H. R. 3530
IN THE HOUSE OF REPRESENTATIVES
November 30, 2011
Mr. Perlmutter (for himself and Mr. Schweikert) introduced the following bill; which was referred to the Committee on Financial Services
To require the exercise of clean-up call options under securities issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and to prohibit any new mortgage-backed securities issued by such enterprises to contain provisions for a clean-up call option.
This Act may be cited as the
Freddie Mac Debt Reduction Act of
Exercise of clean-up call options
Subtitle B of title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4611 et seq.) is amended by adding at the end the following new section:
Exercise of clean-up call options
In complying with any restriction under law, regulation, order, or agreement with the Director or the Secretary of the Treasury on the mortgage assets issued by the Federal Home Loan Mortgage Corporation, such Corporation or, during the term of any conservatorship or receivership of such enterprise pursuant to section 1367, the Director, shall in the case of any mortgage-backed security with a clean-up call option (as such term is defined in subsection (c) of this section) that is issued by such Corporation, exercise any option under which the residual holder is willing to share not less than 50 percent of any excess proceeds resulting from exercise of such option or right with the Agency as conservator or receiver of such Corporation, which thereby reduces the liability of the taxpayers of the United States.
Prohibition regarding issuance of new securities
The Director shall prohibit the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association from issuing, after the date of the enactment of this section, any mortgage-backed security with a clean-up call option.
Use of proceeds To reduce deficit
The Director shall ensure that any excess proceeds received as result of the exercise of any clean-up call option shall be used only to reduce the budget deficit of the Federal Government.
The term mortgage assets means, with respect to the Federal Home Loan Mortgage Corporation, assets of such Corporation consisting of mortgages, mortgage loans, mortgage-related securities, participation certificates, mortgage-backed commercial paper, obligations of real estate mortgage investment conduits and similar assets, in each case to the extent such assets would appear on the balance sheet of such Corporation in accordance with generally accepted accounting principles in effect in the United States as of September 7, 2008 (as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board from time to time; and without giving any effect to any change that may be made after September 7, 2008, in respect of Statement of Financial Accounting Standards No. 140 or any similar accounting standard).
Mortgage-backed security with a clean-up call option
with a clean-up call option means any mortgage-backed security under
which there is an option or right to redeem all remaining classes of such
security at such time when the amount of the aggregate remaining principal
would be less than the amount of the optional redemption or clean-up call
percentage, as defined in the applicable circular offering or offering circular
excess proceeds means, with respect to exercise of any clean-up
call option, the excess of the net proceeds from the sale of the collateral
underlying the mortgage-backed security with such option, and the redemption
price as defined in the applicable offering circular or offering circular