110th CONGRESS
1st Session
S. 1100
To address the regulation of secondary mortgage market enterprises,
and for other purposes.
IN THE SENATE OF THE UNITED STATES
April 12, 2007
Mr. HAGEL (for himself, Mr. SUNUNU, Mrs. DOLE, and Mr. MARTINEZ) introduced
the following bill; which was read twice and referred to the Committee on
Banking, Housing, and Urban Affairs
A BILL
To address the regulation of secondary mortgage market enterprises,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title- This Act may be cited as the `Federal Housing Enterprise
Regulatory Reform Act of 2007'.
(b) Table of Contents- The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--REFORM OF REGULATION OF ENTERPRISES
Subtitle A--Improvement of Safety and Soundness Supervision
Sec. 101. Establishment of the Federal Housing Enterprise Regulatory Agency.
Sec. 102. Duties and authorities of Director.
Sec. 103. Federal Housing Enterprise Board.
Sec. 104. Authority to require reports by regulated entities.
Sec. 105. Examiners and accountants; authority to contract for reviews
of regulated entities.
Sec. 107. Regulations and orders.
Sec. 108. Prudential management and operations standards.
Sec. 109. Capital levels and holdings.
Sec. 110. Risk-Based capital test for enterprises.
Sec. 111. Registration of enterprise securities.
Sec. 112. Limit on golden parachutes.
Sec. 113. Reporting of fraudulent loans.
Subtitle B--Improvement of Mission Supervision
Sec. 121. Transfer of program approval and housing goal oversight.
Sec. 122. Review of enterprise products.
Sec. 123. Monitoring and enforcing compliance with housing goals.
Sec. 124. Assumption by Director of other HUD responsibilities.
Sec. 125. Administrative and judicial enforcement proceedings.
Sec. 126. Conforming loan limits.
Sec. 127. Reporting of mortgage data; housing goals.
Sec. 128. Duty to serve underserved markets.
Sec. 129. Home purchase goal.
Subtitle C--Prompt Corrective Action
Sec. 141. Critical capital levels.
Sec. 142. Capital classifications.
Sec. 143. Supervisory actions applicable to undercapitalized regulated
entities.
Sec. 144. Supervisory actions applicable to significantly undercapitalized
regulated entities.
Sec. 145. Authority over critically undercapitalized regulated entities.
Subtitle D--Enforcement Actions
Sec. 151. Cease-and-desist proceedings.
Sec. 152. Temporary cease-and-desist proceedings.
Sec. 153. Removal and prohibition authority.
Sec. 154. Enforcement and jurisdiction.
Sec. 155. Civil money penalties.
Sec. 156. Criminal penalty.
Sec. 157. Notice after separation from service.
Sec. 158. Subpoena authority.
Subtitle E--General Provisions
Sec. 161. Conforming and technical amendments.
Sec. 162. Presidentially appointed directors of enterprises.
Sec. 163. Effective date.
TITLE II--FEDERAL HOME LOAN BANKS
Sec. 203. Agency oversight of Federal home loan banks.
Sec. 204. Federal Home Loan Bank Finance Facility.
Sec. 205. Exclusion from certain securities reporting requirements.
Sec. 207. Authority to reduce districts.
Sec. 208. Management of home loan banks.
TITLE III--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND
THE FEDERAL HOUSING FINANCE BOARD
Subtitle A--OFHEO
Sec. 301. Abolishment of OFHEO.
Sec. 302. Continuation and coordination of certain regulations.
Sec. 303. Transfer and rights of employees of OFHEO.
Sec. 304. Transfer of property and facilities.
Subtitle B--Federal Housing Finance Board
Sec. 311. Abolishment of the Federal Housing Finance Board.
Sec. 312. Continuation and coordination of certain regulations.
Sec. 313. Transfer and rights of employees of the Federal Housing Finance
Board.
Sec. 314. Transfer of property and facilities.
TITLE IV--STUDIES AND REPORTS
Sec. 401. Study and report on Basel II and enterprise debt.
Sec. 402. Affordable housing audits.
Sec. 403. Report on insured depository institution holdings of regulated
entity debt and mortgage-backed securities.
Sec. 404. Report on risk-based capital levels.
Sec. 405. Report on resources and allocations.
Sec. 406. Study and report on guarantee fees.
Sec. 407. Report on conforming loan limits.
Sec. 408. Reviews and studies relating to enterprises and related foundations.
Sec. 409. Recommendations.
SEC. 2. DEFINITIONS.
(a) Federal Safety and Soundness Act Definitions- Section 1303 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4502) is amended--
(1) in each of paragraphs (8), (9), (10), and (19), by striking `Secretary'
each place that term appears and inserting `Director';
(2) in paragraph (14), by striking `Office of Federal Housing Enterprise
Oversight of the Department of Housing and Urban Development' and inserting
`Federal Housing Enterprise Regulatory Agency';
(3) by redesignating paragraphs (16) through (19) as paragraphs (22) through
(25), respectively;
(4) by striking paragraph (15) and inserting the following:
`(21) REGULATED ENTITY- The term `regulated entity' means--
`(A) the Federal National Mortgage Association and any affiliate thereof;
`(B) the Federal Home Loan Mortgage Corporation and any affiliate thereof;
and
`(C) any Federal Home Loan Bank.';
(5) by striking paragraph (13);
(6) by redesignating paragraph (7) as paragraph (13);
(7) by redesignating paragraphs (11), (12), and (14) as paragraphs (18)
through (20), respectively;
(8) by striking paragraphs (8) through (10) and inserting the following:
`(15) LOW-INCOME- The term `low-income' means a family income that is
less than 50 percent of the area median income, or a family income that
is less than 50 percent of the area median income.
`(16) MEDIAN INCOME- The term `area median income' means--
`(A) the median family income for a metropolitan statistical area (as
designated under 13 U.S.C. 421), if the family is located in a metropolitan
statistical area; or
`(B) the statewide nonmetropolitan median family income, if the family
is located outside a metropolitan statistical area.
`(17) MODERATE-INCOME- The term `moderate-income' means an individual
income that is at least 50 percent and less than 80 percent of the area
median income, or a median family income that is at least 50 percent and
not more than 80 percent of the area median income.';
(A) by striking `(5)' and inserting `(9)'; and
(B) by striking `Office of Federal Housing Enterprise Oversight of the
Department of Housing and Urban Development' and inserting `Federal
Housing Enterprise Regulatory Agency';
(10) by redesignating paragraph (6) as paragraph (10);
(11) by redesignating paragraphs (2) through (4) as paragraphs (5) through
(7), respectively;
(12) by inserting after paragraph (7), as redesignated, the following:
`(8) DEFAULT; IN DANGER OF DEFAULT-
`(A) DEFAULT- The term `default' means, with respect to a regulated
entity, any adjudication or other official determination by any court
of competent jurisdiction, or the Agency, pursuant to which a conservator,
receiver, limited-life regulated entity, or legal custodian is appointed
for a regulated entity.
`(B) IN DANGER OF DEFAULT- The term `in danger of default' means a regulated
entity with respect to which--
`(i) in the opinion of the Agency--
`(I) the regulated entity is not likely to be able to pay the obligations
of the regulated entity in the normal course of business; or
`(II) the regulated entity has incurred or is likely to incur losses
that will deplete all or substantially all of its capital; and
`(ii) there is no reasonable prospect that the capital of the regulated
entity will be replenished.';
(13) by inserting after paragraph (1) the following:
`(2) AGENCY; DIRECTOR- The term--
`(A) `Agency' means the Federal Housing Enterprise Regulatory Agency
established under section 1311; and
`(B) `Director' means the Director of the Agency, appointed under section
1312;
`(3) AUTHORIZING STATUTES- The term `authorizing statutes' means--
`(A) the Federal National Mortgage Association Charter Act;
`(B) the Federal Home Loan Mortgage Corporation Act; and
`(C) the Federal Home Loan Bank Act.
`(4) BOARD- The term `Board' means the Federal Housing Enterprise Board
established under section 1313A.';
(14) by inserting after paragraph (10), as redesignated, the following:
`(11) ENTITY-AFFILIATED PARTY- The term `entity-affiliated party' means--
`(A) any director, officer, employee, or controlling stockholder of,
or agent for, a regulated entity;
`(B) any shareholder, affiliate, consultant, or joint venture partner
of a regulated entity, and any other person, as determined by the Director
(by regulation or on a case-by-case basis) that participates in the
conduct of the affairs of a regulated entity, provided that a member
of a Federal Home Loan Bank shall not be deemed to have participated
in the affairs of that Bank solely by virtue of being a shareholder
of, and obtaining advances from, that Bank;
`(C) any independent contractor for a regulated entity (including any
attorney, appraiser, or accountant), if--
`(i) the independent contractor knowingly or recklessly participates
in--
`(I) any violation of any law or regulation;
`(II) any breach of fiduciary duty; or
`(III) any unsafe or unsound practice; and
`(ii) such violation, breach, or practice caused, or is likely to
cause, more than a minimal financial loss to, or a significant adverse
effect on, the regulated entity; and
`(D) any not-for-profit corporation that receives its principal funding,
on an ongoing basis, from any regulated entity; and
`(E) the Finance Facility.
`(12) FINANCE FACILITY- The term `Finance Facility' means the Federal
Home Loan Bank Finance Facility established under section 11A of the Federal
Home Loan Bank Act.
`(13) LIMITED-LIFE REGULATED ENTITY- The term `limited-life regulated
entity' means an entity established by the Agency under section 1367(i)
with respect to a Federal Home Loan Bank in default or in danger of default
or with respect to an enterprise in default or in danger of default.';
(15) in paragraph (25), as so redesignated by this section, by striking
`60' each place that term appears and inserting `30'; and
(16) by adding at the end the following:
`(26) UPPER- AND MIDDLE-INCOME-
`(A) UPPER-INCOME- The term `upper-income' means a family income that
is 120 percent of the area median income or greater.
`(B) MIDDLE-INCOME- The term `middle-income' means a family income that
is not less than 80 percent but less than 120 percent of the area median
income, or a median family income that is at least 80 percent and not
more than 120 percent.
`(27) VIOLATION- The term `violation' includes any action (alone or in
combination with another or others) for or toward causing, bringing about,
participating in, counseling, or aiding or abetting a violation.'.
(b) References in This Act- As used in this Act, unless otherwise specified--
(1) the term `Agency' means the Federal Housing Enterprise Regulatory
Agency;
(2) the term `Director' means the Director of the Agency; and
(3) the terms `enterprise', `Finance Facility', `regulated entity', and
`authorizing statutes' have the same meanings as in section 1303 of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992,
as amended by this Act.
TITLE I--REFORM OF REGULATION OF ENTERPRISES
Subtitle A--Improvement of Safety and Soundness Supervision
SEC. 101. ESTABLISHMENT OF THE FEDERAL HOUSING ENTERPRISE REGULATORY AGENCY.
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4501 et seq.) is amended by striking sections 1311 and 1312 and
inserting the following:
`SEC. 1311. ESTABLISHMENT OF THE FEDERAL HOUSING ENTERPRISE REGULATORY
AGENCY.
`(a) Establishment- There is established the Federal Housing Enterprise
Regulatory Agency, which shall be an independent agency of the Federal Government.
`(b) General Supervisory and Regulatory Authority-
`(1) IN GENERAL- Each regulated entity shall, to the extent provided in
this title, be subject to the supervision and regulation of the Agency.
`(2) AUTHORITY OVER FANNIE MAE, FREDDIE MAC, THE FEDERAL HOME LOAN BANKS,
AND THE FINANCE FACILITY- The Director shall have general regulatory authority
over each regulated entity and the Finance Facility, and shall exercise
such general regulatory authority, including such duties and authorities
set forth under section 1313, to ensure that the purposes of this Act,
the authorizing statutes, and any other applicable law are carried out.
`(c) Savings Provision- The authority of the Director to take actions under
subtitles B and C shall not in any way limit the general supervisory and
regulatory authority granted to the Director under subsection (b).
`SEC. 1312. DIRECTOR.
`(a) Establishment of Position- There is established the position of the
Director of the Agency, who shall be the head of the Agency.
`(1) APPOINTMENT- The Director shall be appointed by the President, by
and with the advice and consent of the Senate, from among individuals
who are citizens of the United States, have a demonstrated understanding
of financial management or oversight, and have a demonstrated understanding
of capital markets, including the mortgage securities markets and housing
finance.
`(2) TERM- The Director shall be appointed for a term of 6 years, unless
removed before the end of such term for cause by the President.
`(3) VACANCY- A vacancy in the position of Director that occurs before
the expiration of the term for which a Director was appointed shall be
filled in the manner established under paragraph (1), and the Director
appointed to fill such vacancy shall be appointed only for the remainder
of such term.
`(4) SERVICE AFTER END OF TERM- An individual may serve as the Director
after the expiration of the term for which appointed until a successor
has been appointed.
`(5) TRANSITIONAL PROVISION- Notwithstanding paragraphs (1) and (2), during
the period beginning on the effective date of the Federal Housing Enterprise
Regulatory Reform Act of 2007, and ending on the date on which the Director
is appointed and confirmed, the person serving as the Director of the
Office of Federal Housing Enterprise Oversight of the Department of Housing
and Urban Development on that effective date shall act for all purposes
as, and with the full powers of, the Director.
`(c) Deputy Director of the Division of Enterprise Regulation-
`(1) IN GENERAL- The Agency shall have a Deputy Director of the Division
of Enterprise Regulation, who shall be designated by the Director from
among individuals who are citizens of the United States, have a demonstrated
understanding of financial management or oversight, and have a demonstrated
understanding of mortgage securities markets and housing finance.
`(2) FUNCTIONS- The Deputy Director of the Division of Enterprise Regulation
shall have such functions, powers, and duties with respect to the oversight
of the enterprises as the Director shall prescribe.
`(d) Deputy Director of the Division of Federal Home Loan Bank Regulation-
`(1) IN GENERAL- The Agency shall have a Deputy Director of the Division
of Federal Home Loan Bank Regulation, who shall be designated by the Director
from among individuals who are citizens of the United States, have a demonstrated
understanding of financial management or oversight, and have a demonstrated
understanding of the Federal Home Loan Bank System and housing finance.
`(2) FUNCTIONS- The Deputy Director of the Division of Federal Home Loan
Bank Regulation shall have such functions, powers, and duties with respect
to the oversight of the Federal Home Loan Banks as the Director shall
prescribe.
`(e) Deputy Director for Housing Mission and Goals-
`(1) IN GENERAL- The Agency shall have a Deputy Director for Housing Mission
and Goals, who shall be designated by the Director from among individuals
who are citizens of the United States, and have a demonstrated understanding
of the housing markets and housing finance.
`(2) FUNCTIONS- The Deputy Director for Housing Mission and Goals shall
have such functions, powers, and duties with respect to the oversight
of the housing mission and goals of the regulated entities as the Director
shall prescribe.
`(f) Acting Director- In the event of the death, resignation, sickness,
or absence of the Director, the President shall designate either the Deputy
Director of the Division of Enterprise Regulation, the Deputy Director of
the Division of Federal Home Loan Bank Regulation, or the Deputy Director
for Housing Mission and Goals, to serve as acting Director until the return
of the Director, or the appointment of a successor pursuant to subsection
(b).
`(g) Limitations- The Director and each of the Deputy Directors may not--
`(1) have any direct or indirect financial interest in any regulated entity
or entity-affiliated party;
`(2) hold any office, position, or employment in any regulated entity
or entity-affiliated party; or
`(3) have served as an executive officer or director of any regulated
entity or entity-affiliated party at any time during the 3-year period
preceding the date of appointment of such individual as Director or Deputy
Director.'.
SEC. 102. DUTIES AND AUTHORITIES OF DIRECTOR.
(a) In General- Section 1313 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4513) is amended to read as
follows:
`SEC. 1313. DUTIES AND AUTHORITIES OF DIRECTOR.
`(1) PRINCIPAL DUTIES- The principal duties of the Director shall be--
`(A) to oversee the prudential operations of each regulated entity;
and
`(i) each regulated entity operates in a safe and sound manner, including
maintenance of adequate capital and internal controls;
`(ii) the operations and activities of each regulated entity foster
liquid, efficient, competitive, and resilient national housing finance
markets (including activities relating to mortgages on housing for
low- and moderate-income families involving a reasonable economic
return that may be less than the return earned on other activities);
`(iii) each regulated entity complies with this title and the rules,
regulations, guidelines, and orders issued under this title and the
authorizing statutes;
`(iv) each regulated entity carries out its statutory mission only
through activities that are authorized under and consistent with this
title and the authorizing statutes;
`(v) the activities of each regulated entity and the manner in which
such regulated entity is operated are consistent with the public interest;
`(vi) each regulated entity remains adequately capitalized, after
due consideration of the risk to such regulated entity; and
`(vii) in the case of the Federal Home Loan Banks, they provide funds
to community financial institutions for small businesses, small farms,
and small agricultural businesses and accept as collateral whole interests
in such obligations.
`(2) SCOPE OF AUTHORITY- The authority of the Director shall include the
authority--
`(A) to review and, if warranted based on the principle duties described
in paragraph (1), reject any acquisition or transfer of a controlling
interest in a regulated entity; and
`(B) to exercise such incidental powers as may be necessary or appropriate
to fulfill the duties and responsibilities of the Director in the supervision
and regulation of each regulated entity.
`(b) Delegation of Authority- The Director may delegate to officers and
employees of the Agency any of the functions, powers, or duties of the Director,
as the Director considers appropriate.
`(c) Litigation Authority-
`(1) IN GENERAL- In enforcing any provision of this title, any regulation
or order prescribed under this title, or any other provision of law, rule,
regulation, or order, or in any other action, suit, or proceeding to which
the Director is a party or in which the Director is interested, and in
the administration of conservatorships and receiverships, the Director
may act in the Director's own name and through the Director's own attorneys.
`(2) SUBJECT TO SUIT- Except as otherwise provided by law, the Director
shall be subject to suit (other than suits on claims for money damages)
by a regulated entity with respect to any matter under this title or any
other applicable provision of law, rule, order, or regulation under this
title, in the United States district court for the judicial district in
which the regulated entity has its principle place of business, or in
the United States District Court for the District of Columbia, and the
Director may be served with process in the manner prescribed by the Federal
Rules of Civil Procedure.'.
(b) Independence in Congressional Testimony and Recommendations- Section
111 of Public Law 93-495 (12 U.S.C. 250) is amended by striking `the Federal
Housing Finance Board' and inserting `the Director of the Federal Housing
Enterprise Regulatory Agency'.
SEC. 103. FEDERAL HOUSING ENTERPRISE BOARD.
(a) In General- The Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting after section
1313 the following:
`SEC. 1313A. FEDERAL HOUSING ENTERPRISE BOARD.
`(a) In General- There is established the Federal Housing Enterprise Board,
which shall advise the Director with respect to overall strategies and policies
in carrying out the duties of the Director under this title.
`(b) Limitations- The Board may not exercise any executive authority, and
the Director may not delegate to the Board any of the functions, powers,
or duties of the Director.
`(c) Composition- The Board shall be comprised of 4 members, of whom--
`(1) 1 member shall be the Secretary of the Treasury;
`(2) 1 member shall be the Secretary of Housing and Urban Development;
`(3) 1 member shall be the Chairman of the Securities and Exchange Commission;
and
`(4) 1 member shall be the Director, who shall serve as the Chairperson
of the Board.
`(1) IN GENERAL- The Board shall meet upon notice by the Director, but
in no event shall the Board meet less frequently than once every 3 months.
`(2) SPECIAL MEETINGS- Either the Secretary of the Treasury, the Secretary
of Housing and Urban Development, or the Chairman of the Securities and
Exchange Commission may, upon giving written notice to the Director, require
a special meeting of the Board.
`(e) Testimony- On an annual basis, the Board shall testify before Congress
regarding--
`(1) the safety and soundness of the regulated entities;
`(2) any material deficiencies in the conduct of the operations of the
regulated entities;
`(3) the overall operational status of the regulated entities;
`(4) an evaluation of the performance of the regulated entities in carrying
out their respective missions;
`(5) operations, resources, and performance of the Agency; and
`(6) such other matters relating to the Agency and its fulfillment of
its mission, as the Board determines appropriate.'.
(b) Annual Report of the Director- Section 1319B(a) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4521(a))
is amended--
(1) by striking `enterprise' each place that term appears and inserting
`regulated entity';
(2) by striking `enterprises' each place that term appears and inserting
`regulated entities';
(3) in paragraph (3), by striking `; and' and inserting a semicolon;
(4) in paragraph (4), by striking `1994.' and inserting `1994; and'; and
(5) by adding at the end the following:
`(5) the assessment of the Board or any of its members with respect to--
`(A) the safety and soundness of the regulated entities;
`(B) any material deficiencies in the conduct of the operations of the
regulated entities;
`(C) the overall operational status of the regulated entities; and
`(D) an evaluation of the performance of the regulated entities in carrying
out their respective missions;
`(6) operations, resources, and performance of the Agency; and
`(7) such other matters relating to the Agency and the fulfillment of
its mission.'.
SEC. 104. AUTHORITY TO REQUIRE REPORTS BY REGULATED ENTITIES.
(a) In General- Section 1314 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4514) is amended--
(1) in the section heading, by striking `enterprises' and inserting `regulated
entities';
(2) by striking `an enterprise' each place that term appears and inserting
`a regulated entity';
(3) by striking `the enterprise' and inserting `the regulated entity';
(A) by striking the subsection heading and all that follows through
`and operations' in paragraph (1) and inserting the following:
`(a) Regular and Special Reports-
`(1) REGULAR REPORTS- The Director may require, by general or specific
orders, a regulated entity to submit regular reports, including financial
statements determined on a fair value basis, on the condition (including
financial condition), management, activities, or operations of the regulated
entity, as the Director considers appropriate'; and
(i) by inserting `, by general or specific orders,' after `may also
require'; and
(ii) by striking `whenever' and inserting `on any of the topics specified
in paragraph (1) or any other relevant topics, if'; and
(5) by adding at the end the following:
`(c) Penalties for Failure To Make Reports-
`(1) VIOLATIONS- It shall be a violation of this section for any regulated
entity--
`(A) to fail to make, obtain, transmit, or publish any report or information
required by the Director under this section, section 309(k) of the Federal
National Mortgage Association Charter Act, or section 307(c) of the
Federal Home Loan Mortgage Corporation Act, within the period of time
specified in such provision of law or otherwise by the Director; or
`(B) to submit or publish any false or misleading report or information
under this section.
`(i) IN GENERAL- A violation described in paragraph (1) shall be subject
to a penalty of not more than $2,000 for each day during which such
violation continues, in any case in which--
`(I) the subject regulated entity maintains procedures reasonably
adapted to avoid any inadvertent error and the violation was unintentional
and a result of such an error; or
`(II) the violation was an inadvertent transmittal or publication
of any report which was minimally late.
`(ii) BURDEN OF PROOF- For purposes of this subparagraph, the regulated
entity shall have the burden of proving that the error was inadvertent
or that a report was inadvertently transmitted or published late.
`(B) TIER 2- A violation described in paragraph (1) shall be subject
to a penalty of not more than $20,000 for each day during which such
violation continues or such false or misleading information is not corrected,
in any case that is not addressed in subparagraph (A) or (C).
`(C) TIER 3- A violation described in paragraph (1) shall be subject
to a penalty of not more than $2,000,000 per day for each day during
which such violation continues or such false or misleading information
is not corrected, in any case in which the subject regulated entity
committed such violation knowingly or with reckless disregard for the
accuracy of any such information or report.
`(3) ASSESSMENTS- Any penalty imposed under this subsection shall be in
lieu of a penalty under section 1376, but shall be assessed and collected
by the Director in the manner provided in section 1376 for penalties imposed
under that section, and any such assessment (including the determination
of the amount of the penalty) shall be otherwise subject to the provisions
of section 1376.
`(4) HEARING- A regulated entity against which a penalty is assessed under
this section shall be afforded an agency hearing if the regulated entity
submits a request for a hearing not later than 20 days after the date
of the issuance of the notice of assessment. Section 1374 shall apply
to any such proceedings.'.
(b) Conforming Amendment- The Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended by striking
sections 1327 and 1328.
SEC. 105. EXAMINERS AND ACCOUNTANTS; AUTHORITY TO CONTRACT FOR REVIEWS
OF REGULATED ENTITIES.
(a) In General- Section 1317 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4517) is amended--
(1) in subsection (a), by striking `enterprise' each place that term appears
and inserting `regulated entity';
(2) in subsection (b), by striking `an enterprise' and inserting `a regulated
entity';
(3) in subsection (c), in the second sentence, by inserting before the
period `to conduct examinations under this section';
(4) by redesignating subsections (d) through (f) as subsections (e) through
(g), respectively; and
(5) by inserting after subsection (c) the following:
`(d) Inspector General- There shall be within the Agency an Inspector General,
who shall be appointed in accordance with section 3(a) of the Inspector
General Act of 1978.'.
(b) Direct Hire Authority To Hire Accountants, Economists, and Examiners-
Section 1317 of the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4517) is amended by adding at the end the following:
`(h) Appointment of Accountants, Economists, and Examiners-
`(1) APPLICABILITY- This section shall apply with respect to any position
of examiner, accountant, economist, and specialist in financial markets
and in technology at the Agency, with respect to supervision and regulation
of the regulated entities, that is in the competitive service.
`(2) APPOINTMENT AUTHORITY- The Director may appoint candidates to any
position described in paragraph (1)--
`(A) in accordance with the statutes, rules, and regulations governing
appointments in the excepted service; and
`(B) notwithstanding any statutes, rules, and regulations governing
appointments in the competitive service.'.
(c) Amendments to Inspector General Act- Section 11 of the Inspector General
Act of 1978 (5 U.S.C. 11 App.) is amended--
(1) in paragraph (1), by inserting `, the Director of the Federal Housing
Enterprises Regulatory Agency' after `Social Security Administration';
and
(2) in paragraph (2), by inserting `, the Federal Housing Enterprises
Regulatory Agency' after `Social Security Administration'.
(d) Authority To Contract for Reviews of Regulated Entities- Section 1319
of the Federal Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4519) is amended in the section heading, by striking `by
rating organization'.
SEC. 106. ASSESSMENTS.
Section 1316 of the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4516) is amended--
(1) by striking subsection (a) and inserting the following:
`(a) Annual Assessments- The Director shall establish and collect from the
regulated entities annual assessments in an amount not exceeding the amount
sufficient to provide for reasonable costs and expenses of the Agency, including--
`(1) the expenses of any examinations under section 1317;
`(2) the expenses of obtaining any reviews and credit assessments under
section 1319; and
`(3) such amounts in excess of actual expenses for any given fiscal year,
as deemed necessary by the Director to maintain working capital.';
(2) by striking `an enterprise' each place that term appears and inserting
`a regulated entity';
(3) by striking `enterprises' each place that term appears and inserting
`regulated entities';
(4) by striking `enterprise' each place that term appears, other than
in subparagraph (B) of subsection (b)(3), and inserting `regulated entity';
(i) by striking `bears to' and inserting `bear to'; and
(ii) by striking `both' and inserting `all'; and
(B) in paragraph (3)(B)--
(i) by inserting `with respect to an enterprise,' before `the unpaid
principal'; and
(ii) by striking `by the enterprise' and inserting `by an enterprise';
(A) by striking `The semiannual' and inserting the following:
`(1) IN GENERAL- The semiannual'; and
(B) by adding at the end the following:
`(2) ADJUSTMENTS- The Director may adjust the amounts of any semiannual
assessments for an assessment under subsection (a) that are to be paid
pursuant to subsection (b) by a regulated entity, as the Director determines
necessary to ensure that the costs of enforcement activities under subtitles
B and C for a regulated entity are borne only by that regulated entity.
`(3) SPECIAL CIRCUMSTANCES- If at any time, as a result of increased costs
of regulation of a regulated entity that is not classified (for purposes
of subtitle B) as adequately capitalized, or as the result of supervisory
or enforcement activities under subtitle B or C for a regulated entity,
the amount available from any semiannual payment made by such regulated
entity pursuant to subsection (b) is insufficient to cover the costs of
the Agency with respect to such entity, the Director may make and collect
from such entity an immediate assessment to cover the amount of such deficiency
for the semiannual period. If, at the end of any semiannual period during
which such an assessment is made, any amount remains from such assessment,
such remaining amount shall be deducted from the assessment for such regulated
entity for the following semiannual period.';
(7) in subsection (d), by striking `If' and inserting `Except with respect
to amounts collected pursuant to subsection (a)(3), if';
(8) by striking subsections (e) and (f) and inserting the following:
`(e) Remission of Assessment- At the end of each year for which an assessment
under this section is made, the Director shall remit to each regulated entity
any amount of an assessment collected from the regulated entity that is
attributable to subsection (a)(3), and is in excess of the amount that the
Director deems necessary to maintain working capital.
`(f) No Appropriated Funds- Salaries of the Director and other employees
of the Agency, and all other expenses thereof, may be paid from assessments
collected under this subsection or other sources, and shall not be construed
to be Government funds or appropriated monies, or subject to apportionment
for the purposes of chapter 15 of title 31, United States Code, or any other
authority.'; and
(A) by striking `the Secretary and' each place that term appears; and
(i) by striking `(A)'; and
(ii) by striking `, and (B)' and all that follows through the end
of the paragraph and inserting a period.
SEC. 107. REGULATIONS AND ORDERS.
Section 1319G of the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4526) is amended--
(1) by striking subsection (a) and inserting the following:
`(a) Authority- The Director shall issue any regulations, guidelines, directives,
or orders necessary to carry out the duties of the Director under this title
or the authorizing statutes, and to ensure that the purposes of this title
and the authorizing statutes are accomplished.'; and
(2) by striking subsection (c).
SEC. 108. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4501 et seq.) is amended by inserting after section 1313A, as
added by this Act, the following new section:
`SEC. 1313B. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS.
`The Director may establish standards, by regulation, order, or guideline,
for each regulated entity relating to--
`(1) adequacy of internal controls and information systems taking into
account the nature and scale of business operations;
`(2) independence and adequacy of internal audit systems;
`(3) management of interest rate risk exposure;
`(4) management of market risk, including standards that provide for systems
that accurately measure, monitor, and control market risks and, as warranted,
that establish limitations on market risk;
`(5) adequacy and maintenance of liquidity and reserves;
`(6) management of asset and investment portfolio growth;
`(7) investments and acquisitions of assets by a regulated entity, to
ensure that they are consistent with the purposes of this title and the
authorizing statutes;
`(8) overall risk management processes, including adequacy of oversight
by senior management and the board of directors and of processes and policies
to identify, measure, monitor, and control material risks, including reputational
risks, and for adequate, well-tested business resumption plans for all
major systems with remote site facilities to protect against disruptive
events; and
`(9) such other operational and management standards as the Director determines
to be appropriate.'.
SEC. 109. CAPITAL LEVELS AND HOLDINGS.
Subtitle B of the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4611 et seq.) is amended--
(1) by striking the subtitle designation and heading and inserting the
following:
`Subtitle B--Required Capital Levels for Enterprises, Special Enforcement
Powers, Limitation on Assets, and Securities Treatment';
(2) by adding at the end the following:
`SEC. 1369E. AFFORDABLE HOUSING FOCUSED PORTFOLIOS.
`(a) Supporting Affordable Housing- Congress finds that, consistent with
the missions of the enterprises, the portfolio holdings of the enterprises
should be focused, to the maximum extent possible, on mortgages and mortgage-backed
securities that meet the affordable housing goals established for the enterprises
pursuant to this Act.
`(b) Authority of the Director- The Director shall, by regulation, provide
that any mortgages or mortgage-related securities acquired by an enterprise
after the date of enactment of this Act shall--
`(1) meet one or more of the housing goals established for the enterprise
under this Act; or
`(2) be promptly securitized and sold to third parties.
`(c) Temporary Adjustments- The Director may, by order, make temporary adjustments
to the standards under subsection (b), if such action would help to mitigate
market disruptions in the housing finance system.'.
SEC. 110. RISK-BASED CAPITAL TEST FOR ENTERPRISES.
(a) Risk-Based Capital Levels- Section 1361 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4611) is amended to
read as follows:
`SEC. 1361. RISK-BASED CAPITAL LEVELS.
`(a) In General- The Director shall, by regulation or order, establish risk-based
capital requirements for each of the enterprises to ensure that the enterprises
operate in a safe and sound manner, with sufficient capital and reserves
to support the risks that arise in the operations and management of each
enterprise.
`(b) No Limitation- Nothing in this section limits the authority of the
Director to require other reports or undertakings in furtherance of the
responsibilities of the Director under this Act.'.
(b) Minimum Capital Levels for Regulated Entities-
(1) ENTERPRISES- Section 1362 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4612) is amended--
(A) in the section heading, by inserting `for enterprises' after `levels';
and
(B) by striking subsection (b) and inserting the following:
`(b) Regulatory Discretion- The Director may, by regulation or order, establish
a minimum capital level that is higher than the level specified in subsection
(a).'.
(2) FEDERAL HOME LOAN BANKS- Section 6(a)(2) of the Federal Home Loan
Bank Act (12 U.S.C. 1426(a)(2)) is amended by adding at the end the following:
`(C) AUTHORITY TO ALTER LEVEL- The Director may, by regulation or order,
establish a minimum capital level that is higher than the level specified
in subparagraph (A).'.
SEC. 111. REGISTRATION OF ENTERPRISE SECURITIES.
(1) MORTGAGE-BACKED SECURITIES- Section 304(d) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1719(d)) is amended by striking
the fourth sentence and inserting the following: `Securities issued by
the corporation under this subsection shall not be exempt securities for
purposes of the Securities Act of 1933.'.
(2) SUBORDINATE OBLIGATIONS- Section 304(e) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1719(e)) is amended by striking the
fourth sentence and inserting the following: `Obligations issued by the
corporation under this subsection shall not be exempt securities for purposes
of the Securities Act of 1933.'.
(3) SECURITIES- Section 311 of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1723c) is amended--
(A) in the section heading, by striking `ASSOCIATION';
(B) by inserting `(a) In General- ' after `SEC. 311.';
(C) in the second sentence, by inserting `by the Association' after
`issued'; and
(D) by adding at the end the following:
`(b) Treatment of Corporation Securities-
`(1) IN GENERAL- Any stock, obligations, securities, participations, or
other instruments issued or guaranteed by the corporation pursuant to
this title shall not be exempt securities for purposes of the Securities
Act of 1933.
`(2) EXEMPTION FOR APPROVED SELLERS- Notwithstanding any other provision
of this title or the Securities Act of 1933, transactions involving the
initial disposition by an approved seller of pooled certificates that
are acquired by that seller from the corporation upon the initial issuance
of the pooled certificates shall be deemed to be transactions by a person
other than an issuer, underwriter, or dealer for purposes of the Securities
Act of 1933.
`(3) DEFINITIONS- For purposes of this subsection, the following definitions
shall apply:
`(A) APPROVED SELLER- The term `approved seller' means an institution
approved by the corporation to sell mortgage loans to the corporation
in exchange for pooled certificates.
`(B) POOLED CERTIFICATES- The term `pooled certificates' means single
class mortgage-backed securities guaranteed by the corporation that
have been issued by the corporation directly to the approved seller
in exchange for the mortgage loans underlying such mortgage-backed securities.
`(4) MORTGAGE RELATED SECURITIES- A single class mortgage-backed security
guaranteed by the corporation that has been issued by the corporation
directly to the approved seller in exchange for the mortgage loans underlying
such mortgage-backed securities or directly by the corporation for cash
shall be deemed to be a mortgage related security, as defined in section
3(a) of the Securities Exchange Act of 1934.'.
(b) Freddie Mac- Section 306(g) of the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1455(g)) is amended to read as follows:
`(g) Treatment of Securities-
`(1) IN GENERAL- Any securities issued or guaranteed by the Corporation
shall not be exempt securities for purposes of the Securities Act of 1933.
`(2) EXEMPTION FOR APPROVED SELLERS- Notwithstanding any other provision
of this title or the Securities Act of 1933, transactions involving the
initial disposition by an approved seller of pooled certificates that
are acquired by that seller from the Corporation upon the initial issuance
of the pooled certificates shall be deemed to be transactions by a person
other than an issuer, underwriter, or dealer for purposes of the Securities
Act of 1933.
`(3) DEFINITIONS- For purposes of this subsection, the following definitions
shall apply:
`(A) APPROVED SELLER- The term `approved seller' means an institution
approved by the Corporation to sell mortgage loans to the Corporation
in exchange for pooled certificates.
`(B) POOLED CERTIFICATES- The term `pooled certificates' means single
class mortgage-backed securities guaranteed by the Corporation that
have been issued by the Corporation directly to the approved seller
in exchange for the mortgage loans underlying such mortgage-backed securities.'.
(c) Limitation on Fees- Section 6(b)(2) of the Securities Act of 1933 (15
U.S.C. 77f(b)(2)) is amended by adding at the end the following: `Notwithstanding
any other provision of this title, no applicant, or group of affiliated
applicants that does not include any investment company registered under
the Investment Company Act of 1940, filing a registration statement subject
to a fee shall be required in any fiscal year with respect to all registration
statements filed by such applicant in such fiscal year to pay an aggregate
amount in fees to the Commission pursuant to this subsection in an amount
that exceeds 5 percent of the target offsetting collection amount for such
fiscal year. Fees paid in connection with registration statements relating
to business combinations shall not be included in calculating the total
fees paid by any such applicant.'.
(d) No Effect on Other Law- Nothing in this section or the amendments made
by this section shall be construed to affect any exemption from the provisions
of the Trust Indenture Act of 1939 provided to the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation.
(e) Regulations- The Securities and Exchange Commission may issue such regulations
as may be necessary or appropriate to carry out this section and the amendments
made by this section.
(f) Effective Date- The amendments made by this section shall become effective
1 year after the date of enactment of this Act.
SEC. 112. LIMIT ON GOLDEN PARACHUTES.
Section 1318 of the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4518) is amended by adding at the end the following:
`(c) Authority To Regulate or Prohibit Certain Forms of Benefits to Affiliated
Parties-
`(1) GOLDEN PARACHUTES AND INDEMNIFICATION PAYMENTS- The Agency may prohibit
or limit, by regulation or order, any golden parachute payment or indemnification
payment.
`(2) FACTORS TO BE TAKEN INTO ACCOUNT- The Agency shall prescribe, by
regulation, the factors to be considered by the Agency in taking any action
pursuant to paragraph (1), which may include such factors as--
`(A) whether there is a reasonable basis to believe that the affiliated
party has committed any fraudulent act or omission, breach of trust
or fiduciary duty, or insider abuse with regard to the regulated entity
that has had a material effect on the financial condition of the regulated
entity;
`(B) whether there is a reasonable basis to believe that the affiliated
party is substantially responsible for the insolvency of the regulated
entity, the appointment of a conservator or receiver for the regulated
entity, or the troubled condition of the regulated entity (as defined
in regulations prescribed by the Agency);
`(C) whether there is a reasonable basis to believe that the affiliated
party has materially violated any applicable provision of Federal or
State law or regulation that has had a material affect on the financial
condition of the regulated entity;
`(D) whether the affiliated party was in a position of managerial or
fiduciary responsibility; and
`(E) the length of time that the party was affiliated with the regulated
entity, and the degree to which--
`(i) the payment reasonably reflects compensation earned over the
period of employment; and
`(ii) the compensation involved represents a reasonable payment for
services rendered.
`(3) CERTAIN PAYMENTS PROHIBITED- No regulated entity may prepay the salary
or any liability or legal expense of any affiliated party if such payment
is made--
`(A) in contemplation of the insolvency of such regulated entity, or
after the commission of an act of insolvency; and
`(B) with a view to, or having the result of--
`(i) preventing the proper application of the assets of the regulated
entity to creditors; or
`(ii) preferring one creditor over another.
`(4) GOLDEN PARACHUTE PAYMENT DEFINED-
`(A) IN GENERAL- For purposes of this subsection, the term `golden parachute
payment' means any payment (or any agreement to make any payment) in
the nature of compensation by any regulated entity for the benefit of
any affiliated party pursuant to an obligation of such regulated entity
that--
`(i) is contingent on the termination of such party's affiliation
with the regulated entity; and
`(ii) is received on or after the date on which--
`(I) the regulated entity became insolvent;
`(II) any conservator or receiver is appointed for such regulated
entity; or
`(III) the Agency determines that the regulated entity is in a troubled
condition (as defined in the regulations of the Agency).
`(B) CERTAIN PAYMENTS IN CONTEMPLATION OF AN EVENT- Any payment which
would be a golden parachute payment but for the fact that such payment
was made before the date referred to in subparagraph (A)(ii) shall be
treated as a golden parachute payment if the payment was made in contemplation
of the occurrence of an event described in any subclause of such subparagraph.
`(C) CERTAIN PAYMENTS NOT INCLUDED- For purposes of this subsection,
the term `golden parachute payment' shall not include--
`(i) any payment made pursuant to a retirement plan which is qualified
(or is intended to be qualified) under section 401 of the Internal
Revenue Code of 1986, or other nondiscriminatory benefit plan;
`(ii) any payment made pursuant to a bona fide deferred compensation
plan or arrangement which the Board determines, by regulation or order,
to be permissible; or
`(iii) any payment made by reason of the death or disability of an
affiliated party.
`(5) OTHER DEFINITIONS- For purposes of this subsection, the following
definitions shall apply:
`(A) INDEMNIFICATION PAYMENT- Subject to paragraph (6), the term `indemnification
payment' means any payment (or any agreement to make any payment) by
any regulated entity for the benefit of any person who is or was an
affiliated party, to pay or reimburse such person for any liability
or legal expense with regard to any administrative proceeding or civil
action instituted by the Agency which results in a final order under
which such person--
`(i) is assessed a civil money penalty;
`(ii) is removed or prohibited from participating in conduct of the
affairs of the regulated entity; or
`(iii) is required to take any affirmative action to correct certain
conditions resulting from violations or practices, by order of the
Agency.
`(B) LIABILITY OR LEGAL EXPENSE- The term `liability or legal expense'
means--
`(i) any legal or other professional expense incurred in connection
with any claim, proceeding, or action;
`(ii) the amount of, and any cost incurred in connection with, any
settlement of any claim, proceeding, or action; and
`(iii) the amount of, and any cost incurred in connection with, any
judgment or penalty imposed with respect to any claim, proceeding,
or action.
`(C) PAYMENT- The term `payment' includes--
`(i) any direct or indirect transfer of any funds or any asset; and
`(ii) any segregation of any funds or assets for the purpose of making,
or pursuant to an agreement to make, any payment after the date on
which such funds or assets are segregated, without regard to whether
the obligation to make such payment is contingent on--
`(I) the determination, after such date, of the liability for the
payment of such amount; or
`(II) the liquidation, after such date, of the amount of such payment.
`(6) CERTAIN COMMERCIAL INSURANCE COVERAGE NOT TREATED AS COVERED BENEFIT
PAYMENT- No provision of this subsection shall be construed as prohibiting
any regulated entity from purchasing any commercial insurance policy or
fidelity bond, except that, subject to any requirement described in paragraph
(5)(A)(iii), such insurance policy or bond shall not cover any legal or
liability expense of the regulated entity which is described in paragraph
(5)(A).'.
SEC. 113. REPORTING OF FRAUDULENT LOANS.
Part 1 of subtitle C of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4631 et seq.), as amended by this Act,
is amended by adding at the end the following:
`SEC. 1379E. REPORTING OF FRAUDULENT LOANS.
`(a) Requirement To Report- The Director shall require a regulated entity
to submit to the Director a timely report upon discovery by the regulated
entity that it has purchased or sold a fraudulent loan or financial instrument,
or suspects a possible fraud relating to the purchase or sale of any loan
or financial instrument. The Director shall require each regulated entity
to establish and maintain procedures designed to discover any such transactions.
`(b) Protection From Liability for Reports- Any regulated entity that makes
a report pursuant to subsection (a), and any entity-affiliated party, that
makes or requires another to make any such report, shall not be liable to
any person under any provision of law or regulation, any constitution, law,
or regulation of any State or political subdivision of any State, or under
any contract or other legally enforceable agreement (including any arbitration
agreement) for such report or for any failure to provide notice of such
report to the person who is the subject of such report or any other persons
identified in the report.'.
Subtitle B--Improvement of Mission Supervision
SEC. 121. TRANSFER OF PROGRAM APPROVAL AND HOUSING GOAL OVERSIGHT.
Part 2 of subtitle A of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is amended--
(1) by striking the heading for the part and inserting the following:
`PART `2'--ADDITIONAL AUTHORITIES OF THE DIRECTOR';
(2) by striking sections 1321 and 1322.
SEC. 122. REVIEW OF ENTERPRISE PRODUCTS.
Part 2 of subtitle A of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as amended by this Act,
is amended by inserting before section 1323 the following:
`SEC. 1321. PRIOR APPROVAL AUTHORITY FOR PRODUCTS.
`(a) In General- The Director shall require each enterprise to obtain the
approval of the Director for any product of the enterprise before initially
offering the product.
`(b) Standard for Approval- In considering any request for approval of a
product pursuant to subsection (a), the Director shall make a determination
that--
`(1) in the case of a product of the Federal National Mortgage Association,
the Director determines that the product is authorized under paragraph
(2), (3), (4), or (5) of section 302(b) or section 304 of the Federal
National Mortgage Association Charter Act (12 U.S.C. 1717(b), 1719);
`(2) in the case of a product of the Federal Home Loan Mortgage Corporation,
the Director determines that the product is authorized under paragraph
(1), (4), or (5) of section 305(a) of the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1454(a));
`(3) the product is in the public interest;
`(4) the product is consistent with the safety and soundness of the enterprise
or the mortgage finance system; and
`(5) the product does not impair the stability or competitiveness of the
mortgage finance system.
`(c) Procedure for Approval-
`(1) SUBMISSION OF REQUEST- An enterprise shall submit to the Director
a written request for approval of a product that describes the product
in such form as prescribed by order or regulation of the Director.
`(2) REQUEST FOR PUBLIC COMMENT- Immediately upon receipt of a request
for approval of a product, as required under paragraph (1), the Director
shall publish notice of such request and of the period for public comment
pursuant to paragraph (3) regarding the product, and a description of
the product proposed by the request. The Director shall give interested
parties the opportunity to respond in writing to the proposed product.
`(3) PUBLIC COMMENT PERIOD- During the 30-day period beginning on the
date of publication pursuant to paragraph (2) of a request for approval
of a product, the Director shall receive public comments regarding the
proposed product.
`(4) OFFERING OF PRODUCT-
`(A) IN GENERAL- Not later than 30 days after the close of the public
comment period described in paragraph (3), the Director shall approve
or deny the product, specifying the grounds for such decision in writing.
`(B) FAILURE TO ACT- If the Director fails to act within the 30-day
period described in subparagraph (A), then the enterprise may offer
the product.
`(1) DETERMINATION AND NOTICE- If an enterprise determines that any new
activity, service, undertaking or offering is excluded from the definition
of a product under subsection (f), then the enterprise shall provide written
notice to the Director prior to the commencement of such activity, service,
undertaking, or offering.
`(2) DIRECTOR DETERMINATION OF APPLICABLE PROCEDURE- Immediately upon
receipt of any notice pursuant to paragraph (1), the Director shall make
a determination under paragraph (3).
`(3) DETERMINATION AND TREATMENT AS A PRODUCT- If the Director determines
that any new activity, service, undertaking, or offering consists of,
relates to, or involves a product--
`(A) the Director shall notify the enterprise of the determination;
`(B) the new activity, service, undertaking, or offering described in
the notice under paragraph (1) shall be considered a product for the
purposes of this section; and
`(C) the enterprise shall withdraw its request or submit a written request
for approval of the product pursuant to subsection (c).
`(e) Conditional Approval- The Director may conditionally approve the offering
of any product by an enterprise, and may establish terms, conditions, or
limitations with respect to such product with which the enterprise must
comply in order to offer such product.
`(f) Definition of Product- As used in this section, the term `product'--
`(1) all programs, products, and activities, offered by the enterprise
in the marketplace; and
`(A) the automated loan underwriting system of an enterprise in existence
as of the date of enactment of the Federal Housing Enterprise Regulatory
Reform Act of 2007, including any upgrade to the technology, operating
system, or software to operate the underwriting system; or
`(B) any modification to the mortgage terms and conditions or mortgage
underwriting criteria relating to the mortgages that are purchased or
guaranteed by an enterprise, provided that such modifications do not
alter the underlying transaction so as to include services or financing,
other than residential mortgage financing, or create significant new
exposure to risk for the enterprise or the holder of the mortgage.
`(g) No Limitation- Nothing in this section shall be deemed to restrict--
`(1) the safety and soundness authority of the Director over all new and
existing products or activities; or
`(2) the authority of the Director to review all new and existing products
or activities to determine that such products or activities are consistent
with the statutory mission of an enterprise.'.
SEC. 123. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING GOALS.
Section 1336(a)(1) of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4566(a)(1)) is amended by striking `established'
and all that follows through `1334' and inserting `under this subpart'.
SEC. 124. ASSUMPTION BY DIRECTOR OF OTHER HUD RESPONSIBILITIES.
(a) In General- Part 2 of subtitle A of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is amended--
(1) by striking `Secretary' each place that term appears and inserting
`Director' in each of sections 1323, 1324, 1326, 1331, 1332, 1333, 1334,
and 1336;
(2) in section 1332 (12 U.S.C. 4562), by striking subsection (d);
(3) in section 1333 (12 U.S.C. 4563), by striking subsection (d);
(4) in section 1334 (12 U.S.C. 4564), by striking subsection (d); and
(5) by striking sections 1337, 1338, and 1349 (12 U.S.C. 4567, 4562 note,
4589).
(b) Retention of Fair Housing Responsibilities- Section 1325 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4545) is amended in the matter preceding paragraph (1), by inserting `of
Housing and Urban Development' after `The Secretary'.
SEC. 125. ADMINISTRATIVE AND JUDICIAL ENFORCEMENT PROCEEDINGS.
(a) Director Authority- Subpart C of part 2 of subtitle A of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4581 et seq.) is amended by striking `Secretary' each place that term appears
and inserting `Director' in each of--
(1) section 1341 (12 U.S.C. 4581);
(2) section 1342 (12 U.S.C. 4582);
(3) section 1343 (12 U.S.C. 4583);
(4) section 1344 (12 U.S.C. 4584);
(5) section 1345 (12 U.S.C. 4585);
(6) section 1346 (12 U.S.C. 4586);
(7) section 1347 (12 U.S.C. 4587); and
(8) section 1348 (12 U.S.C. 4588).
(b) Subpoena Enforcement by Director- Section 1348(c) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4588(c))
is amended by inserting `may bring an action or' before `may request'.
SEC. 126. CONFORMING LOAN LIMITS.
(a) Fannie Mae- Section 302(b)(2) of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1717(b)(2)) is amended by striking `The Corporation
shall establish' and all that follows through the end of the paragraph and
inserting the following: `Such limitations shall not exceed $417,000 for
a mortgage secured by a single-family residence, $533,850 for a mortgage
secured by a 2-family residence, $645,300 for a mortgage secured by a 3-family
residence, or $801,950 for a mortgage secured by a 4-family residence, except
that such maximum limitations shall be adjusted effective January 1 of each
year beginning after the effective date under section 163 of the Federal
Housing Enterprise Regulatory Reform Act of 2007, subject to the limitations
in this paragraph. Such limitation shall be calculated with respect to the
total original principal obligation of the mortgage, and not merely with
respect to the interest purchased by the enterprise. Each adjustment shall
be made by adding to or subtracting from each such amount (as it may have
been previously adjusted) a percentage thereof equal to the percentage increase
or decrease, during the most recent 12-month or fourth quarter period ending
before the time of determining such annual adjustment, in the housing price
index maintained by the Director of the Federal Housing Enterprise Regulatory
Agency (pursuant to section 1321 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4541)).'.
(b) Freddie Mac- Section 305(a)(2) of the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1454(a)(2)) is amended by striking `The Corporation shall
establish' and all that follows through the end of the paragraph and inserting
the following: `Such limitations shall not exceed $417,000 for a mortgage
secured by a single-family residence, $533,850 for a mortgage secured by
a 2-family residence, $645,300 for a mortgage secured by a 3-family residence,
or $801,950 for a mortgage secured by a 4-family residence, except that
such maximum limitations shall be adjusted effective January 1 of each year
beginning after the effective date under section 163 of the Federal Housing
Enterprise Regulatory Reform Act of 2007, subject to the limitations in
this paragraph. Such limitation shall be calculated with respect to the
total original principal obligation of the mortgage and not merely with
respect to the interest purchased by the enterprise. Each adjustment shall
be made by adding to or subtracting from each such amount (as it may have
been previously adjusted) a percentage thereof equal to the percentage increase
or decrease, during the most recent 12-month or fourth quarter period ending
before the time of determining such annual adjustment, in the housing price
index maintained by the Director of the Federal Housing Enterprise Regulatory
Agency (pursuant to section 1321 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4541)).'.
(c) Housing Price Index- The Federal Housing Enterprises Financial Safety
and Soundness Act of 1992, as amended by this Act, is amended by inserting
before section 1323 the following:
`SEC. 1322. HOUSING PRICE INDEX.
`(a) Method of Assessment- The Director shall establish, by regulation,
and maintain a method of assessing the national average single-family housing
price for use in adjusting the conforming loan limitations of the enterprises.
`(b) Considerations- The Director shall take into consideration the monthly
survey of all major lenders conducted by the Agency to determine the national
average single-family house price, the Housing Price Index maintained by
the Office of Federal Housing Enterprise Oversight of the Department of
Housing and Urban Development before the effective date under section 163
of the Federal Housing Enterprise Regulatory Reform Act of 2007, any appropriate
housing price indexes of the Bureau of the Census of the Department of Commerce,
and any other indexes or measure that the Director considers appropriate.'.
SEC. 127. REPORTING OF MORTGAGE DATA; HOUSING GOALS.
(a) Reporting of Mortgage Data- Section 1325 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4546), as so redesignated
by this Act, is amended--
(1) in subsection (a), by striking `The Director' and inserting `Subject
to subsection (d), the Director'; and
(2) by adding at the end the following:
`(d) Mortgage Data- The Director shall, by regulation or order, provide
that certain information relating to single family mortgage data of the
enterprises shall be disclosed to the public in order to make available
to the public the same data from the enterprises that is required of insured
depository institutions under the Home Mortgage Disclosure Act.'.
(b) Definitions- Section 1334 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4564), as amended by this Act,
is amended by adding at the end the following:
`(d) Definitions- For purposes of this section, the term `underserved area'
means an urban census tract that has--
`(1) an average median family income of less than 80 percent of the area
median family income; or
`(2) a minority population of at least 30 percent and a median family
income of less than 100 percent of the area family median income.'.
SEC. 128. DUTY TO SERVE UNDERSERVED MARKETS.
(a) Establishment and Evaluation of Performance- Section 1335 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4565) is amended--
(1) in the section heading, by inserting `duty to serve underserved markets
and' before `other';
(2) by striking subsection (b);
(A) by inserting `and to carry out the duty under subsection (a)' before
`, each enterprise shall';
(B) in paragraph (3), by inserting `and' at the end;
(C) in paragraph (4), by striking `; and' and inserting a period; and
(D) by striking paragraph (5); and
(4) by redesignating subsection (a) as subsection (b);
(5) by inserting before subsection (b) (as so redesignated) the following:
`(a) Duty To Serve Underserved Markets-
`(1) DUTY- In accordance with the purposes of the enterprises under section
301(3) of the Federal National Mortgage Association Charter Act (12 U.S.C.
1716) and section 301(b)(3) of the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1451 note) to undertake activities relating to mortgages
on housing for very low-, low-, and moderate-income families, involving
a reasonable economic return that may be less than the return earned on
other activities, each enterprise shall have the duty to increase the
liquidity of mortgage investments and improve the distribution of investment
capital available for mortgage financing for underserved markets.
`(2) UNDERSERVED MARKETS- To meet its duty under paragraph (1), each enterprise
shall lead the industry in developing loan products and flexible underwriting
guidelines to facilitate a secondary market--
`(A) for mortgages on manufactured homes for very low-, low-, and moderate-income
families;
`(B) to preserve housing affordable to very low-, low-, and moderate-income
families, including housing projects subsidized under--
`(i) the project-based and tenant-based rental assistance programs
under section 8 of the United States Housing Act of 1937;
`(ii) the program under section 236 of the National Housing Act;
`(iii) the below market interest rate mortgage program under section
221(d)(4) of the National Housing Act;
`(iv) the supportive housing for the elderly program under section
202 of the Housing Act of 1959;
`(v) the supportive housing program for persons with disabilities
under section 811 of the Cranston-Gonzalez National Affordable Housing
Act; and
`(vi) the rural rental housing program under section 515 of the Housing
Act of 1949;
`(C) for mortgages on housing for very low-, low-, and moderate-income
families in rural areas, and for mortgages for housing for any other
underserved market for very low-, low-, and moderate-income families
that the Director identifies as lacking adequate credit through conventional
lending sources, which underserved markets may be identified by borrower
type, market segment, or geographic area; and
`(D) for mortgages originated through State or local affordable or subsidized
housing programs.'; and
(6) by adding at the end the following new subsection:
`(c) Evaluation and Reporting of Compliance-
`(1) METHOD OF EVALUATION- Not later than 6 months after the effective
date of title I of the Federal Housing Enterprise Regulatory Reform Act
of 2007, the Director shall establish a method for evaluating whether,
and the extent to which, the enterprises have complied with the duty under
subsection (a) to serve underserved markets and for rating the extent
of such compliance.
`(2) ANNUAL EVALUATIONS- Using the method established under paragraph
(1), the Director shall, for each year, evaluate such compliance and rate
the performance of each enterprise as to the extent of compliance. The
Director shall include such evaluation and rating for each enterprise
for a year in the report for that year submitted pursuant to section 1319B(a).
`(3) SEPARATE EVALUATIONS- In determining whether an enterprise has complied
with the duty under subsection (a), the Director shall separately evaluate
whether the enterprise has complied with such duty with respect to each
of the underserved markets identified in subsection (a), taking into consideration--
`(A) the development of loan products and more flexible underwriting
guidelines;
`(B) the extent of outreach to qualified loan sellers in each of such
underserved markets; and
`(C) the volume of loans purchased in each of such underserved markets.'.
(b) Enforcement- Section 1336(a) of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4566(a)) is amended--
(1) in paragraph (1), by inserting before the period `and with the duty
under section 1335A of each enterprise with respect to underserved markets';
and
(2) by adding at the end the following:
`(4) ENFORCEMENT OF DUTY TO PROVIDE MORTGAGE CREDIT TO UNDERSERVED MARKETS-
Compliance with the duty under section 1335(a) of each enterprise to serve
underserved markets (as determined in accordance with section 1335(c))
shall be enforceable under this section to the same extent and under the
same provisions that the housing goals established under sections 1332,
1333, and 1334 are enforceable. Such duty shall not be enforceable under
any provision of this title (including subpart C), other than this section,
or under any provision of the Federal National Mortgage Association Charter
Act or the Federal Home Loan Mortgage Corporation Act, as applicable.'.
SEC. 129. HOME PURCHASE GOAL.
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4501 et seq.) is amended--
(1) by inserting after section 1334 the following:
`SEC. 1334A. HOME PURCHASE GOAL.
`(1) IN GENERAL- The Director shall establish an annual home purchase
goal for the purchase by each enterprise of mortgage financing of owner-occupied
single family dwelling units.
`(2) COMPONENTS- The Director may, by regulation, establish components
for the goal established under paragraph (1) to include any or all of
the following:
`(A) First-time home buyers.
`(B) Low- and moderate-income home buyers.
`(C) Home buyers in central cities, rural areas, and other underserved
areas.
`(D) Home buyers who obtain financing through State or local affordable
or subsidized housing programs.
`(3) OTHER AUTHORITY- The Director may, by regulation, establish the goal
under paragraph (1) with components as percentages of enterprise business,
or by such other means as necessary to increase the secondary market financing
of mortgages by the enterprises for home purchases, consistent with the
missions of the enterprises.
`(4) ENFORCEABILITY- The components of the goal established by the Director
under paragraph (1) shall be enforceable as goals under subpart C.
`(b) Factors To Be Considered- In establishing the home purchase goal for
an enterprise under this section, the Director shall consider--
`(1) national housing needs;
`(2) economic, housing, and demographic conditions;
`(3) the performance and effort of the enterprises toward achieving the
home purchase goal in previous years;
`(4) the size of the conventional mortgage market serving home purchasers,
relative to the size of the overall conventional mortgage market;
`(5) the ability of the enterprises to lead the industry in making mortgage
credit available for home purchasers; and
`(6) the need to maintain the sound financial condition of the enterprises.
`(c) Transition- In order to permit a transition to the establishment of
the goal under this section, such goal shall not be effective or enforceable
during the 1-year period beginning on the date of its establishment under
subsection (a).
`(d) Implementation During Transition- The Director shall establish, by
rule, any requirements necessary to implement the transition provisions
under subsection (c), after providing the enterprises with an opportunity
to review and comment not less than 30 days before the issuance of such
notice.
`SEC. 1334B HOUSING GOALS, ADDITIONS, MODIFICATIONS, AND RESCISSIONS.
`(1) AUTHORITY TO ADDRESS GOALS- The Director may, by regulation, establish
additional annual housing goals, or modify or rescind existing housing
goals, to address national housing needs consistent with the missions,
of the enterprises and the authorizing statutes, for the purchase of mortgages,
if the Director determines, by regulation, that the housing need is greatest.
`(2) METHODOLOGY- The Director may issue a regulation which establishes
or modifies any goal under this subsection--
`(A) as a percentage of the mortgage purchases of each enterprise;
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