Text: S.2036 — 110th Congress (2007-2008)All Information (Except Text)

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Introduced in Senate (09/10/2007)


110th CONGRESS
1st Session
S. 2036


To temporarily raise conforming loan limits in high cost areas and portfolio caps applicable to Freddie Mac and Fannie Mae, to provide the necessary financing to curb foreclosures by facilitating the refinancing of at-risk subprime borrowers into safe, prime loans, to preserve liquidity in the mortgage lending markets, and for other purposes.


IN THE SENATE OF THE UNITED STATES

September 10, 2007

Mr. Schumer introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs


A BILL

To temporarily raise conforming loan limits in high cost areas and portfolio caps applicable to Freddie Mac and Fannie Mae, to provide the necessary financing to curb foreclosures by facilitating the refinancing of at-risk subprime borrowers into safe, prime loans, to preserve liquidity in the mortgage lending markets, 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.

This Act may be cited as the “Protecting Access to Safe Mortgages Act”.

SEC. 2. Findings.

Congress finds that—

(1) American families will be severely harmed by an unprecedented wave of potential foreclosures expected to occur in the next 12 months, as adjustable rate subprime mortgages reset to higher interest rates;

(2) preventing such foreclosures and facilitating the refinancing of at-risk subprime borrowers into safe prime loans will require additional capacity on the part of the government sponsored enterprises, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Association, and any affiliates thereof, to purchase additional financing;

(3) there is a lack of liquidity in the financial markets for mortgage backed securities, which threatens to impair financing for all mortgages; and

(4) the government sponsored enterprises, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation, and any affiliates thereof, are uniquely positioned to provide the financing necessary to alleviate the predicted wave of upcoming foreclosures, and the liquidity necessary to help United States markets.

SEC. 3. Definitions.

For purposes of this Act, the following definitions shall apply:

(1) DIRECTOR.—The term “Director” means the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development.

(2) ENTERPRISE.—The term “enterprise” means—

(A) the Federal National Mortgage Association, and any affiliate thereof; and

(B) the Federal Home Loan Mortgage Corporation, and any affiliate thereof.

(3) FANNIE MAE CONSENT DECREE.—The term “Fannie Mae Consent Decree” means the order of the Office of Federal Housing Enterprises Oversight dated May 23, 2006, in the matter of the Federal National Mortgage Association.

(4) FREDDIE MAC LETTER.—The term “Freddie Mac Letter” means the letter dated July 31, 2006, from the Chairman and Chief Executive Officer of the Federal Home Loan Mortgage Corporation to the Director.

(5) OFHEO.—The term “OFHEO” means the Office of Federal Housing Enterprises Oversight.

SEC. 4. Amendments To 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 adding at the end the following: “During the 1-year period beginning on the date of enactment of the Protecting Access to Safe Mortgages Act, the limitations established under this paragraph shall be increased with respect to properties of a particular size located in any area for which the median price for such size residence exceeds the foregoing limitations for such size residence, to the lesser of 150 percent of such foregoing limitation for such size residence or the amount that is equal to the median price in such area for such size residence.”.

(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 adding at the end the following: “During the 1-year period beginning on the date of enactment of the Protecting Access to Safe Mortgages Act, the limitations established under this paragraph shall be increased with respect to properties of a particular size located in any area for which the median price for such size residence exceeds the foregoing limitations for such size residence, to the lesser of 150 percent of such foregoing limitation for such size residence or the amount that is equal to the median price in such area for such size residence.”.

SEC. 5. Lifting Of Portfolio Caps.

(a) In general.—Immediately upon the date of enactment of this Act, the Director shall terminate, suspend, modify, or otherwise lift—

(1) the limitation on growth provision set forth in section 4, Article III of the Fannie Mae Consent Decree; and

(2) the voluntary temporary growth limitation described in the Freddie Mac Letter.

(b) Factors.—In carrying out subsection (a), the Director shall increase the mortgage portfolio limitations of both enterprises by not less than 10 percent, unless the Director certifies in writing to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, and demonstrates by compelling evidence that such action is likely to result in a significant depletion of the core capital of an enterprise, or otherwise create an unsafe and unsound condition.

(c) Allocation.—Fifty percent of the portfolio increase described in subsection (b) shall be used on loans which have had or will have interest rate resets between June 2005 and December 2009.

SEC. 6. Sunset provision.

This Act and the amendments made by this Act are repealed, effective 1 year after the date of enactment of this Act.


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