[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2413 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 2413
To establish a sustainable Federal Secondary Market Facility for
Residential Mortgages that is financed by private capital, to terminate
the conservatorships of Fannie Mae and Freddie Mac and repeal the
charter Acts of such enterprises, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 6, 2011
Mr. Gary G. Miller of California (for himself and Mrs. McCarthy of New
York) introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To establish a sustainable Federal Secondary Market Facility for
Residential Mortgages that is financed by private capital, to terminate
the conservatorships of Fannie Mae and Freddie Mac and repeal the
charter Acts of such 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 AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Secondary Market
Facility for Residential Mortgages Act of 2011''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title and table of contents.
Sec. 2. Purpose.
Sec. 3. Definitions.
TITLE I--SECONDARY MARKET FACILITY FOR RESIDENTIAL MORTGAGES
Sec. 101. Establishment of Secondary Market Facility for Residential
Mortgages.
Sec. 102. Limitations on mortgage purchases.
Sec. 103. Reduction of market share.
Sec. 104. Capital standards.
Sec. 105. Guarantee fees.
Sec. 106. Federal insurance backstop.
Sec. 107. Deficit reduction.
Sec. 108. Portfolio reduction.
Sec. 109. Initial standards.
TITLE II--ENDING THE CONSERVATORSHIPS OF FANNIE MAE AND FREDDIE MAC
Sec. 201. Treasury plan.
Sec. 202. Implementation of plan.
Sec. 203. Repeal of charter Acts.
TITLE III--FEDERAL HOUSING FINANCE AGENCY
Sec. 301. Establishment of Federal Housing Finance Agency Board.
Sec. 302. Supervision and regulation of Facility by FHFA.
Sec. 303. Conforming amendments.
SEC. 2. PURPOSE.
The purpose of this Act is to establish a Federal secondary market
facility for residential mortgages, to provide that the operations
thereof shall be financed by private capital, and to authorize such
facility to--
(1) provide stability in the secondary market for
residential mortgages;
(2) respond appropriately to the private capital market;
(3) maintain the secondary market for residential
mortgages, including the ``TBA'' (to-be-announced) market;
(4) improve the distribution of investment capital
available for residential mortgage financing and as a result
facilitate access to mortgage credit to qualified borrowers
throughout the United States (including in central cities,
rural areas, high-cost areas, and underserved areas); and
(5) manage and liquidate the mortgage portfolios of Fannie
Mae and Freddie Mac in an orderly manner, in a way that
contributes to the stability of the housing market and with
minimum loss and maximum profit to the Federal Government.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) Approved seller.--The term ``approved seller'' means a
seller of a mortgage who has been approved by the Facility in
accordance with the standards established by the FHFA Board
pursuant to section 102(j).
(2) Conservatorship.--The term ``conservatorship'' means,
with respect to an enterprise, the conservatorship of the
enterprise established pursuant to section 1367 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4617) and in effect on the date of the enactment of
this Act.
(3) Enterprise.--The term ``enterprise'' means--
(A) the Federal National Mortgage Association; and
(B) the Federal Home Loan Mortgage Corporation.
(4) Facility.--The term ``Facility'' means the Secondary
Market Facility for Residential Mortgages established under
section 101 of this Act.
(5) Facility-affiliated party.--The term ``Facility-
affiliated party'' means--
(A) any director, officer, or employee of, or agent
for, the Facility;
(B) any affiliate, consultant, or joint venture
partner of the Facility, and any other person, as
determined by the FHFA Board (by regulation or on a
case-by-case basis) that participates in the conduct of
the affairs of the Facility; and
(C) any independent contractor for the Facility
(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 Facility.
(6) Facility board.--The term ``Facility Board'' means the
Board of Directors of the Secondary Market Facility for
Residential Mortgages, established under section 101.
(7) FHFA board.--The term ``FHFA Board'' means the Federal
Housing Finance Agency Board established under section 1312 of
the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992, as amended by section 301 of this Act.
(8) Residential mortgage.--The term ``residential
mortgage'' means a mortgage on single-family housing or
multifamily housing.
(9) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(10) Single-family housing.--The term ``single-family
housing'' means a residence consisting of 1 to 4 dwelling
units.
(11) Multifamily housing.--The term ``multifamily housing''
means a residence consisting of more than 4 dwelling units.
TITLE I--SECONDARY MARKET FACILITY FOR RESIDENTIAL MORTGAGES
SEC. 101. ESTABLISHMENT OF SECONDARY MARKET FACILITY FOR RESIDENTIAL
MORTGAGES.
(a) Establishment.--There is hereby established a Secondary Market
Facility for Residential Mortgages, which shall be a body corporate
without capital stock.
(b) Purpose.--The purpose of the Facility shall be to ensure that
capital for residential mortgages is available to qualified homebuyers
throughout the United States, without regard to region, area, or other
geographic location.
(c) Federal Status.--The Facility shall be an instrumentality of
the Federal Government.
(d) Board of Directors.--
(1) Establishment; appointment.--The Facility shall be
under the direction of a Board of Directors, which shall
consist of 5 members who shall be appointed by the President,
and shall not be officers or employees of the Federal
Government. The initial members of the Facility Board shall be
appointed not later than the expiration of the 6-month period
beginning on the date of the enactment of this Act.
(2) Qualifications.--Of the members appointed to the
Facility Board--
(A) 3 members shall possess extensive experience
and expertise in financial management or oversight,
capital markets (including debt markets), the secondary
mortgage market, and mortgage-backed securities; and
(B) 2 members shall possess extensive experience
and expertise in mortgage finance (including single-
family and multifamily housing mortgage finance and
with credit unions and small institutions).
(3) Political affiliation.--Not more than three members of
the Facility Board may be members of the same political party.
(4) Term; removal.--Each member of the Facility Board shall
be appointed for a term of 5 years, except that any member may
be removed from office by the President for good cause.
(5) Chairperson.--The Chairperson of the Facility Board
shall be designated by the President at the time of
appointment. The Chairperson shall designate another member to
serve as Acting Chairperson during the absence or disability of
the Chairperson.
(6) Vacancies.--A member of the Facility Board appointed to
fill a vacancy occurring before the expiration of the term for
which the member's predecessor was appointed shall be appointed
only for the remainder of that term.
(7) Continuation of membership.--A member of the Facility
Board may serve after the expiration of the member's term until
a successor has been appointed.
(e) Mortgage-Related Activities.--The business of the Facility
shall be limited to the following functions, and such activities as may
be incident to such functions:
(1) Borrowing.--Borrowing, giving security, paying interest
and other return, and issuing notes, debentures, bonds, and
other obligations and securities to fund the purchase of
residential mortgages, and to achieve initial capitalization
levels as required by the FHFA Board.
(2) Single-family mortgage purchase.--The purchase of
residential mortgages on single-family housing that are
originated by approved sellers pursuant to section 102(j).
(3) Multifamily mortgage purchase.--The purchase of
residential mortgages on multifamily housing that are
originated by approved sellers pursuant to section 102(j).
(4) Maintenance of tba market.--Maintaining the ``to-be-
announced'' market for securities based on or backed by
residential mortgages on single-family or multifamily housing.
(5) Mortgage-backed securities.--Issuing, and guaranteeing
timely payment of principal and interest on, securities and
other obligations based on or backed by a pool of residential
mortgages purchased by the Facility, whose quality and
characteristics are interchangeable with securities issued by
the enterprises before the date of the enactment of this Act,
including applicable rules related to the calculation of net
capital requirements.
(6) Collection of fees.--The collection of guarantee fees
established under section 105 in connection with mortgage
purchases and reinsurance fees established under section
106(a).
(7) Risk management.--The management of interest rate risk
associated with operations of the Facility.
(f) Prohibition on Mortgage Origination.--The Facility shall not
engage in mortgage origination.
(g) Self-Supporting.--The operations of the Facility shall be
funded only by income derived from its operations, after obligations
for capital reserves in accordance with section 104 and for the
Reinsurance Fund under section 106(b) are met.
(h) Equal Access to Products.--The FHFA Board shall, by regulation,
require that the Facility operate to carry out the purposes under
subsection (b) in a manner that provides equal access at all times, by
all eligible or qualified and approved residential mortgage lenders,
and all markets, to products of the Facility.
(i) Personnel.--The Facility Board may fix the number and basic pay
of, and appoint and direct, all employees of the Facility without
regard to the provisions of title 5, United States Code.
(j) Leasing Authority.--For the purpose of mitigating losses to the
taxpayer and stabilizing home prices, the Facility may market for
rental any real-estate owned properties and assets of the enterprises
that are transferred to the Facility pursuant to section 201(b) and
enter into such lease agreements with lessees as the Facility Board
determines appropriate, prior to sale of such properties and assets,
except that any such lease agreement shall terminate before the
expiration of the 5-year period beginning upon the establishment of the
Facility.
(k) Budgets; Audits; Management Reports; Obligations.--The Facility
shall be considered a wholly owned Government corporation for purposes
of chapter 91 of title 31, United States Code, but not including
section 9108 of such chapter.
(l) General Powers.--The Facility may--
(1) adopt, amend, and repeal bylaws;
(2) adopt and use a corporate seal;
(3) enter into contracts, incur liabilities, make
guarantees, borrow money, issue notes, bonds, and other
obligations;
(4) sue or be sued in its own capacity; and
(5) purchase, receive, hold, and use real and personal
property and other assets necessary for the conduct of its
operations.
SEC. 102. LIMITATIONS ON MORTGAGE PURCHASES.
(a) Safe and Sound Mortgages.--
(1) Limitation on facility purchases.--To limit the risk
assumed by the Facility, the FHFA Board shall, by regulation,
limit the residential mortgages that may be purchased by the
Facility to safe and sound mortgages, as such term is defined
pursuant to paragraph (2), within such mortgage product types
and classifications as are approved in advance by the FHFA
Board pursuant to paragraph (3).
(2) Definition.--The FHFA Board shall, by regulation,
define the term ``safe and sound residential mortgages'' for
purposes of this subsection, which shall--
(A) be established by the FHFA Board;
(B) be limited to mortgages that are of a quality,
type, and class determined by the FHFA Board to be
appropriate to provide adequate liquidity in the
housing finance markets and that serve a range of
residential mortgagors and residential housing markets,
which shall include--
(i) mortgages having a term to maturity of
30 years or less and a fixed rate of interest
over the entire term of mortgage;
(ii) mortgages for single-family housing
and mortgages for multifamily housing;
(iii) programs for whole loans and
certificates; and
(iv) other mortgages that are not insured
under the National Housing Act and not
securitized through securities guaranteed by
the Government National Mortgage Association;
(C) incorporate--
(i) the outstanding balance requirements
for single-family mortgages under subsection
(b) of this section;
(ii) the conforming loan limits for single-
family mortgages under subsection (c) of this
section;
(iii) the downpayment requirements for
single-family mortgages under subsection (d) of
this section;
(iv) the requirements for adjustable rate
mortgages under subsection (e) of this section;
(v) the representation and warranty
requirements under subsection (f) of this
section;
(vi) the underwriting standards under
subsection (g) of this section; and
(vii) the property valuation standards
under subsection (h) of this section.
(3) Product approval.--The FHFA Board shall require the
Facility to obtain the approval of the FHFA Board for any
product of the Facility before initially offering the product.
The FHFA Board shall establish standards for approval of
products, which shall provide for conditional approval and
procedures for submission of requests for such approval.
(b) Outstanding Balance Requirements for Single-Family Mortgages.--
The regulations of the FHFA Board pursuant to subsection (a) shall
ensure that a mortgage on single-family housing shall not be considered
a safe and sound mortgage if the outstanding principal balance under
the mortgage at the time of purchase by the Facility exceeds 80 percent
of the sale price of the single-family residence securing the mortgage,
unless--
(1) the seller retains a participation of not less than 10
percent of the sale price of the single-family residence
securing the mortgage, and the aggregate amount any outstanding
principal balance (including such participation) shall not
exceed 90 percent of the sale price of the single-family
residence securing the mortgage;
(2) for such period and under such circumstances as the
Facility Board may require, the seller agrees to repurchase or
replace the mortgage upon demand of the Facility in the event
that the mortgage is in default;
(3) the portion of the outstanding principal balance of the
mortgage that exceeds such 80 percent is guaranteed or insured
by a qualified insurer, as determined by the Facility in
accordance with such standards and requirements as the FHFA
Board shall establish; or
(4) the mortgage is financed in part through a shared
equity arrangement under which independent, private sector
investors invest, together with the mortgagors, equity funds
for such residences in the form of cash (or its equivalent)
paid on account of the property and thereby share in the
ownership of such residences, except that--
(A) the mortgagor shall retain an ownership in the
residence under the shared equity arrangement that is
not less than 50 percent; and
(B) such private sector financing may provide not
more than half of the minimum downpayment amount
required under subsection (d).
(c) Conforming Loan Limits for Single-Family Mortgages.--The
regulations of the FHFA Board pursuant to subsection (a) shall ensure
that a mortgage on single-family housing of a particular size shall not
be considered a safe and sound mortgage if the mortgage has an original
principal obligation that exceeds the higher of--
(1) the maximum dollar amount limitation for such fiscal
year governing the maximum original principal obligation of
mortgages that are purchased by the Federal Home Loan Mortgage
Corporation for such size residence, as determined under
section 305(a)(2) of the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1454(a)(2)), or
(2) 125 percent of the area median price for a residence of
the applicable size, but in no case to exceed 175 percent of
the limitation for such year determined under such section
305(a)(2) for a residence of the applicable size,
except that, for mortgages originated in any year, if the limitation
for such year on the maximum original principal obligation of a
mortgage that may be purchased by the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation determined
under section 302(b)(2) of the Federal National Mortgage Association
Charter Act (12 U.S.C. 1717(b)(2)) or section 305(a)(2) of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1754(a)(2)) respectively,
for any size residence for any area is less than such maximum original
principal obligation limitation that was in effect for such size
residence for such area for 2008 pursuant to section 201 of the
Economic Stimulus Act of 2008 (Public Law 110-185; 122 Stat. 619),
notwithstanding any other provision of law or of this Act, the
limitation under this subsection on the maximum original principal
obligation of a mortgage for such size residence for such area that may
be considered a safe and sound mortgage shall be such maximum
limitation in effect for such size residence for such area for 2008.
(d) Downpayment Requirement.--The regulations of the FHFA Board
pursuant to subsection (a) shall ensure that, notwithstanding any other
provision of this title, a mortgage on single-family housing shall not
be considered a safe and sound mortgage unless the mortgagor has paid
on account of the property subject to the mortgage, in cash (or its
equivalent), an amount equal to not less than 5 percent of the sale
price of the property or such larger amount as the FHFA Board may
establish to mitigate risks and prevent losses to the Facility.
(e) Adjustable Rate Mortgages.--The regulations of the FHFA Board
pursuant to subsection (a) shall provide that a mortgage on single-
family housing having an interest rate that is not fixed at a single
annual percentage rate for the entire term of the mortgage shall not be
considered a safe and sound mortgage unless such quality, type, and
class of non-fixed rate mortgages has been approved for purposes of
this section by the FHFA Board as consistent with the safety and
soundness of the Facility and the mortgage finance system.
(f) Representation and Warranty Requirement.--The regulations of
the FHFA Board pursuant to subsection (a) shall provide that a mortgage
shall not be considered a safe and sound mortgage unless such mortgage
meets such requirements regarding representations and warranties
sufficient to certifying that the mortgage is covered by a policy for
title insurance as the FHFA Board shall establish to ensure that title-
related risks for the mortgage are borne by State-licensed title
insurance companies.
(g) Underwriting Standards.--The regulations of the FHFA Board
pursuant to subsection (a) shall provide that a mortgage shall not be
considered a safe and sound mortgage unless such mortgage meets such
underwriting standards as the FHFA Board shall establish that--
(1) promote transparency, uniformity, and consumer
protections; and
(2) ensure a mortgagor's ability to repay the mortgage
obligation, including standards for determining mortgagors'
income, assets, liabilities, credit history, and credit risk.
(h) Property Valuation Standards.--The regulations of the FHFA
Board pursuant to subsection (a) shall provide that a mortgage shall
not be considered a safe and sound mortgage unless such mortgage meets
the property valuation and appraisal standards under subpart E of part
226 of title 12, Code of Federal Regulations (Regulation Z).
(i) Price Limitations.--The Facility shall ensure that prices to be
paid by the Facility for residential mortgages purchased shall be based
on market prices for the particular class of mortgages involved.
(j) Seller Approval.--The Facility may purchase residential
mortgages meeting the requirements of this title only from sellers who
have been approved by the Facility as meeting such standards for
approval as the Facility Board shall establish, which shall include
standards governing the following:
(1) Care and due diligence in complying with the
underwriting standards established pursuant to subsection (g).
(2) Minimum capital to ensure the ability to perform under
standard representations and warranties.
(3) Contractual obligations.
(4) Representations and warranties pursuant to subsection
(f).
(5) Indemnification for losses.
(6) Delivery of documents.
(7) Ownership, establishment, maintenance, retaining,
examination, and storage of mortgage records and information.
(8) Fidelity bond and errors and omissions coverage.
(9) Capitalization, net worth, and liquidity.
(10) Lending practices.
(k) Servicing of Mortgages.--This Act may not be construed to
prohibit, or to authorize the Facility Board or the FHFA Board to
prohibit, any approved seller who sells a mortgage to the Facility from
servicing such mortgage.
SEC. 103. REDUCTION OF MARKET SHARE.
(a) Limitations.--The FHFA Board shall, by regulation, seek to
ensure that the market share of the Facility, as defined by the FHFA
Board, does not exceed approximately 50 percent of mortgage
originations in the United States.
(b) Standards and Requirements.--The FHFA Board shall establish
such standards and requirements regarding the maximum volume of
purchases by the Facility. In establishing such standards, the FHFA
Board shall seek to avoid excessive disruption to stability of the
residential mortgage market.
(c) Safety Valve.--Notwithstanding any other provision of this
section, the FHFA Board may provide, in a timely manner, for the
temporary suspension or adjustment of the limits under this section on
the market share of the Facility, but only if the FHFA Board determines
that the private market has significantly reduced participation in the
residential mortgage markets, taking into consideration the yield
spread between private label mortgage-backed securities and mortgage-
backed securities issued by the Facility and such other indicia as the
FHFA Board considers appropriate.
(d) Correction Plan.--If at any time the FHFA Board determines that
the market share of the Facility exceeds the maximum market share
permitted under this section, the FHFA Board shall require the Facility
to establish and implement a plan that--
(1) reduces such market share so that it complies with the
subsection (a)(1);
(2) impacts all geographic regions of the country
similarly;
(3) restricts or prohibits the business of the Facility in
mortgages that are used to prepay an existing loan secured by
the same property as such mortgage; and
(4) increases guarantee fees under section 105 or
reinsurance fees under section 106(a), or both.
Such a plan shall seek to impact all lenders as equally as possible,
taking into account each lender's history regarding its share of
activity in selling mortgages to the Facility.
SEC. 104. CAPITAL STANDARDS.
(a) In General.--The FHFA Board shall, by regulation, establish
risk-based capital requirements for the Facility to ensure that the
Facility operates in a safe and sound manner, maintaining sufficient
capital and reserves to support the risks that arise in operations and
management of the Facility.
(b) Factors.--The capital requirements for the Facility shall--
(1) be based on the risks specifically involved in the
purchase and securitization of safe and sound mortgages, as
such term is defined pursuant to section 103(a); and
(2) be based on actuarial loss rate history of mortgages
having similar characteristics.
SEC. 105. GUARANTEE FEES.
(a) Establishment.--The Facility shall charge a guarantee fee under
this section in connection with any purchase of residential mortgages
from approved sellers and in connection with any guarantee issued by
the Facility of timely payment of principal and interest on mortgage-
backed securities, notes, and other obligations issued by the Facility.
(b) Amount.--Any guarantee fee under this section shall be in an
amount that the Facility Board determines appropriate and reasonable,
based on likelihood of loss for the particular type of product, to
provide for operation of the Facility in accordance with this Act,
except that such fees may be increased to facilitate compliance with
the market share limitations under section 103 or for such other
purpose as the FHFA Board may approve. The FHFA Board may establish a
minimum amount for the guarantee fee.
(c) Impermissible Considerations.--Such fees shall be based on
quality of mortgages and may not be based on or incorporate--
(1) the geographic location of properties subject to
mortgages backing or on which are based such securities, notes,
or other obligations;
(2) the volume of mortgages sold to the Facility by an
approved seller; or
(3) any consideration of reducing the costs of
homeownership.
SEC. 106. FEDERAL INSURANCE BACKSTOP.
(a) Reinsurance Fees.--
(1) In general.--The Facility shall collect and transfer to
the Reinsurance Fund established under subsection (b), a
reinsurance fee under this subsection in connection with any
guarantee issued by the Facility of timely payment of principal
and interest on mortgage-backed securities, notes, and other
obligations issued by the Facility.
(2) Amount.--The fee shall be established by the Facility
Board in such amount as may be necessary to cover obligations
of the Facility under such guarantees to the extent the capital
funds of the Facility cannot cover such obligations and shall
be based on the outstanding mortgage exposure of the Facility.
The FHFA Board may establish a minimum amount for the
reinsurance fee.
(b) Reinsurance Fund.--
(1) Establishment.--There is established in the Treasury of
the United States a Reinsurance Fund for the Facility.
(2) Credits.--The Reinsurance Fund shall be credited with--
(A) all reinsurance fees collected by the Facility
pursuant to subsection (a);
(B) any amounts earned on investments of the Fund
pursuant to paragraph (4); and
(C) such other amounts as may be credited to the
Fund, including amounts as may be required to be
credited by the Secretary of the Treasury.
(3) Use.--Amounts in the Reinsurance Fund shall be
available, at the direction of FHFA Board, only for payment of
obligations of the Facility under guarantees issued by the
Facility of timely payment of principal and interest on
mortgage-backed securities, notes, and other obligations issued
by the Facility and only to the extent that the FHFA Board
determines that the capital of the Facility is insufficient to
cover such obligations.
(4) Investments.--The Secretary may invest such amounts as
the Secretary considers advisable in obligations issued or
guaranteed by the United States.
SEC. 107. DEFICIT REDUCTION.
Any receipts and earnings of the Facility in excess of amounts
required to comply with the capital standards established pursuant to
section 104, amounts required to be deposited in the Reinsurance Fund
established under section 106(b), and amounts required for the
repurchase of senior preferred stock of the enterprises issued pursuant
to the Senior Preferred Stock Purchase Agreements entered into between
the Department of the Treasury and the enterprises in September 2008
(as such Agreement may be amended and restated), shall be transferred
into the General Fund of the Treasury and used to reduce the budget
deficit of the Federal Government.
SEC. 108. PORTFOLIO REDUCTION.
(a) Limitation.--
(1) In general.--The Facility may not own mortgage assets
in excess of $250,000,000,000, as such amount shall be adjusted
by the FHFA Board, effective January 1 of each year beginning
after the date of the enactment of this Act, in accordance with
an appropriate inflationary index, as determined by the FHFA
Board. The FHFA Board shall cause notice of each such
adjustment to be published promptly in the Federal Register.
(2) Definition.--For purposes of this section, the term
``mortgage assets'' means, with respect to the Facility, assets
of the Facility 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
the Facility.
(b) Use.--Mortgage assets owned by the Facility shall be available
for use--
(1) to support multifamily housing and residential
mortgages that cannot readily be securitized;
(2) to provide financing to support residential mortgage
markets affected by economic downturns; and
(3) to modify delinquent mortgages that are purchased from
pools of mortgages backing or on which are based mortgage-
backed securities issued and guaranteed by the Facility.
(c) Monitoring.--The FHFA Board shall monitor the mortgage assets
owned by the Facility to ensure compliance with this section.
(d) Safety Valve.--Notwithstanding subsection (a), the FHFA Board
may provide for the temporary increase in the limitation under
subsection (a) on mortgage assets owned by the Facility if the FHFA
Board determines that the there has been a substantial reduction in the
availability of private residential mortgage financing, taking into
consideration such indicia as the FHFA Board considers appropriate.
SEC. 109. INITIAL STANDARDS.
Not later than the expiration of the 6-month period beginning upon
the appointment of all initial members of the FHFA Board pursuant to
section 301(b) the FHFA Board shall issue such regulations, guidelines,
orders, requirements, and standards pursuant to section 1396C of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
(as added by section 302 of this Act) as may be required under this
title for the establishment and operation of the Facility.
TITLE II--ENDING THE CONSERVATORSHIPS OF FANNIE MAE AND FREDDIE MAC
SEC. 201. TREASURY PLAN.
(a) In General.--Not later than the expiration of the 6-month
period beginning upon the date of the enactment of this Act, the
Secretary of the Treasury, in consultation with the Director of the
Federal Housing Finance Agency, shall develop and submit to the
Congress a plan that provides for the orderly and timely wind-down and
termination of the enterprises, during such period as the Secretary
considers appropriate but in no case ending later than 36 months after
the date of the enactment of this Act, in accordance with this section
and the receivership authority under section 1367 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 and in a
manner that avoids excessive disruption to the stability of the
residential mortgage market.
(b) Contents.--Such plan--
(1) shall provide for the termination, during the period
referred to in subsection (a), of the authority of the
enterprises to conduct any new business;
(2) shall provide for the transfer of the assets,
obligations, and liabilities of the enterprises to the
Secondary Market Facility for Residential Mortgages established
under title I;
(3) may provide for the Facility to segregate such sound
assets and troubled or impaired assets of the enterprises into
separate trusts or entities;
(4) shall provide for the full repayment to the taxpayers
and the Federal Government of the investment made by the
taxpayers and the Federal Government in the enterprises, which
repayment shall be made by the Facility from income generated
by the Facility, in a manner that is generally consistent with
the manner in which the taxpayers and the Federal Government
were reimbursed by financial institutions assisted under the
Troubled Assets Relief Program of the Secretary of the Treasury
under title I of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5211 et seq.), or in such other manner as the
Secretary considers appropriate;
(5) shall provide for the Secondary Market Facility for
Residential Mortgages established under title I of this Act to
purchase from the Secretary of the Treasury all preferred stock
held by the Treasury pursuant to purchase under the Senior
Preferred Stock Purchase Agreements entered into with the
Treasury by the enterprises in September 2008 (as such
Agreements have been amended and restated);
(6) shall provide that, notwithstanding any other provision
of law, any provision of the Senior Preferred Stock Purchase
Agreement entered into between the Department of the Treasury
and an enterprise in September 2008 (as any such Agreement may
be amended and restated), or any provision of any certificate
in connection with such an 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 an
Agreement, the annual rate of dividends paid on the Variable
Liquidation Preference Senior Preferred Stock of each
enterprise issued pursuant to such an Agreement shall, until
all such stock is purchases by the Facility pursuant to
paragraph (5) of this subsection--
(A) be reduced to not more than 5 percent; and
(B) be variable and based on market conditions and
performance;
(7) shall provide for the fulfillment of all obligations of
the enterprises under any outstanding debt obligations and
mortgage-backed securities of the enterprises; and
(8) shall provide a date during the period referred to in
subsection (a) for the repeal of the Federal National Mortgage
Association Charter Act and the Federal Home Loan Mortgage
Corporation Act.
SEC. 202. IMPLEMENTATION OF PLAN.
The Secretary shall--
(1) commence implementation of the plan submitted to the
Congress under section 201 upon expiration of the 90-day period
beginning upon such submission; and
(2) wind-down and terminate the enterprises in accordance
with the terms of the plan.
SEC. 203. REPEAL OF CHARTER ACTS.
Upon the date specified in the plan pursuant to section 201(b)(8),
the following provisions are repealed:
(1) The Federal National Mortgage Association Charter Act
(12 U.S.C. 1716 et seq.).
(2) The Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1451 et seq.).
TITLE III--FEDERAL HOUSING FINANCE AGENCY
SEC. 301. ESTABLISHMENT OF FEDERAL HOUSING FINANCE AGENCY BOARD.
(a) Establishment.--Section 1312 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4512) is
amended--
(1) by striking the section designation and heading and all
that follows through subsection (c);
(2) by striking subsections (e) through (g);
(3) by redesignating subsection (d) as subsection (l); and
(4) by inserting before subsection (l) (as so redesignated)
the following:
``SEC. 1312. FEDERAL HOUSING FINANCE AGENCY BOARD.
``(a) Establishment.--There is established the Federal Housing
Finance Agency Board, who shall govern the Agency.
``(b) Appointment.--The FHFA Board which shall consist of 5
members, as follows:
``(1) Ex officio members.--Two ex officio members who shall
be--
``(A) the Secretary of the Treasury or the
Secretary's designee; and
``(B) the Secretary of Housing and Urban
Development or the Secretary's designee.
``(2) Appointed members.--Three members, who shall be
appointed by the President, by and with the advice and consent
of the Senate, who shall include--
``(A) one member who shall possess extensive
experience and expertise in financial management or
oversight, capital markets (including debt markets),
the secondary mortgage market, and mortgage-backed
securities; and
``(B) two members who shall possess extensive
experience and expertise in mortgage finance (including
single-family and multifamily housing mortgage finance
and with credit unions and smaller financial
institutions), development of affordable housing, and
economic development and revitalization.
``(c) Political Affiliation.--Not more than three members of the
FHFA Board may be members of the same political party.
``(d) Chairperson.--The Chairperson of the FHFA Board shall be
designated by the President at the time of appointment. The Chairperson
shall designate another member to serve as Acting Chairperson during
the absence or disability of the Chairperson.
``(e) Term; Removal.--Each member of the FHFA Board shall be
appointed for a term of 5 years, and may be removed by the President
only for cause.
``(f) Vacancies.--A member of the FHFA Board appointed to fill a
vacancy occurring before the expiration of the term for which the
member's predecessor was appointed shall be appointed only for the
remainder of that term.
``(g) Continuation of Membership.--A member of the FHFA Board may
serve after the expiration of the member's term until a successor has
been appointed.
``(h) Compensation.--Members of the FHFA Board shall each receive
compensation at the rate prescribed for level III of the Executive
Schedule under section 5314 of title 5, United States Code.
``(i) Meetings.--The FHFA Board shall meet upon notice by the
Chairperson, but in no event shall the FHFA Board meet less frequently
than once every 2 months. Any member of the FHA Board may, upon giving
written notice to the Chairperson, require a special meeting of the
FHFA Board, which shall be convened by the Chairperson within 30 days
after such notice.
``(j) Testimony.--On an annual basis, the Board shall testify
before the Congress regarding the safety and soundness of the Secondary
Market Facility for Residential Mortgages, any material deficiencies in
the conduct of the operations of the Facility; the overall operational
status of the Facility; operations, resources, and performance of the
FHFA Board, and such other matters relating to the FHFA Board and the
Facility.
``(k) Advisory Committee.--
``(1) Establishment.--There is established an Advisory
Committee to consist of 12 members who shall be appointed by
the FHFA Board.
``(2) Membership.--Members of the Advisory Committee shall
be broadly representative of mortgage loan originators,
investors in mortgage-backed securities, and consumer advocacy
organizations, and shall include--
``(A) 3 members who have extensive experience and
expertise in financial management or oversight, capital
markets (including debt markets), the secondary
mortgage market, and mortgage-backed securities;
``(B) 3 members who have extensive experience and
expertise in mortgage finance, including with single
family and multifamily housing and with credit unions
and small institutions;
``(C) 3 members who have extensive experience and
expertise in mortgage loan origination and closing,
including mortgage bankers, mortgage brokers,
settlement services providers; and
``(D) 3 members from consumer advocacy
organizations and other organizations that the FHFA
Board deems appropriate to advise the FHFA Board in
effectively carrying out its oversight of the Facility.
``(3) Meetings.--The Advisory Committee shall meet at least
once each calendar quarter.
``(4) Duties.--The Advisory Committee shall advise the FHFA
Board on its operations and discharge of its duties, and shall
submit its own comments to the Congress on the extent to which
the FHFA Board is meeting its responsibilities under the law
and any suggestions for improvements in such regard.''.
(b) Transition.--
(1) Timing of appointments.--The President shall endeavor
to appoint and have confirmed all initial members of the
Federal Housing Finance Agency Board pursuant to section
1312(b)(2) of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (as amended by subsection (a)(1) of
this section) not later than the expiration of the 6-month
period beginning upon the date of the enactment of this Act.
(2) Continued service of director.--Notwithstanding the
amendment made by subsection (a), during the period beginning
on the date of the enactment of this Act and ending upon the
first date on which all initial members of the Federal Housing
Finance Agency Board are appointed and confirmed, the person
serving as the Director of the Federal Housing Finance Agency
on such date of enactment shall act for all purposes as, and
with the full powers of, the Federal Housing Finance Agency
Board.
(c) Conforming Amendment; References.--
(1) Conforming amendment.--Section 5313 of title 5, United
States Code, is amended by striking the item relating to
Director of the Federal Housing Finance Agency.
(2) References.--Any references to the Director of the
Federal Housing Finance Agency in statutes, Executive orders,
rules, regulations, directives, or delegations of authority
shall be deemed to refer to the Federal Housing Finance Agency
Board established under the amendment made by subsection (a) of
this section.
SEC. 302. SUPERVISION AND REGULATION OF FACILITY BY FHFA.
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 is amended by adding at the end the following new subtitle:
``Subtitle F--Supervision and Regulation of Secondary Market Facility
for Residential Mortgages
``SEC. 1396. OVERSIGHT OF FACILITY.
``(a) Authority.--
``(1) In general.--The Secondary Market Facility for
Residential Mortgages established by title I of the Secondary
Market Facility for Residential Mortgages Act of 2011 (in this
subtitle referred to as the `Facility') shall be subject to the
supervision and regulation of the FHFA Board. The FHFA Board
shall have general regulatory authority over the Facility and
shall exercise such authority, and may issue such regulations,
orders, and interpretations as the FHFA Board determines
necessary to ensure that the purposes of title I of such Act
and this subtitle and any other applicable laws are carried out
and that the Facility is operated in a safe and sound manner.
``(2) Limitation.--Any authority under this subtitle of the
FHFA Board to supervise and regulate the Facility may not be
construed to authorize the FHFA Board to establish or regulate
the amount of guarantee fees under section 105 of the Secondary
Market Facility for Residential Mortgages Act of 2011.
``(b) Use of Existing Authority.--Except as provided in this
section, the Facility and a Facility-affiliated party shall be subject
to the same supervisory and enforcement powers of the Director under
this title, to the same extent as if the Facility was a regulated
entity and the Facility-affiliated party was an entity-affiliated
party, including--
``(1) authority to establish and enforce prudential
management and operations standards under section 1313B (12
U.S.C. 4513b);
``(2) authority to require reports under section 1314 (12
U.S.C. 4514);
``(3) authority to conduct examinations under section 1317
(12 U.S.C. 4517);
``(4) the enforcement powers under sections 1371 through
1379 (12 U.S.C. 4631-9); and
``(5) authority to take prompt corrective supervisory
actions in response to capital classifications as provided for
in sections 1365 and 1366 (12 U.S.C. 4615, 4616).
``SEC. 1396A. MONITORING AND EVALUATION.
``(a) Monitoring.--The FHFA Board shall monitor compliance by the
Facility with the requirements of title I of the Secondary Market
Facility for Residential Mortgages Act of 2011.
``(b) Evaluation.--Upon the expiration of the 5-year period
beginning on the date of the enactment of the Secondary Market Facility
for Residential Mortgages Act of 2011, the FHFA Board shall submit to
the Congress a report analyzing the performance of the Facility in
meeting the purposes of title I of such Act. Such report shall analyze
and compare the performance of the enterprises during the period
consisting of the year 2008 and years prior to the performance of the
enterprises and the Facility during the period consisting of the year
2009 and years after through the end of such 5-year period.
``SEC. 1396B. FUNDING OF FHFA BOARD OVERSIGHT OF FACILITY.
``(a) Annual Assessments.--The FHFA Board shall establish and
collect from the Facility annual assessments in an amount not exceeding
the amount sufficient to provide for reasonable costs (including
administrative costs) and expenses of the Agency attributable to the
Agency's supervision and regulation of the Facility, including--
``(1) the expenses of any examinations pursuant section
1396(b)(3);
``(2) the expenses of monitoring pursuant to section
1396A(a); and
``(3) such amounts in excess of actual expenses for any
given year as deemed necessary by the FHFA Board to maintain a
working capital fund in accordance with subsection (e) of this
section.
``(b) Timing of Payment.--The annual assessment shall be payable
semiannually for each fiscal year, on October 1 and April 1.
``(c) Increased Costs of Regulation.--
``(1) Increase for inadequate capitalization.--If the FHFA
Board determines that the Facility is not adequately
capitalized in accordance with the standards established under
section 104 of the Secondary Market Facility for Residential
Mortgages Act of 2011, the semiannual payments made pursuant to
subsection (b) by the Facility may be increased, as necessary,
in the discretion of the Board to pay additional estimated
costs of regulation of the Facility.
``(2) Additional assessment for deficiencies.--If at any
time, as a result of increased costs of regulation of the
Facility that is not classified (for purposes of the standards
established under section 104 of such Act) as adequately
capitalized or as the result of supervisory or enforcement
activities pursuant to this subtitle for the Facility, the
amount available from any semiannual payment made by the
Facility pursuant to subsection (b) is insufficient to cover
the costs of the Agency with respect to the Facility, the FHFA
Board may make and collect from the Facility 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 the Facility for the following
semiannual period.
``(d) Surplus.--Except with respect to amounts collected pursuant
to subsection (a)(3), if any amount from any annual assessment
collected from the Facility remains unobligated at the end of the year
for which the assessment was collected, such amount shall be credited
to the assessment to be collected from the Facility for the following
year.
``(e) Working Capital Fund.--At the end of each year for which an
assessment under this section is made, the FHFA Board shall remit to
the Facility any amount of assessment collected from the Facility that
is attributable to subsection (a)(3) and is in excess of the amount the
FHFA Board deems necessary to maintain a working capital fund.
``(f) Treatment of Assessments.--
``(1) Deposit.--Amounts received by the FHFA Board from
assessments under this section may be deposited by the Board in
the manner provided in section 5234 of the Revised Statutes of
the United States (12 U.S.C. 192) for monies deposited by the
Comptroller of the Currency.
``(2) Not government funds.--The amounts received by the
FHFA Board from any assessment under this section shall not be
construed to be Government or public funds or appropriated
money.
``(3) No apportionment of funds.--Notwithstanding any other
provision of law, the amounts received by the FHFA Board from
any assessment under this section shall not be subject to
apportionment for the purpose of chapter 15 of title 31, United
States Code, or under any other authority.
``(4) Use of funds.--The FHFA Board may use any amounts
received by the Board from assessments under this section for
compensation of the Board and other employees of the Agency and
for all other expenses of the Board and the Agency.
``(5) Treasury investments.--
``(A) Authority.--The FHFA Board may request the
Secretary of the Treasury to invest such portions of
amounts received by the Board from assessments paid
under this section that, in the Board's discretion, are
not required to meet the current working needs of the
Agency.
``(B) Government obligations.--Pursuant to a
request under subparagraph (A), the Secretary of the
Treasury shall invest such amounts in Government
obligations guaranteed as to principal and interest by
the United States with maturities suitable to the needs
of the Agency and bearing interest at a rate determined
by the Secretary of the Treasury taking into
consideration current market yields on outstanding
marketable obligations of the United States of
comparable maturity.
``SEC. 1396C. REGULATIONS AND ORDERS.
``(a) Authority.--The FHFA Board shall issue any regulations,
guidelines, or orders necessary to carry out the duties of the FHFA
Board under this subtitle and title I of the Secondary Market Facility
for Residential Mortgages Act of 2011, and to ensure that the purposes
of this subtitle and title I of such Act are accomplished.
``(b) Notice and Comment.--Any regulations issued by the FHFA Board
under this section shall be issued after notice and opportunity for
public comment pursuant to the provisions of section 553 of title 5.''.
SEC. 303. CONFORMING AMENDMENTS.
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 is amended--
(1) in section 1303 (12 U.S.C. 4502)--
(A) by striking paragraph (4);
(B) by redesignating paragraphs (5) through (8) as
paragraphs (4) through (7), respectively;
(C) by striking paragraph (9);
(D) by redesignating paragraphs (10) through (12)
as paragraphs (8) through (10), respectively;
(E) by inserting before paragraph (13) the
following new paragraph:
``(11) FHFA board.--The term `FHFA Board' means the Federal
Housing Finance Agency Board established under section 1312.'';
and
(F) by redesignating paragraphs (13) through (31)
as paragraphs (12) through (30), respectively;
(2) by striking section 1313A (12 U.S.C. 4513a: relating to
the Federal Housing Finance Agency Oversight Board);
(3) by striking ``Director'' each place such term appears
(except in section 1316(g), 1338(i), and 1355) and inserting
``FHFA Board'';
(4) by striking ``Director's'' each place such term appears
and inserting ``FHFA Board's'';
(5) by striking ``Director'' each place such term appears
in the section headings for sections 1313, 1319B, and 1369D and
inserting ``fhfa board''; and
(6) in the heading for part 2 of subtitle A, by striking
``director'' and inserting ``fhfa board''.
<all>