II
Calendar No. 579
113th CONGRESS
2d Session
S. 1217
IN THE SENATE OF THE UNITED STATES
June 25, 2013
Mr. Corker (for himself, Mr. Warner, Mr. Johanns, Mr. Tester, Mr. Heller, Ms. Heitkamp, Mr. Moran, Mrs. Hagan, Mr. Kirk, Mr. Manchin, Mr. Chambliss, and Mr. Begich) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
September 18, 2014
Reported by Mr. Johnson of South Dakota, with an amendment
Strike out all after the enacting clause and insert the part printed in italic
A BILL
To provide secondary mortgage market reform, and for other purposes.
Short title; table of contents
Short title
This Act may be cited
as the Housing Finance Reform and
Taxpayer Protection Act of 2013
.
Table of Contents
The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I—Federal Mortgage Insurance Corporation
Sec. 101. Establishment.
Sec. 102. Director.
Sec. 103. Board of Directors.
Sec. 104. Office of the Inspector General.
Sec. 105. Staff, experts, and consultants.
Sec. 106. Reports; testimony; audits.
Sec. 107. Initial funding.
TITLE II—Duties, Responsibilities, and Structure of the FMIC
Subtitle A—Duties and Authorities
Sec. 201. Duties and responsibilities of the FMIC.
Sec. 202. Standard form credit risk-sharing mechanisms, products, structures, contracts, or other security agreements.
Sec. 203. Mortgage Insurance Fund.
Sec. 204. Insurance.
Sec. 205. Authority to protect taxpayers in unusual and exigent market conditions.
Sec. 206. General powers.
Sec. 207. Exemptions.
Subtitle B—Oversight of market participants
Sec. 211. Approval of private mortgage insurers.
Sec. 212. Approval of servicers.
Sec. 213. Approval of issuers.
Sec. 214. Approval of bond guarantors.
Sec. 215. Authority to establish FMIC Mutual Securitization Company.
Sec. 216. Additional authority relating to oversight of market participants.
Sec. 217. Civil money penalties.
Sec. 218. Protection of privilege and other matters relating to disclosures by market participants.
Subtitle C—Transparency in market operations
Sec. 221. Review of loan documents; disclosures.
Sec. 222. Investor immunity.
Sec. 223. Uniform securitization agreements.
Sec. 224. Uniform mortgage database.
Sec. 225. Electronic registration of eligible mortgages.
Subtitle D—FMIC Structure
Sec. 231. Office of Underwriting.
Sec. 232. Office of Securitization.
Sec. 233. Office of Federal Home Loan Bank Supervision.
TITLE III—Transfer of powers, personnel, and property to FMIC from FHFA
Sec. 301. Powers and duties transferred.
Sec. 302. Transfer and rights of employees of the FHFA.
Sec. 303. Abolishment of FHFA.
Sec. 304. Transfer of property and facilities.
Sec. 305. Technical and conforming amendments.
TITLE IV—Improving transparency, accountability, and efficacy within affordable housing
Sec. 401. Affordable housing allocations.
Sec. 402. Housing Trust Fund.
Sec. 403. Capital Magnet Fund.
Sec. 404. Additional taxpayer protections.
TITLE V—Wind Down of Fannie Mae and Freddie Mac
Sec. 501. Repeal of GSE charters.
Sec. 502. Wind down.
Sec. 503. Aligning purpose of conservatorship with FMIC.
Sec. 504. Conforming loan limits.
Sec. 505. Portfolio reduction.
Sec. 506. Repeal of mandatory housing goals.
TITLE VI—Improvements to functioning of housing market
Sec. 601. Continuation of multifamily business of the enterprises.
Sec. 602. Multiple lender issues.
Sec. 603. GAO report on full privatization of secondary mortgage market.
TITLE VII—General provisions
Sec. 701. Authority to issue regulations.
Sec. 702. Fair value accounting.
Sec. 703. Rule of construction.
Sec. 704. Severability.
Definitions
As used in this Act, the following definitions shall apply:
Approved bond guarantor
The term
approved bond guarantor
means any entity that provides credit
enhancement that is approved by the Corporation pursuant to section 214 to
guarantee the timely payment of principal and interest on securities
collateralized by eligible mortgages and insured by the Corporation.
Approved issuer
The term approved issuer
means an issuer
that is approved by the Corporation pursuant to section 213—
to issue covered securities; and
to purchase insurance offered by the Corporation pursuant to title II on a covered security for which first loss credit enhancement has been secured.
Approved private mortgage insurer
The term approved private
mortgage insurer
means an insurer that is approved by the Corporation
pursuant to section 211 to provide private mortgage insurance on eligible
mortgages.
Approved servicer
The term approved servicer
means a
servicer that is approved by the Corporation pursuant to section 212 to
administer eligible mortgages.
Area
The
term area
—
means a metropolitan statistical area as established by the Office of Management and Budget; and
for purposes of paragraph (11)(A)(ii), the median 1-family house price for an area shall be equal to the median 1-family house price of the county within the area that has the highest such median price.
Board; Board of Directors
The terms Board
and Board of
Directors
mean the Board of Directors of the Federal Mortgage Insurance
Corporation.
Charter
The term charter means—
with respect to the Federal National Mortgage Association, the Federal National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.); and
with respect to the Federal Home Loan Mortgage Corporation, the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.).
Corporation
The
term Corporation
means the Federal Mortgage Insurance
Corporation established under title I.
Covered security
The term covered security means a mortgage-backed security—
collateralized by eligible mortgages;
which is issued subject to a standard form credit-risk sharing mechanism, product, structure, contract, or other securitization agreement developed by the Corporation pursuant to title II; and
which is eligible for insurance by the Corporation pursuant to title II, which insurance is purchased by an approved issuer who issues covered securities.
Director
The
term Director
means the Director of the Federal Mortgage
Insurance Corporation, unless the context otherwise requires.
Eligible mortgage
The term eligible mortgage means a mortgage—
that is a
residential real estate loan secured by a property with 1 to 4 single
family
units that has been originated in compliance with the provisions of
section
1026 of title 12 of the Code of Federal Regulations, as promulgated by the
Bureau of Consumer Financial Protection pursuant to section 129C(b) of the
Truth in Lending Act (15 U.S.C. 1639c(b)) (commonly referred to as the
Ability-to-Repay and Qualified Mortgage Rule
);
has a maximum original principal obligation amount that does not exceed the conforming loan limitation determined under section 504;
the outstanding principal balance of which at the time of purchase of insurance available under title II—
is less than 80 percent of the value of the property securing the mortgage;
is not less than 80 percent but not more than 85 percent of the value of the property securing the mortgage, provided that not less than 12 percent of the unpaid principal balance of the mortgage, accounting for any downpayment required under subparagraph (D), is insured by—
an approved private mortgage insurer; or
lender recourse or other credit enhancement that—
meets standards comparable to the standards required of private mortgage insurers under section 211; and
is approved by the Corporation;
is not less than 85 percent but not more than 90 percent of the value of the property securing the mortgage, provided that not less than 25 percent of the unpaid principal balance of the mortgage, accounting for any downpayment required under subparagraph (D), is insured by—
an approved private mortgage insurer; or
lender recourse or other credit enhancement that—
meets standards comparable to the standards required of private mortgage insurers under section 211; and
is approved by the Corporation; or
is not less than 90 percent but not more than 95 percent of the value of the property securing the mortgage, provided that not less than 30 percent of the unpaid principal balance of the mortgage, accounting for any downpayment required under subparagraph (D), is insured by—
an approved private mortgage insurer; or
lender recourse or other credit enhancement that—
meets standards comparable to the standards required of private mortgage insurers under section 211; and
is approved by the Corporation;
having a downpayment which shall be equal to not less than 5 percent of purchase price of the property securing the mortgage;
that is insured by an approved State licensed title insurance company;
that contains such terms and provisions with respect to insurance, property maintenance, repairs, alterations, payment of taxes, default, reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters, including matters that set forth terms and provisions for establishing escrow accounts, performing financial assessments, or limiting the amount of any payment made available under the mortgage as the Corporation may prescribe; and
that contains such other terms or characteristics as the Corporation, in consultation with the Bureau of Consumer Financial Protection, may determine necessary or appropriate.
Enterprise
The term enterprise means—
the Federal National Mortgage Association and any affiliate thereof; and
the Federal Home Loan Mortgage Corporation and any affiliate thereof.
Federal banking agencies
The term—
Federal
banking agency
means, individually, the Board of Governors of the
Federal Reserve System, the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the Bureau of Consumer Financial
Protection, the National Credit Union Administration, the Securities and
Exchange Commission, the Commodities Futures Trading Commission, the
Federal
Housing Finance Agency, and the Secretary of the Treasury; and
Federal
banking agencies
means all of the agencies referred to in subparagraph
(A), collectively.
Federal Home Loan Bank
The term Federal Home Loan Bank means a bank established under the authority of the Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.).
Federal Home Loan Bank System
The term Federal Home Loan Bank System means the Federal Home Loan Banks and the Office of Finance and any authorized subsidiary of one or more Federal Home Loan Banks.
FMIC certification date
The term FMIC certification
date
means the date on which the Board of Directors certifies that the
Corporation is operational and able to perform the insurance functions for
covered securities as provided in this Act, which date shall be not later
than
5 years after the date of enactment of this Act.
Insured depository institution
The term insured depository
institution
means—
an insured depository institution, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
a credit union
that meets the definition of depository institution
as that term
is defined under section 19(b) of the Federal Reserve Act (12 U.S.C.
461).
Senior Preferred Stock Purchase Agreement defined
The term Senior Preferred Stock Purchase Agreement means—
the Amended and Restated Senior Preferred Stock Purchase Agreement, dated September 26, 2008, as such Agreement has been amended on May 6, 2009, December 24, 2009, and August 17, 2012, respectively, and as such Agreement may be further amended and restated, entered into between the Department of the Treasury and each enterprise, as applicable; and
any provision of any certificate in connection with such Agreement creating or designating the terms, powers, preferences, privileges, limitations, or any other conditions of the Variable Liquidation Preference Senior Preferred Stock of an enterprise issued or sold pursuant to such Agreement.
Transfer date
The term transfer date
means the date that is
1 year after the date of enactment of this Act.
Federal Mortgage Insurance Corporation
Establishment
Establishment
There is hereby established the Federal Mortgage Insurance Corporation which shall have the powers hereinafter granted.
Purpose
The purpose of the Corporation shall be to—
provide liquidity, transparency, and access to mortgage credit by supporting a robust secondary mortgage market and the production of residential mortgage-backed securities; and
protect the taxpayer from having to absorb losses incurred in the secondary mortgage market during periods of economic stress.
Federal Status
The Corporation shall be an independent agency of the Federal Government.
Succession
The Corporation shall have succession until dissolved by Act of Congress.
Principal office
The Corporation shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof.
Authority To establish other offices
The Corporation may establish such other offices in such other place or places as the Corporation may deem necessary or appropriate in the conduct of its business.
Prohibition
The Corporation shall not engage in mortgage origination.
Director
Establishment of position
There is established the position of the Director of the Corporation, who shall be the head of the Corporation.
Appointment; term
Appointment
The Director shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who—
are citizens of the United States; and
have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working in, the mortgage securities markets and housing finance.
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.
Vacancy
In general
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.
Acting Director
Designation by the President
Eligible individuals
If the Senate has not confirmed a Director, the President may designate either the individual nominated, but not yet confirmed, for the position of Director or a member of the Board of Directors to serve as the Acting Director, and such Acting Director shall have all the rights, duties, powers, and responsibilities of the Director, until such time as a Director is confirmed by the Senate.
Limitation
No individual may serve concurrently as the Acting Director of the Corporation and the Director of the Federal Housing Finance Agency.
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.
Compensation
The Director shall be compensated at the rate prescribed for level II of the Executive Schedule under section 5313 of title 5, United States Code.
Rules of construction
No individual—
may serve concurrently as the Director of the Corporation and the Director of the Federal Housing Finance Agency; and
that has, at any time prior to, on, or after the date of enactment of this Act, served as the Director of the Federal Housing Finance Agency may serve as the Director of the Corporation.
Membership on FSOC
The Dodd-Frank Wall Street Reform and Consumer Protection Act is amended—
in section 2, by amending paragraph (12)(E) to read as follows:
the Federal Mortgage Insurance Corporation, with respect to—
the Mortgage Insurance Fund established under title II of the Housing Finance Reform and Taxpayer Protection Act of 2013; and
the Federal Home Loan Banks or the Federal Home Loan Bank System.
; and
in section
111(b)(1)(H), by striking Director of the Federal Housing Finance
Agency
and inserting Chairperson of the Federal Mortgage
Insurance Corporation
.
Board of Directors
Board of Directors
Voting members
The management of the Corporation shall be vested in a Board of Directors consisting of 5 voting members—
1 of whom shall be the Director, who shall serve as Chairperson of the Board; and
4 of whom 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—
1 of whom shall have demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working in, the field of asset management;
1 of whom shall have demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working in, mortgage insurance markets;
1 of whom shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, lenders having less than $10,000,000,000 in total assets; and
1 of whom shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, multifamily housing development.
Non-voting member
The President shall appoint the Director of the Federal Housing Finance Agency as an additional non-voting member of the Board of Directors. The Director of the Federal Housing Finance Agency shall serve as non-voting member of the Board of Directors until such time as that position is abolished pursuant to title III.
Independence
In general
Each voting member of the Board of Directors shall be independent and neutral and maintain a fiduciary relationship to the Corporation in performing his or her duties.
Independence determination
In order to be considered independent for purposes of this paragraph, a voting member of the Board of Directors—
may not, other than in his or her capacity as a member of the Board of Directors or any committee thereof—
accept any consulting, advisory, or other compensatory fee from the Corporation; or
be a person associated with the Corporation or with any affiliated company thereof; and
shall be disqualified from any deliberation involving any transaction of the Corporation in which the member has a financial interest in the outcome of the transaction.
Rule of construction
No individual that has, at any time prior to, on, or after the date of enactment of this Act, served as the Director or Acting Director of the Federal Housing Finance Agency may serve as a voting member of the Board of Directors.
Administration
Except as otherwise may provided in this Act, the Board of Directors shall administer the affairs of the Corporation fairly and impartially and without discrimination.
Consultation
The Board of Directors may, in carrying out any duty, responsibility, requirement, or action authorized under this Act, consult with the Federal banking agencies or any individual Federal banking agency, as the Board determines necessary and appropriate.
Terms
Appointed members
Each appointed voting member shall be appointed for a term of 5 years and shall serve on a full-time basis.
Interim appointments
Any voting member appointed to fill a vacancy occurring before the expiration of the term for which such member's predecessor was appointed shall be appointed only for the remainder of such term.
Continuation of service
The Chairperson and each appointed voting member may continue to serve after the expiration of the term of office to which such member was appointed until a successor has been appointed and qualified.
Vacancy
A vacancy in the voting membership of the Board of Directors shall not affect the powers of the Board, and shall be filled in the manner in which the original appointment was made.
Voting
A majority vote of all voting members of the Board of Directors is necessary to resolve all voting issues of the Corporation.
Meetings
The Board of Directors shall meet in accordance with the bylaws of the Corporation—
at the call of the Chairperson; and
not less frequently than once each month.
Quorum
Three voting members of the Board of Directors then in office shall constitute a quorum.
Bylaws
A majority of the voting members of the Board of Directors may amend the bylaws of the Corporation.
Attendance
Members of the Board of Directors may attend meetings of the Corporation and vote in person, via telephone conference, or via video conference.
Ineligibility for other offices during service
In general
No voting member of the Board of Directors may during the time such member is in office—
be an officer or director of any insured depository institution, depository institution holding company, Federal Reserve bank, Federal home loan bank, approved servicer, approved private mortgage insurer, institution that originates eligible mortgages, or institution that issues a covered security; or
hold stock or a controlling interest in any insured depository institution or depository institution holding company, approved servicer, approved private mortgage insurer, institution that originates eligible mortgages, or institution that issues a covered security.
Certification
Upon taking office, each voting member of the Board of Directors shall certify under oath that such member has complied with this subsection and such certification shall be filed with the secretary of the Board of Directors.
Status of employees
In general
A director, member, officer, or employee of the Corporation has no liability under the Securities Act of 1933 (15 U.S.C. 77a et seq.) with respect to any claim arising out of or resulting from any act or omission by such person within the scope of such person's employment in connection with any transaction involving the Corporation. This subsection shall not be construed to limit personal liability for criminal acts or omissions, willful or malicious misconduct, acts or omissions for private gain, or any other acts or omissions outside the scope of such person's employment.
Effect on other law
In general
This subsection does not affect—
any other immunities and protections that may be available to such person under applicable law with respect to such transactions; or
any other right or remedy against the Corporation, against the United States under applicable law, or against any person other than a person described in paragraph (1) participating in such transactions.
Rule of construction
This subsection shall not be construed to limit or alter in any way the immunities that are available under applicable law for Federal officials and employees not described in this subsection.
Office of the Inspector General
Office of Inspector General
In general
There is established the Office of the Inspector General
of the Federal Mortgage Insurance Corporation. The head of the Office of
the
Inspector General of the Federal Mortgage Insurance Corporation is the
Inspector General of the Federal Mortgage Insurance Corporation (in this
section referred to as the Inspector General
), who shall be
appointed by the President, by and with the advice and consent of the
Senate.
Additional responsibilities
In addition to carrying out the requirements established under the Inspector General Act of 1978 (5 U.S.C. App.), the Inspector General shall—
conduct, supervise, and coordinate audits and investigations relating to the programs and operations of the Corporation—
to ensure that the first loss position that the Corporation requires of private market holders of covered securities insured under this Act is adequate to cover losses that might be incurred as a result of adverse economic conditions, wherein such conditions are generally consistent with the economic conditions, including national home price declines, observed in the United States during moderate to severe recessions experienced during the last 100 years; and
with respect to the—
oversight and supervision of the Federal Home Loan Banks and the Federal Home Loan Bank System; and
the contracting practices and procedures of the Corporation; and
recommend policies for the purpose of addressing any deficiencies, inefficiencies, gaps, or failures in the administration of such programs and operations.
Inspector General report; report of independent actuary
Beginning 1 year after the FMIC certification date, and annually thereafter, the Inspector General and an independent actuary contracted for by the Director shall each conduct an examination and issue a separate report regarding—
the adequacy of insurance fees charged by the Board of Directors under title II; and
the adequacy of the Mortgage Insurance Fund established under title II.
Amendments to Inspector General Act of 1978
Section 11 of the Inspector General Act of 1978 (5 U.S.C. App.) is amended—
in paragraph (1),
by inserting Chairperson of the Federal Mortgage Insurance
Corporation;
after the Director of the Federal Housing Finance
Agency;
; and
in paragraph (2),
by inserting the Federal Mortgage Insurance Corporation,
after
the Federal Housing Finance Agency,
.
Compensation
The annual rate of basic pay of the Inspector General shall be the annual rate of basic pay provided for positions at level III of the Executive Schedule under section 5314 of title 5, United States Code.
Staff, experts, and consultants
Compensation
In general
The Board of Directors may appoint and fix the compensation of such officers, attorneys, economists, examiners, and other employees as may be necessary for carrying out the functions of the Corporation.
Rates of pay
Rates of basic pay and the total amount of compensation and benefits for all employees of the Corporation may be—
set and adjusted by the Board of Directors without regard to the provisions of chapter 51 or subchapter III of chapter 53 of title 5, United States Code; and
reasonably increased, notwithstanding any limitation set forth in paragraph (3), if the Board of Directors determines such increases are necessary to attract and hire qualified employees.
Parity
The Board of Directors may provide additional compensation and benefits to employees of the Corporation, of the same type of compensation or benefits that are then being provided by any agency referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b) or, if not then being provided, could be provided by such an agency under applicable provisions of law, rule, or regulation. In setting and adjusting the total amount of compensation and benefits for employees, the Board of Directors shall consult with and seek to maintain comparability with the agencies referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b).
Detail of government employees
Upon the request of the Board of Directors, any Federal Government employee may be detailed to the Corporation without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.
Experts and consultants
The Board of Directors may procure the services of experts and consultants as the Board considers necessary or appropriate.
Technical and professional advisory committees
The Board of Directors may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Corporation.
Reports; testimony; audits
Reports
In general
The Corporation shall submit, on an annual basis, to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a written report of its operations, activities, budget, receipts, and expenditures for the preceding 12-month period.
Contents of report
The report required under subsection (a) shall include an analysis of—
with respect to the Mortgage Insurance Fund established under section 203—
the current financial condition of the Mortgage Insurance Fund;
the exposure of the Mortgage Insurance Fund to changes in those economic factors most likely to affect the condition of that fund;
a current estimate of the resources needed for the Mortgage Insurance Fund to achieve the purposes of this Act; and
any findings, conclusions, and recommendations for legislative and administrative actions considered appropriate to the future activities of the Corporation;
the secondary mortgage market, the housing market, and the economy, including through use of stress tests, and how such analysis was used to determine and set the reserve ratio for the Mortgage Insurance Fund for the preceding 12-month period;
whether or not the actual reserve ratio of the Mortgage Insurance Fund met—
the reserve ratio set for the preceding 12-month period; or
the reserve ratio goals established in section 203(e);
how the Corporation intends to ensure that the goals set for the reserve ratio for the Mortgage Insurance Fund are to be met and maintained for the next 12-month period, and such analysis shall include a detailed and descriptive plan of the actions that the Corporation intends to take pursuant to its authorities under this Act;
how the Corporation has provided liquidity, transparency, and access to mortgage credit in its support of a robust secondary mortgage market and the production of residential mortgage-backed securities;
the state of the private label mortgage-backed securities market, and such analysis shall include the submission of a reasonable set of administrative, regulatory, and legislative proposals on how to limit the Federal Government's footprint in the secondary mortgage market;
the effect that further decreases in loan limits would have on the secondary mortgage market, the housing market, and the economy; and
the state of the global covered bond market.
Testimony
The Chairperson of the Corporation, on a biannual basis, shall provide testimony to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.
Audit of Corporation
Annual audit
The Comptroller General of the United States shall annually audit the financial transactions of the Corporation in accordance with the United States generally accepted government auditing standards as may be prescribed by the Comptroller General.
Place of audit
The audit required under this subsection shall be conducted at the place or places where accounts of the Corporation are normally kept.
Access
The representatives of the Comptroller General 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, or property belonging to or under the control of or used or employed by the Corporation pertaining to its financial transactions and necessary to facilitate the audit required under this subsection, and such representatives shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents, and custodians.
Possession and custody
All such books, accounts, documents, records, reports, files, papers, and property of the Corporation used to carry out the audit required under this subsection shall remain in the possession and custody of the Corporation.
Permissible duplication
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.
Report
Submission to Congress
The Comptroller General shall submit to Congress a report of each annual audit conducted under this subsection.
Required content
The report to Congress required under subparagraph (A) shall—
set forth the scope of the audit; and
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 the Comptroller General may deem necessary to inform Congress of the financial operations and condition of the Corporation, together with such recommendations with respect thereto as the Comptroller General may deem advisable.
Copies
A copy of each report required under subparagraph (A) shall be furnished to the President and to the Chairperson of the Corporation at the time such report is submitted to the Congress.
Assistance and costs
Permitted use of outside assistance
For the purpose of conducting an audit under this subsection, the Comptroller General may 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.
Cost of audit covered by Corporation
In general
Upon the request of the Comptroller General, the Chairperson of the Corporation shall transfer to the Comptroller General from funds available, the amount requested by the Comptroller General to cover the reasonable costs of any audit and report conducted by the Comptroller General pursuant to this subsection.
Credit of funds
The Comptroller General shall credit funds transferred under clause (i) to the account at the Treasury established for salaries and expenses of the Government Accountability Office, and such amounts shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report.
Initial funding
In general
Section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4516) is amended by adding at the end the following:
Annual assessments relating to initial funding of the FMIC
Notwithstanding title V of the Housing Finance Reform and Taxpayer Protection Act of 2013 or any other provision of law, for the period beginning on the date of enactment of this subsection and ending on the FMIC certification date (as that date is set forth under section 2(16) of the Housing Finance Reform and Taxpayer Protection Act of 2013, the Director, in consultation with the Chairperson of the Federal Mortgage Insurance Corporation, shall establish and collect from the enterprises annual assessments in addition to those required under subsection (a) in an amount not exceeding the amount sufficient to provide for the reasonable costs (including administrative costs) and expenses of the Corporation. All amounts collected under this subsection shall be transferred to the Federal Mortgage Insurance Corporation. The annual assessment shall be payable semiannually for each fiscal year, on October 1 and April 1.
.
Treatment of assessments
Deposit
Amounts received by the Corporation from assessments imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 shall be deposited by the Corporation 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.
Not government funds
The amounts received by the Corporation from any assessment imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 shall not be construed to be Government or public funds or appropriated money.
No apportionment of funds
Notwithstanding any other provision of law, the amounts received by the Corporation from any assessment imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 shall not be subject to apportionment for the purpose of chapter 15 of title 31, United States Code, or under any other authority.
Use of funds
In general
The Corporation may use any amounts received from assessments imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992—
for compensation of the employees of the Corporation; and
for all other expenses of the Corporation.
Treasury investments
The Corporation may request the Secretary of the Treasury to invest such portions of amounts received from assessments imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 that, in the discretion of the Corporation, are not required to meet the current working needs of the Corporation.
Government obligations
Pursuant to a request under subparagraph (B), 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 Corporation; 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.
Duties, Responsibilities, and Structure of the FMIC
Duties and Authorities
Duties and responsibilities of the FMIC
Duties
The principal duties of the Corporation shall be to—
carry out this Act in a manner that—
minimizes any potential long-term negative cost on the taxpayer; and
ensures, to the maximum extent possible—
a liquid and resilient housing finance market; and
the availability of mortgage credit;
develop standard form credit risk-sharing mechanisms, products, structures, contracts, or other security agreements that require private market holders of a covered security insured under this Act to assume the first loss position with respect to losses incurred on such securities;
provide insurance on any covered security for which private market holders of such security have assumed the first loss position with respect to losses that may be incurred on such security in order to provide a liquid and resilient housing finance market;
provide leadership to the housing finance market to help ensure that all geographic locations have access to mortgage credit;
charge and collect fees in exchange for providing such insurance, whereby such fees shall be sufficient to protect the taxpayer from the risk of providing such insurance and to fund the activities and operations of the Corporation;
establish and maintain a Mortgage Insurance Fund;
facilitate securitization of eligible mortgages originated by credit unions and community and mid-size banks without securitization capabilities;
ensure discipline and integrity in the market for covered securities by setting standards for the approval of private mortgage insurers, servicers, issuers, and bond guarantors;
establish, operate, and maintain a database for the collection, public use, and dissemination of uniform loan level information on eligible mortgages;
develop, adopt, and publish standard uniform securitization agreements for covered securities;
establish, operate, and maintain an electronic registry system for eligible mortgages that collateralize covered securities insured under this Act;
oversee and supervise the common securitization platform developed by the business entity announced by the Federal Housing Finance Agency and established by the enterprises; and
ensure that credit unions and community and mid-size banks—
have equal access to any such common securitization platform and any other securitization platforms; and
are not, in their access or use of such platforms, discriminated against through discounts for volume pricing or other mechanisms.
Scope of authority
The authority of the Corporation shall include the authority to exercise such incidental powers as may be necessary or appropriate to fulfill the duties and responsibilities of the Corporation set forth under subsection (a).
Delegation of authority
The Board of Directors may delegate to officers and employees of the Corporation any of the functions, powers, or duties of the Corporation, as the Board of Directors determines appropriate.
Standard form credit risk-sharing mechanisms, products, structures, contracts, or other security agreements
Requirements; share of loss; diversity
Pursuant to section 201(a)(2), the Corporation shall develop standard form credit-risk sharing mechanisms, products, structures, contracts, or other security agreements which shall require that the first loss position of private market holders of a covered security insured under this Act—
is adequate to cover losses that might be incurred as a result of adverse economic conditions, wherein such conditions are generally consistent with the economic conditions, including national home price declines, observed in the United States during moderate to severe recessions experienced during the last 100 years; and
is not less than 10 percent of the principal or face value of the covered security.
Development window for risk-Sharing mechanisms
In general
The Corporation shall complete the development and implementation of the mechanisms, products, structures, contracts, or other security agreements required under subsection (a) not later than 5 years after the date of enactment of this Act.
Examination of various mechanisms
In developing the mechanisms, products, structures, contracts, or other security agreements required under subsection (a), the Corporation shall—
examine proposals that include a senior-subordinated deal structure, credit-linked structures, and the use of regulated guarantors with sufficient equity capital to absorb losses associated with moderate or severe economic downturns;
consider any risk-sharing mechanisms, products, structures, contracts, or other security agreements undertaken by the business entity announced by the Federal Housing Finance Agency and established by the enterprises to provide a common securitization platform for issuers in the secondary mortgage market;
consider how each proposed mechanism, product, structure, contract, or other security agreement—
minimizes any potential long-term negative cost to the taxpayer;
impacts the availability of mortgage credit for—
small financial institutions, such as credit unions and community and mid-size banks; and
consumers;
influences mortgage affordability;
allows for loan modifications and foreclosure prevention alternatives;
interacts with the To-Be-Announced market; and
facilitates market liquidity and resiliency; and
ensure that lenders of all sizes and from all geographic locations, including rural locations, have equitable access to secondary mortgage market financing.
Report
In general
Not later than 1 year after the date of enactment of this Act, and annually thereafter until the end of the 5-year period provided in paragraph (1), the Corporation 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 that—
details the benefits and drawbacks of each mechanism, product, structure, contract, or other security agreement that the Director considered in carrying out the requirement of this section;
describes the operation and execution of any mechanisms, products, structures, contracts, or other security agreements that the Director determines best fulfills the requirements of this section; and
explains how the Corporation arrived at the determination made under clause (ii).
Subsequent reports
After the expiration of the 5-year period provided in paragraph (1) and the submission of the report required under subparagraph (A), each time the Corporation develops an additional standard form credit risk-sharing mechanism, product, structure, contract, or other security agreement that fulfills the requirements of this section, the Corporation 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 addressing the identical concerns set forth under clauses (i) through (iii) of subparagraph (A).
Mortgage Insurance Fund
Establishment
There is established the Mortgage Insurance Fund, which the Corporation shall—
maintain and administer; and
use to cover losses incurred on covered securities insured under this Act, when such losses exceed the first position losses absorbed by private market holders of such securities.
Deposits
The Mortgage Insurance Fund shall be credited with any—
insurance fee amounts required to be deposited in the Fund under this section;
guarantee fee amounts collected under section 601; and
amounts earned on investments pursuant to subsection (h).
Fiduciary responsibility
The Corporation has the responsibility to ensure that the Mortgage Insurance Fund remains financially sound.
Use
In general
The Mortgage Insurance Fund shall be solely available to the Corporation for use by the Corporation to carry out the functions authorized by this Act and may not be used or otherwise diverted to cover any other expense of the Federal Government.
Exemption from apportionment
Notwithstanding any other provision of law, amounts received by the Mortgage Insurance Fund pursuant to any fees collected under this section shall not be subject to apportionment for the purposes of chapter 15 of title 31, United States Code, or under any other authority.
Reserve ratio goals for Mortgage Insurance Fund
The Corporation shall endeavor to ensure that the Mortgage Insurance Fund attains a reserve balance—
of 1.25 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title within 5 years of the FMIC certification date, and to strive to maintain such ratio thereafter, subject to subparagraph (B); and
of 2.50 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title within 10 years of the FMIC certification date, and to strive to maintain such ratio at all times thereafter.
Maintenance of reserve ratio; establishment of fees
Establishment of fees
The Corporation shall charge and collect a fee, and may in its discretion increase or decrease such fee, in connection with any insurance provided under this title to—
achieve and maintain the reserve ratio goals established under subsection (e);
achieve such reserve ratio goals, if the actual balance of such reserve is below the goal amounts established under subsection (e); and
fund the operations of the Corporation.
Fee considerations
In exercising the authority granted under paragraph (1), the Corporation shall consider—
the expected operating expenses of the Mortgage Insurance Fund;
the risk of loss to the Mortgage Insurance Fund in carrying out the requirements under this Act;
the risk presented by, and the loss absorption capacity of, the credit enhancement that is provided on the pool of eligible mortgages collateralizing the covered security to be insured under this title;
economic conditions generally affecting the mortgage markets;
the extent to which the reserve ratio of the Mortgage Insurance Fund met—
the reserve ratio set for the preceding 12-month period; or
the reserve ratio goals established in subsection (e); and
any other factor that the Corporation determines appropriate.
Fee Uniformity
The fee required under paragraph (1)—
shall be set at a uniform amount applicable to all institutions purchasing insurance under this title;
may not vary—
by geographic location; or
by the size of the institution to which the fee is charged; and
may not be based on the volume of insurance to be purchased by an approved issuer.
Deposit into Mortgage Insurance Fund
Any fee amounts collected under this subsection shall be deposited in the Mortgage Insurance Fund.
Full Faith and Credit
The full faith and credit of the United States is pledged to the payment of all amounts from the Mortgage Insurance Fund which may be required to be paid under any insurance provided under this title.
Investments
Amounts in the Mortgage Insurance Fund that are not otherwise employed—
shall be invested in obligations of the United States; and
may not be invested in any covered security insured under this Act.
Insurance
Authority
The Corporation shall, upon application and in exchange for a fee in accordance with section 203(f), insure the payment of principal and interest on a covered security with respect to losses that may be incurred on such security.
Precondition; ensuring placement of first loss capital
The Corporation shall develop standards and processes to ensure that prior to making any commitment to provide insurance under this section that private market holders have taken first loss position in a covered security and that such holders have sufficient capital to cover their risk-sharing obligations.
Cash payments; continued operations
In the event of a payment default on an eligible mortgage that collateralizes a covered security insured under this section that exceeds the first loss position assumed by a private market holder or that, in the case of an approved bond guarantor, if the guarantor has become insolvent, the Corporation shall—
pay, in cash when due, any shortfalls in payment of principal and interest under the eligible mortgage; and
continue to charge and collect any fees for the provision of insurance (in accordance with section 203(f)) relating to the covered security.
Full faith and credit
The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any insurance provided under this section.
Prohibition on Federal assistance
Notwithstanding any other provision of law, no Federal funds may be used to purchase or guarantee obligations of, issue lines of credit to, provide direct or indirect access to any financing provided by the United States Government to, or provide direct or indirect grants and aid to any private market holder of the first loss position on a covered security which, on or after the date of enactment of this Act, has defaulted on its obligations, is at risk of defaulting, or is likely to default, absent such assistance from the United States Government.
Authority to protect taxpayers in unusual and exigent market conditions
In general
If the Corporation, upon the written agreement of the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury, and in consultation with the Secretary of Housing and Urban Development, determines that unusual and exigent circumstances have created or threatened to create an anomalous lack of mortgage credit availability within the housing markets that could materially and severely disrupt the functioning of the housing finance system of the United States, the Corporation may, for a period not to exceed 6 months, provide insurance in accord with section 204 to any covered security regardless of whether such security has satisfied the requirements of section 202(a).
Considerations
In exercising the authority granted under subsection (a), the Corporation shall consider the severity of the conditions present in the housing markets and the risks presented to the Mortgage Insurance Fund in exercising such authority.
Limitation
The authority granted to the Corporation under subsection (a) may not be exercised more than once in any given 3-year period.
General powers
Corporate powers
The Federal Mortgage Insurance Corporation shall have power—
to adopt, alter, and use a corporate seal, which shall be judicially noticed;
to enter into and perform contracts, leases, cooperative agreements, or other transactions, on such terms as it may deem appropriate, with any agency or instrumentality of the United States, or with any State, Territory, or possession, or the Commonwealth of Puerto Rico, or with any political subdivision thereof, or with any person, firm, association, or corporation;
to execute, in accordance with its bylaws, all instruments necessary or appropriate in the exercise of any of its powers;
in its corporate name, to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal, but no attachment, injunction, or other similar process, mesne or final, shall be issued against the property of the Corporation;
to conduct its business without regard to any qualification or similar statute in any State of the United States, including the District of Columbia, the Commonwealth of Puerto Rico, and the Territories and possessions of the United States;
to lease, purchase, or acquire any property, real, personal, or mixed, or any interest therein, to hold, rent, maintain, modernize, renovate, improve, use, and operate such property, and to sell, for cash or credit, lease, or otherwise dispose of the same, at such time and in such manner as and to the extent that it may deem necessary or appropriate;
to prescribe, repeal, and amend or modify, rules, regulations, or requirements governing the manner in which its general business may be conducted;
to accept gifts or donations of services, or of property, real, personal, or mixed, tangible, or intangible, in aid of any of its purposes; and
to do all things as are necessary or incidental to the proper management of its affairs and the proper conduct of its business.
Expenditures
Except as may be otherwise provided in this title, in chapter 91 of title 31, United States Code, or in other laws specifically applicable to Government corporations, the Corporation shall determine the necessity for, and the character and amount of its obligations and expenditures, and the manner in which they shall be incurred, allowed, paid, and accounted for.
Exemption from certain taxes
The Corporation, including its franchise, capital, reserves, surplus, mortgages or other security holdings, 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, except that any real property of the Corporation 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.
Exclusive use of name
No individual, association, partnership, or corporation,
except the bodies corporate named under section 101, shall hereafter use
the
words Federal Mortgage Insurance Corporation
or any combination
of such words, as the name or a part thereof under which the individual,
association, partnership, or corporation shall do business. Violations of
the
foregoing sentence may be enjoined by any court of general jurisdiction at
the
suit of the proper body corporate. In any such suit, the plaintiff may
recover
any actual damages flowing from such violation, and, in addition, shall be
entitled to punitive damages (regardless of the existence or nonexistence
of
actual damages) of not exceeding $100 for each day during which such
violation
is committed or repeated.
Fiscal agents
The Federal Reserve banks are authorized and directed to act as depositories, custodians, and fiscal agents for each of the bodies corporate named in section 101, for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.
Exemptions
Securities exempt from SEC regulation
In general
All covered securities insured or guaranteed by the Corporation shall, to the same extent as securities that are direct obligations of or obligations guaranteed as to principal or interest by the United States, be deemed to be exempt securities within the meaning of the laws administered by the Securities and Exchange Commission.
Conforming amendment
The first sentence
of section 3(a)(2) of the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is
amended by inserting or any covered security, as such term is defined
under section 2(9) of the Housing Finance
Reform and Taxpayer Protection Act of 2013;
after
Federal Reserve bank;
.
QRM exemption
Section 15G(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–11(e)) is amended—
in paragraph (3)(B)—
by striking
Association, the
and inserting Association and
the
; and
by striking
and the Federal home loan banks
; and
by adding at the end the following:
Covered securities insured by the Federal Mortgage Insurance Corporation
Notwithstanding any other provision of this section, the requirements of this section shall not apply to any covered security, as such term is defined under section 2(9) of the Housing Finance Reform and Taxpayer Protection Act of 2013, insured or guaranteed by the Federal Mortgage Insurance Corporation or any institution that is subject to the supervision of the Federal Mortgage Insurance Corporation.
.
Oversight of market participants
Approval of private mortgage insurers
Standards for approval of private mortgage insurers
In general
The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of private mortgage insurers to provide private mortgage insurance on eligible mortgages.
Required standards
The standards required under paragraph (1) shall include—
the financial history and condition of the insurer;
the adequacy of the insurer's capital structure, including whether the insurer has sufficient capital to cover the first loss insurance obligations it assumes under this Act and that might be incurred in a period of economic stress, including, but not limited to, any period of economic stress that would result in a 30 percent (or greater) national home price decline;
the general character and fitness of the management of the insurer, including compliance history with Federal and State laws;
the risk presented by such insurer to the Mortgage Insurance Fund;
the adequacy of insurance and fidelity coverage of the insurer;
a requirement that the insurer submit audited financial statements to the Director; and
any other standard the Corporation determines necessary or appropriate.
Application and approval
Application process
The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of private mortgage insurers under this section.
Approval
The Corporation may approve any application made pursuant to paragraph (1) provided the private mortgage insurer meets the standards adopted under subsection (a).
Publication
The Corporation shall—
publish in the Federal Register a list of newly approved private mortgage insurers; and
maintain an updated list of approved private mortgage insurers on the website of the Corporation.
Review, suspension, and revocation of approved status
In general
The Corporation may review the status of any approved private mortgage insurer if the Corporation is notified of or becomes aware of any violation by the insurer of this Act or the rules promulgated pursuant to this Act.
Suspension or Revocation
Corporation authority
If the Corporation determines, in a review pursuant to paragraph (1), that an approved private mortgage insurer no longer meets the standards for approval, the Corporation may suspend or revoke the approved status of such insurer.
Rule of construction
The suspension or revocation of an approved private mortgage insurer's approved status under this paragraph shall have no effect on the status of any covered security.
Publication
The Corporation shall—
publish in the Federal Register a list of any approved private mortgage insurers who lost their approved status; and
maintain an updated list of such insurers on the website of the Corporation.
Appeals
In general
Appeals of denials of application
A private mortgage insurer who submits an application under subsection (b)(1) to become an approved private mortgage insurer may appeal a decision of the Corporation denying such application.
Appeals of denials of benefits or suspensions of participation
An approved private mortgage insurer may appeal a decision of the Corporation suspending or revoking the approved status of such insurer.
Filing of appeal
Any insurer who files an appeal under paragraph (1) shall file the appeal with the Corporation not later than 90 days after the date on which the person receives notice of the decision of the Corporation being appealed.
Final determination
The Corporation shall make a final determination with respect to an appeal under paragraph (1) not later than 180 days after the date on which the appeal is filed under paragraph (2).
Avoidance of conflicts of interest
With respect to any eligible mortgage collateralizing a covered security insured under this Act, an approved private mortgage insurer may not provide insurance both—
in satisfaction of the credit enhancement required under section 2(11)(C); and
to cover the first loss position of private market holders of such covered security.
Approval of servicers
Standards for approval of servicers
In general
The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of servicers to administer eligible mortgages, including standards with respect to—
the collection and forwarding of principal and interest payments;
the maintenance of escrow accounts;
the collection and payment of taxes and insurance premiums;
the maintenance of records on eligible mortgages;
the establishment of foreclosure loss mitigation programs that seek to enhance investor value and prevent, to greatest extent possible, the need to trigger any claim on insurance offered by the Corporation pursuant to this title;
the advancement of principal and interest payments to investors in the case of a delinquency by a borrower until such time as the borrower has made all payments in arrears or the property securing the eligible mortgage has been liquidated; and
implementing the terms of any loss mitigation and foreclosure prevention as required by a uniform securitization agreement developed under section 223.
Additional required standards
The standards required under paragraph (1) shall also include—
the financial history and condition of the servicer;
the general character and fitness of the management of the servicer, including compliance history with Federal and State laws;
the risk presented by such servicer to the Mortgage Insurance Fund;
a requirement that the servicer submit audited financial statements to the Corporation; and
any other standard the Corporation determines necessary or appropriate.
Coordination with other regulators
In developing the standards required under paragraph (1), the Corporation shall—
coordinate with the Bureau of Consumer Financial Protection; and
to the extent the Corporation determines practical and appropriate, shall coordinate with the other Federal banking agencies.
Application and approval
Application process
The Corporation shall establish an application process—
in such form and manner and requiring such information as the Corporation may require, for the approval of servicers under this section; and
that does not discriminate against or otherwise disadvantage small servicers.
Approval
The Corporation may approve any application made pursuant to paragraph (1) provided the servicer meets the standards adopted under subsection (a).
Publication
The Corporation shall—
publish in the Federal Register a list of newly approved servicers; and
maintain an updated list of approved servicers on the website of the Corporation.
Review, suspension, and revocation of approved status
In general
The Corporation may review the status of any approved servicer if the Corporation is notified of or becomes aware of any violation by the servicer of this Act or the rules promulgated pursuant to this Act, including any failure by an approved servicer to comply with terms set forth in any uniform securitization agreement developed under section 223.
Suspension or Revocation
Corporation authority
If the Corporation determines, in a review pursuant to paragraph (1), that an approved servicer no longer meets the standards for approval, the Corporation may suspend or revoke the approved status of such servicer.
Rule of construction
The suspension or revocation of an approved servicer's approved status under this paragraph shall have no effect on the status of any covered security.
Publication
The Corporation shall—
publish in the Federal Register a list of any approved servicers who lost their approved status; and
maintain an updated list of such servicers on the website of the Corporation.
Appeals
In general
Appeals of denials of application
A servicer who submits an application under subsection (b)(1) to become an approved servicer may appeal a decision of the Corporation denying such application.
Appeals of denials of benefits or suspensions of participation
An approved servicer may appeal a decision of the Corporation suspending or revoking the approved status of such servicer.
Filing of appeal
Any servicer who files an appeal under paragraph (1) shall file the appeal with the Corporation not later than 90 days after the date on which the person receives notice of the decision of the Corporation being appealed.
Final determination
The Corporation shall make a final determination with respect to an appeal under paragraph (1) not later than 180 days after the date on which the appeal is filed under paragraph (2).
Petitions for change of servicer by private market holders
The Corporation shall develop a process by which private market holders of the first loss position in a covered security may petition the Corporation for a change in approved servicers if the private market holders can demonstrate that their current approved servicer has failed to appropriately protect their investment, including by failing to meet any standard identified under subsection (a)(1).
Approval of issuers
Standards for approval of issuers
In general
The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of issuers to issue covered securities, including standards with respect to an issuer's ability to—
aggregate eligible mortgage loans into pools;
securitize eligible mortgage loans for sale to private investors as a covered security;
transfer investment risk and credit to private market participants in accordance with the risk-sharing mechanisms developed by the Corporation under section 202;
ensure equitable access to the secondary mortgage market for covered securities for all institutions regardless of size or geographic location;
create mechanisms for multi-lender pools; and
ensure that eligible mortgage loans that collateralize a covered security insured under this title are originated in compliance with the requirements of this Act.
Additional required standards
The standards required under paragraph (1) shall also include—
the financial history and condition of the issuer;
the adequacy of the capital structure of the issuer;
the general character and fitness of the management of the issuer, including compliance history with Federal and State laws;
the risk presented by such issuer to the Mortgage Insurance Fund;
the adequacy of insurance and fidelity coverage of the issuer;
a requirement that the issuer submit audited financial statements to the Corporation;
the capacity of the issuer to secure first loss credit enhancement; and
any other standard the Corporation determines necessary or appropriate.
Application and approval
Application process
In general
The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of issuers under this section.
Application process for insured depository institutions
If an insured depository institution seeks to become an approved issuer under this section, such institution may only submit its application via a separately capitalized affiliate or subsidiary.
Approval
The Corporation—
may approve—
any application made pursuant to paragraph (1) provided the issuer meets the standards adopted under subsection (a); and
any application to become an approved issuer made by the Federal Home Loan Bank System; and
shall ensure that at least one issuer approved to issue covered securities under this section is dedicated to serving the securitization needs of credit unions and community and mid-size banks without securitization capabilities.
Publication
The Corporation shall—
publish in the Federal Register a list of newly approved issuers; and
maintain an updated list of approved issuers on the website of the Corporation.
Federal Home Loan Bank System
In general
If the Federal Home Loan Bank System is approved by the Corporation to become an approved issuer under this section, the Corporation shall—
develop a process by which each individual Federal Home Loan Bank may elect not to engage or otherwise contribute to any activity practiced by the Federal Home Loan Bank System as an approved issuer;
ensure that, notwithstanding section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431), any covered securities issued by the Federal Home Loan Bank System as an approved issuer are not issued as consolidated Federal Home Loan Bank debentures and are explicitly designated or otherwise treated as not being the joint and several obligations of any individual Federal Home Loan Bank that has made an election under subparagraph (A); and
ensure that in establishing the capital standards set forth under subsection (a)(2)(B) with respect to the Federal Home Loan Bank System, that such standards shall—
not be applicable to any individual Federal Home Loan Bank that has made an election under subparagraph (A);
be based on the volume of eligible mortgage loan originations made by the Federal Home Loan Banks that have not made an election under subparagraph (A); and
not adversely impact the traditional liquidity and advance business of the Federal Home Loan Banks or the Federal Home Loan Bank System.
Federal Home Loan Bank Act
Amendment
Section 12 of the Federal Home Loan Bank Act (12 U.S.C. 1432) is amended by adding at the end the following:
Subject to such regulations as may be prescribed by the Corporation, one or more Federal Home Loan Banks may establish a subsidiary. Any subsidiary established under this subsection shall be subject to supervision by the Office of Federal Home Loan Bank Supervision of the Corporation and shall be restricted to engaging in activities related to being an approved issuer, as that term is defined under section 2(2) of the Housing Finance Reform and Taxpayer Protection Act of 2013.
.
Effective date
The amendment made by subparagraph (A) shall take effect on the transfer date.
Review, suspension, and revocation of approved status
In general
The Corporation may review the status of any approved issuer if the Corporation is notified of or becomes aware of any violation by the issuer of this Act or the rules promulgated pursuant to this Act.
Suspension or Revocation
Corporation authority
If the Corporation determines, in a review pursuant to paragraph (1), that an approved issuer no longer meets the standards for approval, the Corporation may suspend or revoke the approved status of such issuer.
Rule of construction
The suspension or revocation of an approved issuer's approved status under this paragraph shall have no effect on the status of any covered security.
Publication
The Corporation shall—
publish in the Federal Register a list of any approved issuers who lost their approved status; and
maintain an updated list of such issuers on the website of the Corporation.
Appeals
In general
Appeals of denials of application
An issuer who submits an application under subsection (b)(1) to become an approved issuer may appeal a decision of the Corporation denying such application.
Appeals of denials of benefits or suspensions of participation
An approved issuer may appeal a decision of the Corporation suspending or revoking the approved status of such issuer.
Filing of appeal
Any issuer who files an appeal under paragraph (1) shall file the appeal with the Corporation not later than 90 days after the date on which the person receives notice of the decision of the Corporation being appealed.
Final determination
The Corporation shall make a final determination with respect to an appeal under paragraph (1) not later than 180 days after the date on which the appeal is filed under paragraph (2).
Limitation on market share
In general
The Corporation may not enter into any contract, covenant, or other agreement with an approved issuer, if such contract, covenant, or agreement would provide the issuer a share of the covered security issuer market in excess of 15 percent of the total market, as such market is measured by the total outstanding principal balance at origination of eligible mortgages collateralizing covered securities issued in the previous 12-month period.
Exception
The limitation set forth under paragraph (1) shall not apply to—
an approved issuer described under subsection (b)(2)(A)(ii);
the FMIC Mutual Securitization Company;
any approved issuer which securitizes only eligible mortgage loans originated by the issuer or an affiliate of the issuer; or
any approved issuer to which the Corporation grants a waiver pursuant to paragraph (3).
Waiver
The Corporation may, during the 3-year period beginning on the FMIC certification date, grant a waiver from the limitation set forth under paragraph (1) to an approved issuer if the Corporation determines that the number of approved issuers is insufficient, such that imposition of the limitation would adversely affect the availability of mortgage credit.
Limited authority To hold eligible mortgage loans
An approved issuer may, for a period not to exceed 6-months, hold—
eligible mortgage loans on the balance sheet of such issuer; and
the first loss position in a covered security for purposes of obtaining insurance under this title.
Approval of bond guarantors
Standards for approval of bond guarantors
In general
The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of bond guarantors to guarantee the timely payment of principal and interest on securities collateralized by eligible mortgages and insured by the Corporation.
Required standards
The standards required under paragraph (1) shall include—
the financial history and condition of the guarantor;
that the guarantor maintain a minimum capital level equal to not less than 10 percent of the unpaid principal balance of outstanding mortgage-backed securities for which the guarantor is providing insurance, net of any transactions, including derivative transactions, repurchase agreements, reverse repurchase agreements, securities lending transactions, or securities borrowing transactions, that in the determination of the Corporation are used by the guarantor to hedge or mitigate against credit risk, provided that any such hedging transaction does not diminish the total amount of loss absorption capital in the secondary mortgage market that stands in front of the insurance provided by the Corporation under this title;
the general character and fitness of the management of the guarantor, including compliance history with Federal and State laws;
the risk presented by such guarantor to the Mortgage Insurance Fund;
the adequacy of insurance and fidelity coverage of the guarantor;
a requirement that the guarantor submit audited financial statements to the Director;
a requirement that the guarantor meet a minimum tangible common equity level, or other minimum capital threshold as the Corporation determines necessary; and
any other standard the Corporation determines necessary or appropriate.
Rule of construction
Any covered security issued by an approved issuer and insured by an approved bond guarantor shall be deemed to have satisfied the credit-risk sharing requirements under section 202(a)(1) with respect to the eligibility of that security to obtain insurance under this title.
Application and approval
Application process
In general
The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of bond guarantors under this section.
Application process by insured depository institutions
If an insured depository institution seeks to become an approved bond guarantor under this section, such institution may only submit its application via a separately capitalized affiliate or subsidiary.
Approval
The Corporation may approve any application made pursuant to paragraph (1) provided the bond guarantor meets the standards adopted under subsection (a).
Publication
The Corporation shall—
publish in the Federal Register a list of newly approved bond guarantors; and
maintain an updated list of approved bond guarantors on the website of the Corporation.
Review, suspension, and revocation of approved status
In general
The Corporation may review the status of any approved bond guarantor if the Corporation is notified of or becomes aware of any violation by the insurer of this Act or the rules promulgated pursuant to this Act.
Suspension or Revocation
Corporation authority
If the Corporation determines, in a review pursuant to paragraph (1), that an approved bond guarantor no longer meets the standards for approval, the Corporation shall revoke the approved status of such guarantor.
rule of construction
The revocation of an approved bond guarantor's approved status under this paragraph shall have no effect on the status of any covered security.
Publication
The Corporation shall—
publish in the Federal Register a list of any approved bond guarantors who lost their approved status; and
maintain an updated list of such guarantors on the website of the Corporation.
Appeals
In general
Appeals of denials of application
A bond guarantor who submits an application under subsection (c)(1) to become an approved bond guarantor may appeal a decision of the Corporation denying such application.
Appeals of denials of benefits or suspensions of participation
An approved bond guarantor may appeal a decision of the Corporation suspending or revoking the approved status of such guarantor.
Filing of appeal
Any bond guarantor who files an appeal under paragraph (1) shall file the appeal with the Corporation not later than 90 days after the date on which the person receives notice of the decision of the Corporation being appealed.
Final determination
The Corporation shall make a final determination with respect to an appeal under paragraph (1) not later than 180 days after the date on which the appeal is filed under paragraph (2).
Limitations on approved bond guarantors
With respect to any eligible mortgage collateralizing a covered security insured under this Act, an approved bond guarantor may not provide insurance—
in satisfaction of the credit enhancement required under section 2(11)(C) or as an approved private mortgage insurer pursuant to section 211; and
as an approved bond guarantor under this section.
Permission To carry out other activities
Nothing in this Act prohibits an approved bond guarantor from being or controlling an approved issuer, provided that each issuer and bond guarantor, independent of each other, meet the approval standards established by the Corporation under this title.
Authority to establish FMIC Mutual Securitization Company
In general
The Corporation shall establish a mutual corporation to
be known as the FMIC Mutual Securitization Company
.
Purpose
The purpose of the FMIC Mutual Securitization Company is to—
develop, securitize, sell, and otherwise meet the issuing needs of credit unions, community and mid-size banks, and non-depository mortgage originators with respect to covered securities; and
purchase from its member participants for cash, on a single loan basis, eligible mortgage loans to securitize in a covered security.
Sale of necessary technology
Upon the FMIC certification date, the enterprises shall sell to the FMIC Mutual Securitization Company any function, activity, infrastructure, property, including intellectual property, platform, or any other object or service of an enterprise that the Corporation determines necessary for the FMIC Mutual Securitization Company to carry out its activities and operations.
Designation as an approved issuer
The FMIC Mutual Securitization Company shall be an approved issuer for purposes of section 213.
Eligibility
Eligibility to participate as a member in the FMIC Mutual Securitization Company shall be limited to—
insured depository institutions having less than $15,000,000,000 in total consolidated assets at the time of the institution's initial participation in the Company; or
any non-depository mortgage originator having a minimum net worth of $2,500,000.
Governance
Recognition of important role of smaller institutions
The Corporation shall take all necessary steps to ensure that the governance provisions of the FMIC Mutual Securitization Company reflect the important role in the mortgage market played by the small and mid-sized member participants of the FMIC Mutual Securitization Company.
Establishment of position of Director
There is established the position of the Director of the FMIC Mutual Securitization Company who shall be the head of the Company.
Board of Directors
In general
The management of the FMIC Mutual Securitization Company
shall be vested in a Board of Directors (hereafter referred to as the
Mutual Board
), which shall include representatives of member
participants of the Company, including representatives of—
mortgage bankers;
community banks; and
credit unions.
Initial appointment
The Corporation shall make initial appointments of the members of the Mutual Board. Each such initial appointment shall be for a term 1 year.
Appointments
Following the initial 1-year appointment of the members of the Mutual Board, member participants in the FMIC Mutual Securitization Company shall elect the members of the Mutual Board from within the membership of the Company.
Administration
The Mutual Board shall administer the affairs of the FMIC Mutual Securitization Company fairly and impartially and without discrimination.
No preferences for size
Member participants of the FMIC Mutual Securitization Company shall have equal voting rights on any matters before the Company, regardless of the size of the individual member participant.
Approval of member participants
In general
The Mutual Board shall develop standards and procedures to approve the application of member participants in the FMIC Mutual Securitization Company.
Content of standards
The standards required under paragraph (1) shall include standards relating to the safety and soundness of prospective member participants, including standards regarding the underwriting practices of such prospective members.
Coordination with other regulators
Consultation
In approving any prospective member to become a member participant in the FMIC Mutual Securitization Company, the Mutual Board may consult and share information with the primary prudential regulator of the prospective member.
Privilege preserved
Information shared pursuant to subparagraph (A) shall not be construed as waiving, destroying, or otherwise affecting any privilege or confidential status that a prospective member may claim with respect to such information under Federal or State law as to any person or entity other than the Mutual Board or its primary prudential regulator.
Rule of construction
No provision of this subsection may be construed as implying or establishing that—
any prospective member waives any privilege applicable to information that is shared or transferred under any circumstance to which this subsection does not apply; or
any prospective would waive any privilege applicable to any information by submitting the information directly to its primary prudential regulator, but for this subsection.
Funding authority
Authority to establish membership fees
The Mutual Board shall have the authority to charge and collect fees, and may in its discretion increase or decrease such fee, on its member participants for membership in the FMIC Mutual Securitization Company, including to cover the costs of—
the initial capitalization of the Company;
the purchase of any function, activity, infrastructure, property, including intellectual property, platform, or any other object or service from an enterprise pursuant to subsection (c); and
the continued operation of the Company.
Limitation
The fees authorized under paragraph (1)—
shall be equitably assessed; and
may be based on the volume of eligible mortgages that the member participant sells to the FMIC Mutual Securitization Company.
Coordination of servicer approval
The Mutual Board may coordinate with the Corporation to facilitate the application process for its member participants to become approved servicers of the Corporation pursuant to section 212.
Additional authority relating to oversight of market participants
In carrying out its authorities under this subtitle, the Corporation may, in its discretion, develop, publish, and adopt such other additional standards or requirements as the Corporation determines necessary to ensure—
competition among approved private mortgage insurers, servicers, issuers, and bond guarantors and other market participants in the secondary mortgage market;
competitive pricing among approved private mortgage insurers, servicers, issuers, and bond guarantors and other market participants in the secondary mortgage market; and
liquidity, transparency, and access to mortgage credit in the secondary mortgage market.
Civil money penalties
Authority
In addition to any suspension or revocation of the approved status of an approved private mortgage insurer, servicer, issuer, or bond guarantor under this subtitle, the Corporation may, in its discretion, impose a civil money penalty on any such approved private mortgage insurer, servicer, issuer, or bond guarantor that has failed to comply with or otherwise violates—
any standard adopted by the Corporation pursuant to this subtitle; or
any other requirement or provision of this Act, or any order, condition, rule, or regulation issued pursuant to this Act, applicable to such private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be.
Procedures
Establishment
The Corporation shall establish standards and procedures governing the imposition of civil money penalties under this section. Such standards and procedures—
shall provide for the Corporation to notify the approved private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be, in writing of the determination of the Corporation to impose the penalty, which shall be made on the record;
shall provide for the imposition of a penalty only after the approved private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be, has been given an opportunity for a hearing on the record; and
may provide for review by the Corporation of any determination or order, or interlocutory ruling, arising from a hearing.
Factors determining amount of penalty
In determining the amount of a penalty under this section, the Corporation shall give consideration to factors including—
the gravity of the offense;
any history of prior offenses;
ability to pay the penalty;
injury to the public;
benefits received;
deterrence of future violations; and
such other factors as the Corporation may determine, by regulation, to be appropriate.
Action To collect penalty
If the approved private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be, fails to comply with an order by the Corporation imposing a civil money penalty under this section, the Corporation may bring an action in the United States District Court for the District of Columbia to obtain a monetary judgment against the approved private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be, 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.
Settlements
The Corporation may compromise, modify, or remit any civil money penalty which may be, or has been, imposed under this section.
Deposit of Penalties
The Corporation shall use any civil money penalties collected under this section to help fund the Mortgage Insurance Fund established under section 203.
Protection of privilege and other matters relating to disclosures by market participants
Information sharing and maintenance of privilege
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended—
in section 11(t)(2)(A) (12 U.S.C. 1821(t)(2)(A)), by inserting after clause (v) the following:
The Federal Mortgage Insurance Corporation.
; and
in section 18(x) (12 U.S.C. 1828(x))—
by inserting
the Federal Mortgage Insurance Corporation,
before any
Federal banking agency
each place that term appears; and
by striking
such agency
each place that term appears and inserting
Corporation, agency
.
Permissible consultation with Federal banking agencies
In general
Pursuant to its authority under section 103(c), to facilitate the consultive process, the Corporation may share information with the Federal banking agencies, or any individual Federal banking agency, or any State bank supervisor, or foreign banking authority, on a one-time, regular, or periodic basis as determined by the Corporation regarding the capital, asset and liabilities, financial condition, risk management practices or any other practice of any approved private mortgage insurer, servicer, issuer, or bond guarantor.
Privilege preserved
Information shared by the Corporation pursuant to paragraph (1) shall not be construed as waiving, destroying, or otherwise affecting any privilege or confidential status that any approved private mortgage insurer, servicer, issuer, or bond guarantor or any other person may claim with respect to such information under Federal or State law as to any person or entity other than such agencies, agency, supervisor, or authority.
Rule of construction
No provision of this subsection may be construed as implying or establishing that—
any person waives any privilege applicable to information that is shared or transferred under any circumstance to which this subsection does not apply; or
any person would waive any privilege applicable to any information by submitting the information directly to the Federal banking agencies, or any individual Federal banking agency, or any State bank supervisor, or foreign banking authority, but for this subsection.
Transparency in market operations
Review of loan documents; disclosures
In general
The Corporation shall, by rule—
require that approved issuers—
grant access to private market investors seeking to take the first loss position in a covered security to all—
documents relating to eligible mortgage loans collateralizing that covered security; and
servicing reports of the approved servicer relating to such mortgages; and
disclose any other material information that a reasonable investor would want to know, and make no material omission of such information, relating to eligible mortgage loans collateralizing a covered security; and
establish the timing, frequency, and manner in which such access and disclosures are made.
Privacy protections
In prescribing the rules required under this section, the Corporation shall take into consideration issues of consumer privacy and all statutes, rules, and regulations related to privacy of consumer credit information and personally identifiable information. Such rules shall expressly prohibit the identification of specific borrowers.
Investor immunity
Any private market investor that has taken the first loss position in a covered security or that has otherwise invested in any covered security insured under this Act shall have immunity and protection from civil liability under Federal and State law, and no cause of action may be brought under Federal or State law against such investor, with respect to whether or not eligible mortgages that collateralize a covered security insured under this Act have complied with the requirements of this Act, including, but not limited to, with respect to any underwriting requirements applicable to such mortgage, any representations or warranties made by an approved issuer or an approved bond guarantor with respect to such mortgages, or whether or not the terms of any uniform securitization agreement have been met.
Uniform securitization agreements
In general
The Corporation shall develop, adopt, and publish standard uniform securitization agreements for covered securities which are insured under this Act.
Required content
The standard uniform securitization agreements required to be developed under subsection (a) shall include terms relating to—
pooling and servicing, including the development of uniform standards and practices—
regarding remittance schedules and payment delays; and
permitting the transfer of servicing rights, if such transfer is determined to be in the best financial interest of the investor, as such interest is calculated on a net present value basis;
representations and warranties, including representations and warranties as to compliance or conformity with the requirements of this Act;
indemnification and remedies, including for the restitution or indemnification of the Corporation with respect to early term delinquencies of eligible mortgages collateralizing a covered security;
the qualification, responsibilities, and duties of trustees; and
any other terms or standards the Corporation determines necessary or appropriate.
Defining representation and warranty violations
In developing the uniform securitization agreements required under subsection (a), the Corporation shall also develop, adopt, and publish clear and uniform standards that define and illustrate what actions, or omissions to act, comprise a violation of the representations and warranties clauses that are made a part of such agreements.
Consultation
The Corporation shall work with industry groups, including servicers, originators, issuers, and mortgage investors to develop the uniform securitization agreements required under subsection (a).
Uniform mortgage database
Uniform Mortgage Database
The Corporation shall establish, operate, and maintain a database for the collection, public use, and dissemination of uniform loan level information on eligible mortgages relating to—
loan characteristics;
borrower information;
the property securing the eligible mortgages;
loan data required at the time of application for insurance from the Corporation under this title;
the quality and consistency of appraisal and collateral data on eligible mortgages;
industry-wide servicing data standards; and
such other data, datasets, information, facts, or measurements as the Corporation determines appropriate to improve and enhance loan quality and operational efficiencies within the secondary mortgage market.
Considerations
In establishing the database required under subsection (a), the Corporation shall take into consideration, build upon, and adopt to the extent the Corporation determines appropriate, the existing data standards set forth under the Uniform Mortgage Data Program initiative established by the Federal Housing Finance Agency.
Regulations
The Corporation shall, by regulation—
establish the manner and form by which any loan level information collected under subsection (a) may be accessed by the public, including whether or not to establish a fee for such access;
require that such loan level information be made available to the public in a uniform manner, in a form designed for ease and speed of access, ease and speed of downloading, and ease and speed of use; and
ensure the protection of any personally identifiable information contained in any information, or mix of information, collected and made available for public access.
Monthly update
The database required under subsection (a) shall be updated not less frequently than once a month.
Electronic registration of eligible mortgages
Establishment of electronic registration system
The Corporation shall establish, operate, and maintain an electronic registry system for eligible mortgages that collateralize a covered security insured under this Act in order to automate, centralize, standardize, and improve the process of tracking changes in servicing rights and beneficial ownership interests in such eligible mortgages.
Considerations
In establishing the electronic registry system required under subsection (a), the Corporation shall take into consideration, build upon, and adopt to the extent the Corporation determines appropriate, any existing efforts of the Federal Housing Finance Agency or expertise among the private sector to develop a sound, efficient system for document custody and electronic registration of mortgages, notes, titles, and liens.
FMIC Structure
Office of Underwriting
Establishment
There is established within the Federal Mortgage Insurance Corporation an Office of Underwriting which shall be headed by the Deputy Director of Underwriting, who shall be appointed by the Board of Directors.
Responsibilities
The Office of Underwriting shall ensure, through oversight, analysis, and examination, that eligible mortgages that collateralize a covered security insured under this Act comply with the requirements of this Act, including with respect to—
the submission of complete and accurate loan data on eligible mortgages;
the identification of ineligible mortgage loans;
assisting lenders with originating high-quality, lower-risk eligible mortgages; and
any other activity that the Director determines appropriate.
Office of Securitization
Establishment
There is established within the Federal Mortgage Insurance Corporation an Office of Securitization which shall be headed by the Deputy Director of Securitization, who shall be appointed by the Board of Directors.
Responsibilities
In general
The Office of Securitization shall—
oversee and supervise the common securitization platform developed by the business entity announced by the Federal Housing Finance Agency and established by the enterprises, including by requiring that the platform have system capabilities to permit the issuance of multi-lender covered securities;
ensure that credit unions, community and mid-size banks, and small non-depository lenders have equitable access to any such platform, including through the development and facilitation of options for multi-lender pools of eligible mortgages to be securitized and issued as covered securities through such platform; and
coordinate and consult with the Federal Home Loan Bank System to establish a securitization platform that addresses the needs of its members.
Rules for use of common securitization platform
In general
The Corporation, acting through the Office of Securitization, may promulgate rules—
regarding the use of the common securitization platform described under paragraph (1)(A); and
to permit securities other than covered securities to be issued through such platform for reasonable compensation.
Content of rules
Any rule that may be promulgated under subparagraph (A) may include a requirement that any security to be issued through the common securitization platform be subject to a uniform securitization agreement developed under section 223.
Establishment of database To provide notice to different classes of lien holders
The Office of Securitization shall establish, operate, and maintain a database that—
can be accessed by any holder of a lien on an eligible mortgage;
identifies and tracks if a junior lien or any other subordinate lien has been issued on the property securing an eligible mortgage;
notifies, to the extent feasible, any senior or first lien holder of the existence of such junior or subordinate lien; and
informs—
the senior or first lien holder of the monthly performance of the junior or subordinate lien; and
the junior or subordinate lien holder of the monthly performance of the senior or first lien.
Office of Federal Home Loan Bank Supervision
Establishment
There is established within the Federal Mortgage Insurance Corporation an Office of Federal Home Loan Bank Supervision which shall be headed by the Deputy Director of Federal Home Loan Bank Supervision, who shall be appointed by the Board of Directors.
Responsibilities
The Office of Federal Home Loan Bank Supervision shall—
oversee, coordinate, and supervise the Federal Home Loan Banks and the Federal Home Loan Bank System, including the transition of all activities transferred to the Corporation pursuant to section 301; and
supervise any authorized subsidiary of one or more Federal Home Loan Banks that is approved as an approved issuer pursuant to section 213(b)(2)(A)(ii), including with respect to the initial capitalization of any such subsidiary.
Transfer of powers, personnel, and property to FMIC from FHFA
Powers and duties transferred
Federal Home Loan Bank functions transferred
Transfer of functions
There are transferred to the Corporation all functions of the Federal Housing Finance Agency and the Director of the Federal Housing Finance Agency relating to—
the supervision of the Federal Home Loan Banks and the Federal Home Loan Bank System; and
all rulemaking authority of the Federal Housing Finance Agency and the Director of the Federal Housing Finance Agency relating to the Federal Home Loan Banks and the Federal Home Loan Bank System.
Powers, authorities, rights, and duties
The Corporation shall succeed to all powers, authorities, rights, and duties that were vested in the Federal Housing Finance Agency and the Director of the Federal Housing Finance Agency, including all conservatorship or receivership authorities, on the day before the transfer date in connection with the functions and authorities transferred under paragraph (1).
Effective date
The transfer of functions under this paragraph shall take effect on the transfer date.
Continuation and coordination of certain actions
In general
All regulations, orders, determinations, and resolutions described under paragraph (2) shall remain in effect according to the terms of such regulations, orders, determinations, and resolutions, and shall be enforceable by or against the Corporation until modified, terminated, set aside, or superseded in accordance with applicable law by the Corporation, any court of competent jurisdiction, or operation of law.
Applicability
A regulation, order, determination, or resolution is described under this subsection if it—
was issued, made, prescribed, or allowed to become effective by—
the Federal Housing Finance Agency; or
a court of competent jurisdiction, and relates to functions transferred by this Act;
relates to the performance of functions that are transferred by this section; and
is in effect on the transfer date.
Disposition of affairs
During the period preceding the transfer date, the Director of the Federal Housing Finance Agency, for the purpose of winding up the affairs of the Federal Housing Finance Agency in connection with the performance of functions that are transferred by this section—
shall manage the employees of such Agency and provide for the payment of the compensation and benefits of any such employees which accrue before the transfer date; and
may take any other action necessary for the purpose of winding up the affairs of the Office.
Use of property and services
Property
The Corporation may use the property and services of the Federal Housing Finance Agency to perform functions which have been transferred to the Corporation until such time as the Agency is abolished under section 303 to facilitate the orderly transfer of functions transferred under this section, any other provision of this Act, or any amendment made by this Act to any other provision of law.
Agency services
Any agency, department, or other instrumentality of the United States, and any successor to any such agency, department, or instrumentality, that was providing supporting services to the Agency before the transfer date in connection with functions that are transferred to the Corporation shall—
continue to provide such services, on a reimbursable basis, until the transfer of such functions is complete; and
consult with any such agency to coordinate and facilitate a prompt and reasonable transition.
Continuation of services
The Corporation may use the services of employees and other personnel of the Federal Housing Finance Agency, on a reimbursable basis, to perform functions which have been transferred to the Corporation for such time as is reasonable to facilitate the orderly transfer of functions pursuant to this section, any other provision of this Act, or any amendment made by this Act to any other provision of law.
Savings provisions
Existing rights, duties, and obligations not affected
Subsection (a) and section 303 shall not affect the validity of any right, duty, or obligation of the United States, the Director of the Federal Housing Finance Agency, the Federal Housing Finance Agency, or any other person, that existed on the day before transfer date.
Continuation of suits
No action or other proceeding commenced by or against the Director of the Federal Housing Finance Agency in connection with the functions that are transferred to the Corporation under this section shall abate by reason of the enactment of this Act, except that the Corporation shall be substituted for the Director of the Federal Housing Finance Agency as a party to any such action or proceeding.
Conforming amendments
Federal Home Loan Bank Act
The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended—
by striking
the Director
and inserting the Corporation
each
place that term appears;
by striking
The Director
and inserting The Corporation
each
place that term appears;
by striking
Chairman of the Director of Governors
and inserting
Chairman of the Board of Governors
each place that term
appears;
by striking
the Agency
and inserting the Corporation
each
place that term appears;
in section 2, by striking paragraphs (11) and (12) and inserting the following:
Corporation
The
term Corporation
means the Federal Mortgage Insurance
Corporation established under title I of the Housing Finance Reform and Taxpayer Protection Act of
2013.
; and
in section
11(l)(5), in the header to such paragraph, by striking of the director
.
Federal Housing Enterprises Financial Safety and Soundness Act
Section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4516) is amended—
in subsection (a)—
in
the matter preceding paragraph (1), by striking the regulated
entities
and inserting each enterprise
; and
in
paragraph (1), by striking and under section 20 of the Federal Home Loan
Bank Act
;
in subsection (b), by striking paragraph (2);
in subsection (c)—
by
striking any regulated entity
and inserting any
enterprise
;
by
striking the regulated entity
and inserting the
enterprise
;
by striking
a regulated entity
and inserting an enterprise
each place that term appears;
by
striking such regulated entity
and inserting such
enterprise
each place that term appears; and
by
striking such entity
and inserting such
enterprise
; and
in subsection (e)—
by
striking each regulated entity
and inserting each
enterprise
; and
by
striking such regulated entity
and inserting such
enterprise
.
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—
in the heading to
the subsection, by Federal Housing Finance Agency
and
inserting Federal
Mortgage Insurance Corporation
;
by striking
Federal Housing Finance Agency
and inserting Federal
Mortgage Insurance Corporation
; and
by striking
Federal Housing Finance Agency's
and inserting Federal
Mortgage Insurance Corporation's
.
Effective date
The amendments made by this subsection shall take effect on the transfer date.
Transfer and rights of employees of the FHFA
Transfer
Each employee of the Federal Housing Finance Agency that is employed in connection with functions that are transferred to the Corporation under section 301 shall be transferred to the Corporation for employment, not later than the transfer date, and such transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code.
Status of employees
The transfer of functions under this title, and the abolishment of the Federal Housing Finance Agency under section 303, may not be construed to affect the status of any transferred employee as an employee of an agency of the United States for purposes of any other provision of law.
Guaranteed positions
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.
Appointment authority for excepted employees
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).
Decline of transfer
The Corporation 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.
Reorganization
If the Corporation determines, after the end of the 1-year period beginning on the transfer date, 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.
Employee benefit programs
In general
Any employee of the Federal Housing Finance Agency accepting employment with the Corporation 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 Corporation, as applicable, including insurance, to which such employee belongs on the transfer date if—
the employee does not elect to give up the benefit or membership in the program; and
the benefit or program is continued by the Corporation.
Cost differential
In general
The difference in the costs between the benefits which would have been provided by the Federal Housing Finance Agency and those provided by this section shall be paid by the Corporation.
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 Corporation, 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.
Abolishment of FHFA
Effective upon the FMIC certification date, the Federal Housing Finance Agency and the position of the Director of the Federal Housing Finance Agency are abolished.
Transfer of property and facilities
Effective upon the FMIC certification date all property of the Federal Housing Finance Agency shall transfer to the Corporation.
Technical and conforming amendments
Effective date
The amendments made by this section shall take effect on the date of enactment of this Act.
References in Federal law
On and after the date of enactment of this Act, any reference in Federal law to the Director of the Federal Housing Finance Agency or the Federal Housing Finance Agency, in connection with any function of the Director of the Federal Housing Finance Agency or the Federal Housing Finance Agency transferred under section 301, shall be deemed a reference to the Chairperson of the Federal Mortgage Insurance Corporation or the Federal Mortgage Insurance Corporation, as appropriate and consistent with the amendments made by this Act.
Title 18, United States Code
Title 18, United States Code, is amended—
in section 1905,
by inserting or the Federal Mortgage Insurance Corporation
after
Federal Housing Finance Agency
;
in section 212(c)(2)—
in subparagraph
(F), by striking ; and
and inserting a semicolon;
in subparagraph
(G), by striking the period at the end and inserting ; and
;
and
by adding at the end the following:
the Federal Mortgage Insurance Corporation.
;
in section 657,
by inserting the Federal Mortgage Insurance Corporation,
after
Federal Housing Finance Agency,
;
in section 1006,
by inserting the Federal Mortgage Insurance Corporation,
after
Federal Housing Finance Agency,
; and
in section 1014,
by inserting the Federal Mortgage Insurance Corporation,
after
Federal Housing Finance Agency,
.
Flood Disaster Protection Act of 1973
Section 102(b)(5) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4012a(b)(5)) is amended in subsection
(b)(5),
by inserting the Federal Mortgage Insurance Corporation,
after
Federal Housing Finance Agency,
.
Title 5, United States Code
Title 5, United States Code, is amended—
in section 5313, by inserting the following new item after the item relating to the Director of the Federal Housing Finance Agency:
Director of the Federal Mortgage Insurance Corporation.
; and
in section
3132(a)(1)(D), by inserting the Federal Mortgage Insurance
Corporation,
after Federal Housing Finance
Agency,
.
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 or the
Chairperson of the Federal Mortgage Insurance Corporation
after
Director of the Federal Housing Finance Agency
.
Federal Deposit Insurance Act
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended—
in section
7(a)(2)(A), by inserting the Federal Mortgage Insurance
Corporation,
after Federal Housing Finance Agency,
each
place that term appears;
in section
8(e)(7)(A)(vi), by inserting , the Federal Mortgage Insurance
Corporation,
after Federal Housing Finance
Agency
;
in section 11(t)(2)(A), by adding at the end the following:
The Federal Mortgage Insurance Corporation.
; and
in section 33(e),
by inserting , the Federal Mortgage Insurance Corporation,
after
Federal Housing Finance Agency
.
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
inserting
the Federal Mortgage Insurance Corporation,
after Federal
Housing Finance Agency,
.
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
inserting
the Federal Mortgage Insurance Corporation,
after Federal
Housing Finance Agency,
.
Title 44, United States Code
Section 3502(5) of title 44, United States
Code, is amended by inserting the Federal Mortgage Insurance
Corporation,
after Federal Housing Finance
Agency,
.
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 inserting or the Federal Mortgage
Insurance Corporation,
after Federal Housing Finance
Agency
.
FIRREA
The Financial Institutions Reform, Recovery, and Enhancement Act of 1989 is amended—
in section 1216—
in subsection (a)—
in
paragraph (2), by striking ; and
and inserting a
semicolon;
in
paragraph (3), by striking the period and inserting ; and
;
and
by adding at the end the following:
the Federal Mortgage Insurance Corporation.
; and
in subsection
(c), by inserting the Federal Mortgage Insurance Corporation,
before and the Federal Housing Finance Agency,
;
in section
402(e), by striking Federal Housing Finance Agency
each place
that term appears and inserting Federal Mortgage Insurance
Corporation
;
in section 1124,
by inserting the Federal Mortgage Insurance Corporation,
after
Federal Housing Finance Agency,
each place that term appears;
and
in section
1125(b), by inserting the Federal Mortgage Insurance
Corporation,
after Federal Housing Finance
Agency,
.
EESA
The Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 note) is amended—
in section 104(b)—
in paragraph (4),
by striking ; and
and inserting a semicolon;
in paragraph (5),
by striking the period and inserting ; and
; and
by adding at the end the following:
the Federal Mortgage Insurance Corporation.
; and
in section
109(b), by inserting the Federal Mortgage Insurance Corporation,
after Federal Housing Finance Agency,
.
Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111–203) is amended—
in section 342(g)(1)—
in subparagraph
(H), by striking ; and
and inserting a semicolon;
in subparagraph
(I), by striking the period and inserting ; and
; and
by adding at the end the following:
the Federal Mortgage Insurance Corporation.
;
in section 989E(a)(1), by adding at the end the following:
The Federal Mortgage Insurance Corporation.
; and
in section
1481(b), by inserting the Federal Mortgage Insurance
Corporation,
after Federal Housing Finance
Agency,
.
Housing and Urban-Rural Recovery Act
Section 469 of the Housing and
Urban-Rural Recovery Act of 1983 (12 U.S.C. 1701p–1) is amended, in the
first
sentence, by inserting the Federal Mortgage Insurance
Corporation,
after Federal Housing Finance
Agency,
.
Neighborhood Reinvestment Corporation Act
Section 606(c)(3) of the
Neighborhood Reinvestment Corporation Act (42 U.S.C. 8105(c)(3)) is
amended by
inserting , the Federal Mortgage Insurance Corporation,
after
Federal Housing Finance Agency
.
Federal Insurance Office Act
Section 313(r)(4) of title 31, United States
Code, is amended by inserting the Federal Mortgage Insurance
Corporation,
after Federal Housing Finance
Agency,
.
Commodity Exchange Act
Section 1a(39)(E) of the Commodity Exchange Act (7 U.S.C. 1a(39)(E)) is amended—
by striking
a regulated entity
and inserting an enterprise
;
and
by inserting
before the period at the end the Federal Mortgage Insurance Corporation
in the case of a swap dealer, major swap participant, security-based swap
dealer, or major security-based swap participant that is a Federal Home
Loan
Bank
.
Truth in Lending Act
The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended—
section
129H(b)(4), by inserting the Federal Mortgage Insurance
Corporation,
after Federal Housing Finance Agency,
;
and
in section 129E—
in subsection
(g)(1), by inserting the Federal Mortgage Insurance Corporation,
after Federal Housing Finance Agency,
; and
in subsection
(h), by inserting the Federal Mortgage Insurance Corporation,
after Federal Housing Finance Agency,
.
FFIEC
The
first sentence of section 1011 of the Federal Financial Institutions
Examination Council Act of 1978 (12 U.S.C. 3310) is amended by inserting
the Federal Mortgage Insurance Corporation,
before and
the Federal Housing Finance Agency
.
Improving transparency, accountability, and efficacy within affordable housing
Affordable housing allocations
Fee and allocation of amounts
Subject to subsection (b), and in addition to any fees for the provision of insurance established in accordance with title II, in each fiscal year the Corporation shall—
charge and collect a fee in an amount equal to not less than 5 basis points and not more than 10 basis points for each dollar of the outstanding principal balance of eligible mortgages collateralizing covered securities for which insurance is being provided under title II; and
allocate or otherwise transfer—
80 percent of such fee amounts to the Secretary of Housing and Urban Development to fund the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568); and
20 percent of such fee amounts to the Secretary of the Treasury to fund the Capital Magnet Fund established under section 1339 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4569).
Suspension of contributions
The Corporation may temporarily suspend allocations under subsection (a) upon a finding by the Corporation that such allocations are contributing, or would contribute, to the financial instability of the Mortgage Insurance Fund established under section 203.
Housing Trust Fund
Section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568) is amended—
in subsection (a), by striking by
the enterprises under section 1337
and inserting pursuant to
section 401 of the Housing Finance Reform and
Taxpayer Protection Act of 2013
;
by repealing subsection (b); and
in subsection (c)—
in paragraph (1),
by striking Except as provided in subsection (b), the
and
inserting The
;
in paragraph
(4)(B), by striking other than fiscal year 2009
;
in paragraph (7)—
in
subparagraph (A), by striking ; and
and inserting a
semicolon;
in subparagraph (B)(iv)—
by striking
section 132
and inserting section 1132
;
and
by striking the period at the end and inserting a semicolon; and
by adding at the end the following:
grants and loans, including through the use of pilot programs of sufficient scale, to support the research and development of sustainable homeownership and affordable rental programs, provided that such grant or loan amounts are used only for the benefit of families whose income does not exceed 120 percent of the area median income as determined by the Secretary, with adjustments for family size; and
provide limited credit enhancement, and other forms of credit support, for product and services that—
will increase the rate of sustainable homeownership and affordable rental by individuals or families whose income does not exceed 120 percent of the area median income as determined by the Secretary, with adjustments for family size; and
might not otherwise be offered or supported by a pilot program of sufficient scale to determine the viability of such products and services in the private market.
; and
in paragraph (10)—
by amending subparagraph (A) to read as follows:
Ensuring efficient use of grant amounts
Use for certain eligible activities
In each fiscal year, of the aggregate amount allocated to a State or State designated entity under this subsection—
35 percent shall be used for activities under subparagraph (A) of paragraph (7);
5 percent shall be used for activities under subparagraph (B) of paragraph (7); and
60 percent shall be used for activities under subparagraphs (C) and (D) of paragraph (7).
Ensuring benefits for rural communities
In general
In each fiscal year, of the aggregate amount allocated to a State or State designated entity under this subsection, the State or State designated entity shall ensure that, at a minimum, such amounts are distributed for the benefit of nonentitlement areas in that State in the same proportion that the total amount of nonentitlement areas in that State bears to the total amount of all areas in that State.
Targeted outreach to smaller communities
In carrying out the requirement under subclause (I), each State or State designated entity shall in distributing amounts allocated to that State or State designated entity give priority to nonentitlement areas with a population of less than 20,000.
Definition of nonentitlement area
For purposes of this clause, the term
nonentitlement area
has the same meaning given that term under
section 102(a)(7) of the Housing and Community Development Act of
1974 (42
U.S.C. 5302(a)(7)).
; and
by striking subparagraph (E).
Capital Magnet Fund
Section 1339 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4569) is amended—
in subsection (b)(1), by striking
pursuant to section 1337
and inserting pursuant to
section 401 of the Housing Finance Reform and
Taxpayer Protection Act of 2013
; and
in subsection (h), by striking paragraph (7).
Additional taxpayer protections
Ensuring benefits support citizens and lawful permanent residents
The Secretary of Housing and Urban Development and the Secretary of the Treasury, respectively, shall ensure that grant amounts allocated to covered grantees, allocated by covered grantees to eligible recipients, or allocated to individuals by such eligible recipients are used for the benefit of only lawful permanent residents and citizens of the United States in carrying out the activities of—
the Housing Trust Fund; and
the Capital Magnet Fund.
Not To be used for political activities
Consistent with the existing requirements under sections 1338(c)(10)(D) and section 1339(h)(5) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, the Secretary of Housing and Urban Development and the Secretary of the Treasury, respectively, shall ensure that grant amounts allocated by covered grantees to eligible recipients or allocated to individuals by such eligible recipients are not used for—
political activities;
advocacy;
lobbying, whether directly or through other parties;
influencing the selection, nomination, election, or appointment of one or more candidates to any Federal, State or local office;
personal counseling services;
travel expenses; and
preparing or providing advice on tax returns.
Penalties
Civil money penalty
If an eligible recipient or any other individual in receipt of grant amounts described by this section violates any provision of subsection (a) or (b), the Secretary of Housing and Urban Development or the Secretary of the Treasury, as the case may be, may impose a civil penalty on such recipient or individual, as the case may be, of not more than $1,000,000 for each violation.
Criminal penalties
Whoever, being subject to the provisions of subsection (a) or (b), knowingly participates, directly or indirectly, in any manner in conduct that results in a violation of such provisions shall, notwithstanding section 3571 of title 18, United States Code, be fined not more than $1,000,000 for each violation, imprisoned for not more than 5 years, or both.
Rule of construction
The penalties imposed under paragraphs (1) or (2) shall be in addition to any other available civil remedy or any other available criminal penalty and may be imposed whether or not the Secretary of Housing and Urban Development or the Secretary of the Treasury, as the case may be, imposes other administrative sanctions.
Definition
As used in this section—
the term
covered grantee
means—
for purposes of the Housing Trust Fund, a State or State designated entity; and
for purposes of the Capital Magnet Fund, an eligible grantee as described under section 1339(e) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992;
the term
eligible recipient
means—
for purposes of the Housing Trust Fund, a recipient as described under section 1338(c)(9) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992t; and
for purposes of the Capital Magnet Fund, a recipient of assistance from the Capital Magnet Fund;
the term
Capital Magnet Fund
means the Capital Magnet Fund established
under section 1339 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4569); and
the term
Housing Trust Fund
means the Housing Trust Fund established
under section 1338 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4568).
Wind Down of Fannie Mae and Freddie Mac
Repeal of GSE charters
Fannie Mae
Effective on the FMIC certification date, the charter of the Federal National Mortgage Association is repealed and the Federal National Mortgage Association shall have no authority to conduct new business under such charter, except that the provisions of such charter in effect immediately before such repeal shall continue to apply with respect to the rights and obligations of any holders of—
outstanding debt obligations of the Federal National Mortgage Association, including any—
bonds, debentures, notes, or other similar instruments;
capital lease obligations; or
obligations in respect of letters of credit, bankers' acceptances, or other similar instruments; or
mortgage-backed securities guaranteed by the Federal National Mortgage Association.
Freddie Mac
Effective on the FMIC certification date, the charter of the Federal Home Loan Mortgage Corporation is repealed and the Federal Home Loan Mortgage Corporation shall have no authority to conduct new business under such charter, except that the provisions of such charter in effect immediately before such repeal shall continue to apply with respect to the rights and obligations of any holders of—
outstanding debt obligations of the Federal Home Loan Mortgage Corporation, including any—
bonds, debentures, notes, or other similar instruments;
capital lease obligations; or
obligations in respect of letters of credit, bankers' acceptances, or other similar instruments; or
mortgage-backed securities guaranteed by the Federal Home Loan Mortgage Corporation.
Existing guarantee obligations
Explicit guarantee
The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any obligation described under subsections (a) and (b).
Continued dividend payments
Notwithstanding section 502 or any other provision of law, and subject to section 601, provision 2(a) (relating to Dividend Payment Dates and Dividend Periods) and provision 2(c) (relating to Dividend Rates and Dividend Amount) of the Senior Preferred Stock Purchase Agreement, or any provision of any certificate in connection with such Agreement creating or designating the terms, powers, preferences, privileges, limitations, or any other conditions of the Variable Liquidation Preference Senior Preferred Stock of an enterprise issued pursuant to such Agreement—
shall not be amended, restated, or otherwise changed to reduce the rate or amount of dividends in effect pursuant to such Agreement as of the Third Amendment to such Agreement dated August 17, 2012, except that any amendment to such Agreement to facilitate the sale of assets of the enterprises to facilitate compliance with the provisions of section 502(b) shall be permitted; and
shall remain in effect until the guarantee obligations described under subsections (a)(2) and (b)(2) are fully extinguished.
Applicability
Notwithstanding section 502, all guarantee fee amounts derived from the single-family mortgage guarantee business of the enterprises in existence as of the FMIC certification date shall be subject to the terms of the Senior Preferred Stock Purchase Agreement.
Federal Safety and Soundness Act
In general
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended—
in section 1303—
in paragraph (2),
by striking 'Federal Housing Finance Agency
and inserting
Federal Mortgage Insurance Corporation
;
in paragraph
(3), by striking means
and all that follows through the period
at the end, and inserting means the Federal Home Loan Bank
Act.
;
by repealing paragraph (4); and
in paragraph
(9), by striking Director of the Federal Housing Finance Agency
and inserting Board of Directors of the Federal Mortgage Insurance
Corporation
;
by repealing section 1313A; and
by repealing section 1317(d).
Effective date
The amendments made by paragraph (1) shall take effect on the FMIC certification date.
Wind down
Wind down
Authority of FHFA
Beginning on the date of enactment of this Act and ending on the FMIC certification date, the Director of the Federal Housing Finance Agency, in consultation with the Corporation and the Secretary of the Treasury, shall take such action, and may prescribe such regulations and procedures, as may be necessary to wind down the operations of the enterprises in an orderly manner that complies with the requirements of this Act and any amendments made by this Act.
Limitation
Notwithstanding any authority granted to the Director of the Federal Housing Finance Agency under paragraph (1), the sale, transfer, exchange, or other disposition of any asset subject to the wind down required under this section shall be prohibited, if the Corporation—
in its discretion determines that such sale, transfer, exchange, or disposition would materially interfere with the ability of the Corporation to carry out the requirements of this Act; and
notifies, in writing, the Director of the Federal Housing Finance Agency within 14 days of such determination.
Rule of construction
Notwithstanding any authority granted to the Director of the Federal Housing Finance Agency under paragraph (1), the Director of the Federal Housing Finance Agency—
shall have no authority to sell, transfer, exchange, or otherwise dispose of any guarantee obligations described under subsections (a)(2) and (b)(2) of section 501; and
shall have no rights, claims, or title to, nor any authority to sell, transfer, exchange, or otherwise dispose of, guarantee fee amounts derived from the single-family mortgage guarantee business of the enterprises in existence as of the FMIC certification date.
Division of assets and liabilities; authority To establish holding corporation and dissolution trust fund
The action and procedures required under subsection (a)—
shall include the establishment and execution of plans to provide for an equitable division, distribution, and liquidation of the assets and liabilities of an enterprise, including any infrastructure, property, including intellectual property, platforms, or any other thing or object of value, provided such plan complies with the requirements of this Act and any amendments made by this Act; and
may provide for establishment of—
a holding corporation organized under the laws of any State of the United States or the District of Columbia for the purpose of winding down an enterprise; and
one or more trusts to which to transfer—
outstanding debt obligations of an enterprise; or
outstanding mortgages held for the purpose of collateralizing mortgage-backed securities guaranteed by an enterprise.
Recoupment by senior preferred shareholders
In general
Subject to the requirements of this Act, any proceeds from the wind down of an enterprise shall be paid first to the senior preferred shareholders of each such enterprise, then to the preferred shareholders of each such enterprise, and then to the common shareholders of each such enterprise.
Joint determination
The amount of any proceeds to be paid pursuant to paragraph (1) shall be jointly determined by the Director of the Federal Housing Finance Agency, the Corporation, and the Secretary of the Treasury.
Maximum return to shareholders
The wind down of each enterprise required under this section shall be managed by the Director of the Federal Housing Finance Agency, in consultation with the Corporation and the Secretary of the Treasury, to obtain resolutions that maximize the return for the senior preferred shareholders under paragraph (1), to the extent that such resolutions—
are consistent with the goal of supporting a sound, stable, and liquid housing market;
are consistent with applicable Federal and State law;
comply with the requirements of this Act and any amendments made by this Act; and
protect the taxpayer.
Sale of certain assets as a going concern
Except as provided in section 601 or elsewhere as required in this Act, if the Director of the Federal Housing Finance Agency, in consultation with the Corporation and the Secretary of the Treasury, determines that the sale of any line of business, or any function, activity, or service of an enterprise as a going concern will maximize the return for the senior preferred shareholders as required under paragraph (3), the Director may conduct such sale, provided that—
under no circumstance, shall such sale transfer, convey, or authorize, or be deemed to transfer, convey, or authorize, any guarantee or Federal support, assistance, or backing, implicit or explicit, related to any such line of business, function, activity, or service; and
such sale does not impede or otherwise interfere with the ability of the Federal Mortgage Insurance Corporation to carry out the functions and requirements of this Act.
Rule of construction
For purposes of this subsection, the term
proceeds
does not include any guarantee fee amounts derived from
the single-family mortgage guarantee business of the enterprises in
existence
as of the FMIC certification date.
Aligning purpose of conservatorship with FMIC
Power as conservator
Section 1367(b)(2)(D) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617(b)(2)(D)) is amended to read as follows:
Power as conservator
After the date of enactment of the Housing Finance Reform and Taxpayer Protection Act of 2013 the Agency shall, as conservator, take such actions as are necessary—
to ensure the efficient, effective, and expeditious wind down of the enterprises;
to manage the affairs, assets, and obligations of the enterprises and to operate the enterprises in compliance with the requirements of the Housing Finance Reform and Taxpayer Protection Act of 2013;
to assist the Federal Mortgage Insurance Corporation, in a consultative capacity, in carrying out the requirements under the Housing Finance Reform and Taxpayer Protection Act of 2013; and
to maintain liquidity and stability in the secondary mortgage market until such as time as the charters of the enterprises are revoked pursuant to title V of such Act.
.
Rule of construction
Nothing in this Act, or any amendments made by this Act, except as may be explicitly provided for in this Act, or any amendment made by this Act, shall be deemed to alter the powers, authorities, rights, and duties that are vested in the Federal Housing Finance Agency and the Director of the Federal Housing Finance Agency with respect to its supervision and regulation of the enterprises.
Conforming loan limits
In general
Beginning on the date of enactment of this Act, the limitations governing the maximum original principal obligation of conventional mortgages that may be purchased by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, referred to in section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) and section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), respectively, 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 date of enactment of this Act, 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 pursuant to section 1322 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4542). 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.
Special exception for Alaska, Hawaii, Guam, and USVI
The limitations set forth under subsection (a) shall be increased by not to exceed 50 per centum with respect to properties located in Alaska, Guam, Hawaii, and the Virgin Islands.
High-Cost area limit
The limitations set forth under subsection (a) shall also be increased, with respect to properties of a particular size located in any area for which 115 percent of the median house price for such size residence exceeds the limitation under subsection (a) for such size residence—
for the first year following the date of enactment of this Act, 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;
for the second year following the date of enactment of this Act, to the lesser of 145 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;
for the third year following the date of enactment of this Act, to the lesser of 135 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;
for the fourth year following the date of enactment of this Act, to the lesser of 130 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; and
for the fifth year following the date of enactment of this Act, and each year thereafter, to the lesser of 125 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.
Portfolio reduction
Graduated reduction
In general
Each enterprise shall not own, as of any applicable date, mortgage assets in excess of—
as of December 31, 2013, $552,500,000,000; and
on December 31 of each year thereafter until the FMIC certification date, 85 percent of the aggregate amount of the mortgage assets that the enterprise was permitted to own as of December 31 of the immediately preceding calendar year.
Retained portfolio to facilitate orderly wind down
On December 31 of the year in which the FMIC certification date occurs, the Corporation shall establish an allowable amount of enterprise owned mortgage assets in an amount equal to the amount necessary to facilitate—
the orderly wind down of the enterprises; and
appropriate loss mitigation on any legacy guarantees of the enterprises.
Mortgage assets defined
For purposes of this section, the term mortgage assets means, with respect to an enterprise, assets of such enterprise consisting of mortgages, mortgage loans, mortgage-related securities, participation certificates, mortgage-backed commercial paper, obligations of real estate mortgage investment conduits and similar assets, in each case to the extent such assets would appear on the balance sheet of such enterprise in accordance with generally accepted accounting principles in effect in the United States as of September 7, 2008 (as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board from time to time; and without giving any effect to any change that may be made after September 7, 2008, in respect of Statement of Financial Accounting Standards No. 140 or any similar accounting standard).
Repeal of mandatory housing goals
Repeal of housing goals
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 is amended by striking sections 1331 through 1336 (12 U.S.C. 4561–6).
Conforming amendments
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended—
in section
1303(28), by striking , and, for the purposes
and all that
follows through designated disaster areas
;
in section 1324(b)(1)(A), by striking clauses (i), (ii), and (iv);
in section 1341—
in subsection (a)—
in
paragraph (1), by inserting or
after the semicolon at the
end;
in paragraph (2), by striking the semicolon at the end and inserting a period; and
by striking paragraphs (3) and (4); and
in subsection (b)(2)—
in subparagraph (A), by inserting
or
after the semicolon at the end;
by striking subparagraphs (B) and (C); and
by redesignating subparagraph (D) as subparagraph (B);
in section 1345(a)—
in paragraph (1),
by inserting or
after the semicolon at the end;
in paragraph (2), by striking the semicolon at the end and inserting a period; and
by striking paragraphs (3) and (4); and
in section
1371(a)(2), by striking with any housing goal established under subpart
B of part 2 of subtitle A of this title, with section 1336 or 1337 of this
title,
.
Improvements to functioning of housing market
Continuation of multifamily business of the enterprises
In general
Notwithstanding any provision of title V, or any other provision of law, effective on the FMIC certification date, all functions, activities, infrastructure, property, including intellectual property, platforms, or any other object or service of an enterprise relating to the maintenance and operation of the multifamily guarantee business of an enterprise shall be transferred, without cost, to the Corporation.
Authority of Director
The Corporation is authorized, upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest, on any mortgage on multifamily housing purchased by the Corporation pursuant to the transfer of an enterprise's multifamily guarantee business under subsection (a).
Limitation on ongoing operation of multifamily business
In carrying out the multifamily guarantee business of an enterprise transferred pursuant to subsection (a), the Corporation shall ensure that any such business continues to operate, as applicable, consistent with—
the Delegated Underwriting and Servicing Lender Program established by the Federal National Mortgage Association; and
the Program Plus Lender Program established by the Federal Home Loan Mortgage Corporation, especially the Series K Structured Pass-Through Certificates offered by the enterprise.
Explicit guarantee
The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any guaranty—
issued by the Corporation pursuant to this subsection; and
obligation assumed by the Corporation pursuant to the transfer of an enterprise's multifamily guarantee business under subsection (a).
Guarantee fee
In general
The Corporation shall collect a reasonable fee for any guaranty under this subsection and shall make such charges as it may determine to be reasonable for the analysis of any trust or other security arrangement proposed by an issuer of a security backed by multifamily mortgages guaranteed under this section.
Deposit into Mortgage Insurance Fund
Any guarantee fee amounts collected under this subsection shall be deposited in the Mortgage Insurance Fund.
Multiple lender issues
With respect to the dwelling of a borrower that serves as security for an eligible mortgage, if the borrower enters into any credit transaction that would result in the creation of a new mortgage or other lien on such dwelling where the loan-to-value ratio of such credit transaction amount is 80 percent or more, the creditor of such new mortgage or other lien shall seek and obtain the approval of the creditor of the senior eligible mortgage loan before any such credit transaction becomes valid and enforceable.
GAO report on full privatization of secondary mortgage market
GAO report
Not later than 8 years after the date of enactment of this Act, the Comptroller General of the United States shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the feasibility of maintaining a fully privatized secondary mortgage market, including recommendations on how to best carry out any displacement of the insurance model established under this Act.
Corporation plan To transition to a fully private secondary mortgage market
Required submission to Congress
Not later than 6 months after the date on which the report required under subsection (a) is submitted, the Corporation shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a plan to transition to a fully privatized secondary mortgage market.
Required content of plan
The plan required to be submitted under paragraph (1) shall describe, chronicle, and specify all the legislative, administrative, and regulatory actions necessary to carry out a transition to a fully private secondary mortgage market, including all actions necessary to dissolve the Corporation and successfully displace the insurance model established under this Act.
General provisions
Authority to issue regulations
The Corporation may prescribe such regulations and issue such guidelines, orders, requirements, or standards as are necessary to carry out this Act, or any amendment made by this Act.
Fair value accounting
In any evaluation, oversight, audit, or analysis by the Corporation of the cost of the Mortgage Insurance Fund, the insurance or guarantee activities of the Corporation required under this Act, including any fee or charge in connection with the provision of such insurance or guarantee, or the financial transactions of the Corporation, the Corporation shall conduct any such evaluation, oversight, audit, or analysis based on the fair-value accrual accounting method.
Rule of construction
Nothing in this Act shall be construed to prohibit or otherwise restrict the ability of a holder of any loss position in any covered security insured under this Act from restructuring, retranching, or resecuritizing such position.
Severability
If any provision of this Act or the application of any provision of this Act to any person or circumstance, is held invalid, the application of such provision to other persons or circumstances, and the remainder of this Act, shall not be affected thereby.
Short title; table of contents
Short title
This Act may be cited
as the Housing Finance Reform and Taxpayer Protection Act of 2014
.
Table of contents
The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I—Elimination of Fannie Mae and Freddie Mac
Sec. 101. Elimination of Fannie Mae and Freddie Mac.
TITLE II—Federal Mortgage Insurance Corporation
Sec. 201. Establishment.
Sec. 202. Management of Corporation.
Sec. 203. Advisory Committee.
Sec. 204. Office of the Inspector General.
Sec. 205. Staff, experts, and consultants.
Sec. 206. Reports; testimony; audits.
Sec. 207. Specific offices.
Sec. 208. Office of Consumer and Market Access.
Sec. 209. Office of Multifamily Housing.
Sec. 210. Equitable access for lenders and borrowers.
Sec. 211. Office of Taxpayer Protection.
TITLE III—Duties and responsibilities of the FMIC
Subtitle A—Duties and authorities
Sec. 301. Duties and responsibilities.
Sec. 302. Standards for credit risk-sharing mechanisms.
Sec. 303. Insurance; Mortgage Insurance Fund.
Sec. 304. Loan limits; Housing Price Index.
Sec. 305. Authority to protect taxpayers in unusual and exigent market conditions.
Sec. 306. General powers.
Sec. 307. Exemptions.
Sec. 308. Regulatory consultation and coordination.
Sec. 309. Authority to issue regulations.
Sec. 310. Equivalency in protection of the Mortgage Insurance Fund.
Subtitle B—Approval and supervision of approved entities for single-family activities
Sec. 311. Approval and supervision of guarantors.
Sec. 312. Approval and supervision of aggregators.
Sec. 313. Approval of private mortgage insurers.
Sec. 314. Approval of servicers.
Sec. 315. Authority to establish and approve small lender mutuals.
Sec. 316. Supervisory actions related to capital and solvency.
Sec. 317. Ownership, acquisitions, and operations of covered entities.
Subtitle C—Securitization Platform and Transparency in Market Operations
PART I—Securitization Platform
Sec. 321. Establishment of the Securitization Platform.
Sec. 322. Management of the Platform.
Sec. 323. Membership in the Platform.
Sec. 324. Fees.
Sec. 325. Purposes and obligations of the Platform.
Sec. 326. Uniform securitization agreements for covered securities and required contractual terms for noncovered securities.
Sec. 327. Approval and standards for collateral risk managers.
PART II—Transparency in market operations
Sec. 331. Review of loan documents; disclosures.
Sec. 332. National mortgage database.
Sec. 333. Working group on electronic registration of mortgage loans.
Sec. 334. Multiple lender issues.
Sec. 335. Required harmonization of standards within eligible mortgage criteria.
TITLE IV—FHFA and FMIC Transition
Sec. 401. Definitions.
Sec. 402. FHFA transition.
Sec. 403. Transfer and rights of employees of the FHFA.
Sec. 404. Transition Committee.
Sec. 405. Transition assessments.
Sec. 406. Transfer of powers and duties on the system certification date; continuation and coordination of certain actions.
Sec. 407. Technical and conforming amendments relating to abolishment of FHFA.
Sec. 408. Repeal of mandatory housing goals.
TITLE V—Improving transparency, accountability, and efficacy within affordable housing
Sec. 501. Affordable housing allocations.
Sec. 502. Housing Trust Fund.
Sec. 503. Capital Magnet Fund.
Sec. 504. Market Access Fund.
Sec. 505. Additional taxpayer protections.
Sec. 506. Promoting affordable housing investment.
TITLE VI—Transition and termination of Fannie Mae and Freddie Mac
Sec. 601. Minimum housing finance system criteria to be met prior to system certification date.
Sec. 602. Transition of the housing finance system.
Sec. 603. Resolution authority; technical amendments.
Sec. 604. Wind down.
Sec. 605. Portfolio reduction.
Sec. 606. Oversight of transition of the housing finance system.
Sec. 607. Authority to establish provisional standards.
Sec. 608. Initial fund level for the Mortgage Insurance Fund.
Sec. 609. GAO report on full privatization of secondary mortgage market.
TITLE VII—Multifamily
Sec. 701. Establishment of multifamily subsidiaries.
Sec. 702. Disposition of multifamily businesses.
Sec. 703. Approval and supervision of multifamily guarantors.
Sec. 704. Multifamily housing requirement.
Sec. 705. Establishment of small multifamily property program.
Sec. 706. Multifamily housing study.
Sec. 707. Multifamily platform study.
Sec. 708. Short-term residential housing.
TITLE VIII—General provisions
Sec. 801. Rule of construction.
Sec. 802. Severability.
Sec. 803. Transfer notification under TILA.
Sec. 804. Investment authority to support rural infrastructure.
Sec. 805. Consolidation of similar housing assistance programs.
Sec. 806. Bureau of Consumer Financial Protection review; GAO report.
Sec. 807. Determination of budgetary effects.
Definitions
As used in this Act, the following definitions shall apply:
Affiliate
The term affiliate means any person that controls, is controlled by, or is under common control with another person.
Affordable rental housing
The term affordable rental housing
means a rental housing unit that is considered affordable for extremely low-, very low-, low-, and
moderate-income families if the rent charged, including utilities or a
utility allowance, does not exceed 30 percent of the respective income
limit in that market area for extremely low-, very low-, low-, or
moderate-income families, respectively, of the size appropriate for the
number of bedrooms in the unit, as established by the Secretary of Housing
and Urban Development.
Agency transfer date
The term agency transfer date
means the date that is 6 months after the date of enactment of this Act.
Appropriate Federal banking agency
The term appropriate Federal banking agency
has the same meaning as in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)),
and includes the National Credit Union Administration in the case of any
credit union.
Approved aggregator
The term approved aggregator
means an entity that is approved by the Corporation pursuant to section 312.
Approved entity
The term approved entity
means—
an approved guarantor;
an approved multifamily guarantor;
an approved aggregator;
an approved private mortgage insurer; and
an approved servicer.
Approved guarantor
The term
approved guarantor
means an entity that is approved by the Corporation pursuant to section 311.
Approved multifamily guarantor
The term approved multifamily guarantor means an entity that is approved by the Corporation pursuant to section 703.
Approved private mortgage insurer
The term approved private
mortgage insurer
means an entity that is approved by the Corporation
pursuant to section 313.
Approved servicer
The term approved servicer
means an
entity that is approved by the Corporation pursuant to section 314.
Area
The term area means a metropolitan statistical area, a micropolitan statistical area, and a noncore area, as such areas may be established by the Office of Management and Budget.
Board; Board of Directors
The terms Board
and Board of
Directors
mean the Board of Directors of the Federal Mortgage Insurance
Corporation, unless the context otherwise requires.
Chairperson
The term Chairperson means the Chairperson of Board of Directors of the Federal Mortgage Insurance Corporation, unless the context otherwise requires.
Charter
The term charter means—
with respect to the Federal National Mortgage Association, the Federal National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.); and
with respect to the Federal Home Loan Mortgage Corporation, the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.).
Community Development Financial Institution
The term Community Development Financial Institution
has the same meaning as in section 103 of the Riegle Community Development and Regulatory
Improvement Act of 1994 (12 U.S.C. 4702).
Community land trust
The term community land trust means a nonprofit organization or State or local government that owns real property and leases the land through homeownership programs that—
use a ground lease to—
make real property affordable to low- or moderate-income borrowers; and
stipulate a preemptive option to purchase the real property from the home owner at resale so that the affordability of the real property is preserved for successive low- and moderate-income borrowers;
monitor properties to ensure affordability is preserved over resales; and
support homeowners to promote successful homeownership and prevent foreclosure.
Corporation
The
term Corporation
means the Federal Mortgage Insurance
Corporation established under title II.
Covered entity
The term covered entity
means—
an approved guarantor;
an approved multifamily guarantor; and
an approved aggregator that is neither an insured depository institution nor an affiliate of an insured depository institution.
Covered guarantee transaction
Definition
The term covered guarantee transaction
means a transaction, as that term shall be defined by the Corporation by regulation, involving
the agreement to
guarantee—
any eligible mortgage loan;
any pool of such eligible mortgage loans; or
the payment of principal and interest on covered securities collateralized by eligible mortgage loans before payments insured by the Corporation are made.
Rules of construction
A covered guarantee transaction—
shall not be construed to be—
a contract for sale of a commodity for future delivery or a swap under the Commodity Exchange Act; or
a contract of insurance or reinsurance under any Federal or State law regulating the sale, underwriting, provision, or brokerage of insurance;
shall not be subject to any requirement of the Commodity Exchange Act; and
shall not be subject to any requirement imposed under State law pertaining to the sale, underwriting, provision, or brokerage of insurance or reinsurance.
Covered market-based risk-sharing transaction
Definition
The term covered market-based risk-sharing transaction
means any private market transaction, as that term shall be defined by the Corporation by
regulation, involving a covered security issued subject to a standard
risk-sharing mechanism, product, contract, or
other security agreement approved by the Corporation under
section 302.
Rules of construction
A covered market-based risk-sharing transaction—
shall not be construed to be a contract of insurance or reinsurance under any Federal or State law regulating the sale, underwriting, provision, or brokerage of insurance; and
shall not be subject to any requirement imposed under State law pertaining to the sale, underwriting, provision, or brokerage of insurance or reinsurance.
Covered security
The term covered security means—
a single-family covered security; and
a multifamily covered security.
Credit risk-sharing mechanism
The term credit risk-sharing mechanism
means any mechanism, product, structure, contract, or security agreement by which a private market
holder assumes the first loss position, or any
part of such position, associated with the pool of eligible mortgage loans
collateralizing a covered security, or by which an approved guarantor or
approved
multifamily guarantor manages the credit risk related to guarantees
provided for covered securities.
CSP
The term CSP
means the securitization infrastructure announced by the Federal Housing Finance Agency on October
4, 2012, and developed by the enterprises while under conservatorship,
under the authority of the Federal Housing Finance Agency pursuant to the
Safety and Soundness Act,
and commonly referred to as the common securitization platform
.
Days
The term days
means—
with respect to any period of time less than or equal to 10 days, business days; and
with respect to any period of time greater than 10 days, calendar days.
Depository institution holding company
The term depository institution holding company
has the same meaning as section 3(w)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(w)(1)).
Eligible borrower
The term eligible borrower
means a borrower who—
applies for an eligible mortgage loan; and
meets the standards required of a borrower to be approved for an eligible mortgage loan.
Eligible mortgage loan
The term eligible mortgage loan
means—
an eligible single-family mortgage loan; and
an eligible multifamily mortgage loan.
Eligible multifamily mortgage loan
The term eligible multifamily mortgage loan
means a commercial real estate loan—
secured by a property with—
5 or more residential units; or
2 or more residential units, if the requirement under clause (i) is waived by the Corporation for purposes of carrying out a demonstration or pilot program;
the primary source of repayment for which is expected to be derived from rental income generated by the property;
the term of which may not be less than 5 years but not more than 40 years, except that the term may be less than 5 years subject to standards set by the Corporation;
that satisfies any additional underwriting criteria established by the Corporation to balance supporting access to capital with managing credit risk to the Mortgage Insurance Fund, including—
a maximum loan-to-value ratio;
a minimum debt service coverage ratio; and
considerations for restrictive or special uses of a property, including non-residential uses, properties for seniors, manufactured housing, and affordability restrictions, and the impact of such uses on clauses (i) and (ii); and
that satisfies any additional underwriting criteria that may be established by the Corporation.
Eligible single-family mortgage loan
The term eligible single-family mortgage loan means—
a loan that—
has been originated in compliance with minimum standards issued by the Corporation by regulation, provided that such standards—
are uniform and equal in kind, nature, and application regardless of—
the originator of the mortgage loan; or
the role performed by an approved entity with respect to the mortgage loan;
are, to the greatest extent possible, substantially similar to the regulations issued by the Bureau of Consumer Financial Protection under section 129C(b) of the Truth in Lending Act (15 U.S.C. 1639c); and
permit—
residential real estate loans secured by a property with 1 to 4 single-family units, including units that are not owner-occupied;
loans secured by manufactured homes, as defined in section 603(6) of the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5402(6));
residential real estate loans secured by a property with 1 to 4 single-family units that are originated by a State housing finance agency, as defined in section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x);
loans originated by a Community Development Financial Institution;
loans originated by a mission-based nonprofit lender;
loans secured by real property in a permanently affordable homeownership program or community land trust; and
loans to entities that provide non-owner occupied rental housing with care providers for individuals with intellectual and developmental disabilities;
has a maximum original principal obligation amount that does not exceed the applicable loan limitation established under section 304;
has an outstanding principal balance at the time of purchase of insurance available under title II that does not exceed 80 percent of the value of the property securing the loan, unless—
for such period and under such circumstances as the Corporation may require, the seller agrees to repurchase or replace the loan upon demand of the Corporation in the event the loan is in default;
an approved private mortgage insurer guarantees or insures—
not less than 12 percent of the unpaid principal balance of the loan, accounting for any down payment required under clause (iv), for loans in which the unpaid principal balance exceeds 80 percent but not more than 85 percent of the value of the property securing the loan;
not less than 25 percent of the unpaid principal balance of the loan, accounting for any down payment required under clause (iv), for loans in which the unpaid principal balance exceeds 85 percent but not more than 90 percent of the value of the property securing the loan;
not less than 30 percent of the unpaid principal balance of the loan, accounting for any down payment required under clause (iv), for loans in which the unpaid principal balance exceeds 90 percent but not more than 95 percent of the value of the property securing the loan; and
not less than 35 percent of the unpaid principal balance of the loan, accounting for any down payment required under clause (iv), for loans in which the unpaid principal balance exceeds 95 percent of the value of the property securing the loan; or
that portion of the unpaid principal balance of the loan which exceeds 80 percent of the value of the property securing the loan is subject to other credit enhancement that—
meets standards comparable to the standards required of private mortgage insurers under subclause (II); and
is approved by the Corporation;
has a down payment that is—
for a first-time homebuyer, as that term shall be defined by the Corporation by regulation, equal to not less than 3.5 percent of the purchase price of the property securing the loan; or
for non first-time homebuyers, equal to—
not less than 3.5 percent of the purchase price of the property securing the loan, if such purchase occurs prior to the system certification date or less than 1 year after the system certification date;
not less than 4 percent of the purchase price of the property securing the loan, if such purchase occurs during the period that begins 1 year after the system certification date and ends less than 2 years after the system certification date;
not less than 4.5 percent of the purchase price of the property securing the loan, if such purchase occurs during the period that begins 2 years after the system certification date and ends less than 3 years after the system certification date; or
not less than 5 percent of the purchase price of the property securing the loan, if such purchase occurs during any period after the period set forth in item (cc);
satisfies standards related to establishing title or marketability of title, as may be required by the Corporation, which standards may include the required purchase of title insurance on the property securing the loan;
contains such terms and provisions with respect to insurance, property maintenance, repairs, alterations, payment of taxes, default, reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters, including matters that set forth terms and provisions for establishing escrow accounts, performing financial assessments, or limiting the amount of any payment made available under the loan as the Corporation may prescribe; and
contains such other terms, characteristics, or underwriting criteria as the Corporation, in consultation with the Bureau of Consumer Financial Protection, may determine necessary or appropriate; or
a loan refinanced pursuant to the authority granted under section 305(i).
Enterprise
The term enterprise means—
the Federal National Mortgage Association and any affiliate thereof; and
the Federal Home Loan Mortgage Corporation and any affiliate thereof.
Extremely low-income
The term extremely low-income means—
in the case of owner-occupied units, income not in excess of 30 percent of the median income of the area; and
in the case of rental units, income not in excess of 30 percent of the median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.
Federal Home Loan Bank
The term Federal Home Loan Bank means a bank established under the authority of the Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.).
Federal Home Loan Bank System
The term Federal Home Loan Bank System means the Federal Home Loan Banks and the Office of Finance and any authorized subsidiary of one or more Federal Home Loan Banks.
FHFA related terms
Federal Housing Finance Agency
The term Federal Housing Finance Agency
shall mean—
prior to the agency transfer date, the Federal Housing Finance Agency established under section 1311 of the Safety and Soundness Act (12 U.S.C. 4511);
on and after the agency transfer date but prior to the system certification date, the Federal Housing Finance Agency established within the Corporation under title IV; and
on and after the system certification date, the Corporation.
FHFA Director
The
term FHFA Director
has the same meaning as the term Director
in section 401(1).
Federal regulatory agencies
The term—
Federal
regulatory agency
means, individually, the Board of Governors of the
Federal Reserve System, the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the Bureau of Consumer Financial
Protection, the National Credit Union Administration, the Securities and
Exchange Commission, the Commodity Futures Trading Commission, and the
Federal
Housing Finance Agency; and
Federal
regulatory agencies
means all of the agencies referred to in subparagraph
(A), collectively.
First loss position
The term first loss position means, with regard to a covered security—
either—
the fully-funded position to which any credit loss on such covered security resulting from the nonperformance of underlying mortgage loans will accrue and be absorbed, to the full extent of the holder’s interest in such position; or
the guarantee provided by an approved guarantor or approved multifamily guarantor with respect to an eligible single-family mortgage loan, pool of eligible single-family mortgage loans, or a single-family covered security or eligible multifamily mortgage loan, pool of eligible multifamily mortgage loans, or a multifamily covered security, as applicable; and
the position or guarantee described under subparagraph (A), as applicable, which is required to absorb any initial credit loss on a covered security prior to the Corporation becoming obligated to make any payment of insurance in accordance with this Act.
HUD-approved housing counseling agency
The term HUD-approved housing counseling agency
means an agency certified by the Secretary of Housing and Urban Development under section 106(e)
of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)).
Insured depository institution
The term insured depository
institution
means—
an insured depository institution, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
an insured credit union, as defined under section 101 of the Federal Credit Union Act (12 U.S.C. 1752).
Issuer
For a noncovered security, the term issuer shall have the same meaning as under the Securities Act of 1933 (15 U.S.C. 77b) and the rules and regulations promulgated thereunder. The Platform shall not be deemed to be an issuer of noncovered securities for purposes of the Securities Act of 1933.
Low-income
The term low-income
means—
in the case of owner-occupied units, income not in excess of 80 percent of median income of the area; and
in the case of rental units, income not in excess of 80 percent of median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.
Market participant
The term market participant means any—
approved entity;
private market holder; and
member of the Securitization Platform.
Median income
The term median income
means, with respect to an area, the unadjusted median family income for the area, as determined
and published annually by the Secretary of Housing and Urban Development.
Mission-based nonprofit lender
The term mission-based nonprofit lender
means an organization that—
is exempt from taxation pursuant to section 501(c)(3) of the Internal Revenue Code of 1986;
makes—
residential real estate loans for the purpose of promoting or facilitating homeownership for poor or low- or moderate-income, disabled, or other disadvantaged persons or families; or
real estate loans for the purpose of promoting or facilitating affordable rental housing for low-income persons or families and subject to any other additional criteria established by the Corporation;
sets interest rates on such loans that—
are lower than the bank prime loan rate, as determined under the Federal Reserve Statistical
Release of selected interest rates (commonly referred to as the H.15
) by
the Board of Governors of the Federal Reserve System, for the last day of
the most recent weekly release of such rates; or
are, after adjusting for inflation, no-interest loans or loans with interest rates at or below the interest rates for mortgage loans generally available in the market;
except as described under subparagraph (B), does not engage in the business of a mortgage originator or mortgage broker;
conducts its activities in a manner that serves public or charitable purposes;
receives funding and revenue and charges fees in a manner that does not incentivize the organization or its employees to act other than in the best interests of its clients;
compensates employees in a manner that does not incentivize employees to act other than in the best interests of its clients; and
meets such other requirements as the Corporation determines appropriate.
Moderate-income
The term moderate-income
means
in the case of owner-occupied units, income not in excess of median income of the area; and
in the case of rental units, income not in excess of median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.
Mortgage aggregator
The term mortgage aggregator means a person that—
arranges, in connection with a single-family covered security, a credit-risk sharing mechanism that is approved by the Corporation pursuant to section 302;
issues such single-family covered security through the Securitization Platform;
does not originate eligible single-family mortgage loans; and
is not affiliated with a person that actively engages in the business of originating eligible single-family mortgage loans.
Mortgage-backed security
The term mortgage-backed security
means an asset-backed security, as defined in section 3(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)), that is collateralized by—
a mortgage loan, including any residential real estate loan or commercial real estate loan; or
a collateralized mortgage obligation of mortgage-backed securities.
Mortgage originator
The term mortgage originator has the same meaning as in section 103(cc)(2) of the Truth in Lending Act (15 U.S.C. 1602(cc)(2)).
Multifamily business
The term multifamily business
means the activities and processes of the enterprises of—
purchasing, selling, lending on the security of, or otherwise dealing in multifamily mortgage loans;
securitizing a pool of multifamily mortgage loans; and
issuing multifamily securities.
Multifamily covered security
The term multifamily covered security
means a multifamily mortgage-backed security—
collateralized by eligible multifamily mortgage loans; and
that is insured by the Corporation pursuant to section 303.
Multifamily mortgage-backed security
The term multifamily mortgage-backed security means a mortgage-backed security collateralized by commercial real estate loans secured by properties with 5 or more residential units in accordance with the requirements of this Act.
Noncovered security
The term noncovered security means any mortgage-backed security other than a covered security.
Noneligible mortgage loan
The term noneligible mortgage loan means any mortgage loan other than an eligible mortgage loan.
Office of Finance
The term Office of Finance
means the Office of Finance in the Federal Home Loan Bank System.
Permanently affordable homeownership program
The term permanently affordable homeownership program includes programs administered by community land trusts, nonprofit organizations, or State or local governments that—
use a ground lease, deed restriction, subordinate loan, or similar legal mechanism to—
make real property affordable to low- or moderate-income borrowers; and
stipulate a preemptive option to purchase the real property from the homeowner at resale to preserve the affordability of the real property for successive low- and moderate-income borrowers;
monitor properties to ensure affordability is preserved over resales; and
support homeowners to promote successful homeownership and prevent foreclosure.
Person
The term person means an individual, corporation, company (including a limited liability company or joint stock company), association (incorporated or unincorporated), mutual or cooperative organization, partnership, trust, estate, society, or any other legal entity.
Platform; Securitization Platform
The terms Platform
and Securitization Platform
mean the securitization infrastructure established under part I of subtitle C of title III.
Platform Directors
The term Platform Directors
means the board of directors of the Securitization Platform.
Platform security
The term Platform security
means a mortgage-backed security issued through the Securitization
Platform.
Private label mortgage-backed securities market
The term private label mortgage-backed securities market means the market in which noncovered securities are issued, bought, and sold.
Private market holder
The term private market holder means the holder or holders, other than an approved guarantor or an approved multifamily guarantor, of the first loss position with respect to eligible mortgage loans collateralizing any covered security insured in accordance with this Act.
Regulated entity
The term regulated entity means—
the Federal National Mortgage Association and any affiliate thereof;
the Federal Home Loan Mortgage Corporation and any affiliate thereof;
any Federal Home Loan Bank; and
the Securitization Platform.
Residential real estate loan
The term residential real estate loan
includes any—
real estate mortgage loan;
personal property loan secured solely by the home itself;
hybrid land-home loan for a manufactured home, as defined in section 603(6) of the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5402(6)), to which the requirements of paragraph (29)(A)(v) shall not apply; and
mortgage loan secured by real property in a community land trust or permanently affordable homeownership program.
Safety and Soundness Act
The term Safety and Soundness Act
means the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501
et seq.).
Senior Preferred Stock Purchase Agreement
The term Senior Preferred Stock Purchase Agreement means—
the Amended and Restated Senior Preferred Stock Purchase Agreement, dated September 26, 2008, as such Agreement has been amended on May 6, 2009, December 24, 2009, and August 17, 2012, respectively, and as such Agreement may be further amended and restated, entered into between the Department of the Treasury and each enterprise, as applicable; and
any provision of any certificate in connection with such Agreement creating or designating the terms, powers, preferences, privileges, limitations, or any other conditions of the Variable Liquidation Preference Senior Preferred Stock of an enterprise issued or sold pursuant to such Agreement.
Single-family activities
The term single-family activities
means the activities and processes of the Corporation in providing insurance for single-family
covered securities as provided in this Act.
Single-family covered security
The term single-family covered security
means a single-family mortgage-backed security—
collateralized by eligible single-family mortgage loans; and
that is insured by the Corporation pursuant to section 303.
Small mortgage lender
The term small mortgage lender
means a community bank, credit union, mid-sized bank, non-depository institution, Community
Development Financial Institution, mission-based nonprofit lender,
or housing finance agency that originates residential real estate loans or
commercial real estate loans.
Standardized covered security; standardized security for single-family covered securities
The terms standardized covered security and standardized single-family covered security mean a single-family covered security that is—
issued through the Platform; and
in a form, and includes the standardized and uniform terms for the security and transaction that have been, developed by the Platform Directors and approved by the Corporation for use across various issuances.
Standardized noncovered security; standardized security for single-family noncovered securities
The terms standardized noncovered security and standardized single-family noncovered security mean a single-family noncovered security that is—
issued through the Platform; and
in a form, and includes the standardized and uniform terms for the security and transaction that have been, developed by the Platform Directors for use across various issuances.
State
The term State
means any State, territory, or possession of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana
Islands, Guam, American Samoa, or the United States Virgin Islands or any
Federally recognized Indian tribe, as defined by the Secretary of the
Interior under section 104(a) of the Federally Recognized Indian Tribe
List Act of 1994 (25 U.S.C. 479a–1(a)).
System certification date
The term system certification
date
means the date on which the Board of Directors certifies that the requirements of section 601 have
been met.
Very low-income
In general
The term very low-income
means—
in the case of owner-occupied units, families having incomes not greater than 50 percent of the median income of the area; and
in the case of rental units, families having incomes not greater than 50 percent of the median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.
Rule of construction
For purposes of the Housing Trust Fund established under section 1338 of the Safety and Soundness Act (12 U.S.C. 4568), the Capital Magnet Fund established under section 1339 of the Safety and Soundness Act (12 U.S.C. 4569), and the Market Access Fund established under section 504, the term very low-income means—
in the case of owner-occupied units, income in excess of 30 percent but not greater than 50 percent of the median income of the area; and
in the case of rental units, income in excess of 30 percent but not greater than 50 percent of the median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.
Elimination of Fannie Mae and Freddie Mac
Elimination of Fannie Mae and Freddie Mac
Fannie Mae
Effective on the agency transfer date, the Corporation shall take all steps necessary to dissolve and eliminate the Federal National Mortgage Association pursuant to the provisions of this Act. The charter for the Federal National Mortgage Association shall be repealed pursuant to title VI.
Freddie Mac
Effective on the agency transfer date, the Corporation shall take all steps necessary to dissolve and eliminate the Federal Home Loan Mortgage Corporation pursuant to the provisions of this Act. The charter for the Federal Home Loan Mortgage Corporation shall be repealed pursuant to title VI.
Federal Mortgage Insurance Corporation
Establishment
Establishment
Effective on the agency transfer date, there is established the Federal Mortgage Insurance Corporation, which is charged with ensuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by the institutions and other persons subject to its jurisdiction and which shall have the powers hereinafter granted.
Purpose
The purpose of the Corporation shall be to—
facilitate a liquid, transparent, and resilient single-family and multifamily mortgage credit market by supporting a robust secondary mortgage market, including during the transition to the new housing finance system;
provide insurance on any mortgage-backed security that satisfies the requirements under this Act to become a covered security;
monitor and supervise approved entities to the extent provided in this Act;
supervise the regulated entities;
facilitate the broad availability of mortgage credit and secondary mortgage market financing through fluctuations in the business cycle for eligible single-family and multifamily lending across all—
regions;
localities;
institutions;
property types, including housing serving renters; and
eligible borrowers;
ensure continued, widespread availability of an affordable, long-term, fixed rate, prepayable mortgage, such as a 30-year fixed rate mortgage; and
preserve and maintain a liquid forward execution market for eligible single-family mortgage loans and single-family covered securities, such as the To-Be-Announced market.
General supervisory and regulatory authority
In general
Each approved entity shall, to the extent provided in this Act, be subject to the supervision and regulation of the Corporation.
Regulated entities; Office of Finance
The Corporation shall have general regulatory authority over each regulated entity and the Office of Finance, and shall exercise such general regulatory authority to ensure that the purposes of this Act, any amendments made by this Act, and any other applicable law as to which the Corporation has responsibility under this Act are carried out.
Federal status
The Corporation shall be an independent agency and an instrumentality of the Federal Government.
Succession
The Corporation shall have succession until dissolved by an Act of Congress.
Principal office
The Corporation shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof.
Authority to establish other offices
The Corporation may establish such other offices in such other place or places as the Corporation may deem necessary or appropriate in the conduct of its business.
Prohibition
The Corporation shall not engage in mortgage loan origination.
Management of Corporation
Board of Directors
Members
The management of the Corporation shall be vested in a Board of Directors consisting of 5 members who shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who—
are citizens of the United States; and
have demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working in, housing and housing finance.
Political affiliation
Not more than 3 of the members of the Board of Directors may be members of the same political party.
Duties
The Board of Directors shall advise the Chairperson regarding overall strategies and policies to carry out the duties and purposes of this Act.
Chairperson and Vice Chairperson
Chairperson
Designation
1 of the members appointed pursuant to subsection (a)(1) shall be designated by the President to serve as Chairperson of the Board of Directors.
Term
Except as provided in subsection (c)(1)(A), the Chairperson shall be appointed for a term of 5 years, unless removed before the end of such term by the President under subparagraph (C).
Removal for cause
The President may remove the Chairperson for inefficiency, neglect of duty, or malfeasance in office.
Duties and authorities
In general
The Chairperson—
shall—
be the active executive officer of the Corporation, subject to supervision by the Board of Directors;
oversee the prudential operations of each regulated entity; and
ensure that each approved entity and regulated entity operates in a safe and sound manner, including—
through the maintenance of adequate capital, standards, and internal controls; and
by ensuring compliance with the rules, regulations, guidelines, and orders issued pursuant to this Act; and
may exercise such incidental powers as may be necessary or appropriate to assist the Corporation in fulfilling the duties and responsibilities of the Corporation in the supervision and regulation of each approved entity and regulated entity.
Delegation
The Chairperson may delegate to officers and employees of the Corporation any of the functions, powers, or duties of the Chairperson, as the Chairperson considers appropriate.
Vice Chairperson
Designation
1 of the members appointed pursuant to subsection (a)(1) shall be designated by the President to serve as Vice Chairperson of the Board of Directors.
Term
Except as provided in subsection (c)(1)(B), the Vice Chairperson shall be appointed for a term of 5 years, unless removed before the end of such term by the President under subparagraph (C).
Removal for cause
The President may remove the Vice Chairperson for inefficiency, neglect of duty, or malfeasance in office.
Acting Chairperson
During vacancy in the position of Chairperson
Except as provided in section 402, in the event of a vacancy in the position of Chairperson of the Board of Directors or during the absence or disability of the Chairperson, the Vice Chairperson shall act as Chairperson.
During vacancies in the position of Chairperson and Vice Chairperson
Except as provided in section 402, in the event of vacancies in the positions of Chairperson and Vice Chairperson, or during the absence or disability of both the Chairperson and the Vice Chairperson, the President shall designate 1 of the other members appointed pursuant to subsection (a)(1) as Acting Chairperson.
Retention of authority
Any person confirmed to serve as Chairperson, or acting as Chairperson, whether designated to act as such by the President under this paragraph or acting in such capacity by operation of this paragraph or section 402, shall for the period that such person is serving as Chairperson or acting as Chairperson—
act for all purposes as the Chairperson; and
have all the rights, duties, powers, and responsibilities of the Chairperson.
Staggered terms; term continuation
Terms
Term of initial Chairperson
The initial member of the Board of Directors appointed pursuant to subsection (a)(1) and designated as Chairperson under subsection (b)(1) shall serve a term of 30 months.
Term of initial Vice Chairperson
The initial member of the Board of Directors appointed pursuant to subsection (a)(1) and designated as Vice Chairperson under subsection (b)(2) shall serve a term of 30 months.
Term of other appointed members
1 of the other initial members of the Board of Directors appointed pursuant to subsection (a)(1) and not designated as Chairperson or Vice Chairperson under subsection (b) shall serve a term of 30 months and the other 2 initial members shall serve a term of 4 years.
All other terms
After the expiration of the initial terms under subparagraphs (A) through (C), all subsequent members of the Board of Directors appointed pursuant to subsection (a)(1) shall serve for a term of 5 years.
Continuation of service
Each member of the Board of Directors appointed pursuant to subsection (a)(1), including any member appointed to serve as Chairperson or Vice Chairperson, may continue to serve after the expiration of the term of office to which such member was appointed until the expiration of the next session of Congress subsequent to the expiration of said fixed term of office.
Vacancy; manner of fulfillment
Any vacancy on the Board of Directors shall be filled in the manner in which the original appointment was made, and the person appointed to fill such vacancy shall be appointed only for the remainder of such term.
Compensation of members
Chairperson
The Chairperson shall receive compensation at the rate prescribed for Level II of the Executive Schedule under section 5313 of title 5, United States Code.
Other appointed members
All members of the Board of Directors not described in paragraph (1) shall receive compensation at the rate prescribed for Level III of the Executive Schedule under section 5314 of title 5, United States Code.
Ineligibility for other offices during service; postservice restriction
Restrictions during service
No member of the Board of Directors may, during the time such member is serving in such capacity and for the 2-year period beginning on the date such member ceases to serve as a member of the Board of Directors—
be an officer, employee, or director of any—
insured depository institution;
insured depository institution holding company;
Federal Reserve bank;
regulated entity;
approved entity; or
non-bank financial institution or company that originates eligible mortgage loans; or
hold stock or have beneficial ownership in any—
insured depository institution;
insured depository institution holding company;
regulated entity;
approved entity; or
non-bank financial institution or company that originates eligible mortgage loans.
Certification
Upon taking office, each member of the Board of Directors shall certify under oath that such member has complied, and will comply, with this subsection and such certification shall be filed with the secretary of the Board of Directors.
Status of directors, officers, and employees
In general
A member of the Board of Directors, officer, or employee of the Corporation has no liability under the Securities Act of 1933 (15 U.S.C. 77b et seq.) with respect to any claim arising out of or resulting from any act or omission by such person within the scope of such person’s employment in connection with any transaction involving the disposition of assets (or any interests in any assets or any obligations backed by any assets) by the Corporation. This subsection shall not be construed to limit personal liability for criminal acts or omissions, willful or malicious misconduct, acts or omissions for private gain, or any other acts or omissions outside the scope of such person’s employment.
Effect on other law
This subsection does not affect—
any other immunities and protections that may be available to such person under applicable law with respect to such transactions; or
any other right or remedy against the Corporation, against the United States under applicable law, or against any person other than a person described in paragraph (1) participating in such transactions.
Rule of construction
This subsection shall not be construed to limit or alter in any way the immunities that are available under applicable law for Federal officials and employees not described in this subsection.
Independence
In general
Each member of the Board of Directors shall be independent in performing his or her duties.
Independence determination
In order to be considered independent for purposes of this subsection, a member of the Board of Directors—
may not, other than in his or her capacity as a member of the Board of Directors or any committee thereof—
accept any consulting, advisory, or other compensatory fee from the Corporation; or
be a person associated with the Corporation or with any affiliate of the Corporation; and
shall be disqualified from any deliberation involving any transaction of the Corporation in which the member has a financial interest in the outcome of the transaction.
Administration
Except as may be otherwise provided in this Act, the Board of Directors shall administer the affairs of the Corporation fairly and impartially and without discrimination.
Voting
A majority vote of all members of the Board of Directors is necessary to resolve all voting issues of the Corporation.
Meetings
The Board of Directors shall meet in accordance with the bylaws of the Corporation—
at the call of the Chairperson; and
not less frequently than once each quarter.
Quorum
3 members of the Board of Directors then in office shall constitute a quorum.
Bylaws
A majority of the members of the Board of Directors may amend the bylaws of the Corporation.
Advisory Committee
Establishment
In general
The Corporation shall establish an Advisory Committee for the purpose of advising the Office of Consumer and Market Access and the Board of Directors on developments in the primary and secondary mortgage markets that have material effects on the ongoing mission of the Corporation.
Duties
The Advisory Committee shall provide advice and recommendations to the Office of Consumer and Market Access and the Board of Directors as to material developments in the following areas:
Housing prices and affordability.
The effectiveness of consumer protections in the housing market.
Volume and characteristics of eligible mortgage loan originations.
The condition of the rental housing market.
Small lender participation in the secondary mortgage market.
Access to credit in rural and underserved communities.
Competition among approved entities.
Fair, equitable, and nondiscriminatory access to mortgage credit for individuals and communities.
Composition and qualifications
In general
The Advisory Committee shall be composed of 14 members as follows:
1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, non-depository mortgage originators having less than $10,000,000,000 in total assets.
1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, credit unions having less than $10,000,000,000 in total assets.
1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, banks having less than $10,000,000,000 in total assets.
1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, banks having more than $500,000,000,000 in total assets.
1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocation, or regulatory experience working with, regional banks having more than $10,000,000,000 and less than $500,000,000,000 in total assets.
1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience with private mortgage insurance.
1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience with securitization.
1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience with investor protection and institutional investors.
1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with consumer protection.
1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with policies and programs to support sustainable homeownership.
1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with multifamily housing development.
1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with affordable rental housing.
1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with asset management.
1 member who shall have a demonstrated professional understanding of and vocational experience with State bank, non-bank, or insurance regulation.
Experience with rural housing
Of the members of the Advisory Committee identified under subparagraphs (B) and (C) of paragraph (1), at least 1 shall be required to have practical, disciplinary, or vocational experience working in rural areas and with rural borrowers.
Experience with fair lending
Of the members of the Advisory Committee identified under paragraph (1), at least 1 shall be required to have demonstrated practical, academic, disciplinary, or vocational experience with fair lending practices and policies and programs that promote fair, equitable, and nondiscriminatory access to credit in underserved markets.
Member selection
Members of the Advisory Committee shall be appointed to the Committee by the Chairperson, subject to approval by a majority of the Board of Directors.
Meetings
The Advisory Committee shall meet no less frequently than once during each calendar quarter.
Office of the Inspector General
Office of Inspector General
Establishment
On the agency transfer date, there is established the Office of the Inspector General of the Federal Mortgage Insurance Corporation.
Head of office
In general
The head of the Office of the Inspector General of the Federal Mortgage Insurance Corporation shall be the Inspector General of the Federal Mortgage Insurance Corporation, who shall be appointed by the President, by and with the advice and consent of the Senate, in accordance with section 3(a) of the Inspector General Act of 1978 (5 U.S.C. App.).
Transitional provision
Notwithstanding subparagraph (A), during the period beginning on the agency transfer date and ending on the date on which the Inspector General of the Federal Mortgage Insurance Corporation is confirmed, the person serving as the Inspector General or the Acting Inspector General for the Office of the Inspector General within the Federal Housing Finance Agency on the date that is 1 day prior to the agency transfer date shall act for all purposes as, and with the full powers of, the Inspector General of the Federal Mortgage Insurance Corporation.
Office of the Inspector General authorities
Beginning on the agency transfer date, the authority of the Office of the Inspector General of the Federal Mortgage Insurance Corporation shall include all rights and responsibilities of the Office of the Inspector General of the Federal Housing Finance Agency as such rights and responsibilities existed on the date that is 1 day prior to the agency transfer date.
Provision of property and facilities
The Chairperson shall provide the Office of the Inspector General of the Federal Mortgage Insurance Corporation with—
appropriate and adequate office space at each central and field office location established by the Corporation, together with such equipment, office supplies, and communications facilities and services as may be necessary for the Inspector General of the Federal Mortgage Insurance Corporation to operate such offices; and
the necessary maintenance services for—
any office provided under paragraph (1); and
the equipment and facilities located in any such office.
Hiring of employees, experts, and consultants
Notwithstanding paragraphs (7) and (8) of section 6(a) of the Inspector General Act of 1978 (5 U.S.C. App.), the Inspector General of the Federal Mortgage Insurance Corporation may select, appoint, and employ such officers and employees as may be necessary—
for carrying out the functions, powers, and duties of the Office of the Inspector General; and
to obtain the temporary or intermittent services of experts or consultants or an organization of experts or consultants, subject to the applicable laws and regulations that govern such selections, appointments, and employment, and the obtaining of such services, within the Corporation.
Submission of budget
In general
For each fiscal year, the Inspector General of the Federal Mortgage Insurance Corporation shall transmit a budget estimate and request for funds to the Chairperson.
Required content
The budget request required under paragraph (1) shall—
specify—
the aggregate amount of funds requested for such fiscal year for the operations of the Office of the Inspector General of the Federal Mortgage Insurance Corporation; and
the amount requested for all training needs, including a certification from the Inspector General that the amount requested satisfies all training requirements for the Office of the Inspector General of the Federal Mortgage Insurance Corporation for that fiscal year; and
specifically—
identify and specify any resources necessary to support the Council of the Inspectors General on Integrity and Efficiency; and
justify the need for any resources identified and specified under clause (i).
Amendments to Inspector General Act of 1978
The Inspector General Act of 1978 (5 U.S.C. App.) is amended—
in section 6(e)(3), by inserting Federal Mortgage Insurance Corporation
after Federal Emergency Management Agency
;
in section 8G(a)(2), by striking the Federal Housing Finance Board
; and
in section 12—
in paragraph (1), by striking Director of the Federal Housing Finance Agency
and inserting Chairperson of the Federal Mortgage Insurance Corporation
; and
in paragraph (2), by striking Federal Housing Finance Agency
and inserting Federal Mortgage Insurance Corporation
.
Effective date
The amendments made by this section shall take effect on the agency transfer date.
Staff, experts, and consultants
Compensation
In general
The Board of Directors may appoint and fix the compensation of such officers, attorneys, economists, examiners, and other employees as may be necessary for carrying out the functions of the Corporation.
Rates of pay
Rates of basic pay and the total amount of compensation and benefits for all employees of the Corporation may be—
set and adjusted by the Board of Directors without regard to the provisions of chapter 51 or subchapter III of chapter 53 of title 5, United States Code; and
reasonably increased, notwithstanding any limitation set forth in paragraph (3), if the Board of Directors determines such increases are necessary to attract and hire qualified employees.
Parity
The Board of Directors may provide additional compensation and benefits to employees of the Corporation, of the same type of compensation or benefits that are then being provided by any agency referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b) or, if not then being provided, could be provided by such an agency under applicable provisions of law, rule, or regulation. In setting and adjusting the total amount of compensation and benefits for employees, the Board of Directors shall consult with and seek to maintain comparability with the agencies referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b).
Detail of government employees
Upon the request of the Board of Directors, any Federal Government employee may be detailed to the Corporation without reimbursement from the Corporation, and such detail shall be without interruption or loss of civil service status or privilege.
Experts and consultants
The Corporation may procure the services of experts and consultants as the Corporation considers necessary or appropriate.
Technical and professional advisory committees
The Board of Directors may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Corporation.
Reports; testimony; audits
Reports
In general
After the system certification date, the Corporation shall submit, on an annual basis, to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a written report of its operations, activities, budget, receipts, and expenditures for the preceding 12-month period.
Contents of report
The report required under subsection (a) shall include—
an analysis of—
with respect to the Mortgage Insurance Fund established under section 303(e)—
the current financial condition of the Mortgage Insurance Fund;
the exposure of the Mortgage Insurance Fund to economic conditions and an analysis of any stress tests conducted with respect to the Fund;
an estimate of the resources needed for the Mortgage Insurance Fund to achieve the purposes of this Act; and
any findings, conclusions, and recommendations for legislative and administrative actions considered appropriate to the future activities of the Corporation;
whether or not the actual reserve ratio of the Mortgage Insurance Fund met—
the reserve ratio set for the preceding 12-month period; or
the reserve ratio goals established in section 303(e)(7);
the detailed plan of the Corporation to ensure that the goals set for the reserve ratio for the Mortgage Insurance Fund are met and maintained for the next 12-month period;
the state of the private label mortgage-backed securities market, including the submission of a reasonable set of administrative, regulatory, and legislative proposals on how to limit the Federal Government’s footprint in the secondary mortgage market;
how and the extent to which the Corporation and the Small Lender Mutual established under section 315(a)(1) has fulfilled its obligations to ensure that community and mid-size banks, credit unions, and other small lenders have equitable and meaningful access to the secondary mortgage market; and
the report required under section 208(b)(2)(B);
a discussion of the significant problems faced by consumers in shopping for or obtaining mortgage credit or services;
a justification of the Corporation’s budget for the preceding 12-month period;
a list of the significant rules and orders adopted by the Corporation, as well as other significant initiatives conducted by the Corporation, during the preceding 12-month period and the plan of the Corporation for rules, orders, or other initiatives to be undertaken during the next 12-month period;
a list, with a brief statement of the issues, of the public supervisory and enforcement actions to which the Corporation was a party during the preceding 12-month period;
the actions of the Corporation taken regarding rules, orders, and supervisory actions with respect to covered entities; and
an assessment of significant actions by State attorneys general or State regulators relating to Federal law within the Corporation’s jurisdiction.
Testimony
After the system certification date, the Chairperson shall appear annually before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives to provide testimony on the report submitted under subsection (a).
Reports to the Office of Management and Budget
Financial operating plans and forecasts
The Corporation shall provide to the Director of the Office of Management and Budget copies of the—
Corporation’s financial operating plans and forecasts as prepared by the Corporation in the ordinary course of its operations; and
quarterly reports of the Corporation’s financial condition and results of operations as prepared by the Corporation in the ordinary course of its operations.
Rule of construction
This subsection shall not be construed to—
require any obligation on the part of the Corporation to consult with, or obtain the consent or approval of, the Director of the Office of Management and Budget with respect to any reports, plans, forecasts, or other information referred to in paragraph (1); or
authorize any jurisdiction or oversight by the Director of the Office of Management and Budget over the affairs or operations of the Corporation.
Audit
Annual audit
The Comptroller General of the United States shall annually audit—
the financial transactions of the Corporation; and
the Mortgage Insurance Fund.
Auditing standards
The audit required under this subsection shall be completed in accordance with the United States generally accepted government auditing standards as may be prescribed by the Comptroller General.
Place of audit
The audit required under this subsection shall be conducted at the place or places where accounts of the Corporation are normally kept.
Access
Notwithstanding any other provision of law, upon request and in such reasonable form as the Comptroller General may request, the Comptroller General shall have access to—
any records, books, accounts, documents, reports, files, papers, property, or other information under the control of or used by the Corporation;
any records or other information under the control of a person or entity acting on behalf of or under the authority of the Corporation, to the extent that such records or other information are relevant to an audit required under this subsection; and
the officers, directors, employees, financial advisors, staff, working groups, and agents and representatives of the Corporation (relating to the activities on behalf of the Corporation of such agent or representative).
Rule of construction
All records, books, accounts, documents, reports, files, papers, property, or other information referred to in paragraph (4) shall remain in the possession and custody of the Corporation.
Copies
The Comptroller General may, as the Comptroller General considers appropriate, make and retain copies of the records, books, accounts, documents, reports, files, papers, property, or other information to which the Comptroller General is granted access under paragraph (3).
Report
Submission to Congress
The Comptroller General shall submit to Congress a report of each annual audit conducted under this subsection not later than six and one-half months following the close of the year covered by such audit.
Required content
The report required under subparagraph (A) shall—
set forth the scope of the audit; and
include—
the statement of assets and liabilities, as well as any surplus or deficit;
the statement of income and expenses;
the statement of sources and application of funds;
such comments and information as the Comptroller General may deem necessary to inform Congress of the financial operations and condition of the Corporation and the Mortgage Insurance Fund, together with such recommendations with respect thereto as the Comptroller General may deem advisable; and
a description of any program, expenditure, or other financial transaction or undertaking observed in the course of the audit, which, in the opinion of the Comptroller General, has been carried on or made without authority of law.
Copies
A copy of each report required under subparagraph (A) shall be furnished to the President and to the Chairperson at the time such report is submitted to Congress.
Assistance and costs
Permitted use of outside assistance
For the purpose of conducting an audit under this subsection, the Comptroller General may employ by contract, without regard to section 3709 of the Revised Statutes of the United States (41 U.S.C. 6101), professional services of firms and organizations of certified public accountants for temporary periods or for special purposes.
Cost of audit covered by Corporation
In general
Upon the request of the Comptroller General, the Chairperson shall transfer to the Comptroller General from funds available the amount requested by the Comptroller General to cover the reasonable costs of any audit and report conducted by the Comptroller General pursuant to this subsection.
Credit of funds
The Comptroller General shall credit funds transferred under clause (i) to the account at the United States Treasury established for salaries and expenses of the Government Accountability Office, and such amounts shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report.
Specific offices
Establishment
General authority
The Corporation—
shall establish within the Corporation any office required to be established by this Act;
may establish such other offices or suboffices as are necessary and proper for the functioning of the Corporation; and
may eliminate or consolidate any office or suboffice established under subparagraph (B).
Appointments
Except as may otherwise be specifically provided, the head of any office established pursuant to paragraph (1) shall be appointed by the Board of Directors.
Underwriting
The Corporation shall establish an Office of Underwriting in the Corporation, whose functions shall include ensuring that eligible single-family mortgage loans that collateralize single-family covered securities insured under this Act comply with the requirements of this Act and minimize risk to the Mortgage Insurance Fund.
Securitization
The Corporation shall establish an Office of Securitization in the Corporation, whose functions shall include—
overseeing and supervising the Securitization Platform established under part I of subtitle C of title III; and
ensuring that small mortgage lenders have equitable access to—
the Securitization Platform, including through the development and facilitation of options such as multi-guarantor pools and multi-lender pools of eligible single-family mortgage loans to be securitized and issued as single-family covered securities through such Platform; and
any small lender mutual established or approved under section 315.
Federal Home Loan Banks
In general
Upon the system certification date, the Corporation shall establish an Office of Federal Home Loan Bank Supervision in the Corporation, whose functions shall include—
overseeing, coordinating, and supervising the Federal Home Loan Banks and the Federal Home Loan Bank System;
supervising any authorized subsidiary of 1 or more Federal Home Loan Banks that is an approved aggregator pursuant to section 312(m), including with respect to the capitalization of any such subsidiary;
serving as the central point of coordination within the Corporation with respect to any regulations or regulatory actions relating to the role of a Federal Home Loan Bank, or subsidiary or joint office thereof, as a covered entity; and
monitoring whether any regulation or regulatory action taken with respect to a Federal Home Loan Bank, or subsidiary or joint office thereof, approved under section 312 in its role as a covered entity does not adversely impact the traditional liquidity and advance mission of the Federal Home Loan Banks and Federal Home Loan Bank System.
Transfer of functions
Effective on the system certification date, there are transferred to the Office of Federal Home Loan Bank Supervision in the Corporation all functions of the Federal Housing Finance Agency of the Corporation relating to—
the supervision of the Federal Home Loan Banks and the Federal Home Loan Bank System; and
all rulemaking authority of the Federal Housing Finance Agency of the Corporation relating to the Federal Home Loan Banks and the Federal Home Loan Bank System.
Office of Consumer and Market Access
Establishment
The Corporation shall establish an Office of Consumer and Market Access in the Corporation, whose functions shall include the responsibilities set forth under subsection (b).
Responsibilities
Administering the Market Access Fund
The Office of Consumer and Market Access shall administer the Market Access Fund established under section 504.
Monitoring, coordinating, and facilitating the needs of underserved markets
In general
The Office of Consumer and Market Access shall—
monitor, on a macro level, the national, regional, and area single-family and multifamily housing finance markets to identify underserved markets, communities, and consumers in accordance with the market segments identified and defined under section 210;
coordinate with Federal and State agencies regarding existing policies and initiatives that address—
the housing needs of underserved markets, communities, and consumers; and
the affordable housing needs of markets, communities, and consumers; and
provide information on business practices and technical assistance to market participants regarding communities identified as underserved with regards to addressing the housing needs of consumers in that community.
Annual state of covered securities market report
In general
The Office of Consumer and Market Access shall, on an annual basis, submit a report to Congress on the state of the covered securities market, and make such report available to the public.
Required content
The report required under clause (i) shall include—
an assessment of the extent to which the covered securities market is providing liquidity to eligible borrowers in all segments of the mortgage origination primary market, including underserved segments identified and defined by the Corporation under section 210; and
recommendations for such legislative, regulatory, or administrative actions as may be necessary to address any deficiencies in the availability of mortgage credit in any market or region identified pursuant to clause (i) via existing Federal programs or the covered securities market.
Reliance on public data
In preparing each report required under this subparagraph, the Office of Consumer and Market Access—
shall use, to the maximum extent practicable, publicly available data and data otherwise collected under this Act; and
shall not include or review any confidential information or information collected by the Corporation as part of its supervisory or examination authorities that is confidential.
Incentive study
The Office of Consumer and Market Access shall, on a biennial basis, conduct a study on incentives to encourage mortgage lenders and mortgage originators to address the housing needs of underserved markets and communities.
Inclusion in annual report
The Corporation shall include the report required in subparagraph (B) and the study required in subparagraph (C) in the annual report required under section 206.
Consultation
The Office of Consumer and Market Access shall consult with the Federal Home Loan Banks and any small lender mutual established or approved under section 315 on approaches, methods, and practices designed to address the housing needs of underserved markets and communities.
Office of Multifamily Housing
The Corporation shall establish an Office of Multifamily Housing in the Corporation, whose functions shall include—
developing, adopting, and publishing specific eligibility criteria to ensure that eligible multifamily mortgage loans that collateralize multifamily covered securities insured under this Act comply with the requirements of this Act; and
performing any other activity relating to the multifamily housing finance system that the Corporation may determine appropriate to fulfill the requirements of this Act.
Equitable access for lenders and borrowers
Equitable access in underserved market segments
In general
Subject to subsection (b), the Corporation shall seek to support the primary mortgage market for eligible mortgage loans on an equitable, nondiscriminatory, and non-exclusionary basis to help ensure that all eligible borrowers have access to mortgage credit, including underserved segments of the primary mortgage market as identified and defined by the Corporation under paragraph (2).
Underserved market segments
The Corporation shall, by regulation, identify and define not more than 8 segments of the primary mortgage market in which lenders and eligible borrowers have been determined to lack equitable access to the housing finance system facilitated by the Corporation. The regulation required under this paragraph shall set forth the criteria by which the Corporation identified such underserved market segments. The identified underserved market segments required to be identified and defined under this paragraph may include the following:
Historically underserved communities, including rural and urban areas.
Manufactured housing.
Small balance loans.
Low- and moderate-income creditworthy borrowers.
Preservation of existing housing stock created by State or Federal laws.
Affordable rental housing.
Reports on serving underserved market segments
Annual reports
The Corporation shall require that each approved guarantor and approved aggregator engaged in a covered guarantee transaction or in a covered market-based risk-sharing transaction submit on annual basis a public report describing the actions taken by such approved guarantor or approved aggregator during the year, consistent with its business judgment, to provide credit to the underserved market segments identified and defined by the Corporation pursuant to this subsection, including corporate practices designed to serve such identified market segments. The annual report required under this subparagraph shall be approved by the board of directors and signed by the chief executive officer of the approved guarantor or approved aggregator submitting the report.
Report template
The Corporation may establish an optional template for the annual report required under subparagraph (A).
Report not subject to prior review or approval
An annual report required under subparagraph (A) shall not be subject to prior review or approval by the Corporation.
Coordination with other Federal and State agencies
The Corporation shall, in establishing the requirements for the annual report required under subparagraph (A), coordinate with other Federal and State agencies, as necessary, to reduce duplicative reporting requirements.
Limitations
Limitation on use of authorities and information
In carrying out this title, the Corporation shall not interfere with the exercise of business judgment of an approved aggregator or approved guarantor in determining which specific mortgage loans to include in a covered guarantee transaction or a covered market-based risk-sharing transaction, including through the Corporation’s use of—
the approval process for a guarantor or an aggregator established under subtitle B of title III;
its general supervisory and examination authorities under subtitle B of title III; or
information collected under this section, section 501, or section 208.
Rule of construction
Nothing in this subsection shall prevent the imposition of the variable incentive-based fees authorized in section 501 nor shall it exempt covered entities from compliance with the Fair Housing Act (42 U.S.C. 3601 et seq.) and the Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) as required in section 408(d).
Consistency with safety and soundness
The Corporation shall take appropriate measures designed to ensure that the requirements under this section are implemented in a manner consistent with safety and soundness principles.
Office of Taxpayer Protection
Establishment
The Corporation shall establish an Office of Taxpayer Protection whose functions shall include the responsibilities set forth under subsection (b).
Responsibilities
Study on market concentration and the impact of the FMIC guarantee
The Office of Taxpayer Protection shall, on a semi-annual basis, conduct a study and submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on—
market concentration in the secondary mortgage markets, including the exposure of the Mortgage Insurance Fund to the top 10 largest approved aggregators and approved guarantors, as measured by the total outstanding principal balance at origination of eligible single-family mortgage loans collateralizing single-family covered securities for which such aggregator or guarantor has obtained insurance provided under this Act in the previous 6 months;
the general state of underwriting standards in the origination of eligible single-family mortgage loans and the effect of insurance provided under this Act on such underwriting standards;
whether the insurance provided under this Act produces a subsidy to any approved entity or approved entities;
a comparison of the treatment in the secondary mortgage markets of mortgage-backed securities guaranteed by the Government National Mortgage Association and single-family covered securities insured under this Act, which shall include—
a discussion of the characteristics of—
mortgage loans collateralizing mortgage-backed securities guaranteed by the Government National Mortgage Association; and
eligible single-family mortgage loans collateralizing single-family covered securities insured under this Act; and
an analysis of any actions taken in the secondary mortgage markets to manipulate the guarantee provided by the Government National Mortgage Association and the insurance provided under this Act to the advantage of the secondary mortgage markets; and
what steps the Corporation has taken to minimize any potential long-term costs to the taxpayers and the Mortgage Insurance Fund relating to risks identified in subparagraphs (A) through (D).
Annual report on taxpayer protection and the exposure of the Mortgage Insurance Fund
In general
The Office of Taxpayer Protection shall, on an annual basis, 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 containing the information required under subparagraph (B).
Required content
The report required under subparagraph (A) shall—
include an analysis of the adequacy of—
the first loss position required under this Act, including the sufficiency of any permissible risk-sharing or risk mitigation permitted as a substitute for equity capital intended to cover the initial credit losses on a covered security prior to use of any amounts in the Mortgage Insurance Fund, the ability of the first loss position to absorb credit loss on covered securities, and to protect taxpayers; and
the performance of eligible single-family mortgage loans collateralizing single-family covered securities insured under this Act based upon current underwriting standards and how that performance differs from the performance of noneligible mortgage loans based upon the underwriting standards for such noneligible mortgage loans, including with respect to—
debt to income ratio;
loan to value ratios;
credit history;
loan documentation;
occupancy status;
credit enhancements;
housing counseling by a HUD-approved housing counseling agency;
loan payments;
the purpose of the loan, such as to refinance or purchase a home;
the type of loan product, such as a 30-year fixed interest rate mortgage loan, a 15-year fixed interest rate mortgage loan, or an adjustable interest rate mortgage loan;
the mortgage loan origination channel; and
such other underwriting criteria that would be useful to the Director of Taxpayer Protection; and
provide recommendations for such legislative, regulatory, or administrative actions to—
address any need to further limit overexposure of the Mortgage Insurance Fund to any 1 approved entity or business practice;
foster and encourage a robust private secondary mortgage market for noneligible mortgage loans and mortgage-backed securities that are not guaranteed by the Government National Mortgage Association; and
assist the Corporation in protecting taxpayers, including a recommendation as to whether a counter-cyclical increase of the reserve ratio of the Mortgage Insurance Fund or of the capital standards required of individual approved guarantors is necessary to protect taxpayers.
Annual report on system-wide leverage
The Office of Taxpayer Protection shall, on an annual basis, submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on system-wide leverage in the secondary mortgage market.
Annual report on early payment defaults
The Office of Taxpayer Protection shall, on an annual basis, submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on early payment defaults on eligible single-family mortgage loans for the preceding year, which shall include any eligible single-family mortgage loan that becomes delinquent or that is in default within 24 months of the origination of the loan.
Inclusion in annual report
The Corporation shall include the reports required under paragraphs (2) and (3) in the annual report required under section 206.
Reliance on public data
In preparing each report required under this section, the Office of Taxpayer Protection—
shall use, to the maximum extent practicable, publicly available data and data otherwise collected under this Act; and
shall not include or review any confidential information or information collected by the Corporation as part of its supervisory or examination authorities that is confidential.
Duties and responsibilities of the FMIC
Duties and authorities
Duties and responsibilities
Duties
The principal duties of the Corporation shall be to—
carry out this Act in a manner that fulfills the purposes of the Corporation as described in section 201(b);
minimize any potential long-term cost to the taxpayer, including through the use of the Mortgage Insurance Fund, the assessment of insurance fees, and the approval of approved entities and credit risk-sharing mechanisms;
facilitate fair access to the secondary mortgage market for small mortgage lenders originating eligible single-family and multifamily mortgage loans, including through the establishment, approval, and oversight of small lender mutuals;
ensure integrity and discipline in the mortgage market, particularly by monitoring the safety and soundness of regulated entities and approved entities;
ensure that approved entities maintain the capacity to further the requirements of the Corporation pursuant to section 201(b)(5) and that approved guarantors, approved multifamily guarantors, and approved aggregators are in compliance with section 210(a)(3);
promote the standardization of the secondary mortgage market through the use of uniform securitization agreements, servicing agreements, and the Securitization Platform;
increase transparency in single-family and multifamily mortgage markets, including through the National Mortgage Database; and
ensure continued, widespread availability of an affordable, long-term, fixed rate, prepayable mortgage, such as a 30-year fixed rate mortgage.
Scope of authority
The authority of the Corporation shall include the authority to exercise such incidental powers as may be necessary or appropriate to fulfill the duties and responsibilities of the Corporation set forth in this Act.
Delegation of authority
The Board of Directors may delegate to any duly authorized employee or representative any power vested in the Corporation by law.
Standards for credit risk-sharing mechanisms
Approval
Authority
The Corporation shall develop, adopt, and publish, after notice and comment, standards for the consideration and, as appropriate, the approval of credit risk-sharing mechanisms that shall require that the first loss position of private market holders on single-family covered securities is—
adequate to cover losses that might be incurred in a period of economic stress, including national and regional home price declines, such as those observed during moderate to severe recessions in the United States; and
not less than 10 percent of the principal or face value of the single-family covered security at the time of issuance.
Fraud prohibition
Prohibition
It shall be unlawful for any person to intentionally create and issue any instrument or security as a first loss position on a single-family covered security that such person knows or in the exercise of reasonable care should have known does not satisfy the requirements of this section.
Penalty
Violations of subparagraph (A) shall be punishable in accordance with section 1343 of title 18, United States Code.
Approval of credit risk-sharing mechanisms
Considerations for approval of various mechanisms
In approving credit risk-sharing mechanisms under subsection (a), the Corporation shall—
consider proposals that include credit-linked structures or other instruments that are designed to absorb credit losses on single-family covered securities;
consider any credit risk-sharing mechanisms undertaken by the enterprises;
ensure that the first loss position is fully funded to meet the requirements of subsection (a)(1)(B);
ensure that each type of proposed mechanism—
enables the Corporation to verify that the first loss position is fully funded;
minimizes any potential long-term cost to the taxpayer;
accommodates the availability of mortgage credit on equal and transparent terms in the secondary mortgage market for—
small mortgage lenders; and
lenders from all geographic locations, including rural locations;
allows for broad availability of mortgage credit and secondary mortgage market financing through fluctuations in the business cycle for eligible single-family lending across all—
regions;
localities;
institutions;
property types, including housing serving renters; and
eligible borrowers;
fulfills the requirements under section 314 with respect to loan modifications and foreclosure prevention;
does not prevent the securitization of refinanced or modified eligible single-family mortgage loans within single-family covered securities during a period when the authority under section 305(i) is exercised;
does not diminish market liquidity and resiliency;
does not prevent the refinancing of underwater eligible single-family mortgage loans; and
does not present an unnecessary risk to the Mortgage Insurance Fund;
consider whether the approval of any credit risk-sharing mechanism will impair the operation and liquidity of forward market executions for eligible single-family mortgage loans and single-family covered securities, such as the To-Be-Announced market, taking into consideration other risk-sharing options available to market participants; and
take necessary steps to prevent abuse and deceptive practices in the use of the credit risk-sharing mechanisms, including by—
creating appropriate standards relating to—
the vintages or categories of covered securities that are referenced by a credit risk-sharing mechanism;
standardization of the terms and features of credit risk-sharing structures; and
measures that prevent the duplicative sale by a guarantor of the same mortgage credit risk in the same pool of eligible single-family mortgage loans; and
requiring additional disclosures and affirmative representations that must be made by entities that create and issue credit risk-sharing mechanisms.
Notice and publication
The Corporation shall—
provide prompt notice to any person seeking approval for a credit risk-sharing mechanism of the approval or denial of that credit risk-sharing mechanism; and
make available detailed information regarding approved mechanisms on the website of the Corporation.
Review of approved credit risk-sharing mechanisms
Authority to suspend
The Corporation may, from time to time and in its discretion—
conduct reviews of approved credit risk-sharing mechanisms to determine whether such credit risk-sharing mechanisms continue to satisfy the considerations for approval under paragraph (1);
assess the functioning of the forward market for eligible single-family mortgage loans and single-family covered securities, including the To-Be-Announced market, to determine whether any approved credit risk-sharing mechanism has adversely affected the liquidity or resiliency of such market; and
suspend the approval of—
any credit risk-sharing mechanism that it determines does not satisfy the considerations for approval under paragraph (1); or
any credit risk-sharing mechanism that it determines has adversely affected the liquidity or resiliency of the forward market for eligible single-family mortgage loans and single-family covered securities, including the To-Be-Announced market.
Reconsideration
Development of expedited process
The Corporation shall develop an expedited process for the reinstatement of the approval of any credit risk-sharing mechanism that is suspended under subparagraph (A)(iii).
Revision of mechanism
If a credit risk-sharing mechanism is suspended under subparagraph (A)(iii), the credit risk-sharing mechanism may be adapted or revised, as necessary, for reconsideration for reinstatement of the approval of the credit risk-sharing mechanism under the expedited process developed under clause (i).
No effect on existing mechanisms
The suspension of the approval of any credit risk-sharing mechanism under subparagraph (A)(iii) shall have no effect on the status of single-family covered securities and related instruments using the credit risk-sharing mechanism that were issued prior to the suspension.
Additional credit risk-sharing mechanisms
Approval
In addition to credit risk-sharing mechanisms approved by the Corporation under subsection (a), the Corporation shall consider and may approve additional fully-funded credit risk-sharing mechanisms that—
may be employed by an approved guarantor to manage the credit risk relating to guarantees provided for single-family covered securities; and
do not represent the first loss position with respect to single-family covered securities.
Rule of construction
Nothing in this paragraph shall be construed to limit an approved guarantor from engaging in other forms of risk-sharing or risk mitigation using mechanisms that have not been considered or approved by the Corporation.
Reports
In general
Not later than 1 year after the agency transfer date, and annually thereafter until the system certification date, the Corporation 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 that—
discusses each credit risk-sharing mechanism that the Chairperson considered in carrying out the requirements of this section;
describes how the operation and execution of each approved credit risk-sharing mechanism fulfills the requirements of this section; and
explains how the Corporation arrived at the determinations made under clause (ii), including a discussion of the data considered.
Subsequent reports
On the system certification date and annually thereafter, the Corporation shall publish in the Federal Register a list of the credit risk-sharing mechanisms that the Corporation approved or suspended, addressing the identical concerns set forth under clauses (i) through (iii) of subparagraph (A) and, with respect to any suspension, the considerations under paragraph (1) that are no longer satisfied.
Multifamily reports
The Corporation shall include in the reports prepared under subparagraphs (A) and (B) a description of the credit risk-sharing mechanisms approved by the Corporation for multifamily guarantors pursuant to section 703.
Collateral diversification standards
The Corporation shall establish standards, after notice and comment, for the appropriate minimum level of diversification for eligible single-family mortgage loans that collateralize single-family covered securities that are issued subject to an approved credit risk-sharing mechanism in order to reduce the credit risk such single-family covered securities could pose to the Mortgage Insurance Fund.
Rule of construction
Nothing in this section shall be construed to require the Corporation to approve any credit risk-sharing mechanism.
Applicability of the Commodity Exchange Act and Securities Act of 1933
Exemption from the Commodity Exchange Act; prior consultation required
Exemption
No counterparty that enters into a swap, as that term is defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a), for purposes of structuring any credit risk-sharing mechanism that is approved by the Corporation pursuant to this section, which credit risk-sharing mechanism is designed to be used or is used by a private market holder to assume losses and to reduce the specific risks arising from losses realized under such credit risk-sharing mechanism associated with any single-family covered security insured in accordance with section 303 or section 305, shall be deemed, by reason of such swap transaction, to be a commodity pool, as that term is defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
Prior consultation required
Before approving any credit risk-sharing mechanism that would be exempt from the Commodity Exchange Act pursuant to subparagraph (A), the Corporation shall consult with the Commodity Futures Trading Commission.
Exemption from section 27B of the Securities Act of 1933; prior consultation required
Exemption
Any credit risk-sharing mechanism that is approved by the Corporation pursuant to this section, which credit risk-sharing mechanism is designed to be used or is used by a private market holder to assume losses and to reduce the specific risks arising from losses realized under such credit risk-sharing mechanism associated with any single-family covered security insured in accordance with section 303 or section 305, shall be exempt from section 27B of the Securities Act of 1933 (15 U.S.C. 77z-2a).
Prior consultation required
Before approving any credit risk-sharing mechanism that would be exempt from section 27B of the Securities Act of 1933 pursuant to subparagraph (A), the Corporation shall consult with the Securities and Exchange Commission.
Insurance; Mortgage Insurance Fund
Authority
The Corporation shall, in exchange for a fee in accordance with subsection (e)(8), insure the payment of principal and interest on a covered security with respect to any failure to pay on such covered security subject to the requirements of this section.
Terms and conditions
In general
The Corporation shall, by regulation, establish terms and conditions for the provision of insurance under this Act.
Single-family
The terms and conditions required to be established under paragraph (1) shall, for single-family covered securities, include terms and conditions that ensure—
eligible single-family mortgage loans collateralizing single-family covered securities have been delivered to the Platform; and
with respect to each single-family covered security, either—
private market holders have taken a first loss position that satisfies the requirements of section 302; or
an approved guarantor has provided a guarantee in satisfaction of the requirements of section 311.
Multifamily
The terms and conditions required to be established under paragraph (1) shall, for multifamily covered securities, include terms and conditions that ensure, with respect to each multifamily covered security, that an approved multifamily guarantor has provided a guarantee in satisfaction of the requirements of section 703.
Cash payments; continued operations
The Corporation shall facilitate the timely and unconditional payment of principal and interest on covered securities insured under this Act by paying, in cash when due, any shortfalls in principal and interest due on the covered security, and continuing to charge and collect any fees for the provision of insurance (in accordance with subsection (e)(8)) relating to the covered security in the event of any losses that may be incurred (1) in excess of a payment default on the covered security that exceeds the first loss position assumed by a private market holder, (2) in the case of a covered security that is guaranteed by an approved guarantor or approved multifamily guarantor as a result of the insolvency of the guarantor, or (3) upon the failure of the servicer or guarantor to transfer to the bond administrator for the covered security funds in amounts necessary to make timely payment of principal and interest due on the covered security.
Cost recovery
In the event the Corporation makes a payment on a covered security based on subsection (c)(3), the Corporation shall recover such amount paid, and reasonable costs and expenses, from the servicer or guarantor.
Mortgage Insurance Fund
Establishment
On the agency transfer date, there shall be established the Mortgage Insurance Fund, which the Corporation shall—
maintain and administer;
use to carry out the insurance functions authorized under this Act, including any function or action authorized under section 305; and
invest in accordance with the requirements of paragraph (10).
Deposits
The Mortgage Insurance Fund shall be credited with any—
fee amounts required to be deposited in the Fund under this section;
amounts earned on investments pursuant to paragraph (10);
assessment amounts authorized to be deposited into the Fund under section 405(b); and
assessment amounts required to be deposited into the Fund under section 608(c).
Fees for single-family and multifamily covered securities
In determining the amount of any fee to be charged by the Corporation under this section, the Corporation shall charge a separate fee for single-family covered securities and multifamily covered securities, as appropriate for each asset class.
Separate accounting required
The Corporation shall keep and maintain separate accounting for deposits in the Mortgage Insurance Fund related to fee amounts charged and collected for the insurance of single-family covered securities and multifamily covered securities.
Fiduciary responsibility
The Corporation has the responsibility to ensure that the Mortgage Insurance Fund remains financially sound.
Use and treatment of amounts in the Fund
In general
The Mortgage Insurance Fund shall be solely available to the Corporation for use by the Corporation to carry out the functions authorized by this Act, for the expenses of the Corporation, and for—
compensation of the employees of the Corporation;
purposes of—
funding the CSP; and
establishing the Securitization Platform under section 321, multifamily subsidiaries under section 701, the initial Small Lender Mutual under section 315, and any other entity authorized by this Act that facilitates an orderly transition to the new housing finance system; and
covering all other expenses of the Corporation.
Prohibition
The Mortgage Insurance Fund may not be used or otherwise diverted to cover any other expense of the Federal Government.
Exemption from apportionment
Notwithstanding any other provision of law, amounts in the Mortgage Insurance Fund shall not be subject to apportionment for the purposes of chapter 15 of title 31, United States Code, or under any other authority.
Not Government funds
Amounts in the Mortgage Insurance Fund shall not be construed to be Government or public funds or appropriated money.
Reserve ratio goals for Mortgage Insurance Fund
The Corporation shall—
endeavor to ensure that the Mortgage Insurance Fund attains a reserve ratio—
of 1.25 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title within 5 years of the system certification date; and
of 2.50 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title within 10 years of the system certification date; and
after the expiration of the period referred to in subparagraph (A)(ii), endeavor to ensure that the Mortgage Insurance Fund maintains a reserve ratio of not less than 2.50 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title.
Maintenance of reserve ratio; establishment of fees
Establishment of fees
The Corporation shall charge and collect a fee, and may in its discretion increase or decrease such fee, in connection with any insurance provided under this title to—
achieve and maintain the reserve ratio goals established under paragraph (7); and
fund the operations of the Corporation.
Fee considerations
In establishing fees under subparagraph (A), the Corporation shall consider—
the expected operating expenses of the Mortgage Insurance Fund;
the risk of loss to the Mortgage Insurance Fund in carrying out the requirements under this Act;
the risk presented by, and the loss absorption capacity of, the credit risk-sharing mechanism or guarantee that is provided on the pool of eligible mortgage loans collateralizing the covered security to be insured under this title;
economic conditions generally affecting the mortgage markets;
the extent to which the reserve ratio of the Mortgage Insurance Fund met—
the reserve ratio set for the preceding 12-month period; or
the reserve ratio goals established in paragraph (7); and
any other factors that the Corporation determines appropriate.
Fee uniformity
The fee required under subparagraph (A)—
except as provided in subparagraph (D), shall be set at a uniform amount applicable to all institutions purchasing insurance under this title;
may not vary—
by geographic location; or
by the size of the institution to which the fee is charged; and
may not be based on the volume of insurance to be purchased.
Separate and distinct fees based on credit risk-sharing mechanisms
Nothing in subparagraph (C) shall prohibit or be construed to prohibit the Corporation from charging separate and distinct fees under this paragraph based on the type or form of credit risk-sharing mechanism applicable to the covered security to be insured under this title.
Deposit into Mortgage Insurance Fund
Any fee amounts collected under this paragraph shall be deposited in the Mortgage Insurance Fund.
Full faith and credit
The full faith and credit of the United States is pledged to the payment of all amounts from the Mortgage Insurance Fund which may be required to be paid under any insurance provided under this title.
Investments
In general
The Board of Directors may request the Secretary of the Treasury to invest such portion of amounts in the Mortgage Insurance Fund that, in the judgment of the Board, is not required to meet the current needs of the Corporation.
Eligible investments
Pursuant to a request under subparagraph (A), the Secretary of the Treasury shall invest such portions in obligations of the United States with maturities suitable to the needs of the Corporation, as determined by the Board, and bearing interest at a rate determined by the Secretary of the Treasury, taking into consideration, at the time of the investment, market yields on outstanding marketable obligations of the United States of comparable maturity.
Prohibited investments
Amounts in the Mortgage Insurance Fund may not be invested in any—
covered security insured under this title; or
mortgage-backed security issued by the enterprises.
Mandatory loss review by the Inspector General of the Federal Mortgage Insurance Corporation
In general
If the Mortgage Insurance Fund is required to make any payment of principal or interest, or both, on a covered security with respect to losses incurred on such covered security to any holder of such covered security, the Inspector General of the Federal Mortgage Insurance Corporation shall—
review and make a written report to the Corporation regarding the decision of the Corporation to insure such covered security and the supervision by the Corporation of all market participants involved in the creation, issuance, servicing, guarantee of, or insurance of such covered security, which shall—
ascertain why the covered security resulted in a loss to the Mortgage Insurance Fund; and
make recommendations for preventing any such loss in the future; and
provide a copy of the report required under subparagraph (A) to—
the Comptroller General of the United States;
the appropriate Federal banking agency or State regulatory authority, as appropriate, of any market participant involved in the creation, issuance, servicing, guarantee of, or insurance of such covered security; and
the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.
Deadline for report
The Inspector General of the Federal Mortgage Insurance Corporation shall comply with paragraph (1) as expeditiously as possible, but in no event shall the report required under paragraph (1) be submitted later than 6 months after the date on which the loss was incurred.
Public disclosure required
In general
The Corporation shall disclose any report on losses required under this subsection, upon request under section 552 of title 5, United States Code, without excising—
any portion under section 552(b)(5) of that title; or
any information under paragraph (4) (other than trade secrets) or paragraph (8) of section 552(b) of that title.
Exception
Subparagraph (A) does not require the Corporation to disclose the name of any holder of the covered security, or information from which the identity of such a person could reasonably be ascertained.
Review by Comptroller General
The Comptroller General of the United States shall, under such conditions as the Comptroller General determines to be appropriate, review any report made under paragraph (1) and recommend to the Corporation improvements in the supervision of market participants.
Loan limits; Housing Price Index
Establishment
The Corporation shall establish limitations governing the maximum original principal obligation of eligible single-family mortgage loans that may collateralize a covered security to be insured by the Corporation under this title.
Calculation of amount
The limitation set forth under subsection (a) shall be calculated with respect to the total original principal obligation of the eligible single-family mortgage loan and not merely with respect to the amount insured by the Corporation.
Maximum limits
In general
Except as provided in paragraph (2), the maximum limitation amount under this subsection shall not exceed $417,000 for a mortgage loan secured by a 1-family residence, for a mortgage loan secured by a 2-family residence the limit shall equal 128 percent of the limit for a mortgage loan secured by a 1-family residence, for a mortgage loan secured by a 3-family residence the limit shall equal 155 percent of the limit for a mortgage loan secured by a 1-family residence, and for a mortgage loan secured by a 4-family residence the limit shall equal 192 percent of the limit for a mortgage loan secured by a 1-family residence, except that such maximum limitations shall be adjusted effective January 1 of each year beginning after the effective date of this Act, 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 Chairperson pursuant to subsection (d). 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 upward 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.
High-cost area limits
The limitations set forth in paragraph (1) may be increased by not more than 50 percent with respect to properties located in Alaska, Guam, Hawaii, and the Virgin Islands. 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 limitation for such size residence set forth under paragraph (1), 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.
Housing Price Index
National Index
The Corporation shall establish and maintain a method of assessing a national average single-family house price for use in calculating the loan limits for eligible single-family mortgage loans under subsection (c), and other averages as the Corporation considers appropriate, including—
averages based on different geographic regions; and
an average for houses whose mortgage collateralized single-family covered securities.
Considerations
In establishing the method described under subsection (a), the Corporation may take into consideration the data collected in carrying out the functions described under section 332, and such other data, existing house price indexes, and other measures as the Corporation considers appropriate.
Authority to protect taxpayers in unusual and exigent market conditions
In general
If the Corporation, upon the written agreement of the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury, and in consultation with the Secretary of Housing and Urban Development, determines that unusual and exigent circumstances have created or threaten to create an anomalous lack of mortgage credit availability within the single-family housing market, multifamily housing market, or entire United States housing market that could materially and severely disrupt the functioning of the housing finance system of the United States, the Corporation may, for a period of 6 months—
provide insurance in accordance with section 303 to any single-family covered security regardless of whether such security has satisfied the requirements of section 302; and
establish provisional standards for approved entities, notwithstanding any standard required under subtitle B or section 703, pursuant to section 607.
Considerations
In exercising the authority granted under subsection (a), the Corporation shall consider the severity of the conditions present in the housing markets and the risks presented to the Mortgage Insurance Fund in exercising such authority.
Terms and conditions
Insurance provided under subsection (a) shall be subject to such additional or different limitations, restrictions, and regulations as the Corporation may prescribe.
Bailout strictly prohibited
In exercising the authority granted under subsection (a), the Corporation may not—
provide aid to an approved entity or an affiliate of the approved entity, if such approved entity is in bankruptcy or any other Federal or State insolvency proceeding; or
provide aid for the purpose of assisting a single and specific company to avoid bankruptcy or any other Federal or State insolvency proceeding.
Notice
Not later than 7 days after authorizing insurance or establishing provisional standards under subsection (a), the Corporation shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that includes—
the justification for the exercise of authority to provide such insurance or establish such provisional standards;
evidence that unusual and exigent circumstances have created or threatened to create an anomalous lack of mortgage credit availability within the single-family housing market, multifamily housing market, or entire United States housing market that could materially and severely disrupt the functioning of the housing finance system of the United States; and
evidence that failure to exercise such authority would have undermined the safety and soundness of the housing finance system.
Additional exercise of authority
In general
Subject to the limitation under subsection (g), the authority granted to the Corporation under subsection (a) may be exercised for 2 additional 9-month periods within any given 3-year period, provided that the Corporation, upon the written agreement of the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury, and in consultation with the Secretary of Housing and Urban Development—
determines—
for a second exercise of authority under subsection (a), by an affirmative vote of 2/3 or more of the Board of Directors then serving, that a second exercise of authority under subsection (a) is necessary; or
for a third exercise of authority under subsection (a), by an affirmative vote of 2/3 or more of the Board of Directors then serving, and an affirmative vote of 2/3 or more of the Board of Governors of the Federal Reserve System then serving, that a third exercise of authority under this section is necessary; and
provides notice to Congress, as provided under subsection (e).
Order of exercise of authority
Any additional exercise of authority under this subsection may occur consecutively or non-consecutively.
Limitation
The authority granted to the Corporation under this section may not be exercised more than 3 times in any given 3-year period, which 3-year period shall commence upon the initial exercise of authority under subsection (a).
Normalization and reduction of risk
Following any exercise of authority under this section, the Corporation shall—
establish a timeline for approved entities to meet the approval standards set forth in this Act; and
in a manner and pursuant to a timeline that will minimize losses to the Mortgage Insurance Fund, establish a program to either—
sell, in whole or in part, the first loss position on covered securities issued pursuant to this section to private market holders; or
transfer for value to approved entities, or work with approved entities to sell, in whole or in part, the first lost position on covered securities issued pursuant to this section.
Authority to respond to sustained national home price decline
Authority
In the event of a significant decline of national home prices, in at least 2 consecutive calendar quarters, the Corporation, by an affirmative vote of 2/3 or more of the Board of Directors then serving, may for a period of 6 months permit the transfer of guarantees of eligible mortgage loans that secure covered securities if such eligible mortgage loans are refinanced, regardless of the value of the underlying collateral securing such eligible mortgage loans.
Additional exercise of authority
The authority granted to the Corporation under paragraph (1) may be exercised for additional 6-month periods, if upon each additional extension of such authority there is an affirmative vote of 2/3 or more of the Board of Directors then serving.
Limitation
The Corporation shall not provide insurance under this section to any covered security that includes mortgage loans that do not meet the definition of an eligible mortgage loan, as defined in this Act, except for mortgage loans refinanced from eligible mortgage loans in covered securities.
Rule of construction
No provision in this section shall be construed as permitting the Corporation to lower any other requirement related to the requirements set forth under the definition of an eligible mortgage loan.
General powers
Corporate powers
The Federal Mortgage Insurance Corporation shall have the power—
to adopt, alter, and use a corporate seal, which shall be judicially noticed;
to enter into, execute, and perform contracts, leases, cooperative agreements, or other transactions, on such terms as it may deem appropriate, with any agency or instrumentality of the United States, or with any political subdivision thereof, or with any person, firm, association, or corporation;
to execute, in accordance with its bylaws, all instruments necessary or appropriate in the exercise of any of its powers;
in its corporate name, to sue and to be sued, and to complain and to defend, in any court or tribunal of competent jurisdiction, Federal or State, but no attachment, injunction, or other similar process, mesne or final, shall be issued against the property of the Corporation;
to conduct its business without regard to any qualification or similar statute in any State of the United States;
to lease, purchase, or acquire any property, real, personal, or mixed, or any interest therein, to hold, rent, maintain, modernize, renovate, improve, use, and operate such property, and to sell, for cash or credit, lease, or otherwise dispose of the same, at such time and in such manner as and to the extent that it may deem necessary or appropriate;
to prescribe, repeal, and amend or modify, rules, regulations, or requirements governing the manner in which its general business may be conducted;
to accept gifts or donations of services, or of property, real, personal, or mixed, tangible, or intangible, in aid of any of its purposes;
to appoint and supervise personnel employed by the Corporation;
to establish and maintain divisions, units, or other offices within the Corporation, including those established in sections 207, 208, 209, and 211 in order to carry out the responsibilities of this Act, and to satisfy the requirements of other applicable law; and
to manage the affairs of the Corporation and conduct the business of the Corporation, as necessary.
Litigation authority
In general
In enforcing any provision of this Act, any regulation or order prescribed under this Act, or any other provision of law, rule, regulation, or order, or in any other action, suit, or proceeding to which the Corporation is a party or in which the Corporation is interested, and in the administration of conservatorships and receiverships, the Corporation may act in the Corporation’s own name and through attorneys or other agents acting on behalf of the Corporation.
Subject to suit
Except as otherwise provided by law, the Corporation shall be subject to suit (other than suits for claims for money damages) by a regulated entity or market participant with respect to any matter under this Act or any other applicable provision of law, rule, order, or regulation under this Act, in the United States district court for the judicial district in which the regulated entity or market participant has its principal place of business, or in the United States District Court for the District of Columbia, and the Corporation may be served with process in the manner prescribed by the Federal Rules of Civil Procedure.
Expenditures
Except as may be otherwise provided in this title, the Corporation shall determine the necessity for, and the character and amount of its obligations and expenditures, and the manner in which they shall be incurred, allowed, paid, and accounted for.
Exemption from certain taxes
The Corporation, including its franchise, capital, reserves, surplus, mortgage loans or other security holdings, 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, except that any real property of the Corporation shall be subject to State, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.
Exclusive use of name
No individual, association, partnership, or corporation, except the body corporate named under
section 201, shall hereafter use the words Federal Mortgage Insurance Corporation
or any combination of such words, as the name or a part thereof under which such individual,
association, partnership, or corporation shall do business. Violations of
the foregoing sentence may be enjoined by any court of general
jurisdiction at the suit of the proper body corporate named under section
201. In any such suit,
the plaintiff may recover any actual damages flowing from such violation,
and, in addition, shall be entitled to punitive damages (regardless of the
existence or nonexistence of actual damages) of not exceeding $1,000 for
each day during which such violation is committed or repeated.
Fiscal agents
The Federal Reserve banks are authorized and directed to act as depositories, custodians, and fiscal agents for the Corporation, for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon, and the Corporation may itself act in such capacities, for its own account or as fiduciary, and for the account of others.
Other powers
The Corporation is authorized to assess and collect fees on regulated entities and approved entities, including for applications, examinations, and other purposes, as authorized by this Act.
Federal Home Loan Bank assessment
The Corporation shall have the authority to assess a fee on the Federal Home Loan Banks to cover the necessary costs related to supervising the Federal Home Loan Banks. The costs associated with the secondary market activities of the Federal Home Loan Banks pursuant to section 312 shall be covered by the fee charged pursuant to this subsection.
Rule of construction related to fair housing
Nothing in this Act shall be construed as authorizing the Corporation to waive, repeal, amend, or modify requirements relating to fair housing law, including those requirements under the Fair Housing Act (42 U.S.C. 3601 et seq.) and the Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.).
Exemptions
Securities exempt from Securities and Exchange Commission regulation
Covered securities
In general
All securities insured or guaranteed by the Corporation shall, to the same extent as securities that are direct obligations of or obligations guaranteed as to principal or interest by the United States, be deemed to be exempt securities within the meaning of the laws administered by the Securities and Exchange Commission.
Conforming amendment
The first sentence of section 3(a)(2) of the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is
amended by inserting or any security insured or guaranteed by the Federal Mortgage Insurance Corporation;
after Federal Reserve bank;
.
Credit risk-sharing mechanisms
Section 27B(c) of the Securities Act of 1933 (15 U.S.C. 77z-2a(c)) is amended—
in paragraph (1), by striking or
at the end;
in paragraph (2), by striking the period at the end and inserting ; or
; and
by adding at the end the following:
purchases or sales of any asset-backed security that is a credit risk-sharing mechanism approved by the Federal Mortgage Insurance Corporation in accordance with section 302 or section 703(c) of the Housing Finance Reform and Taxpayer Protection Act of 2014, which credit risk-sharing mechanism is designed to be used or is used, as determined by the Federal Mortgage Insurance Corporation, by a private market holder to assume losses and to reduce the specific risks arising from losses realized under such credit risk-sharing mechanism associated with any pool of eligible mortgage loans that collateralizes a covered security insured in accordance with section 303 or 305 of that Act.
.
QRM exemption
Section 15G(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–11(e)) is amended—
in paragraph (3)(B)—
by striking Association, the
and inserting Association and the
; and
by striking and the Federal home loan banks
; and
by adding at the end the following:
Covered securities insured by the Federal Mortgage Insurance Corporation
Notwithstanding any other provision of this section, the requirements of this section shall not apply to any covered security, as such term is defined under section 2 of the Housing Finance Reform and Taxpayer Protection Act of 2014, insured or guaranteed by the Federal Mortgage Insurance Corporation or any institution that is subject to the supervision of the Federal Mortgage Insurance Corporation.
.
Counterparties exempt from the Commodity Exchange Act
Section 1a(10) of the Commodity Exchange Act (7 U.S.C. 1a(10)) is amended by adding at the end the following:
Exemption
Solely as it relates to the specific role of a counterparty in connection with the swap transaction described in this paragraph, the term commodity pool does not include any counterparty that enters into any swap for purposes of structuring a credit risk-sharing mechanism that is approved by the Federal Mortgage Insurance Corporation in accordance with section 302 or section 703(c) of the Housing Finance Reform and Taxpayer Protection Act of 2014, which credit risk-sharing mechanism is designed to be used or is used, as determined by the Federal Mortgage Insurance Corporation, by a private market holder to assume losses and to reduce the specific risks arising from losses realized under such credit risk-sharing mechanism associated with any pool of eligible mortgage loans that collateralizes a covered security insured in accordance with section 303 or 305 of that Act.
.
Regulatory consultation and coordination
Consultation permitted
The Corporation may, in carrying out any duty, responsibility, requirement, or action authorized under this Act, consult with the Federal regulatory agencies, any individual Federal regulatory agency, the Secretary of the Treasury, the Secretary of Housing and Urban Development, any State banking regulator, any State insurance regulator, and any other State agency, as the Corporation determines necessary and appropriate.
Coordination required
The Corporation shall, as required by this Act, in carrying out any duty, responsibility, requirement, or action authorized under this Act, coordinate with the Federal regulatory agencies, any individual Federal regulatory agency, the Secretary of the Treasury, the Secretary of Housing and Urban Development, any State banking regulator, any State insurance regulator, and any other State agency.
Avoidance of duplication
To the fullest extent possible, the Corporation shall—
avoid duplication of examination activities, reporting requirements, and requests for information;
rely on examination reports made by other Federal or State regulatory agencies relating to an approved entity and its subsidiaries, if any; and
ensure that approved entities are not subject to conflicting supervisory demands by the Corporation and other Federal regulatory agencies.
Protection of privileges
In general
Pursuant to the authorities provided under subsections (a) and (b), to facilitate the consultative process and coordination, the Corporation may share information with the Federal regulatory agencies, any individual Federal regulatory agency, the Secretary of the Treasury, the Secretary of Housing and Urban Development, any State bank supervisor, any State insurance regulator, any other State agency, or any foreign banking authority, on a one-time, regular, or periodic basis, as determined by the Corporation, regarding the capital assets and liabilities, financial condition, risk management practices, or any other practice of any market participant.
Privilege preserved
Information shared by the Corporation pursuant to paragraph (1) shall not be construed as waiving, destroying, or otherwise affecting any privilege or confidential status that any market participant or any other person may claim with respect to such information under Federal or State law as to any person or entity other than such agencies, agency, supervisor, or authority.
Rule of construction
No provision of this subsection may be construed as implying or establishing that—
any person waives any privilege applicable to information that is shared or transferred under any circumstance to which this subsection does not apply; or
any person would waive any privilege applicable to any information by submitting the information directly to the Federal regulatory agencies, any individual Federal regulatory agency, any State bank supervisor, any State insurance regulator, any other State agency, or any foreign banking authority, but for this subsection.
Federal and State authority preserved
Unless otherwise expressly provided by this section, no provision of this section shall limit or be construed to limit, in any way, the existing authority of any Federal agency or State regulatory authority.
Authority to issue regulations
General authority
The Corporation may prescribe such regulations and issue such guidelines, orders, requirements, or standards as are necessary to—
carry out this Act, or any amendment made by this Act; and
ensure—
competition among approved entities in the secondary mortgage market;
liquidity in the secondary mortgage market and the forward execution market for eligible single-family mortgage loans and single-family covered securities, such as the To-Be-Announced market; and
mitigation of systemic risk in the secondary mortgage market.
Capital standards
In general
For each type of covered entity the Corporation shall establish, by regulation, capital standards and related solvency standards necessary to implement the provisions of this Act.
Definitions
In general
The regulations required under this subsection shall define all such terms as are necessary to carry out the purposes of this subsection.
Considerations in defining instruments and contracts that qualify as capital
In defining instruments and contracts that qualify as capital pursuant to subparagraph (A), the Corporation—
shall include such instruments and contracts that will absorb losses before the Mortgage Insurance Fund; and
may assign significance to those instruments and contracts based on the nature and risks of such instruments and contracts.
Considerations in defining capital ratios
Solely for the purposes of calculating a capital ratio appropriate to the business model of the applicable entity pursuant to subparagraph (A), the Corporation shall consider for the denominator—
total assets;
total liabilities;
risk in force; or
unpaid principal balance.
Designed to ensure safety and soundness
The capital and related solvency standards established under this subsection shall be designed to—
ensure the safety and soundness of a covered entity;
minimize the risk of loss to the Mortgage Insurance Fund;
in consultation and coordination with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration, reduce the potential for regulatory arbitrage between capital standards for covered entities and capital standards promulgated by Federal regulatory agencies for insured depository institutions and their affiliates; and
be specifically tailored to accommodate a diverse range of business models that may be employed by covered entities.
Supplemental capital requirements
In order to prevent or mitigate risks to the secondary mortgage market of the United States that could arise from the material financial distress or failure, or ongoing activities, of covered entities that are large approved aggregators or large approved guarantors that engage in covered guarantee transactions, the Corporation, by regulation—
shall establish supplemental capital requirements for covered entities that are large approved aggregators or large approved guarantors; and
may establish such other standards for covered entities that are large approved aggregators or large approved guarantors that the Corporation determines necessary or appropriate.
Market share limitation for certain large entities
The Corporation shall establish, by regulation, market share limitations for large approved aggregators and large approved guarantors that would take effect only in the event the Corporation has reason to believe the supplemental standards established under subsection (b)(4) are insufficient to prevent or mitigate risks to the secondary mortgage market of the United States that could arise from the material financial distress or failure, or ongoing activities, of such approved aggregators and approved guarantors.
Recognition of distinctions between the approved entities and the Federal Home Loan Banks
In general
Prior to promulgating any regulation or taking any other formal or informal action of general applicability and future effect relating to the Federal Home Loan Banks, including the issuance of an advisory document or examination guidance, the Chairperson, in consultation with the Office of Federal Home Loan Bank Supervision, shall consider the differences between the Federal Home Loan Banks and approved entities with respect to—
the Banks’—
cooperative ownership structure;
mission of providing liquidity to its members;
affordable housing and community development mission;
capital structure; and
joint and several liability; and
any other differences that the Corporation considers appropriate.
Capital considerations
The Corporation, in coordination with the Office of Federal Home Loan Bank Supervision, shall establish capital standards, as required under section 309(b), with respect to a Federal Home Loan Bank, or subsidiary or joint office thereof, that is approved as an aggregator under section 312, that—
are adequate to support the role of a Federal Home Loan Bank as a covered entity, consistent with the safe and sound operations of the Bank or Banks involved; and
do not adversely impact the traditional liquidity and advance business of the Federal Home Loan Bank System or the marketability or creditworthiness of Federal Home Loan Bank consolidated obligations.
Regulations relating to force-placed insurance
In general
The Corporation shall, by regulation, set standards for the purchase of force-placed insurance by market participants.
Limitation
No standards developed, adopted, or published under paragraph (1) shall concern the regulation of the business of insurance or preempt any State law, regulation, or procedure concerning the regulation of the business of insurance.
Use and protection of personally identifiable information
Privacy considerations
In collecting information from any person, in publicly releasing information held by the Corporation, or in requiring approved entities to publicly report information, the Corporation shall take steps to ensure that proprietary, personal, or confidential consumer information that is protected from public disclosure under section 552(b) or 552a of title 5, United States Code, or any other provision of law, is not made public.
Treatment of approved entities
With respect to the application of any provision of the Right to Financial Privacy Act of 1978 to a
disclosure by an approved entity subject to this subsection, the approved
entity shall be treated as if it were a financial institution
as defined in section 1101 of that Act (12 U.S.C. 3401).
Non disclosure
In general
Unless otherwise specified by this Act, any personally identifiable information obtained or maintained by the Corporation in connection with any supervision or enforcement authority or function, including the Office of General Counsel and Office of the Inspector General of the Federal Mortgage Insurance Corporation, may not be disclosed to any non supervisory or non enforcement office, division, or employee of the Corporation, or to any other Federal or State agency unless—
the information is necessary and appropriate for such office, division, or employee of the Corporation to comply with this Act, and the office, division, or employee cannot reasonably obtain the information through the normal course of business of such office, division, or employee;
the other Federal or State agency has satisfied any conditions of information sharing that the Corporation may establish, including treatment of personally identifiable information and sharing of information that shall conform to the standards for protection of the confidentiality of personally identifiable information and for data integrity and security that are applicable to Federal agencies; or
the records are relevant to a legitimate law enforcement inquiry, or intelligence or counterintelligence activity, investigation, or analysis related to international terrorism within the jurisdiction of the receiving entity.
Protection of personally identifiable information by specific offices
Any office created under section 207(a)(1)(B) shall—
develop standards regarding treatment and confidentiality of personally identifiable information and the collection and sharing of information that are tailored to the purpose or mission of the office; and
obtain approval from the Chairperson of the standards developed under clause (i) prior to the operation of the office.
Consumer Privacy
The Corporation shall not obtain from an approved entity any personally identifiable financial information about a consumer from the financial records of the approved entity, except—
if the financial records are reasonably described in a request by the Corporation and the consumer provides written permission for the disclosure of such information by an approved entity to the Corporation; or
as may be specifically permitted or required under other applicable provisions of law and in accordance with the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.).
Option for approved guarantors and approved aggregators
Establishment of process for approval
The Corporation may, if it determines necessary or appropriate, establish a process and criteria for approved guarantors and approved aggregators to apply to the Corporation for approval to operate a cash window for the purchase of individual eligible single-family mortgage loans.
Requirements
If the Corporation establishes a process and criteria under paragraph (1), the Corporation—
may grant approval to an approved guarantor or an approved aggregator that applies to operate a cash window for the purchase of individual eligible single-family mortgage loans only if the Corporation determines that—
the approved guarantor or approved aggregator meets the criteria established under paragraph (1); and
the operation of the cash window would not pose a risk to the Mortgage Insurance Fund; and
to ensure the safety and soundness of each approved guarantor and approved aggregator, shall establish standards for the regulation, supervision, and operation of each cash window that an approved guarantor or approved aggregator is approved to operate under this paragraph.
Equivalency in protection of the Mortgage Insurance Fund
In order to protect the Mortgage Insurance Fund and promote multiple sources of first loss positions, the Corporation shall seek to ensure equivalent loss absorption capacity between approved credit risk-sharing mechanisms pursuant to section 302 and capital standards for approved guarantors pursuant to section 311.
Approval and supervision of approved entities for single-family activities
Approval and supervision of guarantors
Standards for approval of guarantors
In general
The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of guarantors to guarantee the timely payment of principal and interest on securities collateralized by eligible single-family mortgage loans and insured by the Corporation.
Required standards
The standards required under paragraph (1) shall include—
the financial history and condition of the guarantor;
a requirement that the guarantor maintain capital levels as defined by the Corporation, pursuant to subsection (g);
the capability of the management of the guarantor;
the general character and fitness of the officers and directors of the guarantor, including the compliance history of the guarantor’s officers and directors with Federal and State laws and the rules and regulations promulgated by self-regulatory organizations (as defined in section 3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)), as applicable;
the risk presented by the guarantor to the Mortgage Insurance Fund;
the adequacy of insurance and fidelity coverage of the guarantor;
the ability of the guarantor to—
at the discretion of the guarantor, transfer investment risk and credit risk to private market holders in the single-family market in accordance with the credit risk-sharing mechanisms approved by the Corporation under section 302;
create mechanisms to guarantee multi-lender pools; and
ensure that eligible single-family mortgage loans that collateralize a single-family covered security insured under this title are originated in compliance with the requirements of this Act;
the capacity of the guarantor to take the first loss position;
that the guarantor has the capacity to guarantee eligible single-family mortgage loans in a manner that furthers the purposes of the Corporation described in section 201(b)(5);
a requirement that the guarantor timely issue publicly available audited financial statements on an annual basis prepared in accordance with generally accepted accounting principles used in the industry;
that the guarantor is in compliance with section 210(a)(3);
that the guarantor has substantial analytical capabilities to effectively manage credit risk;
that the guarantor does not originate eligible single-family mortgage loans and is not an affiliate of a person that actively engages in the business of originating eligible single-family mortgage loans; and
any other standard the Corporation determines necessary to protect the Mortgage Insurance Fund.
Rule of construction
Nothing in subparagraph (I) of paragraph (2) shall be construed to prevent the Corporation from approving a small or specialty guarantor, provided that the guarantor has the capacity to adequately diversify its risk to meet appropriate safety and soundness concerns.
Consultation and coordination
To promote consistency and minimize regulatory conflict, the Corporation shall consult and coordinate with appropriate Federal and State regulators and officials when developing standards pursuant to this subsection.
Application and approval
Application process
In general
The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of a guarantor under this section.
Application review
The Corporation shall establish internal timelines for its processing of an application under this section, including timelines for any action to approve or to deny an application under this section.
Prohibition on control by insured depository institutions or affiliates of insured depository institutions
In general
It shall be unlawful for an insured depository institution or an affiliate of an insured depository institution to control an approved guarantor.
Rule of construction regarding control
For purposes of this subparagraph, any insured depository institution or affiliate of an insured depository institution has control over an approved guarantor if the company directly or indirectly or acting through 1 or more other persons owns, controls, or has power to vote 10 percent or more of any class of voting shares of the approved guarantor.
Approval
The Corporation may approve any application made pursuant to paragraph (1), provided the guarantor meets the standards established under subsection (a).
Denial
The Corporation shall have the authority to deny any application made pursuant to paragraph (1) if an officer or director of the guarantor has, at any time prior to the date of the approval of such application, been—
subject to a statutory disqualification pursuant to section 3(a)(39) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(39)); or
suspended, removed, or prohibited from participation pursuant to section 8(g) of the Federal Deposit Insurance Act (12 U.S.C. 1818(g)), prohibited from certain action pursuant to paragraphs (6) or (7) of section 8(e) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)), subject to an action resulting in a written agreement or other written statement under section 8(u)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(u)(1)), for which a violation may be enforced by an appropriate Federal banking agency, or subject to any final order issued with respect to any administrative enforcement proceeding initiated by such agency under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818).
Notice and publication
The Corporation shall—
provide prompt notice to a guarantor of the approval or denial of any application of the guarantor to become an approved guarantor under this section;
publish a notice in the Federal Register upon approval of any guarantor; and
maintain an updated list of approved guarantors on the website of the Corporation.
Requirement to maintain approval status
Authority to issue order
If the Corporation determines that an approved guarantor no longer meets the standards for such approval or violates a requirement under this Act, including any standard, regulation, or order promulgated in accordance with this Act, the Corporation may—
suspend or revoke the approved status of the approved guarantor; or
take any other action with respect to such approved guarantor as may be authorized under this Act.
Rule of construction
The suspension or revocation of the approved status of an approved guarantor under this section shall have no effect on the status as a covered security of any covered security collateralized by eligible mortgage loans with which the approved guarantor contracted prior to the suspension or revocation.
Publication
The Corporation shall—
promptly publish a notice in the Federal Register upon suspension or revocation of the approval of any approved guarantor; and
maintain an updated list of such approved guarantors on the website of the Corporation.
Definition
In this subsection, the term violate includes any action, taken alone or with others, for or toward causing, bringing about, participating in, counseling, or aiding or abetting, a violation of the requirements under this Act.
Prudential standards for supervision
The Corporation shall prescribe prudential standards for approved guarantors in order to—
ensure—
the safety and soundness of approved guarantors; and
the maintenance of approval standards by approved guarantors; and
minimize the risk presented to the Mortgage Insurance Fund.
Reports and examinations
For purposes of determining whether an approved guarantor is fulfilling the requirements under this Act, the Corporation shall have the authority to require reports from and examine an approved guarantor, in the same manner and to the same extent as the Federal Deposit Insurance Corporation has with respect to an insured depository institution under the provisions of subsection (a) of section 9 of the Federal Deposit Insurance Act (12 U.S.C. 1819).
Enforcement
The Corporation shall have the authority to enforce the provisions of this Act with respect to an approved guarantor, in the same manner and to the same extent as the Federal Deposit Insurance Corporation has with respect to an insured depository institution under the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818).
Capital standards
In general
Pursuant to the requirement to establish capital and related solvency standards under section 309(b), the Corporation shall establish standards for approved guarantors that require an approved guarantor to—
hold 10 percent capital; and
maintain solvency levels adequate for the approved guarantor to withstand losses that might be incurred by the approved guarantor in a period of economic stress, including national and regional home price declines, such as those observed during moderate to severe recessions in the United States.
Risk-sharing considerations
For purposes of paragraph (1), the Corporation shall consider the extent, amount, and form of risk-sharing and risk mitigation through the use by approved guarantors of credit risk-sharing mechanisms approved pursuant to section 302(b)(4). The Corporation shall allow such risk-sharing and risk mitigation to fulfill required amounts of capital to be held under paragraph (1)(A) such that it ensures an equivalent amount of loss absorption capacity as required under section 302(a)(1)(B) while maintaining an appropriate structure of capital as determined by the Corporation.
Stress tests
The Corporation shall conduct appropriate stress tests of each approved guarantor that has total assets of more than $10,000,000,000, provided that such stress tests shall be—
specifically tailored to the business model of the approved guarantor; and
utilized to—
ensure the safety and soundness of the approved guarantor; and
minimize the risk the approved guarantor may present to the Mortgage Insurance Fund.
Resolution authority for failing guarantors
In general
Notwithstanding any other provision of Federal law, the law of any State, or the constitution of any State, the Corporation shall—
have the authority to act, in the same manner and to the same extent, with respect to an approved guarantor as the Federal Deposit Insurance Corporation has with respect to an insured depository institution under subsections (c) through (s) of section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821), section 12 of the Federal Deposit Insurance Act (12 U.S.C. 1822), and section 13 of the Federal Deposit Insurance Act (12 U.S.C. 1823), while tailoring such actions to the specific business model of the approved guarantor, as may be necessary to properly exercise such authority under this subsection;
in carrying out any authority provided in subparagraph (A), act, in the same manner and to the same extent, with respect to the Mortgage Insurance Fund as the Federal Deposit Insurance Corporation may act with respect to the Deposit Insurance Fund under the provisions of the Federal Deposit Insurance Act set forth in subparagraph (A);
prescribe regulations governing the applicable rights, duties, and obligations of an approved guarantor placed into resolution under this subsection, its creditors, counterparties, and other persons, as the Corporation deems necessary to properly exercise the authority provided in subparagraph (A);
consistent with the authorities provided in subparagraph (A), immediately place an insolvent approved guarantor into receivership; and
upon placing an approved guarantor into receivership, treat single-family covered securities insured by the Corporation under section 303 in the same manner as the Federal Deposit Insurance Corporation treats deposit liabilities under section 11(d)(11)(A)(ii) of the Federal Deposit Insurance Act and insured deposits under section 11(f) of the Federal Deposit Insurance Act, where the Corporation shall have the same right of subrogation as the Federal Deposit Insurance Corporation has under section 11(g) of the Federal Deposit Insurance Act.
Least-cost resolution required
The Corporation may not exercise any authority under paragraph (1) with respect to any approved guarantor unless the total amount of the expenditures by the Corporation and obligations incurred by the Corporation in connection with the exercise of any such authority with respect to such approved guarantor is the least costly to the Mortgage Insurance Fund, consistent with the least cost approach specified in the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), of all possible methods for meeting the Corporation's obligations under this Act and expeditiously concluding its resolution activities, subject to section 13 of the Federal Deposit Insurance Act where the Corporation and the Board of Directors shall have the same authority as the Federal Deposit Insurance Corporation and the Federal Deposit Insurance Corporation’s board of directors.
Taxpayer protection
The Corporation, in carrying out any authority provided in this subsection, shall prescribe regulations to ensure that any amounts owed to the United States, unless the United States agrees or consents otherwise, shall have priority following administrative expenses of the receiver when satisfying unsecured claims against an approved guarantor, or the receiver therefor, that are proven to the satisfaction of the receiver.
Hearing
Upon notice of denial of an application for approval under subsection (b) or upon a notice of suspension or revocation of the approved status of an approved guarantor under subsection (c), the applicant or approved guarantor shall be afforded a hearing under subsection (h) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818(h)), in the same manner and to the same extent as if the Corporation were the appropriate Federal banking agency, provided that the approved guarantor submits a request to the Corporation for a hearing not later than 10 days after the date on which the notice is published under subsection (b)(3) or (c)(3).
Other activities
An approved guarantor shall be prohibited from being an approved aggregator.
Provision of pool level insurance
Subject to such standards as the Corporation may provide, an approved guarantor may provide insurance or other credit enhancement on a pool of eligible single-family mortgage loans collateralizing a single-family covered security insured under this title.
Prohibited activity
An approved guarantor may not—
originate eligible single-family mortgage loans; or
be an affiliate of a person that actively engages in the business of originating eligible single-family mortgage loans.
Guarantors required to pay claims
Subject to such standards as the Corporation may provide, an approved guarantor may not for any reason withhold payment of funds that would ensure holders of single-family covered securities receive timely payment of principal and interest on single-family covered securities. The Corporation shall by regulation develop a process for the mediation and resolution of disputed payment amounts.
Approval and supervision of aggregators
Standards for approval of mortgage aggregators
In general
The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of mortgage aggregators to deliver eligible single-family mortgage loans to the Securitization Platform for securitization by such aggregator as a single-family covered security.
Required standards
The standards required under paragraph (1) shall include standards with respect to the ability of mortgage aggregator to—
aggregate eligible single-family mortgage loans into pools, including multi-lender pools, as appropriate;
transfer investment risk and credit risk to private market participants in accordance with the credit risk-sharing mechanisms approved by the Corporation under section 302;
ensure equitable access to the secondary mortgage market for single-family covered securities for all institutions regardless of size or geographic location; and
ensure that eligible single-family mortgage loans that collateralize a single-family covered security insured under this title are originated in compliance with the requirements of this Act.
Additional required standards
The standards required under paragraph (1) shall also include—
the financial history and condition of the mortgage aggregator;
the adequacy of the capital structure of the mortgage aggregator;
the capability of the management of the mortgage aggregator;
the general character and fitness of the officers and directors of the mortgage aggregator, including the compliance history of the mortgage aggregator’s officers and directors with Federal and State laws and the rules and regulations promulgated by self-regulatory organizations (as defined in section 3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)), as applicable;
the risk presented by the mortgage aggregator to the Mortgage Insurance Fund;
the adequacy of insurance and fidelity coverage of the mortgage aggregator;
a requirement that the mortgage aggregator submit audited financial statements to the Corporation;
that the mortgage aggregator has the capacity to aggregate mortgage loans in a manner that furthers purposes of the Corporation described in section 201(b)(5);
that the mortgage aggregator is in compliance with section 210(a)(3); and
any other standard the Corporation determines necessary to protect the Mortgage Insurance Fund.
Rule of construction
Nothing in subparagraph (H) of paragraph (3) shall be construed to prevent the Corporation from approving a small or specialty mortgage aggregator, provided that the mortgage aggregator has the capacity to adequately diversify its risk to meet appropriate safety and soundness concerns of the Corporation.
Consultation and coordination
To promote consistency and minimize regulatory conflict, the Corporation shall consult and coordinate with appropriate Federal and State regulators and officials when developing standards pursuant to this subsection.
Application and approval
Application process
In general
The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of a mortgage aggregator under this section.
Application review
The Corporation shall establish internal timelines for its processing of an application under this section, including timelines for any action to approve or to deny an application under this section.
Approval
The Corporation may approve any application made pursuant to paragraph (1), provided the mortgage aggregator meets the standards established under subsection (a).
Denial
The Corporation shall have the authority to deny any application made pursuant to paragraph (1) if an officer or director of the mortgage aggregator has, at any time prior to the date of the approval of such application, been—
subject to a statutory disqualification pursuant to section 3(a)(39) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(39)); or
suspended, removed, or prohibited from participation pursuant to section 8(g) of the Federal Deposit Insurance Act (12 U.S.C. 1818(g)), prohibited from certain action pursuant to paragraphs (6) or (7) of section 8(e) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)), subject to an action resulting in a written agreement or other written statement under section 8(u)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(u)(1)), for which a violation may be enforced by an appropriate Federal banking agency, or subject to any final order issued with respect to any administrative enforcement proceeding initiated by such agency under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818).
Notice and publication
The Corporation shall—
provide prompt notice to a mortgage aggregator of the approval or denial of any application of the mortgage aggregator to become an approved aggregator under this section;
publish a notice in the Federal Register upon approval of any mortgage aggregator; and
maintain an updated list of approved aggregators on the website of the Corporation.
Requirement to maintain approval status
Authority to issue order
If the Corporation determines that an approved aggregator no longer meets the standards for such approval or violates a requirement under this Act, including any standard, regulation, or order promulgated in accordance with this Act, the Corporation may—
suspend or revoke the approved status of the approved aggregator; or
take any other action with respect to such approved aggregator as may be authorized under this Act.
Rule of construction
The suspension or revocation of the approved status of an approved aggregator under this section shall have no effect on the status as a covered security of any covered security collateralized by eligible mortgage loans with which the approved aggregator contracted prior to the suspension or revocation.
Publication
The Corporation shall—
promptly publish a notice in the Federal Register upon suspension or revocation of the approval of any approved aggregator; and
maintain an updated list of such approved aggregators on the website of the Corporation.
Definition
In this subsection, the term violate includes any action, taken alone or with others, for or toward causing, bringing about, participating in, counseling, or aiding or abetting, a violation of the requirements under this Act.
Prudential standards for supervision
In general
Subject to subsection (k)(1), the Corporation shall prescribe prudential standards for approved aggregators in order to—
ensure—
the safety and soundness of approved aggregators; and
the maintenance of approval standards by approved aggregators; and
minimize the risk presented to the Mortgage Insurance Fund.
Recognition of distinctions between aggregators that are insured depository institutions, affiliates of insured depository institutions, and those that are not
In carrying out the requirements under paragraph (1), the Corporation shall—
distinguish between prudential standards for approved aggregators that are insured depository institutions, approved aggregators that are affiliates of insured depository institutions, and approved aggregators that are neither insured depository institutions nor affiliates of insured depository institutions; and
consult and coordinate with Federal and State banking agencies when establishing prudential standards for approved aggregators that are insured depository institutions and approved aggregators that are affiliates of insured depository institutions, in order to minimize duplication of and conflicts with the prudential standards set by the appropriate Federal or State banking agencies of insured depository institutions or the affiliates of insured depository institutions.
Rule of construction
Nothing in this section shall supersede the prudential standards established by the appropriate Federal banking agencies.
Reports and examinations
For purposes of gathering information to determine whether an approved aggregator is fulfilling the requirements under this Act, the Corporation shall have the authority to require reports from and examine an approved aggregator as follows:
Not insured depository institutions or affiliates
For an approved aggregator that is neither an insured depository institution nor an affiliate of an insured depository institution, the Corporation shall have the authority to require reports from and examine an approved aggregator, in the same manner and to the same extent as the Federal Deposit Insurance Corporation has with respect to an insured depository institution under the provisions of subsection (a) of section 9 of the Federal Deposit Insurance Act (12 U.S.C. 1819).
Insured depository institutions and affiliates
For an approved aggregator that is an insured depository institution or an affiliate of an insured depository institutions:
Use of existing reports to reduce examinations
To the fullest extent possible, the Corporation shall—
rely on the examinations, inspections, and reports of the appropriate Federal or State banking agencies;
avoid duplication of examination activities, reporting requirements, and requests for information; and
ensure that the depository institution holding company and the subsidiaries of the depository institution holding company are not subject to conflicting supervisory demands by the Corporation and appropriate Federal and State banking agencies.
Examination authority
If the Corporation determines that the examinations, inspections, and reports obtained pursuant to subparagraph (A) are insufficient for the Corporation to adequately supervise an approved aggregator for compliance with this Act, the Corporation shall have the authority to require reports from and examine the approved aggregator for compliance with this Act, in the same manner and to the same extent as the Board of Governors of the Federal Reserve System has with respect to a subsidiary of a bank holding companyunder the provisions of paragraphs (1) and (2) of subsection (c) of section 5 of the Bank Holding Company Act (12 U.S.C. 1844).
Regulatory notice
Regulatory notice
Before commencing an examination of an approved aggregator under this paragraph, the Corporation shall provide reasonable notice to, and coordinate with, the appropriate Federal or State banking agency or State regulatory agency.
Rule of construction
Nothing in this Act shall limit the authority of the Corporation to require reports of and examine an approved aggregator—
to verify the sale of, and funds received from, the first loss position; and
when the Corporation becomes aware—
of a material threat to the safety and soundness of the approved aggregator;
that the approved aggregator is in material violation of this Act or the rules promulgated by the Corporation pursuant to this Act; or
that the activities of the approved aggregator threaten the financial stability of the housing finance system or the Mortgage Insurance Fund.
Enforcement
The Corporation shall have the authority to enforce the provisions of this Act with respect to an approved aggregator, in the same manner and to the same extent as the Federal Deposit Insurance Corporation has with respect to an insured depository institution under the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), provided that to the extent that the Corporation and an appropriate Federal banking agency are each authorized to enforce prudential standards with respect to an approved aggregator that is an insured depository institution or an affiliate of an insured depository institution, the appropriate Federal banking agency shall have primary authority to enforce such standards.
Capital standards
For approved aggregators that are neither an insured depository institution nor an affiliate of an insured depository institution the following shall apply:
In general
Pursuant to the requirement to establish capital and related solvency standards under section 309(b), the Corporation shall establish standards for approved aggregators that require an approved aggregator—
to hold capital in an amount comparable to that which is required to be held by insured depository institutions and their affiliates with respect to their applicable aggregating activities; and
to maintain solvency levels adequate for the approved aggregator to withstand losses that might be incurred by the approved aggregator in a period of economic stress, including national and regional home price declines, such as those observed during moderate to severe recessions in the United States.
Stress tests
The Corporation shall conduct appropriate stress tests of each approved aggregator that has total assets of more than $10,000,000,000, provided that such stress tests shall be—
specifically tailored to the business model of the approved aggregator;
utilized to—
ensure the safety and soundness of the approved aggregator; and
minimize the risk the approved aggregator may present to the Mortgage Insurance Fund; and
coordinated with the Board of Governors of the Federal Reserve System, if the approved aggregator is an affiliate of an insured depository institution.
Resolution authority for failing aggregators
In general
Notwithstanding any other provision of Federal law, the law of any State, or the constitution of any State, the Corporation shall—
have the authority to act, in the same manner and to the same extent, with respect to an approved aggregator that is not an insured depository institution as the Federal Deposit Insurance Corporation has with respect to an insured depository institution under subsections (c) through (s) of section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821), section 12 of the Federal Deposit Insurance Act (12 U.S.C. 1822), and section 13 of the Federal Deposit Insurance Act (12 U.S.C. 1823), while tailoring such actions to the specific business model of the approved aggregator, as may be necessary to properly exercise such authority under this subsection;
in carrying out any authority provided under subparagraph (A), act, in the same manner and to the same extent, with respect to the Mortgage Insurance Fund as the Federal Deposit Insurance Corporation may act with respect to the Deposit Insurance Fund under the provisions of the Federal Deposit Insurance Act set forth in subparagraph (A);
prescribe regulations governing the applicable rights, duties, and obligations of an approved aggregator that is not an insured depository institution placed into resolution under this subsection, its creditors, counterparties, and other persons, as the Corporation deems necessary to properly exercise the authority provided in subparagraph (A); and
consistent with the authorities provided in subparagraph (A), immediately place an insolvent approved aggregator that is not an insured depository institution into receivership.
Rule of construction
If an insolvent approved aggregator is an insured depository institution, the Corporation shall recommend, in writing, to such approved aggregator’s appropriate Federal banking agency or State banking regulator to resolve such approved aggregator, which agency shall have sole authority to resolve such aggregator pursuant to section 11(c) of the Federal Deposit Insurance Act (12 U.S.C. 1821(c)) and other appropriate sections of the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) or appropriate Federal or State law, as applicable.
Least-cost resolution required
The Corporation may not exercise any authority under paragraph (1) with respect to any approved aggregator that is not an insured depository institution unless the total amount of the expenditures by the Corporation and obligations incurred by the Corporation in connection with the exercise of any such authority with respect to such approved aggregator is the least costly to the Mortgage Insurance Fund, consistent with the least cost approach specified in the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), of all possible methods for meeting the Corporation’s obligations under this Act and expeditiously concluding its resolution activities, subject to section 13 of the Federal Deposit Insurance Act where the Corporation and the Board of Directors shall have the same authority as the Federal Deposit Insurance Corporation and the Federal Deposit Insurance Corporation’s board of directors.
Taxpayer protection
The Corporation, in carrying out any authority provided in this subsection, shall prescribe regulations to ensure that any amounts owed to the United States, unless the United States agrees or consents otherwise, shall have priority following administrative expenses of the receiver when satisfying unsecured claims against an approved aggregator, or the receiver therefor, that are proven to the satisfaction of the receiver.
Hearing
Upon notice of denial of an application for approval under subsection (b) or upon a notice of suspension or revocation of the approved status of an approved aggregator under subsection (c), the applicant or approved aggregator shall be afforded a hearing under subsection (h) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818(h)), in the same manner and to the same extent as if the Corporation were the appropriate Federal banking agency, provided that the approved aggregator submits a request to the Corporation for a hearing not later than 10 days after the date on which the notice is published under subsection (b)(3) or (c)(3).
Other activities
An approved aggregator shall be prohibited from being an approved guarantor.
Information sharing regarding insured depository institutions and affiliates of insured depository institutions
By the Corporation
To the extent the Corporation has relevant information indicating that an approved aggregator that is an insured depository institution or an affiliate of an insured depository institution (A) faces a material threat to its safety and soundness, including insufficient capital, (B) may be in material violation of Federal banking law, or (C) may threaten the financial stability of the housing finance system or the Mortgage Insurance Fund, the Corporation shall notify, in writing, such appropriate Federal banking agency that such conditions exist. The Corporation shall have no authority to enforce prudential standards established by an appropriate Federal banking agency pursuant to the appropriate Federal banking agency’s authority.
By Federal and State banking agencies
To the extent an appropriate Federal banking agency or State banking agency has relevant information indicating that an approved aggregator that is an insured depository institution or an affiliate of an insured depository institution (A) faces a material threat to its safety and soundness, including insufficient capital, (B) may be in material violation of this Act or the rules promulgated by the Corporation pursuant to this Act, or (C) may threaten the financial stability of the housing finance system or the Mortgage Insurance Fund, such appropriate Federal banking agency or State banking agency shall notify, in writing, the Corporation that such conditions exist.
Rule of construction regarding preservation of Corporation authority
Nothing in this section limits, or shall be construed to limit, the authority of the Corporation to provide exemptions to, or adjustments for, the provisions of this section based on the asset size of an approved aggregator, or other criteria, as the Corporation deems appropriate, in order to reduce regulatory burdens while appropriately balancing protection of the Mortgage Insurance Fund.
Federal Home Loan Banks, joint offices, and bank subsidiaries as aggregators
Federal Home Loan Bank Act
Establishment of joint offices and subsidiaries
Amendment
Section 12 of the Federal Home Loan Bank Act (12 U.S.C. 1432) is amended by adding at the end the following:
Subject to such regulations as may be prescribed by the Agency, in coordination with the Federal Mortgage Insurance Corporation, 1 or more Federal Home Loan Banks may establish a subsidiary or joint office in any form under the laws of any State, subject to the approval of the Corporation. Any subsidiary or joint office established under this subsection shall be restricted to engaging in activities related to being an approved aggregator, as that term is defined under section 2 of Housing Finance Reform and Taxpayer Protection Act of 2014.
Subject to such regulations as may be prescribed by the Agency, in coordination with the Federal Mortgage Insurance Corporation, 1 or more Federal Home Loan Banks or any subsidiary or joint office of a Federal Home Loan Bank established under subsection (c) may apply to become, and may become, an approved aggregator, as that term is defined under section 2 of the Housing Finance Reform and Taxpayer Protection Act of 2014.
.
Effective date
The amendments made by clause (i) shall take effect on the system certification date.
CDFIs
Amendment
Section 10(a) of the Federal Home Loan Bank Act (12 U.S.C. 1430(a)) is amended—
in paragraph (2)(B), by inserting or community development financial institution (as defined in section 103 of the Riegle Community
Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702))
after community financial institution
; and
in paragraph (3)(E), by inserting or community development financial institution (as defined in section 103 of the Riegle Community
Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702))
after community financial institution
.
Effective date
The amendment made by clause (i) shall take effect on the agency transfer date.
Not consolidated debt
Notwithstanding section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431), any covered security secured by eligible mortgage loans transferred to the Platform by a Federal Home Loan Bank or subsidiary or joint office thereof, acting as an approved aggregator, shall not be designated as, or considered to be the joint and several obligations of the Federal Home Loan Banks.
Approval of private mortgage insurers
Standards for approval of private mortgage insurers
In general
The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of private mortgage insurers to provide private mortgage loan insurance on eligible single-family mortgage loans that collateralize single-family covered securities.
Required standards
The standards required under paragraph (1) shall include—
the financial history and current financial condition, including capital and loss reserves to comply with any applicable State law or regulation, of the private mortgage insurer;
the capability of the management of the private mortgage insurer;
the general character and fitness of the officers and directors of the private mortgage insurer, including the compliance history of the private mortgage insurer’s officers and directors with Federal and State laws and the rules and regulations promulgated by self-regulatory organizations (as defined in section 3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)), as applicable;
that the private mortgage insurer has the capacity to insure eligible single-family mortgage loans in a manner to comply with any applicable State law or regulation and that furthers the purposes of the Corporation as described in section 201(b)(5);
the risk presented by the private mortgage insurer to the Mortgage Insurance Fund;
the adequacy of insurance and fidelity coverage of the private mortgage insurer;
a requirement that the private mortgage insurer submit audited financial statements to the Corporation; and
any other standard the Corporation, after notice and public comment, determines necessary to avoid significant risk to the Mortgage Insurance Fund, provided the standard does not materially conflict with State law.
Rule of construction
Nothing in subparagraph (D) of paragraph (2) shall be construed to prevent the Corporation from approving a small or specialty private mortgage insurer, provided that the private mortgage insurer has the capacity to adequately diversify its risk to meet solvency standards required by any applicable State law or regulation.
Consultation and coordination
To promote consistency and minimize regulatory conflict, the Corporation shall consult and coordinate with appropriate Federal regulators and State regulators and officials when developing standards pursuant to this subsection.
Application and approval
Application process
In general
The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of a private mortgage insurer under this section.
Application review
The Corporation shall establish internal timelines for its processing of an application under this section, including timelines for any action to approve or to deny an application under this section.
Notification
The Corporation shall notify the appropriate State insurance regulator upon receipt of any application by a private mortgage insurer to become an approved private mortgage insurer under this section.
Approval
The Corporation may approve any application made pursuant to paragraph (1), provided the private mortgage insurer meets the standards established under subsection (a).
Denial
The Corporation shall have the authority to deny any application made pursuant to paragraph (1) if an officer or director of the private mortgage insurer has, at any time prior to the date of the approval of such application, been—
subject to a statutory disqualification pursuant to section 3(a)(39) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(39)); or
suspended, removed, or prohibited from participation pursuant to section 8(g) of the Federal Deposit Insurance Act (12 U.S.C. 1818(g)), prohibited from certain action pursuant to paragraphs (6) or (7) of section 8(e) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)), subject to an action resulting in a written agreement or other written statement under section 8(u)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(u)(1)), for which a violation may be enforced by an appropriate Federal banking agency, or subject to any final order issued with respect to any administrative enforcement proceeding initiated by such agency under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818).
Notice and publication
The Corporation shall—
provide prompt notice to a private mortgage insurer of the approval or denial of any application of the private mortgage insurer to become an approved private mortgage insurer under this section;
publish a notice in the Federal Register upon approval of any private mortgage insurer;
maintain an updated list of approved private mortgage insurers on the website of the Corporation; and
provide prompt notice to the appropriate State insurance regulator upon the approval or denial of any application of a private mortgage insurer to become an approved private mortgage insurer under this section.
Grandfathered insurers of the enterprises
Any private mortgage insurer who was approved to insure mortgage loans for an enterprise on the date that is 1 day before the date the Corporation publishes the provisional standards for the approval of private mortgage insurers required under section 607(a)(2), and was in good standing as of such date—
shall be deemed conditionally approved for a period of 1 year from the date on which the Corporation publishes the provisional standards for the approval of private mortgage insurers required under section 607(a)(2);
shall, not later than the date which is 6 months after date on which the Corporation publishes the standards required under subsection (a), apply for approved status via the application process described in this subsection to be eligible for approved status; and
shall, provided the private mortgage insurer has complied with subparagraph (B), receive a determination from the Corporation as to the approval or denial of its application to become an approved private mortgage insurer prior to the expiration of the 1-year period described under subparagraph (A).
Requirement to maintain approval status
Authority to issue order
If the Corporation determines that an approved private mortgage insurer no longer meets the standards for such approval or violates a requirement under this section, including any standard, regulation, or order promulgated in accordance with this Act, the Corporation may—
provide prompt notice to the appropriate State insurance regulator that the Corporation determines that an approved private mortgage insurer no longer meets the standard for such approval;
suspend or revoke the approved status of the approved private mortgage insurer; or
take any other action with respect to such approved private mortgage insurer as may be authorized under this Act.
Rule of construction
The suspension or revocation of the approved status of an approved private mortgage insurer under this section shall have no effect on the status as a covered security of any covered security collateralized by eligible mortgage loans with which the approved private mortgage insurer contracted prior to the suspension or revocation.
Publication
The Corporation shall—
promptly publish a notice in the Federal Register upon suspension or revocation of the approval of any approved private mortgage insurer; and
maintain an updated list of such approved private mortgage insurers on the website of the Corporation.
Definition
In this subsection, the term violate includes any action, taken alone or with others, for or toward causing, bringing about, participating in, counseling, or aiding or abetting, a violation of the requirements under this Act.
State regulation
The appropriate State insurance regulator of an approved private mortgage insurer has primary authority to examine and supervise the approved private mortgage insurer.
Reports and examinations
In general
For purposes of determining whether an approved private mortgage insurer is fulfilling the requirements under this Act, the Corporation may, in coordination with the appropriate State insurance regulator of the approved private mortgage insurer, including providing the appropriate State insurance regulator the opportunity to join the Corporation in an on-site examination, examine or review any approved private mortgage insurer if the Corporation has substantial reason to believe—
that an approved private mortgage insurer has engaged in a material violation or pattern of violations of this Act or the rules promulgated pursuant to this Act; or
that the activities of an approved private mortgage insurer may threaten the financial stability of the housing finance system or the Mortgage Insurance Fund.
3-year compliance examination
In addition to the authority under paragraph (1), the Corporation shall conduct an examination of an approved private mortgage insurer once, but not more than once, every 3 years, provided the approved private mortgage insurer has not been examined on-site by an appropriate State insurance regulator.
Coordination
In conducting an exam or review authorized pursuant to paragraph (1) or paragraph (2), the Corporation shall—
provide reasonable notice to, and coordinate with, the appropriate State insurance regulator for an approved private mortgage insurer before commencing an examination of the approved private mortgage insurer under this section;
to the fullest extent possible, avoid duplication of examination activities, reporting requirements, and requests for information, including by relying on existing examinations, inspections, and reports of the appropriate State insurance regulator; and