[United States Statutes at Large, Volume 122, 110th Congress, 2nd Session]
[From the U.S. Government Publishing Office, www.gpo.gov]

122 STAT. 2654

Public Law 110-289
110th Congress

An Act


 
To provide needed housing reform and for other purposes. [NOTE: July
30, 2008 -  [H.R. 3221]]

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress [NOTE: Housing and Economic
Recovery Act of 2008.] assembled,

SECTION. 1. [NOTE: 42 USC 4501 note.] 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.
Sec. 1116. Inclusion of minorities and women; diversity in Agency
workforce.
Sec. 1117. Temporary authority for purchase of obligations of regulated
entities by Secretary of Treasury.
Sec. 1118. Consultation between the Director of the Federal Housing
Finance Agency and the Board of Governors of the Federal
Reserve System to ensure financial market stability .

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.

[[Page 2655]]
122 STAT. 2655

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.

[[Page 2656]]
122 STAT. 2656

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.

[[Page 2657]]
122 STAT. 2657

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.
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--HOUSING PRESERVATION

Subtitle A--Preservation Under Federal Housing Programs

Sec. 2801. Clarification of disposition of certain properties.
Sec. 2802. Eligibility of certain projects for enhanced voucher
assistance.
Sec. 2803. Transfer of certain rental assistance contracts.
Sec. 2804. Public housing disaster relief.
Sec. 2805. Preservation of certain affordable housing.

Subtitle B--Coordination of Federal Housing Programs and Tax Incentives
for Housing

Sec. 2831. Short title.

[[Page 2658]]
122 STAT. 2658

Sec. 2832. Approvals by Department of Housing and Urban Development.
Sec. 2833. Project approvals by rural housing service.
Sec. 2834. Use of FHA loans with housing tax credits.
Sec. 2835. Other HUD programs.

TITLE IX--MISCELLANEOUS

Sec. 2901. Homeless assistance.
Sec. 2902. Increasing access and understanding of energy efficient
mortgages.

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.
Sec. 3027. Transfer of funds appropriated to carry out 2008 recovery
rebates for individuals.

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.

[[Page 2659]]
122 STAT. 2659

TITLE III--REVENUE PROVISIONS

Subtitle A--General Provisions

Sec. 3081. Election to accelerate the AMT and research credits in lieu
of bonus depreciation.
Sec. 3082. Certain GO Zone incentives.
Sec. 3083. Increase in statutory limit on the public debt.

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. Delay in application of worldwide allocation of interest.
Sec. 3094. Time for payment of corporate estimated taxes.

DIVISION A--HOUSING [NOTE: Federal Housing Finance Regulatory Reform
Act of 2008.]  FINANCE REFORM

SEC. 1001. [NOTE: 12 USC 4501 note.] 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;

[[Page 2660]]
122 STAT. 2660

(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.'';
(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

[[Page 2661]]
122 STAT. 2661

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) [NOTE: 12 USC 4511 note.] 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.) [NOTE: 12 USC 4511, 4512.]  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

[[Page 2662]]
122 STAT. 2662

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 [NOTE: President.]  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 [NOTE: Effective date. Termination date.]
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.--

[[Page 2663]]
122 STAT. 2663

``(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(d).

``(f) Acting Director.--In [NOTE: President.]  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

[[Page 2664]]
122 STAT. 2664

``(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.

``(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''.

[[Page 2665]]
122 STAT. 2665

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. [NOTE: 12 USC 4513a.] FEDERAL HOUSING FINANCE OVERSIGHT
BOARD.

``(a) In General.--There [NOTE: Establishment.]  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) [NOTE: Notices.]  Meetings.--
``(1) In general.--The [NOTE: Deadlines.]  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 [NOTE: Deadline.]  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:

[[Page 2666]]
122 STAT. 2666

``(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.--

[[Page 2667]]
122 STAT. 2667

``(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 [NOTE: Deadline.]  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. [NOTE: Applicability.] 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 [NOTE: 12 USC 4547, 4548.]  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

[[Page 2668]]
122 STAT. 2668

(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)--
``(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 [NOTE: Establishment. Regulations.]
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.''.

[[Page 2669]]
122 STAT. 2669

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

[[Page 2670]]
122 STAT. 2670

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.

[[Page 2671]]
122 STAT. 2671

``(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 [NOTE: Reports.]  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 [NOTE: Deadline.]  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 [NOTE: Deadline. Records.]
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

[[Page 2672]]
122 STAT. 2672

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 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 [NOTE: Guidelines.]  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:

[[Page 2673]]
122 STAT. 2673

``SEC. 1313B. PRUDENTIAL [NOTE: 12 USC 4513b.] MANAGEMENT AND
OPERATIONS STANDARDS.

``(a) Standards.--The [NOTE: Regulations. Guidelines.]  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 [NOTE: Regulations.]  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

[[Page 2674]]
122 STAT. 2674

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 [NOTE: Applicability.]  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--

[[Page 2675]]
122 STAT. 2675

(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. [NOTE: 12 USC 4624.] REVIEWS OF ENTERPRISE ASSETS AND
LIABILITIES.

``(a) In General.--The [NOTE: Regulations. Criteria.]  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 [NOTE: Deadline. Standards. 12 USC
4624 note.]  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 [NOTE: Regulations.]  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 [NOTE: Standards.]
Director shall establish risk-based capital standards under
section 6 of the Federal Home Loan Bank Act for the Federal Home
Loan Banks.

[[Page 2676]]
122 STAT. 2676

``(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 [NOTE: Regulations.]  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);

[[Page 2677]]
122 STAT. 2677

``(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 [NOTE: 15 USC 78oo.] 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 [NOTE: Deadline.]  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.''.

[[Page 2678]]
122 STAT. 2678

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) in subsection (a)--
(A) by striking ``enterprise'' and inserting
``regulated entity''; and
(B) by striking ``enterprises'' and inserting
``regulated entities'';
(3) by redesignating subsection (b) as subsection (d); and
(4) 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,

[[Page 2679]]
122 STAT. 2679

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 [NOTE: Regulations.]  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
``(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

[[Page 2680]]
122 STAT. 2680

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

[[Page 2681]]
122 STAT. 2681

``(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. [NOTE: 12 USC 4642.] 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. [NOTE: Procedures.]  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.''.

SEC. 1116. INCLUSION OF MINORITIES AND WOMEN; DIVERSITY IN AGENCY
WORKFORCE.

Section 1319A of the Housing and Community Development Act of 1992
(12 U.S.C. 4520) is amended--
(1) in the section heading, by striking ``equal opportunity
in solicitation of contracts'' and inserting

[[Page 2682]]
122 STAT. 2682

``minority and women inclusion; diversity requirements'';
(2) in subsection (a), by striking ``(a) In General.--Each
enterprise'' and inserting ``(e) Outreach.--Each regulated
entity''; and
(3) by striking subsection (b);
(4) by inserting before subsection (e), as so redesignated
by paragraph (2) of this section, the following new subsections:

``(a) Office of Minority and Women Inclusion.--
Each [NOTE: Establishment.]  regulated entity shall establish an
Office of Minority and Women Inclusion, or designate an office of the
entity, that shall be responsible for carrying out this section and all
matters of the entity relating to diversity in management, employment,
and business activities in accordance with such standards and
requirements as the Director shall establish.

``(b) Inclusion in All Levels of Business Activities.--
Each [NOTE: Standards. Procedures.]  regulated entity shall develop
and implement standards and procedures to ensure, to the maximum extent
possible, the inclusion and utilization of minorities (as such term is
defined in section 1204(c) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note)) and women,
and minority- and women-owned businesses (as such terms are defined in
section 21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C.
1441a(r)(4)) (including financial institutions, investment banking
firms, mortgage banking firms, asset management firms, broker-dealers,
financial services firms, underwriters, accountants, brokers, investment
consultants, and providers of legal services) in all business and
activities of the regulated entity at all levels, including in
procurement, insurance, and all types of contracts (including contracts
for the issuance or guarantee of any debt, equity, or mortgage-related
securities, the management of its mortgage and securities portfolios,
the making of its equity investments, the purchase, sale and servicing
of single- and multi-family mortgage loans, and the implementation of
its affordable housing program and initiatives). The processes
established by each regulated entity for review and evaluation for
contract proposals and to hire service providers shall include a
component that gives consideration to the diversity of the applicant.

``(c) Applicability.--This [NOTE: Contracts.]  section shall apply
to all contracts of a regulated entity for services of any kind,
including services that require the services of investment banking,
asset management entities, broker-dealers, financial services entities,
underwriters, accountants, investment consultants, and providers of
legal services.

``(d) Inclusion in Annual Reports.--Each regulated entity shall
include, in the annual report submitted by the entity to the Director
pursuant to section 309(k) of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1723a(k)), section 307(c) of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C. 1456(c)), and section 20 of the
Federal Home Loan Bank Act (12 U.S.C. 1440), as applicable, detailed
information describing the actions taken by the entity pursuant to this
section, which shall include a statement of the total amounts paid by
the entity to third party contractors since the last such report and the
percentage of such amounts paid to businesses described in subsection
(b) of this section.''; and
(5) by adding at the end the following new subsection:

[[Page 2683]]
122 STAT. 2683

``(f) Diversity in Agency Workforce.--The Agency shall take
affirmative steps to seek diversity in its workforce at all levels of
the agency consistent with the demographic diversity of the United
States, which shall include--
``(1) heavily recruiting at historically Black colleges and
universities, Hispanic-serving institutions, women's colleges,
and colleges that typically serve majority minority populations;
``(2) sponsoring and recruiting at job fairs in urban
communities, and placing employment advertisements in newspapers
and magazines oriented toward women and people of color;
``(3) partnering with organizations that are focused on
developing opportunities for minorities and women to place
talented young minorities and women in industry internships,
summer employment, and full-time positions; and
``(4) where feasible, partnering with inner-city high
schools, girls' high schools, and high schools with majority
minority populations to establish or enhance financial literacy
programs and provide mentoring.''.

SEC. 1117. TEMPORARY AUTHORITY FOR PURCHASE OF OBLIGATIONS OF REGULATED
ENTITIES BY SECRETARY OF TREASURY.

(a) Fannie Mae.--Section 304 of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1719) is amended by adding at the end
the following new subsection:
``(g) Temporary Authority of Treasury to Purchase Obligations and
Securities; Conditions.--
``(1) Authority to purchase.--
``(A) General authority.--In addition to the
authority under subsection (c) of this section, the
Secretary of the Treasury is authorized to purchase any
obligations and other securities issued by the
corporation under any section of this Act, on such terms
and conditions as the Secretary may determine and in
such amounts as the Secretary may determine. Nothing in
this subsection requires the corporation to issue
obligations or securities to the Secretary without
mutual agreement between the Secretary and the
corporation. Nothing in this subsection permits or
authorizes the Secretary, without the agreement of the
corporation, to engage in open market purchases of the
common securities of the corporation.
``(B) Emergency determination required.--In
connection with any use of this authority, the Secretary
must determine that such actions are necessary to--
``(i) provide stability to the financial
markets;
``(ii) prevent disruptions in the availability
of mortgage finance; and
``(iii) protect the taxpayer.
``(C) Considerations.--To protect the taxpayers, the
Secretary of the Treasury shall take into consideration
the following in connection with exercising the
authority contained in this paragraph:
``(i) The need for preferences or priorities
regarding payments to the Government.
``(ii) Limits on maturity or disposition of
obligations or securities to be purchased.
``(iii) The corporation's plan for the orderly
resumption of private market funding or capital
market access.

[[Page 2684]]
122 STAT. 2684

``(iv) The probability of the corporation
fulfilling the terms of any such obligation or
other security, including repayment.
``(v) The need to maintain the corporation's
status as a private shareholder-owned company.
``(vi) Restrictions on the use of corporation
resources, including limitations on the payment of
dividends and executive compensation and any such
other terms and conditions as appropriate for
those purposes.
``(D) Reports to congress.--Upon exercise of this
authority, the Secretary shall report to the Committees
on the Budget, Financial Services, and Ways and Means of
the House of Representatives and the Committees on the
Budget, Finance, and Banking, Housing, and Urban Affairs
of the Senate as to the necessity for the purchase and
the determinations made by the Secretary under
subparagraph (B) and with respect to the considerations
required under subparagraph (C), and the size, terms,
and probability of repayment or fulfillment of other
terms of such purchase.
``(2) Rights; sale of obligations and securities.--
``(A) Exercise of rights.--The Secretary of the
Treasury may, at any time, exercise any rights received
in connection with such purchases.
``(B) Sale of obligation and securities.--The
Secretary of the Treasury may, at any time, subject to
the terms of the security or otherwise upon terms and
conditions and at prices determined by the Secretary,
sell any obligation or security acquired by the
Secretary under this subsection.
``(C) Application of sunset to purchased obligations
or securities.--The authority of the Secretary of the
Treasury to hold, exercise any rights received in
connection with, or sell, any obligations or securities
purchased is not subject to the provisions of paragraph
(4).
``(3) Funding.--For the purpose of the authorities granted
in this subsection, the Secretary of the Treasury may use the
proceeds of the sale of any securities issued under chapter 31
of Title 31, and the purposes for which securities may be issued
under chapter 31 of Title 31 are extended to include such
purchases and the exercise of any rights in connection with such
purchases. Any funds expended for the purchase of, or
modifications to, obligations and securities, or the exercise of
any rights received in connection with such purchases under this
subsection shall be deemed appropriated at the time of such
purchase, modification, or exercise.
``(4) Termination of authority.--The authority under this
subsection (g), with the exception of paragraphs (2) and (3) of
this subsection, shall expire December 31, 2009.
``(5) Authority of the director with respect to executive
compensation.--The Director shall have the power to approve,
disapprove, or modify the executive compensation of the
corporation, as defined under Regulation S-K, 17 C.F.R. 229.''.

(b) Freddie Mac.--Section 306 of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1455) is amended by adding at the end the
following new subsection:

[[Page 2685]]
122 STAT. 2685

``(l) Temporary Authority of Treasury to Purchase Obligations and
Securities; Conditions.--
``(1) Authority to purchase.--
``(A) General authority.--In addition to the
authority under subsection (c) of this section, the
Secretary of the Treasury is authorized to purchase any
obligations and other securities issued by the
Corporation under any section of this Act, on such terms
and conditions as the Secretary may determine and in
such amounts as the Secretary may determine. Nothing in
this subsection requires the Corporation to issue
obligations or securities to the Secretary without
mutual agreement between the Secretary and the
Corporation. Nothing in this subsection permits or
authorizes the Secretary, without the agreement of the
Corporation, to engage in open market purchases of the
common securities of the Corporation.
``(B) Emergency determination required.--In
connection with any use of this authority, the Secretary
must determine that such actions are necessary to--
``(i) provide stability to the financial
markets;
``(ii) prevent disruptions in the availability
of mortgage finance; and
``(iii) protect the taxpayer.
``(C) Considerations.--To protect the taxpayers, the
Secretary of the Treasury shall take into consideration
the following in connection with exercising the
authority contained in this paragraph:
``(i) The need for preferences or priorities
regarding payments to the Government.
``(ii) Limits on maturity or disposition of
obligations or securities to be purchased.
``(iii) The Corporation's plan for the orderly
resumption of private market funding or capital
market access.
``(iv) The probability of the Corporation
fulfilling the terms of any such obligation or
other security, including repayment.
``(v) The need to maintain the Corporation's
status as a private shareholder-owned company.
``(vi) Restrictions on the use of Corporation
resources, including limitations on the payment of
dividends and executive compensation and any such
other terms and conditions as appropriate for
those purposes.
``(D) Reports to congress.--Upon exercise of this
authority, the Secretary shall report to the Committees
on the Budget, Financial Services, and Ways and Means of
the House of Representatives and the Committees on the
Budget, Finance, and Banking, Housing, and Urban Affairs
of the Senate as to the necessity for the purchase and
the determinations made by the Secretary under
subparagraph (B) and with respect to the considerations
required under subparagraph (C), and the size, terms,
and probability of repayment or fulfillment of other
terms of such purchase.
``(2) Rights; sale of obligations and securities.--

[[Page 2686]]
122 STAT. 2686

``(A) Exercise of rights.--The Secretary of the
Treasury may, at any time, exercise any rights received
in connection with such purchases.
``(B) Sale of obligation and securities.--The
Secretary of the Treasury may, at any time, subject to
the terms of the security or otherwise upon terms and
conditions and at prices determined by the Secretary,
sell any obligation or security acquired by the
Secretary under this subsection.
``(C) Application of sunset to purchased obligations
or securities.--The authority of the Secretary of the
Treasury to hold, exercise any rights received in
connection with, or sell, any obligations or securities
purchased is not subject to the provisions of paragraph
(4).
``(3) Funding.--For the purpose of the authorities granted
in this subsection, the Secretary of the Treasury may use the
proceeds of the sale of any securities issued under chapter 31
of Title 31, and the purposes for which securities may be issued
under chapter 31 of Title 31 are extended to include such
purchases and the exercise of any rights in connection with such
purchases. Any funds expended for the purchase of, or
modifications to, obligations and securities, or the exercise of
any rights received in connection with such purchases under this
subsection shall be deemed appropriated at the time of such
purchase, modification, or exercise.
``(4) Termination of authority.--The authority under this
subsection (l), with the exception of paragraphs (2) and (3) of
this subsection, shall expire December 31, 2009.
``(5) Authority of the director with respect to executive
compensation.--The Director shall have the power to approve,
disapprove, or modify the executive compensation of the
Corporation, as defined under Regulation S-K, 17 C.F.R. 229.''.

(c) Federal Home Loan Banks.--Section 11 of the Federal Home Loan
Bank Act (12 U.S.C. 1431) is amended by adding at the end the following
new subsection:
``(l) Temporary Authority of Treasury to Purchase Obligations;
Conditions.--
``(1) Authority to purchase.--
``(A) General authority.--In addition to the
authority under subsection (i) of this section, the
Secretary of the Treasury is authorized to purchase any
obligations issued by any Federal Home Loan Bank under
any section of this Act, on such terms and conditions as
the Secretary may determine and in such amounts as the
Secretary may determine. Nothing in this subsection
requires a Federal Home Loan Bank to issue obligations
or securities to the Secretary without mutual agreement
between the Secretary and the Federal Home Loan Bank.
Nothing in this subsection permits or authorizes the
Secretary, without the agreement of the Federal Home
Loan Bank, to engage in open market purchases of the
common securities of any Federal Home Loan Bank.
``(B) Emergency determination required.--In
connection with any use of this authority, the Secretary
must determine that such actions are necessary to--
``(i) provide stability to the financial
markets;

[[Page 2687]]
122 STAT. 2687

``(ii) prevent disruptions in the availability
of mortgage finance; and
``(iii) protect the taxpayer.
``(C) Considerations.--To protect the taxpayers, the
Secretary of the Treasury shall take into consideration
the following in connection with exercising the
authority contained in this paragraph:
``(i) The need for preferences or priorities
regarding payments to the Government.
``(ii) Limits on maturity or disposition of
obligations or securities to be purchased.
``(iii) The Federal Home Loan Bank's plan for
the orderly resumption of private market funding
or capital market access.
``(iv) The probability of the Federal Home
Loan Bank fulfilling the terms of any such
obligation or other security, including repayment.
``(v) The need to maintain the Federal Home
Loan Bank's status as a private shareholder-owned
company.
``(vi) Restrictions on the use of Federal Home
Loan Bank resources, including limitations on the
payment of dividends and executive compensation
and any such other terms and conditions as
appropriate for those purposes.
``(D) Reports to congress.--Upon exercise of this
authority, the Secretary shall report to the Committees
on the Budget, Financial Services, and Ways and Means of
the House of Representatives and the Committees on the
Budget, Finance, and Banking, Housing, and Urban Affairs
of the Senate as to the necessity for the purchase and
the determinations made by the Secretary under
subparagraph (B) and with respect to the considerations
required under subparagraph (C), and the size, terms,
and probability of repayment or fulfillment of other
terms of such purchase.
``(2) Rights; sale of obligations and securities.--
``(A) Exercise of rights.--The Secretary of the
Treasury may, at any time, exercise any rights received
in connection with such purchases.
``(B) Sale of obligations.--The Secretary of the
Treasury may, at any time, subject to the terms of the
security or otherwise upon terms and conditions and at
prices determined by the Secretary, sell any obligation
acquired by the Secretary under this subsection.
``(C) Application of sunset to purchased
obligations.--The authority of the Secretary of the
Treasury to hold, exercise any rights received in
connection with, or sell, any obligations purchased is
not subject to the provisions of paragraph (4).
``(3) Funding.--For the purpose of the authorities granted
in this subsection, the Secretary of the Treasury may use the
proceeds of the sale of any securities issued under chapter 31
of Title 31, and the purposes for which securities may be issued
under chapter 31 of Title 31 are extended to include such
purchases and the exercise of any rights in connection with such
purchases. Any funds expended for the purchase of, or
modifications to, obligations and securities, or the exercise

[[Page 2688]]
122 STAT. 2688

of any rights received in connection with such purchases under
this subsection shall be deemed appropriated at the time of such
purchase, modification, or exercise.
``(4) Termination of authority.--The authority under this
subsection (l), with the exception of paragraphs (2) and (3) of
this subsection, shall expire December 31, 2009.
``(5) Authority of the director with respect to executive
compensation.--The Director shall have the power to approve,
disapprove, or modify the executive compensation of the Federal
Home Loan Bank, as defined under Regulation S-K, 17 C.F.R.
229.''.

SEC. 1118. CONSULTATION BETWEEN THE DIRECTOR OF THE FEDERAL HOUSING
FINANCE AGENCY AND THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM TO ENSURE FINANCIAL MARKET STABILITY .

Subsection (a) of section 1313 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4513), as amended
by the preceding provisions of this Act, is further amended by adding at
the end the following new paragraph:
``(3) Coordination with the chairman of the board of
governors of the federal reserve system.--
``(A) Consultation.-- The Director shall consult
with, and consider the views of, the Chairman of the
Board of Governors of the Federal Reserve System, with
respect to the risks posed by the regulated entities to
the financial system, prior to issuing any proposed or
final regulations, orders, and guidelines with respect
to the exercise of the additional authority provided in
this Act regarding prudential management and operations
standards, safe and sound operations of, and capital
requirements and portfolio standards applicable to the
regulated entities (as such term is defined in section
1303). The Director also shall consult with the Chairman
regarding any decision to place a regulated entity into
conservatorship or receivership.
``(B) Information sharing.--To facilitate the
consultative process, the Director shall share
information with the Board of Governors of the Federal
Reserve System on a regular, periodic basis as
determined by the Director and the Board regarding the
capital, asset and liabilities, financial condition, and
risk management practices of the regulated entities as
well as any information related to financial market
stability.
``(C) Termination of consultation requirement.--The
requirement of the Director to consult with the Board of
Governors of the Federal Reserve System under this
paragraph shall expire at the conclusion of December 31,
2009.''.

[[Page 2689]]
122 STAT. 2689

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 [NOTE: 12 USC 4541.] striking the heading for the
part and inserting the following:

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

and
(2) by striking [NOTE: 12 USC 4541, 4542.]  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 [NOTE: 12 USC 4543, 4546-
4548, 4566.]  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. [NOTE: 12 USC 4541.] 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

[[Page 2690]]
122 STAT. 2690

``(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 [NOTE: Publication. Notice.]  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 [NOTE: Deadline.]  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 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.

[[Page 2691]]
122 STAT. 2691

``(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). [NOTE: Regulations.]  The Director
shall establish, by regulation, the form and content of
such written notice.
``(B) Director determination.--
Not [NOTE: Deadline. Notification.]  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: [NOTE: Effective dates.]  ``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 4-
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 4-
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

[[Page 2692]]
122 STAT. 2692

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 115 percent of the median house price for such size
residence exceeds the foregoing limitation for such size
residence, to the lesser of 150 percent of such limitation for
such size residence or the amount that is equal to 115 percent
of the median house price in such area for such size
residence.''.
(3) Effective [NOTE: 12 USC 1717 note.] 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: [NOTE: Effective dates.]  ``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 4-
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 4-
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 (12 U.S.C. 1454(a)(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 115 percent of the median house price for such size
residence exceeds the foregoing limitation for such size
residence, to

[[Page 2693]]
122 STAT. 2693

the lesser of 150 percent of such limitation for such size
residence or the amount that is equal to 115 percent of the
median house price in such area for such size residence.''.
(3) Effective [NOTE: 12 USC 1454 note.] 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. [NOTE: 12 USC 4542.] HOUSING PRICE INDEX.

``The [NOTE: Assessments.]  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. [NOTE: 12 USC 4544.] 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--

[[Page 2694]]
122 STAT. 2694

``(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
``(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 [NOTE: Deadlines. Surveys.]  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;

[[Page 2695]]
122 STAT. 2695

``(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 [NOTE: Deadline.]  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:

[[Page 2696]]
122 STAT. 2696

``(d) Mortgage [NOTE: Public information. Regulations. Order.]
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 Goals.--The Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 is amended by inserting before section 1335
the following:

``SEC. 1331. [NOTE: 12 USC 4561.] ESTABLISHMENT OF HOUSING GOALS.

``(a) In General.--The [NOTE: Regulations. Effective date.]
Director shall, by regulation, establish effective for 2010 and each
year thereafter, annual housing goals, with respect to the mortgage
purchases by the enterprises, as follows:
``(1) Single-family housing goals.--Four single-family
housing goals under section 1332.
``(2) Multifamily special affordable housing goal.--One
multifamily special affordable housing goal under section 1333.

``(b) Timing.--The [NOTE: Deadline. Regulations.]  Director shall,
by regulation, establish an annual deadline by which the Director shall
establish the annual housing goals under this subpart for each year,
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 annual goals.

``(c) Transition.--The [NOTE: Deadline. Review.]  annual housing
goals effective for 2008 pursuant to this subpart, as in effect before
the enactment of the Federal Housing Finance Regulatory Reform Act of
2008, shall remain in effect for 2009, except that not later than the
expiration of the 270-day period beginning on the date of the enactment
of such Act, the Director shall review such goals applicable for 2009 to
determine the feasibility of such goals given the market conditions
current at such time and, after seeking public comment for a period not
to exceed 30 days, may make appropriate adjustments consistent with such
market conditions.

``(d) Eliminating Interest Rate Disparities.--
``(1) In general.--Upon [NOTE: Records.]  request by the
Director, an enterprise shall provide to the Director, in a form
determined by the Director, data the Director may review to
determine whether there exist disparities in interest rates
charged on mortgages to borrowers who are minorities as compared
with comparable mortgages to borrowers of similar
creditworthiness who are not minorities.
``(2) Remedial actions upon preliminary finding.--Upon a
preliminary finding by the Director that a pattern of
disparities in interest rates with respect to any lender or
lenders

[[Page 2697]]
122 STAT. 2697

exists pursuant to the data provided by an enterprise in
paragraph (1), the Director shall_
``(A) refer the preliminary finding to the
appropriate regulatory or enforcement agency for further
review; and
``(B) require the enterprise to submit additional
data with respect to any lender or lenders, as
appropriate and to the extent practicable, to the
Director who shall submit any such additional data to
the regulatory or enforcement agency for appropriate
action.
``(3) Annual report to congress.--The Director shall submit
to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate a report describing the actions taken, and
being taken, by the Director to carry out this subsection. No
such report shall identify any lender or lenders who have not
been found to have engaged in discriminatory lending practices
pursuant to a final adjudication on the record, and after
opportunity for an administrative hearing, in accordance with
subchapter II of chapter 5 of title 5, United States Code.
``(4) Protection of identity of individuals.--In carrying
out this subsection, the Director shall ensure that no property-
related or financial information that would enable a borrower to
be identified shall be made public.

``SEC. 1332. [NOTE: 12 USC 4562.] SINGLE-FAMILY HOUSING GOALS.

``(a) In General.--The [NOTE: Regulations.]  Director shall, by
regulation, establish annual goals for the purchase by each enterprise
of the following types of mortgages for the following categories of
families:
``(1) Purchase-money mortgages.--A goal for purchase of
conventional, conforming, single-family, purchase money
mortgages financing owner-occupied housing for each of the
following categories of families:
``(A) Low-income families.
``(B) Families that reside in low-income areas.
``(C) Very low-income families.
``(2) Refinancing mortgages.--A goal for purchase of
conventional, conforming mortgages on owner-occupied, single-
family housing for low-income families that are given to pay off
or prepay an existing loan secured by the same property.

``(b) Goals as a Percentage of Total Mortgage Purchases.--The goals
established under paragraphs (1) and (2) of subsection (a) shall be
established as a percentage of the total number of conventional,
conforming, single-family, owner-occupied, purchase money mortgages
purchased by the enterprise, or as percentage of the total number of
conventional, single-family, owner-occupied refinance mortgages
purchased by the enterprise, as applicable, that are mortgages for the
types of families specified in paragraphs (1) and (2) of subsection (a).
``(c) Single-Family, Owner-Occupied Rental Housing Units.--
The [NOTE: Reports. Deadline.]  Director shall require each enterprise
to report the number of rental housing units affordable to low-income
families each year which are contained in mortgages purchased by the
enterprise financing 2- to 4-unit single-family, owner-occupied
properties and may, by regulation, establish additional requirements
relating to such units.

``(d) Determination of Compliance.--

[[Page 2698]]
122 STAT. 2698

``(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 each such goal established under subsection (a) of
this section and any additional requirements which may be
established under subsection (c) of this section.
``(2) Purchase-money mortgage goals.--An enterprise shall be
considered to be in compliance with a housing goal under
subparagraph (A), (B), or (C) of subsection (a)(1) for a year
only if, for the type of family described in such subparagraph,
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 target for the year for such type
of family that is established under subsection (e).
``(3) Refinance goal.--An enterprise shall be considered to
be in compliance with the refinance goal under subsection (a)(2)
for a year only if the percentage of the number of conventional,
conforming, single-family, owner-occupied refinance mortgages
purchased by the enterprise in such year that serve low-income
families meets or exceeds the target for the year that is
established under subsection (e).

``(e) Annual Targets.--
``(1) In general.--The [NOTE: Regulations.]  Director
shall, by regulation, establish annual targets for each goal and
subgoal under this section, provided that the Director shall not
set prospective targets longer than three years. In establishing
such targets, the Director shall not consider segments of the
market determined to be unacceptable or contrary to good lending
practices, inconsistent with safety and soundness, or
unauthorized for purchase by the enterprises.
``(2) Goals targets.--
``(A) Calculation.--The Director shall calculate,
for each of the types of families described in
subsection (a), the percentage, for each of the three
years that most recently precede such year and for which
information under the Home Mortgage Disclosure Act of
1975 is publicly available--
``(i) of the number of conventional,
conforming, single-family, owner-occupied purchase
money mortgages originated in such year that serve
such type of family, or
``(ii) the number of conventional, conforming,
single-family, owner-occupied refinance mortgages
originated in such year that serve low-income
families,
as applicable, as determined by the Director using the
information obtained and determined pursuant to
paragraphs (4) and (5).
``(B) Establishment of goal targets.--
The [NOTE: Regulations.]  Director shall, by
regulation, establish targets for each of the goal
categories, taking into consideration the calculations
under subparagraph (A) and the following factors:
``(i) National housing needs.
``(ii) Economic, housing, and demographic
conditions, including expected market
developments.

[[Page 2699]]
122 STAT. 2699

``(iii) The performance and effort of the
enterprises toward achieving the housing goals
under this section in previous years.
``(iv) The ability of the enterprise to lead
the industry in making mortgage credit available.
``(v) Such other reliable mortgage data as may
be available.
``(vi) The size of the purchase money
conventional mortgage market, or refinance
conventional mortgage market, as applicable,
serving each of the types of families described in
subsection (a), relative to the size of the
overall purchase money mortgage market or the
overall refinance mortgage market, respectively.
``(vii) The need to maintain the sound
financial condition of the enterprises.
``(3) Authority to adjust targets.--The Director may, by
regulation, adjust the percentage targets previously established
by regulation pursuant to paragraph (2)(B) for any year, to
reflect subsequent available data and market developments.
``(4) HMDA information.--The [NOTE: Deadline.]  Director
shall annually obtain information submitted in compliance with
the Home Mortgage Disclosure Act of 1975 regarding conventional,
conforming, single-family, owner-occupied, purchase money and
refinance mortgages originated and purchased for the previous
year.
``(5) Conforming mortgages.--In determining whether a
mortgage is a conforming mortgage for purposes of this
paragraph, the Director shall consider the original principal
balance of the mortgage loan to be the principal balance as
reported in the information referred to in paragraph (4), as
rounded to the nearest thousand dollars.

``(f) Notice of Determination and Enterprise Comment.--
``(1) Notice.--Within [NOTE: Deadline.]  30 days of making
a determination under subsection (d) regarding compliance of an
enterprise for a year with a 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
targets for the year under subsection (e).
``(2) Comment period.--The Director shall provide each
enterprise an opportunity to comment on the determination during
the 30-day period beginning upon receipt by the enterprise of
the notice.

``(g) 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 such income at the time of
origination of the mortgage.
``(h) Consideration of Properties With Rental Units.--Mortgages
financing two- to four-unit owner-occupied properties shall count toward
the achievement of the single-family housing goals under this section,
if such properties otherwise meet the requirements under this section,
notwithstanding the use of one or more units for rental purposes.
``(i) Goals Credit.--The Director shall determine whether an
enterprise shall receive full, partial, or no credit for a transaction

[[Page 2700]]
122 STAT. 2700

toward achievement of any of the housing goals established pursuant to
section 1332 and 1333. In making any such determination, the Director
shall consider whether a transaction or activity of an enterprise is
substantially equivalent to a mortgage purchase and either (1) creates a
new market, or (2) adds liquidity to an existing market. No credit
toward the achievement of the housing goals and subgoals established
under this section may be given to the purchase of mortgages, including
any transaction or activity of an enterprise determined to be
substantially equivalent to a mortgage purchase, that is determined to
be unacceptable or contrary to good lending practices, inconsistent with
safety and soundness, or unauthorized for purchase by the enterprises,
pursuant to regulations issued by the Director.

``SEC. 1333. [NOTE: 12 USC 4563.] MULTIFAMILY SPECIAL AFFORDABLE
HOUSING GOAL.

``(a) Establishment of Goal.--
``(1) In general.--The [NOTE: Regulations.]  Director
shall, by regulation, establish a single annual goal, by either
unit or dollar volume, of purchases by each enterprise of
mortgages on multifamily housing that finance dwelling units
affordable to low-income families.
``(2) Additional requirements for units affordable to very
low-income families.--When establishing the goal under this
section, the Director shall establish additional requirements
for the purchase by each enterprise of mortgages on multifamily
housing that finance dwelling units affordable to very low-
income families.
``(3) Reporting on smaller properties.--The Director shall
require each enterprise to report on the purchase by each
enterprise of multifamily housing of a smaller or limited size
that is affordable to low-income families, which may be based on
multifamily projects of 5 to 50 units (as such numbers may be
adjusted by the Director) or on mortgages of up to $5,000,000
(as such amount may be adjusted by the Director), and may, by
regulation, establish such aditional requirements related to
such units.
``(4) Factors.--In establishing the goal and additional
requirements under this section, the Director shall not consider
segments of the market determined to be inconsistent with safety
and soundness or unauthorized for purchase by the enterprises,
and shall take into consideration--
``(A) national multifamily mortgage credit needs and
the ability of the enterprise to provide additional
liquidity and stability for the multifamily mortgage
market;
``(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
for housing affordable to low-income and very low-income
families, including the size of the multifamily markets
for housing of a smaller or limited size;
``(D) the ability of the enterprise to lead the
market in making multifamily mortgage credit available,
especially for multifamily housing described in
paragraphs (1) and (2);
``(E) the availability of public subsidies; and

[[Page 2701]]
122 STAT. 2701

``(F) the need to maintain the sound financial
condition of the enterprise.

``(b) Units Financed by Housing Finance Agency Bonds.--The Director
shall give full 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 that otherwise qualifies
under such goal and that is financed by tax-exempt or taxable bonds
issued by a State or local housing finance agency, if such bonds, in
whole or in part--
``(1) are secured by a guarantee of the enterprise; or
``(2) are purchased by the enterprise, except that the
Director may give less than full credit for purchases of
investment grade bonds, to the extent that such purchases do not
provide a new market or add liquidity to an existing market.

``(c) Measurement of Performance.--The Director shall monitor the
performance of each enterprise in meeting the goals established under
this section and shall evaluate such performance (for purposes of
section 1336) based on whether the rent levels are affordable. A rent
level shall be considered to be affordable for purposes of this
subsection for low-income families 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.--The Director shall determine,
for each year that the housing goal under this section is in effect
pursuant to section 1331(a), whether each enterprise has complied with
such goal and the additional requirements under subsection (a)(2).

``SEC. 1334. [NOTE: 12 USC 4564.] DISCRETIONARY ADJUSTMENT OF HOUSING
GOALS.

``(a) Authority.--An enterprise may petition the Director in writing
at any time during a year to reduce the level of any goal or subgoal for
such year established pursuant to this subpart.
``(b) Standard for Reduction.--The Director may reduce the level for
a goal or subgoal 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 or subgoal would result in
the constraint of liquidity, over-investment in certain market
segments, or other consequences contrary to the intent of this
subpart, or 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.--The [NOTE: Public comment.]  Director shall,
promptly upon receipt of a petition regarding a reduction, seek public
comment on the reduction for a period of 30 days. [NOTE: Deadline.]
The Director shall make a determination regarding any proposed reduction
within 30 days after the expiration of such public comment period. The
Director may extend such determination period for a single additional
15-day period, but only if the Director requests additional information
from the enterprise.''.

(c) Conforming Amendments.--The Housing and Community Development
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

[[Page 2702]]
122 STAT. 2702

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
dollar amount limitation in effect at the time of such
origination and applicable to such mortgage, under, as
applicable--
``(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)(1)(B), shall include
families having incomes not greater than 100 percent of the area
median income who reside in minority census tracts and shall
include families having incomes not greater than 100 percent of
the area median income who reside in designated disaster areas.

[[Page 2703]]
122 STAT. 2703

``(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

[[Page 2704]]
122 STAT. 2704

(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.--To increase the liquidity of mortgage
investments and improve the distribution of investment capital
available for mortgage financing for underserved markets, each
enterprise shall provide leadership to the market in developing
loan products and flexible underwriting guidelines to facilitate
a secondary market for mortgages for very low-, low-, and
moderate-income families with respect to the following
underserved markets:
``(A) Manufactured housing.--The enterprise shall
develop 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 develop 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;
``(vii) the rural rental housing program under
section 515 of the Housing Act of 1949;
``(viii) the low-income housing tax credit
under section 42 of the Internal Revenue Code of
1986; and
``(ix) comparable state and local affordable
housing programs.
``(C) Rural markets.--The [NOTE: Guidelines.]
enterprise shall develop loan products and flexible
underwriting guidelines to facilitate a secondary market
for mortgages on housing for very low-, and low-, and
moderate-income families in rural areas.''; and
(5) by adding at the end the following new subsections:

``(c) Additional Categories.--The Director may submit
recommendations to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban Affairs
of the Senate for the establishment of additional categories under
subsection (a), provided that the Director makes

[[Page 2705]]
122 STAT. 2705

a preliminary determination that any such category is important to the
mission of the enterprises, that the category is an underserved market,
and that the establishment of such category is warranted.
``(d) Evaluation and Reporting of Compliance.--
``(1) In general.--The [NOTE: Regulations.]  Director
shall, by regulation, establish effective for 2010 and
thereafter 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 2010 and each year thereafter, 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, more
flexible underwriting guidelines, and other innovative
approaches to providing financing to each of such
underserved markets;
``(B) the extent of outreach to qualified loan
sellers and other market participants in each of such
underserved markets;
``(C) the volume of loans purchased in each of such
underserved markets relative to the market opportunities
available to the enterprise, except that the Director
shall not establish specific quantitative targets nor
evaluate the enterprises based solely on the volume of
loans purchased; and
``(D) the amount of investments and grants in
projects which assist in meeting the needs of such
underserved markets.
``(3) Manufactured housing market.--In determining whether
an enterprise has complied with the duty under subparagraph (A)
of subsection (a)(1), the Director may consider loans secured by
both real and personal property.
``(4) Prohibition of consideration of affordable housing
fund grants for meeting duty to serve.-- In determining whether
an enterprise has complied with the duty referred to in
paragraph (1), the Director may not consider any affordable
housing fund grant amounts used under section 1337 for eligible
activities under subsection (g) of such section.''.

(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 title, the following new
paragraph:
``(4) Enforcement of duty to provide mortgage credit to
underserved markets.--The duty under section 1335(a)

[[Page 2706]]
122 STAT. 2706

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 be enforceable only under this
section, except that such duty shall not be subject to
subsection (c)(7) of this section and shall not be enforceable
under any other provision of this title (including subpart C of
this part) or under any provision of the Federal National
Mortgage Association Charter Act or the Federal Home Loan
Mortgage Corporation Act.''.

(c) Additional Credit for Certain Mortgages.--Section 1336(a) of the
Housing and Community Development Act of 1992 (12 U.S.C. 4566(a)) is
amended_
(1) in paragraph (2), by inserting ``, except as provided in
paragraph (5),'' after ``which''; and
(2) by adding at the end the following new paragraph:
``(5) Additional credit.--The Director may assign additional
credit toward achievement, under this section, of the housing
goals for mortgage purchase activities of the enterprises that
comply with the requirements of such goals and support housing
that includes a licensed childcare center. The availability of
additional credit under this paragraph shall not be used to
increase any housing goal, subgoal, or target established under
this subpart.''.

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

[[Page 2707]]
122 STAT. 2707

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, or fails to
comply with the plan, the Director may issue a cease and desist
order in accordance with section 1341 and impose civil money
penalties in accordance with section 1345.
``(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

[[Page 2708]]
122 STAT. 2708

``(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 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 [NOTE: Review. Deadline.]
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 [NOTE: Deadline.]  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) Cease and desist orders; civil money penalties.--
Solely with respect to the housing goals established under
sections 1332(a) and 1333(a)(1), if the Director requires an
enterprise to submit a housing plan under this subsection and
the enterprise refuses to submit such a plan, submits an
unacceptable plan, or fails to comply with the plan, the
Director may issue a cease and desist order in accordance with
section 1341, impose civil money penalties in accordance with
section 1345, exercise other appropriate enforcement authority
or seek other appropriate actions.''.

(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. [NOTE: 12 USC 4581.] 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--

[[Page 2709]]
122 STAT. 2709

``(1) 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;
``(2) 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, or subsection
(e) or (f) of section 307 of the Federal Home Loan Mortgage
Corporation Act;
``(3) solely with respect to the housing goals established
under sections 1332(a) and 1333(a)(1), the enterprise has failed
to submit a housing plan that complies with section 1336(c)
within the applicable period; or
``(4) solely with respect to the housing goals established
under sections 1332(a) and 1333(a)(1), 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) submit a report under section 1327;
``(B) solely with respect to the housing goals
established under sections 1332(a) and 1333(a)(1),
submit a housing plan in compliance with section
1336(c);
``(C) solely with respect to the housing goals
established under sections 1332(a) and 1333(a)(1),
comply with the housing plan in compliance with section
1336(c); or
``(D) 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
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:

[[Page 2710]]
122 STAT. 2710

``SEC. 1345. [NOTE: 12 USC 4585.] 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) 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;
``(2) 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;
``(3) solely with respect to the housing goals established
under sections 1332(a) and 1333(a)(1), submit a housing plan or
perform its responsibilities under a remedial order issued
pursuant to section 1336(c) within the required period; or
``(4) solely with respect to the housing goals established
under sections 1332(a) and 1333(a)(1), 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 [NOTE: Standards.]  Director
shall establish standards and procedures governing the
imposition of civil money penalties under this section. Such
standards and procedures--
``(A) [NOTE: Records.]  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,

[[Page 2711]]
122 STAT. 2711

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. [NOTE: 12 USC 4567.] 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--

[[Page 2712]]
122 STAT. 2712

``(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) [NOTE: Regulations.]  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. [NOTE: 12 USC 4568.] HOUSING TRUST FUND.

``(a) Establishment and Purpose.--
``(1) In general.--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 (as such term is
defined in section 1303) for use--
``(A) to increase and preserve the supply of rental
housing for extremely low- and very low-income families,
including homeless families; and

[[Page 2713]]
122 STAT. 2713

``(B) to increase homeownership for extremely low-
and very low-income families.
``(2) Federal assistance.--For purposes of the application
of Federal civil rights laws, all assistance provided from the
Housing Trust Fund shall be considered Federal financial
assistance.

``(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.

``(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 [NOTE: Regulations. Deadline. Disadvantaged
persons.]  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:

[[Page 2714]]
122 STAT. 2714

``(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 [NOTE: Deadline. Federal
Register, publication.]  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 [NOTE: State and local
governments.]  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.

[[Page 2715]]
122 STAT. 2715

``(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 of the 50
States of the United States or the District of Columbia,
the allocation for such State of the United States or
the District of Columbia shall be $3,000,000, and the
increase shall be deducted pro rata from the allocations
made to all other of the States (as such term is defined
in section 1303).
``(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)(D);
``(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 [NOTE: Notification. Public comments.]
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 [NOTE: Public information.]  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

[[Page 2716]]
122 STAT. 2716

``(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)(D).
``(7) [NOTE: Disadvantaged persons.]  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 or
families with incomes at or below the poverty line (as
such term is defined in section 673 of the Omnibus
Budget Reconciliation Act of 1981 (42 U.S.C. 9902),
including any revision required by such section)
applicable to a family of the size involved, 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) Tenant protections and public participation.--All
amounts from the Trust Fund shall be allocated in accordance
with, and any eligible activities carried out in whole or in
part with grant amounts under this subtitle (including housing

[[Page 2717]]
122 STAT. 2717

provided with such grant amounts) shall comply with and be
operated in compliance with--
``(A) laws relating to tenant protections and tenant
rights to participate in decision making regarding their
residences;
``(B) laws requiring public participation, including
laws relating to Consolidated Plans, Qualified
Allocation Plans, and Public Housing Agency Plans; and
``(C) fair housing laws and laws regarding
accessibility in federally assisted housing, including
section 504 of the Rehabilitation Act of 1973.
``(9) 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 [NOTE: Regulations.] 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.
``(10) 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.

[[Page 2718]]
122 STAT. 2718

``(C) Use of returns.--The [NOTE: Regulations.]
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 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 [NOTE: Regulations.]
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;
and for the purposes of this subparagraph, the
prohibited use of funds for political activities
includes influencing the selection, nomination,
election, or appointment of one or more candidates
to any Federal, State or local office as codified
in section 501 of the Internal Revenue Code of
1986 (26 U.S.C. 501);
``(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

[[Page 2719]]
122 STAT. 2719

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) [NOTE: Payments.]  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) [NOTE: Requirements.]  establish
minimum requirements for agreements, between the
State or State designated entity and recipients,
regarding assistance under this section, which
shall include--

``(I) [NOTE: Reports. Recordkeeping.]
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 [NOTE: Deadline.]  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

[[Page 2720]]
122 STAT. 2720

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) [NOTE: Notification.]  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 [NOTE: Notification.]
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.

[[Page 2721]]
122 STAT. 2721

``(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.--

[[Page 2722]]
122 STAT. 2722

``(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) [NOTE: Deadline.]  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) a requirement that, for the purposes of
subparagraphs (A) and (B), any financial statement
submitted by a grantee or recipient to the Secretary
shall be reviewed by an independent certified public
accountant in accordance with Statements on Standards
for Accounting and Review Services, issued by the
American Institute of Certified Public Accountants;
``(D) 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--
``(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;
``(E) 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
``(F) 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

[[Page 2723]]
122 STAT. 2723

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 [NOTE: Records.]
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. [NOTE: 12 USC 4569.] 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 [NOTE: Grants.]  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.--For purposes of the application of
Federal civil rights laws, all assistance provided using amounts in the
Capital Magnet Fund shall be considered Federal financial assistance.
``(e) Eligible Grantees.--A [NOTE: Requirements.]  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

[[Page 2724]]
122 STAT. 2724

``(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 [NOTE: Regulations.]  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

[[Page 2725]]
122 STAT. 2725

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) Prohibited uses.--The [NOTE: Regulations.]
Secretary shall, by regulation, set forth prohibited uses of
grant amounts awarded under this section, which shall include
use for--
``(A) political activities;
``(B) advocacy;
``(C) lobbying, whether directly or through other
parties;
``(D) counseling services;
``(E) travel expenses; and
``(F) preparing or providing advice on tax returns;
and for the purposes of this paragraph, the prohibited use of
funds for political activities includes influencing the
selection, nomination, election, or appointment of one or more
candidates to any Federal, State or local office as codified in
section Sec. 501 of the Internal Revenue Code of 1986 (26 U.S.C.
501).
``(6) Additional 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.
``(7) 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.
``(8) Accountability of recipients and grantees.--
``(A) Tracking of funds.--The Secretary of the
Treasury shall--
``(i) [NOTE: Records.]  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

[[Page 2726]]
122 STAT. 2726

``(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.

``(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) [NOTE: Deadline.]  a requirement that the
Secretary ensure that the allocation of each enterprise
is audited not less than annually to ensure compliance
with this section;
``(C) a requirement that, for the purposes of
subparagraphs (A) and (B), any financial statement
submitted by a grantee to the Secretary shall be
reviewed by an independent certified public accountant
in accordance with

[[Page 2727]]
122 STAT. 2727

Statements on Standards for Accounting and Review
Services, issued by the American Institute of Certified
Public Accountants; and
``(D) 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. [NOTE: 12 USC 1701x note.] 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--

[[Page 2728]]
122 STAT. 2728

(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 [NOTE: Grants.]  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. [NOTE: 12 USC 4511 note.] TRANSFER AND RIGHTS OF CERTAIN
HUD EMPLOYEES.

(a) Transfer.--Each [NOTE: Deadline.]  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

[[Page 2729]]
122 STAT. 2729

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.--

[[Page 2730]]
122 STAT. 2730

(A) In general.--The [NOTE: Payments.]  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 [NOTE: Deadline.]  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 [NOTE: Regulations.]  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 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 [NOTE: Deadline. 12 USC 4613 note.]  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.--

[[Page 2731]]
122 STAT. 2731

``(1) Establishment and criteria.--
For [NOTE: Regulations.]  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 mortgages 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.

[[Page 2732]]
122 STAT. 2732

``(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 [NOTE: Deadline.]  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) [NOTE: Review.]  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

[[Page 2733]]
122 STAT. 2733

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.

[[Page 2734]]
122 STAT. 2734

``(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:

``(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) Assets insufficient for obligations.--The
assets of the regulated entity are less than the
obligations of the regulated entity to its creditors and
others.
``(B) Substantial dissipation.--Substantial
dissipation of assets or earnings due to--

[[Page 2735]]
122 STAT. 2735

``(i) any violation of any provision of
Federal or State law; or
``(ii) any unsafe or unsound practice.
``(C) Unsafe or unsound condition.--An unsafe or
unsound condition to transact business.
``(D) Cease and desist orders.--Any willful
violation of a cease and desist order that has become
final.
``(E) 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.
``(F) 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.
``(G) 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)).
``(H) 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.
``(I) Consent.--The regulated entity, by resolution
of its board of directors or its shareholders or
members, consents to the appointment.
``(J) 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.
``(K) Critical undercapitalization.--The regulated
entity is critically undercapitalized, as defined in
section 1364(a)(4).
``(L) Money laundering.--
The [NOTE: Notification.]  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.--

[[Page 2736]]
122 STAT. 2736

``(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) [NOTE: Deadlines.]  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 [NOTE: Deadline.]  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.

[[Page 2737]]
122 STAT. 2737

``(b) Powers and Duties of the Agency as Conservator or Receiver.--
``(1) Rulemaking authority of the agency.--
The [NOTE: Regulations.]  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.

[[Page 2738]]
122 STAT. 2738

``(F) Organization of new enterprise.--The Agency
may, 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.
``(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

[[Page 2739]]
122 STAT. 2739

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 [NOTE: Publication. Deadline.]  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 [NOTE: Notice.]
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 [NOTE: Deadline.] 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 [NOTE: Deadline. Notification.]  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

[[Page 2740]]
122 STAT. 2740

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

[[Page 2741]]
122 STAT. 2741

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 [NOTE: Deadline.]  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 [NOTE: Procedures.]  Agency shall establish a
procedure for expedited relief outside of the routine
claims process established under paragraph (5) for
claimants who--

[[Page 2742]]
122 STAT. 2742

``(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 [NOTE: Deadline.]  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) [NOTE: Notification.]  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 [NOTE: Deadline.]  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 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--

[[Page 2743]]
122 STAT. 2743

``(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

[[Page 2744]]
122 STAT. 2744

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 [NOTE: Effective date.]  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.

[[Page 2745]]
122 STAT. 2745

``(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

[[Page 2746]]
122 STAT. 2746

``(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 [NOTE: Applicability.]
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 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

[[Page 2747]]
122 STAT. 2747

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

[[Page 2748]]
122 STAT. 2748

``(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

[[Page 2749]]
122 STAT. 2749

``(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) [NOTE: Payments.]  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--

[[Page 2750]]
122 STAT. 2750

``(I)
shall [NOTE: Payments.] 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.
``(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) [NOTE: Payments.]  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)

[[Page 2751]]
122 STAT. 2751

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.

[[Page 2752]]
122 STAT. 2752

``(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

[[Page 2753]]
122 STAT. 2753

``(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,

[[Page 2754]]
122 STAT. 2754

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

[[Page 2755]]
122 STAT. 2755

thereof certificates of deposit,
eligible bankers' acceptances,
securities, mortgage loans, or interests
as described above, at a date 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

[[Page 2756]]
122 STAT. 2756

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.

[[Page 2757]]
122 STAT. 2757

``(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

[[Page 2758]]
122 STAT. 2758

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.--
[NOTE: Deadline. Contracts.] 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) [NOTE: Effective dates.]
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

[[Page 2759]]
122 STAT. 2759

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).
``(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.-- [NOTE: Effective
dates.] 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

[[Page 2760]]
122 STAT. 2760

``(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

[[Page 2761]]
122 STAT. 2761

``(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.--
[NOTE: Applicability.] 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 may 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

[[Page 2762]]
122 STAT. 2762

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.

[[Page 2763]]
122 STAT. 2763

``(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.
``(6) Winding up.--
``(A) In general.-- [NOTE: Deadline.] 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.--
[NOTE: Deadline.] 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.

[[Page 2764]]
122 STAT. 2764

``(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

[[Page 2765]]
122 STAT. 2765

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--

[[Page 2766]]
122 STAT. 2766

``(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) Effect 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.

[[Page 2767]]
122 STAT. 2767

``(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'';
(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

[[Page 2768]]
122 STAT. 2768

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

[[Page 2769]]
122 STAT. 2769

(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

[[Page 2770]]
122 STAT. 2770

(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. [NOTE: 12 USC 4636a.] 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.--

[[Page 2771]]
122 STAT. 2771

``(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.
``(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,

[[Page 2772]]
122 STAT. 2772

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.-- [NOTE: Deadline.] 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,

[[Page 2773]]
122 STAT. 2773

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

[[Page 2774]]
122 STAT. 2774

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) [NOTE: Deadline. Notification.] 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), [NOTE: 12 USC 4517.] by
striking ``section 1379B'' and inserting ``section
1379D'';
(B) in section [NOTE: 12 USC 4633.] 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

[[Page 2775]]
122 STAT. 2775

(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 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;

[[Page 2776]]
122 STAT. 2776

``(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)--

[[Page 2777]]
122 STAT. 2777

(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. [NOTE: 12 USC 4636b.] 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 [NOTE: 12 USC 4637.] (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 [NOTE: 12 USC 4638.] (as so
designated by this Act), by striking ``an enterprise'' and
inserting ``a regulated entity'';
(3) in section 1379B(c) [NOTE: 12 USC 4639.] (as so
designated by this Act), by striking ``enterprise'' and
inserting ``regulated entity''; and
(4) in section 1379D [NOTE: 12 USC 4641.] (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.''.

[[Page 2778]]
122 STAT. 2778

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)--

[[Page 2779]]
122 STAT. 2779

(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''.

(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''.

[[Page 2780]]
122 STAT. 2780

(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,

[[Page 2781]]
122 STAT. 2781

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 [NOTE: 12 USC 1723 note.] 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.--

[[Page 2782]]
122 STAT. 2782

(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 [NOTE: 12 USC 1452 note.] 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. [NOTE: 5 USC 13132 note.] 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 and
future effect relating to the Federal Home Loan Banks (other than any
regulation, advisory document, or examination guidance of the Federal
Housing Finance Board that the Director reissues after the authority of
the Director over the Federal Home Loan Banks takes effect), 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

[[Page 2783]]
122 STAT. 2783

``(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.
``(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

[[Page 2784]]
122 STAT. 2784

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--

[[Page 2785]]
122 STAT. 2785

(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--

[[Page 2786]]
122 STAT. 2786

(1) by striking sections 2A and 2B (12 U.S.C. 1422a, 1422b);
(2) in section 18 (12 U.S.C. 1438), by striking subsection
(b);
(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 [NOTE: 12 USC 1422 et al.] ``the Board''
each place that term appears and inserting ``the Director'';
(9) by [NOTE: 12 USC 1427 et al.] striking ``The Board''
each place that term appears and inserting ``The Director'';
(10) by [NOTE: 12 USC 1422 et al.] 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 [NOTE: 12 USC 1430 et al.] 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. [NOTE: 12 USC 1430c.] HOUSING GOALS.

``(a) In General.--The Director shall establish housing goals with
respect to the purchase of mortgages, if any, by the Federal

[[Page 2787]]
122 STAT. 2787

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. [NOTE: 12 USC 1440a.] SHARING OF INFORMATION AMONG FEDERAL
HOME LOAN BANKS.

``(a) [NOTE: Reports. Records.] 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)  [NOTE: Regulations.] 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

[[Page 2788]]
122 STAT. 2788

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.
``(d) No Waiver of Privilege.--The Director shall not be deemed to
have waived any privilege applicable to any information concerning a
Federal Home Loan Bank by transferring, or permitting the transfer of,
that information to any other Federal Home Loan Bank for the purposes
set out in subsection (a).''.

SEC. 1208. [NOTE: 12 USC 1426a.] 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--

[[Page 2789]]
122 STAT. 2789

(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 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.''.

[[Page 2790]]
122 STAT. 2790

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)  [NOTE: Deadline.] 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.--

[[Page 2791]]
122 STAT. 2791

``(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 [NOTE: 12 USC
1441b.] 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. [NOTE: Deadline. Notification.] 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 [NOTE: Records.] 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;

[[Page 2792]]
122 STAT. 2792

(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''.

[[Page 2793]]
122 STAT. 2793

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

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

(a)  [NOTE: Deadline.] 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) [NOTE: Recommenda- tions.] 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) [NOTE: Public comment.] 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) [NOTE: Effective date.] during the 2-year
period beginning on the date of enactment of this
subparagraph, use such percentage as the Director may by
regulation establish of any subsidized advances set
aside to finance homeownership under subparagraph (A) to
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.''.

[[Page 2794]]
122 STAT. 2794

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

Subtitle A--OFHEO

SEC. 1301. [NOTE: 12 USC 4511 note.] ABOLISHMENT OF OFHEO.

(a) In [NOTE: Effective date.] 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)  [NOTE: Effective date.] 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

[[Page 2795]]
122 STAT. 2795

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. [NOTE: 12 USC 4511 note.] 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).

[[Page 2796]]
122 STAT. 2796

SEC. 1303. [NOTE: 12 USC 4511 note.] TRANSFER AND RIGHTS OF EMPLOYEES
OF OFHEO.

(a)  [NOTE: Deadline.] 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)  [NOTE: Effective date.] 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)  [NOTE: Effective date.] 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.

[[Page 2797]]
122 STAT. 2797

(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)  [NOTE: Deadline.] 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. 1304. [NOTE: 12 USC 4511 note.] 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. [NOTE: 12 USC 4511 note.] ABOLISHMENT OF THE FEDERAL
HOUSING FINANCE BOARD.

(a)  [NOTE: Effective date. Termination date.] 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)  [NOTE: Effective date.] 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)  [NOTE: Deadline.] 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--

[[Page 2798]]
122 STAT. 2798

(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. [NOTE: 12 USC 4511 note.] CONTINUATION AND COORDINATION OF
CERTAIN ACTIONS.

(a)  [NOTE: Regulations. Orders.] 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. [NOTE: 12 USC 4511 note.] TRANSFER AND RIGHTS OF EMPLOYEES
OF THE FEDERAL HOUSING FINANCE BOARD.

(a)  [NOTE: Deadline.] 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.

[[Page 2799]]
122 STAT. 2799

(2)  [NOTE: Effective date.] 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)  [NOTE: Deadline.] 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. [NOTE: Effective date. 12 USC 4511 note.] 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.

[[Page 2800]]
122 STAT. 2800

TITLE IV--HOPE FOR HOMEOWNERS

SEC. 1401. [NOTE: 12 USC 1701 note.] 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. [NOTE: 12 USC 1715z-23.] 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) [NOTE: Standards.] establish requirements
and standards for the program; and
``(B) [NOTE: Regulations.] 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:

[[Page 2801]]
122 STAT. 2801

``(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
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)  [NOTE: Records.] 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

[[Page 2802]]
122 STAT. 2802

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)  [NOTE: Standards. Policies.] 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, except as the Board determines to be necessary to
ensure the maintenance of property standards; and provided that
such new outstanding liens (A) do not reduce the value of the
Government's equity in the borrower's home; and (B) when
combined with the mortgagor's existing mortgage indebtedness, do
not exceed 95 percent of the home's appraised value at the time
of the new second lien.
``(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;

[[Page 2803]]
122 STAT. 2803

``(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)  [NOTE: Procedures. Standards.] Documentation and
verification of income.--In complying with the FHA underwriting
requirements under the HOPE for Homeowners Program under this
section, the mortgagee shall document and verify the income of
the mortgagor or non-filing status by procuring (A) an income
tax return transcript of the income tax returns of the
mortgagor, or(B) a copy of the income tax returns from the
Internal Revenue Service, for the two 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 shall establish.
``(10) Mortgage fraud.--The mortgagor shall not have been
convicted under Federal or State law for fraud during the 10-
year period ending upon the insurance of the mortgage under this
section.
``(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;

[[Page 2804]]
122 STAT. 2804

``(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)  [NOTE: Regulations. Orders.] 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.

[[Page 2805]]
122 STAT. 2805

``(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.
``(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)  [NOTE: Effective dates.] 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

[[Page 2806]]
122 STAT. 2806

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--

[[Page 2807]]
122 STAT. 2807

``(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, or their designees.
``(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.

[[Page 2808]]
122 STAT. 2808

``(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 `HOPE Bonds', that
are callable at the discretion of the Secretary of the

[[Page 2809]]
122 STAT. 2809

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. [NOTE: 15 USC 1639a.] 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

[[Page 2810]]
122 STAT. 2810

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'
means the person responsible for servicing of a loan (including the
person who makes or holds a loan if such person also services the
loan).''.

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)  [NOTE: Effective date.] 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) [NOTE: Certification.] 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. [NOTE: Secure and Fair Enforcement
for Mortgage Licensing Act of 2008. 12 USC 5101 note.]  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. [NOTE: State and local governments. 12 USC
5101 note.] 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

[[Page 2811]]
122 STAT. 2811

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. [NOTE: 12 USC 5102.] 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

[[Page 2812]]
122 STAT. 2812

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'' 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--

[[Page 2813]]
122 STAT. 2813

(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.--The term ``State'' means any State of the
United States, the District of Columbia, any territory of the
United States, Puerto Rico, Guam, American Samoa, the Trust
Territory of the Pacific Islands, the Virgin Islands, and the
Northern Mariana Islands.
(11) 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.
(12) 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

[[Page 2814]]
122 STAT. 2814

shall use unique identifiers in lieu of social security
numbers.

SEC. 1504. [NOTE: 12 USC 5103.] LICENSE OR REGISTRATION REQUIRED.

(a) In General.--Subject to the existence of a licensing or
registration regime, as the case may be, 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. [NOTE: 12 USC 5104.] 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.

[[Page 2815]]
122 STAT. 2815

(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, or paid into a State fund, 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.--

[[Page 2816]]
122 STAT. 2816

(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. [NOTE: 12 USC 5105.] 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.
(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.

[[Page 2817]]
122 STAT. 2817

(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. [NOTE: 12 USC 5106.] 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. [NOTE: Deadline.] 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)  [NOTE: Public information.] 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

[[Page 2818]]
122 STAT. 2818

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)  [NOTE: Information technology.] 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 [NOTE: State and local governments. Deadlines. 12
USC 5107.] 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)  [NOTE: Public infomation.] 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) [NOTE: Reports.] The State loan originator supervisory
authority is required to regularly report violations of such
law, as well

[[Page 2819]]
122 STAT. 2819

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, or has established a
recovery fund paid into by the loan originators.

(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.

SEC. 1509. [NOTE: 12 USC 5108.] 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. [NOTE: 12 USC 5109.] 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. [NOTE: 12 USC 5110.] 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

[[Page 2820]]
122 STAT. 2820

and distributing information between the Department of Justice and the
appropriate State agencies.

SEC. 1512. [NOTE: 12 USC 5111.] CONFIDENTIALITY OF INFORMATION.

(a) System [NOTE: Applicability.] 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.
(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. [NOTE: 12 USC 5112.] 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.

[[Page 2821]]
122 STAT. 2821

SEC. 1514. [NOTE: 12 USC 5113.] 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

[[Page 2822]]
122 STAT. 2822

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)  [NOTE: Notification. Deadline.] 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. [NOTE: Effective date.] 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,

[[Page 2823]]
122 STAT. 2823

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 [NOTE: Notification. Hearings.] 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. [NOTE: 12 USC 5114.] 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) [NOTE: Records.] 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

[[Page 2824]]
122 STAT. 2824

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. [NOTE: 12 USC 5115.] 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)  [NOTE: Deadline.] 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 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. [NOTE: 12 USC 5116.] 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)  [NOTE: Deadline.] 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)  [NOTE: Deadline.] 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. [NOTE: 12 USC 4514a.] 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)  [NOTE: Regulations. Orders. Procedures. Deadline.] 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.

[[Page 2825]]
122 STAT. 2825

(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)  [NOTE: Deadline.] 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. [NOTE: 42 USC 1437f note.] 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);

[[Page 2826]]
122 STAT. 2826

(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 subparagraph (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 the heading for subsection (e)(10)(C), by striking
``Bridge Banks'' and inserting ``Bridge Depository
Institutions'';

[[Page 2827]]
122 STAT. 2827

(3) in subsection (e)(10)(C)(i), by striking ``bridge bank''
and inserting ``bridge depository institution'';
(4) in subsection (m)--
(A) in the subsection heading, by striking ``Banks''
and inserting ``Depository Institutions'';
(B) by striking ``insured bank'' each place such
term appears and inserting ``insured depository
institution'';
(C) by striking ``new bank'' each place such term
appears and inserting ``new depository institution'';
(D) by striking ``such bank'' each place such term
appears and inserting ``such depository institution'';
(E) by striking ``the bank'' each place such term
appears and inserting ``the insured depository
institution'';
(F) in paragraph (1), by inserting ``or Federal
savings association'' after ``national bank'';
(G) in paragraph (6), by striking ``only bank'' and
inserting ``only depository institution'';
(H) in paragraph (9), by inserting ``or the Director
of the Office of Thrift Supervision, as appropriate''
after ``Comptroller of the Currency'';
(I) in paragraph (15), by striking ``, but in no
event'' and all that follows through ``located'';
(J) in paragraph (16)--
(i) by inserting ``or the Director of the
Office of Thrift Supervision, as appropriate,''
after ``Comptroller of the Currency'' each place
such term appears;
(ii) by striking ``the bank'' each place such
term appears and inserting ``the depository
institution'';
(iii) by inserting ``or Federal savings
association'' after ``national bank'' each place
such term appears;
(iv) by inserting ``or Federal savings
associations'' after ``national banks''; and
(v) by striking ``Such bank'' and inserting
``Such depository institution''; and
(K) in paragraph (18), by inserting ``or the
Director of the Office of Thrift Supervision, as
appropriate,'' after ``Comptroller of the Currency''
each place such term appears;
(5) in subsection (n)--
(A) in the subsection heading, by striking ``Banks''
and inserting ``Depository Institutions'';
(B) by striking ``bridge bank'' each place such term
appears and inserting ``bridge depository institution'';
(C) by striking ``bridge banks'' each place such
term appears (other than in paragraph (1)(A))and
inserting ``bridge depository institutions'';
(D) by striking ``bridge bank's'' each place such
term appears and inserting ``bridge depository
institution's'';
(E) by striking ``insured bank'' each place such
term appears and inserting ``insured depository
institution'';
(F) by striking ``insured banks'' each place such
term appears and inserting ``insured depository
institutions'';
(G) by striking ``such bank'' each place such term
appears (other than in paragraph (4)(J)) and inserting
``such depository institution'';
(H) by striking ``the bank'' each place such term
appears and inserting ``the depository institution'';

[[Page 2828]]
122 STAT. 2828

(I) by striking ``bank or banks'' each place such
term appears and inserting ``depository institution or
institutions'';
(J) 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'
'';
(K) in paragraph (1)(B)--
(i) by striking ``of a bank''; and
(ii) by striking ``of that bank'';
(L) in the heading for paragraph (1)(E), by
inserting ``or federal savings association'' before the
period;
(M) 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'';
(N) in paragraph (2)--
(i) by inserting ``or Federal savings
association'' after ``national bank'' each place
such term appears;
(ii) in subparagraph (A), by inserting ``or
the Director of the Office of Thrift Supervision''
after ``Comptroller of the Currency''; and
(iii) in the heading for subparagraph (B), by
inserting ``or federal savings association''
before the period;
(O) in paragraph (4)--
(i) in the matter preceding subparagraph (A),
by inserting ``or Federal savings association, as
appropriate'' after ``national bank'';
(ii) in subparagraph (C), by striking ``under
section 5138 of the Revised Statutes or any
other'' and inserting ``under any'';
(iii) by inserting ``and the Director of the
Office of Thrift Supervision, as appropriate,''
after ``Comptroller of the Currency'' each place
such term appears;
(iv) in subparagraph (D), by striking
``bank's'' and inserting ``depository
institution's''; and
(v) in subparagraph (H), by striking ``a bank
in default'' and inserting ``a depository
institution in default'';
(P) 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'';
(Q) by striking ``bridge bank'' or ``bridge banks''
as the case may be in the headings for paragraphs (9),
(10), (12), and (13) and inserting ``bridge depository
institution'' or ``bridge depository institutions'' as
appropriate;

[[Page 2829]]
122 STAT. 2829

(R) in paragraph (11), by inserting ``or a Federal
savings association, as the case may be,'' after
``national bank'' each place such term appears;
(S) in paragraph (12)--
(i) by inserting ``or the Director of the
Office of Thrift Supervision, as appropriate,''
after ``Comptroller of the Currency'' each place
such term appears; and
(ii) by inserting ``or Federal savings
associations, as appropriate'' after ``national
banks''; and
(T) 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 such 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, united states code.--Section 783 of title 11,
United States Code, is amended by striking ``bridge bank'' and
inserting ``bridge depository institution''.
(4) Title 26, united states code.--Section 414(l)(2)(G) of
the Internal Revenue Code of 1986, is amended by striking
``bridge bank'' and inserting ``bridge depository institution''.

(c) Repeal of Deposit Limitation.--Section 11(n)(1)(B)(i) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(n)(1)(B)(i)) is amended by
striking ``, except that'' and all that follows through ``another
insured depository institution''.
(d) Federal Reserve Bank Lending to Bridge Depository
Institutions.--Section 11(n)(5) of the Federal Deposit Insurance Act (12
U.S.C. 1821(n)(5)) is amended by adding at the end the following new
subparagraph:
``(D) Capital levels.--A bridge depository
institution shall not be considered an undercapitalized
depository institution or a critically undercapitalized
depository institution for purposes of section 10B(b) of
the Federal Reserve Act.''.

[[Page 2830]]
122 STAT. 2830

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-- [NOTE: Foreclosure Prevention Act of 2008.] FORECLOSURE
PREVENTION

SEC. 2001. [NOTE: 12 USC 1701 note.] 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 [NOTE: FHA Modernization Act of 2008.]  MODERNIZATION ACT
OF 2008

SEC. 2101. [NOTE: 12 USC 1701 note.] SHORT TITLE.

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

Subtitle [NOTE: Building American Homeownership Act of 2008.] A--
Building American Homeownership

SEC. 2111. [NOTE: 12 USC 1701 note.] 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) of the National
Housing Act (12 U.S.C. 1709(b)(2)) is amended--
(1) by striking subparagraphs (A) and (B) and inserting the
following:
``(A) not to exceed the lesser of--
``(i) in the case of a 1-family residence, 115
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 the sixth
sentence of section 305(a)(2) of the Federal Home
Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)) for a 2-, 3-, or 4-family residence,
respectively, bears to the dollar amount
limitation determined under such section for a 1-
family residence; or

[[Page 2831]]
122 STAT. 2831

``(ii) 150 percent of the dollar amount
limitation determined under the sixth sentence of
such section 305(a)(2) 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 the sixth
sentence of 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) Treatment of Up-Front Premiums.--Section 203(d) of the National
Housing Act (12 U.S.C. 1709(d)) is amended--
(1) by striking ``Notwithstanding any'' and inserting the
following: ``Except as provided in paragraph (2) of this
subsection, notwithstanding'';
(2) by inserting ``(1)'' after ``(d)''; and
(3) by adding at the end the following new paragraph:

``(2) The maximum amount of a mortgage determined under subsection
(b)(2)(B) of this section may not be increased as provided in paragraph
(1).''.
(c) Effective [NOTE: 12 USC 1709 note.] 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; 122 Stat. 620).

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 or its equivalent, 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 plus any initial service
charges, appraisal,

[[Page 2832]]
122 STAT. 2832

inspection, and other fees in connection with the
mortgage.
``(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).
[NOTE: Applicability. Effective date.] This
subparagraph shall apply only to mortgages for which the
mortgagee has issued credit approval for the borrower on
or after October 1, 2008.''.

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--

[[Page 2833]]
122 STAT. 2833

(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)'';
(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. [NOTE: Reports.] 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

[[Page 2834]]
122 STAT. 2834

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.
[NOTE: Deadline.] 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) [NOTE: Deadline.] 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

[[Page 2835]]
122 STAT. 2835

(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''.

[[Page 2836]]
122 STAT. 2836

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. [NOTE: Standards. Deadline.] 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
(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

[[Page 2837]]
122 STAT. 2837

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 mortgagor or any other party shall not be required by the
mortgagee or any other party to purchase an insurance, annuity, or other
similar product as a requirement or condition of eligibility for
insurance under subsection (c), except for title insurance, hazard,
flood, or other peril insurance, or other such products that are
customary and normal under subsection (c), as determined by the
Secretary.
``(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

[[Page 2838]]
122 STAT. 2838

(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) be equal to 2.0 percent of the maximum claim amount of
the mortgage, up to a maximum claim amount of $200,000 plus 1
percent of any portion of the maximum claim amount that is
greater than $200,000, unless adjusted thereafter on the basis
of an analysis of--
``(A) the costs to mortgagors; and
``(B) the impact 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;
``(5) have the same effective date as subsection (m)(2)
regarding the limitation on principal obligation; and
``(6) be subject to a maximum origination fee of $6,000,
except that such maximum limit shall be adjusted in accordance
with the annual percentage increase in the Consumer Price Index
of the Bureau of Labor Statistics of the Department of Labor in
increments of $500 only when the percentage increase in such
index, when applied to the maximum origination fee, produces
dollar increases that exceed $500.''.

(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.

[[Page 2839]]
122 STAT. 2839

(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. [NOTE: 12 USC 1715z-24.] 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

[[Page 2840]]
122 STAT. 2840

any new commitment to insure any mortgage, or newly insure any mortgage,
pursuant to the automated process established under this section.''.
(b) GAO Report.-- [NOTE: Deadline.] 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. [NOTE: 12 USC 1710 note.] 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) [NOTE: Plans.] develop and implement a plan to improve
the Federal Housing Administration's loss mitigation process;
and
(2) [NOTE: Reports.] 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.-- [NOTE: Regulations.] 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 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

[[Page 2841]]
122 STAT. 2841

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. [NOTE: Deadline. Reports.] 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. [NOTE: 12 USC 1701x note.] 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--

[[Page 2842]]
122 STAT. 2842

(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 [NOTE: Deadline.] 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. [NOTE: 12 USC 1709 note.] 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

[[Page 2843]]
122 STAT. 2843

(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) [NOTE: Notification.] 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) [NOTE: Federal
Register, publication.] 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. [NOTE: 12 USC 1701 note.] 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. [NOTE: Requirements. Notification. Effective date. 12 USC
1701 note.] 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.-- [NOTE: Effective date.] During the 12-month
period beginning on October 1, 2008, the Secretary of Housing and Urban
Development shall not take any action to implement or carry out 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.--
[NOTE: Effective date.] During the 12-month period beginning on
October 1, 2008, the Secretary of Housing and Urban Development shall
not take any action to implement or carry out any other 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.

[[Page 2844]]
122 STAT. 2844

Subtitle B-- [NOTE: FHA Manufactured Housing Loan Modernization Act of
2008.] Manufactured Housing Loan Modernization

SEC. 2141. [NOTE: 12 USC 1701 note.] SHORT TITLE.

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

SEC. 2142. [NOTE: 12 USC 1703 note.] 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 [NOTE: Contracts.] 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 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.-- [NOTE: 12 USC 1703 note.] 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'';

[[Page 2845]]
122 STAT. 2845

(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. [NOTE: Deadline.] 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:

[NOTE: Regulations.] ``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).

[[Page 2846]]
122 STAT. 2846

``(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

[[Page 2847]]
122 STAT. 2847

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 [NOTE: 12 USC 1703 note.] 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. [NOTE: 12 USC 1706f.] 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

[[Page 2848]]
122 STAT. 2848

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 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 [NOTE: Definition.] 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

[[Page 2849]]
122 STAT. 2849

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. [NOTE: 10 USC 992 note.] 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.

[[Page 2850]]
122 STAT. 2850

``(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 [NOTE: 50 USC app. 533 note.] 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. [NOTE: 42 USC 5301 note.] 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)  [NOTE: State and local governments.] 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)  [NOTE: Deadline.] 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)  [NOTE: Deadline.] 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.--

[[Page 2851]]
122 STAT. 2851

(1)  [NOTE: Deadline.] 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) [NOTE: Urban and rural areas.]  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)  [NOTE: Discounts.] 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) Rehabilitation.--Any rehabilitation of a foreclosed-upon
home or residential property under this section shall be to the
extent necessary to comply with applicable laws, codes, and
other requirements relating to housing safety, quality, and
habitability, in order to sell, rent, or redevelop such homes
and properties. Rehabilitation may include improvements to
increase the energy efficiency or conservation of such homes and
properties or provide a renewable energy source or sources for
such homes and properties.
(3) 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.
(4) Reinvestment of profits.--
(A) Profits from sales, rentals, and
redevelopment.--

[[Page 2852]]
122 STAT. 2852

(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 [NOTE: State and
local governments.] .--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)  [NOTE: State and local governments.] Rules of Construction.--
(1) In general.--Except as otherwise provided by this
section, amounts appropriated, revenues 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.

[[Page 2853]]
122 STAT. 2853

(2) Notice.-- [NOTE: Deadline.] 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)  [NOTE: Regulations. Orders.] 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. [NOTE: 42 USC 5301 note.] 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. [NOTE: 42 USC 5301 note.] 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. [NOTE: 42 USC 5301 note.] 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.

[[Page 2854]]
122 STAT. 2854

(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. [NOTE: 42 USC 5301 note.] 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:  [NOTE: Disadvantaged persons.] Provided, That of the
amount appropriated under section 2401 of this Act pursuant to this
section, not less than 15 percent shall be provided to counseling
organizations that target counseling services regarding loss mitigation
to minority and low-income homeowners or provide such services in
neighborhoods with high concentrations of minority and low-income
homeowners:  [NOTE: Grants.] Provided further, 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:  [NOTE: Legal
assistance. Deadline.] Provided further, 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:
Provided further, That the NRC, in awarding counseling grants under
section 2401 of this Act, may consider, where appropriate, whether the
entity has implemented a written plan for providing in-person counseling
and for making contact, including personal contact, with defaulted
mortgagors, for the purpose of providing counseling or providing
information about available counseling.

TITLE IV--HOUSING COUNSELING RESOURCES

SEC. 2401. [NOTE: Appropriations authorization.] HOUSING COUNSELING
RESOURCES.

There are appropriated out of any money in the Treasury not
otherwise appropriated for the fiscal year 2008, for an additional

[[Page 2855]]
122 STAT. 2855

amount for the ``Neighborhood Reinvestment Corporation--Payment to the
Neighborhood Reinvestment Corporation'' $100,000,000, to remain
available until December 31, 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 [NOTE: Mortgage Disclosure Improvement Act of
2008.]  DISCLOSURE IMPROVEMENT ACT

SEC. 2501. [NOTE: 15 USC 1601 note.] SHORT TITLE.

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

SEC. 2502. [NOTE: Creditors.] 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'' and
inserting ``and'';
(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

[[Page 2856]]
122 STAT. 2856

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. [NOTE: Consumer
testing.] 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 [NOTE: Deadline.] 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 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 [NOTE: Definition. Regulations.] term
`bona fide personal emergency' may be further defined in
regulations issued by the Board;

[[Page 2857]]
122 STAT. 2857

``(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 [NOTE: 15 USC 1638 note.] 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''.

[[Page 2858]]
122 STAT. 2858

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

[[Page 2859]]
122 STAT. 2859

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

[[Page 2860]]
122 STAT. 2860

(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.'';

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)--

[[Page 2861]]
122 STAT. 2861

(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 [NOTE: Effective date.] 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.-- [NOTE: 38 USC 2102 note.] 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.-- [NOTE: Deadline.] 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--

[[Page 2862]]
122 STAT. 2862

(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 [NOTE: Deadline.] 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.''.

[[Page 2863]]
122 STAT. 2863

TITLE VII--SMALL [NOTE: Small
Public Housing Authorities Paperwork Reduction Act.]  PUBLIC HOUSING
AUTHORITIES PAPERWORK REDUCTION ACT

SEC. 2701. [NOTE: 42 USC 1437 note.] 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 [NOTE: Applicability.] 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.--

[[Page 2864]]
122 STAT. 2864

``(A) In general.-- [NOTE: Establishment.] 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 [NOTE: Public comment.] invite
public comment regarding such changes.
``(B) Availability [NOTE: Deadline.] 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--
``(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.''.

[[Page 2865]]
122 STAT. 2865

TITLE VIII--HOUSING PRESERVATION

Subtitle A--Preservation Under Federal Housing Programs

SEC. 2801. [NOTE: Deadlines.] CLARIFICATION OF DISPOSITION OF CERTAIN
PROPERTIES.

Notwithstanding any other provision of law, subtitle A of title II
of the Deficit Reduction Act of 2005 (12 U.S.C. 1701z-11 note) and the
amendments made by such title shall not apply to any transaction
regarding a multifamily real property for which--
(1) the Secretary of Housing and Urban Development has
received, before the date of the enactment of such Act, written
expressions of interest in purchasing the property from both a
city government and the housing commission of such city;
(2) after such receipt, the Secretary acquires title to the
property at a foreclosure sale; and
(3) such city government and housing commission have
resolved a previous disagreement with respect to the disposition
of the property.

SEC. 2802. [NOTE: Massachusetts. Disadvantaged persons.] ELIGIBILITY
OF CERTAIN PROJECTS FOR ENHANCED VOUCHER ASSISTANCE.

Notwithstanding any other provision of law--
(1) the property known as The Heritage Apartments (FHA No.
023-44804), in Malden, Massachusetts, shall be considered
eligible low-income housing for purposes of the eligibility of
residents of the property for enhanced voucher assistance under
section 8(t) of the United States Housing Act of 1937 (42 U.S.C.
1437f(t)), pursuant to paragraph (2)(A) of section 223(f) of the
Low-Income Housing Preservation and Resident Homeownership Act
of 1990 (12 U.S.C. 4113(f)(2)(A));
(2) such residents shall receive enhanced rental housing
vouchers upon the prepayment of the mortgage loan for the
property under section 236 of the National Housing Act (12
U.S.C. 1715z-1); and
(3) the [NOTE: Public information.] Secretary shall
approve such prepayment and subsequent transfer of the property
without any further condition, except that the property shall be
restricted for occupancy, until the original maturity date of
the prepaid mortgage loan, only by families with incomes not
exceeding 80 percent of the adjusted median income for the area
in which the property is located, as published by the Secretary.

Amounts for the enhanced vouchers pursuant to this section shall be
provided under amounts appropriated for tenant-based rental assistance
otherwise authorized under section 8(t) of the United States Housing Act
of 1937.

SEC. 2803. TRANSFER OF CERTAIN RENTAL ASSISTANCE CONTRACTS.

(a) Transfer.-- [NOTE: Ohio.] Subject to subsection (c) and
notwithstanding any other provision of law, the Secretary of Housing and
Urban Development shall, at the request of the owner, transfer or
authorize the transfer, of the contracts, restrictions, and debt
described in subsection (b)--
(1) on the housing that is owned or managed by Community
Properties of Ohio Management Services LLC or an affiliate of
Ohio Capital Corporation for Housing and located in Franklin

[[Page 2866]]
122 STAT. 2866

County, Ohio, to other properties located in Franklin County,
Ohio; and
(2) on the housing that is owned or managed by The Model
Group, Inc., and located in Hamilton County, Ohio, to other
properties located in Hamilton County, Ohio.

(b) Contracts, Restrictions, and Debt Covered.--The contracts,
restrictions, and debt described in this subsection are as follows:
(1) All or a portion of a project-based rental assistance
housing assistance payments contract under section 8 of the
United States Housing Act of 1937 (42 U.S.C. 1437f).
(2) Existing Federal use restrictions, including without
limitation use agreements, regulatory agreements, and
accommodation agreements.
(3) Any subordinate debt held by the Secretary or assigned
and any mortgages securing such debt, all related loan and
security documentation and obligations, and reserve and escrow
balances.

(c) Retention of Same Number of Units and Amount of Assistance.--Any
transfer pursuant to subsection (a) shall result in--
(1) a total number of dwelling units (including units
retained by the owners and units transferred) covered by
assistance described in subsection (b)(1) after the transfer
remaining the same as such number assisted before the transfer,
with such increases or decreases in unit sizes as may be
contained in a plan approved by a local planning or development
commission or department; and
(2) no reduction in the total amount of the housing
assistance payments under contracts described in subsection
(b)(1).

SEC. 2804. PUBLIC HOUSING DISASTER RELIEF.

Section 9 of the United States Housing Act of 1937 (42 U.S.C. 1437g)
is amended--
(1) by striking subsection (k); and
(2) by redesignating subsections (l), (m), and (n) as
subsections (k), (l), and (m), respectively.

SEC. 2805. [NOTE: California.] PRESERVATION OF CERTAIN AFFORDABLE
HOUSING.

Notwithstanding any other provision of law--
(1) for the property known as Nihonmachi Terrace (FHA No.
121-44284), in San Francisco, California, upon the refinancing
of the existing federally insured mortgage pursuant to section
236(b) of the National Housing Act (12 U.S.C. 1715z-1(b)),
unassisted low and moderate-income residents of the property
shall be deemed eligible for and shall receive voucher
assistance under section 8(o) of the United States Housing Act
of 1937 (42 U.S.C. 1437f(o)); and
(2) to preserve the affordability of the property, the
housing authority shall utilize such additional voucher
assistance pursuant to subsection 8(o)(13) of the United States
Housing Act of 1937, without regard to the limitations of
subparagraphs (B) and (D) of that subsection.

Amounts for the vouchers pursuant to this section shall be provided
under amounts appropriated for tenant-based rental assistance otherwise
authorized.

[[Page 2867]]
122 STAT. 2867

Subtitle B-- [NOTE: Housing Tax Credit Coordination Act of
2008. Disadvantaged persons.] Coordination of Federal Housing Programs
and Tax Incentives for Housing

SEC. 2831. [NOTE: 12 USC 1701 note.] SHORT TITLE.

This subtitle may be cited as the ``Housing Tax Credit Coordination
Act of 2008''.

SEC. 2832. [NOTE: 12 USC 1715s.] APPROVALS BY DEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT.

(a) Administrative and Procedural Changes.--
(1) In general.--The [NOTE: Deadline.] Secretary of
Housing and Urban Development (in this section referred to as
the ``Secretary'') shall, not later than the expiration of the
6-month period beginning upon after the date of the enactment of
this Act, implement administrative and procedural changes to
expedite approval of multifamily housing projects under the
jurisdiction of the Department of Housing and Urban Development
that meet the requirements of the Secretary for such approvals.
(2) Projects.--The multifamily housing projects referred to
in paragraph (1) shall include--
(A) projects for which assistance is provided by
such Department in conjunction with any low-income
housing tax credits under section 42 of the Internal
Revenue Code of 1986 or tax-exempt housing bonds; and
(B) existing public housing projects and assisted
housing projects, for which approval of the Secretary is
necessary for transactions, in conjunction with any such
low-income housing tax credits or tax-exempt housing
bonds, involving the preservation or rehabilitation of
the project.
(3) Changes.--The administrative and procedural changes
referred to in paragraph (1) shall include all actions necessary
to carry out paragraph (1), which may include--
(A) improving the efficiency of approval procedures;
(B) simplifying approval requirements,
(C) establishing time deadlines or target deadlines
for required approvals;
(D) modifying division of approval authority between
field and national offices;
(E) improving outreach to project sponsors regarding
information that is required to be submitted for such
approvals;
(F) requesting additional funding for increasing
staff, if necessary; and
(G) any other actions which would expedite
approvals.
Any such changes shall be made in a manner that provides for
full compliance with any existing requirements under law or
regulation that are designed to protect families receiving
public and assisted housing assistance, including income
targeting, rent, and fair housing provisions, and shall also
comply with requirements regarding environmental review and
protection and wages paid to laborers.

(b) Consultation.--The Secretary shall consult with the Commissioner
of the Internal Revenue Service and take such actions

[[Page 2868]]
122 STAT. 2868

as are appropriate in conjunction with such consultation to simplify the
coordination of rules, regulations, forms, and approval requirements for
multifamily housing projects projects for which assistance is provided
by such Department in conjunction with any low-income housing tax
credits under section 42 of the Internal Revenue Code of 1986 or tax-
exempt housing bonds.
(c) Recommendations.--In implementing the changes required under
this section, the Secretary shall solicit recommendations regarding such
changes from project owners and sponsors, investors and stakeholders in
housing tax credits, State and local housing finance agencies, public
housing agencies, tenant advocates, and other stakeholders in such
projects.
(d) Report.--Not [NOTE: Deadline.] later than the expiration of
the 9-month period beginning on the date of the enactment of this Act,
the Secretary shall submit a report to the Committee on Financial
Services of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate that--
(1) identifies the actions taken by the Secretary to comply
with this section;
(2) includes information regarding any resulting
improvements in the expedited approval for multifamily housing
projects;
(3) identifies recommendations made pursuant to subsection
(c);
(4) identifies actions taken by the Secretary to implement
the provisions in the amendments made by sections 2834 and 2835
of this Act; and
(5) makes recommendations for any legislative changes that
are needed to facilitate prompt approval of assistance for such
projects.

SEC. 2833. PROJECT APPROVALS BY RURAL HOUSING SERVICE.

Section 515(h) of the Housing Act of 1949 (42 U.S.C. 1485) is
amended--
(1) by inserting ``(1) Condition.--'' after ``(h)''; and
(2) by adding at the end the following new paragraphs:
``(2) Actions to expedite project approvals.--
``(A) In general.--The Secretary shall take actions
to facilitate timely approval of requests to transfer
ownership or control, for the purpose of rehabilitation
or preservation, of multifamily housing projects for
which assistance is provided by the Secretary of
Agriculture in conjunction with any low-income housing
tax credits under section 42 of the Internal Revenue
Code of 1986 or tax-exempt housing bonds.
``(B) Consultation.--The Secretary of Agriculture
shall consult with the Commissioner of the Internal
Revenue Service and take such actions as are appropriate
in conjunction with such consultation to simplify the
coordination of rules, regulations, forms (including
applications forms for project transfers), and approval
requirements multifamily housing projects for which
assistance is provided by the Secretary of Agriculture
in conjunction with any low-income housing tax credits
under section 42 of the Internal Revenue Code of 1986 or
tax-exempt housing bonds.

[[Page 2869]]
122 STAT. 2869

``(C) Existing requirements.--Any actions taken
pursuant to this paragraph shall be taken in a manner
that provides for full compliance with any existing
requirements under law or regulation that are designed
to protect families receiving Federal housing
assistance, including income targeting, rent, and fair
housing provisions, and shall also comply with
requirements regarding environmental review and
protection and wages paid to laborers.
``(D) Recommendations.--In implementing the changes
required under this paragraph, the Secretary shall
solicit recommendations regarding such changes from
project owners and sponsors, investors and stakeholders
in housing tax credits, State and local housing finance
agencies, tenant advocates, and other stakeholders in
such projects.''.

SEC. 2834. USE OF FHA LOANS WITH HOUSING TAX CREDITS.

(a) Subsidy Layering Requirements.--Subsection (d) of section 102 of
the Department of Housing and Urban Development Reform Act of 1989 (42
U.S.C. 3545(d)) is amended--
(1) in the first sentence, by inserting after ``assistance
within the jurisdiction of the Department'' the following: ``,
as such term is defined in subsection (m), except that for
purposes of this subsection such term shall not include any
mortgage insurance provided pursuant to title II of the National
Housing Act (12 U.S.C. 1707 et seq.)''; and
(2) in the second sentence, by inserting ``such'' before
``assistance''.

(b) Cost Certification.--Section 227 of National Housing Act (12
U.S.C. 1715r) is amended--
(1) in the matter preceding paragraph (a) (relating to a
definition of ``new or rehabilitated multifamily housing'')--
(A) in the first sentence--
(i) by striking ``Notwithstanding'' and
inserting ``Except as provided in subsection (b)
and notwithstanding''; and
(ii) by redesignating clauses (a) and (b) as
clauses (A) and (B), respectively; and
(B) by striking ``As used in this section--'';
(2) in paragraph (c) (relating to a definition of ``actual
cost'')--
(A) in clause (i), by redesignating clauses (1) and
(2) as clauses (I) and (II), respectively; and
(B) in clause (ii), by redesignating clauses (1) and
(2) as clauses (I) and (II), respectively;
(3) by redesignating paragraphs (a), (b), and (c) as
paragraphs (1), (2), and (3), respectively;
(4) by inserting before paragraph (1) (as so redesignated by
paragraph (3) of this subsection) the following:

``(b) Exemption for Certain Projects Assisted With Low-Income
Housing Tax Credit.--In the case of any mortgage insured under any
provision of this title that is executed in connection with the
construction, rehabilitation, purchase, or refinancing of a multifamily
housing project for which equity provided through any low-income housing
tax credit pursuant to section 42 of the Internal Revenue Code of 1986
(26 U.S.C. 42), if the Secretary determines at the time of issuance of
the firm commitment for

[[Page 2870]]
122 STAT. 2870

insurance that the ratio of the loan proceeds to the actual cost of the
project is less than 80 percent, subsection (a) of this section shall
not apply.
``(c) Definitions.--For purposes of this section, the following
definitions shall apply:''; and
(5) by inserting ``(a) Requirement.--'' after ``227.''.

(c) Other Provisions Regarding Treatment of Mortgages Covering Tax
Credit Projects.--Title II of the National Housing Act is amended by
inserting after section 227 (12 U.S.C. 1715r) the following new section:

``SEC. 228. [NOTE: 12 USC 1715s.] TREATMENT OF MORTGAGES COVERING TAX
CREDIT PROJECTS.

``(a) Definition.--For purposes of this section, the term `insured
mortgage covering a tax credit project' means a mortgage insured under
any provision of this title that is executed in connection with the
construction, rehabilitation, purchase, or refinancing of a multifamily
housing project for which equity provided through any low-income housing
tax credit pursuant to section 42 of the Internal Revenue Code of 1986
(26 U.S.C. 42).
``(b) Acceptance of Letters of Credit.--In the case of an insured
mortgage covering a tax credit project, the Secretary may not require
the escrowing of equity provided by the sale of any low-income housing
tax credits for the project pursuant to section 42 of the Internal
Revenue Code of 1986, or any other form of security, such as a letter of
credit.
``(c) Asset Management Requirements.--In the case of an insured
mortgage covering a tax credit project for which project the applicable
tax credit allocating agency is causing to be performed periodic
inspections in compliance with the requirements of section 42 of the
Internal Revenue Code of 1986, such project shall be exempt from
requirements imposed by the Secretary regarding periodic inspections of
the property by the mortgagee. To the extent that other compliance
monitoring is being performed with respect to such a project by such an
allocating agency pursuant to such section 42, the Secretary shall, to
the extent that the Secretary determines such monitoring is sufficient
to ensure compliance with any requirements established by the Secretary,
accept such agency's evidence of compliance for purposes of determining
compliance with the Secretary's requirements.
``(d) Streamlined Processing Pilot Program.--
``(1) In general.--The Secretary shall establish a pilot
program to demonstrate the effectiveness of streamlining the
review process, which shall include all applications for
mortgage insurance under any provision of this title for
mortgages executed in connection with the construction,
rehabilitation, purchase, or refinancing of a multifamily
housing project for which equity provided through any low-income
housing tax credit pursuant to section 42 of the Internal
Revenue Code of 1986. [NOTE: Intructions. Deadline.] The
Secretary shall issue instructions for implementing the pilot
program under this subsection not later than the expiration of
the 180-day period beginning upon the date of the enactment of
the Housing Tax Credit Coordination Act of 2008.
``(2) Requirements.--Such pilot program shall provide for--

[[Page 2871]]
122 STAT. 2871

``(A) the Secretary to appoint designated
underwriters, who shall be responsible for reviewing
such mortgage insurance applications and making
determinations regarding the eligibility of such
applications for such mortgage insurance in lieu of the
processing functions regarding such applications that
are otherwise performed by other employees of the
Department of Housing and Urban Development;
``(B) submission of applications for such mortgage
insurance by mortgagees who have previously been
expressly approved by the Secretary; and
``(C) determinations [NOTE: Reports.] regarding
the eligibility of such applications for such mortgage
insurance to be made by the chief underwriter pursuant
to requirements prescribed by the Secretary, which shall
include requiring submission of reports regarding
applications of proposed mortgagees by third-party
entities expressly approved by the chief underwriter.''.

SEC. 2835. OTHER HUD PROGRAMS.

(a) Section 8 Assistance.--
(1) PHA project-based assistance.--Section 8(o)(13) of the
United States Housing Act of 1937 (42 U.S.C. 1437f(o)(13)) is
amended--
(A) in subparagraph (D)(i)--
(i) by striking ``building'' and inserting
``project''; and
(ii) by [NOTE: Definition.] adding at the
end the following: ``For purposes of this
subparagraph, the term''project`` means a single
building, multiple contiguous buildings, or
multiple buildings on contiguous parcels of
land.'';
(B) in the first sentence of subparagraph (F), by
striking ``10 years'' and inserting ``15 years'';
(C) in subparagraph (G)--
(i) by inserting after the period at the end
of the first sentence the following: ``Such
contract may, at the election of the public
housing agency and the owner of the structure,
specify that such contract shall be extended for
renewal terms of up to 15 years each, if the
agency makes the determination required by this
subparagraph and the owner is in compliance with
the terms of the contract.''; and
(ii) by adding at the end the following: ``A
public housing agency may agree to enter into such
a contract at the time it enters into the initial
agreement for a housing assistance payment
contract or at any time thereafter that is before
the expiration of the housing assistance payment
contract.'';
(D) in subparagraph (H), by inserting before the
period at the end of the first sentence the following:
``, except that in the case of a contract unit that has
been allocated low-income housing tax credits and for
which the rent limitation pursuant to such section 42 is
less than the amount that would otherwise be permitted
under this subparagraph, the rent for such unit may, in
the sole discretion of a public housing agency, be
established at the higher section 8 rent, subject only
to paragraph (10)(A)'';

[[Page 2872]]
122 STAT. 2872

(E) in subparagraph (I)(i), by inserting before the
semicolon the following: ``, except that the contract
may provide that the maximum rent permitted for a
dwelling unit shall not be less than the initial rent
for the dwelling unit under the initial housing
assistance payments contract covering the unit''; and
(F) by adding at the end the following new
subparagraphs:
``(L) Use in cooperative housing and elevator
buildings.--A public housing agency may enter into a
housing assistance payments contract under this
paragraph with respect to--
``(i) dwelling units in cooperative housing;
and
``(ii) notwithstanding subsection (c),
dwelling units in a high-rise elevator project,
including such a project that is occupied by
families with children, without review and
approval of the contract by the Secretary.
``(M) Reviews.--
``(i) Subsidy layering.--A subsidy layering
review in accordance with section 102(d) of the
Department of Housing and Urban Development Reform
Act of 1989 (42 U.S.C. 3545(d)) shall not be
required for assistance under this paragraph in
the case of a housing assistance payments contract
for an existing structure, or if a subsidy
layering review has been conducted by the
applicable State or local agency.
``(ii) Environmental review.--A public housing
agency shall not be required to undertake any
environmental review before entering into a
housing assistance payments contract under this
paragraph for an existing structure, except to the
extent such a review is otherwise required by law
or regulation.''.
(2) Voucher program rent reasonableness.--Section 8(o)(10)
of the United States Housing Act of 1937 (42 U.S.C.
1437f(o)(10)) is amended by adding at the end the following new
subparagraph;
``(F) Tax credit projects.--In the case of a
dwelling unit receiving tax credits pursuant to section
42 of the Internal Revenue Code of 1986 or for which
assistance is provided under subtitle A of title II of
the Cranston Gonzalez National Affordable Housing Act of
1990, for which a housing assistance contract not
subject to paragraph (13) of this subsection is
established, rent reasonableness shall be determined as
otherwise provided by this paragraph, except that--
``(i) comparison with rent for units in the
private, unassisted local market shall not be
required if the rent is equal to or less than the
rent for other comparable units receiving such tax
credits or assistance in the project that are not
occupied by families assisted with tenant-based
assistance under this subsection; and
``(ii) the rent shall not be considered
reasonable for purposes of this paragraph if it
exceeds the greater of--
``(I) the rents charged for other
comparable units receiving such tax
credits or assistance in

[[Page 2873]]
122 STAT. 2873

the project that are not occupied by
families assisted with tenant-based
assistance under this subsection; and
``(II) the payment standard
established by the public housing agency
for a unit of the size involved.''.

(b) Section 202 Housing for Elderly Persons.--Subsection (f) of
section 202 of the Housing Act of 1959 (12 U.S.C. 1701q(f)) is amended--
(1) by striking ``Selection Criteria.--'' and inserting
``Initial Selection Criteria and Processing.-- (1) Selection
criteria.--'';
(2) by redesignating paragraphs (1) through (7) as
subparagraphs (A) through (G), respectively; and
(3) by adding at the end the following new paragraph:
``(2) Delegated processing.--
``(A) In [NOTE: Deadlines.] issuing a capital
advance under this subsection for any project for which
financing for the purposes described in the last two
sentences of subsection (b) is provided by a combination
of a capital advance under subsection (c)(1) and sources
other than this section, within 30 days of award of the
capital advance, the Secretary shall delegate review and
processing of such projects to a State or local housing
agency that--
``(i) is in geographic proximity to the
property;
``(ii) has demonstrated experience in and
capacity for underwriting multifamily housing
loans that provide housing and supportive
services;
``(iii) may or may not be providing low-income
housing tax credits in combination with the
capital advance under this section, and
``(iv) agrees to issue a firm commitment
within 12 months of delegation.
``(B) The Secretary shall retain the authority to
process capital advances in cases in which no State or
local housing agency has applied to provide delegated
processing pursuant to this paragraph or no such agency
has entered into an agreement with the Secretary to
serve as a delegated processing agency.
``(C) An agency to which review and processing is
delegated pursuant to subparagraph (A) may assess a
reasonable fee which shall be included in the capital
advance amounts and may recommend project rental
assistance amounts in excess of those initially awarded
by the Secretary. The Secretary shall develop a schedule
for reasonable fees under this subparagraph to be paid
to delegated processing agencies, which shall take into
consideration any other fees to be paid to the agency
for other funding provided to the project by the agency,
including bonds, tax credits, and other gap funding.
``(D) Under [NOTE: Deadline.] such delegated
system, the Secretary shall retain the authority to
approve rents and development costs and to execute a
capital advance within 60 days of receipt of the
commitment from the State or local agency. The Secretary
shall provide to such agency and the project sponsor, in
writing, the reasons for any reduction in capital

[[Page 2874]]
122 STAT. 2874

advance amounts or project rental assistance and such
reductions shall be subject to appeal.''.

(c) McKinney-Vento Act Homeless Assistance Under Shelter Plus Care
Program.--
(1) Term of contracts with owner or lessor.--Part I of
subtitle F of the McKinney-Vento Homeless Assistance Act is
amended--
(A) by redesignating sections 462 and 463 (42 U.S.C.
11403g, 11403h) as sections 463 and 464, respectively;
(B) by striking ``section 463'' each place such term
appears in sections 471, 476, 481, 486, and 488 (42
U.S.C. 11404, 11405, 11406, 11407, and 11407b) and
inserting ``section 464''; and
(C) by inserting after section 461 (42 U.S.C.
11403f) the following new section:

``SEC. 462. [NOTE: 42 USC 11403f-1.] TERM OF CONTRACT WITH OWNER OR
LESSOR.

``An applicant under this subtitle may enter into a contract with
the owner or lessor of a property that receives rental assistance under
this subtitle having a term of not more than 15 years, subject to the
availability of sufficient funds provided in appropriation Acts for the
purpose of renewing expiring contracts for assistance payments. Such
contract may, at the election of the applicant and owner or lessor,
specify that such contract shall be extended for renewal terms of not
more than 15 years each, subject to the availability of sufficient such
appropriated funds.''.
(2) Project-based [NOTE: Termination date. Extension. 42
USC 11405b.] rental assistance contracts.--Section 478(a) of
the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11405a(a))
is amended by inserting before the period at the end the
following: ``; except that, in the case of any project for which
equity is provided through any low-income housing tax credit
pursuant to section 42 of the Internal Revenue Code of 1986 (26
U.S.C. 42), if an expenditure of such amount for each unit
(including the prorated share of such work) is required to make
the structure decent, safe, and sanitary, and the owner agrees
to reach initial closing on permanent financing from such other
sources within two years and agrees to carry out the
rehabilitation with resources other than assistance under this
subtitle within 60 months of notification of grant approval, the
contract shall be for a term of 10 years (except that such
period may be extended by up to 1 year by the Secretary, which
extension shall be granted unless the Secretary determines that
the sponsor is primarily responsible for the failure to meet
such deadline)''.

(d) Data Collection on Tenants of Housing Tax Credit Projects.--
Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et
seq.) is amended by adding at the end the following new section:

``SEC. 36. [NOTE: 42 USC 1437z-8.] COLLECTION OF INFORMATION ON
TENANTS IN TAX CREDIT PROJECTS.

``(a) In General.-- [NOTE: Deadline.] Each State agency
administering tax credits under section 42 of the Internal Revenue Code
of 1986 (26 U.S.C. 42) shall furnish to the Secretary of Housing and
Urban Development, not less than annually, information concerning the
race, ethnicity, family composition, age, income, use of rental
assistance under section 8(o) of the United States Housing Act of 1937
or

[[Page 2875]]
122 STAT. 2875

other similar assistance, disability status, and monthly rental payments
of households residing in each property receiving such credits through
such agency. [NOTE: Reports.] Such State agencies shall, to the extent
feasible, collect such information through existing reporting processes
and in a manner that minimizes burdens on property owners. In the case
of any household that continues to reside in the same dwelling unit,
information provided by the household in a previous year may be used if
the information is of a category that is not subject to change or if
information for the current year is not readily available to the owner
of the property.

``(b) Standards.--The Secretary shall establish standards and
definitions for the information collected under subsection (a), provide
States with technical assistance in establishing systems to compile and
submit such information, and, in coordination with other Federal
agencies administering housing programs, establish procedures to
minimize duplicative reporting requirements for properties assisted
under multiple housing programs.
``(c) Public Availability.--The Secretary [NOTE: Deadline.]
shall, not less than annually, compile and make publicly available the
information submitted to the Secretary pursuant to subsection (a).

``(d) Authorization of Appropriations.--There is authorized to be
appropriated for the cost of activities required under subsections (b)
and (c) $2,500,000 for fiscal year 2009 and $900,000 for each of fiscal
years 2010 through 2013.''.

TITLE IX--MISCELLANEOUS

SEC. 2901. HOMELESS ASSISTANCE.

(a) Appropriations.--Section 726 of the McKinney-Vento Homeless
Assistance Act (42 U.S.C. 11435) is amended by striking ``$70,000,000''
and all that follows and inserting ``$100,000,000 for fiscal year 2009
and such sums as may be necessary for each subsequent fiscal year.''.
(b) Emergency Assistance.--Section 722 of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11432) is amended by adding at the
end the following:
``(h) Special Rule for Emergency Assistance.--
``(1) Emergency assistance.--
``(A) Reservation of amounts.--Subject to paragraph
(4) and notwithstanding any other provision of this
title, the Secretary shall use funds appropriated under
section 726 for fiscal year 2009, but not to exceed
$30,000,000, for the purposes of providing emergency
assistance through grants.
``(B) General [NOTE: State and local
governments. Grants.] authority.--The Secretary shall
use the funds to make grants to State educational
agencies under paragraph (2), to enable the agencies to
make subgrants to local educational agencies under
paragraph (3), to provide activities described in
section 723(d) for individuals referred to in
subparagraph (C).
``(C) Eligible individuals.--Funds made available
under this subsection shall be used to provide such
activities for eligible individuals, consisting of
homeless children and youths, and their families, who
have become homeless due to home foreclosure, including
children and youths,

[[Page 2876]]
122 STAT. 2876

and their families, who became homeless when lenders
foreclosed on properties rented by the families.
``(2) Grants to state educational agencies.--
``(A) Disbursement.--The Secretary shall make grants
with funds provided under paragraph (1)(A) to State
educational agencies based on need, consistent with the
number of eligible individuals described in paragraph
(1)(C) in the States involved, as determined by the
Secretary.
``(B) Assurance.--To be eligible to receive a grant
under this paragraph, a State educational agency shall
provide an assurance to the Secretary that the State
educational agency, and each local educational agency
receiving a subgrant from the State educational agency
under this subsection shall ensure that the activities
carried out under this subsection are consistent with
the activities described in section 723(d).
``(3) Subgrants to local educational agencies.--A State
educational agency that receives a grant under paragraph (2)
shall use the funds made available through the grant to make
subgrants to local educational agencies. The State educational
agency shall make the subgrants to local educational agencies
based on need, consistent with the number of eligible
individuals described in paragraph (1)(C) in the areas served by
the local educational agencies, as determined by the State
educational agency.
``(4) Restriction.--The Secretary--
``(A) shall determine the amount (if any) by which
the funds appropriated under section 726 for fiscal year
2009 exceed $70,000,000; and
``(B) may only use funds from that amount to carry
out this subsection.''.

SEC. 2902. [NOTE: 12 USC 1701z-17.] INCREASING ACCESS AND
UNDERSTANDING OF ENERGY EFFICIENT MORTGAGES.

(a) Definition.--As used in this section, the term ``energy
efficient mortgage'' has the same meaning as given that term in
paragraph (24) of section 104 of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12704(24)).
(b) Recommendations to Eliminate Barriers to Use of Energy Efficient
Mortgages.--
(1) In general.--Not [NOTE: Deadline.] later than 180 days
after the date of enactment of this section, the Secretary of
Housing and Urban Development, in conjunction with the Secretary
of Energy and the Administrator of the Environmental Protection
Agency, shall consult with the residential mortgage industry and
States to develop recommendations to eliminate the barriers that
exist to increasing the availability, use, and purchase of
energy efficient mortgages, including such barriers as--
(A) the lack of reliable and accessible information
on such mortgages, including estimated energy savings
and other benefits of energy efficient housing;
(B) the confusion regarding underwriting
requirements and differences among various energy
efficient mortgage programs;
(C) the complex and time consuming process of
securing such mortgages;

[[Page 2877]]
122 STAT. 2877

(D) the lack of publicly available research on the
default risk of such mortgages; and
(E) the availability of certified or accredited home
energy rating services.
(2) Report to congress.--The Secretary of Housing and Urban
Development shall submit a report to Congress that--
(A) summarizes the recommendations developed under
paragraph (1); and
(B) includes any recommendations for statutory,
regulatory, or administrative changes that the Secretary
deems necessary to institute such recommendations.

(c) Energy Efficient Mortgages Outreach Campaign.--
(1) In general.--The Secretary of Housing and Urban
Development, in consultation and coordination with the Secretary
of Energy, the Administrator of the Environmental Protection
Agency, and State Energy and Housing Finance Directors, shall
carry out an education and outreach campaign to inform and
educate consumers, home builders, residential lenders, and other
real estate professionals on the availability, benefits, and
advantages of--
(A) improved energy efficiency in housing; and
(B) energy efficient mortgages.
(2) Authorization of appropriations.--There are authorized
to be appropriated such sums as are necessary to carry out the
education and outreach campaign described under paragraph (1).

DIVISION C-- [NOTE: Housing Assistance Tax Act of 2008.] TAX-RELATED
PROVISIONS

SEC. 3000. [NOTE: 26 USC 1 note.] 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.
(c) Table of Contents.--The table of contents for this division is
as follows:

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.

[[Page 2878]]
122 STAT. 2878

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.
Sec. 3027. Transfer of funds appropriated to carry out 2008 recovery
rebates for individuals.

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 the AMT and research credits in lieu
of bonus depreciation.
Sec. 3082. Certain GO Zone incentives.
Sec. 3083. Increase in statutory limit on the public debt.

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. Delay in application of worldwide allocation of interest.
Sec. 3094. Time for payment of corporate estimated taxes.

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:

[[Page 2879]]
122 STAT. 2879

``(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.--
(1) In general.--Subsection (b) of section 42 is amended by
striking paragraph (1), by redesignating paragraph (2) as
paragraph (1), and by inserting after paragraph (1), as so
redesignated, the following new paragraph:
``(2) 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.''.
(2) Conforming amendments.--
(A) Subsection (b) of section 42, as amended by
paragraph (1), is amended by striking ``For purposes of
this section--'' and all that follows through ``means
the appropriate'' and inserting the following:
``(1) Determination of applicable percentage.--For purposes
of this section, the term `applicable percentage' means, with
respect to any building, the appropriate''.
(B) Clause (i) of section 42(b)(1)(B), as
redesignated by paragraph (1), is amended by striking
``a building described in paragraph (1)(A)'' and
inserting ``a new building which is not federally
subsidized for the taxable year''.
(C) Clause (ii) of section 42(b)(1)(B), as
redesignated by paragraph (1), is amended by striking
``a building described in paragraph (1)(B)'' and
inserting ``a building not described in clause (i)''.

(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

[[Page 2880]]
122 STAT. 2880

(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

[[Page 2881]]
122 STAT. 2881

``(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 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

[[Page 2882]]
122 STAT. 2882

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, section 515 of the
Housing Act of 1949, or any other housing program
administered by the Department of Housing and
Urban Development or by the Rural Housing Service
of the Department of Agriculture.
``(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 [NOTE: 26 USC 42 note.] requirements.--
(A) In general.--The amendments made by subsection
(b) shall apply to buildings with respect to which
housing credit dollar amounts are 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 buildings
financed with bonds issued pursuant to allocations made
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:

[[Page 2883]]
122 STAT. 2883

``(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 [NOTE: Notification.] 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.''.

[[Page 2884]]
122 STAT. 2884

(g) Clarification of General Public Use Requirement.--Subsection (g)
of section 42 is amended by adding at the end the following new
paragraph:
``(9) Clarification of general public use requirement.--A
project does not fail to meet the general public use requirement
solely because of occupancy restrictions or preferences that
favor tenants--
``(A) with special needs,
``(B) who are members of a specified group under a
Federal program or State program or policy that supports
housing for such a specified group, or
``(C) who are involved in artistic or literary
activities.''.

(h) GAO Study Regarding Modifications to Low-Income Housing Tax
Credit.--Not [NOTE: Deadline. Reports.] 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 [NOTE: 26 USC 42 note.] 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 [NOTE: Applicability.] 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.

[[Page 2885]]
122 STAT. 2885

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.-- [NOTE: 26 USC 142 note.] 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 on or before the date of the
enactment of this Act, or
(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.

[[Page 2886]]
122 STAT. 2886

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.--
[NOTE: Applicability.] 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.-- [NOTE: 26 USC 42 note.] 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

[[Page 2887]]
122 STAT. 2887

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.-- [NOTE: 26 USC 142 note.] 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.

[[Page 2888]]
122 STAT. 2888

``(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.-- [NOTE: 26 USC 142 note.] 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 [NOTE: 26 USC 142 note.] 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 $7,500.
``(B) Married individuals filing separately.--In the
case of a married individual filing a separate return,
subparagraph (A) shall be applied by substituting
`$3,750' for `$7,500'.
``(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 $7,500.
``(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

[[Page 2889]]
122 STAT. 2889

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 such
property, and
``(ii) the basis of the property in the hands
of the person acquiring such property 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 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,

[[Page 2890]]
122 STAT. 2890

``(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--

[[Page 2891]]
122 STAT. 2891

``(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) Return requirement.--If the tax imposed by this
chapter for the taxable year is increased under this subsection,
the taxpayer shall, notwithstanding section 6012, be required to
file a return with respect to the taxes imposed under this
subtitle.
``(7) 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) Election to Treat Purchase in Prior Year.--In the case of a
purchase of a principal residence after December 31, 2008, and before
July 1, 2009, a taxpayer may elect to treat such purchase as made on
December 31, 2008, for purposes of this section (other than subsection
(c)).
``(h) Application of Section.--This section shall only apply to a
principal residence purchased by the taxpayer on or after April 9, 2008,
and before July 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 ``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 [NOTE: 26 USC 26 note.] 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:

[[Page 2892]]
122 STAT. 2892

``(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:
``(7) Real property tax deduction.--For purposes of
paragraph (1), the real property tax deduction is the lesser
of--
``(A) the amount allowable as a deduction under this
chapter for State and local taxes described in section
164(a)(1), or
``(B) $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.''.

(c) Effective [NOTE: 26 USC 63 note.] 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

[[Page 2893]]
122 STAT. 2893

``(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 [NOTE: Applicability.] 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 [NOTE: 26 USC 143 note.] 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.--
(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)).

[[Page 2894]]
122 STAT. 2894

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 [NOTE: 26 USC 56 note.] amendments
made by subsection (a) shall apply to bonds issued after the
date of the enactment of this Act.
(2) Low [NOTE: 26 USC 38 note.] 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 [NOTE: 26 USC 38 note.] 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).''.

[[Page 2895]]
122 STAT. 2895

(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 [NOTE: 26 USC 149 note.] 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

[[Page 2896]]
122 STAT. 2896

``(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 [NOTE: Regulations.] 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 [NOTE: Real property. 26 USC
1445 note.] amendments made by this section shall apply to dispositions
of United States real property interests after the date of the enactment
of this Act.

[[Page 2897]]
122 STAT. 2897

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 [NOTE: 26 USC 47 note.] 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.-- [NOTE: 26 USC 143 note.] The amendments made
by this section shall apply to bonds issued after May 1, 2008.

SEC. 3027. TRANSFER OF FUNDS APPROPRIATED TO CARRY OUT 2008 RECOVERY
REBATES FOR INDIVIDUALS.

Of the funds made available by section 101(e)(1)(A) of the Economic
Stimulus Act of 2008 (Public Law 110-185), the Secretary of the Treasury
may transfer funds among the accounts specified in such section to carry
out section 6428 of the Internal Revenue Code of
1986. [NOTE: Notification.] The Secretary shall provide advance
notification of any such transfer to the Committees on Appropriations of
the House of Representatives and the Senate, and any transfer greater
than $5,000,000 shall be subject to the approval of such Committees.

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 2898]]
122 STAT. 2898

``(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 dealing, or engaging in substantial
and regular trading, 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

[[Page 2899]]
122 STAT. 2899

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) 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 for purposes of
paragraphs (2) or (3), 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).''.

[[Page 2900]]
122 STAT. 2900

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.

(a) In General.--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''.

(b) Retention of Existing Law.--Section 857(b)(6) is amended--
(1) by striking subparagraph (G) and redesignating
subparagraphs (H) and (I) as subparagraphs (G) and (H),
respectively, and
(2) in subparagraph (G), as so redesignated, by adding at
the end the following: ``For purposes of the preceding sentence,
the reference to subparagraph (D) shall be a reference

[[Page 2901]]
122 STAT. 2901

to such subparagraph as in effect on the day before the
enactment of the Housing Assistance Tax Act of 2008, as modified
by subparagraph (G) as so in effect.''.

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

[[Page 2902]]
122 STAT. 2902

(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
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. [NOTE: 26 USC 856 note.] 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.

[[Page 2903]]
122 STAT. 2903

(c) Conforming [NOTE: Applicability.] 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 THE AMT AND RESEARCH 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 the amt and research credits in
lieu of bonus depreciation.--
``(A) In general.--If a corporation elects to have
this paragraph apply for the first taxable year of the
taxpayer ending after March 31, 2008, in the case of
such taxable year and each subsequent taxable year--
``(i) paragraph (1) shall not apply to any
eligible qualified property placed in service by
the taxpayer,
``(ii) the applicable depreciation method used
under this section with respect to such property
shall be the straight line method, and
``(iii) each of the limitations described in
subparagraph (B) for any such taxable year shall
be increased by the bonus depreciation amount
which is--
``(I) determined for such taxable
year under subparagraph (C), and
``(II) allocated to such limitation
under subparagraph (E).
``(B) Limitations to be increased.--The limitations
described in this subparagraph are--
``(i) the limitation imposed by section 38(c),
and
``(ii) the limitation imposed by section
53(c).
``(C) Bonus depreciation amount.--For purposes of
this paragraph--
``(i) In general.--The bonus depreciation
amount for any taxable year is an amount equal to
20 percent of the excess (if any) of--
``(I) the aggregate amount of
depreciation which would be allowed
under this section for eligible
qualified property placed in service by
the taxpayer during such taxable year if
paragraph (1) applied to all such
property, over
``(II) the aggregate amount of
depreciation which would be allowed
under this section for eligible
qualified property placed in service by
the taxpayer during such taxable year if
paragraph (1) did not apply to any such
property.

[[Page 2904]]
122 STAT. 2904

The aggregate amounts determined under subclauses
(I) and (II) shall be determined without regard to
any election made under subsection (b)(2)(C),
(b)(3)(D), or (g)(7) and without regard to
subparagraph (A)(ii).
``(ii) Maximum amount.--The bonus depreciation
amount for any taxable year shall not exceed the
maximum increase amount under clause (iii),
reduced (but not below zero) by the sum of the
bonus depreciation amounts for all preceding
taxable years.
``(iii) Maximum increase amount.--For purposes
of clause (ii), the term `maximum increase amount'
means, with respect to any corporation, the lesser
of--
``(I) $30,000,000, or
``(II) 6 percent of the sum of the
business credit increase amount, and the
AMT credit increase amount, determined
with respect to such corporation under
subparagraph (E).
``(iv) Aggregation rule.--All corporations
which are treated as a single employer under
section 52(a) shall be treated--
``(I) as 1 taxpayer for purposes of
this paragraph, and
``(II) as having elected the
application of this paragraph if any
such corporation so elects.
``(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
paragraph--
``(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, and
``(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.
``(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 for the taxable year which is
to be allocated to each of the limitations
described in subparagraph (B) for such taxable
year.
``(ii) Limitation on allocations.--The portion
of the bonus depreciation amount which may be
allocated under clause (i) to the limitations
described in subparagraph (B) for any taxable year
shall not exceed--
``(I) in the case of the limitation
described in subparagraph (B)(i), the
excess of the business credit increase
amount over the bonus depreciation
amount allocated to such limitation for
all preceding taxable years, and
``(II) in the case of the limitation
described in subparagraph (B)(ii), the
excess of the AMT credit increase amount
over the bonus depreciation

[[Page 2905]]
122 STAT. 2905

amount allocated to such limitation for
all preceding taxable years.
``(iii) Business credit increase amount.--For
purposes of this paragraph, the term `business
credit increase amount' means the amount equal to
the portion of the credit allowable under section
38 (determined without regard to subsection (c)
thereof) for the first taxable year ending after
March 31, 2008, 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).
``(iv) AMT credit increase amount.--For
purposes of this paragraph, the term `AMT credit
increase amount' means the amount equal to the
portion of the minimum tax credit under section
53(b) for the first taxable year ending after
March 31, 2008, determined by taking into account
only the adjusted minimum tax 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.--For purposes of section
6401(b), the aggregate increase in the credits allowable
under part IV of subchapter A for any taxable year
resulting from the application of this paragraph shall
be treated as allowed under subpart C of such part (and
not any other subpart).
``(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) Partnerships with electing partners.--
In the case of a corporation making an election
under subparagraph (A) and which is a partner in a
partnership, for purposes of determining such
corporation's distributive share of partnership
items under section 702--
``(I) paragraph (1) shall not apply
to any eligible qualified property, and
``(II) the applicable depreciation
method used under this section with
respect to such property shall be the
straight line method.
``(iii) Special rule for passenger aircraft.--
In the case of any passenger aircraft, the written
binding contract limitation under paragraph
(2)(A)(iii)(I) shall not apply for purposes of
subparagraphs (C)(i)(I) and (D).''.

(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

[[Page 2906]]
122 STAT. 2906

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 with respect to such property under
section 168 of such Code,
(ii) the applicable depreciation method used
with respect to such property shall be the
straight line method, and
(C) 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
section 168(k)(4) of such Code 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.
(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--

[[Page 2907]]
122 STAT. 2907

(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 [NOTE: 26 USC 168 note.] 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 [NOTE: Deadline.] 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.-- [NOTE: 26 USC 1400N note.] 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.-- [NOTE: Alabama.] 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.''.

[[Page 2908]]
122 STAT. 2908

(2) Effective date.--The [NOTE: 26 USC
1400N note.] 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.

SEC. 3083. INCREASE IN STATUTORY LIMIT ON THE PUBLIC DEBT.

Subsection (b) of section 3101 of title 31, United States Code, is
amended by striking out the dollar limitation contained in such
subsection and inserting in lieu thereof $10,615,000,000,000.

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 payment
transactions are made, and
``(2) the gross amount of the reportable payment
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 entity, and
``(B) in the case of a third party network
transaction, the third party settlement organization.
``(2) Merchant acquiring entity.--The term `merchant
acquiring entity' 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 payment 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

[[Page 2909]]
122 STAT. 2909

``(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 payment
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 Payment Transaction.--For purposes of this
section--
``(1) In general.--The term `reportable payment 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.--Except as
provided by the Secretary in regulations or other
guidance, such term shall not include any person with a
foreign address.
``(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 entities 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--

[[Page 2910]]
122 STAT. 2910

``(A) which involves the establishment of accounts
with a central organization by a substantial number of
persons who--
``(i) are unrelated to such organization,
``(ii) provide goods or services, and
``(iii) have agreed to settle transactions for
the provision of such goods or services pursuant
to such agreement or arrangement,
``(B) which provides for standards and mechanisms
for settling such transactions, and
``(C) 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 [NOTE: Reports.] third party settlement organization
shall be required to report any information under subsection (a) with
respect to third party network transactions of any participating payee
only if--
``(1) the amount which would otherwise be reported under
subsection (a)(2) with respect to such transactions exceeds
$20,000, and
``(2) the aggregate number of such transactions exceeds 200.

``(f) Statements to Be [NOTE: Records.] 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 the reportable payment
transactions with respect to the person required to be shown on
the return.

The written [NOTE: Deadline.] 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. [NOTE: Email.] Such statement may be
furnished electronically, and if so, the email address of the person
required to make such return may be shown in lieu of the phone number.

``(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
(D) by adding at the end the following:
``(xxii) section 6050W (relating to returns to
payments made in settlement of payment card
transactions), and''.

[[Page 2911]]
122 STAT. 2911

(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 [NOTE: 26 USC 3406 note.] 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.--
(A) In general.--The amendment made by subsection
(c) shall apply to amounts paid after December 31, 2011.
(B) Eligibility for tin matching program.--Solely
for purposes of carrying out any TIN matching program
established by the Secretary under section 3406(i) of
the Internal Revenue Code of 1986--
(i) the amendments made this section shall be
treated as taking effect on the date of the
enactment of this Act, and
(ii) each person responsible for setting the
standards and mechanisms referred to in section
6050W(d)(2)(C) of such Code, as added by this
section, for settling transactions involving
payment cards shall be treated in the same manner
as a payment settlement entity.

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--

[[Page 2912]]
122 STAT. 2912

``(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 [NOTE: Applicability.] 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 [NOTE: 26 USC 121 note.] Date.--The amendment made
by this section shall apply to sales and exchanges after December 31,
2008.

SEC. 3093. DELAY IN APPLICATION OF WORLDWIDE ALLOCATION OF INTEREST.

(a) In General.--Paragraphs (5)(D) and (6) of section 864(f) are
each amended by striking ``December 31, 2008'' and inserting ``December
31, 2010''.
(b) Transitional Rule.--Subsection (f) of section 864 is amended by
adding at the end the following new paragraph:
``(7) Transition.--In the case of the first taxable year to
which this subsection applies, the increase (if any) in the
amount of the interest expense allocable to sources within the
United States by reason of the application of this subsection
shall be 30 percent of the amount of such increase determined
without regard to this paragraph.''.

(c) Effective Date.--The [NOTE: 26 USC 864 note.] amendments made
by this section shall apply to taxable years beginning after December
31, 2008.

SEC. 3094. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

(a) Repeal of Adjustment for 2012.--Subparagraph (B) of section
401(1) of the Tax Increase Prevention and Reconciliation

[[Page 2913]]
122 STAT. 2913

Act of 2005 [NOTE: 26 USC 6655 note.] is amended by striking the
percentage contained therein and inserting ``100 percent''. No other
provision of law which would change such percentage shall have any force
and effect.

(b) Modification [NOTE: 26 USC 6655 note.] of Adjustment for
2013.--The percentage under subparagraph (C) of section 401(1) of the
Tax Increase Prevention and Reconciliation Act of 2005 in effect on the
date of the enactment of this Act is increased by 16.75 percentage
points.

Approved July 30, 2008.

LEGISLATIVE HISTORY--H.R. 3221:
---------------------------------------------------------------------------

CONGRESSIONAL RECORD:
Vol. 153 (2007):
Aug. 4, considered and passed House.
Vol. 154 (2008):
Apr. 3, 4, 7-10, considered and
passed Senate, amended.
May 8, House concurred in Senate
amendment with amendments.
June 19, 20, 23-26, July 7-11,
Senate considered and concurred
in House amendments with an
amendment.
July 23, House concurred in Senate
amendment with an amendment.
July 25, 26, Senate considered and
concurred in House amendment.