       ``(c) Effective Date.--An order under this section shall 
     become effective upon the expiration of the 30-day period 
     beginning on the date

[[Page S6749]]

     of service of the order upon the enterprise (except in the 
     case of an order issued upon consent, which shall become 
     effective at the time specified therein), and shall remain 
     effective and enforceable as provided in the order, except to 
     the extent that the order is stayed, modified, terminated, or 
     set aside by action of the Director or otherwise, as provided 
     in this subpart.''.
       (d) Civil Money Penalties.--
       (1) Repeal.--Section 1345 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4585) is hereby repealed.
       (2) Civil money penalties.--The Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 is amended by 
     inserting after section 1344 the following:

     ``SEC. 1345. CIVIL MONEY PENALTIES.

       ``(a) Authority.--The Director may impose a civil money 
     penalty, in accordance with the provisions of this section, 
     on any enterprise that has failed to--
       ``(1) meet any housing goal established under subpart B, 
     following a written notice and determination of such failure 
     in accordance with section 1336(b);
       ``(2) submit a report under section 1327, following a 
     notice of such failure, an opportunity for comment by the 
     enterprise, and a final determination by the Director;
       ``(3) submit the information required under subsection (m) 
     or (n) of section 309 of the Federal National Mortgage 
     Association Charter Act or subsection (e) or (f) of section 
     307 of the Federal Home Loan Mortgage Corporation Act;
       ``(4) comply with any provision of part 2 of this title or 
     any order, rule, or regulation under part 2;
       ``(5) submit a housing plan or perform its responsibilities 
     under a remedial order issued pursuant to section 1336(c) 
     within the required period; or
       ``(6) comply with a housing plan for the enterprise under 
     section 1336(c).
       ``(b) Amount of Penalty.--The amount of a penalty under 
     this section, as determined by the Director, may not exceed--
       ``(1) for any failure described in paragraph (1), (5), or 
     (6) of subsection (a), $100,000 for each day that the failure 
     occurs; and
       ``(2) for any failure described in paragraph (2), (3), or 
     (4) of subsection (a), $50,000 for each day that the failure 
     occurs.
       ``(c) Procedures.--
       ``(1) Establishment.--The Director shall establish 
     standards and procedures governing the imposition of civil 
     money penalties under this section. Such standards and 
     procedures--
       ``(A) shall provide for the Director to notify the 
     enterprise in writing of the determination of the Director to 
     impose the penalty, which shall be made on the record;
       ``(B) shall provide for the imposition of a penalty only 
     after the enterprise has been given an opportunity for a 
     hearing on the record pursuant to section 1342; and
       ``(C) may provide for review by the Director of any 
     determination or order, or interlocutory ruling, arising from 
     a hearing.
       ``(2) Factors in determining amount of penalty.--In 
     determining the amount of a penalty under this section, the 
     Director shall give consideration to factors including--
       ``(A) the gravity of the offense;
       ``(B) any history of prior offenses;
       ``(C) ability to pay the penalty;
       ``(D) injury to the public;
       ``(E) benefits received;
       ``(F) deterrence of future violations;
       ``(G) the length of time that the enterprise should 
     reasonably take to achieve the goal; and
       ``(H) such other factors as the Director may determine, by 
     regulation, to be appropriate.
       ``(d) Action To Collect Penalty.--If an enterprise fails to 
     comply with an order by the Director imposing a civil money 
     penalty under this section, after the order is no longer 
     subject to review, as provided in sections 1342 and 1343, the 
     Director may bring an action in the United States District 
     Court for the District of Columbia to obtain a monetary 
     judgment against the enterprise, and such other relief as may 
     be available. The monetary judgment may, in the court's 
     discretion, include the attorneys' fees and other expenses 
     incurred by the United States in connection with the action. 
     In an action under this subsection, the validity and 
     appropriateness of the order imposing the penalty shall not 
     be subject to review.
       ``(e) Settlement by Director.--The Director may compromise, 
     modify, or remit any civil money penalty which may be, or has 
     been, imposed under this section.
       ``(f) Deposit of Penalties.--The Director shall use any 
     civil money penalties collected under this section to help 
     fund the Housing Trust Fund established under section 
     1338.''.
       (e) Director Authority.--
       (1) Authority to bring a civil action.--Section 1344(a) of 
     the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4584) is amended by striking 
     ``The Secretary may request the Attorney General of the 
     United States to bring a civil action'' and inserting ``The 
     Director may bring a civil action''.
       (2) Subpoena enforcement.--Section 1348(c) of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (12 U.S.C. 4588(c)) is amended by inserting ``may bring 
     an action or'' before ``may request''.
       (3) Conforming amendments.--Subpart C of part 2 of subtitle 
     A of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 (12 U.S.C. 4581 et seq.) is amended by 
     striking ``Secretary'' each place that term appears and 
     inserting ``Director'' in each of--
       (A) section 1342 (12 U.S.C. 4582);
       (B) section 1343 (12 U.S.C. 4583);
       (C) section 1346 (12 U.S.C. 4586);
       (D) section 1347 (12 U.S.C. 4587); and
       (E) section 1348 (12 U.S.C. 4588).

     SEC. 1131. AFFORDABLE HOUSING PROGRAMS.

       (a) Repeal.--Section 1337 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4567) is hereby repealed.
       (b) Annual Housing Report.--The Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 (12 U.S.C. 1301 et 
     seq.) is amended by inserting after section 1336 the 
     following:

     ``SEC. 1337. AFFORDABLE HOUSING ALLOCATIONS.

       ``(a) Set Aside and Allocation of Amounts by Enterprises.--
     Subject to subsection (b), in each fiscal year--
       ``(1) the Federal Home Loan Mortgage Corporation shall--
       ``(A) set aside an amount equal to 4.2 basis points for 
     each dollar of the unpaid principal balance of its total new 
     business purchases; and
       ``(B) allocate or otherwise transfer--
       ``(i) 65 percent of such amounts to the Secretary of 
     Housing and Urban Development to fund the Housing Trust Fund 
     established under section 1338; and
       ``(ii) 35 percent of such amounts to fund the Capital 
     Magnet Fund established pursuant to section 1339; and
       ``(2) the Federal National Mortgage Association shall--
       ``(A) set aside an amount equal to 4.2 basis points for 
     each dollar of unpaid principal balance of its total new 
     business purchases; and
       ``(B) allocate or otherwise transfer--
       ``(i) 65 percent of such amounts to the Secretary of 
     Housing and Urban Development to fund the Housing Trust Fund 
     established under section 1338; and
       ``(ii) 35 percent of such amounts to fund the Capital 
     Magnet Fund established pursuant to section 1339.
       ``(b) Suspension of Contributions.--The Director shall 
     temporarily suspend allocations under subsection (a) by an 
     enterprise upon a finding by the Director that such 
     allocations--
       ``(1) are contributing, or would contribute, to the 
     financial instability of the enterprise;
       ``(2) are causing, or would cause, the enterprise to be 
     classified as undercapitalized; or
       ``(3) are preventing, or would prevent, the enterprise from 
     successfully completing a capital restoration plan under 
     section 1369C.
       ``(c) Prohibition of Pass-Through of Cost of Allocations.--
     The Director shall, by regulation, prohibit each enterprise 
     from redirecting the costs of any allocation required under 
     this section, through increased charges or fees, or decreased 
     premiums, or in any other manner, to the originators of 
     mortgages purchased or securitized by the enterprise.
       ``(d) Enforcement of Requirements on Enterprise.--
     Compliance by the enterprises with the requirements under 
     this section shall be enforceable under subpart C. Any 
     reference in such subpart to this part or to an order, rule, 
     or regulation under this part specifically includes this 
     section and any order, rule, or regulation under this 
     section.
       ``(e) Required Amount for HOPE Reserve Fund.--Of the 
     aggregate amount allocated under subsection (a), 25 percent 
     shall be deposited into a fund established in the Treasury of 
     the United States by the Secretary of the Treasury for such 
     purpose.
       ``(f) Limitation.--No funds under this title may be used in 
     conjunction with property taken by eminent domain, unless 
     eminent domain is employed only for a public use, except 
     that, for purposes of this section, public use shall not be 
     construed to include economic development that primarily 
     benefits any private entity.

     ``SEC. 1338. HOUSING TRUST FUND.

       ``(a) Establishment and Purpose.--The Secretary of Housing 
     and Urban Development (in this section referred to as the 
     `Secretary') shall establish and manage a Housing Trust Fund, 
     which shall be funded with amounts allocated by the 
     enterprises under section 1337 and any amounts as are or may 
     be appropriated, transferred, or credited to such Housing 
     Trust Fund under any other provisions of law. The purpose of 
     the Housing Trust Fund under this section is to provide 
     grants to States for use--
       ``(1) to increase and preserve the supply of rental housing 
     for extremely low- and very low-income families, including 
     homeless families; and
       ``(2) to increase homeownership for extremely low- and very 
     low-income families.
       ``(b) Allocations for HOPE Bond Payments.--
       ``(1) In general.--Notwithstanding subsection (c), to help 
     address the mortgage crisis, of the amounts allocated 
     pursuant to clauses (i) and (ii) of section 1337(a)(1)(B) and 
     clauses (i) and (ii) of section 1337(a)(2)(B) in excess of 
     amounts described in section 1337(e)--
       ``(A) 100 percent of such excess shall be used to reimburse 
     the Treasury for payments made pursuant to section 
     257(w)(1)(C) of the National Housing Act in calendar year 
     2009;
       ``(B) 50 percent of such excess shall be used to reimburse 
     the Treasury for such payments in calendar year 2010; and
       ``(C) 25 percent of such excess shall be used to reimburse 
     the Treasury for such payments in calendar year 2011.
       ``(2) Excess funds.--At the termination of the HOPE for 
     Homeowners Program established under section 257 of the 
     National Housing Act, if amounts used to reimburse the 
     Treasury under paragraph (1) exceed the total net cost to the 
     Government of the HOPE for Homeowners Program, such amounts 
     shall be used for their original purpose, as described in 
     paragraphs (1)(B) and (2)(B) of section 1337(a).
       ``(3) Treasury fund.--The amounts referred to in 
     subparagraphs (A) through (C) of paragraph (1) shall be 
     deposited into a fund established in the Treasury of the 
     United States by the Secretary of the Treasury for such 
     purpose.

[[Page S6750]]

       ``(c) Allocation for Housing Trust Fund in Fiscal Year 2010 
     and Subsequent Years.--
       ``(1) In general.--Except as provided in subsection (b), 
     the Secretary shall distribute the amounts allocated for the 
     Housing Trust Fund under this section to provide affordable 
     housing as described in this subsection.
       ``(2) Permissible designees.--A State receiving grant 
     amounts under this subsection may designate a State housing 
     finance agency, housing and community development entity, 
     tribally designated housing entity (as such term is defined 
     in section 4 of the Native American Housing Assistance and 
     Self-Determination Act of 1997 (25 U.S.C. 4103)), or any 
     other qualified instrumentality of the State to receive such 
     grant amounts.
       ``(3) Distribution to states by needs-based formula.--
       ``(A) In general.--The Secretary shall, by regulation, 
     establish a formula within 12 months of the date of enactment 
     of the Federal Housing Finance Regulatory Reform Act of 2008, 
     to distribute amounts made available under this subsection to 
     each State to provide affordable housing to extremely low- 
     and very low-income households.
       ``(B) Basis for formula.--The formula required under 
     subparagraph (A) shall include the following:
       ``(i) The ratio of the shortage of standard rental units 
     both affordable and available to extremely low-income renter 
     households in the State to the aggregate shortage of standard 
     rental units both affordable and available to extremely low-
     income renter households in all the States.
       ``(ii) The ratio of the shortage of standard rental units 
     both affordable and available to very low-income renter 
     households in the State to the aggregate shortage of standard 
     rental units both affordable and available to very low-income 
     renter households in all the States.
       ``(iii) The ratio of extremely low-income renter households 
     in the State living with either (I) incomplete kitchen or 
     plumbing facilities, (II) more than 1 person per room, or 
     (III) paying more than 50 percent of income for housing 
     costs, to the aggregate number of extremely low-income renter 
     households living with either (IV) incomplete kitchen or 
     plumbing facilities, (V) more than 1 person per room, or (VI) 
     paying more than 50 percent of income for housing costs in 
     all the States.
       ``(iv) The ratio of very low-income renter households in 
     the State paying more than 50 percent of income on rent 
     relative to the aggregate number of very low-income renter 
     households paying more than 50 percent of income on rent in 
     all the States.
       ``(v) The resulting sum calculated from the factors 
     described in clauses (i) through (iv) shall be multiplied by 
     the relative cost of construction in the State. For purposes 
     of this subclause, the term `cost of construction'--

       ``(I) means the cost of construction or building 
     rehabilitation in the State relative to the national cost of 
     construction or building rehabilitation; and
       ``(II) shall be calculated such that values higher than 1.0 
     indicate that the State's construction costs are higher than 
     the national average, a value of 1.0 indicates that the 
     State's construction costs are exactly the same as the 
     national average, and values lower than 1.0 indicate that the 
     State's cost of construction are lower than the national 
     average.

       ``(C) Priority.--The formula required under subparagraph 
     (A) shall give priority emphasis and consideration to the 
     factor described in subparagraph (B)(i).
       ``(4) Allocation of grant amounts.--
       ``(A) Notice.--Not later than 60 days after the date that 
     the Secretary determines the formula amounts described in 
     paragraph (3), the Secretary shall caused to be published in 
     the Federal Register a notice that such amounts shall be so 
     available.
       ``(B) Grant amount.--In each fiscal year other than fiscal 
     year 2009, the Secretary shall make a grant to each State in 
     an amount that is equal to the formula amount determined 
     under paragraph (3) for that State.
       ``(C) Minimum state allocations.--If the formula amount 
     determined under paragraph (3) for a fiscal year would 
     allocate less than $3,000,000 to any State, the allocation 
     for such State shall be $3,000,000, and the increase shall be 
     deducted pro rata from the allocations made to all other 
     States.
       ``(5) Allocation plans required.--
       ``(A) In general.--For each year that a State or State 
     designated entity receives a grant under this subsection, the 
     State or State designated entity shall establish an 
     allocation plan. Such plan shall--
       ``(i) set forth a plan for the distribution of grant 
     amounts received by the State or State designated entity for 
     such year;
       ``(ii) be based on priority housing needs, as determined by 
     the State or State designated entity in accordance with the 
     regulations established under subsection (g)(2)(C);
       ``(iii) comply with paragraph (6); and
       ``(iv) include performance goals that comply with the 
     requirements established by the Secretary pursuant to 
     subsection (g)(2).
       ``(B) Establishment.--In establishing an allocation plan 
     under this paragraph, a State or State designated entity 
     shall--
       ``(i) notify the public of the establishment of the plan;
       ``(ii) provide an opportunity for public comments regarding 
     the plan;
       ``(iii) consider any public comments received regarding the 
     plan; and
       ``(iv) make the completed plan available to the public.
       ``(C) Contents.--An allocation plan of a State or State 
     designated entity under this paragraph shall set forth the 
     requirements for eligible recipients under paragraph (8) to 
     apply for such grant amounts, including a requirement that 
     each such application include--
       ``(i) a description of the eligible activities to be 
     conducted using such assistance; and
       ``(ii) a certification by the eligible recipient applying 
     for such assistance that any housing units assisted with such 
     assistance will comply with the requirements under this 
     section.
       ``(6) Selection of activities funded using housing trust 
     fund grant amounts.--Grant amounts received by a State or 
     State designated entity under this subsection may be used, or 
     committed for use, only for activities that--
       ``(A) are eligible under paragraph (7) for such use;
       ``(B) comply with the applicable allocation plan of the 
     State or State designated entity under paragraph (5); and
       ``(C) are selected for funding by the State or State 
     designated entity in accordance with the process and criteria 
     for such selection established pursuant to subsection 
     (g)(2)(C).
       ``(7) Eligible activities.--Grant amounts allocated to a 
     State or State designated entity under this subsection shall 
     be eligible for use, or for commitment for use, only for 
     assistance for--
       ``(A) the production, preservation, and rehabilitation of 
     rental housing, including housing under the programs 
     identified in section 1335(a)(2)(B) and for operating costs, 
     except that not less than 75 percent of such grant amounts 
     shall be used for the benefit only of extremely low-income 
     families and not more than 25 percent for the benefit only of 
     very low-income families; and
       ``(B) the production, preservation, and rehabilitation of 
     housing for homeownership, including such forms as down 
     payment assistance, closing cost assistance, and assistance 
     for interest rate buy-downs, that--
       ``(i) is available for purchase only for use as a principal 
     residence by families that qualify both as--

       ``(I) extremely low- and very low-income families at the 
     times described in subparagraphs (A) through (C) of section 
     215(b)(2) of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 12745(b)(2)); and
       ``(II) first-time homebuyers, as such term is defined in 
     section 104 of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 12704), except that any reference in 
     such section to assistance under title II of such Act shall 
     for purposes of this subsection be considered to refer to 
     assistance from affordable housing fund grant amounts;

       ``(ii) has an initial purchase price that meets the 
     requirements of section 215(b)(1) of the Cranston-Gonzalez 
     National Affordable Housing Act;
       ``(iii) is subject to the same resale restrictions 
     established under section 215(b)(3) of the Cranston-Gonzalez 
     National Affordable Housing Act and applicable to the 
     participating jurisdiction that is the State in which such 
     housing is located; and
       ``(iv) is made available for purchase only by, or in the 
     case of assistance under this subsection, is made available 
     only to homebuyers who have, before purchase completed a 
     program of independent financial education and counseling 
     from an eligible organization that meets the requirements of 
     section 132 of the Federal Housing Finance Regulatory Reform 
     Act of 2008.
       ``(8) Eligible recipients.--Grant amounts allocated to a 
     State or State designated entity under this subsection may be 
     provided only to a recipient that is an organization, agency, 
     or other entity (including a for-profit entity or a nonprofit 
     entity) that--
       ``(A) has demonstrated experience and capacity to conduct 
     an eligible activity under paragraph (7), as evidenced by its 
     ability to--
       ``(i) own, construct or rehabilitate, manage, and operate 
     an affordable multifamily rental housing development;
       ``(ii) design, construct or rehabilitate, and market 
     affordable housing for homeownership; or
       ``(iii) provide forms of assistance, such as down payments, 
     closing costs, or interest rate buy-downs for purchasers;
       ``(B) demonstrates the ability and financial capacity to 
     undertake, comply, and manage the eligible activity;
       ``(C) demonstrates its familiarity with the requirements of 
     any other Federal, State, or local housing program that will 
     be used in conjunction with such grant amounts to ensure 
     compliance with all applicable requirements and regulations 
     of such programs; and
       ``(D) makes such assurances to the State or State 
     designated entity as the Secretary shall, by regulation, 
     require to ensure that the recipient will comply with the 
     requirements of this subsection during the entire period that 
     begins upon selection of the recipient to receive such grant 
     amounts and ending upon the conclusion of all activities 
     under paragraph (8) that are engaged in by the recipient and 
     funded with such grant amounts.
       ``(9) Limitations on use.--
       ``(A) Required amount for homeownership activities.--Of the 
     aggregate amount allocated to a State or State designated 
     entity under this subsection not more than 10 percent shall 
     be used for activities under subparagraph (B) of paragraph 
     (7).
       ``(B) Deadline for commitment or use.--Grant amounts 
     allocated to a State or State designated entity under this 
     subsection shall be used or committed for use within 2 years 
     of the date that such grant amounts are made available to the 
     State or State designated entity. The Secretary shall 
     recapture any such amounts not so used or committed for use 
     and reallocate such amounts under this subsection in the 
     first year after such recapture.
       ``(C) Use of returns.--The Secretary shall, by regulation, 
     provide that any return on a loan or other investment of any 
     grant amount used by a State or State designated entity to 
     provide

[[Page S6751]]

     a loan under this subsection shall be treated, for purposes 
     of availability to and use by the State or State designated 
     entity, as a grant amount authorized under this subsection.
       ``(D) Prohibited uses.--The Secretary shall, by 
     regulation--
       ``(i) set forth prohibited uses of grant amounts allocated 
     under this subsection, which shall include use for--

       ``(I) political activities;
       ``(II) advocacy;
       ``(III) lobbying, whether directly or through other 
     parties;
       ``(IV) counseling services;
       ``(V) travel expenses; and
       ``(VI) preparing or providing advice on tax returns;

       ``(ii) provide that, except as provided in clause (iii), 
     grant amounts of a State or State designated entity may not 
     be used for administrative, outreach, or other costs of--

       ``(I) the State or State designated entity; or
       ``(II) any other recipient of such grant amounts; and

       ``(iii) limit the amount of any grant amounts for a year 
     that may be used by the State or State designated entity for 
     administrative costs of carrying out the program required 
     under this subsection, including home ownership counseling, 
     to a percentage of such grant amounts of the State or State 
     designated entity for such year, which may not exceed 10 
     percent.
       ``(E) Prohibition of consideration of use for meeting 
     housing goals or duty to serve.--In determining compliance 
     with the housing goals under this subpart and the duty to 
     serve underserved markets under section 1335, the Director 
     may not consider any grant amounts used under this section 
     for eligible activities under paragraph (7). The Director 
     shall give credit toward the achievement of such housing 
     goals and such duty to serve underserved markets to purchases 
     by the enterprises of mortgages for housing that receives 
     funding from such grant amounts, but only to the extent that 
     such purchases by the enterprises are funded other than with 
     such grant amounts.
       ``(d) Reduction for Failure To Obtain Return of Misused 
     Funds.--If in any year a State or State designated entity 
     fails to obtain reimbursement or return of the full amount 
     required under subsection (e)(1)(B) to be reimbursed or 
     returned to the State or State designated entity during such 
     year--
       ``(1) except as provided in paragraph (2)--
       ``(A) the amount of the grant for the State or State 
     designated entity for the succeeding year, as determined 
     pursuant to this section, shall be reduced by the amount by 
     which such amounts required to be reimbursed or returned 
     exceed the amount actually reimbursed or returned; and
       ``(B) the amount of the grant for the succeeding year for 
     each other State or State designated entity whose grant is 
     not reduced pursuant to subparagraph (A) shall be increased 
     by the amount determined by applying the formula established 
     pursuant to this section to the total amount of all 
     reductions for all State or State designated entities for 
     such year pursuant to subparagraph (A); or
       ``(2) in any case in which such failure to obtain 
     reimbursement or return occurs during a year immediately 
     preceding a year in which grants under this section will not 
     be made, the State or State designated entity shall pay to 
     the Secretary for reallocation among the other grantees an 
     amount equal to the amount of the reduction for the entity 
     that would otherwise apply under paragraph (1)(A).
       ``(e) Accountability of Recipients and Grantees.--
       ``(1) Recipients.--
       ``(A) Tracking of funds.--The Secretary shall--
       ``(i) require each State or State designated entity to 
     develop and maintain a system to ensure that each recipient 
     of assistance under this section uses such amounts in 
     accordance with this section, the regulations issued under 
     this section, and any requirements or conditions under which 
     such amounts were provided; and
       ``(ii) establish minimum requirements for agreements, 
     between the State or State designated entity and recipients, 
     regarding assistance under this section, which shall 
     include--

       ``(I) appropriate periodic financial and project reporting, 
     record retention, and audit requirements for the duration of 
     the assistance to the recipient to ensure compliance with the 
     limitations and requirements of this section and the 
     regulations under this section; and
       ``(II) any other requirements that the Secretary determines 
     are necessary to ensure appropriate administration and 
     compliance.

       ``(B) Misuse of funds.--
       ``(i) Reimbursement requirement.--If any recipient of 
     assistance under this section is determined, in accordance 
     with clause (ii), to have used any such amounts in a manner 
     that is materially in violation of this section, the 
     regulations issued under this section, or any requirements or 
     conditions under which such amounts were provided, the State 
     or State designated entity shall require that, within 12 
     months after the determination of such misuse, the recipient 
     shall reimburse the State or State designated entity for such 
     misused amounts and return to the State or State designated 
     entity any such amounts that remain unused or uncommitted for 
     use. The remedies under this clause are in addition to any 
     other remedies that may be available under law.
       ``(ii) Determination.--A determination is made in 
     accordance with this clause if the determination is made by 
     the Secretary or made by the State or State designated 
     entity, provided that--

       ``(I) the State or State designated entity provides 
     notification of the determination to the Secretary for 
     review, in the discretion of the Secretary, of the 
     determination; and
       ``(II) the Secretary does not subsequently reverse the 
     determination.

       ``(2) Grantees.--
       ``(A) Report.--
       ``(i) In general.--The Secretary shall require each State 
     or State designated entity receiving grant amounts in any 
     given year under this section to submit a report, for such 
     year, to the Secretary that--

       ``(I) describes the activities funded under this section 
     during such year with such grant amounts; and
       ``(II) the manner in which the State or State designated 
     entity complied during such year with any allocation plan 
     established pursuant to subsection (c).

       ``(ii) Public availability.--The Secretary shall make such 
     reports pursuant to this subparagraph publicly available.
       ``(B) Misuse of funds.--If the Secretary determines, after 
     reasonable notice and opportunity for hearing, that a State 
     or State designated entity has failed to comply substantially 
     with any provision of this section, and until the Secretary 
     is satisfied that there is no longer any such failure to 
     comply, the Secretary shall--
       ``(i) reduce the amount of assistance under this section to 
     the State or State designated entity by an amount equal to 
     the amount of grant amounts which were not used in accordance 
     with this section;
       ``(ii) require the State or State designated entity to 
     repay the Secretary any amount of the grant which was not 
     used in accordance with this section;
       ``(iii) limit the availability of assistance under this 
     section to the State or State designated entity to activities 
     or recipients not affected by such failure to comply; or
       ``(iv) terminate any assistance under this section to the 
     State or State designated entity.
       ``(f) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Extremely low-income renter household.--The term 
     `extremely low-income renter household' means a household 
     whose income is not in excess of 30 percent of the area 
     median income, with adjustments for smaller and larger 
     families, as determined by the Secretary.
       ``(2) Recipient.--The term `recipient' means an individual 
     or entity that receives assistance from a State or State 
     designated entity from amounts made available to the State or 
     State designated entity under this section.
       ``(3) Shortage of standard rental units both affordable and 
     available to extremely low-income renter households.--
       ``(A) In general.--The term `shortage of standard rental 
     units both affordable and available to extremely low-income 
     renter households' means for any State or other geographical 
     area the gap between--
       ``(i) the number of units with complete plumbing and 
     kitchen facilities with a rent that is 30 percent or less of 
     30 percent of the adjusted area median income as determined 
     by the Secretary that are occupied by extremely low-income 
     renter households or are vacant for rent; and
       ``(ii) the number of extremely low-income renter 
     households.
       ``(B) Rule of construction.--If the number of units 
     described in subparagraph (A)(i) exceeds the number of 
     extremely low-income households as described in subparagraph 
     (A)(ii), there is no shortage.
       ``(4) Shortage of standard rental units both affordable and 
     available to very low-income renter households.--
       ``(A) In general.--The term `shortage of standard rental 
     units both affordable and available to very low-income renter 
     households' means for any State or other geographical area 
     the gap between--
       ``(i) the number of units with complete plumbing and 
     kitchen facilities with a rent that is 30 percent or less of 
     50 percent of the adjusted area median income as determined 
     by the Secretary that are occupied by very low-income renter 
     households or are vacant for rent; and
       ``(ii) the number of very low-income renter households.
       ``(B) Rule of construction.--If the number of units 
     described in subparagraph (A)(i) exceeds the number of very 
     low-income households as described in subparagraph (A)(ii), 
     there is no shortage.
       ``(5) Very low-income family.--The term `very low-income 
     family' has the meaning given such term in section 1303, 
     except that such term includes any family that resides in a 
     rural area that has an income that does not exceed the 
     poverty line (as such term is defined in section 673(2) of 
     the Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 
     9902(2)), including any revision required by such section) 
     applicable to a family of the size involved.
       ``(6) Very low-income renter households.--The term `very 
     low-income renter households' means a household whose income 
     is in excess of 30 percent but not greater than 50 percent of 
     the area median income, with adjustments for smaller and 
     larger families, as determined by the Secretary.
       ``(g) Regulations.--
       ``(1) In general.--The Secretary shall issue regulations to 
     carry out this section.
       ``(2) Required contents.--The regulations issued under this 
     subsection shall include--
       ``(A) a requirement that the Secretary ensure that the use 
     of grant amounts under this section by States or State 
     designated entities is audited not less than annually to 
     ensure compliance with this section;
       ``(B) authority for the Secretary to audit, provide for an 
     audit, or otherwise verify a State or State designated 
     entity's activities to ensure compliance with this section;
       ``(C) requirements for a process for application to, and 
     selection by, each State or State designated entity for 
     activities meeting the State or State designated entity's 
     priority housing needs to be funded with grant amounts under 
     this section, which shall provide for priority in funding to 
     be based upon--

[[Page S6752]]

       ``(i) geographic diversity;
       ``(ii) ability to obligate amounts and undertake activities 
     so funded in a timely manner;
       ``(iii) in the case of rental housing projects under 
     subsection (c)(7)(A), the extent to which rents for units in 
     the project funded are affordable, especially for extremely 
     low-income families;
       ``(iv) in the case of rental housing projects under 
     subsection (c)(7)(A), the extent of the duration for which 
     such rents will remain affordable;
       ``(v) the extent to which the application makes use of 
     other funding sources; and
       ``(vi) the merits of an applicant's proposed eligible 
     activity;
       ``(D) requirements to ensure that grant amounts provided to 
     a State or State designated entity under this section that 
     are used for rental housing under subsection (c)(7)(A) are 
     used only for the benefit of extremely low- and very low-
     income families; and
       ``(E) requirements and standards for establishment, by a 
     State or State designated entity, for use of grant amounts in 
     2009 and subsequent years of performance goals, benchmarks, 
     and timetables for the production, preservation, and 
     rehabilitation of affordable rental and homeownership housing 
     with such grant amounts.
       ``(h) Affordable Housing Trust Fund.--If, after the date of 
     enactment of the Federal Housing Finance Regulatory Reform 
     Act of 2008, in any year, there is enacted any provision of 
     Federal law establishing an affordable housing trust fund 
     other than under this title for use only for grants to 
     provide affordable rental housing and affordable 
     homeownership opportunities, and the subsequent year is a 
     year referred to in subsection (c), the Secretary shall in 
     such subsequent year and any remaining years referred to in 
     subsection (c) transfer to such affordable housing trust fund 
     the aggregate amount allocated pursuant to subsection (c) in 
     such year. Notwithstanding any other provision of law, 
     assistance provided using amounts transferred to such 
     affordable housing trust fund pursuant to this subsection may 
     not be used for any of the activities specified in clauses 
     (i) through (vi) of subsection (c)(9)(D).
       ``(i) Funding Accountability and Transparency.--Any grant 
     under this section to a grantee by a State or State 
     designated entity, any assistance provided to a recipient by 
     a State or State designated entity, and any grant, award, or 
     other assistance from an affordable housing trust fund 
     referred to in subsection (h) shall be considered a Federal 
     award for purposes of the Federal Funding Accountability and 
     Transparency Act of 2006 (31 U.S.C. 6101 note). Upon the 
     request of the Director of the Office of Management and 
     Budget, the Secretary shall obtain and provide such 
     information regarding any such grants, assistance, and awards 
     as the Director of the Office of Management and Budget 
     considers necessary to comply with the requirements of such 
     Act, as applicable, pursuant to the preceding sentence.

     ``SEC. 1339. CAPITAL MAGNET FUND.

       ``(a) Establishment.--There is established in the Treasury 
     of the United States a trust fund to be known as the Capital 
     Magnet Fund, which shall be a special account within the 
     Community Development Financial Institutions Fund.
       ``(b) Deposits to Trust Fund.--The Capital Magnet Fund 
     shall consist of--
       ``(1) any amounts transferred to the Fund pursuant to 
     section 1337; and
       ``(2) any amounts as are or may be appropriated, 
     transferred, or credited to such Fund under any other 
     provisions of law.
       ``(c) Expenditures From Trust Fund.--Amounts in the Capital 
     Magnet Fund shall be available to the Secretary of the 
     Treasury to carry out a competitive grant program to attract 
     private capital for and increase investment in--
       ``(1) the development, preservation, rehabilitation, or 
     purchase of affordable housing for primarily extremely low-, 
     very low-, and low-income families; and
       ``(2) economic development activities or community service 
     facilities, such as day care centers, workforce development 
     centers, and health care clinics, which in conjunction with 
     affordable housing activities implement a concerted strategy 
     to stabilize or revitalize a low-income area or underserved 
     rural area.
       ``(d) Federal Assistance.--All assistance provided using 
     amounts in the Capital Magnet Fund shall be considered to be 
     Federal financial assistance.
       ``(e) Eligible Grantees.--A grant under this section may be 
     made, pursuant to such requirements as the Secretary of the 
     Treasury shall establish for experience and success in 
     attracting private financing and carrying out the types of 
     activities proposed under the application of the grantee, 
     only to--
       ``(1) a Treasury certified community development financial 
     institution; or
       ``(2) a nonprofit organization having as 1 of its principal 
     purposes the development or management of affordable housing.
       ``(f) Eligible Uses.--Grant amounts awarded from the 
     Capital Magnet Fund pursuant to this section may be used for 
     the purposes described in paragraphs (1) and (2) of 
     subsection (c), including for the following uses:
       ``(1) To provide loan loss reserves.
       ``(2) To capitalize a revolving loan fund.
       ``(3) To capitalize an affordable housing fund.
       ``(4) To capitalize a fund to support activities described 
     in subsection (c)(2).
       ``(5) For risk-sharing loans.
       ``(g) Applications.--
       ``(1) In general.--The Secretary of the Treasury shall 
     provide, in a competitive application process established by 
     regulation, for eligible grantees under subsection (e) to 
     submit applications for Capital Magnet Fund grants to the 
     Secretary at such time and in such manner as the Secretary 
     shall determine.
       ``(2) Content of application.--The application required 
     under paragraph (1) shall include a detailed description of--
       ``(A) the types of affordable housing, economic, and 
     community revitalization projects that support or sustain 
     residents of an affordable housing project funded by a grant 
     under this section for which such grant amounts would be 
     used, including the proposed use of eligible grants as 
     authorized under this section;
       ``(B) the types, sources, and amounts of other funding for 
     such projects; and
       ``(C) the expected time frame of any grant used for such 
     project.
       ``(h) Grant Limitation.--
       ``(1) In general.--Any 1 eligible grantee and its 
     subsidiaries and affiliates may not be awarded more than 15 
     percent of the aggregate funds available for grants during 
     any year from the Capital Magnet Fund.
       ``(2) Geographic diversity.--
       ``(A) Goal.--The Secretary of the Treasury shall seek to 
     fund activities in geographically diverse areas of economic 
     distress, including metropolitan and underserved rural areas 
     in every State.
       ``(B) Diversity defined.--For purposes of this paragraph, 
     geographic diversity includes those areas that meet objective 
     criteria of economic distress developed by the Secretary of 
     the Treasury, which may include--
       ``(i) the percentage of low-income families or the extent 
     of poverty;
       ``(ii) the rate of unemployment or underemployment;
       ``(iii) extent of blight and disinvestment;
       ``(iv) projects that target extremely low-, very low-, and 
     low-income families in or outside a designated economic 
     distress area; or
       ``(v) any other criteria designated by the Secretary of the 
     Treasury.
       ``(3) Leverage of funds.--Each grant from the Capital 
     Magnet Fund awarded under this section shall be reasonably 
     expected to result in eligible housing, or economic and 
     community development projects that support or sustain an 
     affordable housing project funded by a grant under this 
     section whose aggregate costs total at least 10 times the 
     grant amount.
       ``(4) Commitment for use deadline.--Amounts made available 
     for grants under this section shall be committed for use 
     within 2 years of the date of such allocation. The Secretary 
     of the Treasury shall recapture into the Capital Magnet Fund 
     any amounts not so used or committed for use and allocate 
     such amounts in the first year after such recapture.
       ``(5) Lobbying restrictions.--No assistance or amounts made 
     available under this section may be expended by an eligible 
     grantee to pay any person to influence or attempt to 
     influence any agency, elected official, officer or employee 
     of a State or local government in connection with the making, 
     award, extension, continuation, renewal, amendment, or 
     modification of any State or local government contract, 
     grant, loan, or cooperative agreement as such terms are 
     defined in section 1352 of title 31, United States Code.
       ``(6) Prohibition of consideration of use for meeting 
     housing goals or duty to serve.--In determining the 
     compliance of the enterprises with the housing goals under 
     this section and the duty to serve underserved markets under 
     section 1335, the Director of the Federal Housing Finance 
     Agency may not consider any Capital Magnet Fund amounts used 
     under this section for eligible activities under subsection 
     (f). The Director of the Federal Housing Finance Agency shall 
     give credit toward the achievement of such housing goals and 
     such duty to serve underserved markets to purchases by the 
     enterprises of mortgages for housing that receives funding 
     from Capital Magnet Fund grant amounts, but only to the 
     extent that such purchases by the enterprises are funded 
     other than with such grant amounts.
       ``(7) Accountability of recipients and grantees.--
       ``(A) Tracking of funds.--The Secretary of the Treasury 
     shall--
       ``(i) require each grantee to develop and maintain a system 
     to ensure that each recipient of assistance from the Capital 
     Magnet Fund uses such amounts in accordance with this 
     section, the regulations issued under this section, and any 
     requirements or conditions under which such amounts were 
     provided; and
       ``(ii) establish minimum requirements for agreements, 
     between the grantee and the Capital Magnet Fund, regarding 
     assistance from the Capital Magnet Fund, which shall 
     include--

       ``(I) appropriate periodic financial and project reporting, 
     record retention, and audit requirements for the duration of 
     the grant to the recipient to ensure compliance with the 
     limitations and requirements of this section and the 
     regulations under this section; and
       ``(II) any other requirements that the Secretary determines 
     are necessary to ensure appropriate grant administration and 
     compliance.

       ``(B) Misuse of funds.--If the Secretary of the Treasury 
     determines, after reasonable notice and opportunity for 
     hearing, that a grantee has failed to comply substantially 
     with any provision of this section and until the Secretary is 
     satisfied that there is no longer any such failure to comply, 
     the Secretary shall--
       ``(i) reduce the amount of assistance under this section to 
     the grantee by an amount equal to the amount of Capital 
     Magnet Fund grant amounts which were not used in accordance 
     with this section;
       ``(ii) require the grantee to repay the Secretary any 
     amount of the Capital Magnet Fund grant amounts which were 
     not used in accordance with this section;
       ``(iii) limit the availability of assistance under this 
     section to the grantee to activities or recipients not 
     affected by such failure to comply; or
       ``(iv) terminate any assistance under this section to the 
     grantee.

[[Page S6753]]

       ``(i) Periodic Reports.--
       ``(1) In general.--The Secretary of the Treasury shall 
     submit a report, on a periodic basis, to the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives describing the activities to be funded under 
     this section.
       ``(2) Reports available to public.--The Secretary of the 
     Treasury shall make the reports required under paragraph (1) 
     publicly available.
       ``(j) Regulations.--
       ``(1) In general.--The Secretary of the Treasury shall 
     issue regulations to carry out this section.
       ``(2) Required contents.--The regulations issued under this 
     subsection shall include--
       ``(A) authority for the Secretary to audit, provide for an 
     audit, or otherwise verify an enterprise's activities, to 
     ensure compliance with this section;
       ``(B) a requirement that the Secretary ensure that the 
     allocation of each enterprise is audited not less than 
     annually to ensure compliance with this section; and
       ``(C) requirements for a process for application to, and 
     selection by, the Secretary for activities to be funded with 
     amounts from the Capital Magnet Fund, which shall provide 
     that--
       ``(i) funds be fairly distributed to urban, suburban, and 
     rural areas; and
       ``(ii) selection shall be based upon specific criteria, 
     including a prioritization of funding based upon--

       ``(I) the ability to use such funds to generate additional 
     investments;
       ``(II) affordable housing need (taking into account the 
     distinct needs of different regions of the country); and
       ``(III) ability to obligate amounts and undertake 
     activities so funded in a timely manner.''.

     SEC. 1132. FINANCIAL EDUCATION AND COUNSELING.

       (a) Goals.--Financial education and counseling under this 
     section shall have the goal of--
       (1) increasing the financial knowledge and decision making 
     capabilities of prospective homebuyers;
       (2) assisting prospective homebuyers to develop monthly 
     budgets, build personal savings, finance or plan for major 
     purchases, reduce their debt, improve their financial 
     stability, and set and reach their financial goals;
       (3) helping prospective homebuyers to improve their credit 
     scores by understanding the relationship between their credit 
     histories and their credit scores; and
       (4) educating prospective homebuyers about the options 
     available to build savings for short- and long-term goals.
       (b) Grants.--
       (1) In general.--The Secretary of the Treasury (in this 
     section referred to as the ``Secretary'') shall make grants 
     to eligible organizations to enable such organizations to 
     provide a range of financial education and counseling 
     services to prospective homebuyers.
       (2) Selection.--The Secretary shall select eligible 
     organizations to receive assistance under this section based 
     on their experience and ability to provide financial 
     education and counseling services that result in documented 
     positive behavioral changes.
       (c) Eligible Organizations.--
       (1) In general.--For purposes of this section, the term 
     ``eligible organization'' means an organization that is--
       (A) certified in accordance with section 106(e)(1) of the 
     Housing and Urban Development Act of 1968 (12 U.S.C. 
     1701x(e)); or
       (B) certified by the Office of Financial Education of the 
     Department of the Treasury for purposes of this section, in 
     accordance with paragraph (2).
       (2) OFE certification.--To be certified by the Office of 
     Financial Education for purposes of this section, an eligible 
     organization shall be--
       (A) a housing counseling agency certified by the Secretary 
     of Housing and Urban Development under section 106(e) of the 
     Housing and Urban Development Act of 1968;
       (B) a State, local, or tribal government agency;
       (C) a community development financial institution (as 
     defined in section 103(5) of the Community Development 
     Banking and Financial Institutions Act of 1994 (12 U.S.C. 
     4702(5)) or a credit union; or
       (D) any collaborative effort of entities described in any 
     of subparagraphs (A) through (C).
       (d) Authority for Pilot Projects.--
       (1) In general.--The Secretary of the Treasury shall 
     authorize not more than 5 pilot project grants to eligible 
     organizations under subsection (c) in order to--
       (A) carry out the services under this section; and
       (B) provide such other services that will improve the 
     financial stability and economic condition of low- and 
     moderate-income and low-wealth individuals.
       (2) Goal.--The goal of the pilot project grants under this 
     subsection is to--
       (A) identify successful methods resulting in positive 
     behavioral change for financial empowerment; and
       (B) establish program models for organizations to carry out 
     effective counseling services.
       (e) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary such sums as are 
     necessary to carry out this section and for the provision of 
     additional financial educational services.
       (f) Study and Report on Effectiveness and Impact.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study on the effectiveness and impact 
     of the grant program established under this section. Not 
     later than 3 years after the date of enactment of this Act, 
     the Comptroller General shall submit a report on the results 
     of such study to the Committee on Banking, Housing, and Urban 
     Affairs of the Senate and the Committee on Financial Services 
     of the House of Representatives.
       (2) Content of study.--The study required under paragraph 
     (1) shall include an evaluation of the following:
       (A) The effectiveness of the grant program established 
     under this section in improving the financial situation of 
     homeowners and prospective homebuyers served by the grant 
     program.
       (B) The extent to which financial education and counseling 
     services have resulted in positive behavioral changes.
       (C) The effectiveness and quality of the eligible 
     organizations providing financial education and counseling 
     services under the grant program.
       (g) Regulations.--The Secretary is authorized to promulgate 
     such regulations as may be necessary to implement and 
     administer the grant program authorized by this section.

     SEC. 1133. TRANSFER AND RIGHTS OF CERTAIN HUD EMPLOYEES.

       (a) Transfer.--Each employee of the Department of Housing 
     and Urban Development whose position responsibilities 
     primarily involve the establishment and enforcement of the 
     housing goals under subpart B of part 2 of subtitle A of the 
     Federal Housing Enterprises Financial Safety and Soundness 
     Act of 1992 (12 U.S.C. 4561 et seq.) shall be transferred to 
     the Federal Housing Finance Agency for employment, not later 
     than the effective date of the Federal Housing Finance 
     Regulatory Reform Act of 2008, 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 that held 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 Director 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 Director determines, after the 
     end of the 1-year period beginning on the effective date of 
     the Federal Housing Finance Regulatory Reform Act of 2008, 
     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 described under subsection 
     (a) accepting employment with the Agency 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 Agency or the Department of 
     Housing and Urban Development, as applicable, including 
     insurance, to which such employee belongs on such effective 
     date, 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 Director of 
     the Federal Housing Finance Agency.
       (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 Director.
       (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 Director, 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.

                  Subtitle C--Prompt Corrective Action

     SEC. 1141. CRITICAL CAPITAL LEVELS.

       (a) In General.--Section 1363 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4613) is amended--
       (1) by striking ``For'' and inserting ``(a) Enterprises.--
     For''; and
       (2) by adding at the end the following new subsection:
       ``(b) Federal Home Loan Banks.--
       ``(1) In general.--For purposes of this subtitle, the 
     critical capital level for each Federal Home Loan Bank shall 
     be such amount of capital as the Director shall, by 
     regulation, require.
       ``(2) Consideration of other critical capital levels.--In 
     establishing the critical capital

[[Page S6754]]

     level under paragraph (1) for the Federal Home Loan Banks, 
     the Director shall take due consideration of the critical 
     capital level established under subsection (a) for the 
     enterprises, with such modifications as the Director 
     determines to be appropriate to reflect the difference in 
     operations between the banks and the enterprises.''.
       (b) Regulations.--Not later than the expiration of the 180-
     day period beginning on the date of enactment of this Act, 
     the Director of the Federal Housing Finance Agency shall 
     issue regulations pursuant to section 1363(b) of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (as added by this section) establishing the critical 
     capital level under such section.

     SEC. 1142. CAPITAL CLASSIFICATIONS.

       (a) In General.--Section 1364 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4614) is amended--
       (1) in the heading for subsection (a) by striking ``In 
     General'' and inserting ``Enterprises'';
       (2) in subsection (c)--
       (A) by striking ``subsection (b)'' and inserting 
     ``subsection (c)'';
       (B) by striking ``enterprises'' and inserting ``regulated 
     entities''; and
       (C) by striking the last sentence;
       (3) by redesignating subsections (c) (as so amended by 
     paragraph (2) of this subsection) and (d) as subsections (d) 
     and (f), respectively;
       (4) by striking subsection (b) and inserting the following:
       ``(b) Federal Home Loan Banks.--
       ``(1) Establishment and criteria.--For purposes of this 
     subtitle, the Director shall, by regulation--
       ``(A) establish the capital classifications specified under 
     paragraph (2) for the Federal Home Loan Banks;
       ``(B) establish criteria for each such capital 
     classification based on the amount and types of capital held 
     by a bank and the risk-based, minimum, and critical capital 
     levels for the banks and taking due consideration of the 
     capital classifications established under subsection (a) for 
     the enterprises, with such modifications as the Director 
     determines to be appropriate to reflect the difference in 
     operations between the banks and the enterprises; and
       ``(C) shall classify the Federal Home Loan Banks according 
     to such capital classifications.
       ``(2) Classifications.--The capital classifications 
     specified under this paragraph are--
       ``(A) adequately capitalized;
       ``(B) undercapitalized;
       ``(C) significantly undercapitalized; and
       ``(D) critically undercapitalized.
       ``(c) Discretionary Classification.--
       ``(1) Grounds for reclassification.--The Director may 
     reclassify a regulated entity under paragraph (2) if--
       ``(A) at any time, the Director determines in writing that 
     the regulated entity is engaging in conduct that could result 
     in a rapid depletion of core or total capital or the value of 
     collateral pledged as security has decreased significantly or 
     that the value of the property subject to any mortgage held 
     by the regulated entity (or securitized in the case of an 
     enterprise) has decreased significantly;
       ``(B) after notice and an opportunity for hearing, the 
     Director determines that the regulated entity is in an unsafe 
     or unsound condition; or
       ``(C) pursuant to section 1371(b), the Director deems the 
     regulated entity to be engaging in an unsafe or unsound 
     practice.
       ``(2) Reclassification.--In addition to any other action 
     authorized under this title, including the reclassification 
     of a regulated entity for any reason not specified in this 
     subsection, if the Director takes any action described in 
     paragraph (1), the Director may classify a regulated entity--
       ``(A) as undercapitalized, if the regulated entity is 
     otherwise classified as adequately capitalized;
       ``(B) as significantly undercapitalized, if the regulated 
     entity is otherwise classified as undercapitalized; and
       ``(C) as critically undercapitalized, if the regulated 
     entity is otherwise classified as significantly 
     undercapitalized.''; and
       (5) by inserting after subsection (d) (as so redesignated 
     by paragraph (3) of this subsection), the following new 
     subsection:
       ``(e) Restriction on Capital Distributions.--
       ``(1) In general.--A regulated entity shall make no capital 
     distribution if, after making the distribution, the regulated 
     entity would be undercapitalized.
       ``(2) Exception.--Notwithstanding paragraph (1), the 
     Director may permit a regulated entity, to the extent 
     appropriate or applicable, to repurchase, redeem, retire, or 
     otherwise acquire shares or ownership interests if the 
     repurchase, redemption, retirement, or other acquisition--
       ``(A) is made in connection with the issuance of additional 
     shares or obligations of the regulated entity in at least an 
     equivalent amount; and
       ``(B) will reduce the financial obligations of the 
     regulated entity or otherwise improve the financial condition 
     of the entity.''.
       (b) Regulations.--Not later than the expiration of the 180-
     day period beginning on the date of enactment of this Act, 
     the Director of the Federal Housing Finance Agency shall 
     issue regulations to carry out section 1364(b) of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (as added by this section), relating to capital 
     classifications for the Federal Home Loan Banks.

     SEC. 1143. SUPERVISORY ACTIONS APPLICABLE TO UNDERCAPITALIZED 
                   REGULATED ENTITIES.

       Section 1365 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4615) is 
     amended--
       (1) by striking ``the enterprise'' each place that term 
     appears and inserting ``the regulated entity'';
       (2) by striking ``An enterprise'' each place that term 
     appears and inserting ``A regulated entity'';
       (3) by striking ``an enterprise'' each place that term 
     appears and inserting ``a regulated entity'';
       (4) in subsection (a)--
       (A) by redesignating paragraphs (1) and (2) as paragraphs 
     (2) and (3), respectively;
       (B) by inserting before paragraph (2), as redesignated, the 
     following:
       ``(1) Required monitoring.--The Director shall--
       ``(A) closely monitor the condition of any undercapitalized 
     regulated entity;
       ``(B) closely monitor compliance with the capital 
     restoration plan, restrictions, and requirements imposed on 
     an undercapitalized regulated entity under this section; and
       ``(C) periodically review the plan, restrictions, and 
     requirements applicable to an undercapitalized regulated 
     entity to determine whether the plan, restrictions, and 
     requirements are achieving the purpose of this section.''; 
     and
       (C) by adding at the end the following:
       ``(4) Restriction of asset growth.--An undercapitalized 
     regulated entity shall not permit its average total assets 
     during any calendar quarter to exceed its average total 
     assets during the preceding calendar quarter, unless--
       ``(A) the Director has accepted the capital restoration 
     plan of the regulated entity;
       ``(B) any increase in total assets is consistent with the 
     capital restoration plan; and
       ``(C) the ratio of tangible equity to assets of the 
     regulated entity increases during the calendar quarter at a 
     rate sufficient to enable the regulated entity to become 
     adequately capitalized within a reasonable time.
       ``(5) Prior approval of acquisitions and new activities.--
     An undercapitalized regulated entity shall not, directly or 
     indirectly, acquire any interest in any entity or engage in 
     any new activity, unless--
       ``(A) the Director has accepted the capital restoration 
     plan of the regulated entity, the regulated entity is 
     implementing the plan, and the Director determines that the 
     proposed action is consistent with and will further the 
     achievement of the plan; or
       ``(B) the Director determines that the proposed action will 
     further the purpose of this subtitle.'';
       (5) in subsection (b)--
       (A) in the subsection heading, by striking 
     ``Discretionary'';
       (B) in the matter preceding paragraph (1), by striking 
     ``may'' and inserting ``shall''; and
       (C) in paragraph (2)--
       (i) by striking ``make, in good faith, reasonable efforts 
     necessary to''; and
       (ii) by striking the period at the end and inserting ``in 
     any material respect.''; and
       (6) by striking subsection (c) and inserting the following:
       ``(c) Other Discretionary Safeguards.--The Director may 
     take, with respect to an undercapitalized regulated entity, 
     any of the actions authorized to be taken under section 1366 
     with respect to a significantly undercapitalized regulated 
     entity, if the Director determines that such actions are 
     necessary to carry out the purpose of this subtitle.''.

     SEC. 1144. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY 
                   UNDERCAPITALIZED REGULATED ENTITIES.

       Section 1366 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4616) is 
     amended--
       (1) in subsection (a)(2), by striking ``undercapitalized 
     enterprise'' and inserting ``undercapitalized'';
       (2) by striking ``the enterprise'' each place that term 
     appears and inserting ``the regulated entity'';
       (3) by striking ``An enterprise'' each place that term 
     appears and inserting ``A regulated entity'';
       (4) by striking ``an enterprise'' each place that term 
     appears and inserting ``a regulated entity'';
       (5) in subsection (b)--
       (A) in the subsection heading, by striking ``Discretionary 
     Supervisory'' and inserting ``Specific'';
       (B) in the matter preceding paragraph (1), by striking 
     ``may, at any time, take any'' and inserting ``shall carry 
     out this section by taking, at any time, 1 or more'';
       (C) by striking paragraph (6);
       (D) by redesignating paragraph (5) as paragraph (6);
       (E) by inserting after paragraph (4) the following:
       ``(5) Improvement of management.--Take 1 or more of the 
     following actions:
       ``(A) New election of board.--Order a new election for the 
     board of directors of the regulated entity.
       ``(B) Dismissal of directors or executive officers.--
     Require the regulated entity to dismiss from office any 
     director or executive officer who had held office for more 
     than 180 days immediately before the date on which the 
     regulated entity became undercapitalized. Dismissal under 
     this subparagraph shall not be construed to be a removal 
     pursuant to the enforcement powers of the Director under 
     section 1377.
       ``(C) Employ qualified executive officers.--Require the 
     regulated entity to employ qualified executive officers (who, 
     if the Director so specifies, shall be subject to approval by 
     the Director).''; and
       (F) by adding at the end the following:
       ``(7) Other action.--Require the regulated entity to take 
     any other action that the Director determines will better 
     carry out the purpose of this section than any of the other 
     actions specified in this subsection.''; and
       (6) by striking subsection (c) and inserting the following:

[[Page S6755]]

       ``(c) Restriction on Compensation of Executive Officers.--A 
     regulated entity that is classified as significantly 
     undercapitalized in accordance with section 1364 may not, 
     without prior written approval by the Director--
       ``(1) pay any bonus to any executive officer; or
       ``(2) provide compensation to any executive officer at a 
     rate exceeding the average rate of compensation of that 
     officer (excluding bonuses, stock options, and profit 
     sharing) during the 12 calendar months preceding the calendar 
     month in which the regulated entity became significantly 
     undercapitalized.''.

     SEC. 1145. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED 
                   REGULATED ENTITIES.

       (a) In General.--Section 1367 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4617) is amended to read as follows:

     ``SEC. 1367. AUTHORITY OVER CRITICALLY UNDERCAPITALIZED 
                   REGULATED ENTITIES.

       ``(a) Appointment of the Agency as Conservator or 
     Receiver.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal or State law, the Director may appoint the Agency as 
     conservator or receiver for a regulated entity in the manner 
     provided under paragraph (2) or (4). All references to the 
     conservator or receiver under this section are references to 
     the Agency acting as conservator or receiver.
       ``(2) Discretionary appointment.--The Agency may, at the 
     discretion of the Director, be appointed conservator or 
     receiver for the purpose of reorganizing, rehabilitating, or 
     winding up the affairs of a regulated entity.
       ``(3) Grounds for discretionary appointment of conservator 
     or receiver.--The grounds for appointing conservator or 
     receiver for any regulated entity under paragraph (2) are as 
     follows:
       ``(A) Substantial dissipation.--Substantial dissipation of 
     assets or earnings due to--
       ``(i) any violation of any provision of Federal or State 
     law; or
       ``(ii) any unsafe or unsound practice.
       ``(B) Unsafe or unsound condition.--An unsafe or unsound 
     condition to transact business.
       ``(C) Cease and desist orders.--Any willful violation of a 
     cease and desist order that has become final.
       ``(D) Concealment.--Any concealment of the books, papers, 
     records, or assets of the regulated entity, or any refusal to 
     submit the books, papers, records, or affairs of the 
     regulated entity, for inspection to any examiner or to any 
     lawful agent of the Director.
       ``(E) Inability to meet obligations.--The regulated entity 
     is likely to be unable to pay its obligations or meet the 
     demands of its creditors in the normal course of business.
       ``(F) Losses.--The regulated entity has incurred or is 
     likely to incur losses that will deplete all or substantially 
     all of its capital, and there is no reasonable prospect for 
     the regulated entity to become adequately capitalized (as 
     defined in section 1364(a)(1)).
       ``(G) Violations of law.--Any violation of any law or 
     regulation, or any unsafe or unsound practice or condition 
     that is likely to--
       ``(i) cause insolvency or substantial dissipation of assets 
     or earnings; or
       ``(ii) weaken the condition of the regulated entity.
       ``(H) Consent.--The regulated entity, by resolution of its 
     board of directors or its shareholders or members, consents 
     to the appointment.
       ``(I) Undercapitalization.--The regulated entity is 
     undercapitalized or significantly undercapitalized (as 
     defined in section 1364(a)(3)), and--
       ``(i) has no reasonable prospect of becoming adequately 
     capitalized;
       ``(ii) fails to become adequately capitalized, as required 
     by--

       ``(I) section 1365(a)(1) with respect to a regulated 
     entity; or
       ``(II) section 1366(a)(1) with respect to a significantly 
     undercapitalized regulated entity;

       ``(iii) fails to submit a capital restoration plan 
     acceptable to the Agency within the time prescribed under 
     section 1369C; or
       ``(iv) materially fails to implement a capital restoration 
     plan submitted and accepted under section 1369C.
       ``(J) Critical undercapitalization.--The regulated entity 
     is critically undercapitalized, as defined in section 
     1364(a)(4).
       ``(K) Money laundering.--The Attorney General notifies the 
     Director in writing that the regulated entity has been found 
     guilty of a criminal offense under section 1956 or 1957 of 
     title 18, United States Code, or section 5322 or 5324 of 
     title 31, United States Code.
       ``(4) Mandatory receivership.--
       ``(A) In general.--The Director shall appoint the Agency as 
     receiver for a regulated entity if the Director determines, 
     in writing, that--
       ``(i) the assets of the regulated entity are, and during 
     the preceding 60 calendar days have been, less than the 
     obligations of the regulated entity to its creditors and 
     others; or
       ``(ii) the regulated entity is not, and during the 
     preceding 60 calendar days has not been, generally paying the 
     debts of the regulated entity (other than debts that are the 
     subject of a bona fide dispute) as such debts become due.
       ``(B) Periodic determination required for critically 
     undercapitalized regulated entity.--If a regulated entity is 
     critically undercapitalized, the Director shall make a 
     determination, in writing, as to whether the regulated entity 
     meets the criteria specified in clause (i) or (ii) of 
     subparagraph (A)--
       ``(i) not later than 30 calendar days after the regulated 
     entity initially becomes critically undercapitalized; and
       ``(ii) at least once during each succeeding 30-calendar day 
     period.
       ``(C) Determination not required if receivership already in 
     place.--Subparagraph (B) does not apply with respect to a 
     regulated entity in any period during which the Agency serves 
     as receiver for the regulated entity.
       ``(D) Receivership terminates conservatorship.--The 
     appointment of the Agency as receiver of a regulated entity 
     under this section shall immediately terminate any 
     conservatorship established for the regulated entity under 
     this title.
       ``(5) Judicial review.--
       ``(A) In general.--If the Agency is appointed conservator 
     or receiver under this section, the regulated entity may, 
     within 30 days of such appointment, bring an action in the 
     United States district court for the judicial district in 
     which the home office of such regulated entity is located, or 
     in the United States District Court for the District of 
     Columbia, for an order requiring the Agency to remove itself 
     as conservator or receiver.
       ``(B) Review.--Upon the filing of an action under 
     subparagraph (A), the court shall, upon the merits, dismiss 
     such action or direct the Agency to remove itself as such 
     conservator or receiver.
       ``(6) Directors not liable for acquiescing in appointment 
     of conservator or receiver.--The members of the board of 
     directors of a regulated entity shall not be liable to the 
     shareholders or creditors of the regulated entity for 
     acquiescing in or consenting in good faith to the appointment 
     of the Agency as conservator or receiver for that regulated 
     entity.
       ``(7) Agency not subject to any other federal agency.--When 
     acting as conservator or receiver, the Agency shall not be 
     subject to the direction or supervision of any other agency 
     of the United States or any State in the exercise of the 
     rights, powers, and privileges of the Agency.
       ``(b) Powers and Duties of the Agency as Conservator or 
     Receiver.--
       ``(1) Rulemaking authority of the agency.--The Agency may 
     prescribe such regulations as the Agency determines to be 
     appropriate regarding the conduct of conservatorships or 
     receiverships.
       ``(2) General powers.--
       ``(A) Successor to regulated entity.--The Agency shall, as 
     conservator or receiver, and by operation of law, immediately 
     succeed to--
       ``(i) all rights, titles, powers, and privileges of the 
     regulated entity, and of any stockholder, officer, or 
     director of such regulated entity with respect to the 
     regulated entity and the assets of the regulated entity; and
       ``(ii) title to the books, records, and assets of any other 
     legal custodian of such regulated entity.
       ``(B) Operate the regulated entity.--The Agency may, as 
     conservator or receiver--
       ``(i) take over the assets of and operate the regulated 
     entity with all the powers of the shareholders, the 
     directors, and the officers of the regulated entity and 
     conduct all business of the regulated entity;
       ``(ii) collect all obligations and money due the regulated 
     entity;
       ``(iii) perform all functions of the regulated entity in 
     the name of the regulated entity which are consistent with 
     the appointment as conservator or receiver;
       ``(iv) preserve and conserve the assets and property of the 
     regulated entity; and
       ``(v) provide by contract for assistance in fulfilling any 
     function, activity, action, or duty of the Agency as 
     conservator or receiver.
       ``(C) Functions of officers, directors, and shareholders of 
     a regulated entity.--The Agency may, by regulation or order, 
     provide for the exercise of any function by any stockholder, 
     director, or officer of any regulated entity for which the 
     Agency has been named conservator or receiver.
       ``(D) Powers as conservator.--The Agency may, as 
     conservator, take such action as may be--
       ``(i) necessary to put the regulated entity in a sound and 
     solvent condition; and
       ``(ii) appropriate to carry on the business of the 
     regulated entity and preserve and conserve the assets and 
     property of the regulated entity.
       ``(E) Additional powers as receiver.--In any case in which 
     the Agency is acting as receiver, the Agency shall place the 
     regulated entity in liquidation and proceed to realize upon 
     the assets of the regulated entity in such manner as the 
     Agency deems appropriate, including through the sale of 
     assets, the transfer of assets to a limited-life regulated 
     entity established under subsection (i), or the exercise of 
     any other rights or privileges granted to the Agency under 
     this paragraph.
       ``(F) Organization of new enterprise.--The Agency shall, as 
     receiver for an enterprise, organize a successor enterprise 
     that will operate pursuant to subsection (i).
       ``(G) Transfer or sale of assets and liabilities.--The 
     Agency may, as conservator or receiver, transfer or sell any 
     asset or liability of the regulated entity in default, and 
     may do so without any approval, assignment, or consent with 
     respect to such transfer or sale.
       ``(H) Payment of valid obligations.--The Agency, as 
     conservator or receiver, shall, to the extent of proceeds 
     realized from the performance of contracts or sale of the 
     assets of a regulated entity, pay all valid obligations of 
     the regulated entity that are due and payable at the time of 
     the appointment of the Agency as conservator or receiver, in 
     accordance with the prescriptions and limitations of this 
     section.
       ``(I) Subpoena authority.--
       ``(i) In general.--

       ``(I) Agency authority.--The Agency may, as conservator or 
     receiver, and for purposes of carrying out any power, 
     authority, or duty with respect to a regulated entity 
     (including determining any claim against the regulated entity 
     and determining and realizing upon any asset of any person in 
     the course of collecting money due the regulated entity), 
     exercise any power established under section 1348.

[[Page S6756]]

       ``(II) Applicability of law.--The provisions of section 
     1348 shall apply with respect to the exercise of any power 
     under this subparagraph, in the same manner as such 
     provisions apply under that section.

       ``(ii) Subpoena.--A subpoena or subpoena duces tecum may be 
     issued under clause (i) only by, or with the written approval 
     of, the Director, or the designee of the Director.
       ``(iii) Rule of construction.--This subsection shall not be 
     construed to limit any rights that the Agency, in any 
     capacity, might otherwise have under section 1317 or 1379B.
       ``(J) Incidental powers.--The Agency may, as conservator or 
     receiver--
       ``(i) exercise all powers and authorities specifically 
     granted to conservators or receivers, respectively, under 
     this section, and such incidental powers as shall be 
     necessary to carry out such powers; and
       ``(ii) take any action authorized by this section, which 
     the Agency determines is in the best interests of the 
     regulated entity or the Agency.
       ``(K) Other provisions.--
       ``(i) Shareholders and creditors of failed regulated 
     entity.--Notwithstanding any other provision of law, the 
     appointment of the Agency as receiver for a regulated entity 
     pursuant to paragraph (2) or (4) of subsection (a) and its 
     succession, by operation of law, to the rights, titles, 
     powers, and privileges described in subsection (b)(2)(A) 
     shall terminate all rights and claims that the stockholders 
     and creditors of the regulated entity may have against the 
     assets or charter of the regulated entity or the Agency 
     arising as a result of their status as stockholders or 
     creditors, except for their right to payment, resolution, or 
     other satisfaction of their claims, as permitted under 
     subsections (b)(9), (c), and (e).
       ``(ii) Assets of regulated entity.--Notwithstanding any 
     other provision of law, for purposes of this section, the 
     charter of a regulated entity shall not be considered an 
     asset of the regulated entity.
       ``(3) Authority of receiver to determine claims.--
       ``(A) In general.--The Agency may, as receiver, determine 
     claims in accordance with the requirements of this subsection 
     and any regulations prescribed under paragraph (4).
       ``(B) Notice requirements.--The receiver, in any case 
     involving the liquidation or winding up of the affairs of a 
     closed regulated entity, shall--
       ``(i) promptly publish a notice to the creditors of the 
     regulated entity to present their claims, together with 
     proof, to the receiver by a date specified in the notice 
     which shall be not less than 90 days after the date of 
     publication of such notice; and
       ``(ii) republish such notice approximately 1 month and 2 
     months, respectively, after the date of publication under 
     clause (i).
       ``(C) Mailing required.--The receiver shall mail a notice 
     similar to the notice published under subparagraph (B)(i) at 
     the time of such publication to any creditor shown on the 
     books of the regulated entity--
       ``(i) at the last address of the creditor appearing in such 
     books; or
       ``(ii) upon discovery of the name and address of a claimant 
     not appearing on the books of the regulated entity, within 30 
     days after the discovery of such name and address.
       ``(4) Rulemaking authority relating to determination of 
     claims.--Subject to subsection (c), the Director may 
     prescribe regulations regarding the allowance or disallowance 
     of claims by the receiver and providing for administrative 
     determination of claims and review of such determination.
       ``(5) Procedures for determination of claims.--
       ``(A) Determination period.--
       ``(i) In general.--Before the end of the 180-day period 
     beginning on the date on which any claim against a regulated 
     entity is filed with the Agency as receiver, the Agency shall 
     determine whether to allow or disallow the claim and shall 
     notify the claimant of any determination with respect to such 
     claim.
       ``(ii) Extension of time.--The period described in clause 
     (i) may be extended by a written agreement between the 
     claimant and the Agency.
       ``(iii) Mailing of notice sufficient.--The requirements of 
     clause (i) shall be deemed to be satisfied if the notice of 
     any determination with respect to any claim is mailed to the 
     last address of the claimant which appears--

       ``(I) on the books of the regulated entity;
       ``(II) in the claim filed by the claimant; or
       ``(III) in documents submitted in proof of the claim.

       ``(iv) Contents of notice of disallowance.--If any claim 
     filed under clause (i) is disallowed, the notice to the 
     claimant shall contain--

       ``(I) a statement of each reason for the disallowance; and
       ``(II) the procedures available for obtaining agency review 
     of the determination to disallow the claim or judicial 
     determination of the claim.

       ``(B) Allowance of proven claim.--The receiver shall allow 
     any claim received on or before the date specified in the 
     notice published under paragraph (3)(B)(i) by the receiver 
     from any claimant which is proved to the satisfaction of the 
     receiver.
       ``(C) Disallowance of claims filed after filing period.--
     Claims filed after the date specified in the notice published 
     under paragraph (3)(B)(i), or the date specified under 
     paragraph (3)(C), shall be disallowed and such disallowance 
     shall be final.
       ``(D) Authority to disallow claims.--
       ``(i) In general.--The receiver may disallow any portion of 
     any claim by a creditor or claim of security, preference, or 
     priority which is not proved to the satisfaction of the 
     receiver.
       ``(ii) Payments to less than fully secured creditors.--In 
     the case of a claim of a creditor against a regulated entity 
     which is secured by any property or other asset of such 
     regulated entity, the receiver--

       ``(I) may treat the portion of such claim which exceeds an 
     amount equal to the fair market value of such property or 
     other asset as an unsecured claim against the regulated 
     entity; and
       ``(II) may not make any payment with respect to such 
     unsecured portion of the claim, other than in connection with 
     the disposition of all claims of unsecured creditors of the 
     regulated entity.

       ``(iii) Exceptions.--No provision of this paragraph shall 
     apply with respect to--

       ``(I) any extension of credit from any Federal Reserve 
     Bank, Federal Home Loan Bank, or the United States Treasury; 
     or
       ``(II) any security interest in the assets of the regulated 
     entity securing any such extension of credit.

       ``(E) No judicial review of determination pursuant to 
     subparagraph (d).--No court may review the determination of 
     the Agency under subparagraph (D) to disallow a claim.
       ``(F) Legal effect of filing.--
       ``(i) Statute of limitation tolled.--For purposes of any 
     applicable statute of limitations, the filing of a claim with 
     the receiver shall constitute a commencement of an action.
       ``(ii) No prejudice to other actions.--Subject to paragraph 
     (10), the filing of a claim with the receiver shall not 
     prejudice any right of the claimant to continue any action 
     which was filed before the date of the appointment of the 
     receiver, subject to the determination of claims by the 
     receiver.
       ``(6) Provision for judicial determination of claims.--
       ``(A) In general.--The claimant may file suit on a claim 
     (or continue an action commenced before the appointment of 
     the receiver) in the district or territorial court of the 
     United States for the district within which the principal 
     place of business of the regulated entity is located or the 
     United States District Court for the District of Columbia 
     (and such court shall have jurisdiction to hear such claim), 
     before the end of the 60-day period beginning on the earlier 
     of--
       ``(i) the end of the period described in paragraph 
     (5)(A)(i) with respect to any claim against a regulated 
     entity for which the Agency is receiver; or
       ``(ii) the date of any notice of disallowance of such claim 
     pursuant to paragraph (5)(A)(i).
       ``(B) Statute of limitations.--A claim shall be deemed to 
     be disallowed (other than any portion of such claim which was 
     allowed by the receiver), and such disallowance shall be 
     final, and the claimant shall have no further rights or 
     remedies with respect to such claim, if the claimant fails, 
     before the end of the 60-day period described under 
     subparagraph (A), to file suit on such claim (or continue an 
     action commenced before the appointment of the receiver).
       ``(7) Review of claims.--
       ``(A) Other review procedures.--
       ``(i) In general.--The Agency shall establish such 
     alternative dispute resolution processes as may be 
     appropriate for the resolution of claims filed under 
     paragraph (5)(A)(i).
       ``(ii) Criteria.--In establishing alternative dispute 
     resolution processes, the Agency shall strive for procedures 
     which are expeditious, fair, independent, and low cost.
       ``(iii) Voluntary binding or nonbinding procedures.--The 
     Agency may establish both binding and nonbinding processes 
     under this subparagraph, which may be conducted by any 
     government or private party. All parties, including the 
     claimant and the Agency, must agree to the use of the process 
     in a particular case.
       ``(B) Consideration of incentives.--The Agency shall seek 
     to develop incentives for claimants to participate in the 
     alternative dispute resolution process.
       ``(8) Expedited determination of claims.--
       ``(A) Establishment required.--The Agency shall establish a 
     procedure for expedited relief outside of the routine claims 
     process established under paragraph (5) for claimants who--
       ``(i) allege the existence of legally valid and enforceable 
     or perfected security interests in assets of any regulated 
     entity for which the Agency has been appointed receiver; and
       ``(ii) allege that irreparable injury will occur if the 
     routine claims procedure is followed.
       ``(B) Determination period.--Before the end of the 90-day 
     period beginning on the date on which any claim is filed in 
     accordance with the procedures established under subparagraph 
     (A), the Director shall--
       ``(i) determine--

       ``(I) whether to allow or disallow such claim; or
       ``(II) whether such claim should be determined pursuant to 
     the procedures established under paragraph (5); and

       ``(ii) notify the claimant of the determination, and if the 
     claim is disallowed, provide a statement of each reason for 
     the disallowance and the procedure for obtaining agency 
     review or judicial determination.
       ``(C) Period for filing or renewing suit.--Any claimant who 
     files a request for expedited relief shall be permitted to 
     file a suit, or to continue a suit filed before the date of 
     appointment of the receiver, seeking a determination of the 
     rights of the claimant with respect to such security interest 
     after the earlier of--
       ``(i) the end of the 90-day period beginning on the date of 
     the filing of a request for expedited relief; or
       ``(ii) the date on which the Agency denies the claim.
       ``(D) Statute of limitations.--If an action described under 
     subparagraph (C) is not filed, or the motion to renew a 
     previously filed suit is not made, before the end of the 30-
     day period beginning on the date on which such action or 
     motion may be filed under subparagraph (B), the claim shall 
     be deemed to be disallowed as of

[[Page S6757]]

     the end of such period (other than any portion of such claim 
     which was allowed by the receiver), such disallowance shall 
     be final, and the claimant shall have no further rights or 
     remedies with respect to such claim.
       ``(E) Legal effect of filing.--
       ``(i) Statute of limitation tolled.--For purposes of any 
     applicable statute of limitations, the filing of a claim with 
     the receiver shall constitute a commencement of an action.
       ``(ii) No prejudice to other actions.--Subject to paragraph 
     (10), the filing of a claim with the receiver shall not 
     prejudice any right of the claimant to continue any action 
     that was filed before the appointment of the receiver, 
     subject to the determination of claims by the receiver.
       ``(9) Payment of claims.--
       ``(A) In general.--The receiver may, in the discretion of 
     the receiver, and to the extent that funds are available from 
     the assets of the regulated entity, pay creditor claims, in 
     such manner and amounts as are authorized under this section, 
     which are--
       ``(i) allowed by the receiver;
       ``(ii) approved by the Agency pursuant to a final 
     determination pursuant to paragraph (7) or (8); or
       ``(iii) determined by the final judgment of any court of 
     competent jurisdiction.
       ``(B) Agreements against the interest of the agency.--No 
     agreement that tends to diminish or defeat the interest of 
     the Agency in any asset acquired by the Agency as receiver 
     under this section shall be valid against the Agency unless 
     such agreement is in writing and executed by an authorized 
     officer or representative of the regulated entity.
       ``(C) Payment of dividends on claims.--The receiver may, in 
     the sole discretion of the receiver, pay from the assets of 
     the regulated entity dividends on proved claims at any time, 
     and no liability shall attach to the Agency by reason of any 
     such payment, for failure to pay dividends to a claimant 
     whose claim is not proved at the time of any such payment.
       ``(D) Rulemaking authority of the director.--The Director 
     may prescribe such rules, including definitions of terms, as 
     the Director deems appropriate to establish a single uniform 
     interest rate for, or to make payments of post-insolvency 
     interest to creditors holding proven claims against the 
     receivership estates of the regulated entity, following 
     satisfaction by the receiver of the principal amount of all 
     creditor claims.
       ``(10) Suspension of legal actions.--
       ``(A) In general.--After the appointment of a conservator 
     or receiver for a regulated entity, the conservator or 
     receiver may, in any judicial action or proceeding to which 
     such regulated entity is or becomes a party, request a stay 
     for a period not to exceed--
       ``(i) 45 days, in the case of any conservator; and
       ``(ii) 90 days, in the case of any receiver.
       ``(B) Grant of stay by all courts required.--Upon receipt 
     of a request by the conservator or receiver under 
     subparagraph (A) for a stay of any judicial action or 
     proceeding in any court with jurisdiction of such action or 
     proceeding, the court shall grant such stay as to all 
     parties.
       ``(11) Additional rights and duties.--
       ``(A) Prior final adjudication.--The Agency shall abide by 
     any final unappealable judgment of any court of competent 
     jurisdiction which was rendered before the appointment of the 
     Agency as conservator or receiver.
       ``(B) Rights and remedies of conservator or receiver.--In 
     the event of any appealable judgment, the Agency as 
     conservator or receiver--
       ``(i) shall have all of the rights and remedies available 
     to the regulated entity (before the appointment of such 
     conservator or receiver) and the Agency, including removal to 
     Federal court and all appellate rights; and
       ``(ii) shall not be required to post any bond in order to 
     pursue such remedies.
       ``(C) No attachment or execution.--No attachment or 
     execution may issue by any court upon assets in the 
     possession of the receiver, or upon the charter, of a 
     regulated entity for which the Agency has been appointed 
     receiver.
       ``(D) Limitation on judicial review.--Except as otherwise 
     provided in this subsection, no court shall have jurisdiction 
     over--
       ``(i) any claim or action for payment from, or any action 
     seeking a determination of rights with respect to, the assets 
     or charter of any regulated entity for which the Agency has 
     been appointed receiver; or
       ``(ii) any claim relating to any act or omission of such 
     regulated entity or the Agency as receiver.
       ``(E) Disposition of assets.--In exercising any right, 
     power, privilege, or authority as conservator or receiver in 
     connection with any sale or disposition of assets of a 
     regulated entity for which the Agency has been appointed 
     conservator or receiver, the Agency shall conduct its 
     operations in a manner which--
       ``(i) maximizes the net present value return from the sale 
     or disposition of such assets;
       ``(ii) minimizes the amount of any loss realized in the 
     resolution of cases; and
       ``(iii) ensures adequate competition and fair and 
     consistent treatment of offerors.
       ``(12) Statute of limitations for actions brought by 
     conservator or receiver.--
       ``(A) In general.--Notwithstanding any provision of any 
     contract, the applicable statute of limitations with regard 
     to any action brought by the Agency as conservator or 
     receiver shall be--
       ``(i) in the case of any contract claim, the longer of--

       ``(I) the 6-year period beginning on the date on which the 
     claim accrues; or
       ``(II) the period applicable under State law; and

       ``(ii) in the case of any tort claim, the longer of--

       ``(I) the 3-year period beginning on the date on which the 
     claim accrues; or
       ``(II) the period applicable under State law.

       ``(B) Determination of the date on which a claim accrues.--
     For purposes of subparagraph (A), the date on which the 
     statute of limitations begins to run on any claim described 
     in such subparagraph shall be the later of--
       ``(i) the date of the appointment of the Agency as 
     conservator or receiver; or
       ``(ii) the date on which the cause of action accrues.
       ``(13) Revival of expired state causes of action.--
       ``(A) In general.--In the case of any tort claim described 
     under clause (ii) for which the statute of limitations 
     applicable under State law with respect to such claim has 
     expired not more than 5 years before the appointment of the 
     Agency as conservator or receiver, the Agency may bring an 
     action as conservator or receiver on such claim without 
     regard to the expiration of the statute of limitations 
     applicable under State law.
       ``(B) Claims described.--A tort claim referred to under 
     clause (i) is a claim arising from fraud, intentional 
     misconduct resulting in unjust enrichment, or intentional 
     misconduct resulting in substantial loss to the regulated 
     entity.
       ``(14) Accounting and recordkeeping requirements.--
       ``(A) In general.--The Agency as conservator or receiver 
     shall, consistent with the accounting and reporting practices 
     and procedures established by the Agency, maintain a full 
     accounting of each conservatorship and receivership or other 
     disposition of a regulated entity in default.
       ``(B) Annual accounting or report.--With respect to each 
     conservatorship or receivership, the Agency shall make an 
     annual accounting or report available to the Board, the 
     Comptroller General of the United States, the Committee on 
     Banking, Housing, and Urban Affairs of the Senate, and the 
     Committee on Financial Services of the House of 
     Representatives.
       ``(C) Availability of reports.--Any report prepared under 
     subparagraph (B) shall be made available by the Agency upon 
     request to any shareholder of a regulated entity or any 
     member of the public.
       ``(D) Recordkeeping requirement.--After the end of the 6-
     year period beginning on the date on which the 
     conservatorship or receivership is terminated by the 
     Director, the Agency may destroy any records of such 
     regulated entity which the Agency, in the discretion of the 
     Agency, determines to be unnecessary, unless directed not to 
     do so by a court of competent jurisdiction or governmental 
     agency, or prohibited by law.
       ``(15) Fraudulent transfers.--
       ``(A) In general.--The Agency, as conservator or receiver, 
     may avoid a transfer of any interest of an entity-affiliated 
     party, or any person determined by the conservator or 
     receiver to be a debtor of the regulated entity, in property, 
     or any obligation incurred by such party or person, that was 
     made within 5 years of the date on which the Agency was 
     appointed conservator or receiver, if such party or person 
     voluntarily or involuntarily made such transfer or incurred 
     such liability with the intent to hinder, delay, or defraud 
     the regulated entity, the Agency, the conservator, or 
     receiver.
       ``(B) Right of recovery.--To the extent a transfer is 
     avoided under subparagraph (A), the conservator or receiver 
     may recover, for the benefit of the regulated entity, the 
     property transferred, or, if a court so orders, the value of 
     such property (at the time of such transfer) from--
       ``(i) the initial transferee of such transfer or the 
     entity-affiliated party or person for whose benefit such 
     transfer was made; or
       ``(ii) any immediate or mediate transferee of any such 
     initial transferee.
       ``(C) Rights of transferee or obligee.--The conservator or 
     receiver may not recover under subparagraph (B) from--
       ``(i) any transferee that takes for value, including 
     satisfaction or securing of a present or antecedent debt, in 
     good faith; or
       ``(ii) any immediate or mediate good faith transferee of 
     such transferee.
       ``(D) Rights under this paragraph.--The rights under this 
     paragraph of the conservator or receiver described under 
     subparagraph (A) shall be superior to any rights of a trustee 
     or any other party (other than any party which is a Federal 
     agency) under title 11, United States Code.
       ``(16) Attachment of assets and other injunctive relief.--
     Subject to paragraph (17), any court of competent 
     jurisdiction may, at the request of the conservator or 
     receiver, issue an order in accordance with rule 65 of the 
     Federal Rules of Civil Procedure, including an order placing 
     the assets of any person designated by the conservator or 
     receiver under the control of the court, and appointing a 
     trustee to hold such assets.
       ``(17) Standards of proof.--Rule 65 of the Federal Rules of 
     Civil Procedure shall apply with respect to any proceeding 
     under paragraph (16) without regard to the requirement of 
     such rule that the applicant show that the injury, loss, or 
     damage is irreparable and immediate.
       ``(18) Treatment of claims arising from breach of contracts 
     executed by the conservator or receiver.--
       ``(A) In general.--Notwithstanding any other provision of 
     this subsection, any final and unappealable judgment for 
     monetary damages entered against the conservator or receiver 
     for the breach of an agreement executed or approved in 
     writing by the conservator or receiver after the date of its 
     appointment, shall be paid as an administrative expense of 
     the conservator or receiver.
       ``(B) No limitation of power.--Nothing in this paragraph 
     shall be construed to limit the power of the conservator or 
     receiver to exercise

[[Page S6758]]

     any rights under contract or law, including to terminate, 
     breach, cancel, or otherwise discontinue such agreement.
       ``(19) General exceptions.--
       ``(A) Limitations.--The rights of the conservator or 
     receiver appointed under this section shall be subject to the 
     limitations on the powers of a receiver under sections 402 
     through 407 of the Federal Deposit Insurance Corporation 
     Improvement Act of 1991 (12 U.S.C. 4402 through 4407).
       ``(B) Mortgages held in trust.--
       ``(i) In general.--Any mortgage, pool of mortgages, or 
     interest in a pool of mortgages held in trust, custodial, or 
     agency capacity by a regulated entity for the benefit of any 
     person other than the regulated entity shall not be available 
     to satisfy the claims of creditors generally, except that 
     nothing in this clause shall be construed to expand or 
     otherwise affect the authority of any regulated entity.
       ``(ii) Holding of mortgages.--Any mortgage, pool of 
     mortgages, or interest in a pool of mortgages described in 
     clause (i) shall be held by the conservator or receiver 
     appointed under this section for the beneficial owners of 
     such mortgage, pool of mortgages, or interest in accordance 
     with the terms of the agreement creating such trust, 
     custodial, or other agency arrangement.
       ``(iii) Liability of conservator or receiver.--The 
     liability of the conservator or receiver appointed under this 
     section for damages shall, in the case of any contingent or 
     unliquidated claim relating to the mortgages held in trust, 
     be estimated in accordance with the regulations of the 
     Director.
       ``(c) Priority of Expenses and Unsecured Claims.--
       ``(1) In general.--Unsecured claims against a regulated 
     entity, or the receiver therefor, that are proven to the 
     satisfaction of the receiver shall have priority in the 
     following order:
       ``(A) Administrative expenses of the receiver.
       ``(B) Any other general or senior liability of the 
     regulated entity (which is not a liability described under 
     subparagraph (C) or (D).
       ``(C) Any obligation subordinated to general creditors 
     (which is not an obligation described under subparagraph 
     (D)).
       ``(D) Any obligation to shareholders or members arising as 
     a result of their status as shareholder or members.
       ``(2) Creditors similarly situated.--All creditors that are 
     similarly situated under paragraph (1) shall be treated in a 
     similar manner, except that the receiver may take any action 
     (including making payments) that does not comply with this 
     subsection, if--
       ``(A) the Director determines that such action is necessary 
     to maximize the value of the assets of the regulated entity, 
     to maximize the present value return from the sale or other 
     disposition of the assets of the regulated entity, or to 
     minimize the amount of any loss realized upon the sale or 
     other disposition of the assets of the regulated entity; and
       ``(B) all creditors that are similarly situated under 
     paragraph (1) receive not less than the amount provided in 
     subsection (e)(2).
       ``(3) Definition.--As used in this subsection, the term 
     `administrative expenses of the receiver' includes--
       ``(A) the actual, necessary costs and expenses incurred by 
     the receiver in preserving the assets of a failed regulated 
     entity or liquidating or otherwise resolving the affairs of a 
     failed regulated entity; and
       ``(B) any obligations that the receiver determines are 
     necessary and appropriate to facilitate the smooth and 
     orderly liquidation or other resolution of the regulated 
     entity.
       ``(d) Provisions Relating to Contracts Entered Into Before 
     Appointment of Conservator or Receiver.--
       ``(1) Authority to repudiate contracts.--In addition to any 
     other rights a conservator or receiver may have, the 
     conservator or receiver for any regulated entity may 
     disaffirm or repudiate any contract or lease--
       ``(A) to which such regulated entity is a party;
       ``(B) the performance of which the conservator or receiver, 
     in its sole discretion, determines to be burdensome; and
       ``(C) the disaffirmance or repudiation of which the 
     conservator or receiver determines, in its sole discretion, 
     will promote the orderly administration of the affairs of the 
     regulated entity.
       ``(2) Timing of repudiation.--The conservator or receiver 
     shall determine whether or not to exercise the rights of 
     repudiation under this subsection within a reasonable period 
     following such appointment.
       ``(3) Claims for damages for repudiation.--
       ``(A) In general.--Except as otherwise provided under 
     subparagraph (C) and paragraphs (4), (5), and (6), the 
     liability of the conservator or receiver for the 
     disaffirmance or repudiation of any contract pursuant to 
     paragraph (1) shall be--
       ``(i) limited to actual direct compensatory damages; and
       ``(ii) determined as of--

       ``(I) the date of the appointment of the conservator or 
     receiver; or
       ``(II) in the case of any contract or agreement referred to 
     in paragraph (8), the date of the disaffirmance or 
     repudiation of such contract or agreement.

       ``(B) No liability for other damages.--For purposes of 
     subparagraph (A), the term `actual direct compensatory 
     damages' shall not include--
       ``(i) punitive or exemplary damages;
       ``(ii) damages for lost profits or opportunity; or
       ``(iii) damages for pain and suffering.
       ``(C) Measure of damages for repudiation of financial 
     contracts.--In the case of any qualified financial contract 
     or agreement to which paragraph (8) applies, compensatory 
     damages shall be--
       ``(i) deemed to include normal and reasonable costs of 
     cover or other reasonable measures of damages utilized in the 
     industries for such contract and agreement claims; and
       ``(ii) paid in accordance with this subsection and 
     subsection (e), except as otherwise specifically provided in 
     this section.
       ``(4) Leases under which the regulated entity is the 
     lessee.--
       ``(A) In general.--If the conservator or receiver 
     disaffirms or repudiates a lease under which the regulated 
     entity was the lessee, the conservator or receiver shall not 
     be liable for any damages (other than damages determined 
     under subparagraph (B)) for the disaffirmance or repudiation 
     of such lease.
       ``(B) Payments of rent.--Notwithstanding subparagraph (A), 
     the lessor under a lease to which that subparagraph applies 
     shall--
       ``(i) be entitled to the contractual rent accruing before 
     the later of the date on which--

       ``(I) the notice of disaffirmance or repudiation is mailed; 
     or
       ``(II) the disaffirmance or repudiation becomes effective, 
     unless the lessor is in default or breach of the terms of the 
     lease;

       ``(ii) have no claim for damages under any acceleration 
     clause or other penalty provision in the lease; and
       ``(iii) have a claim for any unpaid rent, subject to all 
     appropriate offsets and defenses, due as of the date of the 
     appointment, which shall be paid in accordance with this 
     subsection and subsection (e).
       ``(5) Leases under which the regulated entity is the 
     lessor.--
       ``(A) In general.--If the conservator or receiver 
     repudiates an unexpired written lease of real property of the 
     regulated entity under which the regulated entity is the 
     lessor and the lessee is not, as of the date of such 
     repudiation, in default, the lessee under such lease may 
     either--
       ``(i) treat the lease as terminated by such repudiation; or
       ``(ii) remain in possession of the leasehold interest for 
     the balance of the term of the lease, unless the lessee 
     defaults under the terms of the lease after the date of such 
     repudiation.
       ``(B) Provisions applicable to lessee remaining in 
     possession.--If any lessee under a lease described under 
     subparagraph (A) remains in possession of a leasehold 
     interest under clause (ii) of subparagraph (A)--
       ``(i) the lessee--

       ``(I) shall continue to pay the contractual rent pursuant 
     to the terms of the lease after the date of the repudiation 
     of such lease; and
       ``(II) may offset against any rent payment which accrues 
     after the date of the repudiation of the lease, and any 
     damages which accrue after such date due to the 
     nonperformance of any obligation of the regulated entity 
     under the lease after such date; and

       ``(ii) the conservator or receiver shall not be liable to 
     the lessee for any damages arising after such date as a 
     result of the repudiation, other than the amount of any 
     offset allowed under clause (i)(II).
       ``(6) Contracts for the sale of real property.--
       ``(A) In general.--If the conservator or receiver 
     repudiates any contract for the sale of real property and the 
     purchaser of such real property under such contract is in 
     possession, and is not, as of the date of such repudiation, 
     in default, such purchaser may either--
       ``(i) treat the contract as terminated by such repudiation; 
     or
       ``(ii) remain in possession of such real property.
       ``(B) Provisions applicable to purchaser remaining in 
     possession.--If any purchaser of real property under any 
     contract described under subparagraph (A) remains in 
     possession of such property under clause (ii) of subparagraph 
     (A)--
       ``(i) the purchaser--

       ``(I) shall continue to make all payments due under the 
     contract after the date of the repudiation of the contract; 
     and
       ``(II) may offset against any such payments any damages 
     which accrue after such date due to the nonperformance (after 
     such date) of any obligation of the regulated entity under 
     the contract; and

       ``(ii) the conservator or receiver shall--

       ``(I) not be liable to the purchaser for any damages 
     arising after such date as a result of the repudiation, other 
     than the amount of any offset allowed under clause (i)(II);
       ``(II) deliver title to the purchaser in accordance with 
     the provisions of the contract; and
       ``(III) have no obligation under the contract other than 
     the performance required under subclause (II).

       ``(C) Assignment and sale allowed.--
       ``(i) In general.--No provision of this paragraph shall be 
     construed as limiting the right of the conservator or 
     receiver to assign the contract described under subparagraph 
     (A), and sell the property subject to the contract and the 
     provisions of this paragraph.
       ``(ii) No liability after assignment and sale.--If an 
     assignment and sale described under clause (i) is 
     consummated, the conservator or receiver shall have no 
     further liability under the contract described under 
     subparagraph (A), or with respect to the real property which 
     was the subject of such contract.
       ``(7) Service contracts.--
       ``(A) Services performed before appointment.--In the case 
     of any contract for services between any person and any 
     regulated entity for which the Agency has been appointed 
     conservator or receiver, any claim of such person for 
     services performed before the appointment of the conservator 
     or receiver shall be--
       ``(i) a claim to be paid in accordance with subsections (b) 
     and (e); and
       ``(ii) deemed to have arisen as of the date on which the 
     conservator or receiver was appointed.

[[Page S6759]]

       ``(B) Services performed after appointment and prior to 
     repudiation.--If, in the case of any contract for services 
     described under subparagraph (A), the conservator or receiver 
     accepts performance by the other person before the 
     conservator or receiver makes any determination to exercise 
     the right of repudiation of such contract under this 
     section--
       ``(i) the other party shall be paid under the terms of the 
     contract for the services performed; and
       ``(ii) the amount of such payment shall be treated as an 
     administrative expense of the conservatorship or 
     receivership.
       ``(C) Acceptance of performance no bar to subsequent 
     repudiation.--The acceptance by the conservator or receiver 
     of services referred to under subparagraph (B) in connection 
     with a contract described in such subparagraph shall not 
     affect the right of the conservator or receiver to repudiate 
     such contract under this section at any time after such 
     performance.
       ``(8) Certain qualified financial contracts.--
       ``(A) Rights of parties to contracts.--Subject to 
     paragraphs (9) and (10), and notwithstanding any other 
     provision of this title (other than subsection (b)(9)(B) of 
     this section), any other Federal law, or the law of any 
     State, no person shall be stayed or prohibited from 
     exercising--
       ``(i) any right of that person to cause the termination, 
     liquidation, or acceleration of any qualified financial 
     contract with a regulated entity that arises upon the 
     appointment of the Agency as receiver for such regulated 
     entity at any time after such appointment;
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement relating to one or 
     more qualified financial contracts; or
       ``(iii) any right to offset or net out any termination 
     value, payment amount, or other transfer obligation arising 
     under or in connection with 1 or more contracts and 
     agreements described in clause (i), including any master 
     agreement for such contracts or agreements.
       ``(B) Applicability of other provisions.--Subsection 
     (b)(10) shall apply in the case of any judicial action or 
     proceeding brought against any receiver referred to under 
     subparagraph (A), or the regulated entity for which such 
     receiver was appointed, by any party to a contract or 
     agreement described under subparagraph (A)(i) with such 
     regulated entity.
       ``(C) Certain transfers not avoidable.--
       ``(i) In general.--Notwithstanding paragraph (11), or any 
     other provision of Federal or State law relating to the 
     avoidance of preferential or fraudulent transfers, the 
     Agency, whether acting as such or as conservator or receiver 
     of a regulated entity, may not avoid any transfer of money or 
     other property in connection with any qualified financial 
     contract with a regulated entity.
       ``(ii) Exception for certain transfers.--Clause (i) shall 
     not apply to any transfer of money or other property in 
     connection with any qualified financial contract with a 
     regulated entity if the Agency determines that the transferee 
     had actual intent to hinder, delay, or defraud such regulated 
     entity, the creditors of such regulated entity, or any 
     conservator or receiver appointed for such regulated entity.
       ``(D) Certain contracts and agreements defined.--In this 
     subsection the following definitions shall apply:
       ``(i) Qualified financial contract.--The term `qualified 
     financial contract' means any securities contract, commodity 
     contract, forward contract, repurchase agreement, swap 
     agreement, and any similar agreement that the Agency 
     determines by regulation, resolution, or order to be a 
     qualified financial contract for purposes of this paragraph.
       ``(ii) Securities contract.--The term `securities 
     contract'--

       ``(I) means a contract for the purchase, sale, or loan of a 
     security, a certificate of deposit, a mortgage loan, or any 
     interest in a mortgage loan, a group or index of securities, 
     certificates of deposit, or mortgage loans or interests 
     therein (including any interest therein or based on the value 
     thereof) or any option on any of the foregoing, including any 
     option to purchase or sell any such security, certificate of 
     deposit, mortgage loan, interest, group or index, or option, 
     and including any repurchase or reverse repurchase 
     transaction on any such security, certificate of deposit, 
     mortgage loan, interest, group or index, or option;
       ``(II) does not include any purchase, sale, or repurchase 
     obligation under a participation in a commercial mortgage 
     loan, unless the Agency determines by regulation, resolution, 
     or order to include any such agreement within the meaning of 
     such term;
       ``(III) means any option entered into on a national 
     securities exchange relating to foreign currencies;
       ``(IV) means the guarantee by or to any securities clearing 
     agency of any settlement of cash, securities, certificates of 
     deposit, mortgage loans or interests therein, group or index 
     of securities, certificates of deposit, or mortgage loans or 
     interests therein (including any interest therein or based on 
     the value thereof) or option on any of the foregoing, 
     including any option to purchase or sell any such security, 
     certificate of deposit, mortgage loan, interest, group or 
     index, or option;
       ``(V) means any margin loan;
       ``(VI) means any other agreement or transaction that is 
     similar to any agreement or transaction referred to in this 
     clause;
       ``(VII) means any combination of the agreements or 
     transactions referred to in this clause;
       ``(VIII) means any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(IX) means a master agreement that provides for an 
     agreement or transaction referred to in subclause (I), (III), 
     (IV), (V), (VI), (VII), or (VIII), together with all 
     supplements to any such master agreement, without regard to 
     whether the master agreement provides for an agreement or 
     transaction that is not a securities contract under this 
     clause, except that the master agreement shall be considered 
     to be a securities contract under this clause only with 
     respect to each agreement or transaction under the master 
     agreement that is referred to in subclause (I), (III), (IV), 
     (V), (VI), (VII), or (VIII); and
       ``(X) means any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in this clause, including any guarantee or 
     reimbursement obligation in connection with any agreement or 
     transaction referred to in this clause.

       ``(iii) Commodity contract.--The term `commodity contract' 
     means--

       ``(I) with respect to a futures commission merchant, a 
     contract for the purchase or sale of a commodity for future 
     delivery on, or subject to the rules of, a contract market or 
     board of trade;
       ``(II) with respect to a foreign futures commission 
     merchant, a foreign future;
       ``(III) with respect to a leverage transaction merchant, a 
     leverage transaction;
       ``(IV) with respect to a clearing organization, a contract 
     for the purchase or sale of a commodity for future delivery 
     on, or subject to the rules of, a contract market or board of 
     trade that is cleared by such clearing organization, or 
     commodity option traded on, or subject to the rules of, a 
     contract market or board of trade that is cleared by such 
     clearing organization;
       ``(V) with respect to a commodity options dealer, a 
     commodity option;
       ``(VI) any other agreement or transaction that is similar 
     to any agreement or transaction referred to in this clause;
       ``(VII) any combination of the agreements or transactions 
     referred to in this clause;
       ``(VIII) any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(IX) a master agreement that provides for an agreement or 
     transaction referred to in subclause (I), (II), (III), (IV), 
     (V), (VI), (VII), or (VIII), together with all supplements to 
     any such master agreement, without regard to whether the 
     master agreement provides for an agreement or transaction 
     that is not a commodity contract under this clause, except 
     that the master agreement shall be considered to be a 
     commodity contract under this clause only with respect to 
     each agreement or transaction under the master agreement that 
     is referred to in subclause (I), (II), (III), (IV), (V), 
     (VI), (VII), or (VIII); or
       ``(X) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in this clause, including any guarantee or reimbursement 
     obligation in connection with any agreement or transaction 
     referred to in this clause.

       ``(iv) Forward contract.--The term `forward contract' 
     means--

       ``(I) a contract (other than a commodity contract) for the 
     purchase, sale, or transfer of a commodity or any similar 
     good, article, service, right, or interest which is presently 
     or in the future becomes the subject of dealing in the 
     forward contract trade, or product or byproduct thereof, with 
     a maturity date more than 2 days after the date on which the 
     contract is entered into, including a repurchase transaction, 
     reverse repurchase transaction, consignment, lease, swap, 
     hedge transaction, deposit, loan, option, allocated 
     transaction, unallocated transaction, or any other similar 
     agreement;
       ``(II) any combination of agreements or transactions 
     referred to in subclauses (I) and (III);
       ``(III) any option to enter into any agreement or 
     transaction referred to in subclause (I) or (II);
       ``(IV) a master agreement that provides for an agreement or 
     transaction referred to in subclauses (I), (II), or (III), 
     together with all supplements to any such master agreement, 
     without regard to whether the master agreement provides for 
     an agreement or transaction that is not a forward contract 
     under this clause, except that the master agreement shall be 
     considered to be a forward contract under this clause only 
     with respect to each agreement or transaction under the 
     master agreement that is referred to in subclause (I), (II), 
     or (III); or
       ``(V) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in subclause (I), (II), (III), or (IV), including any 
     guarantee or reimbursement obligation in connection with any 
     agreement or transaction referred to in any such subclause.

       ``(v) Repurchase agreement.--The term `repurchase 
     agreement' (including a reverse repurchase agreement)--

       ``(I) means an agreement, including related terms, which 
     provides for the transfer of one or more certificates of 
     deposit, mortgage-related securities (as such term is defined 
     in section 3 of the Securities Exchange Act of 1934), 
     mortgage loans, interests in mortgage-related securities or 
     mortgage loans, eligible bankers' acceptances, qualified 
     foreign government securities (defined for purposes of this 
     clause as a security that is a direct obligation of, or that 
     is fully guaranteed by, the central government of a member of 
     the Organization for Economic Cooperation and Development, as 
     determined by regulation or order adopted by the appropriate 
     Federal banking authority), or securities that are direct 
     obligations of, or that are fully guaranteed by, the United 
     States or any agency of the United States against the 
     transfer of funds by the transferee of such certificates of 
     deposit, eligible bankers' acceptances, securities, mortgage 
     loans, or interests with a simultaneous agreement by such 
     transferee to transfer to the transferor thereof certificates 
     of deposit, eligible bankers' acceptances, securities, 
     mortgage loans, or interests as described above, at a date

[[Page S6760]]

     certain not later than 1 year after such transfers or on 
     demand, against the transfer of funds, or any other similar 
     agreement;
       ``(II) does not include any repurchase obligation under a 
     participation in a commercial mortgage loan, unless the 
     Agency determines by regulation, resolution, or order to 
     include any such participation within the meaning of such 
     term;
       ``(III) means any combination of agreements or transactions 
     referred to in subclauses (I) and (IV);
       ``(IV) means any option to enter into any agreement or 
     transaction referred to in subclause (I) or (III);
       ``(V) means a master agreement that provides for an 
     agreement or transaction referred to in subclause (I), (III), 
     or (IV), together with all supplements to any such master 
     agreement, without regard to whether the master agreement 
     provides for an agreement or transaction that is not a 
     repurchase agreement under this clause, except that the 
     master agreement shall be considered to be a repurchase 
     agreement under this subclause only with respect to each 
     agreement or transaction under the master agreement that is 
     referred to in subclause (I), (III), or (IV); and
       ``(VI) means any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in subclause (I), (III), (IV), or (V), including 
     any guarantee or reimbursement obligation in connection with 
     any agreement or transaction referred to in any such 
     subclause.

       ``(vi) Swap agreement.--The term `swap agreement' means--

       ``(I) any agreement, including the terms and conditions 
     incorporated by reference in any such agreement, which is an 
     interest rate swap, option, future, or forward agreement, 
     including a rate floor, rate cap, rate collar, cross-currency 
     rate swap, and basis swap; a spot, same day-tomorrow, 
     tomorrow-next, forward, or other foreign exchange or precious 
     metals agreement; a currency swap, option, future, or forward 
     agreement; an equity index or equity swap, option, future, or 
     forward agreement; a debt index or debt swap, option, future, 
     or forward agreement; a total return, credit spread or credit 
     swap, option, future, or forward agreement; a commodity index 
     or commodity swap, option, future, or forward agreement; or a 
     weather swap, weather derivative, or weather option;
       ``(II) any agreement or transaction that is similar to any 
     other agreement or transaction referred to in this clause and 
     that is of a type that has been, is presently, or in the 
     future becomes, the subject of recurrent dealings in the swap 
     markets (including terms and conditions incorporated by 
     reference in such agreement) and that is a forward, swap, 
     future, or option on one or more rates, currencies, 
     commodities, equity securities or other equity instruments, 
     debt securities or other debt instruments, quantitative 
     measures associated with an occurrence, extent of an 
     occurrence, or contingency associated with a financial, 
     commercial, or economic consequence, or economic or financial 
     indices or measures of economic or financial risk or value;
       ``(III) any combination of agreements or transactions 
     referred to in this clause;
       ``(IV) any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(V) a master agreement that provides for an agreement or 
     transaction referred to in subclause (I), (II), (III), or 
     (IV), together with all supplements to any such master 
     agreement, without regard to whether the master agreement 
     contains an agreement or transaction that is not a swap 
     agreement under this clause, except that the master agreement 
     shall be considered to be a swap agreement under this clause 
     only with respect to each agreement or transaction under the 
     master agreement that is referred to in subclause (I), (II), 
     (III), or (IV); and
       ``(VI) any security agreement or arrangement or other 
     credit enhancement related to any agreements or transactions 
     referred to in subclause (I), (II), (III), (IV), or (V), 
     including any guarantee or reimbursement obligation in 
     connection with any agreement or transaction referred to in 
     any such subclause.

       ``(vii) Treatment of master agreement as one agreement.--
     Any master agreement for any contract or agreement described 
     in any preceding clause of this subparagraph (or any master 
     agreement for such master agreement or agreements), together 
     with all supplements to such master agreement, shall be 
     treated as a single agreement and a single qualified 
     financial contract. If a master agreement contains provisions 
     relating to agreements or transactions that are not 
     themselves qualified financial contracts, the master 
     agreement shall be deemed to be a qualified financial 
     contract only with respect to those transactions that are 
     themselves qualified financial contracts.
       ``(viii) Transfer.--The term `transfer' means every mode, 
     direct or indirect, absolute or conditional, voluntary or 
     involuntary, of disposing of or parting with property or with 
     an interest in property, including retention of title as a 
     security interest and foreclosure of the equity of redemption 
     of the regulated entity.
       ``(E) Certain protections in event of appointment of 
     conservator.--Notwithstanding any other provision of this 
     section, any other Federal law, or the law of any State 
     (other than paragraph (10) of this subsection and subsection 
     (b)(9)(B)), no person shall be stayed or prohibited from 
     exercising--
       ``(i) any right such person has to cause the termination, 
     liquidation, or acceleration of any qualified financial 
     contract with a regulated entity in a conservatorship based 
     upon a default under such financial contract which is 
     enforceable under applicable noninsolvency law;
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement relating to 1 or more 
     such qualified financial contracts; or
       ``(iii) any right to offset or net out any termination 
     values, payment amounts, or other transfer obligations 
     arising under or in connection with such qualified financial 
     contracts.
       ``(F) Clarification.--No provision of law shall be 
     construed as limiting the right or power of the Agency, or 
     authorizing any court or agency to limit or delay in any 
     manner, the right or power of the Agency to transfer any 
     qualified financial contract in accordance with paragraphs 
     (9) and (10), or to disaffirm or repudiate any such contract 
     in accordance with subsection (d)(1).
       ``(G) Walkaway clauses not effective.--
       ``(i) In general.--Notwithstanding the provisions of 
     subparagraphs (A) and (E), and sections 403 and 404 of the 
     Federal Deposit Insurance Corporation Improvement Act of 
     1991, no walkaway clause shall be enforceable in a qualified 
     financial contract of a regulated entity in default.
       ``(ii) Walkaway clause defined.--For purposes of this 
     subparagraph, the term `walkaway clause' means a provision in 
     a qualified financial contract that, after calculation of a 
     value of a party's position or an amount due to or from 1 of 
     the parties in accordance with its terms upon termination, 
     liquidation, or acceleration of the qualified financial 
     contract, either does not create a payment obligation of a 
     party or extinguishes a payment obligation of a party in 
     whole or in part solely because of the status of such party 
     as a nondefaulting party.
       ``(9) Transfer of qualified financial contracts.--In making 
     any transfer of assets or liabilities of a regulated entity 
     in default which includes any qualified financial contract, 
     the conservator or receiver for such regulated entity shall 
     either--
       ``(A) transfer to 1 person--
       ``(i) all qualified financial contracts between any person 
     (or any affiliate of such person) and the regulated entity in 
     default;
       ``(ii) all claims of such person (or any affiliate of such 
     person) against such regulated entity under any such contract 
     (other than any claim which, under the terms of any such 
     contract, is subordinated to the claims of general unsecured 
     creditors of such regulated entity);
       ``(iii) all claims of such regulated entity against such 
     person (or any affiliate of such person) under any such 
     contract; and
       ``(iv) all property securing, or any other credit 
     enhancement for any contract described in clause (i), or any 
     claim described in clause (ii) or (iii) under any such 
     contract; or
       ``(B) transfer none of the financial contracts, claims, or 
     property referred to under subparagraph (A) (with respect to 
     such person and any affiliate of such person).
       ``(10) Notification of transfer.--
       ``(A) In general.--The conservator or receiver shall notify 
     any person that is a party to a contract or transfer by 5:00 
     p.m. (Eastern Standard Time) on the business day following 
     the date of the appointment of the receiver in the case of a 
     receivership, or the business day following such transfer in 
     the case of a conservatorship, if--
       ``(i) the conservator or receiver for a regulated entity in 
     default makes any transfer of the assets and liabilities of 
     such regulated entity; and
       ``(ii) such transfer includes any qualified financial 
     contract.
       ``(B) Certain rights not enforceable.--
       ``(i) Receivership.--A person who is a party to a qualified 
     financial contract with a regulated entity may not exercise 
     any right that such person has to terminate, liquidate, or 
     net such contract under paragraph (8)(A) of this subsection 
     or under section 403 or 404 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991, solely by reason of or 
     incidental to the appointment of a receiver for the regulated 
     entity (or the insolvency or financial condition of the 
     regulated entity for which the receiver has been appointed)--

       ``(I) until 5:00 p.m. (Eastern Standard Time) on the 
     business day following the date of the appointment of the 
     receiver; or
       ``(II) after the person has received notice that the 
     contract has been transferred pursuant to paragraph (9)(A).

       ``(ii) Conservatorship.--A person who is a party to a 
     qualified financial contract with a regulated entity may not 
     exercise any right that such person has to terminate, 
     liquidate, or net such contract under paragraph (8)(E) of 
     this subsection or under section 403 or 404 of the Federal 
     Deposit Insurance Corporation Improvement Act of 1991, solely 
     by reason of or incidental to the appointment of a 
     conservator for the regulated entity (or the insolvency or 
     financial condition of the regulated entity for which the 
     conservator has been appointed).
       ``(iii) Notice.--For purposes of this paragraph, the 
     conservator or receiver of a regulated entity shall be deemed 
     to have notified a person who is a party to a qualified 
     financial contract with such regulated entity, if the 
     conservator or receiver has taken steps reasonably calculated 
     to provide notice to such person by the time specified in 
     subparagraph (A).
       ``(C) Business day defined.--For purposes of this 
     paragraph, the term `business day' means any day other than 
     any Saturday, Sunday, or any day on which either the New York 
     Stock Exchange or the Federal Reserve Bank of New York is 
     closed.
       ``(11) Disaffirmance or repudiation of qualified financial 
     contracts.--In exercising the rights of disaffirmance or 
     repudiation of a conservator or receiver with respect to any 
     qualified financial contract to which a regulated entity is a 
     party, the conservator or receiver for such institution shall 
     either--
       ``(A) disaffirm or repudiate all qualified financial 
     contracts between--
       ``(i) any person or any affiliate of such person; and
       ``(ii) the regulated entity in default; or
       ``(B) disaffirm or repudiate none of the qualified 
     financial contracts referred to in subparagraph (A) (with 
     respect to such person or any affiliate of such person).

[[Page S6761]]

       ``(12) Certain security interests not avoidable.--No 
     provision of this subsection shall be construed as permitting 
     the avoidance of any legally enforceable or perfected 
     security interest in any of the assets of any regulated 
     entity, except where such an interest is taken in 
     contemplation of the insolvency of the regulated entity, or 
     with the intent to hinder, delay, or defraud the regulated 
     entity or the creditors of such regulated entity.
       ``(13) Authority to enforce contracts.--
       ``(A) In general.--Notwithstanding any provision of a 
     contract providing for termination, default, acceleration, or 
     exercise of rights upon, or solely by reason of, insolvency 
     or the appointment of, or the exercise of rights or powers 
     by, a conservator or receiver, the conservator or receiver 
     may enforce any contract, other than a contract for liability 
     insurance for a director or officer, or a contract or a 
     regulated entity bond, entered into by the regulated entity.
       ``(B) Certain rights not affected.--No provision of this 
     paragraph may be construed as impairing or affecting any 
     right of the conservator or receiver to enforce or recover 
     under a liability insurance contract for an officer or 
     director, or regulated entity bond under other applicable 
     law.
       ``(C) Consent requirement.--
       ``(i) In general.--Except as otherwise provided under this 
     section, no person may exercise any right or power to 
     terminate, accelerate, or declare a default under any 
     contract to which a regulated entity is a party, or to obtain 
     possession of or exercise control over any property of the 
     regulated entity, or affect any contractual rights of the 
     regulated entity, without the consent of the conservator or 
     receiver, as appropriate, for a period of--

       ``(I) 45 days after the date of appointment of a 
     conservator; or
       ``(II) 90 days after the date of appointment of a receiver.

       ``(ii) Exceptions.--This subparagraph shall not--

       ``(I) apply to a contract for liability insurance for an 
     officer or director;
       ``(II) apply to the rights of parties to certain qualified 
     financial contracts under subsection (d)(8); and
       ``(III) be construed as permitting the conservator or 
     receiver to fail to comply with otherwise enforceable 
     provisions of such contracts.

       ``(14) Savings clause.--The meanings of terms used in this 
     subsection are applicable for purposes of this subsection 
     only, and shall not be construed or applied so as to 
     challenge or affect the characterization, definition, or 
     treatment of any similar terms under any other statute, 
     regulation, or rule, including the Gramm-Leach-Bliley Act, 
     the Legal Certainty for Bank Products Act of 2000, the 
     securities laws (as that term is defined in section 3(a)(47) 
     of the Securities Exchange Act of 1934), and the Commodity 
     Exchange Act.
       ``(15) Exception for federal reserve and federal home loan 
     banks.--No provision of this subsection shall apply with 
     respect to--
       ``(A) any extension of credit from any Federal Home Loan 
     Bank or Federal Reserve Bank to any regulated entity; or
       ``(B) any security interest in the assets of the regulated 
     entity securing any such extension of credit.
       ``(e) Valuation of Claims in Default.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal law or the law of any State, and regardless of the 
     method which the Agency determines to utilize with respect to 
     a regulated entity in default or in danger of default, 
     including transactions authorized under subsection (i), this 
     subsection shall govern the rights of the creditors of such 
     regulated entity.
       ``(2) Maximum liability.--The maximum liability of the 
     Agency, acting as receiver or in any other capacity, to any 
     person having a claim against the receiver or the regulated 
     entity for which such receiver is appointed shall be not more 
     than the amount that such claimant would have received if the 
     Agency had liquidated the assets and liabilities of the 
     regulated entity without exercising the authority of the 
     Agency under subsection (i).
       ``(f) Limitation on Court Action.--Except as provided in 
     this section or at the request of the Director, no court may 
     take any action to restrain or affect the exercise of powers 
     or functions of the Agency as a conservator or a receiver.
       ``(g) Liability of Directors and Officers.--
       ``(1) In general.--A director or officer of a regulated 
     entity may be held personally liable for monetary damages in 
     any civil action described in paragraph (2) brought by, on 
     behalf of, or at the request or direction of the Agency, and 
     prosecuted wholly or partially for the benefit of the 
     Agency--
       ``(A) acting as conservator or receiver of such regulated 
     entity; or
       ``(B) acting based upon a suit, claim, or cause of action 
     purchased from, assigned by, or otherwise conveyed by such 
     receiver or conservator.
       ``(2) Actions addressed.--Paragraph (1) applies in any 
     civil action for gross negligence, including any similar 
     conduct or conduct that demonstrates a greater disregard of a 
     duty of care than gross negligence, including intentional 
     tortious conduct, as such terms are defined and determined 
     under applicable State law.
       ``(3) No limitation.--Nothing in this subsection shall 
     impair or affect any right of the Agency under other 
     applicable law.
       ``(h) Damages.--In any proceeding related to any claim 
     against a director, officer, employee, agent, attorney, 
     accountant, appraiser, or any other party employed by or 
     providing services to a regulated entity, recoverable damages 
     determined to result from the improvident or otherwise 
     improper use or investment of any assets of the regulated 
     entity shall include principal losses and appropriate 
     interest.
       ``(i) Limited-Life Regulated Entities.--
       ``(1) Organization.--
       ``(A) Purpose.--The Agency, as receiver appointed pursuant 
     to subsection (a)--
       ``(i) may, in the case of a Federal Home Loan Bank, 
     organize a limited-life regulated entity with those powers 
     and attributes of the Federal Home Loan Bank in default or in 
     danger of default as the Director determines necessary, 
     subject to the provisions of this subsection, and the 
     Director shall grant a temporary charter to that limited-life 
     regulated entity, and that limited-life regulated entity 
     shall operate subject to that charter; and
       ``(ii) shall, in the case of an enterprise, organize a 
     limited-life regulated entity with respect to that enterprise 
     in accordance with this subsection.
       ``(B) Authorities.--Upon the creation of a limited-life 
     regulated entity under subparagraph (A), the limited-life 
     regulated entity may--
       ``(i) assume such liabilities of the regulated entity that 
     is in default or in danger of default as the Agency may, in 
     its discretion, determine to be appropriate, except that the 
     liabilities assumed shall not exceed the amount of assets 
     purchased or transferred from the regulated entity to the 
     limited-life regulated entity;
       ``(ii) purchase such assets of the regulated entity that is 
     in default, or in danger of default as the Agency may, in its 
     discretion, determine to be appropriate; and
       ``(iii) perform any other temporary function which the 
     Agency may, in its discretion, prescribe in accordance with 
     this section.
       ``(2) Charter and establishment.--
       ``(A) Transfer of charter.--
       ``(i) Fannie mae.--If the Agency is appointed as receiver 
     for the Federal National Mortgage Association, the limited-
     life regulated entity established under this subsection with 
     respect to such enterprise shall, by operation of law and 
     immediately upon its organization--

       ``(I) succeed to the charter of the Federal National 
     Mortgage Association, as set forth in the Federal National 
     Mortgage Association Charter Act; and
       ``(II) thereafter operate in accordance with, and subject 
     to, such charter, this Act, and any other provision of law to 
     which the Federal National Mortgage Association is subject, 
     except as otherwise provided in this subsection.

       ``(ii) Freddie mac.--If the Agency is appointed as receiver 
     for the Federal Home Loan Mortgage Corporation, the limited-
     life regulated entity established under this subsection with 
     respect to such enterprise shall, by operation of law and 
     immediately upon its organization--

       ``(I) succeed to the charter of the Federal Home Loan 
     Mortgage Corporation, as set forth in the Federal Home Loan 
     Mortgage Corporation Charter Act; and
       ``(II) thereafter operate in accordance with, and subject 
     to, such charter, this Act, and any other provision of law to 
     which the Federal Home Loan Mortgage Corporation is subject, 
     except as otherwise provided in this subsection.

       ``(B) Interests in and assets and obligations of regulated 
     entity in default.--Notwithstanding subparagraph (A) or any 
     other provision of law--
       ``(i) a limited-life regulated entity shall assume, 
     acquire, or succeed to the assets or liabilities of a 
     regulated entity only to the extent that such assets or 
     liabilities are transferred by the Agency to the limited-life 
     regulated entity in accordance with, and subject to the 
     restrictions set forth in, paragraph (1)(B);
       ``(ii) a limited-life regulated entity shall not assume, 
     acquire, or succeed to any obligation that a regulated entity 
     for which a receiver has been appointed may have to any 
     shareholder of the regulated entity that arises as a result 
     of the status of that person as a shareholder of the 
     regulated entity; and
       ``(iii) no shareholder or creditor of a regulated entity 
     shall have any right or claim against the charter of the 
     regulated entity once the Agency has been appointed receiver 
     for the regulated entity and a limited-life regulated entity 
     succeeds to the charter pursuant to subparagraph (A).
       ``(C) Limited-life regulated entity treated as being in 
     default for certain purposes.--A limited-life regulated 
     entity shall be treated as a regulated entity in default at 
     such times and for such purposes as the Agency may, in its 
     discretion, determine.
       ``(D) Management.--Upon its establishment, a limited-life 
     regulated entity shall be under the management of a board of 
     directors consisting of not fewer than 5 nor more than 10 
     members appointed by the Agency.
       ``(E) Bylaws.--The board of directors of a limited-life 
     regulated entity shall adopt such bylaws as may be approved 
     by the Agency.
       ``(3) Capital stock.--
       ``(A) No agency requirement.--The Agency is not required to 
     pay capital stock into a limited-life regulated entity or to 
     issue any capital stock on behalf of a limited-life regulated 
     entity established under this subsection.
       ``(B) Authority.--If the Director determines that such 
     action is advisable, the Agency may cause capital stock or 
     other securities of a limited-life regulated entity 
     established with respect to an enterprise to be issued and 
     offered for sale, in such amounts and on such terms and 
     conditions as the Director may determine, in the discretion 
     of the Director.
       ``(4) Investments.--Funds of a limited-life regulated 
     entity shall be kept on hand in cash, invested in obligations 
     of the United States or obligations guaranteed as to 
     principal and interest by the United States, or deposited 
     with the Agency, or any Federal reserve bank.
       ``(5) Exempt tax status.--Notwithstanding any other 
     provision of Federal or State law, a limited-life regulated 
     entity, 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.

[[Page S6762]]

       ``(6) Winding up.--
       ``(A) In general.--Subject to subparagraphs (B) and (C), 
     not later than 2 years after the date of its organization, 
     the Agency shall wind up the affairs of a limited-life 
     regulated entity.
       ``(B) Extension.--The Director may, in the discretion of 
     the Director, extend the status of a limited-life regulated 
     entity for 3 additional 1-year periods.
       ``(C) Termination of status as limited-life regulated 
     entity.--
       ``(i) In general.--Upon the sale by the Agency of 80 
     percent or more of the capital stock of a limited-life 
     regulated entity, as defined in clause (iv), to 1 or more 
     persons (other than the Agency)--

       ``(I) the status of the limited-life regulated entity as 
     such shall terminate; and
       ``(II) the entity shall cease to be a limited-life 
     regulated entity for purposes of this subsection.

       ``(ii) Divestiture of remaining stock, if any.--

       ``(I) In general.--Not later than 1 year after the date on 
     which the status of a limited-life regulated entity is 
     terminated pursuant to clause (i), the Agency shall sell to 1 
     or more persons (other than the Agency) any remaining capital 
     stock of the former limited-life regulated entity.
       ``(II) Extension authorized.--The Director may extend the 
     period referred to in subclause (I) for not longer than an 
     additional 2 years, if the Director determines that such 
     action would be in the public interest.

       ``(iii) Savings clause.--Notwithstanding any provision of 
     law, other than clause (ii), the Agency shall not be required 
     to sell the capital stock of an enterprise or a limited-life 
     regulated entity established with respect to an enterprise.
       ``(iv) Applicability.--This subparagraph applies only with 
     respect to a limited-life regulated entity that is 
     established with respect to an enterprise.
       ``(7) Transfer of assets and liabilities.--
       ``(A) In general.--
       ``(i) Transfer of assets and liabilities.--The Agency, as 
     receiver, may transfer any assets and liabilities of a 
     regulated entity in default, or in danger of default, to the 
     limited-life regulated entity in accordance with and subject 
     to the restrictions of paragraph (1).
       ``(ii) Subsequent transfers.--At any time after the 
     establishment of a limited-life regulated entity, the Agency, 
     as receiver, may transfer any assets and liabilities of the 
     regulated entity in default, or in danger of default, as the 
     Agency may, in its discretion, determine to be appropriate in 
     accordance with and subject to the restrictions of paragraph 
     (1).
       ``(iii) Effective without approval.--The transfer of any 
     assets or liabilities of a regulated entity in default or in 
     danger of default to a limited-life regulated entity shall be 
     effective without any further approval under Federal or State 
     law, assignment, or consent with respect thereto.
       ``(iv) Equitable treatment of similarly situated 
     creditors.--The Agency shall treat all creditors of a 
     regulated entity in default or in danger of default that are 
     similarly situated under subsection (c)(1) in a similar 
     manner in exercising the authority of the Agency under this 
     subsection to transfer any assets or liabilities of the 
     regulated entity to the limited-life regulated entity 
     established with respect to such regulated entity, except 
     that the Agency may take actions (including making payments) 
     that do not comply with this clause, if--

       ``(I) the Director determines that such actions are 
     necessary to maximize the value of the assets of the 
     regulated entity, to maximize the present value return from 
     the sale or other disposition of the assets of the regulated 
     entity, or to minimize the amount of any loss realized upon 
     the sale or other disposition of the assets of the regulated 
     entity; and
       ``(II) all creditors that are similarly situated under 
     subsection (c)(1) receive not less than the amount provided 
     in subsection (e)(2).

       ``(v) Limitation on transfer of liabilities.--
     Notwithstanding any other provision of law, the aggregate 
     amount of liabilities of a regulated entity that are 
     transferred to, or assumed by, a limited-life regulated 
     entity may not exceed the aggregate amount of assets of the 
     regulated entity that are transferred to, or purchased by, 
     the limited-life regulated entity.
       ``(8) Regulations.--The Agency may promulgate such 
     regulations as the Agency determines to be necessary or 
     appropriate to implement this subsection.
       ``(9) Powers of limited-life regulated entities.--
       ``(A) In general.--Each limited-life regulated entity 
     created under this subsection shall have all corporate powers 
     of, and be subject to the same provisions of law as, the 
     regulated entity in default or in danger of default to which 
     it relates, except that--
       ``(i) the Agency may--

       ``(I) remove the directors of a limited-life regulated 
     entity;
       ``(II) fix the compensation of members of the board of 
     directors and senior management, as determined by the Agency 
     in its discretion, of a limited-life regulated entity; and
       ``(III) indemnify the representatives for purposes of 
     paragraph (1)(B), and the directors, officers, employees, and 
     agents of a limited-life regulated entity on such terms as 
     the Agency determines to be appropriate; and

       ``(ii) the board of directors of a limited-life regulated 
     entity--

       ``(I) shall elect a chairperson who may also serve in the 
     position of chief executive officer, except that such person 
     shall not serve either as chairperson or as chief executive 
     officer without the prior approval of the Agency; and
       ``(II) may appoint a chief executive officer who is not 
     also the chairperson, except that such person shall not serve 
     as chief executive officer without the prior approval of the 
     Agency.

       ``(B) Stay of judicial action.--Any judicial action to 
     which a limited-life regulated entity becomes a party by 
     virtue of its acquisition of any assets or assumption of any 
     liabilities of a regulated entity in default shall be stayed 
     from further proceedings for a period of not longer than 45 
     days, at the request of the limited-life regulated entity. 
     Such period may be modified upon the consent of all parties.
       ``(10) No federal status.--
       ``(A) Agency status.--A limited-life regulated entity is 
     not an agency, establishment, or instrumentality of the 
     United States.
       ``(B) Employee status.--Representatives for purposes of 
     paragraph (1)(B), interim directors, directors, officers, 
     employees, or agents of a limited-life regulated entity are 
     not, solely by virtue of service in any such capacity, 
     officers or employees of the United States. Any employee of 
     the Agency or of any Federal instrumentality who serves at 
     the request of the Agency as a representative for purposes of 
     paragraph (1)(B), interim director, director, officer, 
     employee, or agent of a limited-life regulated entity shall 
     not--
       ``(i) solely by virtue of service in any such capacity lose 
     any existing status as an officer or employee of the United 
     States for purposes of title 5, United States Code, or any 
     other provision of law; or
       ``(ii) receive any salary or benefits for service in any 
     such capacity with respect to a limited-life regulated entity 
     in addition to such salary or benefits as are obtained 
     through employment with the Agency or such Federal 
     instrumentality.
       ``(11) Authority to obtain credit.--
       ``(A) In general.--A limited-life regulated entity may 
     obtain unsecured credit and issue unsecured debt.
       ``(B) Inability to obtain credit.--If a limited-life 
     regulated entity is unable to obtain unsecured credit or 
     issue unsecured debt, the Director may authorize the 
     obtaining of credit or the issuance of debt by the limited-
     life regulated entity--
       ``(i) with priority over any or all of the obligations of 
     the limited-life regulated entity;
       ``(ii) secured by a lien on property of the limited-life 
     regulated entity that is not otherwise subject to a lien; or
       ``(iii) secured by a junior lien on property of the 
     limited-life regulated entity that is subject to a lien.
       ``(C) Limitations.--
       ``(i) In general.--The Director, after notice and a 
     hearing, may authorize the obtaining of credit or the 
     issuance of debt by a limited-life regulated entity that is 
     secured by a senior or equal lien on property of the limited-
     life regulated entity that is subject to a lien (other than 
     mortgages that collateralize the mortgage-backed securities 
     issued or guaranteed by an enterprise) only if--

       ``(I) the limited-life regulated entity is unable to 
     otherwise obtain such credit or issue such debt; and
       ``(II) there is adequate protection of the interest of the 
     holder of the lien on the property with respect to which such 
     senior or equal lien is proposed to be granted.

       ``(D) Burden of proof.--In any hearing under this 
     subsection, the Director has the burden of proof on the issue 
     of adequate protection.
       ``(12) Affect on debts and liens.--The reversal or 
     modification on appeal of an authorization under this 
     subsection to obtain credit or issue debt, or of a grant 
     under this section of a priority or a lien, does not affect 
     the validity of any debt so issued, or any priority or lien 
     so granted, to an entity that extended such credit in good 
     faith, whether or not such entity knew of the pendency of the 
     appeal, unless such authorization and the issuance of such 
     debt, or the granting of such priority or lien, were stayed 
     pending appeal.
       ``(j) Other Agency Exemptions.--
       ``(1) Applicability.--The provisions of this subsection 
     shall apply with respect to the Agency in any case in which 
     the Agency is acting as a conservator or a receiver.
       ``(2) Taxation.--The Agency, including its franchise, its 
     capital, reserves, and surplus, and its income, shall be 
     exempt from all taxation imposed by any State, county, 
     municipality, or local taxing authority, except that any real 
     property of the Agency shall be subject to State, 
     territorial, county, municipal, or local taxation to the same 
     extent according to its value as other real property is 
     taxed, except that, notwithstanding the failure of any person 
     to challenge an assessment under State law of the value of 
     such property, and the tax thereon, shall be determined as of 
     the period for which such tax is imposed.
       ``(3) Property protection.--No property of the Agency shall 
     be subject to levy, attachment, garnishment, foreclosure, or 
     sale without the consent of the Agency, nor shall any 
     involuntary lien attach to the property of the Agency.
       ``(4) Penalties and fines.--The Agency shall not be liable 
     for any amounts in the nature of penalties or fines, 
     including those arising from the failure of any person to pay 
     any real property, personal property, probate, or recording 
     tax or any recording or filing fees when due.
       ``(k) Prohibition of Charter Revocation.--In no case may 
     the receiver appointed pursuant to this section revoke, 
     annul, or terminate the charter of an enterprise.''.
       (b) Technical and Conforming Amendments.--The Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (12 U.S.C. 4501 et seq.) is amended--
       (1) in section 1368 (12 U.S.C. 4618)--
       (A) by striking ``an enterprise'' each place that term 
     appears and inserting ``a regulated entity''; and
       (B) by striking ``the enterprise'' each place that term 
     appears and inserting ``the regulated entity'';
       (2) in section 1369C (12 U.S.C. 4622), by striking 
     ``enterprise'' each place that term appears and inserting 
     ``regulated entity'';

[[Page S6763]]

       (3) in section 1369D (12 U.S.C. 4623)--
       (A) by striking ``an enterprise'' each place that term 
     appears and inserting ``a regulated entity''; and
       (B) in subsection (a)(1), by striking ``An enterprise'' and 
     inserting ``A regulated entity''; and
       (4) by striking sections 1369, 1369A, and 1369B (12 U.S.C. 
     4619, 4620, and 4621).

                    Subtitle D--Enforcement Actions

     SEC. 1151. CEASE AND DESIST PROCEEDINGS.

       Section 1371 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4631) is 
     amended--
       (1) by striking subsections (a) and (b) and inserting the 
     following:
       ``(a) Issuance for Unsafe or Unsound Practices and 
     Violations.--
       ``(1) Authority of director.--If, in the opinion of the 
     Director, a regulated entity or any entity-affiliated party 
     is engaging or has engaged, or the Director has reasonable 
     cause to believe that the regulated entity or any entity-
     affiliated party is about to engage, in an unsafe or unsound 
     practice in conducting the business of the regulated entity 
     or the Office of Finance, or is violating or has violated, or 
     the Director has reasonable cause to believe is about to 
     violate, a law, rule, regulation, or order, or any condition 
     imposed in writing by the Director in connection with the 
     granting of any application or other request by the regulated 
     entity or the Office of Finance or any written agreement 
     entered into with the Director, the Director may issue and 
     serve upon the regulated entity or entity-affiliated party a 
     notice of charges in respect thereof.
       ``(2) Limitation.--The Director may not, pursuant to this 
     section, enforce compliance 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, with subsection (m) or 
     (n) of section 309 of the Federal National Mortgage 
     Association Charter Act (12 U.S.C. 1723a(m), (n)), with 
     subsection (e) or (f) of section 307 of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1456(e), (f)), or with 
     paragraph (5) of section 10(j) of the Federal Home Loan Bank 
     Act (12 U.S.C. 1430(j)).
       ``(b) Issuance for Unsatisfactory Rating.--If a regulated 
     entity receives, in its most recent report of examination, a 
     less-than-satisfactory rating for asset quality, management, 
     earnings, or liquidity, the Director may (if the deficiency 
     is not corrected) deem the regulated entity to be engaging in 
     an unsafe or unsound practice for purposes of subsection 
     (a).'';
       (2) in subsection (c)--
       (A) in paragraph (1), by inserting before the period at the 
     end the following: ``, unless the party served with a notice 
     of charges shall appear at the hearing personally or by a 
     duly authorized representative, the party shall be deemed to 
     have consented to the issuance of the cease and desist 
     order''; and
       (B) in paragraph (2)--
       (i) by striking ``or director'' and inserting ``director, 
     or entity-affiliated party''; and
       (ii) by inserting ``or entity-affiliated party'' before 
     ``consents'';
       (3) in each of subsections (c), (d), and (e)--
       (A) by striking ``the enterprise'' each place that term 
     appears and inserting ``the regulated entity'';
       (B) by striking ``an enterprise'' each place that term 
     appears and inserting ``a regulated entity''; and
       (C) by striking ``conduct'' each place that term appears 
     and inserting ``practice'';
       (4) in subsection (d)--
       (A) in the matter preceding paragraph (1)--
       (i) by striking ``or director'' and inserting ``director, 
     or entity-affiliated party''; and
       (ii) by inserting ``to require a regulated entity or 
     entity-affiliated party'' after ``includes the authority'';
       (B) in paragraph (1)--
       (i) by striking ``to require an executive officer or a 
     director to''; and
       (ii) by striking ``loss'' and all that follows through 
     ``person'' and inserting ``loss, if'';
       (iii) in subparagraph (A), by inserting ``such entity or 
     party or finance facility'' before ``was''; and
       (iv) by striking subparagraph (B) and inserting the 
     following:
       ``(B) the violation or practice involved a reckless 
     disregard for the law or any applicable regulations or prior 
     order of the Director;''; and
       (C) in paragraph (4), by inserting ``loan or'' before 
     ``asset'';
       (5) in subsection (e), by inserting ``or entity-affiliated 
     party''--
       (A) before ``or any executive''; and
       (B) before the period at the end; and
       (6) in subsection (f)--
       (A) by striking ``enterprise'' and inserting ``regulated 
     entity, finance facility,''; and
       (B) by striking ``or director'' and inserting ``director, 
     or entity-affiliated party''.

     SEC. 1152. TEMPORARY CEASE AND DESIST PROCEEDINGS.

       Section 1372 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4632) is 
     amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) Grounds for Issuance.--
       ``(1) In general.--If the Director determines that the 
     actions specified in the notice of charges served upon a 
     regulated entity or any entity-affiliated party pursuant to 
     section 1371(a), or the continuation thereof, is likely to 
     cause insolvency or significant dissipation of assets or 
     earnings of that entity, or is likely to weaken the condition 
     of that entity prior to the completion of the proceedings 
     conducted pursuant to sections 1371 and 1373, the Director 
     may--
       ``(A) issue a temporary order requiring that regulated 
     entity or entity-affiliated party to cease and desist from 
     any such violation or practice; and
       ``(B) require that regulated entity or entity-affiliated 
     party to take affirmative action to prevent or remedy such 
     insolvency, dissipation, condition, or prejudice pending 
     completion of such proceedings.
       ``(2) Additional requirements.--An order issued under 
     paragraph (1) may include any requirement authorized under 
     subsection 1371(d).'';
       (2) in subsection (b)--
       (A) by striking ``or director'' and inserting ``director, 
     or entity-affiliated party''; and
       (B) by striking ``enterprise'' each place that term appears 
     and inserting ``regulated entity'';
       (3) in subsection (c), by striking ``enterprise'' each 
     place that term appears and inserting ``regulated entity'';
       (4) in subsection (d)--
       (A) by striking ``or director'' each place that term 
     appears and inserting ``director, or entity-affiliated 
     party''; and
       (B) by striking ``An enterprise'' and inserting ``A 
     regulated entity''; and
       (5) in subsection (e)--
       (A) by striking ``request the Attorney General of the 
     United States to''; and
       (B) by striking ``or may, under the direction and control 
     of the Attorney General, bring such action''.

     SEC. 1153. REMOVAL AND PROHIBITION AUTHORITY.

       (a) In General.--Part 1 of subtitle C of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (12 U.S.C. 4631 et seq.) is amended--
       (1) by redesignating sections 1377 through 1379B (12 U.S.C. 
     4637-4641) as sections 1379 through 1379D, respectively; and
       (2) by inserting after section 1376 (12 U.S.C. 4636) the 
     following:

     ``SEC. 1377. REMOVAL AND PROHIBITION AUTHORITY.

       ``(a) Authority To Issue Order.--
       ``(1) In general.--The Director may serve upon a party 
     described in paragraph (2), or any officer, director, or 
     management of the Office of Finance a written notice of the 
     intention of the Director to suspend or remove such party 
     from office, or prohibit any further participation by such 
     party, in any manner, in the conduct of the affairs of the 
     regulated entity.
       ``(2) Applicability.--A party described in this paragraph 
     is an entity-affiliated party or any officer, director, or 
     management of the Office of Finance, if the Director 
     determines that--
       ``(A) that party, officer, or director has, directly or 
     indirectly--
       ``(i) violated--

       ``(I) any law or regulation;
       ``(II) any cease and desist order which has become final;
       ``(III) any condition imposed in writing by the Director in 
     connection with the grant of any application or other request 
     by such regulated entity; or
       ``(IV) any written agreement between such regulated entity 
     and the Director;

       ``(ii) engaged or participated in any unsafe or unsound 
     practice in connection with any regulated entity or business 
     institution; or
       ``(iii) committed or engaged in any act, omission, or 
     practice which constitutes a breach of such party's fiduciary 
     duty;
       ``(B) by reason of the violation, practice, or breach 
     described in subparagraph (A)--
       ``(i) such regulated entity or business institution has 
     suffered or will probably suffer financial loss or other 
     damage; or
       ``(ii) such party has received financial gain or other 
     benefit; and
       ``(C) the violation, practice, or breach described in 
     subparagraph (A)--
       ``(i) involves personal dishonesty on the part of such 
     party; or
       ``(ii) demonstrates willful or continuing disregard by such 
     party for the safety or soundness of such regulated entity or 
     business institution.
       ``(b) Suspension Order.--
       ``(1) Suspension or prohibition authority.--If the Director 
     serves written notice under subsection (a) upon a party 
     subject to that subsection (a), the Director may, by order, 
     suspend or remove such party from office, or prohibit such 
     party from further participation in any manner in the conduct 
     of the affairs of the regulated entity, if the Director--
       ``(A) determines that such action is necessary for the 
     protection of the regulated entity; and
       ``(B) serves such party with written notice of the order.
       ``(2) Effective period.--Any order issued under this 
     subsection--
       ``(A) shall become effective upon service; and
       ``(B) unless a court issues a stay of such order under 
     subsection (g), shall remain in effect and enforceable 
     until--
       ``(i) the date on which the Director dismisses the charges 
     contained in the notice served under subsection (a) with 
     respect to such party; or
       ``(ii) the effective date of an order issued under 
     subsection (b).
       ``(3) Copy of order.--If the Director issues an order under 
     subsection (b) to any party, the Director shall serve a copy 
     of such order on any regulated entity with which such party 
     is affiliated at the time such order is issued.
       ``(c) Notice, Hearing, and Order.--
       ``(1) Notice.--A notice under subsection (a) of the 
     intention of the Director to issue an order under this 
     section shall contain a statement of the facts constituting 
     grounds for such action, and shall fix a time and place at 
     which a hearing will be held on such action.
       ``(2) Timing of hearing.--A hearing shall be fixed for a 
     date not earlier than 30 days, nor later than 60 days, after 
     the date of service of notice under subsection (a), unless an 
     earlier or a later date is set by the Director at the request 
     of--
       ``(A) the party receiving such notice, and good cause is 
     shown; or
       ``(B) the Attorney General of the United States.

[[Page S6764]]

       ``(3) Consent.--Unless the party that is the subject of a 
     notice delivered under subsection (a) appears at the hearing 
     in person or by a duly authorized representative, such party 
     shall be deemed to have consented to the issuance of an order 
     under this section.
       ``(4) Issuance of order of suspension.--The Director may 
     issue an order under this section, as the Director may deem 
     appropriate, if--
       ``(A) a party is deemed to have consented to the issuance 
     of an order under paragraph (3); or
       ``(B) upon the record made at the hearing, the Director 
     finds that any of the grounds specified in the notice have 
     been established.
       ``(5) Effectiveness of order.--Any order issued under 
     paragraph (4) shall become effective at the expiration of 30 
     days after the date of service upon the relevant regulated 
     entity and party (except in the case of an order issued upon 
     consent under paragraph (3), which shall become effective at 
     the time specified therein). Such order shall remain 
     effective and enforceable except to such extent as it is 
     stayed, modified, terminated, or set aside by action of the 
     Director or a reviewing court.
       ``(d) Prohibition of Certain Specific Activities.--Any 
     person subject to an order issued under this section shall 
     not--
       ``(1) participate in any manner in the conduct of the 
     affairs of any regulated entity or the Office of Finance;
       ``(2) solicit, procure, transfer, attempt to transfer, 
     vote, or attempt to vote any proxy, consent, or authorization 
     with respect to any voting rights in any regulated entity;
       ``(3) violate any voting agreement previously approved by 
     the Director; or
       ``(4) vote for a director, or serve or act as an entity-
     affiliated party of a regulated entity or as an officer or 
     director of the Office of Finance.
       ``(e) Industry-Wide Prohibition.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     person who, pursuant to an order issued under this section, 
     has been removed or suspended from office in a regulated 
     entity or the Office of Finance, or prohibited from 
     participating in the conduct of the affairs of a regulated 
     entity or the Office of Finance, may not, while such order is 
     in effect, continue or commence to hold any office in, or 
     participate in any manner in the conduct of the affairs of, 
     any regulated entity or the Office of Finance.
       ``(2) Exception if director provides written consent.--If, 
     on or after the date on which an order is issued under this 
     section which removes or suspends from office any party, or 
     prohibits such party from participating in the conduct of the 
     affairs of a regulated entity or the Office of Finance, such 
     party receives the written consent of the Director, the order 
     shall, to the extent of such consent, cease to apply to such 
     party with respect to the regulated entity or such Office of 
     Finance described in the written consent. Any such consent 
     shall be publicly disclosed.
       ``(3) Violation of paragraph (1) treated as violation of 
     order.--Any violation of paragraph (1) by any person who is 
     subject to an order issued under subsection (h) shall be 
     treated as a violation of the order.
       ``(f) Applicability.--This section shall only apply to a 
     person who is an individual, unless the Director specifically 
     finds that it should apply to a corporation, firm, or other 
     business entity.
       ``(g) Stay of Suspension and Prohibition of Entity-
     Affiliated Party.--Not later than 10 days after the date on 
     which any entity-affiliated party has been suspended from 
     office or prohibited from participation in the conduct of the 
     affairs of a regulated entity under this section, such party 
     may apply to the United States District Court for the 
     District of Columbia, or the United States district court for 
     the judicial district in which the headquarters of the 
     regulated entity is located, for a stay of such suspension or 
     prohibition pending the completion of the administrative 
     proceedings pursuant to subsection (c). The court shall have 
     jurisdiction to stay such suspension or prohibition.
       ``(h) Suspension or Removal of Entity-Affiliated Party 
     Charged With Felony.--
       ``(1) Suspension or prohibition.--
       ``(A) In general.--Whenever any entity-affiliated party is 
     charged in any information, indictment, or complaint, with 
     the commission of or participation in a crime involving 
     dishonesty or breach of trust which is punishable by 
     imprisonment for a term exceeding 1 year under Federal or 
     State law, the Director may, if continued service or 
     participation by such party may pose a threat to the 
     regulated entity or impair public confidence in the regulated 
     entity, by written notice served upon such party, suspend 
     such party from office or prohibit such party from further 
     participation in any manner in the conduct of the affairs of 
     any regulated entity.
       ``(B) Provisions applicable to notice.--
       ``(i) Copy.--A copy of any notice under subparagraph (A) 
     shall be served upon the relevant regulated entity.
       ``(ii) Effective period.--A suspension or prohibition under 
     subparagraph (A) shall remain in effect until the 
     information, indictment, or complaint referred to in 
     subparagraph (A) is finally disposed of, or until terminated 
     by the Director.
       ``(2) Removal or prohibition.--
       ``(A) In general.--If a judgment of conviction or an 
     agreement to enter a pretrial diversion or other similar 
     program is entered against an entity-affiliated party in 
     connection with a crime described in paragraph (1)(A), at 
     such time as such judgment is not subject to further 
     appellate review, the Director may, if continued service or 
     participation by such party may pose a threat to the 
     regulated entity or impair public confidence in the regulated 
     entity, issue and serve upon such party an order removing 
     such party from office or prohibiting such party from further 
     participation in any manner in the conduct of the affairs of 
     the regulated entity without the prior written consent of the 
     Director.
       ``(B) Provisions applicable to order.--
       ``(i) Copy.--A copy of any order under subparagraph (A) 
     shall be served upon the relevant regulated entity, at which 
     time the entity-affiliated party who is subject to the order 
     (if a director or an officer) shall cease to be a director or 
     officer of such regulated entity.
       ``(ii) Effect of acquittal.--A finding of not guilty or 
     other disposition of the charge shall not preclude the 
     Director from instituting proceedings after such finding or 
     disposition to remove a party from office or to prohibit 
     further participation in the affairs of a regulated entity 
     pursuant to subsection (a) or (b).
       ``(iii) Effective period.--Unless terminated by the 
     Director, any notice of suspension or order of removal issued 
     under this subsection shall remain effective and outstanding 
     until the completion of any hearing or appeal authorized 
     under paragraph (4).
       ``(3) Authority of remaining board members.--
       ``(A) In general.--If at any time, because of the 
     suspension of 1 or more directors pursuant to this section, 
     there shall be on the board of directors of a regulated 
     entity less than a quorum of directors not so suspended, all 
     powers and functions vested in or exercisable by such board 
     shall vest in and be exercisable by the director or directors 
     on the board not so suspended, until such time as there shall 
     be a quorum of the board of directors.
       ``(B) Appointment of temporary directors.--If all of the 
     directors of a regulated entity are suspended pursuant to 
     this section, the Director shall appoint persons to serve 
     temporarily as directors pending the termination of such 
     suspensions, or until such time as those who have been 
     suspended cease to be directors of the regulated entity and 
     their respective successors take office.
       ``(4) Hearing regarding continued participation.--
       ``(A) In general.--Not later than 30 days after the date of 
     service of any notice of suspension or order of removal 
     issued pursuant to paragraph (1) or (2), the entity-
     affiliated party may request in writing an opportunity to 
     appear before the Director to show that the continued service 
     or participation in the conduct of the affairs of the 
     regulated entity by such party does not, or is not likely to, 
     pose a threat to the interests of the regulated entity, or 
     threaten to impair public confidence in the regulated entity.
       ``(B) Timing and form of hearing.--Upon receipt of a 
     request for a hearing under subparagraph (A), the Director 
     shall fix a time (not later than 30 days after the date of 
     receipt of such request, unless extended at the request of 
     such party) and place at which the entity-affiliated party 
     may appear, personally or through counsel, before the 
     Director or 1 or more designated employees of the Director to 
     submit written materials (or, at the discretion of the 
     Director, oral testimony) and oral argument.
       ``(C) Determination.--Not later than 60 days after the date 
     of a hearing under subparagraph (B), the Director shall 
     notify the entity-affiliated party whether the suspension or 
     prohibition from participation in any manner in the conduct 
     of the affairs of the regulated entity will be continued, 
     terminated, or otherwise modified, or whether the order 
     removing such party from office or prohibiting such party 
     from further participation in any manner in the conduct of 
     the affairs of the regulated entity will be rescinded or 
     otherwise modified. Such notification shall contain a 
     statement of the basis for any adverse decision of the 
     Director.
       ``(5) Rules.--The Director is authorized to prescribe such 
     rules as may be necessary to carry out this subsection.''.
       (b) Conforming Amendments.--
       (1) Safety and soundness act.--Subtitle C of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (12 U.S.C. 4501 et seq.) is amended--
       (A) in section 1317(f), by striking ``section 1379B'' and 
     inserting ``section 1379D'';
       (B) in section 1373(a)--
       (i) in paragraph (1), by striking ``or 1376(c)'' and 
     inserting ``, 1376(c), or 1377'';
       (ii) in paragraph (2), by inserting ``or 1377'' after'' 
     1371''; and
       (iii) in paragraph (4), by inserting ``or removal or 
     prohibition'' after ``cease and desist''; and
       (C) in section 1374(a)--
       (i) by striking ``or 1376'' and inserting ``1313B, 1376, or 
     1377''; and
       (ii) by striking ``such section'' and inserting ``this 
     title''.
       (2) Fannie mae charter act.--Section 308(b) of the Federal 
     National Mortgage Association Charter Act (12 U.S.C. 1723(b)) 
     is amended in the second sentence, by striking ``The'' and 
     inserting ``Except to the extent that action under section 
     1377 of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992 temporarily results in a lesser number, 
     the''.
       (3) Freddie mac charter act.--Section 303(a)(2)(A) of the 
     Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
     1452(a)(2)(A)) is amended, in the second sentence, by 
     striking ``The'' and inserting ``Except to the extent action 
     under section 1377 of the Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 temporarily 
     results in a lesser number, the''.

     SEC. 1154. ENFORCEMENT AND JURISDICTION.

       Section 1375 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4635) is 
     amended--
       (1) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Enforcement.--The Director may, in the discretion of 
     the Director, apply to the United States District Court for 
     the District of Columbia, or the United States district court 
     within the jurisdiction of which the headquarters of the 
     regulated entity is located, for the enforcement of any 
     effective and outstanding notice or

[[Page S6765]]

     order issued under this subtitle or subtitle B, or request 
     that the Attorney General of the United States bring such an 
     action. Such court shall have jurisdiction and power to order 
     and require compliance with such notice or order.''; and
       (2) in subsection (b), by striking ``or 1376'' and 
     inserting ``1313B, 1376, or 1377''.

     SEC. 1155. CIVIL MONEY PENALTIES.

       Section 1376 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4636) is 
     amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) In General.--The Director may impose a civil money 
     penalty in accordance with this section on any regulated 
     entity or any entity-affiliated party. The Director shall not 
     impose a civil penalty in accordance with this section on any 
     regulated entity or any entity-affiliated party for any 
     violation that is addressed under section 1345(a).'';
       (2) by striking subsection (b) and inserting the following:
       ``(b) Amount of Penalty.--
       ``(1) First tier.--A regulated entity or entity-affiliated 
     party shall forfeit and pay a civil penalty of not more than 
     $10,000 for each day during which a violation continues, if 
     such regulated entity or party--
       ``(A) violates any provision of this title, the authorizing 
     statutes, or any order, condition, rule, or regulation under 
     this title or any authorizing statute;
       ``(B) violates any final or temporary order or notice 
     issued pursuant to this title;
       ``(C) violates any condition imposed in writing by the 
     Director in connection with the grant of any application or 
     other request by such regulated entity; or
       ``(D) violates any written agreement between the regulated 
     entity and the Director.
       ``(2) Second tier.--Notwithstanding paragraph (1), a 
     regulated entity or entity-affiliated party shall forfeit and 
     pay a civil penalty of not more than $50,000 for each day 
     during which a violation, practice, or breach continues, if--
       ``(A) the regulated entity or entity-affiliated party, 
     respectively--
       ``(i) commits any violation described in any subparagraph 
     of paragraph (1);
       ``(ii) recklessly engages in an unsafe or unsound practice 
     in conducting the affairs of the regulated entity; or
       ``(iii) breaches any fiduciary duty; and
       ``(B) the violation, practice, or breach--
       ``(i) is part of a pattern of misconduct;
       ``(ii) causes or is likely to cause more than a minimal 
     loss to the regulated entity; or
       ``(iii) results in pecuniary gain or other benefit to such 
     party.
       ``(3) Third tier.--Notwithstanding paragraphs (1) and (2), 
     any regulated entity or entity-affiliated party shall forfeit 
     and pay a civil penalty in an amount not to exceed the 
     applicable maximum amount determined under paragraph (4) for 
     each day during which such violation, practice, or breach 
     continues, if such regulated entity or entity-affiliated 
     party--
       ``(A) knowingly--
       ``(i) commits any violation described in any subparagraph 
     of paragraph (1);
       ``(ii) engages in any unsafe or unsound practice in 
     conducting the affairs of the regulated entity; or
       ``(iii) breaches any fiduciary duty; and
       ``(B) knowingly or recklessly causes a substantial loss to 
     the regulated entity or a substantial pecuniary gain or other 
     benefit to such party by reason of such violation, practice, 
     or breach.
       ``(4) Maximum amounts of penalties for any violation 
     described in paragraph (3).--The maximum daily amount of any 
     civil penalty which may be assessed pursuant to paragraph (3) 
     for any violation, practice, or breach described in paragraph 
     (3) is--
       ``(A) in the case of any entity-affiliated party, an amount 
     not to exceed $2,000,000; and
       ``(B) in the case of any regulated entity, $2,000,000.'';
       (3) in subsection (c)--
       (A) by striking ``enterprise'' each place that term appears 
     and inserting ``regulated entity'';
       (B) by inserting ``or entity-affiliated party'' before ``in 
     writing''; and
       (C) by inserting ``or entity-affiliated party'' before 
     ``has been given'';
       (4) in subsection (d)--
       (A) by striking ``or director'' each place such term 
     appears and inserting ``director, or entity-affiliated 
     party'';
       (B) by striking ``an enterprise'' and inserting ``a 
     regulated entity'';
       (C) by striking ``the enterprise'' and inserting ``the 
     regulated entity'';
       (D) by striking ``request the Attorney General of the 
     United States to'';
       (E) by inserting ``, or the United States district court 
     within the jurisdiction of which the headquarters of the 
     regulated entity is located,'' after ``District of 
     Columbia'';
       (F) by striking ``, or may, under the direction and control 
     of the Attorney General of the United States, bring such an 
     action''; and
       (G) by striking ``and section 1374''; and
       (5) in subsection (g), by striking ``An enterprise'' and 
     inserting ``A regulated entity''.

     SEC. 1156. CRIMINAL PENALTY.

       (a) In General.--Subtitle C of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4631 et seq.) is amended by inserting after section 
     1377, as added by this Act, the following:

     ``SEC. 1378. CRIMINAL PENALTY.

       ``Whoever, being subject to an order in effect under 
     section 1377, without the prior written approval of the 
     Director, knowingly participates, directly or indirectly, in 
     any manner (including by engaging in an activity specifically 
     prohibited in such an order) in the conduct of the affairs of 
     any regulated entity shall, notwithstanding section 3571 of 
     title 18, be fined not more than $1,000,000, imprisoned for 
     not more than 5 years, or both.''.
       (b) Technical and Conforming Amendments.--The Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (12 U.S.C. 4501 et seq.) is amended--
       (1) in section 1379 (as so designated by this Act)--
       (A) by striking ``an enterprise'' and inserting ``a 
     regulated entity''; and
       (B) by striking ``the enterprise'' and inserting ``the 
     regulated entity'';
       (2) in section 1379A (as so designated by this Act), by 
     striking ``an enterprise'' and inserting ``a regulated 
     entity'';
       (3) in section 1379B(c) (as so designated by this Act), by 
     striking ``enterprise'' and inserting ``regulated entity''; 
     and
       (4) in section 1379D (as so designated by this Act), by 
     striking ``enterprise'' and inserting ``regulated entity''.

     SEC. 1157. NOTICE AFTER SEPARATION FROM SERVICE.

       Section 1379 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4637), as so 
     designated by this Act, is amended--
       (1) by striking ``2-year'' and inserting ``6-year'';
       (2) by striking ``a director or executive officer of an 
     enterprise'' and inserting ``an entity-affiliated party'';
       (3) by striking ``director or officer'' each place that 
     term appears and inserting ``entity-affiliated party''; and
       (4) by striking ``enterprise.'' and inserting ``regulated 
     entity.''.

     SEC. 1158. SUBPOENA AUTHORITY.

       (a) In General.--Section 1379B of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4641) is amended--
       (1) in subsection (a)--
       (A) in the matter preceding paragraph (1)--
       (i) by striking ``administrative'';
       (ii) by inserting ``, examination, or investigation'' after 
     ``proceeding'';
       (iii) by striking ``subtitle'' and inserting ``title''; and
       (iv) by inserting ``or any designated representative 
     thereof, including any person designated to conduct any 
     hearing under this subtitle'' after ``Director''; and
       (B) in paragraph (4), by striking ``issued by the 
     Director'';
       (2) in subsection (b), by inserting ``or in any territory 
     or other place subject to the jurisdiction of the United 
     States'' after ``State'';
       (3) by striking subsection (c) and inserting the following:
       ``(c) Enforcement.--
       ``(1) In general.--The Director, or any party to 
     proceedings under this subtitle, may apply to the United 
     States District Court for the District of Columbia, or the 
     United States district court for the judicial district of the 
     United States in any territory in which such proceeding is 
     being conducted, or where the witness resides or carries on 
     business, for enforcement of any subpoena or subpoena duces 
     tecum issued pursuant to this section.
       ``(2) Power of court.--The courts described under paragraph 
     (1) shall have the jurisdiction and power to order and 
     require compliance with any subpoena issued under paragraph 
     (1).'';
       (4) in subsection (d), by inserting ``enterprise-affiliated 
     party'' before ``may allow''; and
       (5) by adding at the end the following:
       ``(e) Penalties.--A person shall be guilty of a 
     misdemeanor, and upon conviction, shall be subject to a fine 
     of not more than $1,000 or to imprisonment for a term of not 
     more than 1 year, or both, if that person willfully fails or 
     refuses, in disobedience of a subpoena issued under 
     subsection (c), to--
       ``(1) attend court;
       ``(2) testify in court;
       ``(3) answer any lawful inquiry; or
       ``(4) produce books, papers, correspondence, contracts, 
     agreements, or such other records as requested in the 
     subpoena.''.

                     Subtitle E--General Provisions

     SEC. 1161. CONFORMING AND TECHNICAL AMENDMENTS.

       (a) Amendments to 1992 Act.--The Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992 (12 
     U.S.C. 4501 et seq.), as amended by this Act, is amended--
       (1) in section 1315 (12 U.S.C. 4515)--
       (A) in subsection (a)--
       (i) by striking ``(a) Office Personnel.--The'' and 
     inserting ``(a) In General.--Subject to title III of the 
     Federal Housing Finance Regulatory Reform Act of 2008, the''; 
     and
       (ii) by striking ``the Office'' each place that term 
     appears and inserting ``the Agency'';
       (B) in subsection (c), by striking ``the Office'' and 
     inserting ``the Agency'';
       (C) in subsection (e), by striking ``the Office'' and 
     inserting ``the Agency'';
       (D) by striking subsection (d) and redesignating subsection 
     (e) as subsection (d); and
       (E) by striking subsection (f);
       (2) in section 1319A (12 U.S.C. 4520)--
       (A) by striking ``(a) In General.--''; and
       (B) by striking subsection (b);
       (3) in section 1364(c) (12 U.S.C. 4614(c)), by striking the 
     last sentence;
       (4) by striking section 1383 (12 U.S.C. 1451 note);
       (5) in each of sections 1319D, 1319E, and 1319F (12 U.S.C. 
     4523, 4524, 4525) by striking ``the Office'' each place that 
     term appears and inserting ``the Agency''; and
       (6) in each of sections 1319B and 1369(a)(3) (12 U.S.C. 
     4521, 4619(a)(3)), by striking ``Committee on Banking, 
     Finance and Urban Affairs'' each place such term appears and 
     inserting ``Committee on Financial Services''.

[[Page S6766]]

       (b) Amendments to Fannie Mae Charter Act.--The Federal 
     National Mortgage Association Charter Act (12 U.S.C. 1716 et 
     seq.) is amended--
       (1) in each of sections 303(c)(2) (12 U.S.C. 1718(c)(2)), 
     309(d)(3)(B) (12 U.S.C. 1723a(d)(3)(B)), and 309(k)(1) (12 
     U.S.C. 1723a(k)(1)), by striking ``Director of the Office of 
     Federal Housing Enterprise Oversight of the Department of 
     Housing and Urban Development'' each place that term appears, 
     and inserting ``Director of the Federal Housing Finance 
     Agency''; and
       (2) in section 309--
       (A) in subsection (m) (12 U.S.C. 1723a(m))--
       (i) in paragraph (1), by striking ``to the Secretary, in a 
     form determined by the Secretary'' and inserting ``to the 
     Director of the Federal Housing Finance Agency, in a form 
     determined by the Director''; and
       (ii) in paragraph (2), by striking ``to the Secretary, in a 
     form determined by the Secretary'' and inserting ``to the 
     Director of the Federal Housing Finance Agency, in a form 
     determined by the Director'';
       (B) in subsection (n) (12 U.S.C. 1723a(n))--
       (i) in paragraph (1), by striking ``and the Secretary'' and 
     inserting ``and the Director of the Federal Housing Finance 
     Agency''; and
       (ii) in paragraph (2), by striking ``Secretary'' each place 
     that term appears and inserting ``Director of the Federal 
     Housing Finance Agency''; and
       (C) in paragraph (3)(B), by striking ``Secretary'' and 
     inserting ``Director of the Federal Housing Finance Agency''.
       (c) Amendments to Freddie Mac Charter Act.--The Federal 
     Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.) 
     is amended--
       (1) in each of sections 303(b)(2) (12 U.S.C. 1452(b)(2)), 
     303(h)(2) (12 U.S.C. 1452(h)(2)), and section 307(c)(1) (12 
     U.S.C. 1456(c)(1)), by striking ``Director of the Office of 
     Federal Housing Enterprise Oversight of the Department of 
     Housing and Urban Development'' each place that term appears, 
     and inserting ``Director of the Federal Housing Finance 
     Agency'';
       (2) in section 306 (12 U.S.C. 1455)--
       (A) in subsection (c)(2), by inserting ``the'' after 
     ``Secretary of'';
       (B) in subsection (i)--
       (i) by striking ``section 1316(c)'' and inserting ``section 
     306(c)''; and
       (ii) by striking ``section 106'' and inserting ``section 
     1316''; and
       (C) in subsection (j)(2), by striking ``of substantially'' 
     and inserting ``or substantially''; and
       (3) in section 307 (12 U.S.C. 1456)--
       (A) in subsection (e)--
       (i) in paragraph (1), by striking ``to the Secretary, in a 
     form determined by the Secretary'' and inserting ``to the 
     Director of the Federal Housing Finance Agency, in a form 
     determined by the Director''; and
       (ii) in paragraph (2), by striking ``to the Secretary, in a 
     form determined by the Secretary'' and inserting ``to the 
     Director of the Federal Housing Finance Agency, in a form 
     determined by the Director''; and
       (B) in subsection (f)--
       (i) in paragraph (1), by striking ``and the Secretary'' and 
     inserting ``and the Director of the Federal Housing Finance 
     Agency'';
       (ii) in paragraph (2), by striking ``the Secretary'' each 
     place that term appears and inserting ``the Director of the 
     Federal Housing Finance Agency''; and
       (iii) in paragraph (3)(B), by striking ``Secretary'' and 
     inserting ``Director of the Federal Housing Finance Agency''.
       (d) Amendment to Title 18, United States Code.--Section 
     1905 of title 18, United States Code, is amended by striking 
     ``Office of Federal Housing Enterprise Oversight'' and 
     inserting ``Federal Housing Finance Agency''.
       (e) Amendments to Flood Disaster Protection Act of 1973.--
     Section 102(f)(3)(A) of the Flood Disaster Protection Act of 
     1973 (42 U.S.C. 4012a(f)(3)(A)) is amended by striking 
     ``Director of the Office of Federal Housing Enterprise 
     Oversight of the Department of Housing and Urban 
     Development'' and inserting ``Director of the Federal Housing 
     Finance Agency''.
       (f) Amendment to Department of Housing and Urban 
     Development Act.--Section 5 of the Department of Housing and 
     Urban Development Act (42 U.S.C. 3534) is amended by striking 
     subsection (d).
       (g) Amendments to Title 5, United States Code.--Title 5, 
     United States Code, is amended--
       (1) in section 5313, by striking the item relating to the 
     Director of the Office of Federal Housing Enterprise 
     Oversight, Department of Housing and Urban Development and 
     inserting the following new item:
       ``Director of the Federal Housing Finance Agency.''; and
       (2) in section 3132(a)(1)--
       (A) in subparagraph (B), by striking ``,, and'' and 
     inserting ``, and'';
       (B) in subparagraph (D)--
       (i) by striking ``the Federal Housing Finance Board'';
       (ii) by striking ``the Office of Federal Housing Enterprise 
     Oversight of the Department of Housing and Urban 
     Development'' and inserting ``the Federal Housing Finance 
     Agency''; and
       (iii) by striking ``or or'' at the end;
       (C) in subparagraph (E), as added by section 
     8(d)(1)(B)(iii) of Public Law 107-123, by adding ``or'' at 
     the end; and
       (D) by redesignating subparagraph (E), as added by section 
     10702(c)(1)(C) of Public Law 107-171, as subparagraph (F).
       (h) Amendment to Sarbanes-Oxley Act.--Section 
     105(b)(5)(B)(ii)(II) of the Sarbanes-Oxley Act of 2002 (15 
     U.S.C. 7215(b)(5)(B)(ii)(II)) is amended by inserting ``and 
     the Director of the Federal Housing Finance Agency,'' after 
     ``Commission,''.
       (i) Amendment to Federal Deposit Insurance Act.--Section 
     11(t)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(t)(2)(A)) is amended by adding at the end the following:
       ``(vii) Federal Housing Finance Agency.''.

     SEC. 1162. PRESIDENTIALLY-APPOINTED DIRECTORS OF ENTERPRISES.

       (a) Fannie Mae.--
       (1) In general.--Section 308(b) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1723(b)) is 
     amended--
       (A) in the first sentence, by striking ``eighteen persons, 
     five of whom shall be appointed annually by the President of 
     the United States, and the remainder of whom'' and inserting 
     ``13 persons, or such other number that the Director 
     determines appropriate, who'';
       (B) in the second sentence, by striking ``appointed by the 
     President'';
       (C) in the third sentence--
       (i) by striking ``appointed or''; and
       (ii) by striking ``, except that any such appointed member 
     may be removed from office by the President for good cause'';
       (D) in the fourth sentence, by striking ``elective''; and
       (E) by striking the fifth sentence.
       (2) Transitional provision.--The amendments made by 
     paragraph (1) shall not apply to any appointed position of 
     the board of directors of the Federal National Mortgage 
     Association until the expiration of the annual term for such 
     position during which the effective date under section 1163 
     occurs.
       (b) Freddie Mac.--
       (1) In general.--Section 303(a)(2) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1452(a)(2)) is amended--
       (A) in subparagraph (A)--
       (i) in the first sentence, by striking ``18 persons, 5 of 
     whom shall be appointed annually by the President of the 
     United States and the remainder of whom'' and inserting ``13 
     persons, or such other number as the Director determines 
     appropriate, who''; and
       (ii) in the second sentence, by striking ``appointed by the 
     President of the United States'';
       (B) in subparagraph (B)--
       (i) by striking ``such or''; and
       (ii) by striking ``, except that any appointed member may 
     be removed from office by the President for good cause''; and
       (C) in subparagraph (C)--
       (i) by striking the first sentence; and
       (ii) by striking ``elective''.
       (2) Transitional provision.--The amendments made by 
     paragraph (1) shall not apply to any appointed position of 
     the board of directors of the Federal Home Loan Mortgage 
     Corporation until the expiration of the annual term for such 
     position during which the effective date under section 1163 
     occurs.

     SEC. 1163. EFFECTIVE DATE.

       Except as otherwise specifically provided in this title, 
     this title and the amendments made by this title shall take 
     effect on, and shall apply beginning on, the date of 
     enactment of this Act.

                   TITLE II--FEDERAL HOME LOAN BANKS

     SEC. 1201. RECOGNITION OF DISTINCTIONS BETWEEN THE 
                   ENTERPRISES AND THE FEDERAL HOME LOAN BANKS.

       Section 1313 of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992 (12 U.S.C. 4513) is amended 
     by adding at the end the following:
       ``(f) Recognition of Distinctions Between the Enterprises 
     and the Federal Home Loan Banks.--Prior to promulgating any 
     regulation or taking any other formal or informal agency 
     action of general applicability relating to the Federal Home 
     Loan Banks, including the issuance of an advisory document or 
     examination guidance, the Director shall consider the 
     differences between the Federal Home Loan Banks and the 
     enterprises with respect to--
       ``(1) the Banks'--
       ``(A) cooperative ownership structure;
       ``(B) the mission of providing liquidity to members;
       ``(C) affordable housing and community development mission;
       ``(D) capital structure; and
       ``(E) joint and several liability; and
       ``(2) any other differences that the Director considers 
     appropriate.''.

     SEC. 1202. DIRECTORS.

       Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 
     1427) is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) Number; Election; Qualifications; Conflicts of 
     Interest.--
       ``(1) In general.--Subject to paragraphs (2) through (4), 
     the management of each Federal Home Loan Bank shall be vested 
     in a board of 13 directors, or such other number as the 
     Director determines appropriate.
       ``(2) Board makeup.--The board of directors of each Bank 
     shall be comprised of--
       ``(A) member directors, who shall comprise at least the 
     majority of the members of the board of directors; and
       ``(B) independent directors, who shall comprise not fewer 
     than \2/5\ of the members of the board of directors.
       ``(3) Selection criteria.--
       ``(A) In general.--Each member of the board of directors 
     shall be--
       ``(i) elected by plurality vote of the members, in 
     accordance with procedures established under this section; 
     and
       ``(ii) a citizen of the United States.
       ``(B) Independent director criteria.--
       ``(i) In general.--Each independent director that is not a 
     public interest director under clause (ii) shall have 
     demonstrated knowledge of, or experience in, financial 
     management, auditing and accounting, risk management 
     practices, derivatives, project development, or 
     organizational management, or such other knowledge or 
     expertise as the Director may provide by regulation.

[[Page S6767]]

       ``(ii) Public interest.--Not fewer than 2 of the 
     independent directors shall have more than 4 years of 
     experience in representing consumer or community interests on 
     banking services, credit needs, housing, or financial 
     consumer protections.
       ``(iii) Conflicts of interest.--No independent director 
     may, during the term of service on the board of directors, 
     serve as an officer of any Federal Home Loan Bank or as a 
     director, officer, or employee of any member of a Bank, or of 
     any person that receives advances from a Bank.
       ``(4) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(A) Independent director.--The terms `independent 
     director' and `independent directorship' mean a member of the 
     board of directors of a Federal Home Loan Bank who is a bona 
     fide resident of the district in which the Federal Home Loan 
     Bank is located, or the directorship held by such a person, 
     respectively.
       ``(B) Member director.--The terms `member director' and 
     `member directorship' mean a member of the board of directors 
     of a Federal Home Loan Bank who is an officer or director of 
     a member institution that is located in the district in which 
     the Federal Home Loan Bank is located, or the directorship 
     held by such a person, respectively.'';
       (2) by striking ``elective'' each place that term appears, 
     other than in subsections (d), (e), and (f), and inserting 
     ``member'';
       (3) in subsection (b)--
       (A) by striking the subsection heading and all that follows 
     through ``Each elective directorship'' and inserting the 
     following:
       ``(b) Directorships.--
       ``(1) Member directorships.--Each member directorship''; 
     and
       (B) by adding at the end the following:
       ``(2) Independent directorships.--
       ``(A) Elections.--Each independent director--
       ``(i) shall be elected by the members entitled to vote, 
     from among eligible persons nominated, after consultation 
     with the Advisory Council of the Bank, by the board of 
     directors of the Bank; and
       ``(ii) shall be elected by a plurality of the votes of the 
     members of the Bank at large, with each member having the 
     number of votes for each such directorship as it has under 
     paragraph (1) in an election to fill member directorships.
       ``(B) Criteria.--Nominees shall meet all applicable 
     requirements prescribed in this section.
       ``(C) Nomination and election procedures.--Procedures for 
     nomination and election of independent directors shall be 
     prescribed by the bylaws of each Federal Home Loan Bank, in a 
     manner consistent with the rules and regulations of the 
     Agency.'';
       (4) in subsection (c)--
       (A) by striking ``elective'' each place that term appears 
     and inserting ``member'', except--
       (i) in the second sentence, the second place that term 
     appears; and
       (ii) each place that term appears in the fifth sentence; 
     and
       (B) in the second sentence--
       (i) by inserting ``(A) except as provided in clause (B) of 
     this sentence,'' before ``if at any time''; and
       (ii) by inserting before the period at the end the 
     following: ``, and (B) clause (A) of this sentence shall not 
     apply to the directorships of any Federal Home Loan Bank 
     resulting from the merger of any 2 or more such Banks'';
       (5) in subsection (d)--
       (A) in the first sentence--
       (i) by striking ``, whether elected or appointed,''; and
       (ii) by striking ``3 years'' and inserting ``4 years'';
       (B) in the second sentence--
       (i) by striking ``Federal Home Loan Bank System 
     Modernization Act of 1999'' and inserting ``Federal Housing 
     Finance Regulatory Reform Act of 2008'';
       (ii) by striking ``\1/3\'' and inserting ``\1/4\''; and
       (iii) by striking ``or appointed''; and
       (C) in the third sentence--
       (i) by striking ``an elective'' each place that term 
     appears and inserting ``a''; and
       (ii) by striking ``in any elective directorship or elective 
     directorships'';
       (6) in subsection (f)--
       (A) by striking paragraph (2);
       (B) by striking ``appointed or'' each place that term 
     appears; and
       (C) in paragraph (3)--
       (i) by striking ``(3) Elected bank directors.--'' and 
     inserting ``(2) Election process.--''; and
       (ii) by striking ``elective'' each place that term appears;
       (7) in subsection (i)--
       (A) in paragraph (1), by striking ``Subject to paragraph 
     (2), each'' and inserting ``Each''; and
       (B) by striking paragraph (2) and inserting the following:
       ``(2) Annual report.--The Director shall include, in the 
     annual report submitted to the Congress pursuant to section 
     1319B of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992, information regarding the compensation 
     and expenses paid by the Federal Home Loan Banks to the 
     directors on the boards of directors of the Banks.''; and
       (8) by adding at the end the following:
       ``(l) Transition Rule.--Any member of the board of 
     directors of a Bank elected or appointed in accordance with 
     this section prior to the date of enactment of this 
     subsection may continue to serve as a member of that board of 
     directors for the remainder of the existing term of 
     service.''.

     SEC. 1203. DEFINITIONS.

       Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 
     1422) is amended--
       (1) by striking paragraphs (1), (10), and (11);
       (2) by redesignating paragraphs (2) through (9) as 
     paragraphs (1) through (8), respectively;
       (3) by redesignating paragraphs (12) and (13) as paragraphs 
     (9) and (10), respectively; and
       (4) by adding at the end the following:
       ``(11) Director.--The term `Director' means the Director of 
     the Federal Housing Finance Agency.
       ``(12) Agency.--The term `Agency' means the Federal Housing 
     Finance Agency, established under section 1311 of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992.''.

     SEC. 1204. AGENCY OVERSIGHT OF FEDERAL HOME LOAN BANKS.

       The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.), 
     other than in provisions of that Act added or amended 
     otherwise by this Act, is amended--
       (1) by striking sections 2A and 2B (12 U.S.C. 1422a, 
     1422b);
       (2) by striking section 18 (12 U.S.C. 1438) and inserting 
     the following:

     ``SEC. 18. ADMINISTRATIVE PROVISIONS.

       ``(a) Acquisition Authority.--The Director of the Office of 
     Thrift Supervision, utilizing the services of the 
     Administrator of General Services (hereinafter referred to as 
     the `Administrator'), and subject to any limitation hereon 
     which may hereafter be imposed in appropriation Acts, is 
     hereby authorized--
       ``(1) to acquire, in the name of the United States, real 
     property in the District of Columbia, for the purposes set 
     forth in this section;
       ``(2) to construct, develop, furnish, and equip such 
     buildings thereon and such facilities as in its judgment may 
     be appropriate to provide, to such extent as the Director of 
     the Office of Thrift Supervision may deem advisable, suitable 
     and adequate quarters and facilities for the Director of the 
     Office of Thrift Supervision and the agencies under its 
     administration or supervision;
       ``(3) to enlarge, remodel, or reconstruct any of the same; 
     and
       ``(4) to make or enter into contracts for any of the 
     foregoing.
       ``(b) Advances.--The Director of the Office of Thrift 
     Supervision may require of the respective banks, and they 
     shall make to the Director of the Office of Thrift 
     Supervision, such advances of funds for the purposes set out 
     in subsection (a) as in the sole judgment of the Director of 
     the Office of Thrift Supervision may from time to time be 
     advisable. Such advances shall be apportioned by the Director 
     of the Office of Thrift Supervision among the banks in 
     proportion to the total assets of the respective banks, 
     determined in such manner and as of such times as the 
     Director of the Office of Thrift Supervision may prescribe. 
     Each such advance shall bear interest at the rate of 4\1/2\ 
     per centum per annum from the date of the advance and shall 
     be repaid by the Director of the Office of Thrift Supervision 
     in such installments and over such period, not longer than 
     twenty-five years from the making of the advance, as the 
     Director of the Office of Thrift Supervision may determine. 
     Payments of interest and principal upon such advances shall 
     be made from receipts of the Director of the Office of Thrift 
     Supervision or from other sources which may from time to time 
     be available to the Director of the Office of Thrift 
     Supervision. The obligation of the Director of the Office of 
     Thrift Supervision to make any such payment shall not be 
     regarded as an obligation of the United States. To such 
     extent as the Director of the Office of Thrift Supervision 
     may prescribe any such obligation shall be regarded as a 
     legal investment for the purposes of subsections (g) and (h) 
     of section 11 and for the purposes of section 16.
       ``(c) Plans and Designs.--The plans and designs for such 
     buildings and facilities and for any such enlargement, 
     remodeling, or reconstruction shall, to such extent as the 
     chairperson of the Director of the Office of Thrift 
     Supervision may request, be subject to the approval of the 
     Director.
       ``(d) Custody, Management and Control.--Upon the making of 
     arrangements mutually agreeable to the Director of the Office 
     of Thrift Supervision and the Administrator, which 
     arrangements may be modified from time to time by mutual 
     agreement between them and may include but shall not be 
     limited to the making of payments by the Director of the 
     Office of Thrift Supervision and such agencies to the 
     Administrator and by the Administrator to the Director of the 
     Office of Thrift Supervision, the custody, management, and 
     control of such buildings and facilities and of such real 
     property shall be vested in the Administrator in accordance 
     therewith. Until the making of such arrangements, such 
     custody, management, and control, including the assignment 
     and allotment and the reassignment and reallotment of 
     building and other space, shall be vested in the Director of 
     the Office of Thrift Supervision.
       ``(e) Proceeds.--Any proceeds (including advances) received 
     by the Director of the Office of Thrift Supervision in 
     connection with this subsection, and any proceeds from the 
     sale or other disposition of real or other property acquired 
     by the Director of the Office of Thrift Supervision under 
     this section, shall be considered as receipts of the Director 
     of the Office of Thrift Supervision, and obligations and 
     expenditures of the Director of the Office of Thrift 
     Supervision and such agencies in connection with this section 
     shall not be considered as administrative expenses. As used 
     in this section, the term `property' shall include interests 
     in property.
       ``(f) Budget Program.--
       ``(1) In general.--With respect to its functions under this 
     section, the Director of the Office of Thrift Supervision 
     shall--
       ``(A) annually prepare and submit a budget program as 
     provided in title I of the Government Corporation Control Act 
     with regard to wholly owned Government corporations, and for 
     purposes of this paragraph, the terms `wholly

[[Page S6768]]

     owned Government corporations' and `Government corporations', 
     wherever used in such title, shall include the Director of 
     the Office of Thrift Supervision; and
       ``(B) maintain an integral set of accounts which shall be 
     audited by the General Accounting Office in accordance with 
     the principles and procedures applicable to commercial 
     corporate transactions, as provided in such title, and no 
     other settlement or adjustment shall be required with respect 
     to transactions under this section or with respect to claims, 
     demands, or accounts by or against any person arising 
     thereunder.
       ``(2) Miscellaneous provisions.--The first budget program 
     shall be for the first full fiscal year beginning on or after 
     the date of enactment of this subsection. Except as otherwise 
     provided in this section or by the Director of the Office of 
     Thrift Supervision, the provisions of this section and the 
     functions thereby or thereunder subsisting shall be 
     applicable and exercisable notwithstanding and without regard 
     to the Act of June 20, 1938 (D.C. Code, secs. 5-413--5-428), 
     except that the proviso of section 16 thereof shall apply to 
     any building constructed under this section, and section 306 
     of the Act of July 30, 1947 (61 Stat. 584), or any other 
     provision of law relating to the construction, alteration, 
     repair, or furnishing of public or other buildings or 
     structures or the obtaining of sites therefor, but any person 
     or body in whom any such function is vested may provide for 
     delegation or redelegation of the exercise of such function.
       ``(g) Limitation.--No obligation shall be incurred and no 
     expenditure, except in liquidation of obligation, shall be 
     made pursuant to paragraphs (1) and (2) of subsection (a), if 
     the total amount of all obligations incurred pursuant thereto 
     would thereupon exceed $13,200,000, or such greater amount as 
     may be provided in an appropriations Act or other law.''.
       (3) in section 11 (12 U.S.C. 1431)--
       (A) in subsection (b)--
       (i) in the first sentence--

       (I) by striking ``The Board'' and inserting ``The Office of 
     Finance, as agent for the Banks,''; and
       (II) by striking ``the Board'' and inserting ``such 
     Office''; and

       (ii) in the second and fourth sentences, by striking ``the 
     Board'' each place such term appears and inserting ``the 
     Office of Finance'';
       (B) in subsection (c)--
       (i) by striking ``the Board'' the first place such term 
     appears and inserting ``the Office of Finance, as agent for 
     the Banks,''; and
       (ii) by striking ``the Board'' the second place such term 
     appears and inserting ``such Office''; and
       (C) in subsection (f)--
       (i) by striking the 2 commas after ``permit'' and inserting 
     ``or''; and
       (ii) by striking the comma after ``require'';
       (4) in section 6 (12 U.S.C. 1426)--
       (A) in subsection (b)(1), in the matter preceding 
     subparagraph (A), by striking ``Finance Board approval'' and 
     inserting ``approval by the Director''; and
       (B) in each of subsections (c)(4)(B) and (d)(2), by 
     striking ``Finance Board regulations'' each place that term 
     appears and inserting ``regulations of the Director'';
       (5) in section 10(b) (12 U.S.C. 1430(b))--
       (A) in the subsection heading, by striking ``Formal Board 
     Resolution'' and inserting ``Approval of Director''; and
       (B) by striking ``by formal resolution'';
       (6) in section 21(b)(5) (12 U.S.C. 1441(b)(5)), by striking 
     ``Chairperson of the Federal Housing Finance Board'' and 
     inserting ``Director'';
       (7) in section 15 (12 U.S.C. 1435), by inserting ``or the 
     Director'' after ``the Board'';
       (8) by striking ``the Board'' each place that term appears 
     and inserting ``the Director'';
       (9) by striking ``The Board'' each place that term appears 
     and inserting ``The Director'';
       (10) by striking ``the Finance Board'' each place that term 
     appears and inserting ``the Director'';
       (11) by striking ``The Finance Board'' each place that term 
     appears and inserting ``The Director''; and
       (12) by striking ``Federal Housing Finance Board'' each 
     place that term appears and inserting ``Director''.

     SEC. 1205. HOUSING GOALS.

       The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is 
     amended by inserting after section 10b the following new 
     section:

     ``SEC. 10C. HOUSING GOALS.

       ``(a) In General.--The Director shall establish housing 
     goals with respect to the purchase of mortgages, if any, by 
     the Federal Home Loan Banks. Such goals shall be consistent 
     with the goals established under sections 1331 through 1334 
     of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992.
       ``(b) Considerations.--In establishing the goals required 
     by subsection (a), the Director shall consider the unique 
     mission and ownership structure of the Federal Home Loan 
     Banks.
       ``(c) Transition Period.--To facilitate an orderly 
     transition, the Director shall establish interim target goals 
     for purposes of this section for each of the 2 calendar years 
     following the date of enactment of this section.
       ``(d) Monitoring and Enforcement of Goals.--The 
     requirements of section 1336 of the Federal Housing 
     Enterprises Safety and Soundness Act of 1992, shall apply to 
     this section, in the same manner and to the same extent as 
     that section applies to the Federal housing enterprises.
       ``(e) Annual Report.--The Director shall annually report to 
     Congress on the performance of the Banks in meeting the goals 
     established under this section.''.

     SEC. 1206. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS.

       Section 4(a)(1) of the Federal Home Loan Bank Act (12 
     U.S.C. 1424(a)(1)) is amended--
       (1) by inserting after ``savings bank,'' the following: 
     ``community development financial institution,''; and
       (2) in subparagraph (B), by inserting after ``United 
     States,'' the following: ``or, in the case of a community 
     development financial institution, is certified as a 
     community development financial institution under the 
     Community Development Banking and Financial Institutions Act 
     of 1994.''.

     SEC. 1207. SHARING OF INFORMATION AMONG FEDERAL HOME LOAN 
                   BANKS.

       The Federal Home Loan Bank Act is amended by inserting 
     after section 20 (12 U.S.C. 1440) the following new section:

     ``SEC. 20A. SHARING OF INFORMATION AMONG FEDERAL HOME LOAN 
                   BANKS.

       ``(a) Information on Financial Condition.--In order to 
     enable each Federal Home Loan Bank to evaluate the financial 
     condition of one or more of the other Federal Home Loan Banks 
     individually and the Federal Home Loan Bank System (including 
     any risks associated with the issuance or repayment of 
     consolidated Federal Home Loan Bank bonds and debentures or 
     other borrowings and the joint and several liabilities of the 
     Banks incurred due to such borrowings), as well as to comply 
     with any of its obligations under the Securities Exchange Act 
     of 1934 (15 U.S.C. 78a et seq.), the Director shall make 
     available to the Banks such reports, records, or other 
     information as may be available, relating to the condition of 
     any Federal Home Loan Bank.
       ``(b) Sharing of Information.--
       ``(1) In general.--The Director shall promulgate 
     regulations to facilitate the sharing of information made 
     available under subsection (a) directly among the Federal 
     Home Loan Banks.
       ``(2) Limitation.--Notwithstanding paragraph (1), a Federal 
     Home Loan Bank responding to a request from another Bank or 
     from the Director for information pursuant to this section 
     may request that the Director determine that such information 
     is proprietary and that the public interest requires that 
     such information not be shared.
       ``(c) Limitation.--Nothing in this section shall affect the 
     obligations of any Federal Home Loan Bank under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or 
     the regulations issued by the Securities and Exchange 
     Commission thereunder.''.

     SEC. 1208. EXCLUSION FROM CERTAIN REQUIREMENTS.

       (a) In General.--The Federal Home Loan Banks shall be 
     exempt from compliance with--
       (1) sections 13(e), 14(a), and 14(c) of the Securities 
     Exchange Act of 1934, and related Commission regulations;
       (2) section 15 of the Securities Exchange Act of 1934, and 
     related Commission regulations, with respect to transactions 
     in the capital stock of a Federal Home Loan Bank;
       (3) section 17A of the Securities Exchange Act of 1934, and 
     related Commission regulations, with respect to the transfer 
     of the securities of a Federal Home Loan Bank; and
       (4) the Trust Indenture Act of 1939.
       (b) Member Exemption.--The members of the Federal Home Loan 
     Bank System shall be exempt from compliance with sections 
     13(d), 13(f), 13(g), 14(d), and 16 of the Securities Exchange 
     Act of 1934, and related Commission regulations, with respect 
     to ownership of or transactions in the capital stock of the 
     Federal Home Loan Banks by such members.
       (c) Exempted and Government Securities.--
       (1) Capital stock.--The capital stock issued by each of the 
     Federal Home Loan Banks under section 6 of the Federal Home 
     Loan Bank Act are--
       (A) exempted securities, within the meaning of section 
     3(a)(2) of the Securities Act of 1933; and
       (B) exempted securities, within the meaning of section 
     3(a)(12)(A) of the Securities Exchange Act of 1934, except to 
     the extent provided in section 38 of that Act.
       (2) Other obligations.--The debentures, bonds, and other 
     obligations issued under section 11 of the Federal Home Loan 
     Bank Act (12 U.S.C. 1431) are--
       (A) exempted securities, within the meaning of section 
     3(a)(2) of the Securities Act of 1933;
       (B) government securities, within the meaning of section 
     3(a)(42) of the Securities Exchange Act of 1934; and
       (C) government securities, within the meaning of section 
     2(a)(16) of the Investment Company Act of 1940.
       (3) Brokers and dealers.--A person (other than a Federal 
     Home Loan Bank effecting transactions for members of the 
     Federal Home Loan Bank System) that effects transactions in 
     the capital stock or other obligations of a Federal Home Loan 
     Bank, for the account of others or for that person's own 
     account, as applicable, is a broker or dealer, as those terms 
     are defined in paragraphs (4) and (5), respectively, of 
     section 3(a) of the Securities Exchange Act of 1934, but is 
     excluded from the definition of--
       (A) the term ``government securities broker'' under section 
     3(a)(43) of the Securities Exchange Act of 1934; and
       (B) the term ``government securities dealer'' under section 
     3(a)(44) of the Securities Exchange Act of 1934.
       (d) Exemption From Reporting Requirements.--The Federal 
     Home Loan Banks shall be exempt from periodic reporting 
     requirements under the securities laws pertaining to the 
     disclosure of--
       (1) related party transactions that occur in the ordinary 
     course of the business of the Banks with members; and
       (2) the unregistered sales of equity securities.
       (e) Tender Offers.--Commission rules relating to tender 
     offers shall not apply in connection with transactions in the 
     capital stock of the Federal Home Loan Banks.
       (f) Regulations.--
       (1) In general.--The Commission shall promulgate such rules 
     and regulations as may be

[[Page S6769]]

     necessary or appropriate in the public interest or in 
     furtherance of this section and the exemptions provided in 
     this section.
       (2) Considerations.--In issuing regulations under this 
     section, the Commission shall consider the distinctive 
     characteristics of the Federal Home Loan Banks when 
     evaluating--
       (A) the accounting treatment with respect to the payment to 
     the Resolution Funding Corporation;
       (B) the role of the combined financial statements of the 
     Federal Home Loan Banks;
       (C) the accounting classification of redeemable capital 
     stock; and
       (D) the accounting treatment related to the joint and 
     several nature of the obligations of the Banks.
       (g) Definitions.--As used in this section--
       (1) the terms ``Bank'', ``Federal Home Loan Bank'', 
     ``member'', and ``Federal Home Loan Bank System'' have the 
     same meanings as in section 2 of the Federal Home Loan Bank 
     Act (12 U.S.C. 1422);
       (2) the term ``Commission'' means the Securities and 
     Exchange Commission; and
       (3) the term ``securities laws'' has the same meaning as in 
     section 3(a)(47) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(47)).

     SEC. 1209. VOLUNTARY MERGERS.

       Section 26 of the Federal Home Loan Bank Act (12 U.S.C. 
     1446) is amended--
       (1) by striking ``Whenever'' and inserting ``(a) In 
     General.--Whenever''; and
       (2) by adding at the end the following:
       ``(b) Voluntary Mergers Authorized.--
       ``(1) In general.--Any Federal Home Loan Bank may, with the 
     approval of the Director and of the boards of directors of 
     the Banks involved, merge with another Bank.
       ``(2) Regulations required.--The Director shall promulgate 
     regulations establishing the conditions and procedures for 
     the consideration and approval of any voluntary merger 
     described in paragraph (1), including the procedures for Bank 
     member approval.''.

     SEC. 1210. AUTHORITY TO REDUCE DISTRICTS.

       Section 3 of the Federal Home Loan Bank Act (12 U.S.C. 
     1423) is amended--
       (1) by striking ``As soon'' and inserting ``(a) In 
     General.--As soon''; and
       (2) by adding at the end the following:
       ``(b) Authority To Reduce Districts.--Notwithstanding 
     subsection (a), the number of districts may be reduced to a 
     number less than 8--
       ``(1) pursuant to a voluntary merger between Banks, as 
     approved pursuant to section 26(b); or
       ``(2) pursuant to a decision by the Director to liquidate a 
     Bank pursuant to section 1367 of the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992.''.

     SEC. 1211. COMMUNITY FINANCIAL INSTITUTION MEMBERS.

       (a) Total Asset Requirement.--Paragraph (10) of section 2 
     of the Federal Home Loan Bank Act (12 U.S.C. 1422(10)), as so 
     redesignated by section 201(3) of this Act, is amended by 
     striking ``$500,000,000'' each place such term appears and 
     inserting ``$1,000,000,000''.
       (b) Use of Advances for Community Development Activities.--
     Section 10(a) of the Federal Home Loan Bank Act (12 U.S.C. 
     1430(a)) is amended--
       (1) in paragraph (2)(B)--
       (A) by striking ``and''; and
       (B) by inserting ``, and community development activities'' 
     before the period at the end;
       (2) in paragraph (3)(E), by inserting ``or community 
     development activities'' after ``agriculture,''; and
       (3) in paragraph (6)--
       (A) by striking ``and''; and
       (B) by inserting ``, and `community development activities' 
     '' before ``shall''.

     SEC. 1212. PUBLIC USE DATABASE; REPORTS TO CONGRESS.

       Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 
     1430) is amended--
       (1) in subsection (j)(12)--
       (A) by striking subparagraph (C) and inserting the 
     following:
       ``(C) Reports.--The Director shall annually 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 collateral pledged to the Banks, 
     including an analysis of collateral by type and by Bank 
     district.''; and
       (B) by adding at the end the following:
       ``(D) Submission to congress.--The Director shall submit 
     the reports under subparagraphs (A) and (C) to the Committee 
     on Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives, not later than 180 days after the date of 
     enactment of the Federal Housing Finance Regulatory Reform 
     Act of 2008.''; and
       (2) by adding at the end the following:
       ``(k) Public Use Database.--
       ``(1) Data.--Each Federal Home Loan Bank shall provide to 
     the Director, in a form determined by the Director, census 
     tract level data relating to mortgages purchased, if any, 
     including--
       ``(A) data consistent with that reported under section 1323 
     of the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992;
       ``(B) data elements required to be reported under the Home 
     Mortgage Disclosure Act of 1975; and
       ``(C) any other data elements that the Director considers 
     appropriate.
       ``(2) Public use database.--
       ``(A) In general.--The Director shall make available to the 
     public, in a form that is useful to the public (including 
     forms accessible electronically), and to the extent 
     practicable, the data provided to the Director under 
     paragraph (1).
       ``(B) Proprietary information.--Not withstanding 
     subparagraph (A), the Director may not provide public access 
     to, or disclose to the public, any information required to be 
     submitted under this subsection that the Director determines 
     is proprietary or that would provide personally identifiable 
     information and that is not otherwise publicly accessible 
     through other forms, unless the Director determines that it 
     is in the public interest to provide such information.''.

     SEC. 1213. SEMIANNUAL REPORTS.

       Section 21B of the Federal Home Loan Bank Act is amended in 
     subsection (f)(2)(C), by adding at the end the following:
       ``(v) Semiannual reports.--The Director shall report 
     semiannually 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 projected date for the 
     completion of contributions required by this section.''.

     SEC. 1214. LIQUIDATION OR REORGANIZATION OF A FEDERAL HOME 
                   LOAN BANK.

       Section 26 of the Federal Home Loan Bank Act (12 U.S.C. 
     1446) is amended by adding at the end the following: ``At 
     least 30 days prior to liquidating or reorganizing any Bank 
     under this section, the Director shall notify the Bank of its 
     determination and the facts and circumstances upon which such 
     determination is based. The Bank may contest that 
     determination in a hearing before the Director, in which all 
     issues shall be determined on the record pursuant to section 
     554 of title 5, United States Code.''.

     SEC. 1215. STUDY AND REPORT TO CONGRESS ON SECURITIZATION OF 
                   ACQUIRED MEMBER ASSETS.

       (a) Study.--The Director shall conduct a study on 
     securitization of home mortgage loans purchased or to be 
     purchased from member financial institutions under the 
     Acquired Member Assets programs. In conducting the study, the 
     Director shall establish a process for the formal submission 
     of comments.
       (b) Elements.--The study shall encompass--
       (1) the benefits and risks associated with securitization 
     of Acquired Member Assets;
       (2) the potential impact of securitization upon liquidity 
     in the mortgage and broader credit markets;
       (3) the ability of the Federal Home Loan Bank or Banks in 
     question to manage the risks associated with such a program;
       (4) the impact of such a program on the existing activities 
     of the Banks, including their mortgage portfolios and 
     advances; and
       (5) the joint and several liability of the Banks and the 
     cooperative structure of the Federal Home Loan Bank System.
       (c) Consultations.--In conducting the study under this 
     section, the Director shall consult with the Federal Home 
     Loan Banks, the Banks' fiscal agent, representatives of the 
     mortgage lending industry, practitioners in the structured 
     finance field, and other experts as needed.
       (d) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Director shall submit a report to 
     Congress on the results of the study conducted under 
     subsection (a), including policy recommendations based on the 
     analysis of the Director of the feasibility of mortgage-
     backed securities issuance by a Federal Home Loan Bank or 
     Banks and the risks and benefits associated with such program 
     or programs.
       (e) Definitions.--As used in this section, the terms 
     ``member'', ``Bank'', and ``Federal Home Loan Bank'' have the 
     same meanings as in section 2 of the Federal Home Loan Bank 
     Act (12 U.S.C. 1422).

     SEC. 1216. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Right to Financial Privacy Act of 1978.--Section 
     1113(o) of the Right to Financial Privacy Act of 1978 (12 
     U.S.C. 3413(o)) is amended--
       (1) by striking ``Federal Housing Finance Board'' and 
     inserting ``Federal Housing Finance Agency''; and
       (2) by striking ``Federal Housing Finance Board's'' and 
     inserting ``Federal Housing Finance Agency's''.
       (b) Riegle Community Development and Regulatory Improvement 
     Act of 1994.--Section 117(e) of the Riegle Community 
     Development and Regulatory Improvement Act of 1994 (12 U.S.C. 
     4716(e)) is amended by striking ``Federal Housing Finance 
     Board'' and inserting ``Federal Housing Finance Agency''.
       (c) Title 18, United States Code.--Title 18, United States 
     Code, is amended by striking ``Federal Housing Finance 
     Board'' each place such term appears in each of sections 212, 
     657, 1006, and 1014, and inserting ``Federal Housing Finance 
     Agency''.
       (d) MAHRA Act of 1997.--Section 517(b)(4) of the 
     Multifamily Assisted Housing Reform and Affordability Act of 
     1997 (42 U.S.C. 1437f note) is amended by striking ``Federal 
     Housing Finance Board'' and inserting ``Federal Housing 
     Finance Agency''.
       (e) Title 44, United States Code.--Section 3502(5) of title 
     44, United States Code, is amended by striking ``Federal 
     Housing Finance Board'' and inserting ``Federal Housing 
     Finance Agency''.
       (f) Access to Local TV Act of 2000.--Section 
     1004(d)(2)(D)(iii) of the Launching Our Communities' Access 
     to Local Television Act of 2000 (47 U.S.C. 
     1103(d)(2)(D)(iii)) is amended by striking ``Office of 
     Federal Housing Enterprise Oversight, the Federal Housing 
     Finance Board'' and inserting ``Federal Housing Finance 
     Agency''.
       (g) FIRREA.--Section 1216 of the Financial Institutions 
     Reform, Recovery, and Enhancement Act of 1989 (12 U.S.C. 
     1833e) is amended--
       (1) in subsection (a), by striking paragraph (3) and 
     inserting the following:
       ``(3) the Federal Housing Finance Agency;'';
       (2) in subsection (b), by striking ``Federal National 
     Mortgage Association'' and inserting ``Federal Home Loan 
     Banks, the Federal National Mortgage Association,''; and

[[Page S6770]]

       (3) in subsection (c), by striking ``Finance Board'' and 
     inserting ``Finance Agency''.

     SEC. 1217. STUDY ON FEDERAL HOME LOAN BANK ADVANCES.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the Director shall conduct a study and 
     submit a report to the Committee on Banking, Housing, and 
     Urban Affairs of the Senate and the Committee on Financial 
     Services of the House or Representatives on the extent to 
     which loans and securities used as collateral to support 
     Federal Home Loan Bank advances are consistent with the 
     interagency guidance on nontraditional mortgage products.
       (b) Required Content.--The study required under subsection 
     (a) shall--
       (1) consider and recommend any additional regulations, 
     guidance, advisory bulletins, or other administrative actions 
     necessary to ensure that the Federal Home Loan Banks are not 
     supporting loans with predatory characteristics; and
       (2) include an opportunity for the public to comment on any 
     recommendations made under paragraph (1).

     SEC. 1218. FEDERAL HOME LOAN BANK REFINANCING AUTHORITY FOR 
                   CERTAIN RESIDENTIAL MORTGAGE LOANS.

       Section 10(j)(2) of the Federal Home Loan Bank Act (12 
     U.S.C. 1430(j)(2)) is amended--
       (1) in subparagraph (A), by striking ``or'' at the end;
       (2) in subparagraph (B), by striking the period at the end 
     and inserting ``; or''; and
       (3) by adding at the end the following:
       ``(C) during the 2-year period beginning on the date of 
     enactment of this subparagraph, refinance loans that are 
     secured by a first mortgage on a primary residence of any 
     family having an income at or below 80 percent of the median 
     income for the area.''.

TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND 
                   THE FEDERAL HOUSING FINANCE BOARD

                           Subtitle A--OFHEO

     SEC. 1301. ABOLISHMENT OF OFHEO.

       (a) In General.--Effective at the end of the 1-year period 
     beginning on the date of enactment of this Act, the Office of 
     Federal Housing Enterprise Oversight of the Department of 
     Housing and Urban Development and the positions of the 
     Director and Deputy Director of such Office are abolished.
       (b) Disposition of Affairs.--During the 1-year period 
     beginning on the date of enactment of this Act, the Director 
     of the Office of Federal Housing Enterprise Oversight, solely 
     for the purpose of winding up the affairs of the Office of 
     Federal Housing Enterprise Oversight--
       (1) shall manage the employees of such Office 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 1303; and
       (2) may take any other action necessary for the purpose of 
     winding up the affairs of the Office.
       (c) Status of Employees Before Transfer.--The amendments 
     made by title I and the abolishment of the Office of Federal 
     Housing Enterprise Oversight under subsection (a) of this 
     section may not be construed to affect the status of any 
     employee of such Office 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 1303.
       (d) Use of Property and Services.--
       (1) Property.--The Director may use the property of the 
     Office of Federal Housing Enterprise Oversight to perform 
     functions which have been transferred to the Director for 
     such time as is reasonable to facilitate the orderly transfer 
     of functions transferred under any other provision of this 
     Act or any amendment made by this Act 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 Office of Federal 
     Housing Enterprise Oversight before the expiration of the 
     period under subsection (a) in connection with functions that 
     are transferred to the Director shall--
       (A) continue to provide such services, on a reimbursable 
     basis, until the transfer of such functions is complete; and
       (B) consult with any such agency to coordinate and 
     facilitate a prompt and reasonable transition.
       (e) Continuation of Services.--The Director may use the 
     services of employees and other personnel of the Office of 
     Federal Housing Enterprise Oversight, on a reimbursable 
     basis, to perform functions which have been transferred to 
     the Director for such time as is reasonable to facilitate the 
     orderly transfer of functions pursuant to any other provision 
     of this Act or any amendment made by this Act 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 
     Director of the Office of Federal Housing Enterprise 
     Oversight, or any other person, which--
       (A) arises under--
       (i) the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992;
       (ii) the Federal National Mortgage Association Charter Act;
       (iii) the Federal Home Loan Mortgage Corporation Act; or
       (iv) any other provision of law applicable with respect to 
     such Office; 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 Director of the Office of Federal 
     Housing Enterprise Oversight in connection with functions 
     that are transferred to the Director of the Federal Housing 
     Finance Agency shall abate by reason of the enactment of this 
     Act, except that the Director of the Federal Housing Finance 
     Agency shall be substituted for the Director of the Office of 
     Federal Housing Enterprise Oversight as a party to any such 
     action or proceeding.

     SEC. 1302. 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 Director or the Secretary of Housing and Urban 
     Development, as the case may be, until modified, terminated, 
     set aside, or superseded in accordance with applicable law by 
     the Director or the Secretary, 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 Office of Federal Housing Enterprise Oversight;
       (B) the Secretary of Housing and Urban Development, and 
     relates to the authority of the Secretary under--
       (i) the Federal Housing Enterprises Financial Safety and 
     Soundness Act of 1992;
       (ii) the Federal National Mortgage Association Charter Act, 
     with respect to the Federal National Mortgage Association; or
       (iii) the Federal Home Loan Mortgage Corporation Act, with 
     respect to the Federal Home Loan Mortgage Corporation; or
       (C) a court of competent jurisdiction, and relates to 
     functions transferred by this Act; and
       (2) is in effect on the effective date of the abolishment 
     under section 1301(a).

     SEC. 1303. TRANSFER AND RIGHTS OF EMPLOYEES OF OFHEO.

       (a) Transfer.--Each employee of the Office of Federal 
     Housing Enterprise Oversight shall be transferred to the 
     Agency for employment, not later than the effective date of 
     the abolishment under section 1301(a), 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 that held 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 Director 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 Director determines, after the 
     end of the 1-year period beginning on the effective date of 
     the abolishment under section 1301(a), 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 Office of Federal 
     Housing Enterprise Oversight accepting employment with the 
     Agency 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 
     Agency or the Office of Federal Housing Enterprise Oversight 
     of the Department of Housing and Urban Development, as 
     applicable, including insurance, to which such employee 
     belongs on the date of the abolishment under section 1301(a), 
     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 Director of 
     the Federal Housing Finance Agency.
       (2) Cost differential.--
       (A) In general.--The difference in the costs between the 
     benefits which would have been provided by the Office of 
     Federal Housing Enterprise Oversight and those provided by 
     this section shall be paid by the Director.
       (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 Director, 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.

[[Page S6771]]

     SEC. 1304. TRANSFER OF PROPERTY AND FACILITIES.

       Upon the effective date of its abolishment under section 
     1301(a), all property of the Office of Federal Housing 
     Enterprise Oversight shall transfer to the Agency.

               Subtitle B--Federal Housing Finance Board

     SEC. 1311. ABOLISHMENT OF THE FEDERAL HOUSING FINANCE BOARD.

       (a) In General.--Effective at the end of the 1-year period 
     beginning on the date of enactment of this Act, the Federal 
     Housing Finance Board (in this subtitle referred to as the 
     ``Board'') is abolished.
       (b) Disposition of Affairs.--During the 1-year period 
     beginning on the date of enactment of this Act, the Board, 
     solely for the purpose of winding up the affairs of the 
     Board--
       (1) shall manage the employees of the Board 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 1313; and
       (2) may take any other action necessary for the purpose of 
     winding up the affairs of the Board.
       (c) Status of Employees Before Transfer.--The amendments 
     made by titles I and II and the abolishment of the Board 
     under subsection (a) may not be construed to affect the 
     status of any employee of the Board 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 1313.
       (d) Use of Property and Services.--
       (1) Property.--The Director may use the property of the 
     Board to perform functions which have been transferred to the 
     Director, for such time as is reasonable to facilitate the 
     orderly transfer of functions transferred under any other 
     provision of this Act or any amendment made by this Act 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 Board before the 
     expiration of the 1-year period under subsection (a) in 
     connection with functions that are transferred to the 
     Director shall--
       (A) continue to provide such services, on a reimbursable 
     basis, until the transfer of such functions is complete; and
       (B) consult with any such agency to coordinate and 
     facilitate a prompt and reasonable transition.
       (e) Continuation of Services.--The Director may use the 
     services of employees and other personnel of the Board, on a 
     reimbursable basis, to perform functions which have been 
     transferred to the Director for such time as is reasonable to 
     facilitate the orderly transfer of functions pursuant to any 
     other provision of this Act or any amendment made by this Act 
     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, a member 
     of the Board, or any other person, which--
       (A) arises under the Federal Home Loan Bank Act, or any 
     other provision of law applicable with respect to the Board; 
     and
       (B) existed on the day before the effective date of the 
     abolishment under subsection (a).
       (2) Continuation of suits.--No action or other proceeding 
     commenced by or against the Board in connection with 
     functions that are transferred under this Act to the Director 
     shall abate by reason of the enactment of this Act, except 
     that the Director shall be substituted for the Board or any 
     member thereof as a party to any such action or proceeding.

     SEC. 1312. CONTINUATION AND COORDINATION OF CERTAIN ACTIONS.

       (a) In General.--All regulations, orders, determinations, 
     and resolutions described under subsection (b) shall remain 
     in effect according to the terms of such regulations, orders, 
     determinations, and resolutions, and shall be enforceable by 
     or against the Director until modified, terminated, set 
     aside, or superseded in accordance with applicable law by the 
     Director, any court of competent jurisdiction, or operation 
     of law.
       (b) Applicability.--A regulation, order, determination, or 
     resolution is described under this subsection if it--
       (1) was issued, made, prescribed, or allowed to become 
     effective by--
       (A) the Board; or
       (B) a court of competent jurisdiction, and relates to 
     functions transferred by this Act; and
       (2) is in effect on the effective date of the abolishment 
     under section 1311(a).

     SEC. 1313. TRANSFER AND RIGHTS OF EMPLOYEES OF THE FEDERAL 
                   HOUSING FINANCE BOARD.

       (a) Transfer.--Each employee of the Board shall be 
     transferred to the Agency for employment, not later than the 
     effective date of the abolishment under section 1311(a), 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 that held on the day immediately 
     preceding the transfer.
       (2) No involuntary separation or reduction.--An employee 
     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, if the employee 
     is a temporary employee, separated in accordance with the 
     terms of the appointment of the employee.
       (c) Appointment Authority for Excepted Employees.--
       (1) In general.--In the case of an employee occupying a 
     position in the excepted 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 Director may decline a 
     transfer of authority under paragraph (1), to the extent that 
     such authority relates to a position excepted from the 
     competitive service because of its confidential, 
     policymaking, policy-determining, or policy-advocating 
     character.
       (d) Reorganization.--If the Director determines, after the 
     end of the 1-year period beginning on the effective date of 
     the abolishment under section 1311(a), 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 Board accepting 
     employment with the Agency 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 Agency or the Board, as applicable, 
     including insurance, to which such employee belongs on the 
     effective date of the abolishment under section 1311(a) 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 Director.
       (2) Cost differential.--
       (A) In general.--The difference in the costs between the 
     benefits which would have been provided by the Board and 
     those provided by this section shall be paid by the Director.
       (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 Director, 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. 1314. TRANSFER OF PROPERTY AND FACILITIES.

       Upon the effective date of the abolishment under section 
     1311(a), all property of the Board shall transfer to the 
     Agency.

                     TITLE IV--HOPE FOR HOMEOWNERS

     SEC. 1401. SHORT TITLE.

       This title may be cited as the ``HOPE for Homeowners Act of 
     2008''.

     SEC. 1402. ESTABLISHMENT OF HOPE FOR HOMEOWNERS PROGRAM.

       (a) Establishment.--Title II of the National Housing Act 
     (12 U.S.C. 1707 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 257. HOPE FOR HOMEOWNERS PROGRAM.

       ``(a) Establishment.--There is established in the Federal 
     Housing Administration a HOPE for Homeowners Program.
       ``(b) Purpose.--The purpose of the HOPE for Homeowners 
     Program is--
       ``(1) to create an FHA program, participation in which is 
     voluntary on the part of homeowners and existing loan holders 
     to insure refinanced loans for distressed borrowers to 
     support long-term, sustainable homeownership;
       ``(2) to allow homeowners to avoid foreclosure by reducing 
     the principle balance outstanding, and interest rate charged, 
     on their mortgages;
       ``(3) to help stabilize and provide confidence in mortgage 
     markets by bringing transparency to the value of assets based 
     on mortgage assets;
       ``(4) to target mortgage assistance under this section to 
     homeowners for their principal residence;
       ``(5) to enhance the administrative capacity of the FHA to 
     carry out its expanded role under the HOPE for Homeowners 
     Program;
       ``(6) to ensure the HOPE for Homeowners Program remains in 
     effect only for as long as is necessary to provide stability 
     to the housing market; and
       ``(7) to provide servicers of delinquent mortgages with 
     additional methods and approaches to avoid foreclosure.
       ``(c) Establishment and Implementation of Program 
     Requirements.--
       ``(1) Duties of the board.--In order to carry out the 
     purposes of the HOPE for Homeowners Program, the Board 
     shall--
       ``(A) establish requirements and standards for the program; 
     and
       ``(B) prescribe such regulations and provide such guidance 
     as may be necessary or appropriate to implement such 
     requirements and standards.
       ``(2) Duties of the secretary.--In carrying out any of the 
     program requirements or standards established under paragraph 
     (1), the Secretary may issue such interim guidance and 
     mortgagee letters as the Secretary determines necessary or 
     appropriate.
       ``(d) Insurance of Mortgages.--The Secretary is authorized 
     upon application of a mortgagee to make commitments to insure 
     or to insure any eligible mortgage that has been refinanced 
     in a manner meeting the requirements under subsection (e).
       ``(e) Requirements of Insured Mortgages.--To be eligible 
     for insurance under this section, a refinanced eligible 
     mortgage shall comply with all of the following requirements:
       ``(1) Lack of capacity to pay existing mortgage.--
       ``(A) Borrower certification.--
       ``(i) In general.--The mortgagor shall provide 
     certification to the Secretary that the mortgagor has not 
     intentionally defaulted on the mortgage or any other debt, 
     and has not knowingly, or

[[Page S6772]]

     willfully and with actual knowledge, furnished material 
     information known to be false for the purpose of obtaining 
     any eligible mortgage.
       ``(ii) Penalties.--

       ``(I) False statement.--Any certification filed pursuant to 
     clause (i) shall contain an acknowledgment that any willful 
     false statement made in such certification is punishable 
     under section 1001, of title 18, United States Code, by fine 
     or imprisonment of not more than 5 years, or both.
       ``(II) Liability for repayment.--The mortgagor shall agree 
     in writing that the mortgagor shall be liable to repay to the 
     Federal Housing Administration any direct financial benefit 
     achieved from the reduction of indebtedness on the existing 
     mortgage or mortgages on the residence refinanced under this 
     section derived from misrepresentations made in the 
     certifications and documentation required under this 
     subparagraph, subject to the discretion of the Secretary.

       ``(B) Current borrower debt-to-income ratio.--As of March 
     1, 2008, the mortgagor shall have had a ratio of mortgage 
     debt to income, taking into consideration all existing 
     mortgages of that mortgagor at such time, greater than 31 
     percent (or such higher amount as the Board determines 
     appropriate).
       ``(2) Determination of principal obligation amount.--The 
     principal obligation amount of the refinanced eligible 
     mortgage to be insured shall--
       ``(A) be determined by the reasonable ability of the 
     mortgagor to make his or her mortgage payments, as such 
     ability is determined by the Secretary pursuant to section 
     203(b)(4) or by any other underwriting standards established 
     by the Board; and
       ``(B) not exceed 90 percent of the appraised value of the 
     property to which such mortgage relates.
       ``(3) Required waiver of prepayment penalties and fees.--
     All penalties for prepayment or refinancing of the eligible 
     mortgage, and all fees and penalties related to default or 
     delinquency on the eligible mortgage, shall be waived or 
     forgiven.
       ``(4) Extinguishment of subordinate liens.--
       ``(A) Required agreement.--All holders of outstanding 
     mortgage liens on the property to which the eligible mortgage 
     relates shall agree to accept the proceeds of the insured 
     loan as payment in full of all indebtedness under the 
     eligible mortgage, and all encumbrances related to such 
     eligible mortgage shall be removed. The Secretary may take 
     such actions, subject to standards established by the Board 
     under subparagraph (B), as may be necessary and appropriate 
     to facilitate coordination and agreement between the holders 
     of the existing senior mortgage and any existing subordinate 
     mortgages, taking into consideration the subordinate lien 
     status of such subordinate mortgages.
       ``(B) Shared appreciation.--
       ``(i) In general.--The Board shall establish standards and 
     policies that will allow for the payment to the holder of any 
     existing subordinate mortgage of a portion of any future 
     appreciation in the property secured by such eligible 
     mortgage that is owed to the Secretary pursuant to subsection 
     (k).
       ``(ii) Factors.--In establishing the standards and policies 
     required under clause (i), the Board shall take into 
     consideration--

       ``(I) the status of any subordinate mortgage;
       ``(II) the outstanding principal balance of and accrued 
     interest on the existing senior mortgage and any outstanding 
     subordinate mortgages;
       ``(III) the extent to which the current appraised value of 
     the property securing a subordinate mortgage is less than the 
     outstanding principal balance and accrued interest on any 
     other liens that are senior to such subordinate mortgage; and
       ``(IV) such other factors as the Board determines to be 
     appropriate.

       ``(C) Voluntary program.--This paragraph may not be 
     construed to require any holder of any existing mortgage to 
     participate in the program under this section generally, or 
     with respect to any particular loan.
       ``(5) Term of mortgage.--The refinanced eligible mortgage 
     to be insured shall--
       ``(A) bear interest at a single rate that is fixed for the 
     entire term of the mortgage; and
       ``(B) have a maturity of not less than 30 years from the 
     date of the beginning of amortization of such refinanced 
     eligible mortgage.
       ``(6) Maximum loan amount.--The principal obligation amount 
     of the eligible mortgage to be insured shall not exceed 132 
     percent of the dollar amount limitation in effect for 2007 
     under section 305(a)(2) of the Federal Home Loan Mortgage 
     Corporation Act (12 U.S.C. 1454(a)(2)) for a property of the 
     applicable size.
       ``(7) Prohibition on second liens.--A mortgagor may not 
     grant a new second lien on the mortgaged property during the 
     first 5 years of the term of the mortgage insured under this 
     section.
       ``(8) Appraisals.--Any appraisal conducted in connection 
     with a mortgage insured under this section shall--
       ``(A) be based on the current value of the property;
       ``(B) be conducted in accordance with title XI of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 3331 et seq.);
       ``(C) be completed by an appraiser who meets the competency 
     requirements of the Uniform Standards of Professional 
     Appraisal Practice;
       ``(D) be wholly consistent with the appraisal standards, 
     practices, and procedures under section 202(e) of this Act 
     that apply to all loans insured under this Act; and
       ``(E) comply with the requirements of subsection (g) of 
     this section (relating to appraisal independence).
       ``(9) Documentation and verification of income.--In 
     complying with the FHA underwriting requirements under the 
     HOPE for Homeowners Program under this section, the mortgagee 
     under the mortgage shall document and verify the income of 
     the mortgagor by procuring an Internal Revenue Service 
     transcript of the income tax returns of the mortgagor for the 
     2 most recent years for which the filing deadline for such 
     years has passed and by any other method, in accordance with 
     procedures and standards that the Board or the Secretary 
     shall establish.
       ``(10) Mortgage fraud.--The mortgagor shall not have been 
     convicted under any provision of Federal or State law for 
     fraud, including mortgage fraud.
       ``(11) Primary residence.--The mortgagor shall provide 
     documentation satisfactory in the determination of the 
     Secretary to prove that the residence covered by the mortgage 
     to be insured under this section is occupied by the mortgagor 
     as the primary residence of the mortgagor, and that such 
     residence is the only residence in which the mortgagor has 
     any present ownership interest.
       ``(f) Study of Auction or Bulk Refinance Program.--
       ``(1) Study.--The Board shall conduct a study of the need 
     for and efficacy of an auction or bulk refinancing mechanism 
     to facilitate refinancing of existing residential mortgages 
     that are at risk for foreclosure into mortgages insured under 
     this section. The study shall identify and examine various 
     options for mechanisms under which lenders and servicers of 
     such mortgages may make bids for forward commitments for such 
     insurance in an expedited manner.
       ``(2) Content.--
       ``(A) Analysis.--The study required under paragraph (1) 
     shall analyze--
       ``(i) the feasibility of establishing a mechanism that 
     would facilitate the more rapid refinancing of borrowers at 
     risk of foreclosure into performing mortgages insured under 
     this section;
       ``(ii) whether such a mechanism would provide an effective 
     and efficient mechanism to reduce foreclosures on qualified 
     existing mortgages;
       ``(iii) whether the use of an auction or bulk refinance 
     program is necessary to stabilize the housing market and 
     reduce the impact of turmoil in that market on the economy of 
     the United States;
       ``(iv) whether there are other mechanisms or authority that 
     would be useful to reduce foreclosure; and
       ``(v) and any other factors that the Board considers 
     relevant.
       ``(B) Determinations.--To the extent that the Board finds 
     that a facility of the type described in subparagraph (A) is 
     feasible and useful, the study shall--
       ``(i) determine and identify any additional authority or 
     resources needed to establish and operate such a mechanism;
       ``(ii) determine whether there is a need for additional 
     authority with respect to the loan underwriting criteria 
     established in this section or with respect to eligibility of 
     participating borrowers, lenders, or holders of liens;
       ``(iii) determine whether such underwriting criteria should 
     be established on the basis of individual loans, in the 
     aggregate, or otherwise to facilitate the goal of refinancing 
     borrowers at risk of foreclosure into viable loans insured 
     under this section.
       ``(3) Report.--Not later than the expiration of the 60-day 
     period beginning on the date of the enactment of this 
     section, the Board shall submit a report regarding the 
     results of the study conducted under this subsection to the 
     Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate. The report shall include a 
     detailed description of the analysis required under paragraph 
     (2)(A) and of the determinations made pursuant to paragraph 
     (2)(B), and shall include any other findings and 
     recommendations of the Board pursuant to the study, including 
     identifying various options for mechanisms described in 
     paragraph (1).
       ``(g) Appraisal Independence.--
       ``(1) Prohibitions on interested parties in a real estate 
     transaction.--No mortgage lender, mortgage broker, mortgage 
     banker, real estate broker, appraisal management company, 
     employee of an appraisal management company, nor any other 
     person with an interest in a real estate transaction 
     involving an appraisal in connection with a mortgage insured 
     under this section shall improperly influence, or attempt to 
     improperly influence, through coercion, extortion, collusion, 
     compensation, instruction, inducement, intimidation, 
     nonpayment for services rendered, or bribery, the 
     development, reporting, result, or review of a real estate 
     appraisal sought in connection with the mortgage.
       ``(2) Civil monetary penalties.--The Secretary may impose a 
     civil money penalty for any knowing and material violation of 
     paragraph (1) under the same terms and conditions as are 
     authorized in section 536(a) of this Act.
       ``(h) Standards To Protect Against Adverse Selection.--
       ``(1) In general.--The Board shall, by rule or order, 
     establish standards and policies to require the underwriter 
     of the insured loan to provide such representations and 
     warranties as the Board considers necessary or appropriate to 
     enforce compliance with all underwriting and appraisal 
     standards of the HOPE for Homeowners Program.
       ``(2) Exclusion for violations.--The Board shall prohibit 
     the Secretary from paying insurance benefits to a mortgagee 
     who violates the representations and warranties, as 
     established under paragraph (1), or in any case in which a 
     mortgagor fails to make the first payment on a refinanced 
     eligible mortgage.

[[Page S6773]]

       ``(3) Other authority.--The Board may establish such other 
     standards or policies as necessary to protect against adverse 
     selection, including requiring loans identified by the 
     Secretary as higher risk loans to demonstrate payment 
     performance for a reasonable period of time prior to being 
     insured under the program.
       ``(i) Premiums.--For each refinanced eligible mortgage 
     insured under this section, the Secretary shall establish and 
     collect--
       ``(1) at the time of insurance, a single premium payment in 
     an amount equal to 3 percent of the amount of the original 
     insured principal obligation of the refinanced eligible 
     mortgage, which shall be paid from the proceeds of the 
     mortgage being insured under this section, through the 
     reduction of the amount of indebtedness that existed on the 
     eligible mortgage prior to refinancing; and
       ``(2) in addition to the premium required under paragraph 
     (1), an annual premium in an amount equal to 1.5 percent of 
     the amount of the remaining insured principal balance of the 
     mortgage.
       ``(j) Origination Fees and Interest Rate.--The Board shall 
     establish--
       ``(1) a reasonable limitation on origination fees for 
     refinanced eligible mortgages insured under this section; and
       ``(2) procedures to ensure that interest rates on such 
     mortgages shall be commensurate with market rate interest 
     rates on such types of loans.
       ``(k) Equity and Appreciation.--
       ``(1) Five-year phase-in for equity as a result of sale or 
     refinancing.--For each eligible mortgage insured under this 
     section, the Secretary and the mortgagor of such mortgage 
     shall, upon any sale or disposition of the property to which 
     such mortgage relates, or upon the subsequent refinancing of 
     such mortgage, be entitled to the following with respect to 
     any equity created as a direct result of such sale or 
     refinancing:
       ``(A) If such sale or refinancing occurs during the period 
     that begins on the date that such mortgage is insured and 
     ends 1 year after such date of insurance, the Secretary shall 
     be entitled to 100 percent of such equity.
       ``(B) If such sale or refinancing occurs during the period 
     that begins 1 year after such date of insurance and ends 2 
     years after such date of insurance, the Secretary shall be 
     entitled to 90 percent of such equity and the mortgagor shall 
     be entitled to 10 percent of such equity.
       ``(C) If such sale or refinancing occurs during the period 
     that begins 2 years after such date of insurance and ends 3 
     years after such date of insurance, the Secretary shall be 
     entitled to 80 percent of such equity and the mortgagor shall 
     be entitled to 20 percent of such equity.
       ``(D) If such sale or refinancing occurs during the period 
     that begins 3 years after such date of insurance and ends 4 
     years after such date of insurance, the Secretary shall be 
     entitled to 70 percent of such equity and the mortgagor shall 
     be entitled to 30 percent of such equity.
       ``(E) If such sale or refinancing occurs during the period 
     that begins 4 years after such date of insurance and ends 5 
     years after such date of insurance, the Secretary shall be 
     entitled to 60 percent of such equity and the mortgagor shall 
     be entitled to 40 percent of such equity.
       ``(F) If such sale or refinancing occurs during any period 
     that begins 5 years after such date of insurance, the 
     Secretary shall be entitled to 50 percent of such equity and 
     the mortgagor shall be entitled to 50 percent of such equity.
       ``(2) Appreciation in value.--For each eligible mortgage 
     insured under this section, the Secretary and the mortgagor 
     of such mortgage shall, upon any sale or disposition of the 
     property to which such mortgage relates, each be entitled to 
     50 percent of any appreciation in value of the appraised 
     value of such property that has occurred since the date that 
     such mortgage was insured under this section.
       ``(l) Establishment of HOPE Fund.--
       ``(1) In general.--There is established in the Federal 
     Housing Administration a revolving fund to be known as the 
     Home Ownership Preservation Entity Fund, which shall be used 
     by the Board for carrying out the mortgage insurance 
     obligations under this section.
       ``(2) Management of fund.--The HOPE Fund shall be 
     administered and managed by the Secretary, who shall 
     establish reasonable and prudent criteria for the management 
     and operation of any amounts in the HOPE Fund.
       ``(m) Limitation on Aggregate Insurance Authority.--The 
     aggregate original principal obligation of all mortgages 
     insured under this section may not exceed $300,000,000,000.
       ``(n) Reports by the Board.--The Board shall submit monthly 
     reports to the Congress identifying the progress of the HOPE 
     for Homeowners Program, which shall contain the following 
     information for each month:
       ``(1) The number of new mortgages insured under this 
     section, including the location of the properties subject to 
     such mortgages by census tract.
       ``(2) The aggregate principal obligation of new mortgages 
     insured under this section.
       ``(3) The average amount by which the principle balance 
     outstanding on mortgages insured this section was reduced.
       ``(4) The amount of premiums collected for insurance of 
     mortgages under this section.
       ``(5) The claim and loss rates for mortgages insured under 
     this section.
       ``(6) Any other information that the Board considers 
     appropriate.
       ``(o) Required Outreach Efforts.--The Secretary shall carry 
     out outreach efforts to ensure that homeowners, lenders, and 
     the general public are aware of the opportunities for 
     assistance available under this section.
       ``(p) Enhancement of FHA Capacity.--Under the direction of 
     the Board, the Secretary shall take such actions as may be 
     necessary to--
       ``(1) contract for the establishment of underwriting 
     criteria, automated underwriting systems, pricing standards, 
     and other factors relating to eligibility for mortgages 
     insured under this section;
       ``(2) contract for independent quality reviews of 
     underwriting, including appraisal reviews and fraud 
     detection, of mortgages insured under this section or pools 
     of such mortgages; and
       ``(3) increase personnel of the Department as necessary to 
     process or monitor the processing of mortgages insured under 
     this section.
       ``(q) GNMA Commitment Authority.--
       ``(1) Guarantees.--The Secretary shall take such actions as 
     may be necessary to ensure that securities based on and 
     backed by a trust or pool composed of mortgages insured under 
     this section are available to be guaranteed by the Government 
     National Mortgage Association as to the timely payment of 
     principal and interest.
       ``(2) Guarantee authority.--To carry out the purposes of 
     section 306 of the National Housing Act (12 U.S.C. 1721), the 
     Government National Mortgage Association may enter into new 
     commitments to issue guarantees of securities based on or 
     backed by mortgages insured under this section, not exceeding 
     $300,000,000,000. The amount of authority provided under the 
     preceding sentence to enter into new commitments to issue 
     guarantees is in addition to any amount of authority to make 
     new commitments to issue guarantees that is provided to the 
     Association under any other provision of law.
       ``(r) Sunset.--The Secretary may not enter into any new 
     commitment to insure any refinanced eligible mortgage, or 
     newly insure any refinanced eligible mortgage pursuant to 
     this section before October 1, 2008 or after September 30, 
     2011.
       ``(s) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Approved financial institution or mortgagee.--The 
     term `approved financial institution or mortgagee' means a 
     financial institution or mortgagee approved by the Secretary 
     under section 203 as responsible and able to service 
     mortgages responsibly.
       ``(2) Board.--The term `Board' means the Board of Directors 
     of the HOPE for Homeowners Program. The Board shall be 
     composed of the Secretary, the Secretary of the Treasury, the 
     Chairperson of the Board of Governors of the Federal Reserve 
     System, and the Chairperson of the Board of Directors of the 
     Federal Deposit Insurance Corporation.
       ``(3) Eligible mortgage.--The term `eligible mortgage' 
     means a mortgage--
       ``(A) the mortgagor of which--
       ``(i) occupies such property as his or her principal 
     residence; and
       ``(ii) cannot, subject to subsection (e)(1)(B) and such 
     other standards established by the Board, afford his or her 
     mortgage payments; and
       ``(B) originated on or before January 1, 2008.
       ``(4) Existing senior mortgage.--The term `existing senior 
     mortgage' means, with respect to a mortgage insured under 
     this section, the existing mortgage that has superior 
     priority.
       ``(5) Existing subordinate mortgage.--The term `existing 
     subordinate mortgage' means, with respect to a mortgage 
     insured under this section, an existing mortgage that has 
     subordinate priority to the existing senior mortgage.
       ``(6) HOPE for homeowners program.--The term `HOPE for 
     Homeowners Program' means the program established under this 
     section.
       ``(7) Secretary.--The term `Secretary' means the Secretary 
     of Housing and Urban Development, except where specifically 
     provided otherwise.
       ``(t) Requirements Related to the Board.--
       ``(1) Compensation, actual, necessary, and transportation 
     expenses.--
       ``(A) Federal employees.--A member of the Board who is an 
     officer or employee of the Federal Government shall serve 
     without additional pay (or benefits in the nature of 
     compensation) for service as a member of the Board.
       ``(B) Travel expenses.--Members of the Board shall be 
     entitled to receive travel expenses, including per diem in 
     lieu of subsistence, equivalent to those set forth in 
     subchapter I of chapter 57 of title 5, United States Code.
       ``(2) Bylaws.--The Board may prescribe, amend, and repeal 
     such bylaws as may be necessary for carrying out the 
     functions of the Board.
       ``(3) Quorum.--A majority of the Board shall constitute a 
     quorum.
       ``(4) Staff; experts and consultants.--
       ``(A) Detail of government employees.--Upon request of the 
     Board, any Federal Government employee may be detailed to the 
     Board without reimbursement, and such detail shall be without 
     interruption or loss of civil service status or privilege.
       ``(B) Experts and consultants.--The Board shall procure the 
     services of experts and consultants as the Board considers 
     appropriate.
       ``(u) Rule of Construction Related to Voluntary Nature of 
     the Program.--This section shall not be construed to require 
     that any approved financial institution or mortgagee 
     participate in any activity authorized under this section, 
     including any activity related to the refinancing of an 
     eligible mortgage.
       ``(v) Rule of Construction Related to Insurance of 
     Mortgages.--Except as otherwise provided for in this section 
     or by action of the Board, the provisions and requirements of 
     section 203(b) shall apply with respect to the insurance of 
     any eligible mortgage under this section.
       ``(w) HOPE Bonds.--
       ``(1) Issuance and repayment of bonds.--Notwithstanding 
     section 504(b) of the Federal Credit Reform Act of 1990 (2 
     U.S.C. 661d(b)), the Secretary of the Treasury shall--
       ``(A) subject to such terms and conditions as the Secretary 
     of the Treasury deems necessary, issue Federal credit 
     instruments, to be known as

[[Page S6774]]

     `HOPE Bonds', that are callable at the discretion of the 
     Secretary of the Treasury and do not, in the aggregate, 
     exceed the amount specified in subsection (m);
       ``(B) provide the subsidy amounts necessary for loan 
     guarantees under the HOPE for Homeowners Program, not to 
     exceed the amount specified in subsection (m), in accordance 
     with the provisions of the Federal Credit Reform Act of 1990 
     (2 U.S.C. 661 et seq.), except as provided in this paragraph; 
     and
       ``(C) use the proceeds from HOPE Bonds only to pay for the 
     net costs to the Federal Government of the HOPE for 
     Homeowners Program, including administrative costs.
       ``(2) Reimbursements to treasury.--Funds received pursuant 
     to section 1338(b) of the Federal Housing Enterprises 
     Regulatory Reform Act of 1992 shall be used to reimburse the 
     Secretary of the Treasury for amounts borrowed under 
     paragraph (1).
       ``(3) Use of reserve fund.--If the net cost to the Federal 
     Government for the HOPE for Homeowners Program exceeds the 
     amount of funds received under paragraph (2), remaining debts 
     of the HOPE for Homeowners Program shall be paid from amounts 
     deposited into the fund established by the Secretary under 
     section 1337(e) of the Federal Housing Enterprises Financial 
     Safety and Soundness Act of 1992, remaining amounts in such 
     fund to be used to reduce the National debt.
       ``(4) Reduction of national debt.--Amounts collected under 
     the HOPE for Homeowners Program in accordance with 
     subsections (i) and (k) in excess of the net cost to the 
     Federal Government for such Program shall be used to reduce 
     the National debt.''.

     SEC. 1403. FIDUCIARY DUTY OF SERVICERS OF POOLED RESIDENTIAL 
                   MORTGAGE LOANS.

       The Truth in Lending Act (15 U.S.C. 1601 et seq.) is 
     amended by inserting after section 129 the following new 
     section:

     ``SEC. 129A. FIDUCIARY DUTY OF SERVICERS OF POOLED 
                   RESIDENTIAL MORTGAGES.

       ``(a) In General.--Except as may be established in any 
     investment contract between a servicer of pooled residential 
     mortgages and an investor, a servicer of pooled residential 
     mortgages--
       ``(1) owes any duty to maximize the net present value of 
     the pooled mortgages in an investment to all investors and 
     parties having a direct or indirect interest in such 
     investment, not to any individual party or group of parties; 
     and
       ``(2) shall be deemed to act in the best interests of all 
     such investors and parties if the servicer agrees to or 
     implements a modification or workout plan, including any 
     modification or refinancing undertaken pursuant to the HOPE 
     for Homeowners Act of 2008, for a residential mortgage or a 
     class of residential mortgages that constitute a part or all 
     of the pooled mortgages in such investment, provided that any 
     mortgage so modified meets the following criteria:
       ``(A) Default on the payment of such mortgage has occurred 
     or is reasonably foreseeable.
       ``(B) The property securing such mortgage is occupied by 
     the mortgagor of such mortgage.
       ``(C) The anticipated recovery on the principal outstanding 
     obligation of the mortgage under the modification or workout 
     plan exceeds, on a net present value basis, the anticipated 
     recovery on the principal outstanding obligation of the 
     mortgage through foreclosure.
       ``(b) Definition.--As used in this section, the term 
     `servicer' has the same meaning as in section 6(i)(2) of the 
     Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 
     2605(i)(2)).''.

     SEC. 1404. REVISED STANDARDS FOR FHA APPRAISERS.

       Section 202(e) of the National Housing Act (12 U.S.C. 
     1708(e)) is amended by adding at the end the following:
       ``(5) Additional appraiser standards.--Beginning on the 
     date of enactment of the Federal Housing Finance Regulatory 
     Reform Act of 2008, any appraiser chosen or approved to 
     conduct appraisals for mortgages under this title shall--
       ``(A) be certified--
       ``(i) by the State in which the property to be appraised is 
     located; or
       ``(ii) by a nationally recognized professional appraisal 
     organization; and
       ``(B) have demonstrated verifiable education in the 
     appraisal requirements established by the Federal Housing 
     Administration under this subsection.''.

                TITLE V--S.A.F.E. MORTGAGE LICENSING ACT

     SEC. 1501. SHORT TITLE.

       This title may be cited as the ``Secure and Fair 
     Enforcement for Mortgage Licensing Act of 2008'' or 
     ``S.A.F.E. Mortgage Licensing Act of 2008''.

     SEC. 1502. PURPOSES AND METHODS FOR ESTABLISHING A MORTGAGE 
                   LICENSING SYSTEM AND REGISTRY.

       In order to increase uniformity, reduce regulatory burden, 
     enhance consumer protection, and reduce fraud, the States, 
     through the Conference of State Bank Supervisors and the 
     American Association of Residential Mortgage Regulators, are 
     hereby encouraged to establish a Nationwide Mortgage 
     Licensing System and Registry for the residential mortgage 
     industry that accomplishes all of the following objectives:
       (1) Provides uniform license applications and reporting 
     requirements for State-licensed loan originators.
       (2) Provides a comprehensive licensing and supervisory 
     database.
       (3) Aggregates and improves the flow of information to and 
     between regulators.
       (4) Provides increased accountability and tracking of loan 
     originators.
       (5) Streamlines the licensing process and reduces the 
     regulatory burden.
       (6) Enhances consumer protections and supports anti-fraud 
     measures.
       (7) Provides consumers with easily accessible information, 
     offered at no charge, utilizing electronic media, including 
     the Internet, regarding the employment history of, and 
     publicly adjudicated disciplinary and enforcement actions 
     against, loan originators.
       (8) Establishes a means by which residential mortgage loan 
     originators would, to the greatest extent possible, be 
     required to act in the best interests of the consumer.
       (9) Facilitates responsible behavior in the subprime 
     mortgage market place and provides comprehensive training and 
     examination requirements related to subprime mortgage 
     lending.
       (10) Facilitates the collection and disbursement of 
     consumer complaints on behalf of State and Federal mortgage 
     regulators.

     SEC. 1503. DEFINITIONS.

       For purposes of this title, the following definitions shall 
     apply:
       (1) Federal banking agencies.--The term ``Federal banking 
     agencies'' means the Board of Governors of the Federal 
     Reserve System, the Comptroller of the Currency, the Director 
     of the Office of Thrift Supervision, the National Credit 
     Union Administration, and the Federal Deposit Insurance 
     Corporation.
       (2) Depository institution.--The term ``depository 
     institution'' has the same meaning as in section 3 of the 
     Federal Deposit Insurance Act, and includes any credit union.
       (3) Loan originator.--
       (A) In general.--The term ``loan originator''--
       (i) means an individual who--

       (I) takes a residential mortgage loan application; and
       (II) offers or negotiates terms of a residential mortgage 
     loan for compensation or gain;

       (ii) does not include any individual who is not otherwise 
     described in clause (i) and who performs purely 
     administrative or clerical tasks on behalf of a person who is 
     described in any such clause;
       (iii) does not include a person or entity that only 
     performs real estate brokerage activities and is licensed or 
     registered in accordance with applicable State law, unless 
     the person or entity is compensated by a lender, a mortgage 
     broker, or other loan originator or by any agent of such 
     lender, mortgage broker, or other loan originator; and
       (iv) does not include a person or entity solely involved in 
     extensions of credit relating to timeshare plans, as that 
     term is defined in section 101(53D) of title 11, United 
     States Code.
       (B) Other definitions relating to loan originator.--For 
     purposes of this subsection, an individual ``assists a 
     consumer in obtaining or applying to obtain a residential 
     mortgage loan'' by, among other things, advising on loan 
     terms (including rates, fees, other costs), preparing loan 
     packages, or collecting information on behalf of the consumer 
     with regard to a residential mortgage loan.
       (C) Administrative or clerical tasks.--The term 
     ``administrative or clerical tasks'' means the receipt, 
     collection, and distribution of information common for the 
     processing or underwriting of a loan in the mortgage industry 
     and communication with a consumer to obtain information 
     necessary for the processing or underwriting of a residential 
     mortgage loan.
       (D) Real estate brokerage activity defined.--The term 
     ``real estate brokerage activity'' means any activity that 
     involves offering or providing real estate brokerage services 
     to the public, including--
       (i) acting as a real estate agent or real estate broker for 
     a buyer, seller, lessor, or lessee of real property;
       (ii) bringing together parties interested in the sale, 
     purchase, lease, rental, or exchange of real property;
       (iii) negotiating, on behalf of any party, any portion of a 
     contract relating to the sale, purchase, lease, rental, or 
     exchange of real property (other than in connection with 
     providing financing with respect to any such transaction);
       (iv) engaging in any activity for which a person engaged in 
     the activity is required to be registered or licensed as a 
     real estate agent or real estate broker under any applicable 
     law; and
       (v) offering to engage in any activity, or act in any 
     capacity, described in clause (i), (ii), (iii), or (iv).
       (4) Loan processor or underwriter.--
       (A) In general.--The term ``loan processor or underwriter'' 
     means an individual who performs clerical or support duties 
     at the direction of and subject to the supervision and 
     instruction of--
       (i) a State-licensed loan originator; or
       (ii) a registered loan originator.
       (B) Clerical or support duties.--For purposes of 
     subparagraph (A), the term ``clerical or support duties'' may 
     include--
       (i) the receipt, collection, distribution, and analysis of 
     information common for the processing or underwriting of a 
     residential mortgage loan; and
       (ii) communicating with a consumer to obtain the 
     information necessary for the processing or underwriting of a 
     loan, to the extent that such communication does not include 
     offering or negotiating loan rates or terms, or counseling 
     consumers about residential mortgage loan rates or terms.
       (5) Nationwide mortgage licensing system and registry.--The 
     term ``Nationwide Mortgage Licensing System and Registry'' 
     means a mortgage licensing system developed and maintained by 
     the Conference of State Bank Supervisors and the American 
     Association of Residential Mortgage Regulators for the State 
     licensing and registration of State-licensed loan originators 
     and the registration of registered loan originators or any 
     system established by the Secretary under section 1509.
       (6) Nontraditional mortgage product.--The term 
     ``nontraditional mortgage product''

[[Page S6775]]

     means any mortgage product other than a 30-year fixed rate 
     mortgage.
       (7) Registered loan originator.--The term ``registered loan 
     originator'' means any individual who--
       (A) meets the definition of loan originator and is an 
     employee of--
       (i) a depository institution;
       (ii) a subsidiary that is--

       (I) owned and controlled by a depository institution; and
       (II) regulated by a Federal banking agency; or

       (iii) an institution regulated by the Farm Credit 
     Administration; and
       (B) is registered with, and maintains a unique identifier 
     through, the Nationwide Mortgage Licensing System and 
     Registry.
       (8) Residential mortgage loan.--The term ``residential 
     mortgage loan'' means any loan primarily for personal, 
     family, or household use that is secured by a mortgage, deed 
     of trust, or other equivalent consensual security interest on 
     a dwelling (as defined in section 103(v) of the Truth in 
     Lending Act) or residential real estate upon which is 
     constructed or intended to be constructed a dwelling (as so 
     defined).
       (9) Secretary.--The term ``Secretary'' means the Secretary 
     of Housing and Urban Development.
       (10) State-licensed loan originator.--The term ``State-
     licensed loan originator'' means any individual who--
       (A) is a loan originator;
       (B) is not an employee of--
       (i) a depository institution;
       (ii) a subsidiary that is--

       (I) owned and controlled by a depository institution; and
       (II) regulated by a Federal banking agency; or

       (iii) an institution regulated by the Farm Credit 
     Administration; and
       (C) is licensed by a State or by the Secretary under 
     section 1508 and registered as a loan originator with, and 
     maintains a unique identifier through, the Nationwide 
     Mortgage Licensing System and Registry.
       (11) Unique identifier.--
       (A) In general.--The term ``unique identifier'' means a 
     number or other identifier that--
       (i) permanently identifies a loan originator;
       (ii) is assigned by protocols established by the Nationwide 
     Mortgage Licensing System and Registry and the Federal 
     banking agencies to facilitate electronic tracking of loan 
     originators and uniform identification of, and public access 
     to, the employment history of and the publicly adjudicated 
     disciplinary and enforcement actions against loan 
     originators; and
       (iii) shall not be used for purposes other than those set 
     forth under this title.
       (B) Responsibility of states.--To the greatest extent 
     possible and to accomplish the purpose of this title, States 
     shall use unique identifiers in lieu of social security 
     numbers.

     SEC. 1504. LICENSE OR REGISTRATION REQUIRED.

       (a) In General.--An individual may not engage in the 
     business of a loan originator without first--
       (1) obtaining, and maintaining annually--
       (A) a registration as a registered loan originator; or
       (B) a license and registration as a State-licensed loan 
     originator; and
       (2) obtaining a unique identifier.
       (b) Loan Processors and Underwriters.--
       (1) Supervised loan processors and underwriters.--A loan 
     processor or underwriter who does not represent to the 
     public, through advertising or other means of communicating 
     or providing information (including the use of business 
     cards, stationery, brochures, signs, rate lists, or other 
     promotional items), that such individual can or will perform 
     any of the activities of a loan originator shall not be 
     required to be a State-licensed loan originator.
       (2) Independent contractors.--An independent contractor may 
     not engage in residential mortgage loan origination 
     activities as a loan processor or underwriter unless such 
     independent contractor is a State-licensed loan originator.

     SEC. 1505. STATE LICENSE AND REGISTRATION APPLICATION AND 
                   ISSUANCE.

       (a) Background Checks.--In connection with an application 
     to any State for licensing and registration as a State-
     licensed loan originator, the applicant shall, at a minimum, 
     furnish to the Nationwide Mortgage Licensing System and 
     Registry information concerning the applicant's identity, 
     including--
       (1) fingerprints for submission to the Federal Bureau of 
     Investigation, and any governmental agency or entity 
     authorized to receive such information for a State and 
     national criminal history background check; and
       (2) personal history and experience, including 
     authorization for the System to obtain--
       (A) an independent credit report obtained from a consumer 
     reporting agency described in section 603(p) of the Fair 
     Credit Reporting Act; and
       (B) information related to any administrative, civil or 
     criminal findings by any governmental jurisdiction.
       (b) Issuance of License.--The minimum standards for 
     licensing and registration as a State-licensed loan 
     originator shall include the following:
       (1) The applicant has never had a loan originator license 
     revoked in any governmental jurisdiction.
       (2) The applicant has not been convicted of, or pled guilty 
     or nolo contendere to, a felony in a domestic, foreign, or 
     military court--
       (A) during the 7-year period preceding the date of the 
     application for licensing and registration; or
       (B) at any time preceding such date of application, if such 
     felony involved an act of fraud, dishonesty, or a breach of 
     trust, or money laundering.
       (3) The applicant has demonstrated financial 
     responsibility, character, and general fitness such as to 
     command the confidence of the community and to warrant a 
     determination that the loan originator will operate honestly, 
     fairly, and efficiently within the purposes of this title.
       (4) The applicant has completed the pre-licensing education 
     requirement described in subsection (c).
       (5) The applicant has passed a written test that meets the 
     test requirement described in subsection (d).
       (6) The applicant has met either a net worth or surety bond 
     requirement, as required by the State pursuant to section 
     1508(d)(6).
       (c) Pre-Licensing Education of Loan Originators.--
       (1) Minimum educational requirements.--In order to meet the 
     pre-licensing education requirement referred to in subsection 
     (b)(4), a person shall complete at least 20 hours of 
     education approved in accordance with paragraph (2), which 
     shall include at least--
       (A) 3 hours of Federal law and regulations;
       (B) 3 hours of ethics, which shall include instruction on 
     fraud, consumer protection, and fair lending issues; and
       (C) 2 hours of training related to lending standards for 
     the nontraditional mortgage product marketplace.
       (2) Approved educational courses.--For purposes of 
     paragraph (1), pre-licensing education courses shall be 
     reviewed, and approved by the Nationwide Mortgage Licensing 
     System and Registry.
       (3) Limitation and standards.--
       (A) Limitation.--To maintain the independence of the 
     approval process, the Nationwide Mortgage Licensing System 
     and Registry shall not directly or indirectly offer pre-
     licensure educational courses for loan originators.
       (B) Standards.--In approving courses under this section, 
     the Nationwide Mortgage Licensing System and Registry shall 
     apply reasonable standards in the review and approval of 
     courses.
       (d) Testing of Loan Originators.--
       (1) In general.--In order to meet the written test 
     requirement referred to in subsection (b)(5), an individual 
     shall pass, in accordance with the standards established 
     under this subsection, a qualified written test developed by 
     the Nationwide Mortgage Licensing System and Registry and 
     administered by an approved test provider.
       (2) Qualified test.--A written test shall not be treated as 
     a qualified written test for purposes of paragraph (1) unless 
     the test adequately measures the applicant's knowledge and 
     comprehension in appropriate subject areas, including--
       (A) ethics;
       (B) Federal law and regulation pertaining to mortgage 
     origination;
       (C) State law and regulation pertaining to mortgage 
     origination;
       (D) Federal and State law and regulation, including 
     instruction on fraud, consumer protection, the nontraditional 
     mortgage marketplace, and fair lending issues.
       (3) Minimum competence.--
       (A) Passing score.--An individual shall not be considered 
     to have passed a qualified written test unless the individual 
     achieves a test score of not less than 75 percent correct 
     answers to questions.
       (B) Initial retests.--An individual may retake a test 3 
     consecutive times with each consecutive taking occurring at 
     least 30 days after the preceding test.
       (C) Subsequent retests.--After failing 3 consecutive tests, 
     an individual shall wait at least 6 months before taking the 
     test again.
       (D) Retest after lapse of license.--A State-licensed loan 
     originator who fails to maintain a valid license for a period 
     of 5 years or longer shall retake the test, not taking into 
     account any time during which such individual is a registered 
     loan originator.
       (e) Mortgage Call Reports.--Each mortgage licensee shall 
     submit to the Nationwide Mortgage Licensing System and 
     Registry reports of condition, which shall be in such form 
     and shall contain such information as the Nationwide Mortgage 
     Licensing System and Registry may require.

     SEC. 1506. STANDARDS FOR STATE LICENSE RENEWAL.

       (a) In General.--The minimum standards for license renewal 
     for State-licensed loan originators shall include the 
     following:
       (1) The loan originator continues to meet the minimum 
     standards for license issuance.
       (2) The loan originator has satisfied the annual continuing 
     education requirements described in subsection (b).
       (b) Continuing Education for State-Licensed Loan 
     Originators.--
       (1) In general.--In order to meet the annual continuing 
     education requirements referred to in subsection (a)(2), a 
     State-licensed loan originator shall complete at least 8 
     hours of education approved in accordance with paragraph (2), 
     which shall include at least--
       (A) 3 hours of Federal law and regulations;
       (B) 2 hours of ethics, which shall include instruction on 
     fraud, consumer protection, and fair lending issues; and
       (C) 2 hours of training related to lending standards for 
     the nontraditional mortgage product marketplace.
       (2) Approved educational courses.--For purposes of 
     paragraph (1), continuing education courses shall be 
     reviewed, and approved by the Nationwide Mortgage Licensing 
     System and Registry.
       (3) Calculation of continuing education credits.--A State-
     licensed loan originator--
       (A) may only receive credit for a continuing education 
     course in the year in which the course is taken; and
       (B) may not take the same approved course in the same or 
     successive years to meet the annual requirements for 
     continuing education.

[[Page S6776]]

       (4) Instructor credit.--A State-licensed loan originator 
     who is approved as an instructor of an approved continuing 
     education course may receive credit for the originator's own 
     annual continuing education requirement at the rate of 2 
     hours credit for every 1 hour taught.
       (5) Limitation and standards.--
       (A) Limitation.--To maintain the independence of the 
     approval process, the Nationwide Mortgage Licensing System 
     and Registry shall not directly or indirectly offer any 
     continuing education courses for loan originators.
       (B) Standards.--In approving courses under this section, 
     the Nationwide Mortgage Licensing System and Registry shall 
     apply reasonable standards in the review and approval of 
     courses.

     SEC. 1507. SYSTEM OF REGISTRATION ADMINISTRATION BY FEDERAL 
                   AGENCIES.

       (a) Development.--
       (1) In general.--The Federal banking agencies shall 
     jointly, through the Federal Financial Institutions 
     Examination Council, and together with the Farm Credit 
     Administration, develop and maintain a system for registering 
     employees of a depository institution, employees of a 
     subsidiary that is owned and controlled by a depository 
     institution and regulated by a Federal banking agency, or 
     employees of an institution regulated by the Farm Credit 
     Administration, as registered loan originators with the 
     Nationwide Mortgage Licensing System and Registry. The system 
     shall be implemented before the end of the 1-year period 
     beginning on the date of enactment of this title.
       (2) Registration requirements.--In connection with the 
     registration of any loan originator under this subsection, 
     the appropriate Federal banking agency and the Farm Credit 
     Administration shall, at a minimum, furnish or cause to be 
     furnished to the Nationwide Mortgage Licensing System and 
     Registry information concerning the employees's identity, 
     including--
       (A) fingerprints for submission to the Federal Bureau of 
     Investigation, and any governmental agency or entity 
     authorized to receive such information for a State and 
     national criminal history background check; and
       (B) personal history and experience, including 
     authorization for the Nationwide Mortgage Licensing System 
     and Registry to obtain information related to any 
     administrative, civil or criminal findings by any 
     governmental jurisdiction.
       (b) Coordination.--
       (1) Unique identifier.--The Federal banking agencies, 
     through the Financial Institutions Examination Council, and 
     the Farm Credit Administration shall coordinate with the 
     Nationwide Mortgage Licensing System and Registry to 
     establish protocols for assigning a unique identifier to each 
     registered loan originator that will facilitate electronic 
     tracking and uniform identification of, and public access to, 
     the employment history of and publicly adjudicated 
     disciplinary and enforcement actions against loan 
     originators.
       (2) Nationwide mortgage licensing system and registry 
     development.--To facilitate the transfer of information 
     required by subsection (a)(2), the Nationwide Mortgage 
     Licensing System and Registry shall coordinate with the 
     Federal banking agencies, through the Financial Institutions 
     Examination Council, and the Farm Credit Administration 
     concerning the development and operation, by such System and 
     Registry, of the registration functionality and data 
     requirements for loan originators.
       (c) Consideration of Factors and Procedures.--In 
     establishing the registration procedures under subsection (a) 
     and the protocols for assigning a unique identifier to a 
     registered loan originator, the Federal banking agencies 
     shall make such de minimis exceptions as may be appropriate 
     to paragraphs (1)(A) and (2) of section 1504(a), shall make 
     reasonable efforts to utilize existing information to 
     minimize the burden of registering loan originators, and 
     shall consider methods for automating the process to the 
     greatest extent practicable consistent with the purposes of 
     this title.

     SEC. 1508. SECRETARY OF HOUSING AND URBAN DEVELOPMENT BACKUP 
                   AUTHORITY TO ESTABLISH A LOAN ORIGINATOR 
                   LICENSING SYSTEM.

       (a) Backup Licensing System.--If, by the end of the 1-year 
     period, or the 2-year period in the case of a State whose 
     legislature meets only biennially, beginning on the date of 
     the enactment of this title or at any time thereafter, the 
     Secretary determines that a State does not have in place by 
     law or regulation a system for licensing and registering loan 
     originators that meets the requirements of sections 1505 and 
     1506 and subsection (d) of this section, or does not 
     participate in the Nationwide Mortgage Licensing System and 
     Registry, the Secretary shall provide for the establishment 
     and maintenance of a system for the licensing and 
     registration by the Secretary of loan originators operating 
     in such State as State-licensed loan originators.
       (b) Licensing and Registration Requirements.--The system 
     established by the Secretary under subsection (a) for any 
     State shall meet the requirements of sections 1505 and 1506 
     for State-licensed loan originators.
       (c) Unique Identifier.--The Secretary shall coordinate with 
     the Nationwide Mortgage Licensing System and Registry to 
     establish protocols for assigning a unique identifier to each 
     loan originator licensed by the Secretary as a State-licensed 
     loan originator that will facilitate electronic tracking and 
     uniform identification of, and public access to, the 
     employment history of and the publicly adjudicated 
     disciplinary and enforcement actions against loan 
     originators.
       (d) State Licensing Law Requirements.--For purposes of this 
     section, the law in effect in a State meets the requirements 
     of this subsection if the Secretary determines the law 
     satisfies the following minimum requirements:
       (1) A State loan originator supervisory authority is 
     maintained to provide effective supervision and enforcement 
     of such law, including the suspension, termination, or 
     nonrenewal of a license for a violation of State or Federal 
     law.
       (2) The State loan originator supervisory authority ensures 
     that all State-licensed loan originators operating in the 
     State are registered with Nationwide Mortgage Licensing 
     System and Registry.
       (3) The State loan originator supervisory authority is 
     required to regularly report violations of such law, as well 
     as enforcement actions and other relevant information, to the 
     Nationwide Mortgage Licensing System and Registry.
       (4) The State loan originator supervisory authority has a 
     process in place for challenging information contained in the 
     Nationwide Mortgage Licensing System and Registry.
       (5) The State loan originator supervisory authority has 
     established a mechanism to assess civil money penalties for 
     individuals acting as mortgage originators in their State 
     without a valid license or registration.
       (6) The State loan originator supervisory authority has 
     established minimum net worth or surety bonding requirements 
     that reflect the dollar amount of loans originated by a 
     residential mortgage loan originator.
       (e) Temporary Extension of Period.--The Secretary may 
     extend, by not more than 24 months, the 1-year or 2-year 
     period, as the case may be, referred to in subsection (a) for 
     the licensing of loan originators in any State under a State 
     licensing law that meets the requirements of sections 1505 
     and 1506 and subsection (d) if the Secretary determines that 
     such State is making a good faith effort to establish a State 
     licensing law that meets such requirements, license mortgage 
     originators under such law, and register such originators 
     with the Nationwide Mortgage Licensing System and Registry.
       (f) Contracting Authority.--The Secretary may enter into 
     contracts with qualified independent parties, as necessary to 
     efficiently fulfill the obligations of the Secretary under 
     this section.

     SEC. 1509. BACKUP AUTHORITY TO ESTABLISH A NATIONWIDE 
                   MORTGAGE LICENSING AND REGISTRY SYSTEM.

       If at any time the Secretary determines that the Nationwide 
     Mortgage Licensing System and Registry is failing to meet the 
     requirements and purposes of this title for a comprehensive 
     licensing, supervisory, and tracking system for loan 
     originators, the Secretary shall establish and maintain such 
     a system to carry out the purposes of this title and the 
     effective registration and regulation of loan originators.

     SEC. 1510. FEES.

       The Federal banking agencies, the Farm Credit 
     Administration, the Secretary, and the Nationwide Mortgage 
     Licensing System and Registry may charge reasonable fees to 
     cover the costs of maintaining and providing access to 
     information from the Nationwide Mortgage Licensing System and 
     Registry, to the extent that such fees are not charged to 
     consumers for access to such system and registry.

     SEC. 1511. BACKGROUND CHECKS OF LOAN ORIGINATORS.

       (a) Access to Records.--Notwithstanding any other provision 
     of law, in providing identification and processing functions, 
     the Attorney General shall provide access to all criminal 
     history information to the appropriate State officials 
     responsible for regulating State-licensed loan originators to 
     the extent criminal history background checks are required 
     under the laws of the State for the licensing of such loan 
     originators.
       (b) Agent.--For the purposes of this section and in order 
     to reduce the points of contact which the Federal Bureau of 
     Investigation may have to maintain for purposes of subsection 
     (a), the Conference of State Bank Supervisors or a wholly 
     owned subsidiary may be used as a channeling agent of the 
     States for requesting and distributing information between 
     the Department of Justice and the appropriate State agencies.

     SEC. 1512. CONFIDENTIALITY OF INFORMATION.

       (a) System Confidentiality.--Except as otherwise provided 
     in this section, any requirement under Federal or State law 
     regarding the privacy or confidentiality of any information 
     or material provided to the Nationwide Mortgage Licensing 
     System and Registry or a system established by the Secretary 
     under section 1509, and any privilege arising under Federal 
     or State law (including the rules of any Federal or State 
     court) with respect to such information or material, shall 
     continue to apply to such information or material after the 
     information or material has been disclosed to the system. 
     Such information and material may be shared with all State 
     and Federal regulatory officials with mortgage industry 
     oversight authority without the loss of privilege or the loss 
     of confidentiality protections provided by Federal and State 
     laws.
       (b) Nonapplicability of Certain Requirements.--Information 
     or material that is subject to a privilege or confidentiality 
     under subsection (a) shall not be subject to--
       (1) disclosure under any Federal or State law governing the 
     disclosure to the public of information held by an officer or 
     an agency of the Federal Government or the respective State; 
     or
       (2) subpoena or discovery, or admission into evidence, in 
     any private civil action or administrative process, unless 
     with respect to any privilege held by the Nationwide Mortgage 
     Licensing System and Registry or the Secretary with respect 
     to such information or material, the person to whom such 
     information or material pertains waives, in whole or in part, 
     in the discretion of such person, that privilege.
       (c) Coordination With Other Law.--Any State law, including 
     any State open record law, relating to the disclosure of 
     confidential supervisory information or any information or 
     material described in subsection (a) that is inconsistent 
     with subsection (a) shall be superseded by the requirements 
     of such provision to the extent State law provides less 
     confidentiality or a weaker privilege.

[[Page S6777]]

       (d) Public Access to Information.--This section shall not 
     apply with respect to the information or material relating to 
     the employment history of, and publicly adjudicated 
     disciplinary and enforcement actions against, loan 
     originators that is included in Nationwide Mortgage Licensing 
     System and Registry for access by the public.

     SEC. 1513. LIABILITY PROVISIONS.

       The Secretary, any State official or agency, any Federal 
     banking agency, or any organization serving as the 
     administrator of the Nationwide Mortgage Licensing System and 
     Registry or a system established by the Secretary under 
     section 1509, or any officer or employee of any such entity, 
     shall not be subject to any civil action or proceeding for 
     monetary damages by reason of the good faith action or 
     omission of any officer or employee of any such entity, while 
     acting within the scope of office or employment, relating to 
     the collection, furnishing, or dissemination of information 
     concerning persons who are loan originators or are applying 
     for licensing or registration as loan originators.

     SEC. 1514. ENFORCEMENT UNDER HUD BACKUP LICENSING SYSTEM.

       (a) Summons Authority.--The Secretary may--
       (1) examine any books, papers, records, or other data of 
     any loan originator operating in any State which is subject 
     to a licensing system established by the Secretary under 
     section 1508; and
       (2) summon any loan originator referred to in paragraph (1) 
     or any person having possession, custody, or care of the 
     reports and records relating to such loan originator, to 
     appear before the Secretary or any delegate of the Secretary 
     at a time and place named in the summons and to produce such 
     books, papers, records, or other data, and to give testimony, 
     under oath, as may be relevant or material to an 
     investigation of such loan originator for compliance with the 
     requirements of this title.
       (b) Examination Authority.--
       (1) In general.--If the Secretary establishes a licensing 
     system under section 1508 for any State, the Secretary shall 
     appoint examiners for the purposes of administering such 
     section.
       (2) Power to examine.--Any examiner appointed under 
     paragraph (1) shall have power, on behalf of the Secretary, 
     to make any examination of any loan originator operating in 
     any State which is subject to a licensing system established 
     by the Secretary under section 1508 whenever the Secretary 
     determines an examination of any loan originator is necessary 
     to determine the compliance by the originator with this 
     title.
       (3) Report of examination.--Each examiner appointed under 
     paragraph (1) shall make a full and detailed report of 
     examination of any loan originator examined to the Secretary.
       (4) Administration of oaths and affirmations; evidence.--In 
     connection with examinations of loan originators operating in 
     any State which is subject to a licensing system established 
     by the Secretary under section 1508, or with other types of 
     investigations to determine compliance with applicable law 
     and regulations, the Secretary and examiners appointed by the 
     Secretary may administer oaths and affirmations and examine 
     and take and preserve testimony under oath as to any matter 
     in respect to the affairs of any such loan originator.
       (5) Assessments.--The cost of conducting any examination of 
     any loan originator operating in any State which is subject 
     to a licensing system established by the Secretary under 
     section 1508 shall be assessed by the Secretary against the 
     loan originator to meet the Secretary's expenses in carrying 
     out such examination.
       (c) Cease and Desist Proceeding.--
       (1) Authority of secretary.--If the Secretary finds, after 
     notice and opportunity for hearing, that any person is 
     violating, has violated, or is about to violate any provision 
     of this title, or any regulation thereunder, with respect to 
     a State which is subject to a licensing system established by 
     the Secretary under section 1508, the Secretary may publish 
     such findings and enter an order requiring such person, and 
     any other person that is, was, or would be a cause of the 
     violation, due to an act or omission the person knew or 
     should have known would contribute to such violation, to 
     cease and desist from committing or causing such violation 
     and any future violation of the same provision, rule, or 
     regulation. Such order may, in addition to requiring a person 
     to cease and desist from committing or causing a violation, 
     require such person to comply, or to take steps to effect 
     compliance, with such provision or regulation, upon such 
     terms and conditions and within such time as the Secretary 
     may specify in such order. Any such order may, as the 
     Secretary deems appropriate, require future compliance or 
     steps to effect future compliance, either permanently or for 
     such period of time as the Secretary may specify, with such 
     provision or regulation with respect to any loan originator.
       (2) Hearing.--The notice instituting proceedings pursuant 
     to paragraph (1) shall fix a hearing date not earlier than 30 
     days nor later than 60 days after service of the notice 
     unless an earlier or a later date is set by the Secretary 
     with the consent of any respondent so served.
       (3) Temporary order.--Whenever the Secretary determines 
     that the alleged violation or threatened violation specified 
     in the notice instituting proceedings pursuant to paragraph 
     (1), or the continuation thereof, is likely to result in 
     significant dissipation or conversion of assets, significant 
     harm to consumers, or substantial harm to the public interest 
     prior to the completion of the proceedings, the Secretary may 
     enter a temporary order requiring the respondent to cease and 
     desist from the violation or threatened violation and to take 
     such action to prevent the violation or threatened violation 
     and to prevent dissipation or conversion of assets, 
     significant harm to consumers, or substantial harm to the 
     public interest as the Secretary deems appropriate pending 
     completion of such proceedings. Such an order shall be 
     entered only after notice and opportunity for a hearing, 
     unless the Secretary determines that notice and hearing prior 
     to entry would be impracticable or contrary to the public 
     interest. A temporary order shall become effective upon 
     service upon the respondent and, unless set aside, limited, 
     or suspended by the Secretary or a court of competent 
     jurisdiction, shall remain effective and enforceable pending 
     the completion of the proceedings.
       (4) Review of temporary orders.--
       (A) Review by secretary.--At any time after the respondent 
     has been served with a temporary cease and desist order 
     pursuant to paragraph (3), the respondent may apply to the 
     Secretary to have the order set aside, limited, or suspended. 
     If the respondent has been served with a temporary cease and 
     desist order entered without a prior hearing before the 
     Secretary, the respondent may, within 10 days after the date 
     on which the order was served, request a hearing on such 
     application and the Secretary shall hold a hearing and render 
     a decision on such application at the earliest possible time.
       (B) Judicial review.--Within--
       (i) 10 days after the date the respondent was served with a 
     temporary cease and desist order entered with a prior hearing 
     before the Secretary; or
       (ii) 10 days after the Secretary renders a decision on an 
     application and hearing under paragraph (1), with respect to 
     any temporary cease and desist order entered without a prior 
     hearing before the Secretary,
     the respondent may apply to the United States district court 
     for the district in which the respondent resides or has its 
     principal place of business, or for the District of Columbia, 
     for an order setting aside, limiting, or suspending the 
     effectiveness or enforcement of the order, and the court 
     shall have jurisdiction to enter such an order. A respondent 
     served with a temporary cease and desist order entered 
     without a prior hearing before the Secretary may not apply to 
     the court except after hearing and decision by the Secretary 
     on the respondent's application under subparagraph (A).
       (C) No automatic stay of temporary order.--The commencement 
     of proceedings under subparagraph (B) shall not, unless 
     specifically ordered by the court, operate as a stay of the 
     Secretary's order.
       (5) Authority of the secretary to prohibit persons from 
     serving as loan originators.--In any cease and desist 
     proceeding under paragraph (1), the Secretary may issue an 
     order to prohibit, conditionally or unconditionally, and 
     permanently or for such period of time as the Secretary shall 
     determine, any person who has violated this title or 
     regulations thereunder, from acting as a loan originator if 
     the conduct of that person demonstrates unfitness to serve as 
     a loan originator.
       (d) Authority of the Secretary To Assess Money Penalties.--
       (1) In general.--The Secretary may impose a civil penalty 
     on a loan originator operating in any State which is subject 
     to a licensing system established by the Secretary under 
     section 1508, if the Secretary finds, on the record after 
     notice and opportunity for hearing, that such loan originator 
     has violated or failed to comply with any requirement of this 
     title or any regulation prescribed by the Secretary under 
     this title or order issued under subsection (c).
       (2) Maximum amount of penalty.--The maximum amount of 
     penalty for each act or omission described in paragraph (1) 
     shall be $25,000.

     SEC. 1515. STATE EXAMINATION AUTHORITY.

       In addition to any authority allowed under State law a 
     State licensing agency shall have the authority to conduct 
     investigations and examinations as follows:
       (1) For the purposes of investigating violations or 
     complaints arising under this title, or for the purposes of 
     examination, the State licensing agency may review, 
     investigate, or examine any loan originator licensed or 
     required to be licensed under this title, as often as 
     necessary in order to carry out the purposes of this title.
       (2) Each such loan originator shall make available upon 
     request to the State licensing agency the books and records 
     relating to the operations of such originator. The State 
     licensing agency may have access to such books and records 
     and interview the officers, principals, loan originators, 
     employees, independent contractors, agents, and customers of 
     the licensee concerning their business.
       (3) The authority of this section shall remain in effect, 
     whether such a loan originator acts or claims to act under 
     any licensing or registration law of such State, or claims to 
     act without such authority.
       (4) No person subject to investigation or examination under 
     this section may knowingly withhold, abstract, remove, 
     mutilate, destroy, or secrete any books, records, computer 
     records, or other information.

     SEC. 1516. REPORTS AND RECOMMENDATIONS TO CONGRESS.

       (a) Annual Reports.--Not later than 1 year after the date 
     of enactment of this title, and annually thereafter, the 
     Secretary shall submit a report to Congress on the 
     effectiveness of the provisions of this title, including 
     legislative recommendations, if any, for strengthening 
     consumer protections, enhancing examination standards, 
     streamlining communication between all stakeholders involved 
     in residential mortgage loan origination and processing, and 
     establishing performance based bonding requirements for 
     mortgage originators or institutions that employ such 
     brokers.
       (b) Legislative Recommendations.--Not later than 6 months 
     after the date of enactment of this title, the Secretary 
     shall make recommendations to Congress on legislative reforms

[[Page S6778]]

     to the Real Estate Settlement Procedures Act of 1974, that 
     the Secretary deems appropriate to promote more transparent 
     disclosures, allowing consumers to better shop and compare 
     mortgage loan terms and settlement costs.

     SEC. 1517. STUDY AND REPORTS ON DEFAULTS AND FORECLOSURES.

       (a) Study Required.--The Secretary shall conduct an 
     extensive study of the root causes of default and foreclosure 
     of home loans, using as much empirical data as is available.
       (b) Preliminary Report to Congress.--Not later than 6 
     months after the date of enactment of this title, the 
     Secretary shall submit to Congress a preliminary report 
     regarding the study required by this section.
       (c) Final Report to Congress.--Not later than 12 months 
     after the date of enactment of this title, the Secretary 
     shall submit to Congress a final report regarding the results 
     of the study required by this section, which shall include 
     any recommended legislation relating to the study, and 
     recommendations for best practices and for a process to 
     provide targeted assistance to populations with the highest 
     risk of potential default or foreclosure.

                        TITLE VI--MISCELLANEOUS

     SEC. 1601. STUDY AND REPORTS ON GUARANTEE FEES.

       (a) Ongoing Study of Fees.--The Director shall conduct an 
     ongoing study of fees charged by enterprises for guaranteeing 
     a mortgage.
       (b) Collection of Data.--The Director shall, by regulation 
     or order, establish procedures for the collection of data 
     from enterprises for purposes of this subsection, including 
     the format and the process for collection of such data.
       (c) Reports to Congress.--The Director shall annually 
     submit a report to Congress on the results of the study 
     conducted under subsection (a), based on the aggregated data 
     collected under subsection (a) for the subject year, 
     regarding the amount of such fees and the criteria used by 
     the enterprises to determine such fees.
       (d) Contents of Reports.--The reports required under 
     subsection (c) shall identify and analyze--
       (1) the factors considered in determining the amount of the 
     guarantee fees charged;
       (2) the total revenue earned by the enterprises from 
     guarantee fees;
       (3) the total costs incurred by the enterprises for 
     providing guarantees;
       (4) the average guarantee fee charged by the enterprises;
       (5) an analysis of any increase or decrease in guarantee 
     fees from the preceding year;
       (6) a breakdown of the revenue and costs associated with 
     providing guarantees, based on product type and risk 
     classifications; and
       (7) a breakdown of guarantee fees charged based on asset 
     size of the originator and the number of loans sold or 
     transferred to an enterprise.
       (e) Protection of Information.--Nothing in this section may 
     be construed to require or authorize the Director to publicly 
     disclose information that is confidential or proprietary.

     SEC. 1602. STUDY AND REPORT ON DEFAULT RISK EVALUATION.

       (a) Study.--The Director shall conduct a study of ways to 
     improve the overall default risk evaluation used with respect 
     to residential mortgage loans. Particular attention shall be 
     paid to the development and utilization of processes and 
     technologies that provide a means to standardize the 
     measurement of risk.
       (b) Report.--The Director shall submit a report on the 
     study conducted under this section to the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives, not later than 1 year after the date of 
     enactment of this Act.

     SEC. 1603. CONVERSION OF HUD CONTRACTS.

       (a) In General.--Notwithstanding any other provision of 
     law, the Secretary may, at the request of an owner of a 
     multifamily housing project that exceeds 5,000 units to which 
     a contract for project-based rental assistance under section 
     8 of the United States Housing Act of 1937 (``Act'') (42 
     U.S.C. 1437f) and a Rental Assistance Payment contract is 
     subject, convert such contracts to a contract for project-
     based rental assistance under section 8 of the Act.
       (b) Initial Renewal.--
       (1) At the request of an owner under subsection (a) made no 
     later than 90 days prior to a conversion, the Secretary may, 
     to the extent sufficient amounts are made available in 
     appropriation Acts and notwithstanding any other law, treat 
     the contemplated resulting contract as if such contract were 
     eligible for initial renewal under section 524(a) of the 
     MultiFamily Assisted Housing Reform and Affordability Act of 
     1997 (42 U.S.C. 1437f note) (``MAHRA'') (42 U.S.C. 1437f 
     note).
       (2) A request by an owner pursuant to paragraph (1) shall 
     be upon such terms and conditions as the Secretary may 
     require.
       (c) Resulting Contract.--The resulting contract shall--
       (1) be subject to section 524(a) of MAHRA (42 U.S.C. 1437f 
     note);
       (2) be considered for all purposes a contract that has been 
     renewed under section 524(a) of MAHRA (42 U.S.C. 1437f note) 
     for a term not to exceed 20 years;
       (3) be subsequently renewable at the request of an owner, 
     under any renewal option for which the project is eligible 
     under MAHRA (42 U.S.C. 1437f note);
       (4) contain provisions limiting distributions, as the 
     Secretary determines appropriate, not to exceed 10 percent of 
     the initial investment of the owner;
       (5) be subject to the availability of sufficient amounts in 
     appropriation Acts; and
       (6) be subject to such other terms and conditions as the 
     Secretary considers appropriate.
       (d) Income Targeting.--To the extent that assisted dwelling 
     units, subject to the resulting contract under subsection 
     (a), serve low-income families, as defined in section 3(b)(2) 
     of the Act (42 U.S.C. 1437a(b)(2)) the units shall be 
     considered to be in compliance with all income targeting 
     requirements under the Act (42 U.S.C. 1437 et seq).
       (e) Tenant Eligibility.--Notwithstanding any other 
     provision of law, each family residing in an assisted 
     dwelling unit on the date of conversion of a contract under 
     this section, subject to the resulting contract under 
     subsection (a), shall be considered to meet the applicable 
     requirements for income eligibility and occupancy.
       (f) Definitions.--As used in this section--
       (1) the term ``Secretary'' means the Secretary of Housing 
     and Urban Development;
       (2) the term ``conversion'' means the action under which a 
     contract for project-based rental assistance under section 8 
     of the Act and a Rental Assistance Payment contract become a 
     contract for project-based rental assistance under section 8 
     of the Act (42 U.S.C. 1437f) pursuant to subsection (a);
       (3) the term ``resulting contract'' means the new contract 
     after a conversion pursuant to subsection (a); and
       (4) the term ``assisted dwelling unit'' means a dwelling 
     unit in a multifamily housing project that exceeds 5,000 
     units that, on the date of conversion of a contract under 
     this section, is subject to a contract for project-based 
     rental assistance under section 8 of the Act (42 U.S.C. 
     1437f) or a Rental Assistance Payment contract.

     SEC. 1604. BRIDGE DEPOSITORY INSTITUTIONS.

       (a) In General.--Section 11 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821) is amended--
       (1) in subsection (d)(2)--
       (A) in subsection (F), by striking ``as receiver'' and all 
     that follows through clause (ii) and inserting the following: 
     ``as receiver, with respect to any insured depository 
     institution, organize a new depository institution under 
     subsection (m) or a bridge depository institution under 
     subsection (n).'';
       (B) in subparagraph (G), by striking ``new bank or a bridge 
     bank'' and inserting ``new depository institution or a bridge 
     depository institution'';
       (2) in subsection (e)(10)(C), by striking ``bridge bank'' 
     each place that term appears and inserting ``bridge 
     depository institution'';
       (3) in subsection (m)--
       (A) in the subsection heading, by striking ``Banks'' and 
     inserting ``Depository Institutions'';
       (B) by striking ``new bank'' each place that term appears 
     and inserting ``new depository institution'';
       (C) by striking ``such bank'' each place that term appears 
     and inserting ``such depository institution'';
       (D) in paragraph (1), by inserting ``or Federal savings 
     association'' after ``national bank'';
       (E) in paragraph (6), by striking ``only bank'' and 
     inserting ``only depository institution'';
       (F) in paragraph (9), by inserting ``or the Director of the 
     Office of Thrift Supervision, as appropriate'' after 
     ``Comptroller of the Currency'';
       (G) in paragraph (15), by striking ``, but in no event'' 
     and all that follows through ``located'';
       (H) in paragraph (16)--
       (i) by inserting ``or the Director of the Office of Thrift 
     Supervision, as appropriate,'' after ``Comptroller of the 
     Currency'' each place that term appears;
       (ii) by striking ``the bank'' each place that term appears 
     and inserting ``the depository institution'';
       (iii) by inserting ``or Federal savings association'' after 
     ``national bank'' each place that term appears;
       (iv) by inserting ``or Federal savings associations'' after 
     ``national banks''; and
       (v) by striking ``Such bank'' and inserting ``Such 
     depository institution''; and
       (I) in paragraph (18), by inserting ``or the Director of 
     the Office of Thrift Supervision, as appropriate,'' after 
     ``Comptroller of the Currency'' each place that term appears;
       (4) in subsection (n)--
       (A) in the subsection heading, by striking ``Banks'' and 
     inserting ``Depository Institutions'';
       (B) by striking ``bridge bank'' each place that term 
     appears and inserting ``bridge depository institution'';
       (C) by striking ``bridge banks'' each place that term 
     appears (other than in paragraph (1)(A) and inserting 
     ``bridge depository institutions'';
       (D) by striking ``bridge bank's'' each place that term 
     appears and inserting ``bridge depository institutions'';
       (E) by striking ``insured bank'' each place that term 
     appears and inserting ``insured depository institution'';
       (F) by striking ``insured banks'' each place that term 
     appears and inserting ``insured depository institutions'';
       (G) by striking ``such bank'' each place that term appears 
     (other than in paragraph (4)(J)) and inserting ``such 
     depository institution'';
       (H) by striking ``the bank'' each place that term appears 
     and inserting ``the depository institution'';
       (I) in paragraph (1)(A)--
       (i) by inserting ``, with respect to 1 or more insured 
     banks, or the Director of the Office of Thrift Supervision, 
     with respect to 1 or more insured savings associations,'' 
     after ``Comptroller of the Currency'';
       (ii) by inserting ``or Federal savings associations, as 
     appropriate,'' after ``national banks'';
       (iii) by inserting ``or Federal savings associations, as 
     applicable,'' after ``banking associations''; and
       (iv) by striking ``as bridge banks'' and inserting ``as 
     `bridge depository institutions' '';
       (J) in paragraph (1)(B)--
       (i) by striking ``bank or banks'' each place that term 
     appears and inserting ``depository institution or 
     institutions'';

[[Page S6779]]

       (ii) by striking ``of a bank''; and
       (iii) by striking ``of that bank'';
       (K) in paragraph (1)(E), by inserting before the period ``, 
     in the case of 1 or more insured banks, and as a Federal 
     savings association, in the case of 1 or more insured savings 
     associations'';
       (L) in paragraph (2)--
       (i) in subparagraph by inserting ``or Federal savings 
     association'' after ``national bank'' each place that term 
     appears; and
       (ii) by inserting ``or the Director of the Office of Thrift 
     Supervision'' after ``Comptroller of the Currency'';
       (M) in paragraph (4)--
       (i) in subparagraph (C), by striking ``under section 5138 
     of the Revised Statutes or any other'' and inserting ``under 
     any'';
       (ii) by inserting ``and the Director of the Office of 
     Thrift Supervision, as appropriate,'' after ``Comptroller of 
     the Currency'' each place that term appears;
       (iii) in subparagraph (D), by striking ``bank's'' and 
     inserting ``depository institution's''; and
       (iv) in subparagraph (F), by inserting before the period 
     ``or Federal home loan bank'';
       (N) in paragraph (8)--
       (i) in subparagraph (A), by striking ``the banks'' and 
     inserting ``the depository institutions'';
       (ii) in subparagraph (B), by striking ``bank's'' and 
     inserting ``depository institution's'';
       (O) in paragraph (11), by inserting ``or a Federal savings 
     association, as the case may be,'' after ``national bank'' 
     each place that term appears;
       (P) in paragraph (12)--
       (i) by inserting ``or the Director of the Office of Thrift 
     Supervision, as appropriate,'' after ``Comptroller of the 
     Currency'' each place that term appears; and
       (ii) by inserting ``or Federal savings associations, as 
     appropriate'' after ``national banks''; and
       (Q) in paragraph (13), by striking ``single bank'' and 
     inserting ``single depository institution''.
       (b) Other Conforming Amendments.--
       (1) Federal deposit insurance act.--The Federal Deposit 
     Insurance Act (12 U.S.C. 1811 et seq.) is amended--
       (A) in section 3 (12 U.S.C. 1813), by striking subsection 
     (i) and inserting the following:
       ``(i) New Depository Institution and Bridge Depository 
     Institution Defined.--
       ``(1) New depository institution.--The term `new depository 
     institution' means a new national bank or Federal savings 
     association, other than a bridge depository institution, 
     organized by the Corporation in accordance with section 
     11(m).
       ``(2) Bridge depository institution.--The term `bridge 
     depository institution' means a new national bank or Federal 
     savings association organized by the Corporation in 
     accordance with section 11(n).'';
       (B) in section 10(d)(5)(B) (12 U.S.C. 1820(d)(5)(B)), by 
     striking ``bridge bank'' and inserting ``bridge depository 
     institution'';
       (C) in section 12 (12 U.S.C. 1822), by striking ``new 
     bank'' each place that term appears and inserting ``new 
     depository institution'';and
       (D) in section 38(j)(2) (12 U.S.C. 1831o(j)(2)), by 
     striking ``bridge bank'' and inserting ``bridge depository 
     institution''.
       (2) Federal credit union act.--Section 207(c)(10)(C)(i) of 
     the Federal Credit Union Act (12 U.S.C. 1787(c)(10)(C)(i)) is 
     amended by striking ``bridge bank'' and inserting ``bridge 
     depository institution''.
       (3) Title 11.--Section 783 of title 11, United States Code, 
     is amended by striking ``bridge bank'' and inserting ``bridge 
     depository institution''.
       (4) Title 26.--Section 414(l)(2)(G) of the Internal Revenue 
     Code of 1986, is amended by striking ``bridge bank'' and 
     inserting ``bridge depository institution''.

     SEC. 1605. SENSE OF THE SENATE.

       It is the sense of the Senate that in implementing or 
     carrying out any provision of this Act, or any amendment made 
     by this Act, the Senate supports a policy of noninterference 
     regarding local government requirements that the holder of a 
     foreclosed property maintain that property.

                   DIVISION B--FORECLOSURE PREVENTION

     SECTION 2001. SHORT TITLE.

       This division may be cited as the ``Foreclosure Prevention 
     Act of 2008''.

     SEC. 2002. EMERGENCY DESIGNATION.

       For purposes of Senate enforcement, all provisions of this 
     division are designated as emergency requirements and 
     necessary to meet emergency needs pursuant to section 204 of 
     S. Con. Res. 21 (110th Congress), the concurrent resolution 
     on the budget for fiscal year 2008.

                 TITLE I--FHA MODERNIZATION ACT OF 2008

     SEC. 2101. SHORT TITLE.

       This title may be cited as the ``FHA Modernization Act of 
     2008''.

              Subtitle A--Building American Homeownership

     SEC. 2111. SHORT TITLE.

       This subtitle may be cited as the ``Building American 
     Homeownership Act of 2008''.

     SEC. 2112. MAXIMUM PRINCIPAL LOAN OBLIGATION.

       (a) In General.--Paragraph (2) of section 203(b)(2) of the 
     National Housing Act (12 U.S.C. 1709(b)(2)) is amended--
       (1) by amending subparagraphs (A) and (B) to read as 
     follows:
       ``(A) not to exceed the lesser of--
       ``(i) in the case of a 1-family residence, 110 percent of 
     the median 1-family house price in the area, as determined by 
     the Secretary; and 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 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 section 305(a)(2) of the Federal Home Loan 
     Mortgage Corporation Act for a residence of applicable size,
     except that the dollar amount limitation in effect under this 
     subparagraph for any size residence for any area may not be 
     less than the greater of: (I) the dollar amount limitation in 
     effect under this section for the area on October 21, 1998; 
     or (II) 65 percent of the dollar amount limitation determined 
     under such section 305(a)(2) for a residence of the 
     applicable size; and
       ``(B) not to exceed 100 percent of the appraised value of 
     the property.''; and
       (2) in the matter following subparagraph (B), by striking 
     the second sentence (relating to a definition of ``average 
     closing cost'') and all that follows through ``section 
     3103A(d) of title 38, United States Code.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect upon the expiration of the date described 
     in section 202(a) of the Economic Stimulus Act of 2008 
     (Public Law 110-185).

     SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF 
                   SELLER-FUNDED DOWN PAYMENT ASSISTANCE.

       Paragraph (9) of section 203(b) of the National Housing Act 
     (12 U.S.C. 1709(b)(9)) is amended to read as follows:
       ``(9) Cash investment requirement.--
       ``(A) In general.--A mortgage insured under this section 
     shall be executed by a mortgagor who shall have paid, in 
     cash, on account of the property an amount equal to not less 
     than 3.5 percent of the appraised value of the property or 
     such larger amount as the Secretary may determine.
       ``(B) Family members.--For purposes of this paragraph, the 
     Secretary shall consider as cash or its equivalent any 
     amounts borrowed from a family member (as such term is 
     defined in section 201), subject only to the requirements 
     that, in any case in which the repayment of such borrowed 
     amounts is secured by a lien against the property, that--
       ``(i) such lien shall be subordinate to the mortgage; and
       ``(ii) the sum of the principal obligation of the mortgage 
     and the obligation secured by such lien may not exceed 100 
     percent of the appraised value of the property.
       ``(C) Prohibited sources.--In no case shall the funds 
     required by subparagraph (A) consist, in whole or in part, of 
     funds provided by any of the following parties before, 
     during, or after closing of the property sale:
       ``(i) The seller or any other person or entity that 
     financially benefits from the transaction.
       ``(ii) Any third party or entity that is reimbursed, 
     directly or indirectly, by any of the parties described in 
     clause (i).''.

     SEC. 2114. MORTGAGE INSURANCE PREMIUMS.

       Section 203(c)(2) of the National Housing Act (12 U.S.C. 
     1709(c)(2)) is amended--
       (1) in the matter preceding subparagraph (A), by striking 
     ``or of the General Insurance Fund'' and all that follows 
     through ``section 234(c),,''; and
       (2) in subparagraph (A)--
       (A) by striking ``2.25 percent'' and inserting ``3 
     percent''; and
       (B) by striking ``2.0 percent'' and inserting ``2.75 
     percent''.

     SEC. 2115. REHABILITATION LOANS.

       Subsection (k) of section 203 of the National Housing Act 
     (12 U.S.C. 1709(k)) is amended--
       (1) in paragraph (1), by striking ``on'' and all that 
     follows through ``1978''; and
       (2) in paragraph (5)--
       (A) by striking ``General Insurance Fund'' the first place 
     it appears and inserting ``Mutual Mortgage Insurance Fund''; 
     and
       (B) in the second sentence, by striking the comma and all 
     that follows through ``General Insurance Fund''.

     SEC. 2116. DISCRETIONARY ACTION.

       The National Housing Act is amended--
       (1) in subsection (e) of section 202 (12 U.S.C. 1708(e))--
       (A) in paragraph (3)(B), by striking ``section 202(e) of 
     the National Housing Act'' and inserting ``this subsection''; 
     and
       (B) by redesignating such subsection as subsection (f);
       (2) by striking paragraph (4) of section 203(s) (12 U.S.C. 
     1709(s)(4)) and inserting the following new paragraph:
       ``(4) the Secretary of Agriculture;''; and
       (3) by transferring subsection (s) of section 203 (as 
     amended by paragraph (2) of this section) to section 202, 
     inserting such subsection after subsection (d) of section 
     202, and redesignating such subsection as subsection (e).

     SEC. 2117. INSURANCE OF CONDOMINIUMS.

       (a) In General.--Section 234 of the National Housing Act 
     (12 U.S.C. 1715y) is amended--
       (1) in subsection (c), in the first sentence--
       (A) by striking ``and'' before ``(2)''; and
       (B) by inserting before the period at the end the 
     following: ``, and (3) the project has a blanket mortgage 
     insured by the Secretary under subsection (d)''; and
       (2) in subsection (g), by striking ``, except that'' and 
     all that follows and inserting a period.
       (b) Definition of Mortgage.--Section 201(a) of the National 
     Housing Act (12 U.S.C. 1707(a)) is amended--
       (1) before ``a first mortgage'' insert ``(A)'';
       (2) by striking ``or on a leasehold (1)'' and inserting 
     ``(B) a first mortgage on a leasehold on real estate (i)'';

[[Page S6780]]

       (3) by striking ``or (2)'' and inserting ``, or (ii)''; and
       (4) by inserting before the semicolon the following: ``, or 
     (C) a first mortgage given to secure the unpaid purchase 
     price of a fee interest in, or long-term leasehold interest 
     in, real estate consisting of a one-family unit in a 
     multifamily project, including a project in which the 
     dwelling units are attached, or are manufactured housing 
     units, semi-detached, or detached, and an undivided interest 
     in the common areas and facilities which serve the project''.
       (c) Definition of Real Estate.--Section 201 of the National 
     Housing Act (12 U.S.C. 1707) is amended by adding at the end 
     the following new subsection:
       ``(g) The term `real estate' means land and all natural 
     resources and structures permanently affixed to the land, 
     including residential buildings and stationary manufactured 
     housing. The Secretary may not require, for treatment of any 
     land or other property as real estate for purposes of this 
     title, that such land or property be treated as real estate 
     for purposes of State taxation.''.

     SEC. 2118. MUTUAL MORTGAGE INSURANCE FUND.

       (a) In General.--Subsection (a) of section 202 of the 
     National Housing Act (12 U.S.C. 1708(a)) is amended to read 
     as follows:
       ``(a) Mutual Mortgage Insurance Fund.--
       ``(1) Establishment.--Subject to the provisions of the 
     Federal Credit Reform Act of 1990, there is hereby created a 
     Mutual Mortgage Insurance Fund (in this title referred to as 
     the `Fund'), which shall be used by the Secretary to carry 
     out the provisions of this title with respect to mortgages 
     insured under section 203. The Secretary may enter into 
     commitments to guarantee, and may guarantee, such insured 
     mortgages.
       ``(2) Limit on loan guarantees.--The authority of the 
     Secretary to enter into commitments to guarantee such insured 
     mortgages shall be effective for any fiscal year only to the 
     extent that the aggregate original principal loan amount 
     under such mortgages, any part of which is guaranteed, does 
     not exceed the amount specified in appropriations Acts for 
     such fiscal year.
       ``(3) Fiduciary responsibility.--The Secretary has a 
     responsibility to ensure that the Mutual Mortgage Insurance 
     Fund remains financially sound.
       ``(4) Annual independent actuarial study.--The Secretary 
     shall provide for an independent actuarial study of the Fund 
     to be conducted annually, which shall analyze the financial 
     position of the Fund. The Secretary shall submit a report 
     annually to the Congress describing the results of such study 
     and assessing the financial status of the Fund. The report 
     shall recommend adjustments to underwriting standards, 
     program participation, or premiums, if necessary, to ensure 
     that the Fund remains financially sound. The report shall 
     also include an evaluation of the quality control procedures 
     and accuracy of information utilized in the process of 
     underwriting loans guaranteed by the Fund. Such evaluation 
     shall include a review of the risk characteristics of loans 
     based not only on borrower information and performance, but 
     on risks associated with loans originated or funded by 
     various entities or financial institutions.
       ``(5) Quarterly reports.--During each fiscal year, the 
     Secretary shall submit a report to the Congress for each 
     calendar quarter, which shall specify for mortgages that are 
     obligations of the Fund--
       ``(A) the cumulative volume of loan guarantee commitments 
     that have been made during such fiscal year through the end 
     of the quarter for which the report is submitted;
       ``(B) the types of loans insured, categorized by risk;
       ``(C) any significant changes between actual and projected 
     claim and prepayment activity;
       ``(D) projected versus actual loss rates; and
       ``(E) updated projections of the annual subsidy rates to 
     ensure that increases in risk to the Fund are identified and 
     mitigated by adjustments to underwriting standards, program 
     participation, or premiums, and the financial soundness of 
     the Fund is maintained.

     The first quarterly report under this paragraph shall be 
     submitted on the last day of the first quarter of fiscal year 
     2008, or on the last day of the first full calendar quarter 
     following the enactment of the Building American 
     Homeownership Act of 2008, whichever is later.
       ``(6) Adjustment of premiums.--If, pursuant to the 
     independent actuarial study of the Fund required under 
     paragraph (4), the Secretary determines that the Fund is not 
     meeting the operational goals established under paragraph (7) 
     or there is a substantial probability that the Fund will not 
     maintain its established target subsidy rate, the Secretary 
     may either make programmatic adjustments under this title as 
     necessary to reduce the risk to the Fund, or make appropriate 
     premium adjustments.
       ``(7) Operational goals.--The operational goals for the 
     Fund are--
       ``(A) to minimize the default risk to the Fund and to 
     homeowners by among other actions instituting fraud 
     prevention quality control screening not later than 18 months 
     after the date of enactment of the Building American 
     Homeownership Act of 2008; and
       ``(B) to meet the housing needs of the borrowers that the 
     single family mortgage insurance program under this title is 
     designed to serve.''.
       (b) Obligations of Fund.--The National Housing Act is 
     amended as follows:
       (1) Homeownership voucher program mortgages.--In section 
     203(v) (12 U.S.C. 1709(v))--
       (A) by striking ``Notwithstanding section 202 of this 
     title, the'' and inserting ``The''; and
       (B) by striking ``General Insurance Fund'' the first place 
     such term appears and all that follows through the end of the 
     subsection and inserting ``Mutual Mortgage Insurance Fund.''.
       (2) Home equity conversion mortgages.--Section 255(i)(2)(A) 
     of the National Housing Act (12 U.S.C. 1715z-20(i)(2)(A)) is 
     amended by striking ``General Insurance Fund'' and inserting 
     ``Mutual Mortgage Insurance Fund''.
       (c) Conforming Amendments.--The National Housing Act is 
     amended--
       (1) in section 205 (12 U.S.C. 1711), by striking 
     subsections (g) and (h); and
       (2) in section 519(e) (12 U.S.C. 1735c(e)), by striking 
     ``203(b)'' and all that follows through ``203(i)'' and 
     inserting ``203, except as determined by the Secretary''.

     SEC. 2119. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.

       (a) Hawaiian Home Lands.--Section 247(c) of the National 
     Housing Act (12 U.S.C. 1715z-12(c)) is amended--
       (1) by striking ``General Insurance Fund established in 
     section 519'' and inserting ``Mutual Mortgage Insurance 
     Fund''; and
       (2) in the second sentence, by striking ``(1) all 
     references'' and all that follows through ``and (2)''.
       (b) Indian Reservations.--Section 248(f) of the National 
     Housing Act (12 U.S.C. 1715z-13(f)) is amended--
       (1) by striking ``General Insurance Fund'' the first place 
     it appears through ``519'' and inserting ``Mutual Mortgage 
     Insurance Fund''; and
       (2) in the second sentence, by striking ``(1) all 
     references'' and all that follows through ``and (2)''.

     SEC. 2120. CONFORMING AND TECHNICAL AMENDMENTS.

       (a) Repeals.--The following provisions of the National 
     Housing Act are repealed:
       (1) Subsection (i) of section 203 (12 U.S.C. 1709(i)).
       (2) Subsection (o) of section 203 (12 U.S.C. 1709(o)).
       (3) Subsection (p) of section 203 (12 U.S.C. 1709(p)).
       (4) Subsection (q) of section 203 (12 U.S.C. 1709(q)).
       (5) Section 222 (12 U.S.C. 1715m).
       (6) Section 237 (12 U.S.C. 1715z-2).
       (7) Section 245 (12 U.S.C. 1715z-10).
       (b) Definition of Area.--Section 203(u)(2)(A) of the 
     National Housing Act (12 U.S.C. 1709(u)(2)(A)) is amended by 
     striking ``shall'' and all that follows and inserting ``means 
     a metropolitan statistical area as established by the Office 
     of Management and Budget;''.
       (c) Definition of State.--Section 201(d) of the National 
     Housing Act (12 U.S.C. 1707(d)) is amended by striking ``the 
     Trust Territory of the Pacific Islands'' and inserting ``the 
     Commonwealth of the Northern Mariana Islands''.

     SEC. 2121. INSURANCE OF MORTGAGES.

       Subsection (n)(2) of section 203 of the National Housing 
     Act (12 U.S.C. 1709(n)(2)) is amended--
       (1) in subparagraph (A), by inserting ``or subordinate 
     mortgage or'' before ``lien given''; and
       (2) in subparagraph (C), by inserting ``or subordinate 
     mortgage or'' before ``lien''.

     SEC. 2122. HOME EQUITY CONVERSION MORTGAGES.

       (a) In General.--Section 255 of the National Housing Act 
     (12 U.S.C. 1715z-20) is amended--
       (1) in subsection (b)(2), insert `` `real estate,' '' after 
     `` `mortgagor','';
       (2) by amending subsection (d)(1) to read as follows:
       ``(1) have been originated by a mortgagee approved by the 
     Secretary;'';
       (3) by amending subsection (d)(2)(B) to read as follows:
       ``(B) has received adequate counseling, as provided in 
     subsection (f), by an independent third party that is not, 
     either directly or indirectly, associated with or compensated 
     by a party involved in--
       ``(i) originating or servicing the mortgage;
       ``(ii) funding the loan underlying the mortgage; or
       ``(iii) the sale of annuities, investments, long-term care 
     insurance, or any other type of financial or insurance 
     product;'';
       (4) in subsection (f)--
       (A) by striking ``(f) Information Services for 
     Mortgagors.--'' and inserting ``(f) Counseling Services and 
     Information for Mortgagors.--''; and
       (B) by amending the matter preceding paragraph (1) to read 
     as follows: ``The Secretary shall provide or cause to be 
     provided adequate counseling for the mortgagor, as described 
     in subsection (d)(2)(B). Such counseling shall be provided by 
     counselors that meet qualification standards and follow 
     uniform counseling protocols. The qualification standards and 
     counseling protocols shall be established by the Secretary 
     within 12 months of the date of enactment of the Building 
     American Homeownership Act of 2008. The protocols shall 
     require a qualified counselor to discuss with each mortgagor 
     information which shall include--''
       (5) in subsection (g), by striking ``established under 
     section 203(b)(2)'' and all that follows through ``located'' 
     and inserting ``limitation established under section 
     305(a)(2) of the Federal Home Loan Mortgage Corporation Act 
     for a 1-family residence'';
       (6) by striking subsection (l);
       (7) by redesignating subsection (m) as subsection (l);
       (8) by amending subsection (l), as so redesignated, to read 
     as follows:
       ``(l) Funding for Counseling.--The Secretary may use a 
     portion of the mortgage insurance premiums collected under 
     the program under this section to adequately fund the 
     counseling and disclosure activities required under 
     subsection (f), including counseling for those homeowners who 
     elect not to take out a home equity conversion mortgage, 
     provided that the use of such funds is based upon accepted 
     actuarial principles.''; and

[[Page S6781]]

       (9) by adding at the end the following new subsection:
       ``(m) Authority To Insure Home Purchase Mortgage.--
       ``(1) In general.--Notwithstanding any other provision of 
     this section, the Secretary may insure, upon application by a 
     mortgagee, a home equity conversion mortgage upon such terms 
     and conditions as the Secretary may prescribe, when the home 
     equity conversion mortgage will be used to purchase a 1- to 
     4-family dwelling unit, one unit of which the mortgagor will 
     occupy as a primary residence, and to provide for any future 
     payments to the mortgagor, based on available equity, as 
     authorized under subsection (d)(9).
       ``(2) Limitation on principal obligation.--A home equity 
     conversion mortgage insured pursuant to paragraph (1) shall 
     involve a principal obligation that does not exceed the 
     dollar amount limitation determined under section 305(a)(2) 
     of the Federal Home Loan Mortgage Corporation Act for a 1-
     family residence.
       ``(n) Requirements on Mortgage Originators.--
       ``(1) In general.--The mortgagee and any other party that 
     participates in the origination of a mortgage to be insured 
     under this section shall--
       ``(A) not participate in, be associated with, or employ any 
     party that participates in or is associated with any other 
     financial or insurance activity; or
       ``(B) demonstrate to the Secretary that the mortgagee or 
     other party maintains, or will maintain, firewalls and other 
     safeguards designed to ensure that--
       ``(i) individuals participating in the origination of the 
     mortgage shall have no involvement with, or incentive to 
     provide the mortgagor with, any other financial or insurance 
     product; and
       ``(ii) the mortgagor shall not be required, directly or 
     indirectly, as a condition of obtaining a mortgage under this 
     section, to purchase any other financial or insurance 
     product.
       ``(2) Approval of other parties.--All parties that 
     participate in the origination of a mortgage to be insured 
     under this section shall be approved by the Secretary.
       ``(o) Prohibition Against Requirements To Purchase 
     Additional Products.--The mortgagee or any other party shall 
     not be required by the mortgagor or any other party to 
     purchase an insurance, annuity, or other additional product 
     as a requirement or condition of eligibility for insurance 
     under subsection (c).
       ``(p) Study To Determine Consumer Protections and 
     Underwriting Standards.--The Secretary shall conduct a study 
     to examine and determine appropriate consumer protections and 
     underwriting standards to ensure that the purchase of 
     products referred to in subsection (o) is appropriate for the 
     consumer. In conducting such study, the Secretary shall 
     consult with consumer advocates (including recognized experts 
     in consumer protection), industry representatives, 
     representatives of counseling organizations, and other 
     interested parties.''.
       (b) Mortgages for Cooperatives.--Subsection (b) of section 
     255 of the National Housing Act (12 U.S.C. 1715z-20(b)) is 
     amended--
       (1) in paragraph (4)--
       (A) by inserting ``a first or subordinate mortgage or 
     lien'' before ``on all stock'';
       (B) by inserting ``unit'' after ``dwelling''; and
       (C) by inserting ``a first mortgage or first lien'' before 
     ``on a leasehold''; and
       (2) in paragraph (5), by inserting ``a first or subordinate 
     lien on'' before ``all stock''.
       (c) Limitation on Origination Fees.--Section 255 of the 
     National Housing Act (12 U.S.C. 1715z-20), as amended by the 
     preceding provisions of this section, is further amended by 
     adding at the end the following new subsection:
       ``(r) Limitation on Origination Fees.--The Secretary shall 
     establish limits on the origination fee that may be charged 
     to a mortgagor under a mortgage insured under this section, 
     which limitations shall--
       ``(1) equal 1.5 percent of the maximum claim amount of the 
     mortgage unless adjusted thereafter on the basis of--
       ``(A) the costs to the mortgagor; and
       ``(B) the impact of such fees on the reverse mortgage 
     market;
       ``(2) be subject to a minimum allowable amount;
       ``(3) provide that the origination fee may be fully 
     financed with the mortgage;
       ``(4) include any fees paid to correspondent mortgagees 
     approved by the Secretary; and
       ``(5) have the same effective date as subsection (m)(2) 
     regarding the limitation on principal obligation.''.
       (d) Study Regarding Program Costs and Credit 
     Availability.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study regarding the costs and 
     availability of credit under the home equity conversion 
     mortgages for elderly homeowners program under section 255 of 
     the National Housing Act (12 U.S.C. 1715z-20) (in this 
     subsection referred to as the ``program'').
       (2) Purpose.--The purpose of the study required under 
     paragraph (1) is to help Congress analyze and determine the 
     effects of limiting the amounts of the costs or fees under 
     the program from the amounts charged under the program as of 
     the date of the enactment of this title.
       (3) Content of report.--The study required under paragraph 
     (1) should focus on--
       (A) the cost to mortgagors of participating in the program;
       (B) the financial soundness of the program;
       (C) the availability of credit under the program; and
       (D) the costs to elderly homeowners participating in the 
     program, including--
       (i) mortgage insurance premiums charged under the program;
       (ii) up-front fees charged under the program; and
       (iii) margin rates charged under the program.
       (4) Timing of report.--Not later than 12 months after the 
     date of the enactment of this title, 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 setting 
     forth the results and conclusions of the study required under 
     paragraph (1).

     SEC. 2123. ENERGY EFFICIENT MORTGAGES PROGRAM.

       Section 106(a)(2) of the Energy Policy Act of 1992 (42 
     U.S.C. 12712 note) is amended--
       (1) by amending subparagraph (C) to read as follows:
       ``(C) Costs of improvements.--The cost of cost-effective 
     energy efficiency improvements shall not exceed the greater 
     of--
       ``(i) 5 percent of the property value (not to exceed 5 
     percent of the limit established under section 203(b)(2)(A)) 
     of the National Housing Act (12 U.S.C. 1709(b)(2)(A); or
       ``(ii) 2 percent of the limit established under section 
     203(b)(2)(B) of such Act.''; and
       (2) by adding at the end the following:
       ``(D) Limitation.--In any fiscal year, the aggregate number 
     of mortgages insured pursuant to this section may not exceed 
     5 percent of the aggregate number of mortgages for 1- to 4-
     family residences insured by the Secretary of Housing and 
     Urban Development under title II of the National Housing Act 
     (12 U.S.C. 1707 et seq.) during the preceding fiscal year.''.

     SEC. 2124. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS 
                   WITHOUT SUFFICIENT CREDIT HISTORY.

       (a) Establishment.--Title II of the National Housing Act 
     (12 U.S.C. 1707 et seq.) is amended by adding at the end the 
     following new section:

     ``SEC. 257. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS 
                   WITHOUT SUFFICIENT CREDIT HISTORY.

       ``(a) Establishment.--The Secretary shall carry out a pilot 
     program to establish, and make available to mortgagees, an 
     automated process for providing alternative credit rating 
     information for mortgagors and prospective mortgagors under 
     mortgages on 1- to 4-family residences to be insured under 
     this title who have insufficient credit histories for 
     determining their creditworthiness. Such alternative credit 
     rating information may include rent, utilities, and insurance 
     payment histories, and such other information as the 
     Secretary considers appropriate.
       ``(b) Scope.--The Secretary may carry out the pilot program 
     under this section on a limited basis or scope, and may 
     consider limiting the program to first-time homebuyers.
       ``(c) Limitation.--In any fiscal year, the aggregate number 
     of mortgages insured pursuant to the automated process 
     established under this section may not exceed 5 percent of 
     the aggregate number of mortgages for 1- to 4-family 
     residences insured by the Secretary under this title during 
     the preceding fiscal year.
       ``(d) Sunset.--After the expiration of the 5-year period 
     beginning on the date of the enactment of the Building 
     American Homeownership Act of 2008, the Secretary may not 
     enter into any new commitment to insure any mortgage, or 
     newly insure any mortgage, pursuant to the automated process 
     established under this section.''.
       (b) GAO Report.--Not later than the expiration of the two-
     year period beginning on the date of the enactment of this 
     subtitle, the Comptroller General of the United States shall 
     submit to the Congress a report identifying the number of 
     additional mortgagors served using the automated process 
     established pursuant to section 257 of the National Housing 
     Act (as added by the amendment made by subsection (a) of this 
     section) and the impact of such process and the insurance of 
     mortgages pursuant to such process on the safety and 
     soundness of the insurance funds under the National Housing 
     Act of which such mortgages are obligations.

     SEC. 2125. HOMEOWNERSHIP PRESERVATION.

       The Secretary of Housing and Urban Development and the 
     Commissioner of the Federal Housing Administration, in 
     consultation with industry, the Neighborhood Reinvestment 
     Corporation, and other entities involved in foreclosure 
     prevention activities, shall--
       (1) develop and implement a plan to improve the Federal 
     Housing Administration's loss mitigation process; and
       (2) report such plan to the Committee on Banking, Housing, 
     and Urban Affairs of the Senate and the Committee on 
     Financial Services of the House of Representatives.

     SEC. 2126. USE OF FHA SAVINGS FOR IMPROVEMENTS IN FHA 
                   TECHNOLOGIES, PROCEDURES, PROCESSES, PROGRAM 
                   PERFORMANCE, STAFFING, AND SALARIES.

       (a) Authorization of Appropriations.--There is authorized 
     to be appropriated for each of fiscal years 2009 through 
     2013, $25,000,000, from negative credit subsidy for the 
     mortgage insurance programs under title II of the National 
     Housing Act, to the Secretary of Housing and Urban 
     Development for increasing funding for the purpose of 
     improving technology, processes, program performance, 
     eliminating fraud, and for providing appropriate staffing in 
     connection with the mortgage insurance programs under title 
     II of the National Housing Act.
       (b) Certification.--The authorization under subsection (a) 
     shall not be effective for a fiscal year unless the Secretary 
     of Housing and Urban Development has, by rulemaking in 
     accordance with section 553 of title 5, United States Code 
     (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of 
     such section), made a determination that--
       (1) premiums being, or to be, charged during such fiscal 
     year for mortgage insurance under title II of the National 
     Housing Act are established at the minimum amount sufficient 
     to--
       (A) comply with the requirements of section 205(f) of such 
     Act (relating to required capital

[[Page S6782]]

     ratio for the Mutual Mortgage Insurance Fund); and
       (B) ensure the safety and soundness of the other mortgage 
     insurance funds under such Act; and
       (2) any negative credit subsidy for such fiscal year 
     resulting from such mortgage insurance programs adequately 
     ensures the efficient delivery and availability of such 
     programs.
       (c) Study and Report.--The Secretary of Housing and Urban 
     Development shall conduct a study to obtain recommendations 
     from participants in the private residential (both single 
     family and multifamily) mortgage lending business and the 
     secondary market for such mortgages on how best to update and 
     upgrade processes and technologies for the mortgage insurance 
     programs under title II of the National Housing Act so that 
     the procedures for originating, insuring, and servicing of 
     such mortgages conform with those customarily used by 
     secondary market purchasers of residential mortgage loans. 
     Not later than the expiration of the 12-month period 
     beginning on the date of the enactment of this title, the 
     Secretary shall submit a report to the Congress describing 
     the progress made and to be made toward updating and 
     upgrading such processes and technology, and providing 
     appropriate staffing for such mortgage insurance programs.

     SEC. 2127. POST-PURCHASE HOUSING COUNSELING ELIGIBILITY 
                   IMPROVEMENTS.

       Section 106(c)(4) of the Housing and Urban Development Act 
     of 1968 (12 U.S.C. 1701x(c)(4)) is amended:
       (1) in subparagraph (C)--
       (A) in clause (i), by striking ``; or'' and inserting a 
     semicolon;
       (B) in clause (ii), by striking the period at the end and 
     inserting a semicolon; and
       (C) by adding at the end the following:
       ``(iii) a significant reduction in the income of the 
     household due to divorce or death; or
       ``(iv) a significant increase in basic expenses of the 
     homeowner or an immediate family member of the homeowner 
     (including the spouse, child, or parent for whom the 
     homeowner provides substantial care or financial assistance) 
     due to--

       ``(I) an unexpected or significant increase in medical 
     expenses;
       ``(II) a divorce;
       ``(III) unexpected and significant damage to the property, 
     the repair of which will not be covered by private or public 
     insurance; or
       ``(IV) a large property-tax increase; or'';

       (2) by striking the matter that follows subparagraph (C); 
     and
       (3) by adding at the end the following:
       ``(D) the Secretary of Housing and Urban Development 
     determines that the annual income of the homeowner is no 
     greater than the annual income established by the Secretary 
     as being of low- or moderate-income.''.

     SEC. 2128. PRE-PURCHASE HOMEOWNERSHIP COUNSELING 
                   DEMONSTRATION.

       (a) Establishment of Program.--For the period beginning on 
     the date of enactment of this title and ending on the date 
     that is 3 years after such date of enactment, the Secretary 
     of Housing and Urban Development shall establish and conduct 
     a demonstration program to test the effectiveness of 
     alternative forms of pre-purchase homeownership counseling 
     for eligible homebuyers.
       (b) Forms of Counseling.--The Secretary of Housing and 
     Urban Development shall provide to eligible homebuyers pre-
     purchase homeownership counseling under this section in the 
     form of--
       (1) telephone counseling;
       (2) individualized in-person counseling;
       (3) web-based counseling;
       (4) counseling classes; or
       (5) any other form or type of counseling that the Secretary 
     may, in his discretion, determine appropriate.
       (c) Size of Program.--The Secretary shall make available 
     the pre-purchase homeownership counseling described in 
     subsection (b) to not more than 3,000 eligible homebuyers in 
     any given year.
       (d) Incentive To Participate.--The Secretary of Housing and 
     Urban Development may provide incentives to eligible 
     homebuyers to participate in the demonstration program 
     established under subsection (a). Such incentives may include 
     the reduction of any insurance premium charges owed by the 
     eligible homebuyer to the Secretary.
       (e) Eligible Homebuyer Defined.--For purposes of this 
     section an ``eligible homebuyer'' means a first-time 
     homebuyer who has been approved for a home loan with a loan-
     to-value ratio between 97 percent and 98.5 percent.
       (f) Report to Congress.--The Secretary of Housing and Urban 
     Development shall report to the Committee on Banking, 
     Housing, and Urban Affairs of the Senate and the Committee on 
     Financial Services of the House of Representative--
       (1) on an annual basis, on the progress and results of the 
     demonstration program established under subsection (a); and
       (2) for the period beginning on the date of enactment of 
     this title and ending on the date that is 5 years after such 
     date of enactment, on the payment history and delinquency 
     rates of eligible homebuyers who participated in the 
     demonstration program.

     SEC. 2129. FRAUD PREVENTION.

       Section 1014 of title 18, United States Code, is amended in 
     the first sentence--
       (1) by inserting ``the Federal Housing Administration,'' 
     before ``the Farm Credit Administration''; and
       (2) by striking ``commitment, or loan'' and inserting 
     ``commitment, loan, or insurance agreement or application for 
     insurance or a guarantee''.

     SEC. 2130. LIMITATION ON MORTGAGE INSURANCE PREMIUM 
                   INCREASES.

       (a) In General.--Notwithstanding any other provision of 
     law, including any provision of this title and any amendment 
     made by this title--
       (1) for the period beginning on the date of the enactment 
     of this title and ending on October 1, 2009, the premiums 
     charged for mortgage insurance under multifamily housing 
     programs under the National Housing Act may not be increased 
     above the premium amounts in effect under such program on 
     October 1, 2006, unless the Secretary of Housing and Urban 
     Development determines that, absent such increase, insurance 
     of additional mortgages under such program would, under the 
     Federal Credit Reform Act of 1990, require the appropriation 
     of new budget authority to cover the costs (as such term is 
     defined in section 502 of the Federal Credit Reform Act of 
     1990 (2 U.S.C. 661a) of such insurance; and
       (2) a premium increase pursuant to paragraph (1) may be 
     made only if not less than 30 days prior to such increase 
     taking effect, the Secretary of Housing and Urban 
     Development--
       (A) notifies the Committee on Banking, Housing, and Urban 
     Affairs of the Senate and the Committee on Financial Services 
     of the House of Representatives of such increase; and
       (B) publishes notice of such increase in the Federal 
     Register.
       (b) Waiver.--The Secretary of Housing and Urban Development 
     may waive the 30-day notice requirement under subsection 
     (a)(2), if the Secretary determines that waiting 30-days 
     before increasing premiums would cause substantial damage to 
     the solvency of multifamily housing programs under the 
     National Housing Act.

     SEC. 2131. SAVINGS PROVISION.

       Any mortgage insured under title II of the National Housing 
     Act before the date of enactment of this subtitle shall 
     continue to be governed by the laws, regulations, orders, and 
     terms and conditions to which it was subject on the day 
     before the date of the enactment of this subtitle.

     SEC. 2132. IMPLEMENTATION.

       The Secretary of Housing and Urban Development shall by 
     notice establish any additional requirements that may be 
     necessary to immediately carry out the provisions of this 
     subtitle. The notice shall take effect upon issuance.

     SEC. 2133. MORATORIUM ON IMPLEMENTATION OF RISK-BASED 
                   PREMIUMS.

       (a) In General.--During the 12-month period beginning on 
     the date of enactment of this Act, the Secretary of Housing 
     and Urban Development shall not enact, execute, or take any 
     action to make effective the planned implementation of risk-
     based premiums, which are designed for mortgage lenders to 
     offer borrowers an FHA-insured product that provides a range 
     of mortgage insurance premium pricing, based on the risk that 
     the insurance contract represents, as such planned 
     implementation was set forth in the Notice published in the 
     Federal Register on May 13, 2008 (Vol. 73, No. 93, Pages 
     27703 through 27711)(effective July 14, 2008).
       (b) Insurance of Mortgages Under the National Housing 
     Act.--During the 12-month period beginning on the date of 
     enactment of this Act, the Secretary of Housing and Urban 
     Development shall not enact, execute, or take any action to 
     make effective the implementation of any other new risk-based 
     premium product related to the insurance of any mortgage on a 
     single family residence under title II of the National 
     Housing Act, where the premium price for such new product is 
     based in whole or in part on a borrower's Decision Credit 
     Score, as that term is defined in the Notice described under 
     subsection (a), or any successor thereto.

          Subtitle B--Manufactured Housing Loan Modernization

     SEC. 2141. SHORT TITLE.

       This subtitle may be cited as the ``FHA Manufactured 
     Housing Loan Modernization Act of 2008''.

     SEC. 2142. PURPOSES.

       The purposes of this subtitle are--
       (1) to provide adequate funding for FHA-insured 
     manufactured housing loans for low- and moderate-income 
     homebuyers during all economic cycles in the manufactured 
     housing industry;
       (2) to modernize the FHA title I insurance program for 
     manufactured housing loans to enhance participation by Ginnie 
     Mae and the private lending markets; and
       (3) to adjust the low loan limits for title I manufactured 
     home loan insurance to reflect the increase in costs since 
     such limits were last increased in 1992 and to index the 
     limits to inflation.

     SEC. 2143. EXCEPTION TO LIMITATION ON FINANCIAL INSTITUTION 
                   PORTFOLIO.

       The second sentence of section 2(a) of the National Housing 
     Act (12 U.S.C. 1703(a)) is amended--
       (1) by striking ``In no case'' and inserting ``Other than 
     in connection with a manufactured home or a lot on which to 
     place such a home (or both), in no case''; and
       (2) by striking ``: Provided, That with'' and inserting ``. 
     With''.

     SEC. 2144. INSURANCE BENEFITS.

       (a) In General.--Subsection (b) of section 2 of the 
     National Housing Act (12 U.S.C. 1703(b)), is amended by 
     adding at the end the following new paragraph:
       ``(8) Insurance benefits for manufactured housing loans.--
     Any contract of insurance with respect to loans, advances of 
     credit, or purchases in connection with a manufactured home 
     or a lot on which to place a manufactured home (or both) for 
     a financial institution that is executed under this title 
     after the date of the enactment of the FHA Manufactured 
     Housing Loan Modernization Act of 2008 by the Secretary shall 
     be conclusive evidence of the eligibility of such financial 
     institution for insurance, and the validity of any contract 
     of insurance so executed

[[Page S6783]]

     shall be incontestable in the hands of the bearer from the 
     date of the execution of such contract, except for fraud or 
     misrepresentation on the part of such institution.''.
       (b) Applicability.--The amendment made by subsection (a) 
     shall only apply to loans that are registered or endorsed for 
     insurance after the date of the enactment of this title.

     SEC. 2145. MAXIMUM LOAN LIMITS.

       (a) Dollar Amounts.--Paragraph (1) of section 2(b) of the 
     National Housing Act (12 U.S.C. 1703(b)(1)) is amended--
       (1) in clause (ii) of subparagraph (A), by striking 
     ``$17,500'' and inserting ``$25,090'';
       (2) in subparagraph (C) by striking ``$48,600'' and 
     inserting ``$69,678'';
       (3) in subparagraph (D) by striking ``$64,800'' and 
     inserting ``$92,904'';
       (4) in subparagraph (E) by striking ``$16,200'' and 
     inserting ``$23,226''; and
       (5) by realigning subparagraphs (C), (D), and (E) 2 ems to 
     the left so that the left margins of such subparagraphs are 
     aligned with the margins of subparagraphs (A) and (B).
       (b) Annual Indexing.--Subsection (b) of section 2 of the 
     National Housing Act (12 U.S.C. 1703(b)), as amended by the 
     preceding provisions of this title, is further amended by 
     adding at the end the following new paragraph:
       ``(9) Annual indexing of manufactured housing loans.--The 
     Secretary shall develop a method of indexing in order to 
     annually adjust the loan limits established in subparagraphs 
     (A)(ii), (C), (D), and (E) of this subsection. Such index 
     shall be based on the manufactured housing price data 
     collected by the United States Census Bureau. The Secretary 
     shall establish such index no later than 1 year after the 
     date of the enactment of the FHA Manufactured Housing Loan 
     Modernization Act of 2008.''
       (c) Technical and Conforming Changes.--Paragraph (1) of 
     section 2(b) of the National Housing Act (12 U.S.C. 
     1703(b)(1)) is amended--
       (1) by striking ``No'' and inserting ``Except as provided 
     in the last sentence of this paragraph, no''; and
       (2) by adding after and below subparagraph (G) the 
     following:
       ``The Secretary shall, by regulation, annually increase the 
     dollar amount limitations in subparagraphs (A)(ii), (C), (D), 
     and (E) (as such limitations may have been previously 
     adjusted under this sentence) in accordance with the index 
     established pursuant to paragraph (9).''.

     SEC. 2146. INSURANCE PREMIUMS.

       Subsection (f) of section 2 of the National Housing Act (12 
     U.S.C. 1703(f)) is amended--
       (1) by inserting ``(1) Premium charges.--'' after ``(f)''; 
     and
       (2) by adding at the end the following new paragraph:
       ``(2) Manufactured Home Loans.--Notwithstanding paragraph 
     (1), in the case of a loan, advance of credit, or purchase in 
     connection with a manufactured home or a lot on which to 
     place such a home (or both), the premium charge for the 
     insurance granted under this section shall be paid by the 
     borrower under the loan or advance of credit, as follows:
       ``(A) At the time of the making of the loan, advance of 
     credit, or purchase, a single premium payment in an amount 
     not to exceed 2.25 percent of the amount of the original 
     insured principal obligation.
       ``(B) In addition to the premium under subparagraph (A), 
     annual premium payments during the term of the loan, advance, 
     or obligation purchased in an amount not exceeding 1.0 
     percent of the remaining insured principal balance (excluding 
     the portion of the remaining balance attributable to the 
     premium collected under subparagraph (A) and without taking 
     into account delinquent payments or prepayments).
       ``(C) Premium charges under this paragraph shall be 
     established in amounts that are sufficient, but do not exceed 
     the minimum amounts necessary, to maintain a negative credit 
     subsidy for the program under this section for insurance of 
     loans, advances of credit, or purchases in connection with a 
     manufactured home or a lot on which to place such a home (or 
     both), as determined based upon risk to the Federal 
     Government under existing underwriting requirements.
       ``(D) The Secretary may increase the limitations on premium 
     payments to percentages above those set forth in 
     subparagraphs (A) and (B), but only if necessary, and not in 
     excess of the minimum increase necessary, to maintain a 
     negative credit subsidy as described in subparagraph (C).''.

     SEC. 2147. TECHNICAL CORRECTIONS.

       (a) Dates.--Subsection (a) of section 2 of the National 
     Housing Act (12 U.S.C. 1703(a)) is amended--
       (1) by striking ``on and after July 1, 1939,'' each place 
     such term appears; and
       (2) by striking ``made after the effective date of the 
     Housing Act of 1954''.
       (b) Authority of Secretary.--Subsection (c) of section 2 of 
     the National Housing Act (12 U.S.C. 1703(c)) is amended to 
     read as follows:
       ``(c) Handling and Disposal of Property.--
       ``(1) Authority of secretary.--Notwithstanding any other 
     provision of law, the Secretary may--
       ``(A) deal with, complete, rent, renovate, modernize, 
     insure, or assign or sell at public or private sale, or 
     otherwise dispose of, for cash or credit in the Secretary's 
     discretion, and upon such terms and conditions and for such 
     consideration as the Secretary shall determine to be 
     reasonable, any real or personal property conveyed to or 
     otherwise acquired by the Secretary, in connection with the 
     payment of insurance heretofore or hereafter granted under 
     this title, including any evidence of debt, contract, claim, 
     personal property, or security assigned to or held by him in 
     connection with the payment of insurance heretofore or 
     hereafter granted under this section; and
       ``(B) pursue to final collection, by way of compromise or 
     otherwise, all claims assigned to or held by the Secretary 
     and all legal or equitable rights accruing to the Secretary 
     in connection with the payment of such insurance, including 
     unpaid insurance premiums owed in connection with insurance 
     made available by this title.
       ``(2) Advertisements for proposals.--Section 3709 of the 
     Revised Statutes shall not be construed to apply to any 
     contract of hazard insurance or to any purchase or contract 
     for services or supplies on account of such property if the 
     amount thereof does not exceed $25,000.
       ``(3) Delegation of authority.--The power to convey and to 
     execute in the name of the Secretary, deeds of conveyance, 
     deeds of release, assignments and satisfactions of mortgages, 
     and any other written instrument relating to real or personal 
     property or any interest therein heretofore or hereafter 
     acquired by the Secretary pursuant to the provisions of this 
     title may be exercised by an officer appointed by the 
     Secretary without the execution of any express delegation of 
     power or power of attorney. Nothing in this subsection shall 
     be construed to prevent the Secretary from delegating such 
     power by order or by power of attorney, in the Secretary's 
     discretion, to any officer or agent the Secretary may 
     appoint.''.

     SEC. 2148. REVISION OF UNDERWRITING CRITERIA.

       (a) In General.--Subsection (b) of section 2 of the 
     National Housing Act (12 U.S.C. 1703(b)), as amended by the 
     preceding provisions of this title, is further amended by 
     adding at the end the following new paragraph:
       ``(10) Financial soundness of manufactured housing 
     program.--The Secretary shall establish such underwriting 
     criteria for loans and advances of credit in connection with 
     a manufactured home or a lot on which to place a manufactured 
     home (or both), including such loans and advances represented 
     by obligations purchased by financial institutions, as may be 
     necessary to ensure that the program under this title for 
     insurance for financial institutions against losses from such 
     loans, advances of credit, and purchases is financially 
     sound.''.
       (b) Timing.--Not later than the expiration of the 6-month 
     period beginning on the date of the enactment of this title, 
     the Secretary of Housing and Urban Development shall revise 
     the existing underwriting criteria for the program referred 
     to in paragraph (10) of section 2(b) of the National Housing 
     Act (as added by subsection (a) of this section) in 
     accordance with the requirements of such paragraph.

     SEC. 2149. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES.

       Title I of the National Housing Act is amended by adding at 
     the end of section 9 the following new section:

     ``SEC. 10. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES.

       ``(a) In General.--Except as provided in subsection (b), 
     the provisions of sections 3, 8, 16, 17, 18, and 19 of the 
     Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 
     et seq.) shall apply to each sale of a manufactured home 
     financed with an FHA-insured loan or extension of credit, as 
     well as to services rendered in connection with such 
     transactions.
       ``(b) Authority of the Secretary.--The Secretary is 
     authorized to determine the manner and extent to which the 
     provisions of sections 3, 8, 16, 17, 18, and 19 of the Real 
     Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et 
     seq.) may reasonably be applied to the transactions described 
     in subsection (a), and to grant such exemptions as may be 
     necessary to achieve the purposes of this section.
       ``(c) Definitions.--For purposes of this section--
       ``(1) the term `federally related mortgage loan' as used in 
     sections 3, 8, 16, 17, 18, and 19 of the Real Estate 
     Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) 
     shall include an FHA-insured loan or extension of credit made 
     to a borrower for the purpose of purchasing a manufactured 
     home that the borrower intends to occupy as a personal 
     residence; and
       ``(2) the term `real estate settlement service' as used in 
     sections 3, 8, 16, 17, 18, and 19 of the Real Estate 
     Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) 
     shall include any service rendered in connection with a loan 
     or extension of credit insured by the Federal Housing 
     Administration for the purchase of a manufactured home.
       ``(d) Unfair and Deceptive Practices.--In connection with 
     the purchase of a manufactured home financed with a loan or 
     extension of credit insured by the Federal Housing 
     Administration under this title, the Secretary shall prohibit 
     acts or practices in connection with loans or extensions of 
     credit that the Secretary finds to be unfair, deceptive, or 
     otherwise not in the interests of the borrower.''.

     SEC. 2150. LEASEHOLD REQUIREMENTS.

       Subsection (b) of section 2 of the National Housing Act (12 
     U.S.C. 1703(b)), as amended by the preceding provisions of 
     this title, is further amended by adding at the end the 
     following new paragraph:
       ``(11) Leasehold requirements.--No insurance shall be 
     granted under this section to any such financial institution 
     with respect to any obligation representing any such loan, 
     advance of credit, or purchase by it, made for the purposes 
     of financing a manufactured home which is intended to be 
     situated in a manufactured home community pursuant to a 
     lease, unless such lease--
       ``(A) expires not less than 3 years after the origination 
     date of the obligation;
       ``(B) is renewable upon the expiration of the original 3 
     year term by successive 1 year terms; and
       ``(C) requires the lessor to provide the lessee written 
     notice of termination of the lease not

[[Page S6784]]

     less than 180 days prior to the expiration of the current 
     lease term in the event the lessee is required to move due to 
     the closing of the manufactured home community, and further 
     provides that failure to provide such notice to the mortgagor 
     in a timely manner will cause the lease term, at its 
     expiration, to automatically renew for an additional 1 year 
     term.''.

     TITLE II--MORTGAGE FORECLOSURE PROTECTIONS FOR SERVICEMEMBERS

     SEC. 2201. TEMPORARY INCREASE IN MAXIMUM LOAN GUARANTY AMOUNT 
                   FOR CERTAIN HOUSING LOANS GUARANTEED BY THE 
                   SECRETARY OF VETERANS AFFAIRS.

       Notwithstanding subparagraph (C) of section 3703(a)(1) of 
     title 38, United States Code, for purposes of any loan 
     described in subparagraph (A)(i)(IV) of such section that is 
     originated during the period beginning on the date of the 
     enactment of this Act and ending on December 31, 2008, the 
     term ``maximum guaranty amount'' shall mean an amount equal 
     to 25 percent of the higher of--
       (1) the limitation determined under section 305(a)(2) of 
     the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
     1454(a)(2)) for the calendar year in which the loan is 
     originated for a single-family residence; or
       (2) 125 percent of the area median price for a single-
     family residence, but in no case to exceed 175 percent of the 
     limitation determined under such section 305(a)(2) for the 
     calendar year in which the loan is originated for a single-
     family residence.

     SEC. 2202. COUNSELING ON MORTGAGE FORECLOSURES FOR MEMBERS OF 
                   THE ARMED FORCES RETURNING FROM SERVICE ABROAD.

       (a) In General.--The Secretary of Defense shall develop and 
     implement a program to advise members of the Armed Forces 
     (including members of the National Guard and Reserve) who are 
     returning from service on active duty abroad (including 
     service in Operation Iraqi Freedom and Operation Enduring 
     Freedom) on actions to be taken by such members to prevent or 
     forestall mortgage foreclosures.
       (b) Elements.--The program required by subsection (a) shall 
     include the following:
       (1) Credit counseling.
       (2) Home mortgage counseling.
       (3) Such other counseling and information as the Secretary 
     considers appropriate for purposes of the program.
       (c) Timing of Provision of Counseling.--Counseling and 
     other information under the program required by subsection 
     (a) shall be provided to a member of the Armed Forces covered 
     by the program as soon as practicable after the return of the 
     member from service as described in subsection (a).

     SEC. 2203. ENHANCEMENT OF PROTECTIONS FOR SERVICEMEMBERS 
                   RELATING TO MORTGAGES AND MORTGAGE 
                   FORECLOSURES.

       (a) Extension of Period of Protections Against Mortgage 
     Foreclosures.--
       (1) Extension of protection period.--Subsection (c) of 
     section 303 of the Servicemembers Civil Relief Act (50 U.S.C. 
     App. 533) is amended by striking ``90 days'' and inserting 
     ``9 months''.
       (2) Extension of stay of proceedings period.--Subsection 
     (b) of such section is amended by striking ``90 days'' and 
     inserting ``9 months''.
       (b) Treatment of Mortgages as Obligations Subject to 
     Interest Rate Limitation.--Section 207 of the Servicemembers 
     Civil Relief Act (50 U.S.C. App. 527) is amended--
       (1) in subsection (a)(1), by striking ``in excess of 6 
     percent'' the second place it appears and all that follows 
     and inserting ``in excess of 6 percent--
       ``(A) during the period of military service and one year 
     thereafter, in the case of an obligation or liability 
     consisting of a mortgage, trust deed, or other security in 
     the nature of a mortgage; or
       ``(B) during the period of military service, in the case of 
     any other obligation or liability.''; and
       (2) by striking subsection (d) and inserting the following 
     new subsection:
       ``(d) Definitions.--In this section:
       ``(1) Interest.--The term `interest' includes service 
     charges, renewal charges, fees, or any other charges (except 
     bona fide insurance) with respect to an obligation or 
     liability.
       ``(2) Obligation or liability.--The term `obligation or 
     liability' includes an obligation or liability consisting of 
     a mortgage, trust deed, or other security in the nature of a 
     mortgage.''.
       (c) Effective Date; Sunset.--
       (1) Effective date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act.
       (2) Sunset.--The amendments made by subsection (a) shall 
     expire on December 31, 2010. Effective January 1, 2011, the 
     provisions of subsections (b) and (c) of section 303 of the 
     Servicemembers Civil Relief Act, as in effect on the day 
     before the date of the enactment of this Act, are hereby 
     revived.

TITLE III--EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF ABANDONED AND 
                            FORECLOSED HOMES

     SEC. 2301. EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF 
                   ABANDONED AND FORECLOSED HOMES.

       (a) Direct Appropriations.--There are appropriated out of 
     any money in the Treasury not otherwise appropriated for the 
     fiscal year 2008, $4,000,000,000, to remain available until 
     expended, for assistance to States and units of general local 
     government (as such terms are defined in section 102 of the 
     Housing and Community Development Act of 1974 (42 U.S.C. 
     5302)) for the redevelopment of abandoned and foreclosed upon 
     homes and residential properties.
       (b) Allocation of Appropriated Amounts.--
       (1) In general.--The amounts appropriated or otherwise made 
     available to States and units of general local government 
     under this section shall be allocated based on a funding 
     formula established by the Secretary of Housing and Urban 
     Development (in this title referred to as the ``Secretary'').
       (2) Formula to be devised swiftly.--The funding formula 
     required under paragraph (1) shall be established not later 
     than 60 days after the date of enactment of this section.
       (3) Criteria.--The funding formula required under paragraph 
     (1) shall ensure that any amounts appropriated or otherwise 
     made available under this section are allocated to States and 
     units of general local government with the greatest need, as 
     such need is determined in the discretion of the Secretary 
     based on--
       (A) the number and percentage of home foreclosures in each 
     State or unit of general local government;
       (B) the number and percentage of homes financed by a 
     subprime mortgage related loan in each State or unit of 
     general local government; and
       (C) the number and percentage of homes in default or 
     delinquency in each State or unit of general local 
     government.
       (4) Distribution.--Amounts appropriated or otherwise made 
     available under this section shall be distributed according 
     to the funding formula established by the Secretary under 
     paragraph (1) not later than 30 days after the establishment 
     of such formula.
       (c) Use of Funds.--
       (1) In general.--Any State or unit of general local 
     government that receives amounts pursuant to this section 
     shall, not later than 18 months after the receipt of such 
     amounts, use such amounts to purchase and redevelop abandoned 
     and foreclosed homes and residential properties.
       (2) Priority.--Any State or unit of general local 
     government that receives amounts pursuant to this section 
     shall in distributing such amounts give priority emphasis and 
     consideration to those metropolitan areas, metropolitan 
     cities, urban areas, rural areas, low- and moderate-income 
     areas, and other areas with the greatest need, including 
     those--
       (A) with the greatest percentage of home foreclosures;
       (B) with the highest percentage of homes financed by a 
     subprime mortgage related loan; and
       (C) identified by the State or unit of general local 
     government as likely to face a significant rise in the rate 
     of home foreclosures.
       (3) Eligible uses.--Amounts made available under this 
     section may be used to--
       (A) establish financing mechanisms for purchase and 
     redevelopment of foreclosed upon homes and residential 
     properties, including such mechanisms as soft-seconds, loan 
     loss reserves, and shared-equity loans for low- and moderate-
     income homebuyers;
       (B) purchase and rehabilitate homes and residential 
     properties that have been abandoned or foreclosed upon, in 
     order to sell, rent, or redevelop such homes and properties;
       (C) establish land banks for homes that have been 
     foreclosed upon;
       (D) demolish blighted structures; and
       (E) redevelop demolished or vacant properties.
       (d) Limitations.--
       (1) On purchases.--Any purchase of a foreclosed upon home 
     or residential property under this section shall be at a 
     discount from the current market appraised value of the home 
     or property, taking into account its current condition, and 
     such discount shall ensure that purchasers are paying below-
     market value for the home or property.
       (2) Sale of homes.--If an abandoned or foreclosed upon home 
     or residential property is purchased, redeveloped, or 
     otherwise sold to an individual as a primary residence, then 
     such sale shall be in an amount equal to or less than the 
     cost to acquire and redevelop or rehabilitate such home or 
     property up to a decent, safe, and habitable condition.
       (3) Reinvestment of profits.--
       (A) Profits from sales, rentals, and redevelopment.--
       (i) 5-year reinvestment period.--During the 5-year period 
     following the date of enactment of this Act, any revenue 
     generated from the sale, rental, redevelopment, 
     rehabilitation, or any other eligible use that is in excess 
     of the cost to acquire and redevelop (including reasonable 
     development fees) or rehabilitate an abandoned or foreclosed 
     upon home or residential property shall be provided to and 
     used by the State or unit of general local government in 
     accordance with, and in furtherance of, the intent and 
     provisions of this section.
       (ii) Deposits in the treasury.--

       (I) Profits.--Upon the expiration of the 5-year period set 
     forth under clause (i), any revenue generated from the sale, 
     rental, redevelopment, rehabilitation, or any other eligible 
     use that is in excess of the cost to acquire and redevelop 
     (including reasonable development fees) or rehabilitate an 
     abandoned or foreclosed upon home or residential property 
     shall be deposited in the Treasury of the United States as 
     miscellaneous receipts, unless the Secretary approves a 
     request to use the funds for purposes under this Act.
       (II) Other amounts.--Upon the expiration of the 5-year 
     period set forth under clause (i), any other revenue not 
     described under subclause (I) generated from the sale, 
     rental, redevelopment, rehabilitation, or any other eligible 
     use of an abandoned or foreclosed upon home or residential 
     property shall be deposited in the Treasury of the United 
     States as miscellaneous receipts.

       (B) Other revenues.--Any revenue generated under 
     subparagraphs (A), (C) or (D) of subsection (c)(3) shall be 
     provided to and used by the State or unit of general local 
     government in accordance with, and in furtherance of, the 
     intent and provisions of this section.
       (e) Rules of Construction.--
       (1) In general.--Except as otherwise provided by this 
     section, amounts appropriated, revenues

[[Page S6785]]

     generated, or amounts otherwise made available to States and 
     units of general local government under this section shall be 
     treated as though such funds were community development block 
     grant funds under title I of the Housing and Community 
     Development Act of 1974 (42 U.S.C. 5301 et seq.).
       (2) No match.--No matching funds shall be required in order 
     for a State or unit of general local government to receive 
     any amounts under this section.
       (f) Authority To Specify Alternative Requirements.--
       (1) In general.--In administering any amounts appropriated 
     or otherwise made available under this section, the Secretary 
     may specify alternative requirements to any provision under 
     title I of the Housing and Community Development Act of 1974 
     (except for those related to fair housing, nondiscrimination, 
     labor standards, and the environment) in accordance with the 
     terms of this section and for the sole purpose of expediting 
     the use of such funds.
       (2) Notice.--The Secretary shall provide written notice of 
     its intent to exercise the authority to specify alternative 
     requirements under paragraph (1) to the Committee on Banking, 
     Housing and Urban Affairs of the Senate and the Committee on 
     Financial Services of the House of Representatives not later 
     than 10 business days before such exercise of authority is to 
     occur.
       (3) Low and moderate income requirement.--
       (A) In general.--Notwithstanding the authority of the 
     Secretary under paragraph (1)--
       (i) all of the funds appropriated or otherwise made 
     available under this section shall be used with respect to 
     individuals and families whose income does not exceed 120 
     percent of area median income; and
       (ii) not less than 25 percent of the funds appropriated or 
     otherwise made available under this section shall be used for 
     the purchase and redevelopment of abandoned or foreclosed 
     upon homes or residential properties that will be used to 
     house individuals or families whose incomes do not exceed 50 
     percent of area median income.
       (B) Recurrent requirement.--The Secretary shall, by rule or 
     order, ensure, to the maximum extent practicable and for the 
     longest feasible term, that the sale, rental, or 
     redevelopment of abandoned and foreclosed upon homes and 
     residential properties under this section remain affordable 
     to individuals or families described in subparagraph (A).
       (g) Periodic Audits.--In consultation with the Secretary of 
     Housing and Urban Development, the Comptroller General of the 
     United States shall conduct periodic audits to ensure that 
     funds appropriated, made available, or otherwise distributed 
     under this section are being used in a manner consistent with 
     the criteria provided in this section.

     SEC. 2302. NATIONWIDE DISTRIBUTION OF RESOURCES.

       Notwithstanding any other provision of this Act or the 
     amendments made by this Act, each State shall receive not 
     less than 0.5 percent of funds made available under section 
     2301 (relating to emergency assistance for the redevelopment 
     of abandoned and foreclosed homes).

     SEC. 2303. LIMITATION ON USE OF FUNDS WITH RESPECT TO EMINENT 
                   DOMAIN.

       No State or unit of general local government may use any 
     amounts received pursuant to section 2301 to fund any project 
     that seeks to use the power of eminent domain, unless eminent 
     domain is employed only for a public use: Provided, That for 
     purposes of this section, public use shall not be construed 
     to include economic development that primarily benefits 
     private entities.

     SEC. 2304. LIMITATION ON DISTRIBUTION OF FUNDS.

       (a) In General.--None of the funds made available under 
     this title or title IV shall be distributed to--
       (1) an organization which has been indicted for a violation 
     under Federal law relating to an election for Federal office; 
     or
       (2) an organization which employs applicable individuals.
       (b) Applicable Individuals Defined.--In this section, the 
     term ``applicable individual'' means an individual who--
       (1) is--
       (A) employed by the organization in a permanent or 
     temporary capacity;
       (B) contracted or retained by the organization; or
       (C) acting on behalf of, or with the express or apparent 
     authority of, the organization; and
       (2) has been indicted for a violation under Federal law 
     relating to an election for Federal office.

     SEC. 2305. COUNSELING INTERMEDIARIES.

       Notwithstanding any other provision of this Act, the amount 
     appropriated under section 2301(a) of this Act shall be 
     $3,920,000,000 and the amount appropriated under section 2401 
     of this Act shall be $180,000,000: Provided, That of amounts 
     appropriated under such section 2401 $30,000,000 shall be 
     used by the Neighborhood Reinvestment Corporation (referred 
     to in this section as the ``NRC'') to make grants to 
     counseling intermediaries approved by the Department of 
     Housing and Urban Development or the NRC to hire attorneys to 
     assist homeowners who have legal issues directly related to 
     the homeowner's foreclosure, delinquency or short sale. Such 
     attorneys shall be capable of assisting homeowners of owner-
     occupied homes with mortgages in default, in danger of 
     default, or subject to or at risk of foreclosure and who have 
     legal issues that cannot be handled by counselors already 
     employed by such intermediaries: Provided, That of the 
     amounts provided for in the prior provisos the NRC shall give 
     priority consideration to counseling intermediaries and legal 
     organizations that (1) provide legal assistance in the 100 
     metropolitan statistical areas (as defined by the Director of 
     the Office of Management and Budget) with the highest home 
     foreclosure rates, and (2) have the capacity to begin using 
     the financial assistance within 90 days after receipt of the 
     assistance: Provided further, That no funds provided under 
     this Act shall be used to provide, obtain, or arrange on 
     behalf of a homeowner, legal representation involving or for 
     the purposes of civil litigation.

                 TITLE IV--HOUSING COUNSELING RESOURCES

     SEC. 2401. HOUSING COUNSELING RESOURCES.

       There are appropriated out of any money in the Treasury not 
     otherwise appropriated for the fiscal year 2008, for an 
     additional amount for the ``Neighborhood Reinvestment 
     Corporation--Payment to the Neighborhood Reinvestment 
     Corporation'' $100,000,000, to remain available until 
     September 30, 2008, for foreclosure mitigation activities 
     under the terms and conditions contained in the second 
     undesignated paragraph (beginning with the phrase ``For an 
     additional amount'') under the heading ``Neighborhood 
     Reinvestment Corporation--Payment to the Neighborhood 
     Reinvestment Corporation'' of Public Law 110-161.

     SEC. 2402. CREDIT COUNSELING.

       (a) In General.--Entities approved by the Neighborhood 
     Reinvestment Corporation or the Secretary and State housing 
     finance entities receiving funds under this title shall work 
     to identify and coordinate with non-profit organizations 
     operating national or statewide toll-free foreclosure 
     prevention hotlines, including those that--
       (1) serve as a consumer referral source and data repository 
     for borrowers experiencing some form of delinquency or 
     foreclosure;
       (2) connect callers with local housing counseling agencies 
     approved by the Neighborhood Reinvestment Corporation or the 
     Secretary to assist with working out a positive resolution to 
     their mortgage delinquency or foreclosure; or
       (3) facilitate or offer free assistance to help homeowners 
     to understand their options, negotiate solutions, and find 
     the best resolution for their particular circumstances.

              TITLE V--MORTGAGE DISCLOSURE IMPROVEMENT ACT

     SEC. 2501. SHORT TITLE.

       This title may be cited as the ``Mortgage Disclosure 
     Improvement Act of 2008''.

     SEC. 2502. ENHANCED MORTGAGE LOAN DISCLOSURES.

       (a) Truth in Lending Act Disclosures.--Section 128(b)(2) of 
     the Truth in Lending Act (15 U.S.C. 1638(b)(2)) is amended--
       (1) by inserting ``(A)'' before ``In the'';
       (2) by striking ``a residential mortgage transaction, as 
     defined in section 103(w)'' and inserting ``any extension of 
     credit that is secured by the dwelling of a consumer'';
       (3) by striking ``before the credit is extended, or'';
       (4) by inserting ``, which shall be at least 7 business 
     days before consummation of the transaction'' after ``written 
     application'';
       (5) by striking ``, whichever is earlier''; and
       (6) by striking ``If the'' and all that follows through the 
     end of the paragraph and inserting the following:
       ``(B) In the case of an extension of credit that is secured 
     by the dwelling of a consumer, the disclosures provided under 
     subparagraph (A), shall be in addition to the other 
     disclosures required by subsection (a), and shall--
       ``(i) state in conspicuous type size and format, the 
     following: `You are not required to complete this agreement 
     merely because you have received these disclosures or signed 
     a loan application.'; and
       ``(ii) be provided in the form of final disclosures at the 
     time of consummation of the transaction, in the form and 
     manner prescribed by this section.
       ``(C) In the case of an extension of credit that is secured 
     by the dwelling of a consumer, under which the annual rate of 
     interest is variable, or with respect to which the regular 
     payments may otherwise be variable, in addition to the other 
     disclosures required by subsection (a), the disclosures 
     provided under this subsection shall do the following:
       ``(i) Label the payment schedule as follows: `Payment 
     Schedule: Payments Will Vary Based on Interest Rate Changes'.
       ``(ii) State in conspicuous type size and format examples 
     of adjustments to the regular required payment on the 
     extension of credit based on the change in the interest rates 
     specified by the contract for such extension of credit. Among 
     the examples required to be provided under this clause is an 
     example that reflects the maximum payment amount of the 
     regular required payments on the extension of credit, based 
     on the maximum interest rate allowed under the contract, in 
     accordance with the rules of the Board. Prior to issuing any 
     rules pursuant to this clause, the Board shall conduct 
     consumer testing to determine the appropriate format for 
     providing the disclosures required under this subparagraph to 
     consumers so that such disclosures can be easily understood, 
     including the fact that the initial regular payments are for 
     a specific time period that will end on a certain date, that 
     payments will adjust afterwards potentially to a higher 
     amount, and that there is no guarantee that the borrower will 
     be able to refinance to a lower amount.
       ``(D) In any case in which the disclosure statement under 
     subparagraph (A) contains an annual percentage rate of 
     interest that is no longer accurate, as determined under 
     section 107(c), the creditor shall furnish an additional, 
     corrected statement to the borrower, not later than 3 
     business days before the date of consummation of the 
     transaction.
       ``(E) The consumer shall receive the disclosures required 
     under this paragraph before paying any fee to the creditor or 
     other person in

[[Page S6786]]

     connection with the consumer's application for an extension 
     of credit that is secured by the dwelling of a consumer. If 
     the disclosures are mailed to the consumer, the consumer is 
     considered to have received them 3 business days after they 
     are mailed. A creditor or other person may impose a fee for 
     obtaining the consumer's credit report before the consumer 
     has received the disclosures under this paragraph, provided 
     the fee is bona fide and reasonable in amount.
       ``(F) Waiver of timeliness of disclosures.--To expedite 
     consummation of a transaction, if the consumer determines 
     that the extension of credit is needed to meet a bona fide 
     personal financial emergency, the consumer may waive or 
     modify the timing requirements for disclosures under 
     subparagraph (A), provided that--
       ``(i) the term `bona fide personal emergency' may be 
     further defined in regulations issued by the Board;
       ``(ii) the consumer provides to the creditor a dated, 
     written statement describing the emergency and specifically 
     waiving or modifying those timing requirements, which 
     statement shall bear the signature of all consumers entitled 
     to receive the disclosures required by this paragraph; and
       ``(iii) the creditor provides to the consumers at or before 
     the time of such waiver or modification, the final 
     disclosures required by paragraph (1).
       ``(G) The requirements of subparagraphs (B), (C), (D) and 
     (E) shall not apply to extensions of credit relating to plans 
     described in section 101(53D) of title 11, United States 
     Code.''.
       (b) Civil Liability.--Section 130(a) of the Truth in 
     Lending Act (15 U.S.C. 1640(a)) is amended--
       (1) in paragraph (2)(A)(iii), by striking ``not less than 
     $200 or greater than $2,000'' and inserting ``not less than 
     $400 or greater than $4,000''; and
       (2) in the penultimate sentence of the undesignated matter 
     following paragraph (4)--
       (A) by inserting ``or section 128(b)(2)(C)(ii),'' after 
     ``128(a),''; and
       (B) by inserting ``or section 128(b)(2)(C)(ii)'' before the 
     period.
       (c) Effective Dates.--
       (1) General disclosures.--Except as provided in paragraph 
     (2), the amendments made by subsection (a) shall become 
     effective 12 months after the date of enactment of this Act.
       (2) Variable interest rates.--Subparagraph (C) of section 
     128(b)(2) of the Truth in Lending Act (15 U.S.C. 
     1638(b)(2)(C)), as added by subsection (a) of this section, 
     shall become effective on the earlier of--
       (A) the compliance date established by the Board for such 
     purpose, by regulation; or
       (B) 30 months after the date of enactment of this Act.

     SEC. 2503. COMMUNITY DEVELOPMENT INVESTMENT AUTHORITY FOR 
                   DEPOSITORY INSTITUTIONS.

       (a) National Banks.--The first sentence of the paragraph 
     designated as the ``Eleventh'' of section 5136 of the Revised 
     Statutes of the United States (12 U.S.C. 24) is amended by 
     striking ``promotes the public welfare by benefitting 
     primarily'' and inserting ``is designed primarily to promote 
     the public welfare, including the welfare of''.
       (b) State Member Banks.--The first sentence of the 23rd 
     paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 
     338a) is amended by striking ``promotes the public welfare by 
     benefitting primarily'' and inserting ``is designed primarily 
     to promote the public welfare, including the welfare of''.

                   TITLE VI--VETERANS HOUSING MATTERS

     SEC. 2601. HOME IMPROVEMENTS AND STRUCTURAL ALTERATIONS FOR 
                   TOTALLY DISABLED MEMBERS OF THE ARMED FORCES 
                   BEFORE DISCHARGE OR RELEASE FROM THE ARMED 
                   FORCES.

       Section 1717 of title 38, United States Code, is amended by 
     adding at the end the following new subsection:
       ``(d)(1) In the case of a member of the Armed Forces who, 
     as determined by the Secretary, has a disability permanent in 
     nature incurred or aggravated in the line of duty in the 
     active military, naval, or air service, the Secretary may 
     furnish improvements and structural alterations for such 
     member for such disability or as otherwise described in 
     subsection (a)(2) while such member is hospitalized or 
     receiving outpatient medical care, services, or treatment for 
     such disability if the Secretary determines that such member 
     is likely to be discharged or released from the Armed Forces 
     for such disability.
       ``(2) The furnishing of improvements and alterations under 
     paragraph (1) in connection with the furnishing of medical 
     services described in subparagraph (A) or (B) of subsection 
     (a)(2) shall be subject to the limitation specified in the 
     applicable subparagraph.''.

     SEC. 2602. ELIGIBILITY FOR SPECIALLY ADAPTED HOUSING BENEFITS 
                   AND ASSISTANCE FOR MEMBERS OF THE ARMED FORCES 
                   WITH SERVICE-CONNECTED DISABILITIES AND 
                   INDIVIDUALS RESIDING OUTSIDE THE UNITED STATES.

       (a) Eligibility.--Chapter 21 of title 38, United States 
     Code, is amended by inserting after section 2101 the 
     following new section:

     ``Sec. 2101A. Eligibility for benefits and assistance: 
       members of the Armed Forces with service-connected 
       disabilities; individuals residing outside the United 
       States

       ``(a) Members With Service-Connected Disabilities.--(1) The 
     Secretary may provide assistance under this chapter to a 
     member of the Armed Forces serving on active duty who is 
     suffering from a disability that meets applicable criteria 
     for benefits under this chapter if the disability is incurred 
     or aggravated in line of duty in the active military, naval, 
     or air service. Such assistance shall be provided to the same 
     extent as assistance is provided under this chapter to 
     veterans eligible for assistance under this chapter and 
     subject to the same requirements as veterans under this 
     chapter.
       ``(2) For purposes of this chapter, any reference to a 
     veteran or eligible individual shall be treated as a 
     reference to a member of the Armed Forces described in 
     subsection (a) who is similarly situated to the veteran or 
     other eligible individual so referred to.
       ``(b) Benefits and Assistance for Individuals Residing 
     Outside the United States.--(1) Subject to paragraph (2), the 
     Secretary may, at the Secretary's discretion, provide 
     benefits and assistance under this chapter (other than 
     benefits under section 2106 of this title) to any individual 
     otherwise eligible for such benefits and assistance who 
     resides outside the United States.
       ``(2) The Secretary may provide benefits and assistance to 
     an individual under paragraph (1) only if--
       ``(A) the country or political subdivision in which the 
     housing or residence involved is or will be located permits 
     the individual to have or acquire a beneficial property 
     interest (as determined by the Secretary) in such housing or 
     residence; and
       ``(B) the individual has or will acquire a beneficial 
     property interest (as so determined) in such housing or 
     residence.
       ``(c) Regulations.--Benefits and assistance under this 
     chapter by reason of this section shall be provided in 
     accordance with such regulations as the Secretary may 
     prescribe.''.
       (b) Conforming Amendments.--
       (1) Repeal of superseded authority.--Section 2101 of title 
     38, United States Code, is amended--
       (A) by striking subsection (c); and
       (B) by redesignating subsection (d) as subsection (c).
       (2) Limitations on assistance.--Section 2102 of title 38, 
     United States Code, is amended--
       (A) in subsection (a)--
       (i) by striking ``veteran'' each place it appears and 
     inserting ``individual''; and
       (ii) in paragraph (3), by striking ``veteran's'' and 
     inserting ``individual's'';
       (B) in subsection (b)(1), by striking ``a veteran'' and 
     inserting ``an individual'';
       (C) in subsection (c)--
       (i) by striking ``a veteran'' and inserting ``an 
     individual''; and
       (ii) by striking ``the veteran'' each place it appears and 
     inserting ``the individual''; and
       (D) in subsection (d), by striking ``a veteran'' each place 
     it appears and inserting ``an individual''.
       (3) Assistance for individuals temporarily residing in 
     housing of family member.--Section 2102A of title 38, United 
     States Code, is amended--
       (A) by striking ``veteran'' each place it appears (other 
     than in subsection (b)) and inserting ``individual'';
       (B) in subsection (a), by striking ``veteran's'' each place 
     it appears and inserting ``individual's''; and
       (C) in subsection (b), by striking ``a veteran'' each place 
     it appears and inserting ``an individual''.
       (4) Furnishing of plans and specifications.--Section 2103 
     of title 38, United States Code, is amended by striking 
     ``veterans'' both places it appears and inserting 
     ``individuals''.
       (5) Construction of benefits.--Section 2104 of title 38, 
     United States Code, is amended--
       (A) in subsection (a), by striking ``veteran'' each place 
     it appears and inserting ``individual''; and
       (B) in subsection (b)--
       (i) in the first sentence, by striking ``A veteran'' and 
     inserting ``An individual'';
       (ii) in the second sentence, by striking ``a veteran'' and 
     inserting ``an individual''; and
       (iii) by striking ``such veteran'' each place it appears 
     and inserting ``such individual''.
       (6) Veterans' mortgage life insurance.--Section 2106 of 
     title 38, United States Code, is amended--
       (A) in subsection (a)--
       (i) by striking ``any eligible veteran'' and inserting 
     ``any eligible individual''; and
       (ii) by striking ``the veterans' '' and inserting ``the 
     individual's'';
       (B) in subsection (b), by striking ``an eligible veteran'' 
     and inserting ``an eligible individual'';
       (C) in subsection (e), by striking ``an eligible veteran'' 
     and inserting ``an individual'';
       (D) in subsection (h), by striking ``each veteran'' and 
     inserting ``each individual'';
       (E) in subsection (i), by striking ``the veteran's'' each 
     place it appears and inserting ``the individual's'';
       (F) by striking ``the veteran'' each place it appears and 
     inserting ``the individual''; and
       (G) by striking ``a veteran'' each place it appears and 
     inserting ``an individual''.
       (7) Heading amendments.--(A) The heading of section 2101 of 
     title 38, United States Code, is amended to read as follows:

     ``Sec. 2101. Acquisition and adaptation of housing: eligible 
       veterans''.

       (B) The heading of section 2102A of such title is amended 
     to read as follows:

     ``Sec. 2102A. Assistance for individuals residing temporarily 
       in housing owned by a family member''.

       (8) Clerical amendments.--The table of sections at the 
     beginning of chapter 21 of title 38, United States Code, is 
     amended--
       (A) by striking the item relating to section 2101 and 
     inserting the following new item:

``2101. Acquisition and adaptation of housing: eligible veterans.'';

       (B) by inserting after the item relating to section 2101, 
     as so amended, the following new item:

``2101A. Eligibility for benefits and assistance: members of the Armed 
              Forces with service-connected disabilities; individuals 
              residing outside the United States.'';


[[Page S6787]]


     and
       (C) by striking the item relating to section 2102A and 
     inserting the following new item:

``2102A. Assistance for individuals residing temporarily in housing 
              owned by a family member.''.

     SEC. 2603. SPECIALLY ADAPTED HOUSING ASSISTANCE FOR 
                   INDIVIDUALS WITH SEVERE BURN INJURIES.

       Section 2101 of title 38, United States Code, is amended--
       (1) in subsection (a)(2), by adding at the end the 
     following new subparagraph:
       ``(E) The disability is due to a severe burn injury (as 
     determined pursuant to regulations prescribed by the 
     Secretary).''; and
       (2) in subsection (b)(2)--
       (A) by striking ``either'' and inserting ``any''; and
       (B) by adding at the end the following new subparagraph:
       ``(C) The disability is due to a severe burn injury (as so 
     determined).''.

     SEC. 2604. EXTENSION OF ASSISTANCE FOR INDIVIDUALS RESIDING 
                   TEMPORARILY IN HOUSING OWNED BY A FAMILY 
                   MEMBER.

       Section 2102A(e) of title 38, United States Code, is 
     amended by striking ``after the end of the five-year period 
     that begins on the date of the enactment of the Veterans' 
     Housing Opportunity and Benefits Improvement Act of 2006'' 
     and inserting ``after December 31, 2011''.

     SEC. 2605. INCREASE IN SPECIALLY ADAPTED HOUSING BENEFITS FOR 
                   DISABLED VETERANS.

       (a) In General.--Section 2102 of title 38, United States 
     Code, is amended--
       (1) in subsection (b)(2), by striking ``$10,000'' and 
     inserting ``$12,000'';
       (2) in subsection (d)--
       (A) in paragraph (1), by striking ``$50,000'' and inserting 
     ``$60,000''; and
       (B) in paragraph (2), by striking ``$10,000'' and inserting 
     ``$12,000''; and
       (3) by adding at the end the following new subsection:
       ``(e)(1) Effective on October 1 of each year (beginning in 
     2009), the Secretary shall increase the amounts described in 
     subsection (b)(2) and paragraphs (1) and (2) of subsection 
     (d) in accordance with this subsection.
       ``(2) The increase in amounts under paragraph (1) to take 
     effect on October 1 of a year shall be by an amount of such 
     amounts equal to the percentage by which--
       ``(A) the residential home cost-of-construction index for 
     the preceding calendar year, exceeds
       ``(B) the residential home cost-of-construction index for 
     the year preceding the year described in subparagraph (A).
       ``(3) The Secretary shall establish a residential home 
     cost-of-construction index for the purposes of this 
     subsection. The index shall reflect a uniform, national 
     average change in the cost of residential home construction, 
     determined on a calendar year basis. The Secretary may use an 
     index developed in the private sector that the Secretary 
     determines is appropriate for purposes of this subsection.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on July 1, 2008, and shall apply with 
     respect to payments made in accordance with section 2102 of 
     title 38, United States Code, on or after that date.

     SEC. 2606. REPORT ON SPECIALLY ADAPTED HOUSING FOR DISABLED 
                   INDIVIDUALS.

       (a) In General.--Not later than December 31, 2008, the 
     Secretary of Veterans Affairs shall submit to the Committee 
     on Veterans' Affairs of the Senate and the Committee on 
     Veterans' Affairs of the House of Representatives a report 
     that contains an assessment of the adequacy of the 
     authorities available to the Secretary under law to assist 
     eligible disabled individuals in acquiring--
       (1) suitable housing units with special fixtures or movable 
     facilities required for their disabilities, and necessary 
     land therefor;
       (2) such adaptations to their residences as are reasonably 
     necessary because of their disabilities; and
       (3) residences already adapted with special features 
     determined by the Secretary to be reasonably necessary as a 
     result of their disabilities.
       (b) Focus on Particular Disabilities.--The report required 
     by subsection (a) shall set forth a specific assessment of 
     the needs of--
       (1) veterans who have disabilities that are not described 
     in subsections (a)(2) and (b)(2) of section 2101 of title 38, 
     United States Code; and
       (2) other disabled individuals eligible for specially 
     adapted housing under chapter 21 of such title by reason of 
     section 2101A of such title (as added by section 2602(a) of 
     this Act) who have disabilities that are not described in 
     such subsections.

     SEC. 2607. REPORT ON SPECIALLY ADAPTED HOUSING ASSISTANCE FOR 
                   INDIVIDUALS WHO RESIDE IN HOUSING OWNED BY A 
                   FAMILY MEMBER ON PERMANENT BASIS.

       Not later than December 31, 2008, the Secretary of Veterans 
     Affairs shall submit to the Committee on Veterans' Affairs of 
     the Senate and the Committee on Veterans' Affairs of the 
     House of Representatives a report on the advisability of 
     providing assistance under section 2102A of title 38, United 
     States Code, to veterans described in subsection (a) of such 
     section, and to members of the Armed Forces covered by such 
     section 2102A by reason of section 2101A of title 38, United 
     States Code (as added by section 2602(a) of this Act), who 
     reside with family members on a permanent basis.

     SEC. 2608. DEFINITION OF ANNUAL INCOME FOR PURPOSES OF 
                   SECTION 8 AND OTHER PUBLIC HOUSING PROGRAMS.

       Section 3(b)(4) of the United States Housing Act of 1937 
     (42 U.S.C. 1437a(3)(b)(4)) is amended by inserting ``or any 
     deferred Department of Veterans Affairs disability benefits 
     that are received in a lump sum amount or in prospective 
     monthly amounts'' before ``may not be considered''.

     SEC. 2609. PAYMENT OF TRANSPORTATION OF BAGGAGE AND HOUSEHOLD 
                   EFFECTS FOR MEMBERS OF THE ARMED FORCES WHO 
                   RELOCATE DUE TO FORECLOSURE OF LEASED HOUSING.

       Section 406 of title 37, United States Code, is amended--
       (1) by redesignating subsections (k) and (l) as subsections 
     (l) and (m), respectively; and
       (2) by inserting after subsection (j) the following new 
     subsection (k):
       ``(k) A member of the armed forces who relocates from 
     leased or rental housing by reason of the foreclosure of such 
     housing is entitled to transportation of baggage and 
     household effects under subsection (b)(1) in the same manner, 
     and subject to the same conditions and limitations, as 
     similarly circumstanced members entitled to transportation of 
     baggage and household effects under that subsection.''.

  TITLE VII--SMALL PUBLIC HOUSING AUTHORITIES PAPERWORK REDUCTION ACT

     SEC. 2701. SHORT TITLE.

       This title may be cited as the ``Small Public Housing 
     Authorities Paperwork Reduction Act''.

     SEC. 2702. PUBLIC HOUSING AGENCY PLANS FOR CERTAIN QUALIFIED 
                   PUBLIC HOUSING AGENCIES.

       (a) In General.--Section 5A(b) of the United States Housing 
     Act of 1937 (42 U.S.C. 1437c-1(b)) is amended by adding at 
     the end the following:
       ``(3) Exemption of certain phas from filing requirement.--
       ``(A) In general.--Notwithstanding paragraph (1) or any 
     other provision of this Act--
       ``(i) the requirement under paragraph (1) shall not apply 
     to any qualified public housing agency; and
       ``(ii) except as provided in subsection (e)(4)(B), any 
     reference in this section or any other provision of law to a 
     `public housing agency' shall not be considered to refer to 
     any qualified public housing agency, to the extent such 
     reference applies to the requirement to submit an annual 
     public housing agency plan under this subsection.
       ``(B) Civil rights certification.--Notwithstanding that 
     qualified public housing agencies are exempt under 
     subparagraph (A) from the requirement under this section to 
     prepare and submit an annual public housing plan, each 
     qualified public housing agency shall, on an annual basis, 
     make the certification described in paragraph (16) of 
     subsection (d), except that for purposes of such qualified 
     public housing agencies, such paragraph shall be applied by 
     substituting `the public housing program of the agency' for 
     `the public housing agency plan'.
       ``(C) Definition.--For purposes of this section, the term 
     `qualified public housing agency' means a public housing 
     agency that meets the following requirements:
       ``(i) The sum of (I) the number of public housing dwelling 
     units administered by the agency, and (II) the number of 
     vouchers under section 8(o) of the United States Housing Act 
     of 1937 (42 U.S.C. 1437f(o)) administered by the agency, is 
     550 or fewer.
       ``(ii) The agency is not designated under section 6(j)(2) 
     as a troubled public housing agency, and does not have a 
     failing score under the section 8 Management Assessment 
     Program during the prior 12 months.''.
       (b) Resident Participation.--Section 5A of the United 
     States Housing Act of 1937 (42 U.S.C. 1437c-1) is amended--
       (1) in subsection (e), by inserting after paragraph (3) the 
     following:
       ``(4) Qualified public housing agencies.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     nothing in this section may be construed to exempt a 
     qualified public housing agency from the requirement under 
     paragraph (1) to establish 1 or more resident advisory 
     boards. Notwithstanding that qualified public housing 
     agencies are exempt under subsection (b)(3)(A) from the 
     requirement under this section to prepare and submit an 
     annual public housing plan, each qualified public housing 
     agency shall consult with, and consider the recommendations 
     of the resident advisory boards for the agency, at the annual 
     public hearing required under subsection (f)(5), regarding 
     any changes to the goals, objectives, and policies of that 
     agency.
       ``(B) Applicability of waiver authority.--Paragraph (3) 
     shall apply to qualified public housing agencies, except that 
     for purposes of such qualified public housing agencies, 
     subparagraph (B) of such paragraph shall be applied by 
     substituting `the functions described in the second sentence 
     of paragraph (4)(A)' for `the functions described in 
     paragraph (2)'.
       ``(f) Public Hearings.--''; and
       (2) in subsection (f) (as so designated by the amendment 
     made by paragraph (1)), by adding at the end the following:
       ``(5) Qualified public housing agencies.--
       ``(A) Requirement.--Notwithstanding that qualified public 
     housing agencies are exempt under subsection (b)(3)(A) from 
     the requirement under this section to conduct a public 
     hearing regarding the annual public housing plan of the 
     agency, each qualified public housing agency shall annually 
     conduct a public hearing--
       ``(i) to discuss any changes to the goals, objectives, and 
     policies of the agency; and
       ``(ii) to invite public comment regarding such changes.
       ``(B) Availability of information and notice.--Not later 
     than 45 days before the date of any hearing described in 
     subparagraph (A), a qualified public housing agency shall--

[[Page S6788]]

       ``(i) make all information relevant to the hearing and any 
     determinations of the agency regarding changes to the goals, 
     objectives, and policies of the agency to be considered at 
     the hearing available for inspection by the public at the 
     principal office of the public housing agency during normal 
     business hours; and
       ``(ii) publish a notice informing the public that--

       ``(I) the information is available as required under clause 
     (i); and
       ``(II) a public hearing under subparagraph (A) will be 
     conducted.''.

            TITLE VIII--FORECLOSURE RESCUE FRAUD PROTECTION

     SEC. 2801. SHORT TITLE.

       This title may be cited as the ``Foreclosure Rescue Fraud 
     Act of 2008''.

     SEC. 2802. DEFINITIONS.

       In this title:
       (1) Commission.--The term ``Commission'' means the Federal 
     Trade Commission.
       (2) Foreclosure consultant.--The term ``foreclosure 
     consultant''--
       (A) means a person who makes any solicitation, 
     representation, or offer to a homeowner facing foreclosure on 
     residential real property to perform, for gain, or who 
     performs, for gain, any service that such person represents 
     will prevent, postpone, or reverse the effect of such 
     foreclosure; and
       (B) does not include--
       (i) an attorney licensed to practice law in the State in 
     which the property is located who has established an 
     attorney-client relationship with the homeowner;
       (ii) a person licensed as a real estate broker or 
     salesperson in the State where the property is located, and 
     such person engages in acts permitted under the licensure 
     laws of such State;
       (iii) a housing counseling agency approved by the 
     Secretary;
       (iv) a depository institution (as defined in section 3 of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813));
       (v) a Federal credit union or a State credit union (as 
     defined in section 101 of the Federal Credit Union Act (12 
     U.S.C. 1752)); or
       (vi) an insurance company organized under the laws of any 
     State.
       (3) Homeowner.--The term ``homeowner'', with respect to 
     residential real property for which an action to foreclose on 
     the mortgage or deed of trust on such real property is filed, 
     means the person holding record title to such property as of 
     the date on which such action is filed.
       (4) Loan servicer.--The term ``loan servicer'' has the same 
     meaning as the term ``servicer'' in section 6(i)(2) of the 
     Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 
     2605(i)(2)).
       (5) Residential mortgage loan.--The term ``residential 
     mortgage loan'' means any loan primarily for personal, 
     family, or household use that is secured by a mortgage, deed 
     of trust, or other equivalent consensual security interest on 
     a dwelling (as defined in section 103(v) of the Truth in 
     Lending Act (15 U.S.C. 1602)(v)) or residential real estate 
     upon which is constructed or intended to be constructed a 
     dwelling (as so defined).
       (6) Residential real property.--The term ``residential real 
     property'' has the meaning given the term ``dwelling'' in 
     section 103 of the Consumer Credit Protection Act (15 U.S.C. 
     1602).
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of Housing and Urban Development.

     SEC. 2803. MORTGAGE RESCUE FRAUD PROTECTION.

       (a) Limits on Foreclosure Consultants.--A foreclosure 
     consultant may not--
       (1) claim, demand, charge, collect, or receive any 
     compensation from a homeowner for services performed by such 
     foreclosure consultant with respect to residential real 
     property until such foreclosure consultant has fully 
     performed each service that such foreclosure consultant 
     contracted to perform or represented would be performed with 
     respect to such residential real property;
       (2) hold any power of attorney from any homeowner, except 
     to inspect documents, as provided by applicable law;
       (3) receive any consideration from a third party in 
     connection with services rendered to a homeowner by such 
     third party with respect to the foreclosure of residential 
     real property, unless such consideration is fully disclosed, 
     in a clear and conspicuous manner, to such homeowner in 
     writing before such services are rendered;
       (4) accept any wage assignment, any lien of any type on 
     real or personal property, or other security to secure the 
     payment of compensation with respect to services provided by 
     such foreclosure consultant in connection with the 
     foreclosure of residential real property; or
       (5) acquire any interest, directly or indirectly, in the 
     residence of a homeowner with whom the foreclosure consultant 
     has contracted.
       (b) Contract Requirements.--
       (1) Written contract required.--Notwithstanding any other 
     provision of law, a foreclosure consultant may not provide to 
     a homeowner a service related to the foreclosure of 
     residential real property--
       (A) unless--
       (i) a written contract for the purchase of such service has 
     been signed and dated by the homeowner; and
       (ii) such contract complies with the requirements described 
     in paragraph (2); and
       (B) before the end of the 3-business-day period beginning 
     on the date on which the contract is signed.
       (2) Terms and conditions of contract.--The requirements 
     described in this paragraph, with respect to a contract, are 
     as follows:
       (A) The contract includes, in writing--
       (i) a full and detailed description of the exact nature of 
     the contract and the total amount and terms of compensation;
       (ii) the name, physical address, phone number, email 
     address, and facsimile number, if any, of the foreclosure 
     consultant to whom a notice of cancellation can be mailed or 
     sent under subsection (d); and
       (iii) a conspicuous statement in at least 12 point bold 
     face type in immediate proximity to the space reserved for 
     the homeowner's signature on the contract that reads as 
     follows: ``You may cancel this contract without penalty or 
     obligation at any time before midnight of the 3rd business 
     day after the date on which you sign the contract. See the 
     attached notice of cancellation form for an explanation of 
     this right.''.
       (B) The contract is written in the principal language used 
     to solicit or market the services to the homeowner.
       (C) The contract is accompanied by the form required by 
     subsection (c)(2).
       (c) Right To Cancel Contract.--
       (1) In general.--With respect to a contract between a 
     homeowner and a foreclosure consultant regarding the 
     foreclosure on the residential real property of such 
     homeowner, such homeowner may cancel such contract without 
     penalty or obligation by mailing a notice of cancellation not 
     later than midnight of the 3rd business day after the date on 
     which such contract is executed or would become enforceable 
     against the parties to such contract.
       (2) Cancellation form and other information.--Each contract 
     described in paragraph (1) shall be accompanied by a form, in 
     duplicate, that--
       (A) has the heading ``Notice of Cancellation'' in boldface 
     type; and
       (B) contains in boldface type the following statement:
       ``You may cancel this contract, without any penalty or 
     obligation, at any time before midnight of the 3rd day after 
     the date on which the contract is signed by you.
       ``To cancel this contract, mail or deliver a signed and 
     dated copy of this cancellation notice or any other 
     equivalent written notice to [insert name of foreclosure 
     consultant] at [insert address of foreclosure consultant] 
     before midnight on [insert date].
       ``I hereby cancel this transaction on [insert date] [insert 
     homeowner signature].''.
       (d) Waiver of Rights and Protections Prohibited.--
       (1) In general.--A waiver by a homeowner of any protection 
     provided by this section or any right of a homeowner under 
     this section--
       (A) shall be treated as void; and
       (B) may not be enforced by any Federal or State court or by 
     any person.
       (2) Attempt to obtain a waiver.--Any attempt by any person 
     to obtain a waiver from any homeowner of any protection 
     provided by this section or any right of the homeowner under 
     this section shall be treated as a violation of this section.
       (3) Contracts not in compliance.--Any contract that does 
     not comply with the applicable provisions of this title shall 
     be void and may not be enforceable by any party.

     SEC. 2804. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE 
                   SCAMS.

       (a) In General.--If a loan servicer finds that a homeowner 
     has failed to make 2 consecutive payments on a residential 
     mortgage loan and such loan is at risk of being foreclosed 
     upon, the loan servicer shall notify such homeowner of the 
     dangers of fraudulent activities associated with foreclosure.
       (b) Notice Requirements.--Each notice provided under 
     subsection (a) shall--
       (1) be in writing;
       (2) be included with a mailing of account information;
       (3) have the heading ``Notice Required by Federal Law'' in 
     a 14-point boldface type in English and Spanish at the top of 
     such notice; and
       (4) contain the following statement in English and Spanish: 
     ``Mortgage foreclosure is a complex process. Some people may 
     approach you about saving your home. You should be careful 
     about any such promises. There are government and nonprofit 
     agencies you may contact for helpful information about the 
     foreclosure process. Contact your lender immediately at 
     [____], call the Department of Housing and Urban Development 
     Housing Counseling Line at (800) 569-4287 to find a housing 
     counseling agency certified by the Department to assist you 
     in avoiding foreclosure, or visit the Department's Tips for 
     Avoiding Foreclosure website at http://www.hud.gov/
 foreclosure for additional assistance.'' (the blank space to 
     be filled in by the loan servicer and successor telephone 
     numbers and Uniform Resource Locators (URLs) for the 
     Department of Housing and Urban Development Housing 
     Counseling Line and Tips for Avoiding Foreclosure website, 
     respectively).

     SEC. 2805. CIVIL LIABILITY.

       (a) In General.--Any foreclosure consultant who fails to 
     comply with any provision of section 2803 or 2804 with 
     respect to any other person shall be liable to such person in 
     an amount equal to the greater of--
       (1) the amount of any actual damage sustained by such 
     person as a result of such failure; or
       (2) any amount paid by the person to the foreclosure 
     consultant.
       (b) Class Actions Prohibited.--No Federal court may certify 
     a civil action under subsection (a) as a class action under 
     rule 23 of the Federal Rules of Civil Procedure.

     SEC. 2806. ADMINISTRATIVE ENFORCEMENT.

       (a) Enforcement by Federal Trade Commission.--
       (1) Unfair or deceptive act or practice.--A violation of a 
     prohibition described in section 2803 or a failure to comply 
     with any provision of section 2803 or 2804 shall be treated 
     as a violation of a rule defining an unfair or deceptive act

[[Page S6789]]

     or practice described under section 18(a)(1)(B) of the 
     Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
       (2) Actions by the federal trade commission.--The Federal 
     Trade Commission shall enforce the provisions of sections 
     2803 and 2804 in the same manner, by the same means, and with 
     the same jurisdiction, powers, and duties as though all 
     applicable terms and provisions of the Federal Trade 
     Commission Act (15 U.S.C. 41 et seq.) were incorporated into 
     and made part of this title.
       (b) State Action for Violations.--
       (1) Authority of states.--In addition to such other 
     remedies as are provided under State law, whenever the chief 
     law enforcement officer of a State, or an official or agency 
     designated by a State, has reason to believe that any person 
     has violated or is violating the provisions of section 2803 
     or 2804, the State--
       (A) may bring an action to enjoin such violation;
       (B) may bring an action on behalf of its residents to 
     recover damages for which the person is liable to such 
     residents under section 2805 as a result of the violation; 
     and
       (C) in the case of any successful action under subparagraph 
     (A) or (B), shall be awarded the costs of the action.
       (2) Rights of federal trade commission.--
       (A) Notice to commission.--The State shall serve prior 
     written notice of any civil action under paragraph (1) upon 
     the Commission and provide the Commission with a copy of its 
     complaint, except in any case in which such prior notice is 
     not feasible, in which case the State shall serve such notice 
     immediately upon instituting such action.
       (B) Intervention.--The Commission shall have the right--
       (i) to intervene in any action referred to in subparagraph 
     (A);
       (ii) upon so intervening, to be heard on all matters 
     arising in the action; and
       (iii) to file petitions for appeal in such actions.
       (3) Investigatory powers.--For purposes of bringing any 
     action under this subsection, nothing in this subsection 
     shall prevent the chief law enforcement officer, or an 
     official or agency designated by a State, from exercising the 
     powers conferred on the chief law enforcement officer or such 
     official by the laws of such State to conduct investigations 
     or to administer oaths or affirmations, or to compel the 
     attendance of witnesses or the production of documentary and 
     other evidence.
       (4) Limitation.--Whenever the Federal Trade Commission has 
     instituted a civil action for a violation of section 2803 or 
     2804, no State may, during the pendency of such action, bring 
     an action under this section against any defendant named in 
     the complaint of the Commission for any violation of section 
     2803 or 2804 that is alleged in that complaint.

     SEC. 2807. LIMITATION.

       No violation of a prohibition described in section 2803 or 
     a failure to comply with any provision of section 2803 or 
     2804 shall provide grounds for the halt, delay, or 
     modification of a foreclosure process or proceeding.

     SEC. 2808. PREEMPTION.

       Nothing in this title affects any provision of State or 
     local law respecting any foreclosure consultant, residential 
     mortgage loan, or residential real property that provides 
     equal or greater protection to homeowners than what is 
     provided under this title.

                   DIVISION C--TAX-RELATED PROVISIONS

     SECTION 3000. SHORT TITLE; ETC.

       (a) Short Title.--This division may be cited as the 
     ``Housing Assistance Tax Act of 2008''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this division an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                    TITLE I--HOUSING TAX INCENTIVES

                    Subtitle A--Multi-Family Housing

                 PART I--LOW-INCOME HOUSING TAX CREDIT

     SEC. 3001. TEMPORARY INCREASE IN VOLUME CAP FOR LOW-INCOME 
                   HOUSING TAX CREDIT.

       Paragraph (3) of section 42(h) is amended by adding at the 
     end the following new subparagraph:
       ``(I) Increase in state housing credit ceiling for 2008 and 
     2009.--In the case of calendar years 2008 and 2009--
       ``(i) the dollar amount in effect under subparagraph 
     (C)(ii)(I) for such calendar year (after any increase under 
     subparagraph (H)) shall be increased by $0.20, and
       ``(ii) the dollar amount in effect under subparagraph 
     (C)(ii)(II) for such calendar year (after any increase under 
     subparagraph (H)) shall be increased by an amount equal to 10 
     percent of such dollar amount (rounded to the next lowest 
     multiple of $5,000).''.

     SEC. 3002. DETERMINATION OF CREDIT RATE.

       (a) Temporary Minimum Credit Rate for Non-Federally 
     Subsidized New Buildings.--Subsection (b) of section 42 is 
     amended by redesignating paragraph (3) as paragraph (4) and 
     by inserting after paragraph (2) the following new paragraph:
       ``(3) Temporary minimum credit rate for non-federally 
     subsidized new buildings.--In the case of any new building--
       ``(A) which is placed in service by the taxpayer after the 
     date of the enactment of this paragraph and before December 
     31, 2013, and
       ``(B) which is not federally subsidized for the taxable 
     year,

     the applicable percentage shall not be less than 9 
     percent.''.
       (b) Modifications to Definition of Federally Subsidized 
     Building.--
       (1) In general.--Subparagraph (A) of section 42(i)(2) is 
     amended by striking ``, or any below market Federal loan,''.
       (2) Conforming amendments.--
       (A) Subparagraph (B) of section 42(i)(2) is amended--
       (i) by striking ``balance of loan or'' in the heading 
     thereof,
       (ii) by striking ``loan or'' in the matter preceding clause 
     (i), and
       (iii) by striking ``subsection (d)--'' and all that follows 
     and inserting ``subsection (d) the proceeds of such 
     obligation.''.
       (B) Subparagraph (C) of section 42(i)(2) is amended--
       (i) by striking ``or below market Federal loan'' in the 
     matter preceding clause (i),
       (ii) in clause (i)--

       (I) by striking ``or loan (when issued or made)'' and 
     inserting ``(when issued)'', and
       (II) by striking ``the proceeds of such obligation or 
     loan'' and inserting ``the proceeds of such obligation'', and

       (iii) by striking ``, and such loan is repaid,'' in clause 
     (ii).
       (C) Paragraph (2) of section 42(i) is amended by striking 
     subparagraphs (D) and (E).
       (c) Effective Date.--The amendments made by this subsection 
     shall apply to buildings placed in service after the date of 
     the enactment of this Act.

     SEC. 3003. MODIFICATIONS TO DEFINITION OF ELIGIBLE BASIS.

       (a) Increase in Credit for Certain State Designated 
     Buildings.--Subparagraph (C) of section 42(d)(5) (relating to 
     increase in credit for buildings in high cost areas), before 
     redesignation under subsection (g), is amended by adding at 
     the end the following new clause:
       ``(v) Buildings designated by state housing credit 
     agency.--Any building which is designated by the State 
     housing credit agency as requiring the increase in credit 
     under this subparagraph in order for such building to be 
     financially feasible as part of a qualified low-income 
     housing project shall be treated for purposes of this 
     subparagraph as located in a difficult development area which 
     is designated for purposes of this subparagraph. The 
     preceding sentence shall not apply to any building if 
     paragraph (1) of subsection (h) does not apply to any portion 
     of the eligible basis of such building by reason of paragraph 
     (4) of such subsection.''.
       (b) Modification to Rehabilitation Requirements.--
       (1) In general.--Clause (ii) of section 42(e)(3)(A) is 
     amended--
       (A) by striking ``10 percent'' in subclause (I) and 
     inserting ``20 percent'', and
       (B) by striking ``$3,000'' in subclause (II) and inserting 
     ``$6,000''.
       (2) Inflation adjustment.--Paragraph (3) of section 42(e) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(D) Inflation adjustment.--In the case of any 
     expenditures which are treated under paragraph (4) as placed 
     in service during any calendar year after 2009, the $6,000 
     amount in subparagraph (A)(ii)(II) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2008' for `calendar year 1992' in subparagraph 
     (B) thereof.
     Any increase under the preceding sentence which is not a 
     multiple of $100 shall be rounded to the nearest multiple of 
     $100.''.
       (3) Conforming amendment.--Subclause (II) of section 
     42(f)(5)(B)(ii) is amended by striking ``if subsection 
     (e)(3)(A)(ii)(II)'' and all that follows and inserting ``if 
     the dollar amount in effect under subsection 
     (e)(3)(A)(ii)(II) were two-thirds of such amount.''.
       (c) Increase in Allowable Community Service Facility Space 
     for Small Projects.--Clause (ii) of section 42(d)(4)(C) 
     (relating to limitation) is amended by striking ``10 percent 
     of the eligible basis of the qualified low-income housing 
     project of which it is a part. For purposes of'' and 
     inserting ``the sum of--

       ``(I) 25 percent of so much of the eligible basis of the 
     qualified low-income housing project of which it is a part as 
     does not exceed $15,000,000, plus
       ``(II) 10 percent of so much of the eligible basis of such 
     project as is not taken into account under subclause (I).

     For purposes of''.
       (d) Clarification of Treatment of Federal Grants.--
     Subparagraph (A) of section 42(d)(5) is amended to read as 
     follows:
       ``(A) Federal grants not taken into account in determining 
     eligible basis.--The eligible basis of a building shall not 
     include any costs financed with the proceeds of a Federally 
     funded grant.''.
       (e) Simplification of Related Party Rules.--Clause (iii) of 
     section 42(d)(2)(D), before redesignation under subsection 
     (g)(2), is amended--
       (1) by striking all that precedes subclause (II),
       (2) by redesignating subclause (II) as clause (iii) and 
     moving such clause two ems to the left, and
       (3) by striking the last sentence thereof.
       (f) Exception to 10-Year Nonacquisition Period for Existing 
     Buildings Applicable to Federally- or State-Assisted 
     Buildings.--Paragraph (6) of section 42(d) is amended to read 
     as follows:
       ``(6) Credit allowable for certain buildings acquired 
     during 10-year period described in paragraph (2)(B)(ii).--
       ``(A) In general.--Paragraph (2)(B)(ii) shall not apply to 
     any Federally- or State-assisted building.
       ``(B) Buildings acquired from insured depository 
     institutions in default.--On application by the taxpayer, the 
     Secretary may waive

[[Page S6790]]

     paragraph (2)(B)(ii) with respect to any building acquired 
     from an insured depository institution in default (as defined 
     in section 3 of the Federal Deposit Insurance Act) or from a 
     receiver or conservator of such an institution.
       ``(C) Federally- or state-assisted building.--For purposes 
     of this paragraph--
       ``(i) Federally-assisted building.--The term `Federally-
     assisted building' means any building which is substantially 
     assisted, financed, or operated under section 8 of the United 
     States Housing Act of 1937, section 221(d)(3), 221(d)(4), or 
     236 of the National Housing Act, or section 515 of the 
     Housing Act of 1949 (as such Acts are in effect on the date 
     of the enactment of the Tax Reform Act of 1986).
       ``(ii) State-assisted building.--The term `State-assisted 
     building' means any building which is substantially assisted, 
     financed, or operated under any State law similar in purposes 
     to any of the laws referred to in clause (i).''.
       (g) Repeal of Deadwood.--
       (1) Clause (ii) of section 42(d)(2)(B) is amended by 
     striking ``the later of--'' and all that follows and 
     inserting ``the date the building was last placed in 
     service,''.
       (2) Subparagraph (D) of section 42(d)(2) is amended by 
     striking clause (i) and by redesignating clauses (ii) and 
     (iii) as clauses (i) and (ii), respectively.
       (3) Paragraph (5) of section 42(d) is amended by striking 
     subparagraph (B) and by redesignating subparagraph (C) as 
     subparagraph (B).
       (h) Effective Date.--
       (1) In general.--Except as otherwise provided in paragraph 
     (2), the amendments made by this subsection shall apply to 
     buildings placed in service after the date of the enactment 
     of this Act.
       (2) Rehabilitation requirements.--
       (A) In general.--The amendments made by subsection (b) 
     shall apply with respect to housing credit dollar amounts 
     allocated after the date of the enactment of this Act.
       (B) Buildings not subject to allocation limits.--To the 
     extent paragraph (1) of section 42(h) of the Internal Revenue 
     Code of 1986 does not apply to any building by reason of 
     paragraph (4) thereof, the amendments made by subsection (b) 
     shall apply to buildings placed in service after the date of 
     the enactment of this Act.

     SEC. 3004. OTHER SIMPLIFICATION AND REFORM OF LOW-INCOME 
                   HOUSING TAX INCENTIVES.

       (a) Repeal Prohibition on Moderate Rehabilitation 
     Assistance.--Paragraph (2) of section 42(c) (defining 
     qualified low-income building) is amended by striking the 
     flush sentence at the end.
       (b) Modification of Time Limit for Incurring 10 Percent of 
     Project's Cost.--Clause (ii) of section 42(h)(1)(E) is 
     amended by striking ``(as of the later of the date which is 6 
     months after the date that the allocation was made or the 
     close of the calendar year in which the allocation is made)'' 
     and inserting ``(as of the date which is 1 year after the 
     date that the allocation was made)''.
       (c) Repeal of Bonding Requirement on Disposition of 
     Building.--Paragraph (6) of section 42(j) (relating to no 
     recapture on disposition of building (or interest therein) 
     where bond posted) is amended to read as follows:
       ``(6) No recapture on disposition of building which 
     continues in qualified use.--
       ``(A) In general.--The increase in tax under this 
     subsection shall not apply solely by reason of the 
     disposition of a building (or an interest therein) if it is 
     reasonably expected that such building will continue to be 
     operated as a qualified low-income building for the remaining 
     compliance period with respect to such building.
       ``(B) Statute of limitations.--If a building (or an 
     interest therein) is disposed of during any taxable year and 
     there is any reduction in the qualified basis of such 
     building which results in an increase in tax under this 
     subsection for such taxable or any subsequent taxable year, 
     then--
       ``(i) the statutory period for the assessment of any 
     deficiency with respect to such increase in tax shall not 
     expire before the expiration of 3 years from the date the 
     Secretary is notified by the taxpayer (in such manner as the 
     Secretary may prescribe) of such reduction in qualified 
     basis, and
       ``(ii) such deficiency may be assessed before the 
     expiration of such 3-year period notwithstanding the 
     provisions of any other law or rule of law which would 
     otherwise prevent such assessment.''.
       (d) Energy Efficiency and Historic Nature Taken Into 
     Account in Making Allocations.--Subparagraph (C) of section 
     42(m)(1) (relating to plans for allocation of credit among 
     projects) is amended by striking ``and'' at the end of clause 
     (vii), by striking the period at the end of clause (viii) and 
     inserting a comma, and by adding at the end the following new 
     clauses:
       ``(ix) the energy efficiency of the project, and
       ``(x) the historic nature of the project.''.
       (e) Continued Eligibility for Students Who Received Foster 
     Care Assistance.--Clause (i) of section 42(i)(3)(D) is 
     amended by striking ``or'' at the end of subclause (I), by 
     redesignating subclause (II) as subclause (III), and by 
     inserting after subclause (I) the following new subclause:

       ``(II) a student who was previously under the care and 
     placement responsibility of the State agency responsible for 
     administering a plan under part B or part E of title IV of 
     the Social Security Act, or''.

       (f) Treatment of Rural Projects.--Section 42(i) (relating 
     to definitions and special rules) is amended by adding at the 
     end the following new paragraph:
       ``(8) Treatment of rural projects.--For purposes of this 
     section, in the case of any project for residential rental 
     property located in a rural area (as defined in section 520 
     of the Housing Act of 1949), any income limitation measured 
     by reference to area median gross income shall be measured by 
     reference to the greater of area median gross income or 
     national non-metropolitan median income. The preceding 
     sentence shall not apply with respect to any building if 
     paragraph (1) of section 42(h) does not apply by reason of 
     paragraph (4) thereof to any portion of the credit determined 
     under this section with respect to such building.''.
       (g) Clarification of General Public Use Requirement.--
     Subsection (c) of section 42 is amended by adding at the end 
     the following new paragraph:
       ``(3) Clarification of general public use requirement.--
       ``(A) In general.--A building which meets the requirements 
     of subparagraph (B) shall not fail to be treated as a 
     qualified low-income building solely because occupancy in 
     such building is restricted to individuals who have special 
     needs, share a common occupation or common interests, or are 
     members of a specified group based on Federal, State, or 
     local programs or requirements.
       ``(B) Basic public use requirements.--A building meets the 
     requirements of this subparagraph if--
       ``(i) such building is used consistent with housing policy 
     governing non-discrimination as evidenced by rules and 
     regulations of the Department of Housing and Urban 
     Development,
       ``(ii) occupancy in such building is not restricted on the 
     basis of membership in a social organization or on the basis 
     of employment by specific employers, and
       ``(iii) such building is not part of a hospital, nursing 
     home, sanitarium, lifecare facility, trailer park, or 
     intermediate care facility for the mentally or physically 
     handicapped.''.
       (h) GAO Study Regarding Modifications to Low-Income Housing 
     Tax Credit.--Not later than December 31, 2012, the 
     Comptroller General of the United States shall submit to 
     Congress a report which analyzes the implementation of the 
     modifications made by this subtitle to the low-income housing 
     tax credit under section 42 of the Internal Revenue Code of 
     1986. Such report shall include an analysis of the 
     distribution of credit allocations before and after the 
     effective date of such modifications.
       (i) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to buildings placed in service after the date of the 
     enactment of this Act.
       (2) Repeal of bonding requirement on disposition of 
     building.--The amendment made by subsection (c) shall apply 
     to--
       (A) interests in buildings disposed after the date of the 
     enactment of this Act, and
       (B) interests in buildings disposed of on or before such 
     date if--
       (i) it is reasonably expected that such building will 
     continue to be operated as a qualified low-income building 
     (within the meaning of section 42 of the Internal Revenue 
     Code of 1986) for the remaining compliance period (within the 
     meaning of such section) with respect to such building, and
       (ii) the taxpayer elects the application of this 
     subparagraph with respect to such disposition.
       (3) Energy efficiency and historic nature taken into 
     account in making allocations.--The amendments made by 
     subsection (d) shall apply to allocations made after December 
     31, 2008.
       (4) Continued eligibility for students who received foster 
     care assistance.--The amendments made by subsection (e) shall 
     apply to determinations made after the date of the enactment 
     of this Act.
       (5) Treatment of rural projects.--The amendment made by 
     subsection (f) shall apply to determinations made after the 
     date of the enactment of this Act.
       (6) Clarification of general public use requirement.--The 
     amendment made by subsection (g) shall apply to buildings 
     placed in service before, on, or after the date of the 
     enactment of this Act.

     SEC. 3005. TREATMENT OF MILITARY BASIC PAY.

       (a) In General.--Subparagraph (B) of section 142(d)(2) 
     (relating to income of individuals; area median gross income) 
     is amended--
       (1) by striking ``The income'' and inserting the following:
       ``(i) In general.--The income'', and
       (2) by adding at the end the following:
       ``(ii) Special rule relating to basic housing allowances.--
     For purposes of determining income under this subparagraph, 
     payments under section 403 of title 37, United States Code, 
     as a basic pay allowance for housing shall be disregarded 
     with respect to any qualified building.
       ``(iii) Qualified building.--For purposes of clause (ii), 
     the term `qualified building' means any building located--

       ``(I) in any county in which is located a qualified 
     military installation to which the number of members of the 
     Armed Forces of the United States assigned to units based out 
     of such qualified military installation, as of June 1, 2008, 
     has increased by not less than 20 percent, as compared to 
     such number on December 31, 2005, or
       ``(II) in any county adjacent to a county described in 
     subclause (I).

       ``(iv) Qualified military installation.--For purposes of 
     clause (iii), the term `qualified military installation' 
     means any military installation or facility the number of 
     members of the Armed Forces of the United States assigned to 
     which, as of June 1, 2008, is not less than 1,000.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) determinations made after the date of the enactment of 
     this Act and before January 1, 2012, in the case of any 
     qualified building (as defined in section 142(d)(2)(B)(iii) 
     of the Internal Revenue Code of 1986)--
       (A) with respect to which housing credit dollar amounts 
     have been allocated before the date of the enactment of this 
     Act, or

[[Page S6791]]

       (B) with respect to buildings placed in service before such 
     date of enactment, to the extent paragraph (1) of section 
     42(h) of such Code does not apply to such building by reason 
     of paragraph (4) thereof, but only with respect to bonds 
     issued before such date of enactment, and
       (2) determinations made after the date of enactment of this 
     Act, in the case of qualified buildings (as so defined)--
       (A) with respect to which housing credit dollar amounts are 
     allocated after the date of the enactment of this Act and 
     before January 1, 2012, or
       (B) with respect to which buildings placed in service after 
     the date of enactment of this Act and before January 1, 2012, 
     to the extent paragraph (1) of section 42(h) of such Code 
     does not apply to such building by reason of paragraph (4) 
     thereof, but only with respect to bonds issued after such 
     date of enactment and before January 1, 2012.

        PART II--MODIFICATIONS TO TAX-EXEMPT HOUSING BOND RULES

     SEC. 3007. RECYCLING OF TAX-EXEMPT DEBT FOR FINANCING 
                   RESIDENTIAL RENTAL PROJECTS.

       (a) In General.--Subsection (i) of section 146 (relating to 
     treatment of refunding issues) is amended by adding at the 
     end the following new paragraph:
       ``(6) Treatment of certain residential rental project bonds 
     as refunding bonds irrespective of obligor.--
       ``(A) In general.--If, during the 6-month period beginning 
     on the date of a repayment of a loan financed by an issue 95 
     percent or more of the net proceeds of which are used to 
     provide projects described in section 142(d), such repayment 
     is used to provide a new loan for any project so described, 
     any bond which is issued to refinance such issue shall be 
     treated as a refunding issue to the extent the principal 
     amount of such refunding issue does not exceed the principal 
     amount of the bonds refunded.
       ``(B) Limitations.--Subparagraph (A) shall apply to only 
     one refunding of the original issue and only if--
       ``(i) the refunding issue is issued not later than 4 years 
     after the date on which the original issue was issued,
       ``(ii) the latest maturity date of any bond of the 
     refunding issue is not later than 34 years after the date on 
     which the refunded bond was issued, and
       ``(iii) the refunding issue is approved in accordance with 
     section 147(f) before the issuance of the refunding issue.''.
       (b) Low-Income Housing Credit.--Clause (ii) of section 
     42(h)(4)(A) is amended by inserting ``or such financing is 
     refunded as described in section 146(i)(6)'' before the 
     period at the end.
       (c) Effective Date.--The amendments made by this section 
     shall apply to repayments of loans received after the date of 
     the enactment of this Act.

     SEC. 3008. COORDINATION OF CERTAIN RULES APPLICABLE TO LOW-
                   INCOME HOUSING CREDIT AND QUALIFIED RESIDENTIAL 
                   RENTAL PROJECT EXEMPT FACILITY BONDS.

       (a) Determination of Next Available Unit.--Paragraph (3) of 
     section 142(d) (relating to current income determinations) is 
     amended by adding at the end the following new subparagraph:
       ``(C) Exception for projects with respect to which 
     affordable housing credit is allowed.--In the case of a 
     project with respect to which credit is allowed under section 
     42, the second sentence of subparagraph (B) shall be applied 
     by substituting `building (within the meaning of section 42)' 
     for `project'.''.
       (b) Students.--Paragraph (2) of section 142(d) (relating to 
     definitions and special rules) is amended by adding at the 
     end the following new subparagraph:
       ``(C) Students.--Rules similar to the rules of 42(i)(3)(D) 
     shall apply for purposes of this subsection.''.
       (c) Single-Room Occupancy Units.--Paragraph (2) of section 
     142(d) (relating to definitions and special rules), as 
     amended by subsection (b), is amended by adding at the end 
     the following new subparagraph:
       ``(D) Single-room occupancy units.--A unit shall not fail 
     to be treated as a residential unit merely because such unit 
     is a single-room occupancy unit (within the meaning of 
     section 42).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to determinations of the status of qualified 
     residential rental projects for periods beginning after the 
     date of the enactment of this Act, with respect to bonds 
     issued before, on, or after such date.

  PART III--REFORMS RELATED TO THE LOW-INCOME HOUSING CREDIT AND TAX-
                          EXEMPT HOUSING BONDS

     SEC. 3009. HOLD HARMLESS FOR REDUCTIONS IN AREA MEDIAN GROSS 
                   INCOME.

       (a) In General.--Paragraph (2) of section 142(d), as 
     amended by section 3008, is amended by adding at the end the 
     following new subparagraph:
       ``(E) Hold harmless for reductions in area median gross 
     income.--
       ``(i) In general.--Any determination of area median gross 
     income under subparagraph (B) with respect to any project for 
     any calendar year after 2008 shall not be less than the area 
     median gross income determined under such subparagraph with 
     respect to such project for the calendar year preceding the 
     calendar year for which such determination is made.
       ``(ii) Special rule for certain census changes.--In the 
     case of a HUD hold harmless impacted project, the area median 
     gross income with respect to such project for any calendar 
     year after 2008 (hereafter in this clause referred to as the 
     current calendar year) shall be the greater of the amount 
     determined without regard to this clause or the sum of--

       ``(I) the area median gross income determined under the HUD 
     hold harmless policy with respect to such project for 
     calendar year 2008, plus
       ``(II) any increase in the area median gross income 
     determined under subparagraph (B) (determined without regard 
     to the HUD hold harmless policy and this subparagraph) with 
     respect to such project for the current calendar year over 
     the area median gross income (as so determined) with respect 
     to such project for calendar year 2008.

       ``(iii) HUD hold harmless policy.--The term `HUD hold 
     harmless policy' means the regulations under which a policy 
     similar to the rules of clause (i) applied to prevent a 
     change in the method of determining area median gross income 
     from resulting in a reduction in the area median gross income 
     determined with respect to certain projects in calendar years 
     2007 and 2008.
       ``(iv) HUD hold harmless impacted project.--The term `HUD 
     hold harmless impacted project' means any project with 
     respect to which area median gross income was determined 
     under subparagraph (B) for calendar year 2007 or 2008 if such 
     determination would have been less but for the HUD hold 
     harmless policy.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to determinations of area median gross income for 
     calendar years after 2008.

     SEC. 3010. EXCEPTION TO ANNUAL CURRENT INCOME DETERMINATION 
                   REQUIREMENT WHERE DETERMINATION NOT RELEVANT.

       (a) In General.--Subparagraph (A) of section 142(d)(3) is 
     amended by adding at the end the following new sentence: 
     ``The preceding sentence shall not apply with respect to any 
     project for any year if during such year no residential unit 
     in the project is occupied by a new resident whose income 
     exceeds the applicable income limit.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years ending after the date of the enactment 
     of this Act.

                   Subtitle B--Single Family Housing

     SEC. 3011. FIRST-TIME HOMEBUYER CREDIT.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 is amended by redesignating section 36 as section 
     37 and by inserting after section 35 the following new 
     section:

     ``SEC. 36. FIRST-TIME HOMEBUYER CREDIT.

       ``(a) Allowance of Credit.--In the case of an individual 
     who is a first-time homebuyer of a principal residence in the 
     United States during a taxable year, there shall be allowed 
     as a credit against the tax imposed by this subtitle for such 
     taxable year an amount equal to 10 percent of the purchase 
     price of the residence.
       ``(b) Limitations.--
       ``(1) Dollar limitation.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the credit allowed under subsection (a) shall not 
     exceed $8,000.
       ``(B) Married individuals filing separately.--In the case 
     of a married individual filing a separate return, 
     subparagraph (A) shall be applied by substituting `$4,000' 
     for `$8,000'.
       ``(C) Other individuals.--If two or more individuals who 
     are not married purchase a principal residence, the amount of 
     the credit allowed under subsection (a) shall be allocated 
     among such individuals in such manner as the Secretary may 
     prescribe, except that the total amount of the credits 
     allowed to all such individuals shall not exceed $8,000.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--The amount allowable as a credit under 
     subsection (a) (determined without regard to this paragraph) 
     for the taxable year shall be reduced (but not below zero) by 
     the amount which bears the same ratio to the amount which is 
     so allowable as--
       ``(i) the excess (if any) of--

       ``(I) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(II) $75,000 ($150,000 in the case of a joint return), 
     bears to

       ``(ii) $20,000.
       ``(B) Modified adjusted gross income.--For purposes of 
     subparagraph (A), the term `modified adjusted gross income' 
     means the adjusted gross income of the taxpayer for the 
     taxable year increased by any amount excluded from gross 
     income under section 911, 931, or 933.
       ``(c) Definitions.--For purposes of this section--
       ``(1) First-time homebuyer.--The term `first-time 
     homebuyer' means any individual if such individual (and if 
     married, such individual's spouse) had no present ownership 
     interest in a principal residence during the 3-year period 
     ending on the date of the purchase of the principal residence 
     to which this section applies.
       ``(2) Principal residence.--The term `principal residence' 
     has the same meaning as when used in section 121.
       ``(3) Purchase.--
       ``(A) In general.--The term `purchase' means any 
     acquisition, but only if--
       ``(i) the property is not acquired from a person related to 
     the person acquiring it, and
       ``(ii) the basis of the property in the hands of the person 
     acquiring it is not determined--

       ``(I) in whole or in part by reference to the adjusted 
     basis of such property in the hands of the person from whom 
     acquired, or
       ``(II) under section 1014(a) (relating to property acquired 
     from a decedent).

       ``(B) Construction.--A residence which is constructed by 
     the taxpayer shall be treated as purchased by the taxpayer on 
     the date the taxpayer first occupies such residence.
       ``(4) Purchase price.--The term `purchase price' means the 
     adjusted basis of the principal residence on the date such 
     residence is purchased.
       ``(5) Related persons.--A person shall be treated as 
     related to another person if the relationship between such 
     persons would result in the disallowance of losses under 
     section 267 or

[[Page S6792]]

     707(b) (but, in applying section 267(b) and (c) for purposes 
     of this section, paragraph (4) of section 267(c) shall be 
     treated as providing that the family of an individual shall 
     include only his spouse, ancestors, and lineal descendants).
       ``(d) Exceptions.--No credit under subsection (a) shall be 
     allowed to any taxpayer for any taxable year with respect to 
     the purchase of a residence if--
       ``(1) a credit under section 1400C (relating to first-time 
     homebuyer in the District of Columbia) is allowable to the 
     taxpayer (or the taxpayer's spouse) for such taxable year or 
     any prior taxable year,
       ``(2) the residence is financed by the proceeds of a 
     qualified mortgage issue the interest on which is exempt from 
     tax under section 103,
       ``(3) the taxpayer is a nonresident alien, or
       ``(4) the taxpayer disposes of such residence (or such 
     residence ceases to be the principal residence of the 
     taxpayer (and, if married, the taxpayer's spouse)) before the 
     close of such taxable year.
       ``(e) Reporting.--If the Secretary requires information 
     reporting under section 6045 by a person described in 
     subsection (e)(2) thereof to verify the eligibility of 
     taxpayers for the credit allowable by this section, the 
     exception provided by section 6045(e) shall not apply.
       ``(f) Recapture of Credit.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, if a credit under subsection (a) is allowed to a 
     taxpayer, the tax imposed by this chapter shall be increased 
     by 6\2/3\ percent of the amount of such credit for each 
     taxable year in the recapture period.
       ``(2) Acceleration of recapture.--If a taxpayer disposes of 
     the principal residence with respect to which a credit was 
     allowed under subsection (a) (or such residence ceases to be 
     the principal residence of the taxpayer (and, if married, the 
     taxpayer's spouse)) before the end of the recapture period--
       ``(A) the tax imposed by this chapter for the taxable year 
     of such disposition or cessation, shall be increased by the 
     excess of the amount of the credit allowed over the amounts 
     of tax imposed by paragraph (1) for preceding taxable years, 
     and
       ``(B) paragraph (1) shall not apply with respect to such 
     credit for such taxable year or any subsequent taxable year.
       ``(3) Limitation based on gain.--In the case of the sale of 
     the principal residence to a person who is not related to the 
     taxpayer, the increase in tax determined under paragraph (2) 
     shall not exceed the amount of gain (if any) on such sale. 
     Solely for purposes of the preceding sentence, the adjusted 
     basis of such residence shall be reduced by the amount of the 
     credit allowed under subsection (a) to the extent not 
     previously recaptured under paragraph (1).
       ``(4) Exceptions.--
       ``(A) Death of taxpayer.--Paragraphs (1) and (2) shall not 
     apply to any taxable year ending after the date of the 
     taxpayer's death.
       ``(B) Involuntary conversion.--Paragraph (2) shall not 
     apply in the case of a residence which is compulsorily or 
     involuntarily converted (within the meaning of section 
     1033(a)) if the taxpayer acquires a new principal residence 
     during the 2-year period beginning on the date of the 
     disposition or cessation referred to in paragraph (2). 
     Paragraph (2) shall apply to such new principal residence 
     during the recapture period in the same manner as if such new 
     principal residence were the converted residence.
       ``(C) Transfers between spouses or incident to divorce.--In 
     the case of a transfer of a residence to which section 
     1041(a) applies--
       ``(i) paragraph (2) shall not apply to such transfer, and
       ``(ii) in the case of taxable years ending after such 
     transfer, paragraphs (1) and (2) shall apply to the 
     transferee in the same manner as if such transferee were the 
     transferor (and shall not apply to the transferor).
       ``(5) Joint returns.--In the case of a credit allowed under 
     subsection (a) with respect to a joint return, half of such 
     credit shall be treated as having been allowed to each 
     individual filing such return for purposes of this 
     subsection.
       ``(6) Recapture period.--For purposes of this subsection, 
     the term `recapture period' means the 15 taxable years 
     beginning with the second taxable year following the taxable 
     year in which the purchase of the principal residence for 
     which a credit is allowed under subsection (a) was made.
       ``(g) Application of Section.--This section shall only 
     apply to a principal residence purchased by the taxpayer on 
     or after April 9, 2008, and before April 1, 2009.''.
       (b) Conforming Amendments.--
       (1) Section 26(b)(2) is amended by striking ``and'' at the 
     end of subparagraph (U), by striking the period and inserting 
     ``, and'' and the end of subparagraph (V), and by inserting 
     after subparagraph (V) the following new subparagraph:
       ``(W) section 36(f) (relating to recapture of homebuyer 
     credit).''.
       (2) Section 6211(b)(4)(A) is amended by striking ``34,'' 
     and all that follows through ``6428'' and inserting ``34, 35, 
     36, 53(e), and 6428''.
       (3) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting ``, 36,'' after ``section 35''.
       (4) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by redesignating the 
     item relating to section 36 as an item relating to section 37 
     and by inserting before such item the following new item:

``Sec. 36. First-time homebuyer credit.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to residences purchased on or after April 9, 
     2008, in taxable years ending on or after such date.

     SEC. 3012. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY 
                   TAXES FOR NONITEMIZERS.

       (a) In General.--Section 63(c)(1) (defining standard 
     deduction) is amended by striking ``and'' at the end of 
     subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(C) in the case of any taxable year beginning in 2008, 
     the real property tax deduction.''.
       (b) Definition.--Section 63(c) is amended by adding at the 
     end the following new paragraph:
       ``(8) Real property tax deduction.--
       ``(A) In general.--For purposes of paragraph (1), the real 
     property tax deduction is the lesser of--
       ``(i) the amount allowable as a deduction under this 
     chapter for State and local taxes described in section 
     164(a)(1), or
       ``(ii) $500 ($1,000 in the case of a joint return).

     Any taxes taken into account under section 62(a) shall not be 
     taken into account under this paragraph.
       ``(B) Exception.--The real property tax deduction shall not 
     be allowed in the case of a taxpayer living in a jurisdiction 
     in which the rate of tax for all residential real property 
     taxes is increased, net of any tax rebates, through rate 
     increases or the repeal or reduction of otherwise applicable 
     deductions, credits, or offsets, at any time after the date 
     of the enactment of this paragraph and before December 31, 
     2008. This subparagraph shall not apply in the case of a 
     jurisdiction in which the rate of tax for all residential 
     real property taxes is increased pursuant to an equalization 
     policy in effect before the date of the enactment of this 
     paragraph or as a result of any votes of the residents of 
     such jurisdiction to increase funding for pre-school, 
     primary, secondary, or higher education.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

                     Subtitle C--General Provisions

     SEC. 3021. TEMPORARY LIBERALIZATION OF TAX-EXEMPT HOUSING 
                   BOND RULES.

       (a) Temporary Increase in Volume Cap.--
       (1) In general.--Subsection (d) of section 146 is amended 
     by adding at the end the following new paragraph:
       ``(5) Increase and set aside for housing bonds for 2008.--
       ``(A) Increase for 2008.--In the case of calendar year 
     2008, the State ceiling for each State shall be increased by 
     an amount equal to $11,000,000,000 multiplied by a fraction--
       ``(i) the numerator of which is the State ceiling 
     applicable to the State for calendar year 2008, determined 
     without regard to this paragraph, and
       ``(ii) the denominator of which is the sum of the State 
     ceilings determined under clause (i) for all States.
       ``(B) Set aside.--
       ``(i) In general.--Any amount of the State ceiling for any 
     State which is attributable to an increase under this 
     paragraph shall be allocated solely for one or more qualified 
     housing issues.
       ``(ii) Qualified housing issue.--For purposes of this 
     paragraph, the term `qualified housing issue' means--

       ``(I) an issue described in section 142(a)(7) (relating to 
     qualified residential rental projects), or
       ``(II) a qualified mortgage issue (determined by 
     substituting `12-month period' for `42-month period' each 
     place it appears in section 143(a)(2)(D)(i)).''.

       (2) Carryforward of unused limitations.--Subsection (f) of 
     section 146 is amended by adding at the end the following new 
     paragraph:
       ``(6) Special rules for increased volume cap under 
     subsection (d)(5).--No amount which is attributable to the 
     increase under subsection (d)(5) may be used--
       ``(A) for any issue other than a qualified housing issue 
     (as defined in subsection (d)(5)), or
       ``(B) to issue any bond after calendar year 2010.''.
       (b) Temporary Rule for Use of Qualified Mortgage Bonds 
     Proceeds for Subprime Refinancing Loans.--
       (1) In general.--Section 143(k) (relating to other 
     definitions and special rules) is amended by adding at the 
     end the following new paragraph:
       ``(12) Special rules for subprime refinancings.--
       ``(A) In general.--Notwithstanding the requirements of 
     subsection (i)(1), the proceeds of a qualified mortgage issue 
     may be used to refinance a mortgage on a residence which was 
     originally financed by the mortgagor through a qualified 
     subprime loan.
       ``(B) Special rules.--In applying subparagraph (A) to any 
     refinancing--
       ``(i) subsection (a)(2)(D)(i) shall be applied by 
     substituting `12-month period' for `42-month period' each 
     place it appears,
       ``(ii) subsection (d) (relating to 3-year requirement) 
     shall not apply, and
       ``(iii) subsection (e) (relating to purchase price 
     requirement) shall be applied by using the market value of 
     the residence at the time of refinancing in lieu of the 
     acquisition cost.
       ``(C) Qualified subprime loan.--The term `qualified 
     subprime loan' means an adjustable rate single-family 
     residential mortgage loan made after December 31, 2001, and 
     before January 1, 2008, that the bond issuer determines would 
     be reasonably likely to cause financial hardship to the 
     borrower if not refinanced.
       ``(D) Termination.--This paragraph shall not apply to any 
     bonds issued after December 31, 2010.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 3022. REPEAL OF ALTERNATIVE MINIMUM TAX LIMITATIONS ON 
                   TAX-EXEMPT HOUSING BONDS, LOW-INCOME HOUSING 
                   TAX CREDIT, AND REHABILITATION CREDIT.

       (a) Tax-Exempt Interest on Certain Housing Bonds Exempted 
     From Alternative Minimum Tax.--

[[Page S6793]]

       (1) In general.--Subparagraph (C) of section 57(a)(5) 
     (relating to specified private activity bonds) is amended by 
     redesignating clauses (iii) and (iv) as clauses (iv) and (v), 
     respectively, and by inserting after clause (ii) the 
     following new clause:
       ``(iii) Exception for certain housing bonds.--For purposes 
     of clause (i), the term `private activity bond' shall not 
     include any bond issued after the date of the enactment of 
     this clause if such bond is--

       ``(I) an exempt facility bond issued as part of an issue 95 
     percent or more of the net proceeds of which are to be used 
     to provide qualified residential rental projects (as defined 
     in section 142(d)),
       ``(II) a qualified mortgage bond (as defined in section 
     143(a)), or
       ``(III) a qualified veterans' mortgage bond (as defined in 
     section 143(b)).

     The preceding sentence shall not apply to any refunding bond 
     unless such preceding sentence applied to the refunded bond 
     (or in the case of a series of refundings, the original 
     bond).''.
       (2) No adjustment to adjusted current earnings.--
     Subparagraph (B) of section 56(g)(4) is amended by adding at 
     the end the following new clause:
       ``(iii) Tax exempt interest on certain housing bonds.--
     Clause (i) shall not apply in the case of any interest on a 
     bond to which section 57(a)(5)(C)(iii) applies.''.
       (b) Allowance of Low-Income Housing Credit Against 
     Alternative Minimum Tax.--Subparagraph (B) of section 
     38(c)(4) (relating to specified credits) is amended by 
     redesignating clauses (ii) through (iv) as clauses (iii) 
     through (v) and inserting after clause (i) the following new 
     clause:
       ``(ii) the credit determined under section 42 to the extent 
     attributable to buildings placed in service after December 
     31, 2007,''.
       (c) Allowance of Rehabilitation Credit Against Alternative 
     Minimum Tax.--Subparagraph (B) of section 38(c)(4), as 
     amended by subsection (b), is amended by striking ``and'' at 
     the end of clause (iv), by redesignating clause (v) as clause 
     (vi), and by inserting after clause (iv) the following new 
     clause:
       ``(v) the credit determined under section 47 to the extent 
     attributable to qualified rehabilitation expenditures 
     properly taken into account for periods after December 31, 
     2007, and''.
       (d) Effective Date.--
       (1) Housing bonds.--The amendments made by subsection (a) 
     shall apply to bonds issued after the date of the enactment 
     of this Act.
       (2) Low income housing credit.--The amendments made by 
     subsection (b) shall apply to credits determined under 
     section 42 of the Internal Revenue Code of 1986 to the extent 
     attributable to buildings placed in service after December 
     31, 2007.
       (3) Rehabilitation credit.--The amendments made by 
     subsection (c) shall apply to credits determined under 
     section 47 of the Internal Revenue Code of 1986 to the extent 
     attributable to qualified rehabilitation expenditures 
     properly taken into account for periods after December 31, 
     2007.

     SEC. 3023. BONDS GUARANTEED BY FEDERAL HOME LOAN BANKS 
                   ELIGIBLE FOR TREATMENT AS TAX-EXEMPT BONDS.

       (a) In General.--Subparagraph (A) of section 149(b)(3) 
     (relating to exceptions for certain insurance programs) is 
     amended by striking ``or'' at the end of clause (ii), by 
     striking the period at the end of clause (iii) and inserting 
     ``, or'' and by adding at the end the following new clause:
       ``(iv) subject to subparagraph (E), any guarantee by a 
     Federal home loan bank made in connection with the original 
     issuance of a bond during the period beginning on the date of 
     the enactment of this clause and ending on December 31, 2010 
     (or a renewal or extension of a guarantee so made).''.
       (b) Safety and Soundness Requirements.--Paragraph (3) of 
     section 149(b) is amended by adding at the end the following 
     new subparagraph:
       ``(E) Safety and soundness requirements for federal home 
     loan banks.--Clause (iv) of subparagraph (A) shall not apply 
     to any guarantee by a Federal home loan bank unless such bank 
     meets safety and soundness collateral requirements for such 
     guarantees which are at least as stringent as such 
     requirements which apply under regulations applicable to such 
     guarantees by Federal home loan banks as in effect on April 
     9, 2008.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to guarantees made after the date of the 
     enactment of this Act.

     SEC. 3024. MODIFICATION OF RULES PERTAINING TO FIRPTA 
                   NONFOREIGN AFFIDAVITS.

       (a) In General.--Subsection (b) of section 1445 (relating 
     to exemptions) is amended by adding at the end the following:
       ``(9) Alternative procedure for furnishing nonforeign 
     affidavit.--For purposes of paragraphs (2) and (7)--
       ``(A) In general.--Paragraph (2) shall be treated as 
     applying to a transaction if, in connection with a 
     disposition of a United States real property interest--
       ``(i) the affidavit specified in paragraph (2) is furnished 
     to a qualified substitute, and
       ``(ii) the qualified substitute furnishes a statement to 
     the transferee stating, under penalty of perjury, that the 
     qualified substitute has such affidavit in his possession.
       ``(B) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this paragraph.''.
       (b) Qualified Substitute.--Subsection (f) of section 1445 
     (relating to definitions) is amended by adding at the end the 
     following new paragraph:
       ``(6) Qualified substitute.--The term `qualified 
     substitute' means, with respect to a disposition of a United 
     States real property interest--
       ``(A) the person (including any attorney or title company) 
     responsible for closing the transaction, other than the 
     transferor's agent, and
       ``(B) the transferee's agent.''.
       (c) Exemption Not To Apply if Knowledge or Notice That 
     Affidavit or Statement Is False.--
       (1) In general.--Paragraph (7) of section 1445(b) (relating 
     to special rules for paragraphs (2) and (3)) is amended to 
     read as follows:
       ``(7) Special rules for paragraphs (2), (3), and (9).--
     Paragraph (2), (3), or (9) (as the case may be) shall not 
     apply to any disposition--
       ``(A) if--
       ``(i) the transferee or qualified substitute has actual 
     knowledge that the affidavit referred to in such paragraph, 
     or the statement referred to in paragraph (9)(A)(ii), is 
     false, or
       ``(ii) the transferee or qualified substitute receives a 
     notice (as described in subsection (d)) from a transferor's 
     agent, transferee's agent, or qualified substitute that such 
     affidavit or statement is false, or
       ``(B) if the Secretary by regulations requires the 
     transferee or qualified substitute to furnish a copy of such 
     affidavit or statement to the Secretary and the transferee or 
     qualified substitute fails to furnish a copy of such 
     affidavit or statement to the Secretary at such time and in 
     such manner as required by such regulations.''.
       (2) Liability.--
       (A) Notice.--Paragraph (1) of section 1445(d) (relating to 
     notice of false affidavit; foreign corporations) is amended 
     to read as follows:
       ``(1) Notice of false affidavit; foreign corporations.--
     If--
       ``(A) the transferor furnishes the transferee or qualified 
     substitute an affidavit described in paragraph (2) of 
     subsection (b) or a domestic corporation furnishes the 
     transferee an affidavit described in paragraph (3) of 
     subsection (b), and
       ``(B) in the case of--
       ``(i) any transferor's agent--

       ``(I) such agent has actual knowledge that such affidavit 
     is false, or
       ``(II) in the case of an affidavit described in subsection 
     (b)(2) furnished by a corporation, such corporation is a 
     foreign corporation, or

       ``(ii) any transferee's agent or qualified substitute, such 
     agent or substitute has actual knowledge that such affidavit 
     is false,
     such agent or qualified substitute shall so notify the 
     transferee at such time and in such manner as the Secretary 
     shall require by regulations.''.
       (B) Failure to furnish notice.--Paragraph (2) of section 
     1445(d) (relating to failure to furnish notice) is amended to 
     read as follows:
       ``(2) Failure to furnish notice.--
       ``(A) In general.--If any transferor's agent, transferee's 
     agent, or qualified substitute is required by paragraph (1) 
     to furnish notice, but fails to furnish such notice at such 
     time or times and in such manner as may be required by 
     regulations, such agent or substitute shall have the same 
     duty to deduct and withhold that the transferee would have 
     had if such agent or substitute had complied with paragraph 
     (1).
       ``(B) Liability limited to amount of compensation.--An 
     agent's or substitute's liability under subparagraph (A) 
     shall be limited to the amount of compensation the agent or 
     substitute derives from the transaction.''.
       (C) Conforming amendment.--The heading for section 1445(d) 
     is amended by striking ``or Transferee's Agents'' and 
     inserting ``, Transferee's Agents, or Qualified 
     Substitutes''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to dispositions of United States real property 
     interests after the date of the enactment of this Act.

     SEC. 3025. MODIFICATION OF DEFINITION OF TAX-EXEMPT USE 
                   PROPERTY FOR PURPOSES OF THE REHABILITATION 
                   CREDIT.

       (a) In General.--Subclause (I) of section 47(c)(2)(B)(v) is 
     amended by striking ``section 168(h)'' and inserting 
     ``section 168(h), except that `50 percent' shall be 
     substituted for `35 percent' in paragraph (1)(B)(iii) 
     thereof''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to expenditures properly taken into account for 
     periods after December 31, 2007.

     SEC. 3026. EXTENSION OF SPECIAL RULE FOR MORTGAGE REVENUE 
                   BONDS FOR RESIDENCES LOCATED IN DISASTER AREAS.

       (a) In General.--Paragraph (11) of section 143(k) is 
     amended--
       (1) by striking ``December 31, 1996'' and inserting ``May 
     1, 2008'', and
       (2) by striking ``January 1, 1999'' and inserting ``January 
     1, 2010''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after May 1, 2008.

       TITLE II--REFORMS RELATED TO REAL ESTATE INVESTMENT TRUSTS

      Subtitle A--Foreign Currency and Other Qualified Activities

     SEC. 3031. REVISIONS TO REIT INCOME TESTS.

       (a) Foreign Currency Gains Not Gross Income in Applying 
     REIT Income Tests.--Section 856 (defining real estate 
     investment trust) is amended by adding at the end the 
     following new subsection:
       ``(n) Rules Regarding Foreign Currency Transactions.--
       ``(1) In general.--For purposes of this part--
       ``(A) passive foreign exchange gain for any taxable year 
     shall not constitute gross income for purposes of subsection 
     (c)(2), and
       ``(B) real estate foreign exchange gain for any taxable 
     year shall not constitute gross income for purposes of 
     subsection (c)(3).
       ``(2) Real estate foreign exchange gain.--For purposes of 
     this subsection, the term `real estate foreign exchange gain' 
     means--
       ``(A) foreign currency gain (as defined in section 
     988(b)(1)) which is attributable to--

[[Page S6794]]

       ``(i) any item of income or gain described in subsection 
     (c)(3),
       ``(ii) the acquisition or ownership of obligations secured 
     by mortgages on real property or on interests in real 
     property (other than foreign currency gain attributable to 
     any item of income or gain described in clause (i)), or
       ``(iii) becoming or being the obligor under obligations 
     secured by mortgages on real property or on interests in real 
     property (other than foreign currency gain attributable to 
     any item of income or gain described in clause (i)),
       ``(B) section 987 gain attributable to a qualified business 
     unit (as defined by section 989) of the real estate 
     investment trust, but only if such qualified business unit 
     meets the requirements under--
       ``(i) subsection (c)(3) for the taxable year, and
       ``(ii) subsection (c)(4)(A) at the close of each quarter 
     that the real estate investment trust has directly or 
     indirectly held the qualified business unit, and
       ``(C) any other foreign currency gain as determined by the 
     Secretary.
       ``(3) Passive foreign exchange gain.--For purposes of this 
     subsection, the term `passive foreign exchange gain' means--
       ``(A) real estate foreign exchange gain,
       ``(B) foreign currency gain (as defined in section 
     988(b)(1)) which is not described in subparagraph (A) and 
     which is attributable to--
       ``(i) any item of income or gain described in subsection 
     (c)(2),
       ``(ii) the acquisition or ownership of obligations (other 
     than foreign currency gain attributable to any item of income 
     or gain described in clause (i)), or
       ``(iii) becoming or being the obligor under obligations 
     (other than foreign currency gain attributable to any item of 
     income or gain described in clause (i)), and
       ``(C) any other foreign currency gain as determined by the 
     Secretary.
       ``(4) Exception for income from substantial and regular 
     trading.--Notwithstanding this subsection or any other 
     provision of this part, any section 988 gain derived by a 
     corporation, trust, or association from engaging in 
     substantial and regular trading or dealing in securities (as 
     defined in section 475(c)(2)) shall constitute gross income 
     which does not qualify under paragraph (2) or (3) of 
     subsection (c). This paragraph shall not apply to income 
     which does not constitute gross income by reason of 
     subsection (c)(5)(G).''.
       (b) Addition to REIT Hedging Rule.--Subparagraph (G) of 
     section 856(c)(5) is amended to read as follows:
       ``(G) Treatment of certain hedging instruments.--Except to 
     the extent as determined by the Secretary--
       ``(i) any income of a real estate investment trust from a 
     hedging transaction (as defined in clause (ii) or (iii) of 
     section 1221(b)(2)(A)) which is clearly identified pursuant 
     to section 1221(a)(7), including gain from the sale or 
     disposition of such a transaction, shall not constitute gross 
     income under paragraphs (2) and (3) to the extent that the 
     transaction hedges any indebtedness incurred or to be 
     incurred by the trust to acquire or carry real estate assets, 
     and
       ``(ii) any income of a real estate investment trust from a 
     transaction entered into by the trust primarily to manage 
     risk of currency fluctuations with respect to any item of 
     income or gain described in paragraph (2) or (3) (or any 
     property which generates such income or gain), including gain 
     from the termination of such a transaction, shall not 
     constitute gross income under paragraphs (2) and (3), but 
     only if such transaction is clearly identified as such before 
     the close of the day on which it was acquired, originated, or 
     entered into (or such other time as the Secretary may 
     prescribe).''.
       (c) Authority To Exclude Items of Income From REIT Income 
     Tests.--Section 856(c)(5), as amended by the Heartland, 
     Habitat, Harvest, and Horticulture Act of 2008, is amended by 
     adding at the end the following new subparagraph:
       ``(J) Secretarial authority to exclude other items of 
     income.--To the extent necessary to carry out the purposes of 
     this part, the Secretary is authorized to determine, solely 
     for purposes of this part, whether any item of income or gain 
     which--
       ``(i) does not otherwise qualify under paragraph (2) or (3) 
     may be considered as not constituting gross income, or
       ``(ii) otherwise constitutes gross income not qualifying 
     under paragraph (2) or (3) may be considered as gross income 
     which qualifies under paragraph (2) or (3).''.

     SEC. 3032. REVISIONS TO REIT ASSET TESTS.

       (a) Clarification of Valuation Test.--The first sentence in 
     the matter following section 856(c)(4)(B)(iii)(III) is 
     amended by inserting ``(including a discrepancy caused solely 
     by the change in the foreign currency exchange rate used to 
     value a foreign asset)'' after ``such requirements''.
       (b) Clarification of Permissible Asset Category.--Section 
     856(c)(5), as amended by section 3031(c), is amended by 
     adding at the end the following new subparagraph:
       ``(K) Cash.--If the real estate investment trust or its 
     qualified business unit (as defined in section 989) uses any 
     foreign currency as its functional currency (as defined in 
     section 985(b)), the term `cash' includes such foreign 
     currency but only to the extent such foreign currency--
       ``(i) is held for use in the normal course of the 
     activities of the trust or qualified business unit which give 
     rise to items of income or gain described in paragraph (2) or 
     (3) of subsection (c) or are directly related to acquiring or 
     holding assets described in subsection (c)(4), and
       ``(ii) is not held in connection with an activity described 
     in subsection (n)(4).''.

     SEC. 3033. CONFORMING FOREIGN CURRENCY REVISIONS.

       (a) Net Income From Foreclosure Property.--Clause (i) of 
     section 857(b)(4)(B) is amended to read as follows:
       ``(i) gain (including any foreign currency gain, as defined 
     in section 988(b)(1)) from the sale or other disposition of 
     foreclosure property described in section 1221(a)(1) and the 
     gross income for the taxable year derived from foreclosure 
     property (as defined in section 856(e)), but only to the 
     extent such gross income is not described in (or, in the case 
     of foreign currency gain, not attributable to gross income 
     described in) section 856(c)(3) other than subparagraph (F) 
     thereof, over''.
       (b) Net Income From Prohibited Transactions.--Clause (i) of 
     section 857(b)(6)(B) is amended to read as follows:
       ``(i) the term `net income derived from prohibited 
     transactions' means the excess of the gain (including any 
     foreign currency gain, as defined in section 988(b)(1)) from 
     prohibited transactions over the deductions (including any 
     foreign currency loss, as defined in section 988(b)(2)) 
     allowed by this chapter which are directly connected with 
     prohibited transactions;''.

                 Subtitle B--Taxable REIT Subsidiaries

     SEC. 3041. CONFORMING TAXABLE REIT SUBSIDIARY ASSET TEST.

       Section 856(c)(4)(B)(ii) is amended--
       (1) by striking ``20 percent'' and inserting ``25 
     percent'', and
       (2) by striking ``REIT subsidiaries'' and all that follows, 
     and inserting ``REIT subsidiaries,''.

                        Subtitle C--Dealer Sales

     SEC. 3051. HOLDING PERIOD UNDER SAFE HARBOR.

       Section 857(b)(6) (relating to income from prohibited 
     transactions) is amended--
       (1) by striking ``4 years'' in subparagraphs (C)(i), 
     (C)(iv), and (D)(i) and inserting ``2 years'',
       (2) by striking ``4-year period'' in subparagraphs (C)(ii), 
     (D)(ii), and (D)(iii) and inserting ``2-year period'', and
       (3) by striking ``real estate asset''and all that follows 
     through ``if'' in the matter preceding clause (i) of 
     subparagraphs (C) and (D), respectively, and inserting ``real 
     estate asset (as defined in section 856(c)(5)(B)) and which 
     is described in section 1221(a)(1) if''.

     SEC. 3052. DETERMINING VALUE OF SALES UNDER SAFE HARBOR.

       Section 857(b)(6) is amended--
       (1) by striking the semicolon at the end of subparagraph 
     (C)(iii) and inserting ``, or (III) the fair market value of 
     property (other than sales of foreclosure property or sales 
     to which section 1033 applies) sold during the taxable year 
     does not exceed 10 percent of the fair market value of all of 
     the assets of the trust as of the beginning of the taxable 
     year;'', and
       (2) by adding ``or'' at the end of subclause (II) of 
     subparagraph (D)(iv) and by adding at the end of such 
     subparagraph the following new subclause:
       ``(III) the fair market value of property (other than sales 
     of foreclosure property or sales to which section 1033 
     applies) sold during the taxable year does not exceed 10 
     percent of the fair market value of all of the assets of the 
     trust as of the beginning of the taxable year,''.

                     Subtitle D--Health Care REITs

     SEC. 3061. CONFORMITY FOR HEALTH CARE FACILITIES.

       (a) Related Party Rentals.--Subparagraph (B) of section 
     856(d)(8) (relating to special rule for taxable REIT 
     subsidiaries) is amended to read as follows:
       ``(B) Exception for certain lodging facilities and health 
     care property.--The requirements of this subparagraph are met 
     with respect to an interest in real property which is a 
     qualified lodging facility (as defined in paragraph (9)(D)) 
     or a qualified health care property (as defined in subsection 
     (e)(6)(D)(i)) leased by the trust to a taxable REIT 
     subsidiary of the trust if the property is operated on behalf 
     of such subsidiary by a person who is an eligible independent 
     contractor. For purposes of this section, a taxable REIT 
     subsidiary is not considered to be operating or managing a 
     qualified health care property or qualified lodging facility 
     solely because it--
       ``(i) directly or indirectly possesses a license, permit, 
     or similar instrument enabling it to do so, or
       ``(ii) employs individuals working at such facility or 
     property located outside the United States, but only if an 
     eligible independent contractor is responsible for the daily 
     supervision and direction of such individuals on behalf of 
     the taxable REIT subsidiary pursuant to a management 
     agreement or similar service contract.''.
       (b) Eligible Independent Contractor.--Subparagraphs (A) and 
     (B) of section 856(d)(9) (relating to eligible independent 
     contractor) are amended to read as follows:
       ``(A) In general.--The term `eligible independent 
     contractor' means, with respect to any qualified lodging 
     facility or qualified health care property (as defined in 
     subsection (e)(6)(D)(i)), any independent contractor if, at 
     the time such contractor enters into a management agreement 
     or other similar service contract with the taxable REIT 
     subsidiary to operate such qualified lodging facility or 
     qualified health care property, such contractor (or any 
     related person) is actively engaged in the trade or business 
     of operating qualified lodging facilities or qualified health 
     care properties, respectively, for any person who is not a 
     related person with respect to the real estate investment 
     trust or the taxable REIT subsidiary.
       ``(B) Special rules.--Solely for purposes of this paragraph 
     and paragraph (8)(B), a person shall not fail to be treated 
     as an independent contractor with respect to any qualified 
     lodging facility or qualified health care property (as so 
     defined) by reason of the following:
       ``(i) The taxable REIT subsidiary bears the expenses for 
     the operation of such qualified lodging facility or qualified 
     health care property

[[Page S6795]]

     pursuant to the management agreement or other similar service 
     contract.
       ``(ii) The taxable REIT subsidiary receives the revenues 
     from the operation of such qualified lodging facility or 
     qualified health care property, net of expenses for such 
     operation and fees payable to the operator pursuant to such 
     agreement or contract.
       ``(iii) The real estate investment trust receives income 
     from such person with respect to another property that is 
     attributable to a lease of such other property to such person 
     that was in effect as of the later of--

       ``(I) January 1, 1999, or
       ``(II) the earliest date that any taxable REIT subsidiary 
     of such trust entered into a management agreement or other 
     similar service contract with such person with respect to 
     such qualified lodging facility or qualified health care 
     property.''.

       (c) Taxable Reit Subsidiaries.--The last sentence of 
     section 856(l)(3) is amended--
       (1) by inserting ``or a health care facility'' after ``a 
     lodging facility'', and
       (2) by inserting ``or health care facility'' after ``such 
     lodging facility''.

                      Subtitle E--Effective Dates

     SEC. 3071. EFFECTIVE DATES.

       (a) In General.--Except as otherwise provided in this 
     section, the amendments made by this title shall apply to 
     taxable years beginning after the date of the enactment of 
     this Act.
       (b) REIT Income Tests.--
       (1) The amendments made by section 3031(a) and (c) shall 
     apply to gains and items of income recognized after the date 
     of the enactment of this Act.
       (2) The amendment made by section 3031(b) shall apply to 
     transactions entered into after the date of the enactment of 
     this Act.
       (c) Conforming Foreign Currency Revisions.--
       (1) The amendment made by section 3033(a) shall apply to 
     gains recognized after the date of the enactment of this Act.
       (2) The amendment made by section 3033(b) shall apply to 
     gains and deductions recognized after the date of the 
     enactment of this Act.
       (d) Dealer Sales.--The amendments made by subtitle C shall 
     apply to sales made after the date of the enactment of this 
     Act.

                     TITLE III--REVENUE PROVISIONS

                     Subtitle A--General Provisions

     SEC. 3081. ELECTION TO ACCELERATE AMT AND R AND D CREDITS IN 
                   LIEU OF BONUS DEPRECIATION.

       (a) In General.--Section 168(k) is amended by adding at the 
     end the following new paragraph:
       ``(4) Election to accelerate amt and r and d credits in 
     lieu of bonus depreciation.--
       ``(A) In general.--If a corporation elects to have this 
     paragraph apply--
       ``(i) no additional depreciation shall be allowed under 
     paragraph (1) for any eligible qualified property placed in 
     service during any taxable year to which paragraph (1) would 
     otherwise apply,
       ``(ii) the applicable depreciation method used under this 
     section with respect to such eligible qualified property 
     shall be the straight line method rather than the method that 
     would otherwise be used, and
       ``(iii) the limitations described in subparagraph (B) for 
     such taxable year shall be increased by an aggregate amount 
     not in excess of the bonus depreciation amount for such 
     taxable year.
       ``(B) Limitations to be increased.--The limitations 
     described in this subparagraph are--
       ``(i) the limitation under section 38(c), and
       ``(ii) the limitation under section 53(c).
       ``(C) Bonus depreciation amount.--For purposes of this 
     paragraph--
       ``(i) In general.--The bonus depreciation amount for any 
     applicable taxable year is an amount equal to the product of 
     20 percent and the excess (if any) of--

       ``(I) the aggregate amount of depreciation which would be 
     determined under this section for property placed in service 
     during the taxable year if no election under this paragraph 
     were made, over
       ``(II) the aggregate amount of depreciation allowable under 
     this section for property placed in service during the 
     taxable year.

     In the case of property which is a passenger aircraft, the 
     amount determined under subclause (I) shall be calculated 
     without regard to the written binding contract limitation 
     under paragraph (2)(A)(iii)(I).
       ``(ii) Maximum amount.--The bonus depreciation amount for 
     any applicable taxable year shall not exceed the applicable 
     limitation under clause (iii), reduced (but not below zero) 
     by the bonus depreciation amount for any preceding taxable 
     year.
       ``(iii) Applicable limitation.--For purposes of clause 
     (ii), the term `applicable limitation' means, with respect to 
     any eligible taxpayer, the lesser of--

       ``(I) $30,000,000, or
       ``(II) 6 percent of the sum of the amounts determined with 
     respect to the taxpayer under clauses (ii) and (iii) of 
     subparagraph (E).

       ``(iv) Aggregation rule.--All corporations which are 
     treated as a single employer under section 52(a) shall be 
     treated as 1 taxpayer for purposes of applying the limitation 
     under this subparagraph and determining the applicable 
     limitation under clause (iii).
       ``(D) Eligible qualified property.--For purposes of this 
     paragraph, the term `eligible qualified property' means 
     qualified property under paragraph (2), except that in 
     applying paragraph (2) for purposes of this clause--
       ``(i) `March 31, 2008' shall be substituted for `December 
     31, 2007' each place it appears in subparagraph (A) and 
     clauses (i) and (ii) of subparagraph (E) thereof,
       ``(ii) only adjusted basis attributable to manufacture, 
     construction, or production after March 31, 2008, and before 
     January 1, 2009, shall be taken into account under 
     subparagraph (B)(ii) thereof, and
       ``(iii) in the case of property which is a passenger 
     aircraft, the written binding contract limitation under 
     subparagraph (A)(iii)(I) thereof shall not apply.
       ``(E) Allocation of bonus depreciation amounts.--
       ``(i) In general.--Subject to clauses (ii) and (iii), the 
     taxpayer shall, at such time and in such manner as the 
     Secretary may prescribe, specify the portion (if any) of the 
     bonus depreciation amount which is to be allocated to each of 
     the limitations described in subparagraph (B).
       ``(ii) Business credit limitation.--The portion of the 
     bonus depreciation amount allocated to the limitation 
     described in subparagraph (B)(i) shall not exceed an amount 
     equal to the portion of the credit allowable under section 38 
     for the taxable year which is allocable to business credit 
     carryforwards to such taxable year which are--

       ``(I) from taxable years beginning before January 1, 2006, 
     and
       ``(II) properly allocable (determined under the rules of 
     section 38(d)) to the research credit determined under 
     section 41(a).

       ``(iii) Alternative minimum tax credit limitation.--The 
     portion of the bonus depreciation amount allocated to the 
     limitation described in subparagraph (B)(ii) shall not exceed 
     an amount equal to the portion of the minimum tax credit 
     allowable under section 53 for the taxable year which is 
     allocable to the adjusted minimum tax imposed for taxable 
     years beginning before January 1, 2006. For purposes of the 
     preceding sentence, credits shall be treated as allowed on a 
     first-in, first-out basis.
       ``(F) Credit refundable.--Any aggregate increases in the 
     credits allowed under section 38 or 53 by reason of this 
     paragraph shall, for purposes of this title, be treated as a 
     credit allowed to the taxpayer under subpart C of part IV of 
     subchapter A.
       ``(G) Other rules.--
       ``(i) Election.--Any election under this paragraph 
     (including any allocation under subparagraph (E)) may be 
     revoked only with the consent of the Secretary.
       ``(ii) Deduction allowed in computing minimum tax.--
     Notwithstanding this paragraph, paragraph (2)(G) shall apply 
     with respect to the deduction computed under this section 
     (after application of this paragraph) with respect to 
     property placed in service during any applicable taxable 
     year.''.
       (b) Application to Certain Automotive Partnerships.--
       (1) In general.--If an applicable partnership elects the 
     application of this subsection--
       (A) the partnership shall be treated as having made a 
     payment against the tax imposed by chapter 1 of the Internal 
     Revenue Code of 1986 for any applicable taxable year of the 
     partnership in the amount determined under paragraph (3),
       (B) in the case of any eligible qualified property placed 
     in service by the partnership during any applicable taxable 
     year--
       (i) section 168(k) of such Code shall not apply in 
     determining the amount of the deduction allowable to the 
     partnership or any partner with respect to such property 
     under section 168 of such Code,
       (ii) the applicable depreciation method used by the 
     partnership or any partner under such section with respect to 
     such property shall be the straight line method rather than 
     the method that would otherwise be used,
       (C) no election may be made under section 168(k)(4) of such 
     Code with respect to the partnership, and
       (D) the amount of the credit determined under section 41 of 
     such Code for any applicable taxable year with respect to the 
     partnership shall be reduced by the amount of the deemed 
     payment under subparagraph (A) for the taxable year.
       (2) Treatment of deemed payment.--
       (A) In general.--Notwithstanding any other provision of the 
     Internal Revenue Code of 1986, the Secretary of the Treasury 
     or his delegate shall not use the payment of tax described in 
     paragraph (1) as an offset or credit against any tax 
     liability of the applicable partnership or any partner but 
     shall refund such payment to the applicable partnership.
       (B) No interest.--The payment described in paragraph (1) 
     shall not be taken into account in determining any amount of 
     interest under such Code.
       (3) Amount of deemed payment.--The amount determined under 
     this paragraph for any applicable taxable year shall be the 
     least of the following:
       (A) The amount which would be determined for the taxable 
     year under section 168(k)(4)(C)(i) of the Internal Revenue 
     Code of 1986 (as added by the amendments made by this 
     section) if an election under such section were in effect 
     with respect to the partnership.
       (B) The amount of the credit determined under section 41 of 
     such Code for the taxable year with respect to the 
     partnership.
       (C) $30,000,000, reduced by the amount of any payment under 
     this subsection for any preceding taxable year.
       (4) Definitions.--For purposes of this subsection--
       (A) Applicable partnership.--The term ``applicable 
     partnership'' means a domestic partnership that--
       (i) was formed effective on August 3, 2007, and
       (ii) will produce in excess of 675,000 automobiles during 
     the period beginning on January 1, 2008, and ending on June 
     30, 2008.
       (B) Applicable taxable year.--The term ``applicable taxable 
     year'' means any taxable year during which eligible qualified 
     property is placed in service.

[[Page S6796]]

       (C) Eligible qualified property.--The term ``eligible 
     qualified property'' has the meaning given such term by 
     section 168(k)(4)(D) of the Internal Revenue Code of 1986 (as 
     added by the amendments made by this section).
       (c) Conforming Amendment.--Section 1324(b)(2) of title 31, 
     United States Code, as amended by this Act, is amended--
       (1) by inserting ``168(k)(4)(F),'' after ``36,'', and
       (2) by inserting ``, or due under section 3081(b)(2) of the 
     Housing Assistance Tax Act of 2008'' before the period at the 
     end.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after March 31, 2008.

     SEC. 3082. CERTAIN GO ZONE INCENTIVES.

       (a) Use of Amended Income Tax Returns To Take Into Account 
     Receipt of Certain Hurricane-Related Casualty Loss Grants by 
     Disallowing Previously Taken Casualty Loss Deductions.--
       (1) In general.--Notwithstanding any other provision of the 
     Internal Revenue Code of 1986, if a taxpayer claims a 
     deduction for any taxable year with respect to a casualty 
     loss to a principal residence (within the meaning of section 
     121 of such Code) resulting from Hurricane Katrina, Hurricane 
     Rita, or Hurricane Wilma and in a subsequent taxable year 
     receives a grant under Public Law 109-148, 109-234, or 110-
     116 as reimbursement for such loss, such taxpayer may elect 
     to file an amended income tax return for the taxable year in 
     which such deduction was allowed (and for any taxable year to 
     which such deduction is carried) and reduce (but not below 
     zero) the amount of such deduction by the amount of such 
     reimbursement.
       (2) Time of filing amended return.--Paragraph (1) shall 
     apply with respect to any grant only if any amended income 
     tax returns with respect to such grant are filed not later 
     than the later of--
       (A) the due date for filing the tax return for the taxable 
     year in which the taxpayer receives such grant, or
       (B) the date which is 1 year after the date of the 
     enactment of this Act.
       (3) Waiver of penalties and interest.--Any underpayment of 
     tax resulting from the reduction under paragraph (1) of the 
     amount otherwise allowable as a deduction shall not be 
     subject to any penalty or interest under such Code if such 
     tax is paid not later than 1 year after the filing of the 
     amended return to which such reduction relates.
       (b) Waiver of Deadline on Construction of GO Zone Property 
     Eligible for Bonus Depreciation.--
       (1) In general.--Subparagraph (B) of section 1400N(d)(3) is 
     amended to read as follows:
       ``(B) without regard to `and before January 1, 2009' in 
     clause (i) thereof, and''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to property placed in service after December 31, 
     2007.
       (c) Inclusion of Certain Counties in Gulf Opportunity Zone 
     for Purposes of Tax-Exempt Bond Financing.--
       (1) In general.--Subsection (a) of section 1400N is amended 
     by adding at the end the following new paragraph:
       ``(8) Inclusion of certain counties.--For purposes of this 
     subsection, the Gulf Opportunity Zone includes Colbert 
     County, Alabama and Dallas County, Alabama.''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect as if included in the provisions of the 
     Gulf Opportunity Zone Act of 2005 to which it relates.

                      Subtitle B--Revenue Offsets

     SEC. 3091. RETURNS RELATING TO PAYMENTS MADE IN SETTLEMENT OF 
                   PAYMENT CARD AND THIRD PARTY NETWORK 
                   TRANSACTIONS.

       (a) In General.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by adding at the end the following new 
     section:

     ``SEC. 6050W. RETURNS RELATING TO PAYMENTS MADE IN SETTLEMENT 
                   OF PAYMENT CARD AND THIRD PARTY NETWORK 
                   TRANSACTIONS.

       ``(a) In General.--Each payment settlement entity shall 
     make a return for each calendar year setting forth--
       ``(1) the name, address, and TIN of each participating 
     payee to whom one or more payments in settlement of 
     reportable transactions are made, and
       ``(2) the gross amount of the reportable transactions with 
     respect to each such participating payee.

     Such return shall be made at such time and in such form and 
     manner as the Secretary may require by regulations.
       ``(b) Payment Settlement Entity.--For purposes of this 
     section--
       ``(1) In general.--The term `payment settlement entity' 
     means--
       ``(A) in the case of a payment card transaction, the 
     merchant acquiring bank, and
       ``(B) in the case of a third party network transaction, the 
     third party settlement organization.
       ``(2) Merchant acquiring bank.--The term `merchant 
     acquiring bank' means the bank or other organization which 
     has the contractual obligation to make payment to 
     participating payees in settlement of payment card 
     transactions.
       ``(3) Third party settlement organization.--The term `third 
     party settlement organization' means the central organization 
     which has the contractual obligation to make payment to 
     participating payees of third party network transactions.
       ``(4) Special rules related to intermediaries.--For 
     purposes of this section--
       ``(A) Aggregated payees.--In any case where reportable 
     transactions of more than one participating payee are settled 
     through an intermediary--
       ``(i) such intermediary shall be treated as the 
     participating payee for purposes of determining the reporting 
     obligations of the payment settlement entity with respect to 
     such transactions, and
       ``(ii) such intermediary shall be treated as the payment 
     settlement entity with respect to the settlement of such 
     transactions with the participating payees.
       ``(B) Electronic payment facilitators.--In any case where 
     an electronic payment facilitator or other third party makes 
     payments in settlement of reportable transactions on behalf 
     of the payment settlement entity, the return under subsection 
     (a) shall be made by such electronic payment facilitator or 
     other third party in lieu of the payment settlement entity.
       ``(c) Reportable Transaction.--For purposes of this 
     section--
       ``(1) In general.--The term `reportable transaction' means 
     any payment card transaction and any third party network 
     transaction.
       ``(2) Payment card transaction.--The term `payment card 
     transaction' means any transaction in which a payment card is 
     accepted as payment.
       ``(3) Third party network transaction.--The term `third 
     party network transaction' means any transaction which is 
     settled through a third party payment network.
       ``(d) Other Definitions.--For purposes of this section--
       ``(1) Participating payee.--
       ``(A) In general.--The term `participating payee' means--
       ``(i) in the case of a payment card transaction, any person 
     who accepts a payment card as payment, and
       ``(ii) in the case of a third party network transaction, 
     any person who accepts payment from a third party settlement 
     organization in settlement of such transaction.
       ``(B) Exclusion of foreign persons.--To the extent provided 
     by the Secretary in regulations or other guidance, such term 
     shall not include any foreign person.
       ``(C) Inclusion of governmental units.--The term `person' 
     includes any governmental unit (and any agency or 
     instrumentality thereof).
       ``(2) Payment card.--The term `payment card' means any card 
     which is issued pursuant to an agreement or arrangement which 
     provides for--
       ``(A) one or more issuers of such cards,
       ``(B) a network of persons unrelated to each other, and to 
     the issuer, who agree to accept such cards as payment, and
       ``(C) standards and mechanisms for settling the 
     transactions between the merchant acquiring banks and the 
     persons who agree to accept such cards as payment.

     The acceptance as payment of any account number or other 
     indicia associated with a payment card shall be treated for 
     purposes of this section in the same manner as accepting such 
     payment card as payment.
       ``(3) Third party payment network.--The term `third party 
     payment network' means any agreement or arrangement--
       ``(A) which involves the establishment of accounts with a 
     central organization for the purpose of settling transactions 
     between persons who establish such accounts,
       ``(B) which provides for standards and mechanisms for 
     settling such transactions,
       ``(C) which involves a substantial number of persons 
     unrelated to such central organization who provide goods or 
     services and who have agreed to settle transactions for the 
     provision of such goods or services pursuant to such 
     agreement or arrangement, and
       ``(D) which guarantees persons providing goods or services 
     pursuant to such agreement or arrangement that such persons 
     will be paid for providing such goods or services.

     Such term shall not include any agreement or arrangement 
     which provides for the issuance of payment cards.
       ``(e) Exception for De Minimis Payments by Third Party 
     Settlement Organizations.--A third party settlement 
     organization shall not be required to report any information 
     under subsection (a) with respect to third party network 
     transactions of any participating payee if the amount which 
     would otherwise be reported under subsection (a)(2) with 
     respect to such transactions does not exceed $10,000 and the 
     aggregate number of such transactions does not exceed 200.
       ``(f) Statements To Be Furnished to Persons With Respect to 
     Whom Information Is Required.--Every person required to make 
     a return under subsection (a) shall furnish to each person 
     with respect to whom such a return is required a written 
     statement showing--
       ``(1) the name, address, and phone number of the 
     information contact of the person required to make such 
     return, and
       ``(2) the gross amount of payments made to the person 
     required to be shown on the return.

     The written statement required under the preceding sentence 
     shall be furnished to the person on or before January 31 of 
     the year following the calendar year for which the return 
     under subsection (a) was required to be made.
       ``(g) Regulations.--The Secretary may prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out this section, including rules to 
     prevent the reporting of the same transaction more than 
     once.''.
       (b) Penalty for Failure To File.--
       (1) Return.--Subparagraph (B) of section 6724(d)(1) is 
     amended--
       (A) by striking ``or'' at the end of clause (xx),
       (B) by redesignating the clause (xix) that follows clause 
     (xx) as clause (xxi),
       (C) by striking ``and'' at the end of clause (xxi), as 
     redesignated by subparagraph (B) and inserting ``or'', and

[[Page S6797]]

       (D) by adding at the end the following:
       ``(xxii) section 6050W (relating to returns to payments 
     made in settlement of payment card transactions), and''.
       (2) Statement.--Paragraph (2) of section 6724(d) is amended 
     by striking ``or'' at the end of subparagraph (BB), by 
     striking the period at the end of the subparagraph (CC) and 
     inserting ``, or'', and by inserting after subparagraph (CC) 
     the following:
       ``(DD) section 6050W(c) (relating to returns relating to 
     payments made in settlement of payment card transactions).''.
       (c) Application of Backup Withholding.--Paragraph (3) of 
     section 3406(b) is amended by striking ``or'' at the end of 
     subparagraph (D), by striking the period at the end of 
     subparagraph (E) and inserting ``, or'', and by adding at the 
     end the following new subparagraph:
       ``(F) section 6050W (relating to returns relating to 
     payments made in settlement of payment card transactions).''.
       (d) Clerical Amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 is amended by 
     inserting after the item relating to section 6050V the 
     following:

``Sec. 6050W. Returns relating to payments made in settlement of 
              payment card transactions.''.
       (e) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to returns for calendar years beginning after December 31, 
     2010.
       (2) Application of backup withholding.--The amendment made 
     by subsection (c) shall apply to amounts paid after December 
     31, 2011.

     SEC. 3092. GAIN FROM SALE OF PRINCIPAL RESIDENCE ALLOCATED TO 
                   NONQUALIFIED USE NOT EXCLUDED FROM INCOME.

       (a) In General.--Subsection (b) of section 121 of the 
     Internal Revenue Code of 1986 (relating to limitations) is 
     amended by adding at the end the following new paragraph:
       ``(4) Exclusion of gain allocated to nonqualified use.--
       ``(A) In general.--Subsection (a) shall not apply to so 
     much of the gain from the sale or exchange of property as is 
     allocated to periods of nonqualified use.
       ``(B) Gain allocated to periods of nonqualified use.--For 
     purposes of subparagraph (A), gain shall be allocated to 
     periods of nonqualified use based on the ratio which--
       ``(i) the aggregate periods of nonqualified use during the 
     period such property was owned by the taxpayer, bears to
       ``(ii) the period such property was owned by the taxpayer.
       ``(C) Period of nonqualified use.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `period of nonqualified use' 
     means any period (other than the portion of any period 
     preceding January 1, 2009) during which the property is not 
     used as the principal residence of the taxpayer or the 
     taxpayer's spouse or former spouse.
       ``(ii) Exceptions.--The term `period of nonqualified use' 
     does not include--

       ``(I) any portion of the 5-year period described in 
     subsection (a) which is after the last date that such 
     property is used as the principal residence of the taxpayer 
     or the taxpayer's spouse,
       ``(II) any period (not to exceed an aggregate period of 10 
     years) during which the taxpayer or the taxpayer's spouse is 
     serving on qualified official extended duty (as defined in 
     subsection (d)(9)(C)) described in clause (i), (ii), or (iii) 
     of subsection (d)(9)(A), and
       ``(III) any other period of temporary absence (not to 
     exceed an aggregate period of 2 years) due to change of 
     employment, health conditions, or such other unforeseen 
     circumstances as may be specified by the Secretary.

       ``(D) Coordination with recognition of gain attributable to 
     depreciation.--For purposes of this paragraph--
       ``(i) subparagraph (A) shall be applied after the 
     application of subsection (d)(6), and
       ``(ii) subparagraph (B) shall be applied without regard to 
     any gain to which subsection (d)(6) applies.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to sales and exchanges after December 31, 2008.

     SEC. 3093. INCREASE IN INFORMATION RETURN PENALTIES.

       (a) Failure To File Correct Information Returns.--
       (1) In general.--Subsections (a)(1), (b)(1)(A), and 
     (b)(2)(A) of section 6721 are each amended by striking 
     ``$50'' and inserting ``$100''.
       (2) Aggregate annual limitation.--Subsections (a)(1), 
     (d)(1)(A), and (e)(3)(A) of section 6721 are each amended by 
     striking ``$250,000'' and inserting ``$1,500,000''.
       (b) Reduction Where Correction Within 30 Days.--
       (1) In general.--Subparagraph (A) of section 6721(b)(1) is 
     amended by striking ``$15'' and inserting ``$50''.
       (2) Aggregate annual limitation.--Subsections (b)(1)(B) and 
     (d)(1)(B) of section 6721 are each amended by striking 
     ``$75,000'' and inserting ``$500,000''.
       (c) Reduction Where Correction on or Before August 1.--
       (1) In general.--Subparagraph (A) of section 6721(b)(2) is 
     amended by striking ``$30'' and inserting ``$75''.
       (2) Aggregate annual limitation.--Subsections (b)(2)(B) and 
     (d)(1)(C) of section 6721are each amended by striking 
     ``$150,000'' and inserting ``$1,000,000''.
       (d) Aggregate Annual Limitations for Persons With Gross 
     Receipts of Not More Than $5,000,000.--Paragraph (1) of 
     section 6721(d) is amended--
       (1) by striking ``$100,000'' in subparagraph (A) and 
     inserting ``$500,000'',
       (2) by striking ``$25,000'' in subparagraph (B) and 
     inserting ``$100,000'', and
       (3) by striking ``$50,000'' in subparagraph (C) and 
     inserting ``$250,000''.
       (e) Penalty in Case of Intentional Disregard.--Paragraph 
     (2) of section 6721(e) is amended by striking ``$100'' and 
     inserting ``$250''.
       (f) Failure To Furnish Correct Payee Statements.--
       (1) In general.--Subsection (a) of section 6722 is amended 
     by striking ``$50'' and inserting ``$100''.
       (2) Aggregate annual limitation.--Subsections (a) and 
     (c)(2)(A) of section 6722 are each amended by striking 
     ``$100,000'' and inserting ``$500,000''.
       (3) Penalty in case of intentional disregard.--Paragraph 
     (1) of section 6722(c) is amended by striking ``$100'' and 
     inserting ``$250''.
       (g) Failure To Comply With Other Information Reporting 
     Requirements.--Section 6723 is amended--
       (1) by striking ``$50'' and inserting ``$100'', and
       (2) by striking ``$100,000'' and inserting ``$500,000''.
       (h) Effective Date.--The amendments made by this section 
     shall apply with respect to information returns required to 
     be filed on or after January 1, 2009.

     SEC. 3094. INCREASE IN PENALTY FOR FAILURE TO FILE S 
                   CORPORATION RETURNS.

       (a) In General.--Paragraph (1) of section 6699(b) (relating 
     to amount per month) is amended by striking ``$85'' and 
     inserting ``$100''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to returns the due date for the filing of which 
     (including extensions) is after the date of the enactment of 
     this Act.

     SEC. 3095. INCREASE IN PENALTY FOR FAILURE TO FILE 
                   PARTNERSHIP RETURNS.

       (a) Increase in Penalty Amount.--Paragraph (1) of section 
     6698(b) (relating to amount per month) is amended by striking 
     ``$85'' and inserting ``$100''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to returns the due date for the filing of which 
     (including extensions) is after the date of the enactment of 
     this Act.

     SEC. 3096. INCREASE IN MINIMUM PENALTY ON FAILURE TO FILE A 
                   RETURN OF TAX.

       (a) In General.--Subsection (a) of section 6651, as amended 
     by section 303(a) of the Heroes Earnings Assistance and 
     Relief Tax Act of 2008, is amended by striking ``$135'' in 
     the last sentence and inserting ``$225''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to returns the due date for the filing of which 
     (including extensions) is after the date of the enactment of 
     this Act.

       Resolved further, That on July 8, 2008, the Senate concurs 
     in the House amendments, striking titles VI through XI, to 
     the Senate amendment to the aforesaid bill;
       Resolved further, That on July 11, 2008, the Senate 
     disagrees to the amendments of the House, adding a new title 
     and inserting a new section to the amendment of the Senate to 
     the aforesaid bill.

                          ____________________