Text: S.1217 — 113th Congress (2013-2014)All Bill Information (Except Text)

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Reported to Senate (09/18/2014)

Calendar No. 579

113th CONGRESS
2d Session
S. 1217

To provide secondary mortgage market reform, and for other purposes.


IN THE SENATE OF THE UNITED STATES
June 25, 2013

Mr. Corker (for himself, Mr. Warner, Mr. Johanns, Mr. Tester, Mr. Heller, Ms. Heitkamp, Mr. Moran, Mrs. Hagan, Mr. Kirk, Mr. Manchin, Mr. Chambliss, and Mr. Begich) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

September 18, 2014

Reported by Mr. Johnson of South Dakota, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]


A BILL

To provide secondary mortgage market reform, and for other purposes.

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 “Housing Finance Reform and Taxpayer Protection Act of 2013”.

(b) Table of Contents.—The table of contents for this Act is as follows:


Sec. 1. Short title; table of contents.

Sec. 2. Definitions.

Sec. 101. Establishment.

Sec. 102. Director.

Sec. 103. Board of Directors.

Sec. 104. Office of the Inspector General.

Sec. 105. Staff, experts, and consultants.

Sec. 106. Reports; testimony; audits.

Sec. 107. Initial funding.

Sec. 201. Duties and responsibilities of the FMIC.

Sec. 202. Standard form credit risk-sharing mechanisms, products, structures, contracts, or other security agreements.

Sec. 203. Mortgage Insurance Fund.

Sec. 204. Insurance.

Sec. 205. Authority to protect taxpayers in unusual and exigent market conditions.

Sec. 206. General powers.

Sec. 207. Exemptions.

Sec. 211. Approval of private mortgage insurers.

Sec. 212. Approval of servicers.

Sec. 213. Approval of issuers.

Sec. 214. Approval of bond guarantors.

Sec. 215. Authority to establish FMIC Mutual Securitization Company.

Sec. 216. Additional authority relating to oversight of market participants.

Sec. 217. Civil money penalties.

Sec. 218. Protection of privilege and other matters relating to disclosures by market participants.

Sec. 221. Review of loan documents; disclosures.

Sec. 222. Investor immunity.

Sec. 223. Uniform securitization agreements.

Sec. 224. Uniform mortgage database.

Sec. 225. Electronic registration of eligible mortgages.

Sec. 231. Office of Underwriting.

Sec. 232. Office of Securitization.

Sec. 233. Office of Federal Home Loan Bank Supervision.

Sec. 301. Powers and duties transferred.

Sec. 302. Transfer and rights of employees of the FHFA.

Sec. 303. Abolishment of FHFA.

Sec. 304. Transfer of property and facilities.

Sec. 305. Technical and conforming amendments.

Sec. 401. Affordable housing allocations.

Sec. 402. Housing Trust Fund.

Sec. 403. Capital Magnet Fund.

Sec. 404. Additional taxpayer protections.

Sec. 501. Repeal of GSE charters.

Sec. 502. Wind down.

Sec. 503. Aligning purpose of conservatorship with FMIC.

Sec. 504. Conforming loan limits.

Sec. 505. Portfolio reduction.

Sec. 506. Repeal of mandatory housing goals.

Sec. 601. Continuation of multifamily business of the enterprises.

Sec. 602. Multiple lender issues.

Sec. 603. GAO report on full privatization of secondary mortgage market.

Sec. 701. Authority to issue regulations.

Sec. 702. Fair value accounting.

Sec. 703. Rule of construction.

Sec. 704. Severability.

SEC. 2. Definitions.

As used in this Act, the following definitions shall apply:

(1) APPROVED BOND GUARANTOR.—The term “approved bond guarantor” means any entity that provides credit enhancement that is approved by the Corporation pursuant to section 214 to guarantee the timely payment of principal and interest on securities collateralized by eligible mortgages and insured by the Corporation.

(2) APPROVED ISSUER.—The term “approved issuer” means an issuer that is approved by the Corporation pursuant to section 213—

(A) to issue covered securities; and

(B) to purchase insurance offered by the Corporation pursuant to title II on a covered security for which first loss credit enhancement has been secured.

(3) APPROVED PRIVATE MORTGAGE INSURER.—The term “approved private mortgage insurer” means an insurer that is approved by the Corporation pursuant to section 211 to provide private mortgage insurance on eligible mortgages.

(4) APPROVED SERVICER.—The term “approved servicer” means a servicer that is approved by the Corporation pursuant to section 212 to administer eligible mortgages.

(5) AREA.—The term “area”—

(A) means a metropolitan statistical area as established by the Office of Management and Budget; and

(B) for purposes of paragraph (11)(A)(ii), the median 1-family house price for an area shall be equal to the median 1-family house price of the county within the area that has the highest such median price.

(6) BOARD; BOARD OF DIRECTORS.—The terms “Board” and “Board of Directors” mean the Board of Directors of the Federal Mortgage Insurance Corporation.

(7) CHARTER.—The term “charter” means—

(A) with respect to the Federal National Mortgage Association, the Federal National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.); and

(B) with respect to the Federal Home Loan Mortgage Corporation, the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.).

(8) CORPORATION.—The term “Corporation” means the Federal Mortgage Insurance Corporation established under title I.

(9) COVERED SECURITY.—The term “covered security” means a mortgage-backed security—

(A) collateralized by eligible mortgages;

(B) which is issued subject to a standard form credit-risk sharing mechanism, product, structure, contract, or other securitization agreement developed by the Corporation pursuant to title II; and

(C) which is eligible for insurance by the Corporation pursuant to title II, which insurance is purchased by an approved issuer who issues covered securities.

(10) DIRECTOR.—The term “Director” means the Director of the Federal Mortgage Insurance Corporation, unless the context otherwise requires.

(11) ELIGIBLE MORTGAGE.—The term “eligible mortgage” means a mortgage—

(A) that is a residential real estate loan secured by a property with 1 to 4 single family units that has been originated in compliance with the provisions of section 1026 of title 12 of the Code of Federal Regulations, as promulgated by the Bureau of Consumer Financial Protection pursuant to section 129C(b) of the Truth in Lending Act (15 U.S.C. 1639c(b)) (commonly referred to as the “Ability-to-Repay and Qualified Mortgage Rule”);

(B) has a maximum original principal obligation amount that does not exceed the conforming loan limitation determined under section 504;

(C) the outstanding principal balance of which at the time of purchase of insurance available under title II—

(i) is less than 80 percent of the value of the property securing the mortgage;

(ii) is not less than 80 percent but not more than 85 percent of the value of the property securing the mortgage, provided that not less than 12 percent of the unpaid principal balance of the mortgage, accounting for any downpayment required under subparagraph (D), is insured by—

(I) an approved private mortgage insurer; or

(II) lender recourse or other credit enhancement that—

(aa) meets standards comparable to the standards required of private mortgage insurers under section 211; and

(bb) is approved by the Corporation;

(iii) is not less than 85 percent but not more than 90 percent of the value of the property securing the mortgage, provided that not less than 25 percent of the unpaid principal balance of the mortgage, accounting for any downpayment required under subparagraph (D), is insured by—

(I) an approved private mortgage insurer; or

(II) lender recourse or other credit enhancement that—

(aa) meets standards comparable to the standards required of private mortgage insurers under section 211; and

(bb) is approved by the Corporation; or

(iv) is not less than 90 percent but not more than 95 percent of the value of the property securing the mortgage, provided that not less than 30 percent of the unpaid principal balance of the mortgage, accounting for any downpayment required under subparagraph (D), is insured by—

(I) an approved private mortgage insurer; or

(II) lender recourse or other credit enhancement that—

(aa) meets standards comparable to the standards required of private mortgage insurers under section 211; and

(bb) is approved by the Corporation;

(D) having a downpayment which shall be equal to not less than 5 percent of purchase price of the property securing the mortgage;

(E) that is insured by an approved State licensed title insurance company;

(F) that contains such terms and provisions with respect to insurance, property maintenance, repairs, alterations, payment of taxes, default, reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters, including matters that set forth terms and provisions for establishing escrow accounts, performing financial assessments, or limiting the amount of any payment made available under the mortgage as the Corporation may prescribe; and

(G) that contains such other terms or characteristics as the Corporation, in consultation with the Bureau of Consumer Financial Protection, may determine necessary or appropriate.

(12) 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.

(13) FEDERAL BANKING AGENCIES.—The term—

(A) “Federal banking agency” means, individually, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Bureau of Consumer Financial Protection, the National Credit Union Administration, the Securities and Exchange Commission, the Commodities Futures Trading Commission, the Federal Housing Finance Agency, and the Secretary of the Treasury; and

(B) “Federal banking agencies” means all of the agencies referred to in subparagraph (A), collectively.

(14) FEDERAL HOME LOAN BANK.—The term “Federal Home Loan Bank” means a bank established under the authority of the Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.).

(15) FEDERAL HOME LOAN BANK SYSTEM.—The term “Federal Home Loan Bank System” means the Federal Home Loan Banks and the Office of Finance and any authorized subsidiary of one or more Federal Home Loan Banks.

(16) FMIC CERTIFICATION DATE.—The term “FMIC certification date” means the date on which the Board of Directors certifies that the Corporation is operational and able to perform the insurance functions for covered securities as provided in this Act, which date shall be not later than 5 years after the date of enactment of this Act.

(17) INSURED DEPOSITORY INSTITUTION.—The term “insured depository institution” means—

(A) an insured depository institution, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and

(B) a credit union that meets the definition of “depository institution” as that term is defined under section 19(b) of the Federal Reserve Act (12 U.S.C. 461).

(18) SENIOR PREFERRED STOCK PURCHASE AGREEMENT DEFINED.—The term “Senior Preferred Stock Purchase Agreement” means—

(A) the Amended and Restated Senior Preferred Stock Purchase Agreement, dated September 26, 2008, as such Agreement has been amended on May 6, 2009, December 24, 2009, and August 17, 2012, respectively, and as such Agreement may be further amended and restated, entered into between the Department of the Treasury and each enterprise, as applicable; and

(B) any provision of any certificate in connection with such Agreement creating or designating the terms, powers, preferences, privileges, limitations, or any other conditions of the Variable Liquidation Preference Senior Preferred Stock of an enterprise issued or sold pursuant to such Agreement.

(19) TRANSFER DATE.—The term “transfer date” means the date that is 1 year after the date of enactment of this Act.

SEC. 101. Establishment.

(a) Establishment.—There is hereby established the Federal Mortgage Insurance Corporation which shall have the powers hereinafter granted.

(b) Purpose.—The purpose of the Corporation shall be to—

(1) provide liquidity, transparency, and access to mortgage credit by supporting a robust secondary mortgage market and the production of residential mortgage-backed securities; and

(2) protect the taxpayer from having to absorb losses incurred in the secondary mortgage market during periods of economic stress.

(c) Federal Status.—The Corporation shall be an independent agency of the Federal Government.

(d) Succession.—The Corporation shall have succession until dissolved by Act of Congress.

(e) Principal office.—The Corporation shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof.

(f) Authority To establish other offices.—The Corporation may establish such other offices in such other place or places as the Corporation may deem necessary or appropriate in the conduct of its business.

(g) Prohibition.—The Corporation shall not engage in mortgage origination.

SEC. 102. Director.

(a) Establishment of position.—There is established the position of the Director of the Corporation, who shall be the head of the Corporation.

(b) Appointment; term.—

(1) APPOINTMENT.—The Director shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who—

(A) are citizens of the United States; and

(B) have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working in, the mortgage securities markets and housing finance.

(2) TERM.—The Director shall be appointed for a term of 5 years, unless removed before the end of such term for cause by the President.

(3) VACANCY.—

(A) IN GENERAL.—A vacancy in the position of Director that occurs before the expiration of the term for which a Director was appointed shall be filled in the manner established under paragraph (1), and the Director appointed to fill such vacancy shall be appointed only for the remainder of such term.

(B) ACTING DIRECTOR.—

(i) DESIGNATION BY THE PRESIDENT.—

(I) ELIGIBLE INDIVIDUALS.—If the Senate has not confirmed a Director, the President may designate either the individual nominated, but not yet confirmed, for the position of Director or a member of the Board of Directors to serve as the Acting Director, and such Acting Director shall have all the rights, duties, powers, and responsibilities of the Director, until such time as a Director is confirmed by the Senate.

(II) LIMITATION.—No individual may serve concurrently as the Acting Director of the Corporation and the Director of the Federal Housing Finance Agency.

(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) COMPENSATION.—The Director shall be compensated at the rate prescribed for level II of the Executive Schedule under section 5313 of title 5, United States Code.

(6) RULES OF CONSTRUCTION.—No individual—

(A) may serve concurrently as the Director of the Corporation and the Director of the Federal Housing Finance Agency; and

(B) that has, at any time prior to, on, or after the date of enactment of this Act, served as the Director of the Federal Housing Finance Agency may serve as the Director of the Corporation.

(c) Membership on FSOC.—The Dodd-Frank Wall Street Reform and Consumer Protection Act is amended—

(1) in section 2, by amending paragraph (12)(E) to read as follows:

“(E) the Federal Mortgage Insurance Corporation, with respect to—

“(i) the Mortgage Insurance Fund established under title II of the Housing Finance Reform and Taxpayer Protection Act of 2013; and

“(ii) the Federal Home Loan Banks or the Federal Home Loan Bank System.”; and

(2) in section 111(b)(1)(H), by striking “Director of the Federal Housing Finance Agency” and inserting “Chairperson of the Federal Mortgage Insurance Corporation”.

SEC. 103. Board of Directors.

(a) Board of Directors.—

(1) VOTING MEMBERS.—The management of the Corporation shall be vested in a Board of Directors consisting of 5 voting members—

(A) 1 of whom shall be the Director, who shall serve as Chairperson of the Board; and

(B) 4 of whom shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who are citizens of the United States—

(i) 1 of whom shall have demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working in, the field of asset management;

(ii) 1 of whom shall have demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working in, mortgage insurance markets;

(iii) 1 of whom shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, lenders having less than $10,000,000,000 in total assets; and

(iv) 1 of whom shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, multifamily housing development.

(2) NON-VOTING MEMBER.—The President shall appoint the Director of the Federal Housing Finance Agency as an additional non-voting member of the Board of Directors. The Director of the Federal Housing Finance Agency shall serve as non-voting member of the Board of Directors until such time as that position is abolished pursuant to title III.

(3) INDEPENDENCE.—

(A) IN GENERAL.—Each voting member of the Board of Directors shall be independent and neutral and maintain a fiduciary relationship to the Corporation in performing his or her duties.

(B) INDEPENDENCE DETERMINATION.—In order to be considered independent for purposes of this paragraph, a voting member of the Board of Directors—

(i) may not, other than in his or her capacity as a member of the Board of Directors or any committee thereof—

(I) accept any consulting, advisory, or other compensatory fee from the Corporation; or

(II) be a person associated with the Corporation or with any affiliated company thereof; and

(ii) shall be disqualified from any deliberation involving any transaction of the Corporation in which the member has a financial interest in the outcome of the transaction.

(4) RULE OF CONSTRUCTION.—No individual that has, at any time prior to, on, or after the date of enactment of this Act, served as the Director or Acting Director of the Federal Housing Finance Agency may serve as a voting member of the Board of Directors.

(b) Administration.—Except as otherwise may provided in this Act, the Board of Directors shall administer the affairs of the Corporation fairly and impartially and without discrimination.

(c) Consultation.—The Board of Directors may, in carrying out any duty, responsibility, requirement, or action authorized under this Act, consult with the Federal banking agencies or any individual Federal banking agency, as the Board determines necessary and appropriate.

(d) Terms.—

(1) APPOINTED MEMBERS.—Each appointed voting member shall be appointed for a term of 5 years and shall serve on a full-time basis.

(2) INTERIM APPOINTMENTS.—Any voting member appointed to fill a vacancy occurring before the expiration of the term for which such member's predecessor was appointed shall be appointed only for the remainder of such term.

(3) CONTINUATION OF SERVICE.—The Chairperson and each appointed voting member may continue to serve after the expiration of the term of office to which such member was appointed until a successor has been appointed and qualified.

(e) Vacancy.—A vacancy in the voting membership of the Board of Directors shall not affect the powers of the Board, and shall be filled in the manner in which the original appointment was made.

(f) Voting.—A majority vote of all voting members of the Board of Directors is necessary to resolve all voting issues of the Corporation.

(g) Meetings.—The Board of Directors shall meet in accordance with the bylaws of the Corporation—

(1) at the call of the Chairperson; and

(2) not less frequently than once each month.

(h) Quorum.—Three voting members of the Board of Directors then in office shall constitute a quorum.

(i) Bylaws.—A majority of the voting members of the Board of Directors may amend the bylaws of the Corporation.

(j) Attendance.—Members of the Board of Directors may attend meetings of the Corporation and vote in person, via telephone conference, or via video conference.

(k) Ineligibility for other offices during service.—

(1) IN GENERAL.—No voting member of the Board of Directors may during the time such member is in office—

(A) be an officer or director of any insured depository institution, depository institution holding company, Federal Reserve bank, Federal home loan bank, approved servicer, approved private mortgage insurer, institution that originates eligible mortgages, or institution that issues a covered security; or

(B) hold stock or a controlling interest in any insured depository institution or depository institution holding company, approved servicer, approved private mortgage insurer, institution that originates eligible mortgages, or institution that issues a covered security.

(2) CERTIFICATION.—Upon taking office, each voting member of the Board of Directors shall certify under oath that such member has complied with this subsection and such certification shall be filed with the secretary of the Board of Directors.

(l) Status of employees.—

(1) IN GENERAL.—A director, member, officer, or employee of the Corporation has no liability under the Securities Act of 1933 (15 U.S.C. 77a et seq.) with respect to any claim arising out of or resulting from any act or omission by such person within the scope of such person's employment in connection with any transaction involving the Corporation. This subsection shall not be construed to limit personal liability for criminal acts or omissions, willful or malicious misconduct, acts or omissions for private gain, or any other acts or omissions outside the scope of such person's employment.

(2) EFFECT ON OTHER LAW.—

(A) IN GENERAL.—This subsection does not affect—

(i) any other immunities and protections that may be available to such person under applicable law with respect to such transactions; or

(ii) any other right or remedy against the Corporation, against the United States under applicable law, or against any person other than a person described in paragraph (1) participating in such transactions.

(B) RULE OF CONSTRUCTION.—This subsection shall not be construed to limit or alter in any way the immunities that are available under applicable law for Federal officials and employees not described in this subsection.

SEC. 104. Office of the Inspector General.

(a) Office of Inspector General.—

(1) IN GENERAL.—There is established the Office of the Inspector General of the Federal Mortgage Insurance Corporation. The head of the Office of the Inspector General of the Federal Mortgage Insurance Corporation is the Inspector General of the Federal Mortgage Insurance Corporation (in this section referred to as the “Inspector General”), who shall be appointed by the President, by and with the advice and consent of the Senate.

(2) ADDITIONAL RESPONSIBILITIES.—In addition to carrying out the requirements established under the Inspector General Act of 1978 (5 U.S.C. App.), the Inspector General shall—

(A) conduct, supervise, and coordinate audits and investigations relating to the programs and operations of the Corporation—

(i) to ensure that the first loss position that the Corporation requires of private market holders of covered securities insured under this Act is adequate to cover losses that might be incurred as a result of adverse economic conditions, wherein such conditions are generally consistent with the economic conditions, including national home price declines, observed in the United States during moderate to severe recessions experienced during the last 100 years; and

(ii) with respect to the—

(I) oversight and supervision of the Federal Home Loan Banks and the Federal Home Loan Bank System; and

(II) the contracting practices and procedures of the Corporation; and

(B) recommend policies for the purpose of addressing any deficiencies, inefficiencies, gaps, or failures in the administration of such programs and operations.

(3) INSPECTOR GENERAL REPORT; REPORT OF INDEPENDENT ACTUARY.—Beginning 1 year after the FMIC certification date, and annually thereafter, the Inspector General and an independent actuary contracted for by the Director shall each conduct an examination and issue a separate report regarding—

(A) the adequacy of insurance fees charged by the Board of Directors under title II; and

(B) the adequacy of the Mortgage Insurance Fund established under title II.

(b) Amendments to Inspector General Act of 1978.—Section 11 of the Inspector General Act of 1978 (5 U.S.C. App.) is amended—

(1) in paragraph (1), by inserting “Chairperson of the Federal Mortgage Insurance Corporation;” after “the Director of the Federal Housing Finance Agency;”; and

(2) in paragraph (2), by inserting “the Federal Mortgage Insurance Corporation,” after “the Federal Housing Finance Agency,”.

(c) Compensation.—The annual rate of basic pay of the Inspector General shall be the annual rate of basic pay provided for positions at level III of the Executive Schedule under section 5314 of title 5, United States Code.

SEC. 105. Staff, experts, and consultants.

(a) Compensation.—

(1) IN GENERAL.—The Board of Directors may appoint and fix the compensation of such officers, attorneys, economists, examiners, and other employees as may be necessary for carrying out the functions of the Corporation.

(2) RATES OF PAY.—Rates of basic pay and the total amount of compensation and benefits for all employees of the Corporation may be—

(A) set and adjusted by the Board of Directors without regard to the provisions of chapter 51 or subchapter III of chapter 53 of title 5, United States Code; and

(B) reasonably increased, notwithstanding any limitation set forth in paragraph (3), if the Board of Directors determines such increases are necessary to attract and hire qualified employees.

(3) PARITY.—The Board of Directors may provide additional compensation and benefits to employees of the Corporation, of the same type of compensation or benefits that are then being provided by any agency referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b) or, if not then being provided, could be provided by such an agency under applicable provisions of law, rule, or regulation. In setting and adjusting the total amount of compensation and benefits for employees, the Board of Directors shall consult with and seek to maintain comparability with the agencies referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b).

(b) Detail of government employees.—Upon the request of the Board of Directors, any Federal Government employee may be detailed to the Corporation without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.

(c) Experts and consultants.—The Board of Directors may procure the services of experts and consultants as the Board considers necessary or appropriate.

(d) Technical and professional advisory committees.—The Board of Directors may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Corporation.

SEC. 106. Reports; testimony; audits.

(a) Reports.—

(1) IN GENERAL.—The Corporation shall submit, on an annual basis, to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a written report of its operations, activities, budget, receipts, and expenditures for the preceding 12-month period.

(2) CONTENTS OF REPORT.—The report required under subsection (a) shall include an analysis of—

(A) with respect to the Mortgage Insurance Fund established under section 203—

(i) the current financial condition of the Mortgage Insurance Fund;

(ii) the exposure of the Mortgage Insurance Fund to changes in those economic factors most likely to affect the condition of that fund;

(iii) a current estimate of the resources needed for the Mortgage Insurance Fund to achieve the purposes of this Act; and

(iv) any findings, conclusions, and recommendations for legislative and administrative actions considered appropriate to the future activities of the Corporation;

(B) the secondary mortgage market, the housing market, and the economy, including through use of stress tests, and how such analysis was used to determine and set the reserve ratio for the Mortgage Insurance Fund for the preceding 12-month period;

(C) whether or not the actual reserve ratio of the Mortgage Insurance Fund met—

(i) the reserve ratio set for the preceding 12-month period; or

(ii) the reserve ratio goals established in section 203(e);

(D) how the Corporation intends to ensure that the goals set for the reserve ratio for the Mortgage Insurance Fund are to be met and maintained for the next 12-month period, and such analysis shall include a detailed and descriptive plan of the actions that the Corporation intends to take pursuant to its authorities under this Act;

(E) how the Corporation has provided liquidity, transparency, and access to mortgage credit in its support of a robust secondary mortgage market and the production of residential mortgage-backed securities;

(F) the state of the private label mortgage-backed securities market, and such analysis shall include the submission of a reasonable set of administrative, regulatory, and legislative proposals on how to limit the Federal Government's footprint in the secondary mortgage market;

(G) the effect that further decreases in loan limits would have on the secondary mortgage market, the housing market, and the economy; and

(H) the state of the global covered bond market.

(b) Testimony.—The Chairperson of the Corporation, on a biannual basis, shall provide testimony to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.

(c) Audit of Corporation.—

(1) ANNUAL AUDIT.—The Comptroller General of the United States shall annually audit the financial transactions of the Corporation in accordance with the United States generally accepted government auditing standards as may be prescribed by the Comptroller General.

(2) PLACE OF AUDIT.—The audit required under this subsection shall be conducted at the place or places where accounts of the Corporation are normally kept.

(3) ACCESS.—The representatives of the Comptroller General shall have access to the personnel and to all books, accounts, documents, papers, records (including electronic records), reports, files, and all other papers, automated data, or property belonging to or under the control of or used or employed by the Corporation pertaining to its financial transactions and necessary to facilitate the audit required under this subsection, and such representatives shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents, and custodians.

(4) POSSESSION AND CUSTODY.—All such books, accounts, documents, records, reports, files, papers, and property of the Corporation used to carry out the audit required under this subsection shall remain in the possession and custody of the Corporation.

(5) PERMISSIBLE DUPLICATION.—The Comptroller General may obtain and duplicate any such books, accounts, documents, records, working papers, automated data and files, or other information relevant to such audit without cost to the Comptroller General and the Comptroller General’s right of access to such information shall be enforceable pursuant to section 716(c) of title 31, United States Code.

(6) REPORT.—

(A) SUBMISSION TO CONGRESS.—The Comptroller General shall submit to Congress a report of each annual audit conducted under this subsection.

(B) REQUIRED CONTENT.—The report to Congress required under subparagraph (A) shall—

(i) set forth the scope of the audit; and

(ii) include—

(I) the statement of assets and liabilities and surplus or deficit;

(II) the statement of income and expenses;

(III) the statement of sources and application of funds; and

(IV) such comments and information as the Comptroller General may deem necessary to inform Congress of the financial operations and condition of the Corporation, together with such recommendations with respect thereto as the Comptroller General may deem advisable.

(C) COPIES.—A copy of each report required under subparagraph (A) shall be furnished to the President and to the Chairperson of the Corporation at the time such report is submitted to the Congress.

(7) ASSISTANCE AND COSTS.—

(A) PERMITTED USE OF OUTSIDE ASSISTANCE.—For the purpose of conducting an audit under this subsection, the Comptroller General may employ by contract, without regard to section 3709 of the Revised Statutes of the United States (41 U.S.C. 5), professional services of firms and organizations of certified public accountants for temporary periods or for special purposes.

(B) COST OF AUDIT COVERED BY CORPORATION.—

(i) IN GENERAL.—Upon the request of the Comptroller General, the Chairperson of the Corporation shall transfer to the Comptroller General from funds available, the amount requested by the Comptroller General to cover the reasonable costs of any audit and report conducted by the Comptroller General pursuant to this subsection.

(ii) CREDIT OF FUNDS.—The Comptroller General shall credit funds transferred under clause (i) to the account at the Treasury established for salaries and expenses of the Government Accountability Office, and such amounts shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report.

SEC. 107. Initial funding.

(a) In general.—Section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4516) is amended by adding at the end the following:

“(i) Annual assessments relating to initial funding of the FMIC.—Notwithstanding title V of the Housing Finance Reform and Taxpayer Protection Act of 2013 or any other provision of law, for the period beginning on the date of enactment of this subsection and ending on the FMIC certification date (as that date is set forth under section 2(16) of the Housing Finance Reform and Taxpayer Protection Act of 2013, the Director, in consultation with the Chairperson of the Federal Mortgage Insurance Corporation, shall establish and collect from the enterprises annual assessments in addition to those required under subsection (a) in an amount not exceeding the amount sufficient to provide for the reasonable costs (including administrative costs) and expenses of the Corporation. All amounts collected under this subsection shall be transferred to the Federal Mortgage Insurance Corporation. The annual assessment shall be payable semiannually for each fiscal year, on October 1 and April 1.”.

(b) Treatment of assessments.—

(1) DEPOSIT.—Amounts received by the Corporation from assessments imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 shall be deposited by the Corporation in the manner provided in section 5234 of the Revised Statutes of the United States (12 U.S.C. 192) for monies deposited by the Comptroller of the Currency.

(2) NOT GOVERNMENT FUNDS.—The amounts received by the Corporation from any assessment imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 shall not be construed to be Government or public funds or appropriated money.

(3) NO APPORTIONMENT OF FUNDS.—Notwithstanding any other provision of law, the amounts received by the Corporation from any assessment imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 shall not be subject to apportionment for the purpose of chapter 15 of title 31, United States Code, or under any other authority.

(4) USE OF FUNDS.—

(A) IN GENERAL.—The Corporation may use any amounts received from assessments imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992—

(i) for compensation of the employees of the Corporation; and

(ii) for all other expenses of the Corporation.

(B) TREASURY INVESTMENTS.—The Corporation may request the Secretary of the Treasury to invest such portions of amounts received from assessments imposed under section 1316(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 that, in the discretion of the Corporation, are not required to meet the current working needs of the Corporation.

(C) GOVERNMENT OBLIGATIONS.—Pursuant to a request under subparagraph (B), the Secretary of the Treasury shall invest such amounts in Government obligations—

(i) guaranteed as to principal and interest by the United States with maturities suitable to the needs of the Corporation; and

(ii) 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. 201. Duties and responsibilities of the FMIC.

(a) Duties.—The principal duties of the Corporation shall be to—

(1) carry out this Act in a manner that—

(A) minimizes any potential long-term negative cost on the taxpayer; and

(B) ensures, to the maximum extent possible—

(i) a liquid and resilient housing finance market; and

(ii) the availability of mortgage credit;

(2) develop standard form credit risk-sharing mechanisms, products, structures, contracts, or other security agreements that require private market holders of a covered security insured under this Act to assume the first loss position with respect to losses incurred on such securities;

(3) provide insurance on any covered security for which private market holders of such security have assumed the first loss position with respect to losses that may be incurred on such security in order to provide a liquid and resilient housing finance market;

(4) provide leadership to the housing finance market to help ensure that all geographic locations have access to mortgage credit;

(5) charge and collect fees in exchange for providing such insurance, whereby such fees shall be sufficient to protect the taxpayer from the risk of providing such insurance and to fund the activities and operations of the Corporation;

(6) establish and maintain a Mortgage Insurance Fund;

(7) facilitate securitization of eligible mortgages originated by credit unions and community and mid-size banks without securitization capabilities;

(8) ensure discipline and integrity in the market for covered securities by setting standards for the approval of private mortgage insurers, servicers, issuers, and bond guarantors;

(9) establish, operate, and maintain a database for the collection, public use, and dissemination of uniform loan level information on eligible mortgages;

(10) develop, adopt, and publish standard uniform securitization agreements for covered securities;

(11) establish, operate, and maintain an electronic registry system for eligible mortgages that collateralize covered securities insured under this Act;

(12) oversee and supervise the common securitization platform developed by the business entity announced by the Federal Housing Finance Agency and established by the enterprises; and

(13) ensure that credit unions and community and mid-size banks—

(A) have equal access to any such common securitization platform and any other securitization platforms; and

(B) are not, in their access or use of such platforms, discriminated against through discounts for volume pricing or other mechanisms.

(b) Scope of authority.—The authority of the Corporation shall include the authority to exercise such incidental powers as may be necessary or appropriate to fulfill the duties and responsibilities of the Corporation set forth under subsection (a).

(c) Delegation of authority.—The Board of Directors may delegate to officers and employees of the Corporation any of the functions, powers, or duties of the Corporation, as the Board of Directors determines appropriate.

SEC. 202. Standard form credit risk-sharing mechanisms, products, structures, contracts, or other security agreements.

(a) Requirements; share of loss; diversity.—Pursuant to section 201(a)(2), the Corporation shall develop standard form credit-risk sharing mechanisms, products, structures, contracts, or other security agreements which shall require that the first loss position of private market holders of a covered security insured under this Act—

(1) is adequate to cover losses that might be incurred as a result of adverse economic conditions, wherein such conditions are generally consistent with the economic conditions, including national home price declines, observed in the United States during moderate to severe recessions experienced during the last 100 years; and

(2) is not less than 10 percent of the principal or face value of the covered security.

(b) Development window for risk-Sharing mechanisms.—

(1) IN GENERAL.—The Corporation shall complete the development and implementation of the mechanisms, products, structures, contracts, or other security agreements required under subsection (a) not later than 5 years after the date of enactment of this Act.

(2) EXAMINATION OF VARIOUS MECHANISMS.—In developing the mechanisms, products, structures, contracts, or other security agreements required under subsection (a), the Corporation shall—

(A) examine proposals that include a senior-subordinated deal structure, credit-linked structures, and the use of regulated guarantors with sufficient equity capital to absorb losses associated with moderate or severe economic downturns;

(B) consider any risk-sharing mechanisms, products, structures, contracts, or other security agreements undertaken by the business entity announced by the Federal Housing Finance Agency and established by the enterprises to provide a common securitization platform for issuers in the secondary mortgage market;

(C) consider how each proposed mechanism, product, structure, contract, or other security agreement—

(i) minimizes any potential long-term negative cost to the taxpayer;

(ii) impacts the availability of mortgage credit for—

(I) small financial institutions, such as credit unions and community and mid-size banks; and

(II) consumers;

(iii) influences mortgage affordability;

(iv) allows for loan modifications and foreclosure prevention alternatives;

(v) interacts with the To-Be-Announced market; and

(vi) facilitates market liquidity and resiliency; and

(D) ensure that lenders of all sizes and from all geographic locations, including rural locations, have equitable access to secondary mortgage market financing.

(3) REPORT.—

(A) IN GENERAL.—Not later than 1 year after the date of enactment of this Act, and annually thereafter until the end of the 5-year period provided in paragraph (1), the Corporation shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives that—

(i) details the benefits and drawbacks of each mechanism, product, structure, contract, or other security agreement that the Director considered in carrying out the requirement of this section;

(ii) describes the operation and execution of any mechanisms, products, structures, contracts, or other security agreements that the Director determines best fulfills the requirements of this section; and

(iii) explains how the Corporation arrived at the determination made under clause (ii).

(B) SUBSEQUENT REPORTS.—After the expiration of the 5-year period provided in paragraph (1) and the submission of the report required under subparagraph (A), each time the Corporation develops an additional standard form credit risk-sharing mechanism, product, structure, contract, or other security agreement that fulfills the requirements of this section, the Corporation shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives addressing the identical concerns set forth under clauses (i) through (iii) of subparagraph (A).

SEC. 203. Mortgage Insurance Fund.

(a) Establishment.—There is established the Mortgage Insurance Fund, which the Corporation shall—

(1) maintain and administer; and

(2) use to cover losses incurred on covered securities insured under this Act, when such losses exceed the first position losses absorbed by private market holders of such securities.

(b) Deposits.—The Mortgage Insurance Fund shall be credited with any—

(1) insurance fee amounts required to be deposited in the Fund under this section;

(2) guarantee fee amounts collected under section 601; and

(3) amounts earned on investments pursuant to subsection (h).

(c) Fiduciary responsibility.—The Corporation has the responsibility to ensure that the Mortgage Insurance Fund remains financially sound.

(d) Use.—

(1) IN GENERAL.—The Mortgage Insurance Fund shall be solely available to the Corporation for use by the Corporation to carry out the functions authorized by this Act and may not be used or otherwise diverted to cover any other expense of the Federal Government.

(2) EXEMPTION FROM APPORTIONMENT.—Notwithstanding any other provision of law, amounts received by the Mortgage Insurance Fund pursuant to any fees collected under this section shall not be subject to apportionment for the purposes of chapter 15 of title 31, United States Code, or under any other authority.

(e) Reserve ratio goals for Mortgage Insurance Fund.—The Corporation shall endeavor to ensure that the Mortgage Insurance Fund attains a reserve balance—

(1) of 1.25 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title within 5 years of the FMIC certification date, and to strive to maintain such ratio thereafter, subject to subparagraph (B); and

(2) of 2.50 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title within 10 years of the FMIC certification date, and to strive to maintain such ratio at all times thereafter.

(f) Maintenance of reserve ratio; establishment of fees.—

(1) ESTABLISHMENT OF FEES.—The Corporation shall charge and collect a fee, and may in its discretion increase or decrease such fee, in connection with any insurance provided under this title to—

(A) achieve and maintain the reserve ratio goals established under subsection (e);

(B) achieve such reserve ratio goals, if the actual balance of such reserve is below the goal amounts established under subsection (e); and

(C) fund the operations of the Corporation.

(2) FEE CONSIDERATIONS.—In exercising the authority granted under paragraph (1), the Corporation shall consider—

(A) the expected operating expenses of the Mortgage Insurance Fund;

(B) the risk of loss to the Mortgage Insurance Fund in carrying out the requirements under this Act;

(C) the risk presented by, and the loss absorption capacity of, the credit enhancement that is provided on the pool of eligible mortgages collateralizing the covered security to be insured under this title;

(D) economic conditions generally affecting the mortgage markets;

(E) the extent to which the reserve ratio of the Mortgage Insurance Fund met—

(i) the reserve ratio set for the preceding 12-month period; or

(ii) the reserve ratio goals established in subsection (e); and

(F) any other factor that the Corporation determines appropriate.

(3) FEE UNIFORMITY.—The fee required under paragraph (1)—

(A) shall be set at a uniform amount applicable to all institutions purchasing insurance under this title;

(B) may not vary—

(i) by geographic location; or

(ii) by the size of the institution to which the fee is charged; and

(C) may not be based on the volume of insurance to be purchased by an approved issuer.

(4) DEPOSIT INTO MORTGAGE INSURANCE FUND.—Any fee amounts collected under this subsection shall be deposited in the Mortgage Insurance Fund.

(g) Full Faith and Credit.—The full faith and credit of the United States is pledged to the payment of all amounts from the Mortgage Insurance Fund which may be required to be paid under any insurance provided under this title.

(h) Investments.—Amounts in the Mortgage Insurance Fund that are not otherwise employed—

(1) shall be invested in obligations of the United States; and

(2) may not be invested in any covered security insured under this Act.

SEC. 204. Insurance.

(a) Authority.—The Corporation shall, upon application and in exchange for a fee in accordance with section 203(f), insure the payment of principal and interest on a covered security with respect to losses that may be incurred on such security.

(b) Precondition; ensuring placement of first loss capital.—The Corporation shall develop standards and processes to ensure that prior to making any commitment to provide insurance under this section that private market holders have taken first loss position in a covered security and that such holders have sufficient capital to cover their risk-sharing obligations.

(c) Cash payments; continued operations.—In the event of a payment default on an eligible mortgage that collateralizes a covered security insured under this section that exceeds the first loss position assumed by a private market holder or that, in the case of an approved bond guarantor, if the guarantor has become insolvent, the Corporation shall—

(1) pay, in cash when due, any shortfalls in payment of principal and interest under the eligible mortgage; and

(2) continue to charge and collect any fees for the provision of insurance (in accordance with section 203(f)) relating to the covered security.

(d) Full faith and credit.—The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any insurance provided under this section.

(e) Prohibition on Federal assistance.—Notwithstanding any other provision of law, no Federal funds may be used to purchase or guarantee obligations of, issue lines of credit to, provide direct or indirect access to any financing provided by the United States Government to, or provide direct or indirect grants and aid to any private market holder of the first loss position on a covered security which, on or after the date of enactment of this Act, has defaulted on its obligations, is at risk of defaulting, or is likely to default, absent such assistance from the United States Government.

SEC. 205. Authority to protect taxpayers in unusual and exigent market conditions.

(a) In general.—If the Corporation, upon the written agreement of the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury, and in consultation with the Secretary of Housing and Urban Development, determines that unusual and exigent circumstances have created or threatened to create an anomalous lack of mortgage credit availability within the housing markets that could materially and severely disrupt the functioning of the housing finance system of the United States, the Corporation may, for a period not to exceed 6 months, provide insurance in accord with section 204 to any covered security regardless of whether such security has satisfied the requirements of section 202(a).

(b) Considerations.—In exercising the authority granted under subsection (a), the Corporation shall consider the severity of the conditions present in the housing markets and the risks presented to the Mortgage Insurance Fund in exercising such authority.

(c) Limitation.—The authority granted to the Corporation under subsection (a) may not be exercised more than once in any given 3-year period.

SEC. 206. General powers.

(a) Corporate powers.—The Federal Mortgage Insurance Corporation shall have power—

(1) to adopt, alter, and use a corporate seal, which shall be judicially noticed;

(2) to enter into and perform contracts, leases, cooperative agreements, or other transactions, on such terms as it may deem appropriate, with any agency or instrumentality of the United States, or with any State, Territory, or possession, or the Commonwealth of Puerto Rico, or with any political subdivision thereof, or with any person, firm, association, or corporation;

(3) to execute, in accordance with its bylaws, all instruments necessary or appropriate in the exercise of any of its powers;

(4) in its corporate name, to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal, but no attachment, injunction, or other similar process, mesne or final, shall be issued against the property of the Corporation;

(5) to conduct its business without regard to any qualification or similar statute in any State of the United States, including the District of Columbia, the Commonwealth of Puerto Rico, and the Territories and possessions of the United States;

(6) to lease, purchase, or acquire any property, real, personal, or mixed, or any interest therein, to hold, rent, maintain, modernize, renovate, improve, use, and operate such property, and to sell, for cash or credit, lease, or otherwise dispose of the same, at such time and in such manner as and to the extent that it may deem necessary or appropriate;

(7) to prescribe, repeal, and amend or modify, rules, regulations, or requirements governing the manner in which its general business may be conducted;

(8) to accept gifts or donations of services, or of property, real, personal, or mixed, tangible, or intangible, in aid of any of its purposes; and

(9) to do all things as are necessary or incidental to the proper management of its affairs and the proper conduct of its business.

(b) Expenditures.—Except as may be otherwise provided in this title, in chapter 91 of title 31, United States Code, or in other laws specifically applicable to Government corporations, the Corporation shall determine the necessity for, and the character and amount of its obligations and expenditures, and the manner in which they shall be incurred, allowed, paid, and accounted for.

(c) Exemption from certain taxes.—The Corporation, including its franchise, capital, reserves, surplus, mortgages or other security holdings, and income shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.

(d) Exclusive use of name.—No individual, association, partnership, or corporation, except the bodies corporate named under section 101, shall hereafter use the words “Federal Mortgage Insurance Corporation” or any combination of such words, as the name or a part thereof under which the individual, association, partnership, or corporation shall do business. Violations of the foregoing sentence may be enjoined by any court of general jurisdiction at the suit of the proper body corporate. In any such suit, the plaintiff may recover any actual damages flowing from such violation, and, in addition, shall be entitled to punitive damages (regardless of the existence or nonexistence of actual damages) of not exceeding $100 for each day during which such violation is committed or repeated.

(e) Fiscal agents.—The Federal Reserve banks are authorized and directed to act as depositories, custodians, and fiscal agents for each of the bodies corporate named in section 101, for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others.

SEC. 207. Exemptions.

(a) Securities exempt from SEC regulation.—

(1) IN GENERAL.—All covered securities insured or guaranteed by the Corporation shall, to the same extent as securities that are direct obligations of or obligations guaranteed as to principal or interest by the United States, be deemed to be exempt securities within the meaning of the laws administered by the Securities and Exchange Commission.

(2) CONFORMING AMENDMENT.—The first sentence of section 3(a)(2) of the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is amended by inserting “or any covered security, as such term is defined under section 2(9) of the Housing Finance Reform and Taxpayer Protection Act of 2013;” after “Federal Reserve bank;”.

(b) QRM exemption.—Section 15G(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–11(e)) is amended—

(1) in paragraph (3)(B)—

(A) by striking “Association, the” and inserting “Association and the”; and

(B) by striking “and the Federal home loan banks”; and

(2) by adding at the end the following:

“(7) COVERED SECURITIES INSURED BY THE FEDERAL MORTGAGE INSURANCE CORPORATION.—Notwithstanding any other provision of this section, the requirements of this section shall not apply to any covered security, as such term is defined under section 2(9) of the Housing Finance Reform and Taxpayer Protection Act of 2013, insured or guaranteed by the Federal Mortgage Insurance Corporation or any institution that is subject to the supervision of the Federal Mortgage Insurance Corporation.”.

SEC. 211. Approval of private mortgage insurers.

(a) Standards for approval of private mortgage insurers.—

(1) IN GENERAL.—The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of private mortgage insurers to provide private mortgage insurance on eligible mortgages.

(2) REQUIRED STANDARDS.—The standards required under paragraph (1) shall include—

(A) the financial history and condition of the insurer;

(B) the adequacy of the insurer's capital structure, including whether the insurer has sufficient capital to cover the first loss insurance obligations it assumes under this Act and that might be incurred in a period of economic stress, including, but not limited to, any period of economic stress that would result in a 30 percent (or greater) national home price decline;

(C) the general character and fitness of the management of the insurer, including compliance history with Federal and State laws;

(D) the risk presented by such insurer to the Mortgage Insurance Fund;

(E) the adequacy of insurance and fidelity coverage of the insurer;

(F) a requirement that the insurer submit audited financial statements to the Director; and

(G) any other standard the Corporation determines necessary or appropriate.

(b) Application and approval.—

(1) APPLICATION PROCESS.—The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of private mortgage insurers under this section.

(2) APPROVAL.—The Corporation may approve any application made pursuant to paragraph (1) provided the private mortgage insurer meets the standards adopted under subsection (a).

(3) PUBLICATION.—The Corporation shall—

(A) publish in the Federal Register a list of newly approved private mortgage insurers; and

(B) maintain an updated list of approved private mortgage insurers on the website of the Corporation.

(c) Review, suspension, and revocation of approved status.—

(1) IN GENERAL.—The Corporation may review the status of any approved private mortgage insurer if the Corporation is notified of or becomes aware of any violation by the insurer of this Act or the rules promulgated pursuant to this Act.

(2) SUSPENSION OR REVOCATION.—

(A) CORPORATION AUTHORITY.—If the Corporation determines, in a review pursuant to paragraph (1), that an approved private mortgage insurer no longer meets the standards for approval, the Corporation may suspend or revoke the approved status of such insurer.

(B) RULE OF CONSTRUCTION.—The suspension or revocation of an approved private mortgage insurer's approved status under this paragraph shall have no effect on the status of any covered security.

(3) PUBLICATION.—The Corporation shall—

(A) publish in the Federal Register a list of any approved private mortgage insurers who lost their approved status; and

(B) maintain an updated list of such insurers on the website of the Corporation.

(d) Appeals.—

(1) IN GENERAL.—

(A) APPEALS OF DENIALS OF APPLICATION.—A private mortgage insurer who submits an application under subsection (b)(1) to become an approved private mortgage insurer may appeal a decision of the Corporation denying such application.

(B) APPEALS OF DENIALS OF BENEFITS OR SUSPENSIONS OF PARTICIPATION.—An approved private mortgage insurer may appeal a decision of the Corporation suspending or revoking the approved status of such insurer.

(2) FILING OF APPEAL.—Any insurer who files an appeal under paragraph (1) shall file the appeal with the Corporation not later than 90 days after the date on which the person receives notice of the decision of the Corporation being appealed.

(3) FINAL DETERMINATION.—The Corporation shall make a final determination with respect to an appeal under paragraph (1) not later than 180 days after the date on which the appeal is filed under paragraph (2).

(e) Avoidance of conflicts of interest.—With respect to any eligible mortgage collateralizing a covered security insured under this Act, an approved private mortgage insurer may not provide insurance both—

(1) in satisfaction of the credit enhancement required under section 2(11)(C); and

(2) to cover the first loss position of private market holders of such covered security.

SEC. 212. Approval of servicers.

(a) Standards for approval of servicers.—

(1) IN GENERAL.—The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of servicers to administer eligible mortgages, including standards with respect to—

(A) the collection and forwarding of principal and interest payments;

(B) the maintenance of escrow accounts;

(C) the collection and payment of taxes and insurance premiums;

(D) the maintenance of records on eligible mortgages;

(E) the establishment of foreclosure loss mitigation programs that seek to enhance investor value and prevent, to greatest extent possible, the need to trigger any claim on insurance offered by the Corporation pursuant to this title;

(F) the advancement of principal and interest payments to investors in the case of a delinquency by a borrower until such time as the borrower has made all payments in arrears or the property securing the eligible mortgage has been liquidated; and

(G) implementing the terms of any loss mitigation and foreclosure prevention as required by a uniform securitization agreement developed under section 223.

(2) ADDITIONAL REQUIRED STANDARDS.—The standards required under paragraph (1) shall also include—

(A) the financial history and condition of the servicer;

(B) the general character and fitness of the management of the servicer, including compliance history with Federal and State laws;

(C) the risk presented by such servicer to the Mortgage Insurance Fund;

(D) a requirement that the servicer submit audited financial statements to the Corporation; and

(E) any other standard the Corporation determines necessary or appropriate.

(3) COORDINATION WITH OTHER REGULATORS.—In developing the standards required under paragraph (1), the Corporation shall—

(A) coordinate with the Bureau of Consumer Financial Protection; and

(B) to the extent the Corporation determines practical and appropriate, shall coordinate with the other Federal banking agencies.

(b) Application and approval.—

(1) APPLICATION PROCESS.—The Corporation shall establish an application process—

(A) in such form and manner and requiring such information as the Corporation may require, for the approval of servicers under this section; and

(B) that does not discriminate against or otherwise disadvantage small servicers.

(2) APPROVAL.—The Corporation may approve any application made pursuant to paragraph (1) provided the servicer meets the standards adopted under subsection (a).

(3) PUBLICATION.—The Corporation shall—

(A) publish in the Federal Register a list of newly approved servicers; and

(B) maintain an updated list of approved servicers on the website of the Corporation.

(c) Review, suspension, and revocation of approved status.—

(1) IN GENERAL.—The Corporation may review the status of any approved servicer if the Corporation is notified of or becomes aware of any violation by the servicer of this Act or the rules promulgated pursuant to this Act, including any failure by an approved servicer to comply with terms set forth in any uniform securitization agreement developed under section 223.

(2) SUSPENSION OR REVOCATION.—

(A) CORPORATION AUTHORITY.—If the Corporation determines, in a review pursuant to paragraph (1), that an approved servicer no longer meets the standards for approval, the Corporation may suspend or revoke the approved status of such servicer.

(B) RULE OF CONSTRUCTION.—The suspension or revocation of an approved servicer's approved status under this paragraph shall have no effect on the status of any covered security.

(3) PUBLICATION.—The Corporation shall—

(A) publish in the Federal Register a list of any approved servicers who lost their approved status; and

(B) maintain an updated list of such servicers on the website of the Corporation.

(d) Appeals.—

(1) IN GENERAL.—

(A) APPEALS OF DENIALS OF APPLICATION.—A servicer who submits an application under subsection (b)(1) to become an approved servicer may appeal a decision of the Corporation denying such application.

(B) APPEALS OF DENIALS OF BENEFITS OR SUSPENSIONS OF PARTICIPATION.—An approved servicer may appeal a decision of the Corporation suspending or revoking the approved status of such servicer.

(2) FILING OF APPEAL.—Any servicer who files an appeal under paragraph (1) shall file the appeal with the Corporation not later than 90 days after the date on which the person receives notice of the decision of the Corporation being appealed.

(3) FINAL DETERMINATION.—The Corporation shall make a final determination with respect to an appeal under paragraph (1) not later than 180 days after the date on which the appeal is filed under paragraph (2).

(e) Petitions for change of servicer by private market holders.—The Corporation shall develop a process by which private market holders of the first loss position in a covered security may petition the Corporation for a change in approved servicers if the private market holders can demonstrate that their current approved servicer has failed to appropriately protect their investment, including by failing to meet any standard identified under subsection (a)(1).

SEC. 213. Approval of issuers.

(a) Standards for approval of issuers.—

(1) IN GENERAL.—The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of issuers to issue covered securities, including standards with respect to an issuer's ability to—

(A) aggregate eligible mortgage loans into pools;

(B) securitize eligible mortgage loans for sale to private investors as a covered security;

(C) transfer investment risk and credit to private market participants in accordance with the risk-sharing mechanisms developed by the Corporation under section 202;

(D) ensure equitable access to the secondary mortgage market for covered securities for all institutions regardless of size or geographic location;

(E) create mechanisms for multi-lender pools; and

(F) ensure that eligible mortgage loans that collateralize a covered security insured under this title are originated in compliance with the requirements of this Act.

(2) ADDITIONAL REQUIRED STANDARDS.—The standards required under paragraph (1) shall also include—

(A) the financial history and condition of the issuer;

(B) the adequacy of the capital structure of the issuer;

(C) the general character and fitness of the management of the issuer, including compliance history with Federal and State laws;

(D) the risk presented by such issuer to the Mortgage Insurance Fund;

(E) the adequacy of insurance and fidelity coverage of the issuer;

(F) a requirement that the issuer submit audited financial statements to the Corporation;

(G) the capacity of the issuer to secure first loss credit enhancement; and

(H) any other standard the Corporation determines necessary or appropriate.

(b) Application and approval.—

(1) APPLICATION PROCESS.—

(A) IN GENERAL.—The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of issuers under this section.

(B) APPLICATION PROCESS FOR INSURED DEPOSITORY INSTITUTIONS.—If an insured depository institution seeks to become an approved issuer under this section, such institution may only submit its application via a separately capitalized affiliate or subsidiary.

(2) APPROVAL.—The Corporation—

(A) may approve—

(i) any application made pursuant to paragraph (1) provided the issuer meets the standards adopted under subsection (a); and

(ii) any application to become an approved issuer made by the Federal Home Loan Bank System; and

(B) shall ensure that at least one issuer approved to issue covered securities under this section is dedicated to serving the securitization needs of credit unions and community and mid-size banks without securitization capabilities.

(3) PUBLICATION.—The Corporation shall—

(A) publish in the Federal Register a list of newly approved issuers; and

(B) maintain an updated list of approved issuers on the website of the Corporation.

(c) Federal Home Loan Bank System.—

(1) IN GENERAL.—If the Federal Home Loan Bank System is approved by the Corporation to become an approved issuer under this section, the Corporation shall—

(A) develop a process by which each individual Federal Home Loan Bank may elect not to engage or otherwise contribute to any activity practiced by the Federal Home Loan Bank System as an approved issuer;

(B) ensure that, notwithstanding section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431), any covered securities issued by the Federal Home Loan Bank System as an approved issuer are not issued as consolidated Federal Home Loan Bank debentures and are explicitly designated or otherwise treated as not being the joint and several obligations of any individual Federal Home Loan Bank that has made an election under subparagraph (A); and

(C) ensure that in establishing the capital standards set forth under subsection (a)(2)(B) with respect to the Federal Home Loan Bank System, that such standards shall—

(i) not be applicable to any individual Federal Home Loan Bank that has made an election under subparagraph (A);

(ii) be based on the volume of eligible mortgage loan originations made by the Federal Home Loan Banks that have not made an election under subparagraph (A); and

(iii) not adversely impact the traditional liquidity and advance business of the Federal Home Loan Banks or the Federal Home Loan Bank System.

(2) FEDERAL HOME LOAN BANK ACT.—

(A) AMENDMENT.—Section 12 of the Federal Home Loan Bank Act (12 U.S.C. 1432) is amended by adding at the end the following:

“(c) Subject to such regulations as may be prescribed by the Corporation, one or more Federal Home Loan Banks may establish a subsidiary. Any subsidiary established under this subsection shall be subject to supervision by the Office of Federal Home Loan Bank Supervision of the Corporation and shall be restricted to engaging in activities related to being an approved issuer, as that term is defined under section 2(2) of the Housing Finance Reform and Taxpayer Protection Act of 2013.”.

(B) EFFECTIVE DATE.—The amendment made by subparagraph (A) shall take effect on the transfer date.

(d) Review, suspension, and revocation of approved status.—

(1) IN GENERAL.—The Corporation may review the status of any approved issuer if the Corporation is notified of or becomes aware of any violation by the issuer of this Act or the rules promulgated pursuant to this Act.

(2) SUSPENSION OR REVOCATION.—

(A) CORPORATION AUTHORITY.—If the Corporation determines, in a review pursuant to paragraph (1), that an approved issuer no longer meets the standards for approval, the Corporation may suspend or revoke the approved status of such issuer.

(B) RULE OF CONSTRUCTION.—The suspension or revocation of an approved issuer's approved status under this paragraph shall have no effect on the status of any covered security.

(3) PUBLICATION.—The Corporation shall—

(A) publish in the Federal Register a list of any approved issuers who lost their approved status; and

(B) maintain an updated list of such issuers on the website of the Corporation.

(e) Appeals.—

(1) IN GENERAL.—

(A) APPEALS OF DENIALS OF APPLICATION.—An issuer who submits an application under subsection (b)(1) to become an approved issuer may appeal a decision of the Corporation denying such application.

(B) APPEALS OF DENIALS OF BENEFITS OR SUSPENSIONS OF PARTICIPATION.—An approved issuer may appeal a decision of the Corporation suspending or revoking the approved status of such issuer.

(2) FILING OF APPEAL.—Any issuer who files an appeal under paragraph (1) shall file the appeal with the Corporation not later than 90 days after the date on which the person receives notice of the decision of the Corporation being appealed.

(3) FINAL DETERMINATION.—The Corporation shall make a final determination with respect to an appeal under paragraph (1) not later than 180 days after the date on which the appeal is filed under paragraph (2).

(f) Limitation on market share.—

(1) IN GENERAL.—The Corporation may not enter into any contract, covenant, or other agreement with an approved issuer, if such contract, covenant, or agreement would provide the issuer a share of the covered security issuer market in excess of 15 percent of the total market, as such market is measured by the total outstanding principal balance at origination of eligible mortgages collateralizing covered securities issued in the previous 12-month period.

(2) EXCEPTION.—The limitation set forth under paragraph (1) shall not apply to—

(A) an approved issuer described under subsection (b)(2)(A)(ii);

(B) the FMIC Mutual Securitization Company;

(C) any approved issuer which securitizes only eligible mortgage loans originated by the issuer or an affiliate of the issuer; or

(D) any approved issuer to which the Corporation grants a waiver pursuant to paragraph (3).

(3) WAIVER.—The Corporation may, during the 3-year period beginning on the FMIC certification date, grant a waiver from the limitation set forth under paragraph (1) to an approved issuer if the Corporation determines that the number of approved issuers is insufficient, such that imposition of the limitation would adversely affect the availability of mortgage credit.

(g) Limited authority To hold eligible mortgage loans.—An approved issuer may, for a period not to exceed 6-months, hold—

(1) eligible mortgage loans on the balance sheet of such issuer; and

(2) the first loss position in a covered security for purposes of obtaining insurance under this title.

SEC. 214. Approval of bond guarantors.

(a) Standards for approval of bond guarantors.—

(1) IN GENERAL.—The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of bond guarantors to guarantee the timely payment of principal and interest on securities collateralized by eligible mortgages and insured by the Corporation.

(2) REQUIRED STANDARDS.—The standards required under paragraph (1) shall include—

(A) the financial history and condition of the guarantor;

(B) that the guarantor maintain a minimum capital level equal to not less than 10 percent of the unpaid principal balance of outstanding mortgage-backed securities for which the guarantor is providing insurance, net of any transactions, including derivative transactions, repurchase agreements, reverse repurchase agreements, securities lending transactions, or securities borrowing transactions, that in the determination of the Corporation are used by the guarantor to hedge or mitigate against credit risk, provided that any such hedging transaction does not diminish the total amount of loss absorption capital in the secondary mortgage market that stands in front of the insurance provided by the Corporation under this title;

(C) the general character and fitness of the management of the guarantor, including compliance history with Federal and State laws;

(D) the risk presented by such guarantor to the Mortgage Insurance Fund;

(E) the adequacy of insurance and fidelity coverage of the guarantor;

(F) a requirement that the guarantor submit audited financial statements to the Director;

(G) a requirement that the guarantor meet a minimum tangible common equity level, or other minimum capital threshold as the Corporation determines necessary; and

(H) any other standard the Corporation determines necessary or appropriate.

(b) Rule of construction.—Any covered security issued by an approved issuer and insured by an approved bond guarantor shall be deemed to have satisfied the credit-risk sharing requirements under section 202(a)(1) with respect to the eligibility of that security to obtain insurance under this title.

(c) Application and approval.—

(1) APPLICATION PROCESS.—

(A) IN GENERAL.—The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of bond guarantors under this section.

(B) APPLICATION PROCESS BY INSURED DEPOSITORY INSTITUTIONS.—If an insured depository institution seeks to become an approved bond guarantor under this section, such institution may only submit its application via a separately capitalized affiliate or subsidiary.

(2) APPROVAL.—The Corporation may approve any application made pursuant to paragraph (1) provided the bond guarantor meets the standards adopted under subsection (a).

(3) PUBLICATION.—The Corporation shall—

(A) publish in the Federal Register a list of newly approved bond guarantors; and

(B) maintain an updated list of approved bond guarantors on the website of the Corporation.

(d) Review, suspension, and revocation of approved status.—

(1) IN GENERAL.—The Corporation may review the status of any approved bond guarantor if the Corporation is notified of or becomes aware of any violation by the insurer of this Act or the rules promulgated pursuant to this Act.

(2) SUSPENSION OR REVOCATION.—

(A) CORPORATION AUTHORITY.—If the Corporation determines, in a review pursuant to paragraph (1), that an approved bond guarantor no longer meets the standards for approval, the Corporation shall revoke the approved status of such guarantor.

(B) rULE OF CONSTRUCTION.—The revocation of an approved bond guarantor's approved status under this paragraph shall have no effect on the status of any covered security.

(3) PUBLICATION.—The Corporation shall—

(A) publish in the Federal Register a list of any approved bond guarantors who lost their approved status; and

(B) maintain an updated list of such guarantors on the website of the Corporation.

(e) Appeals.—

(1) IN GENERAL.—

(A) APPEALS OF DENIALS OF APPLICATION.—A bond guarantor who submits an application under subsection (c)(1) to become an approved bond guarantor may appeal a decision of the Corporation denying such application.

(B) APPEALS OF DENIALS OF BENEFITS OR SUSPENSIONS OF PARTICIPATION.—An approved bond guarantor may appeal a decision of the Corporation suspending or revoking the approved status of such guarantor.

(2) FILING OF APPEAL.—Any bond guarantor who files an appeal under paragraph (1) shall file the appeal with the Corporation not later than 90 days after the date on which the person receives notice of the decision of the Corporation being appealed.

(3) FINAL DETERMINATION.—The Corporation shall make a final determination with respect to an appeal under paragraph (1) not later than 180 days after the date on which the appeal is filed under paragraph (2).

(f) Limitations on approved bond guarantors.—With respect to any eligible mortgage collateralizing a covered security insured under this Act, an approved bond guarantor may not provide insurance—

(1) in satisfaction of the credit enhancement required under section 2(11)(C) or as an approved private mortgage insurer pursuant to section 211; and

(2) as an approved bond guarantor under this section.

(g) Permission To carry out other activities.—Nothing in this Act prohibits an approved bond guarantor from being or controlling an approved issuer, provided that each issuer and bond guarantor, independent of each other, meet the approval standards established by the Corporation under this title.

SEC. 215. Authority to establish FMIC Mutual Securitization Company.

(a) In general.—The Corporation shall establish a mutual corporation to be known as the “FMIC Mutual Securitization Company”.

(b) Purpose.—The purpose of the FMIC Mutual Securitization Company is to—

(1) develop, securitize, sell, and otherwise meet the issuing needs of credit unions, community and mid-size banks, and non-depository mortgage originators with respect to covered securities; and

(2) purchase from its member participants for cash, on a single loan basis, eligible mortgage loans to securitize in a covered security.

(c) Sale of necessary technology.—Upon the FMIC certification date, the enterprises shall sell to the FMIC Mutual Securitization Company any function, activity, infrastructure, property, including intellectual property, platform, or any other object or service of an enterprise that the Corporation determines necessary for the FMIC Mutual Securitization Company to carry out its activities and operations.

(d) Designation as an approved issuer.—The FMIC Mutual Securitization Company shall be an approved issuer for purposes of section 213.

(e) Eligibility.—Eligibility to participate as a member in the FMIC Mutual Securitization Company shall be limited to—

(1) insured depository institutions having less than $15,000,000,000 in total consolidated assets at the time of the institution's initial participation in the Company; or

(2) any non-depository mortgage originator having a minimum net worth of $2,500,000.

(f) Governance.—

(1) RECOGNITION OF IMPORTANT ROLE OF SMALLER INSTITUTIONS.—The Corporation shall take all necessary steps to ensure that the governance provisions of the FMIC Mutual Securitization Company reflect the important role in the mortgage market played by the small and mid-sized member participants of the FMIC Mutual Securitization Company.

(2) ESTABLISHMENT OF POSITION OF DIRECTOR.—There is established the position of the Director of the FMIC Mutual Securitization Company who shall be the head of the Company.

(3) BOARD OF DIRECTORS.—

(A) IN GENERAL.—The management of the FMIC Mutual Securitization Company shall be vested in a Board of Directors (hereafter referred to as the “Mutual Board”), which shall include representatives of member participants of the Company, including representatives of—

(i) mortgage bankers;

(ii) community banks; and

(iii) credit unions.

(B) INITIAL APPOINTMENT.—The Corporation shall make initial appointments of the members of the Mutual Board. Each such initial appointment shall be for a term 1 year.

(C) APPOINTMENTS.—Following the initial 1-year appointment of the members of the Mutual Board, member participants in the FMIC Mutual Securitization Company shall elect the members of the Mutual Board from within the membership of the Company.

(D) ADMINISTRATION.—The Mutual Board shall administer the affairs of the FMIC Mutual Securitization Company fairly and impartially and without discrimination.

(4) NO PREFERENCES FOR SIZE.—Member participants of the FMIC Mutual Securitization Company shall have equal voting rights on any matters before the Company, regardless of the size of the individual member participant.

(g) Approval of member participants.—

(1) IN GENERAL.—The Mutual Board shall develop standards and procedures to approve the application of member participants in the FMIC Mutual Securitization Company.

(2) CONTENT OF STANDARDS.—The standards required under paragraph (1) shall include standards relating to the safety and soundness of prospective member participants, including standards regarding the underwriting practices of such prospective members.

(3) COORDINATION WITH OTHER REGULATORS.—

(A) CONSULTATION.—In approving any prospective member to become a member participant in the FMIC Mutual Securitization Company, the Mutual Board may consult and share information with the primary prudential regulator of the prospective member.

(B) PRIVILEGE PRESERVED.—Information shared pursuant to subparagraph (A) shall not be construed as waiving, destroying, or otherwise affecting any privilege or confidential status that a prospective member may claim with respect to such information under Federal or State law as to any person or entity other than the Mutual Board or its primary prudential regulator.

(C) RULE OF CONSTRUCTION.—No provision of this subsection may be construed as implying or establishing that—

(i) any prospective member waives any privilege applicable to information that is shared or transferred under any circumstance to which this subsection does not apply; or

(ii) any prospective would waive any privilege applicable to any information by submitting the information directly to its primary prudential regulator, but for this subsection.

(h) Funding authority.—

(1) AUTHORITY TO ESTABLISH MEMBERSHIP FEES.—The Mutual Board shall have the authority to charge and collect fees, and may in its discretion increase or decrease such fee, on its member participants for membership in the FMIC Mutual Securitization Company, including to cover the costs of—

(A) the initial capitalization of the Company;

(B) the purchase of any function, activity, infrastructure, property, including intellectual property, platform, or any other object or service from an enterprise pursuant to subsection (c); and

(C) the continued operation of the Company.

(2) LIMITATION.—The fees authorized under paragraph (1)—

(A) shall be equitably assessed; and

(B) may be based on the volume of eligible mortgages that the member participant sells to the FMIC Mutual Securitization Company.

(i) Coordination of servicer approval.—The Mutual Board may coordinate with the Corporation to facilitate the application process for its member participants to become approved servicers of the Corporation pursuant to section 212.

SEC. 216. Additional authority relating to oversight of market participants.

In carrying out its authorities under this subtitle, the Corporation may, in its discretion, develop, publish, and adopt such other additional standards or requirements as the Corporation determines necessary to ensure—

(1) competition among approved private mortgage insurers, servicers, issuers, and bond guarantors and other market participants in the secondary mortgage market;

(2) competitive pricing among approved private mortgage insurers, servicers, issuers, and bond guarantors and other market participants in the secondary mortgage market; and

(3) liquidity, transparency, and access to mortgage credit in the secondary mortgage market.

SEC. 217. Civil money penalties.

(a) Authority.—In addition to any suspension or revocation of the approved status of an approved private mortgage insurer, servicer, issuer, or bond guarantor under this subtitle, the Corporation may, in its discretion, impose a civil money penalty on any such approved private mortgage insurer, servicer, issuer, or bond guarantor that has failed to comply with or otherwise violates—

(1) any standard adopted by the Corporation pursuant to this subtitle; or

(2) any other requirement or provision of this Act, or any order, condition, rule, or regulation issued pursuant to this Act, applicable to such private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be.

(b) Procedures.—

(1) ESTABLISHMENT.—The Corporation shall establish standards and procedures governing the imposition of civil money penalties under this section. Such standards and procedures—

(A) shall provide for the Corporation to notify the approved private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be, in writing of the determination of the Corporation to impose the penalty, which shall be made on the record;

(B) shall provide for the imposition of a penalty only after the approved private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be, has been given an opportunity for a hearing on the record; and

(C) may provide for review by the Corporation of any determination or order, or interlocutory ruling, arising from a hearing.

(2) FACTORS DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under this section, the Corporation shall give consideration to factors including—

(A) the gravity of the offense;

(B) any history of prior offenses;

(C) ability to pay the penalty;

(D) injury to the public;

(E) benefits received;

(F) deterrence of future violations; and

(G) such other factors as the Corporation may determine, by regulation, to be appropriate.

(c) Action To collect penalty.—If the approved private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be, fails to comply with an order by the Corporation imposing a civil money penalty under this section, the Corporation may bring an action in the United States District Court for the District of Columbia to obtain a monetary judgment against the approved private mortgage insurer, servicer, issuer, or bond guarantor, as the case may be, and such other relief as may be available. The monetary judgment may, in the court's discretion, include the attorneys' fees and other expenses incurred by the United States in connection with the action. In an action under this subsection, the validity and appropriateness of the order imposing the penalty shall not be subject to review.

(d) Settlements.—The Corporation may compromise, modify, or remit any civil money penalty which may be, or has been, imposed under this section.

(e) Deposit of Penalties.—The Corporation shall use any civil money penalties collected under this section to help fund the Mortgage Insurance Fund established under section 203.

SEC. 218. Protection of privilege and other matters relating to disclosures by market participants.

(a) Information sharing and maintenance of privilege.—The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended—

(1) in section 11(t)(2)(A) (12 U.S.C. 1821(t)(2)(A)), by inserting after clause (v) the following:

“(vii) The Federal Mortgage Insurance Corporation.”; and

(2) in section 18(x) (12 U.S.C. 1828(x))—

(A) by inserting “the Federal Mortgage Insurance Corporation,” before “any Federal banking agency” each place that term appears; and

(B) by striking “such agency” each place that term appears and inserting “Corporation, agency”.

(b) Permissible consultation with Federal banking agencies.—

(1) IN GENERAL.—Pursuant to its authority under section 103(c), to facilitate the consultive process, the Corporation may share information with the Federal banking agencies, or any individual Federal banking agency, or any State bank supervisor, or foreign banking authority, on a one-time, regular, or periodic basis as determined by the Corporation regarding the capital, asset and liabilities, financial condition, risk management practices or any other practice of any approved private mortgage insurer, servicer, issuer, or bond guarantor.

(2) PRIVILEGE PRESERVED.—Information shared by the Corporation pursuant to paragraph (1) shall not be construed as waiving, destroying, or otherwise affecting any privilege or confidential status that any approved private mortgage insurer, servicer, issuer, or bond guarantor or any other person may claim with respect to such information under Federal or State law as to any person or entity other than such agencies, agency, supervisor, or authority.

(3) RULE OF CONSTRUCTION.—No provision of this subsection may be construed as implying or establishing that—

(A) any person waives any privilege applicable to information that is shared or transferred under any circumstance to which this subsection does not apply; or

(B) any person would waive any privilege applicable to any information by submitting the information directly to the Federal banking agencies, or any individual Federal banking agency, or any State bank supervisor, or foreign banking authority, but for this subsection.

SEC. 221. Review of loan documents; disclosures.

(a) In general.—The Corporation shall, by rule—

(1) require that approved issuers—

(A) grant access to private market investors seeking to take the first loss position in a covered security to all—

(i) documents relating to eligible mortgage loans collateralizing that covered security; and

(ii) servicing reports of the approved servicer relating to such mortgages; and

(B) disclose any other material information that a reasonable investor would want to know, and make no material omission of such information, relating to eligible mortgage loans collateralizing a covered security; and

(2) establish the timing, frequency, and manner in which such access and disclosures are made.

(b) Privacy protections.—In prescribing the rules required under this section, the Corporation shall take into consideration issues of consumer privacy and all statutes, rules, and regulations related to privacy of consumer credit information and personally identifiable information. Such rules shall expressly prohibit the identification of specific borrowers.

SEC. 222. Investor immunity.

Any private market investor that has taken the first loss position in a covered security or that has otherwise invested in any covered security insured under this Act shall have immunity and protection from civil liability under Federal and State law, and no cause of action may be brought under Federal or State law against such investor, with respect to whether or not eligible mortgages that collateralize a covered security insured under this Act have complied with the requirements of this Act, including, but not limited to, with respect to any underwriting requirements applicable to such mortgage, any representations or warranties made by an approved issuer or an approved bond guarantor with respect to such mortgages, or whether or not the terms of any uniform securitization agreement have been met.

SEC. 223. Uniform securitization agreements.

(a) In general.—The Corporation shall develop, adopt, and publish standard uniform securitization agreements for covered securities which are insured under this Act.

(b) Required content.—The standard uniform securitization agreements required to be developed under subsection (a) shall include terms relating to—

(1) pooling and servicing, including the development of uniform standards and practices—

(A) regarding remittance schedules and payment delays; and

(B) permitting the transfer of servicing rights, if such transfer is determined to be in the best financial interest of the investor, as such interest is calculated on a net present value basis;

(2) representations and warranties, including representations and warranties as to compliance or conformity with the requirements of this Act;

(3) indemnification and remedies, including for the restitution or indemnification of the Corporation with respect to early term delinquencies of eligible mortgages collateralizing a covered security;

(4) the qualification, responsibilities, and duties of trustees; and

(5) any other terms or standards the Corporation determines necessary or appropriate.

(c) Defining representation and warranty violations.—In developing the uniform securitization agreements required under subsection (a), the Corporation shall also develop, adopt, and publish clear and uniform standards that define and illustrate what actions, or omissions to act, comprise a violation of the representations and warranties clauses that are made a part of such agreements.

(d) Consultation.—The Corporation shall work with industry groups, including servicers, originators, issuers, and mortgage investors to develop the uniform securitization agreements required under subsection (a).

SEC. 224. Uniform mortgage database.

(a) Uniform Mortgage Database.—The Corporation shall establish, operate, and maintain a database for the collection, public use, and dissemination of uniform loan level information on eligible mortgages relating to—

(1) loan characteristics;

(2) borrower information;

(3) the property securing the eligible mortgages;

(4) loan data required at the time of application for insurance from the Corporation under this title;

(5) the quality and consistency of appraisal and collateral data on eligible mortgages;

(6) industry-wide servicing data standards; and

(7) such other data, datasets, information, facts, or measurements as the Corporation determines appropriate to improve and enhance loan quality and operational efficiencies within the secondary mortgage market.

(b) Considerations.—In establishing the database required under subsection (a), the Corporation shall take into consideration, build upon, and adopt to the extent the Corporation determines appropriate, the existing data standards set forth under the Uniform Mortgage Data Program initiative established by the Federal Housing Finance Agency.

(c) Regulations.—The Corporation shall, by regulation—

(1) establish the manner and form by which any loan level information collected under subsection (a) may be accessed by the public, including whether or not to establish a fee for such access;

(2) require that such loan level information be made available to the public in a uniform manner, in a form designed for ease and speed of access, ease and speed of downloading, and ease and speed of use; and

(3) ensure the protection of any personally identifiable information contained in any information, or mix of information, collected and made available for public access.

(d) Monthly update.—The database required under subsection (a) shall be updated not less frequently than once a month.

SEC. 225. Electronic registration of eligible mortgages.

(a) Establishment of electronic registration system.—The Corporation shall establish, operate, and maintain an electronic registry system for eligible mortgages that collateralize a covered security insured under this Act in order to automate, centralize, standardize, and improve the process of tracking changes in servicing rights and beneficial ownership interests in such eligible mortgages.

(b) Considerations.—In establishing the electronic registry system required under subsection (a), the Corporation shall take into consideration, build upon, and adopt to the extent the Corporation determines appropriate, any existing efforts of the Federal Housing Finance Agency or expertise among the private sector to develop a sound, efficient system for document custody and electronic registration of mortgages, notes, titles, and liens.

SEC. 231. Office of Underwriting.

(a) Establishment.—There is established within the Federal Mortgage Insurance Corporation an Office of Underwriting which shall be headed by the Deputy Director of Underwriting, who shall be appointed by the Board of Directors.

(b) Responsibilities.—The Office of Underwriting shall ensure, through oversight, analysis, and examination, that eligible mortgages that collateralize a covered security insured under this Act comply with the requirements of this Act, including with respect to—

(1) the submission of complete and accurate loan data on eligible mortgages;

(2) the identification of ineligible mortgage loans;

(3) assisting lenders with originating high-quality, lower-risk eligible mortgages; and

(4) any other activity that the Director determines appropriate.

SEC. 232. Office of Securitization.

(a) Establishment.—There is established within the Federal Mortgage Insurance Corporation an Office of Securitization which shall be headed by the Deputy Director of Securitization, who shall be appointed by the Board of Directors.

(b) Responsibilities.—

(1) IN GENERAL.—The Office of Securitization shall—

(A) oversee and supervise the common securitization platform developed by the business entity announced by the Federal Housing Finance Agency and established by the enterprises, including by requiring that the platform have system capabilities to permit the issuance of multi-lender covered securities;

(B) ensure that credit unions, community and mid-size banks, and small non-depository lenders have equitable access to any such platform, including through the development and facilitation of options for multi-lender pools of eligible mortgages to be securitized and issued as covered securities through such platform; and

(C) coordinate and consult with the Federal Home Loan Bank System to establish a securitization platform that addresses the needs of its members.

(2) RULES FOR USE OF COMMON SECURITIZATION PLATFORM.—

(A) IN GENERAL.—The Corporation, acting through the Office of Securitization, may promulgate rules—

(i) regarding the use of the common securitization platform described under paragraph (1)(A); and

(ii) to permit securities other than covered securities to be issued through such platform for reasonable compensation.

(B) CONTENT OF RULES.—Any rule that may be promulgated under subparagraph (A) may include a requirement that any security to be issued through the common securitization platform be subject to a uniform securitization agreement developed under section 223.

(c) Establishment of database To provide notice to different classes of lien holders.—The Office of Securitization shall establish, operate, and maintain a database that—

(1) can be accessed by any holder of a lien on an eligible mortgage;

(2) identifies and tracks if a junior lien or any other subordinate lien has been issued on the property securing an eligible mortgage;

(3) notifies, to the extent feasible, any senior or first lien holder of the existence of such junior or subordinate lien; and

(4) informs—

(A) the senior or first lien holder of the monthly performance of the junior or subordinate lien; and

(B) the junior or subordinate lien holder of the monthly performance of the senior or first lien.

SEC. 233. Office of Federal Home Loan Bank Supervision.

(a) Establishment.—There is established within the Federal Mortgage Insurance Corporation an Office of Federal Home Loan Bank Supervision which shall be headed by the Deputy Director of Federal Home Loan Bank Supervision, who shall be appointed by the Board of Directors.

(b) Responsibilities.—The Office of Federal Home Loan Bank Supervision shall—

(1) oversee, coordinate, and supervise the Federal Home Loan Banks and the Federal Home Loan Bank System, including the transition of all activities transferred to the Corporation pursuant to section 301; and

(2) supervise any authorized subsidiary of one or more Federal Home Loan Banks that is approved as an approved issuer pursuant to section 213(b)(2)(A)(ii), including with respect to the initial capitalization of any such subsidiary.

SEC. 301. Powers and duties transferred.

(a) Federal Home Loan Bank functions transferred.—

(1) TRANSFER OF FUNCTIONS.—There are transferred to the Corporation all functions of the Federal Housing Finance Agency and the Director of the Federal Housing Finance Agency relating to—

(A) the supervision of the Federal Home Loan Banks and the Federal Home Loan Bank System; and

(B) all rulemaking authority of the Federal Housing Finance Agency and the Director of the Federal Housing Finance Agency relating to the Federal Home Loan Banks and the Federal Home Loan Bank System.

(2) POWERS, AUTHORITIES, RIGHTS, AND DUTIES.—The Corporation shall succeed to all powers, authorities, rights, and duties that were vested in the Federal Housing Finance Agency and the Director of the Federal Housing Finance Agency, including all conservatorship or receivership authorities, on the day before the transfer date in connection with the functions and authorities transferred under paragraph (1).

(3) EFFECTIVE DATE.—The transfer of functions under this paragraph shall take effect on the transfer date.

(b) Continuation and coordination of certain actions.—

(1) IN GENERAL.—All regulations, orders, determinations, and resolutions described under paragraph (2) shall remain in effect according to the terms of such regulations, orders, determinations, and resolutions, and shall be enforceable by or against the Corporation until modified, terminated, set aside, or superseded in accordance with applicable law by the Corporation, any court of competent jurisdiction, or operation of law.

(2) APPLICABILITY.—A regulation, order, determination, or resolution is described under this subsection if it—

(A) was issued, made, prescribed, or allowed to become effective by—

(i) the Federal Housing Finance Agency; or

(ii) a court of competent jurisdiction, and relates to functions transferred by this Act;

(B) relates to the performance of functions that are transferred by this section; and

(C) is in effect on the transfer date.

(c) Disposition of affairs.—During the period preceding the transfer date, the Director of the Federal Housing Finance Agency, for the purpose of winding up the affairs of the Federal Housing Finance Agency in connection with the performance of functions that are transferred by this section—

(1) shall manage the employees of such Agency and provide for the payment of the compensation and benefits of any such employees which accrue before the transfer date; and

(2) may take any other action necessary for the purpose of winding up the affairs of the Office.

(d) Use of property and services.—

(1) PROPERTY.—The Corporation may use the property and services of the Federal Housing Finance Agency to perform functions which have been transferred to the Corporation until such time as the Agency is abolished under section 303 to facilitate the orderly transfer of functions transferred under this section, any other provision of this Act, or any amendment made by this Act to any other provision of law.

(2) AGENCY SERVICES.—Any agency, department, or other instrumentality of the United States, and any successor to any such agency, department, or instrumentality, that was providing supporting services to the Agency before the transfer date in connection with functions that are transferred to the Corporation shall—

(A) continue to provide such services, on a reimbursable basis, until the transfer of such functions is complete; and

(B) consult with any such agency to coordinate and facilitate a prompt and reasonable transition.

(e) Continuation of services.—The Corporation may use the services of employees and other personnel of the Federal Housing Finance Agency, on a reimbursable basis, to perform functions which have been transferred to the Corporation for such time as is reasonable to facilitate the orderly transfer of functions pursuant to this section, any other provision of this Act, or any amendment made by this Act to any other provision of law.

(f) Savings provisions.—

(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED.—Subsection (a) and section 303 shall not affect the validity of any right, duty, or obligation of the United States, the Director of the Federal Housing Finance Agency, the Federal Housing Finance Agency, or any other person, that existed on the day before transfer date.

(2) CONTINUATION OF SUITS.—No action or other proceeding commenced by or against the Director of the Federal Housing Finance Agency in connection with the functions that are transferred to the Corporation under this section shall abate by reason of the enactment of this Act, except that the Corporation shall be substituted for the Director of the Federal Housing Finance Agency as a party to any such action or proceeding.

(g) Conforming amendments.—

(1) FEDERAL HOME LOAN BANK ACT.—The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is amended—

(A) by striking “the Director” and inserting “the Corporation” each place that term appears;

(B) by striking “The Director” and inserting “The Corporation” each place that term appears;

(C) by striking “Chairman of the Director of Governors” and inserting “Chairman of the Board of Governors” each place that term appears;

(D) by striking “the Agency” and inserting “the Corporation” each place that term appears;

(E) in section 2, by striking paragraphs (11) and (12) and inserting the following:

“(11) CORPORATION.—The term ‘Corporation’ means the Federal Mortgage Insurance Corporation established under title I of the Housing Finance Reform and Taxpayer Protection Act of 2013.”; and

(F) in section 11(l)(5), in the header to such paragraph, by striking “of the director”.

(2) FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND SOUNDNESS ACT.—Section 1316 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4516) is amended—

(A) in subsection (a)—

(i) in the matter preceding paragraph (1), by striking “the regulated entities” and inserting “each enterprise”; and

(ii) in paragraph (1), by striking “and under section 20 of the Federal Home Loan Bank Act”;

(B) in subsection (b), by striking paragraph (2);

(C) in subsection (c)—

(i) by striking “any regulated entity” and inserting “any enterprise”;

(ii) by striking “the regulated entity” and inserting “the enterprise”;

(iii) by striking “a regulated entity” and inserting “an enterprise” each place that term appears;

(iv) by striking “such regulated entity” and inserting “such enterprise” each place that term appears; and

(v) by striking “such entity” and inserting “such enterprise”; and

(D) in subsection (e)—

(i) by striking “each regulated entity” and inserting “each enterprise”; and

(ii) by striking “such regulated entity” and inserting “such enterprise”.

(3) RIGHT TO FINANCIAL PRIVACY ACT OF 1978.—Section 1113(o) of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3413(o)) is amended—

(A) in the heading to the subsection, by “Federal Housing Finance Agency” and inserting “Federal Mortgage Insurance Corporation”;

(B) by striking “Federal Housing Finance Agency” and inserting “Federal Mortgage Insurance Corporation”; and

(C) by striking “Federal Housing Finance Agency's” and inserting “Federal Mortgage Insurance Corporation's”.

(4) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on the transfer date.

SEC. 302. Transfer and rights of employees of the FHFA.

(a) Transfer.—Each employee of the Federal Housing Finance Agency that is employed in connection with functions that are transferred to the Corporation under section 301 shall be transferred to the Corporation for employment, not later than the transfer date, and such transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code.

(b) Status of employees.—The transfer of functions under this title, and the abolishment of the Federal Housing Finance Agency under section 303, may not be construed to affect the status of any transferred employee as an employee of an agency of the United States for purposes of any other provision of law.

(c) Guaranteed positions.—Each employee transferred under subsection (a) shall be guaranteed a position with the same status, tenure, grade, and pay as that held on the day immediately preceding the transfer.

(d) Appointment authority for excepted employees.—

(1) IN GENERAL.—In the case of an employee occupying a position in the excepted service, any appointment authority established under law or by regulations of the Office of Personnel Management for filling such position shall be transferred, subject to paragraph (2).

(2) DECLINE OF TRANSFER.—The Corporation may decline a transfer of authority under paragraph (1), to the extent that such authority relates to a position excepted from the competitive service because of its confidential, policymaking, policy-determining, or policy-advocating character.

(e) Reorganization.—If the Corporation determines, after the end of the 1-year period beginning on the transfer date, that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employee retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code.

(f) Employee benefit programs.—

(1) IN GENERAL.—Any employee of the Federal Housing Finance Agency accepting employment with the Corporation as a result of a transfer under subsection (a) may retain, for 12 months after the date on which such transfer occurs, membership in any employee benefit program of the Agency or the Corporation, as applicable, including insurance, to which such employee belongs on the transfer date if—

(A) the employee does not elect to give up the benefit or membership in the program; and

(B) the benefit or program is continued by the Corporation.

(2) COST DIFFERENTIAL.—

(A) IN GENERAL.—The difference in the costs between the benefits which would have been provided by the Federal Housing Finance Agency and those provided by this section shall be paid by the Corporation.

(B) HEALTH INSURANCE.—If any employee elects to give up membership in a health insurance program or the health insurance program is not continued by the Corporation, the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after the date of such election or notice, without regard to any other regularly scheduled open season.

SEC. 303. Abolishment of FHFA.

Effective upon the FMIC certification date, the Federal Housing Finance Agency and the position of the Director of the Federal Housing Finance Agency are abolished.

SEC. 304. Transfer of property and facilities.

Effective upon the FMIC certification date all property of the Federal Housing Finance Agency shall transfer to the Corporation.

SEC. 305. Technical and conforming amendments.

(a) Effective date.—The amendments made by this section shall take effect on the date of enactment of this Act.

(b) References in Federal law.—On and after the date of enactment of this Act, any reference in Federal law to the Director of the Federal Housing Finance Agency or the Federal Housing Finance Agency, in connection with any function of the Director of the Federal Housing Finance Agency or the Federal Housing Finance Agency transferred under section 301, shall be deemed a reference to the Chairperson of the Federal Mortgage Insurance Corporation or the Federal Mortgage Insurance Corporation, as appropriate and consistent with the amendments made by this Act.

(c) Title 18, United States Code.—Title 18, United States Code, is amended—

(1) in section 1905, by inserting “or the Federal Mortgage Insurance Corporation” after “Federal Housing Finance Agency”;

(2) in section 212(c)(2)—

(A) in subparagraph (F), by striking “; and” and inserting a semicolon;

(B) in subparagraph (G), by striking the period at the end and inserting “; and”; and

(C) by adding at the end the following:

“(H) the Federal Mortgage Insurance Corporation.”;

(3) in section 657, by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”;

(4) in section 1006, by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”; and

(5) in section 1014, by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(d) Flood Disaster Protection Act of 1973.—Section 102(b)(5) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(b)(5)) is amended in subsection (b)(5), by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(e) Title 5, United States Code.—Title 5, United States Code, is amended—

(1) in section 5313, by inserting the following new item after the item relating to the Director of the Federal Housing Finance Agency:

“ Director of the Federal Mortgage Insurance Corporation.”; and

(2) in section 3132(a)(1)(D), by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(f) Sarbanes-Oxley Act.—Section 105(b)(5)(B)(ii)(II) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(B)(ii)(II)) is amended by inserting “or the Chairperson of the Federal Mortgage Insurance Corporation” after “Director of the Federal Housing Finance Agency”.

(g) Federal Deposit Insurance Act.—The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended—

(1) in section 7(a)(2)(A), by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,” each place that term appears;

(2) in section 8(e)(7)(A)(vi), by inserting “, the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency”;

(3) in section 11(t)(2)(A), by adding at the end the following:

“(viii) The Federal Mortgage Insurance Corporation.”; and

(4) in section 33(e), by inserting “, the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency”.

(h) Riegle Community Development and Regulatory Improvement Act of 1994.—Section 117(e) of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4716(e)) is amended by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(i) MAHRA Act of 1997.—Section 517(b)(4) of the Multifamily Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f note) is amended by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(j) Title 44, United States Code.—Section 3502(5) of title 44, United States Code, is amended by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(k) Access to local TV Act of 2000.—Section 1004(d)(2)(D)(iii) of the Launching Our Communities' Access to Local Television Act of 2000 (47 U.S.C. 1103(d)(2)(D)(iii)) is amended by inserting “or the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency”.

(l) FIRREA.—The Financial Institutions Reform, Recovery, and Enhancement Act of 1989 is amended—

(1) in section 1216—

(A) in subsection (a)—

(i) in paragraph (2), by striking “; and” and inserting a semicolon;

(ii) in paragraph (3), by striking the period and inserting “; and”; and

(iii) by adding at the end the following:

“(4) the Federal Mortgage Insurance Corporation.”; and

(B) in subsection (c), by inserting “the Federal Mortgage Insurance Corporation,” before “and the Federal Housing Finance Agency,”;

(2) in section 402(e), by striking “Federal Housing Finance Agency” each place that term appears and inserting “Federal Mortgage Insurance Corporation”;

(3) in section 1124, by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,” each place that term appears; and

(4) in section 1125(b), by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(m) EESA.—The Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 note) is amended—

(1) in section 104(b)—

(A) in paragraph (4), by striking “; and” and inserting a semicolon;

(B) in paragraph (5), by striking the period and inserting “; and”; and

(C) by adding at the end the following:

“(6) the Federal Mortgage Insurance Corporation.”; and

(2) in section 109(b), by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(n) Dodd-Frank Act.—The Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111–203) is amended—

(1) in section 342(g)(1)—

(A) in subparagraph (H), by striking “; and” and inserting a semicolon;

(B) in subparagraph (I), by striking the period and inserting “; and”; and

(C) by adding at the end the following:

“(J) the Federal Mortgage Insurance Corporation.”;

(2) in section 989E(a)(1), by adding at the end the following:

“(J) The Federal Mortgage Insurance Corporation.”; and

(3) in section 1481(b), by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(o) Housing and Urban-Rural Recovery Act.—Section 469 of the Housing and Urban-Rural Recovery Act of 1983 (12 U.S.C. 1701p–1) is amended, in the first sentence, by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(p) Neighborhood Reinvestment Corporation Act.—Section 606(c)(3) of the Neighborhood Reinvestment Corporation Act (42 U.S.C. 8105(c)(3)) is amended by inserting “, the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency”.

(q) Federal Insurance Office Act.—Section 313(r)(4) of title 31, United States Code, is amended by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(r) Commodity Exchange Act.—Section 1a(39)(E) of the Commodity Exchange Act (7 U.S.C. 1a(39)(E)) is amended—

(1) by striking “a regulated entity” and inserting “an enterprise”; and

(2) by inserting before the period at the end “the Federal Mortgage Insurance Corporation in the case of a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant that is a Federal Home Loan Bank”.

(s) Truth in Lending Act.—The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended—

(1) section 129H(b)(4), by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”; and

(2) in section 129E—

(A) in subsection (g)(1), by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”; and

(B) in subsection (h), by inserting “the Federal Mortgage Insurance Corporation,” after “Federal Housing Finance Agency,”.

(t) FFIEC.—The first sentence of section 1011 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3310) is amended by inserting “the Federal Mortgage Insurance Corporation,” before “and the Federal Housing Finance Agency”.

SEC. 401. Affordable housing allocations.

(a) Fee and allocation of amounts.—Subject to subsection (b), and in addition to any fees for the provision of insurance established in accordance with title II, in each fiscal year the Corporation shall—

(1) charge and collect a fee in an amount equal to not less than 5 basis points and not more than 10 basis points for each dollar of the outstanding principal balance of eligible mortgages collateralizing covered securities for which insurance is being provided under title II; and

(2) allocate or otherwise transfer—

(A) 80 percent of such fee amounts to the Secretary of Housing and Urban Development to fund the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568); and

(B) 20 percent of such fee amounts to the Secretary of the Treasury to fund the Capital Magnet Fund established under section 1339 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4569).

(b) Suspension of contributions.—The Corporation may temporarily suspend allocations under subsection (a) upon a finding by the Corporation that such allocations are contributing, or would contribute, to the financial instability of the Mortgage Insurance Fund established under section 203.

SEC. 402. Housing Trust Fund.

Section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568) is amended—

(1) in subsection (a), by striking “by the enterprises under section 1337” and inserting “pursuant to section 401 of the Housing Finance Reform and Taxpayer Protection Act of 2013”;

(2) by repealing subsection (b); and

(3) in subsection (c)—

(A) in paragraph (1), by striking “Except as provided in subsection (b), the” and inserting “The”;

(B) in paragraph (4)(B), by striking “other than fiscal year 2009”;

(C) in paragraph (7)—

(i) in subparagraph (A), by striking “; and” and inserting a semicolon;

(ii) in subparagraph (B)(iv)—

(I) by striking “section 132” and inserting “section 1132”; and

(II) by striking the period at the end and inserting a semicolon; and

(iii) by adding at the end the following:

“(C) grants and loans, including through the use of pilot programs of sufficient scale, to support the research and development of sustainable homeownership and affordable rental programs, provided that such grant or loan amounts are used only for the benefit of families whose income does not exceed 120 percent of the area median income as determined by the Secretary, with adjustments for family size; and

“(D) provide limited credit enhancement, and other forms of credit support, for product and services that—

“(i) will increase the rate of sustainable homeownership and affordable rental by individuals or families whose income does not exceed 120 percent of the area median income as determined by the Secretary, with adjustments for family size; and

“(ii) might not otherwise be offered or supported by a pilot program of sufficient scale to determine the viability of such products and services in the private market.”; and

(D) in paragraph (10)—

(i) by amending subparagraph (A) to read as follows:

“(A) ENSURING EFFICIENT USE OF GRANT AMOUNTS.—

“(i) USE FOR CERTAIN ELIGIBLE ACTIVITIES.—In each fiscal year, of the aggregate amount allocated to a State or State designated entity under this subsection—

“(I) 35 percent shall be used for activities under subparagraph (A) of paragraph (7);

“(II) 5 percent shall be used for activities under subparagraph (B) of paragraph (7); and

“(III) 60 percent shall be used for activities under subparagraphs (C) and (D) of paragraph (7).

“(ii) ENSURING BENEFITS FOR RURAL COMMUNITIES.—

“(I) IN GENERAL.—In each fiscal year, of the aggregate amount allocated to a State or State designated entity under this subsection, the State or State designated entity shall ensure that, at a minimum, such amounts are distributed for the benefit of nonentitlement areas in that State in the same proportion that the total amount of nonentitlement areas in that State bears to the total amount of all areas in that State.

“(II) TARGETED OUTREACH TO SMALLER COMMUNITIES.—In carrying out the requirement under subclause (I), each State or State designated entity shall in distributing amounts allocated to that State or State designated entity give priority to nonentitlement areas with a population of less than 20,000.

“(III) DEFINITION OF NONENTITLEMENT AREA.—For purposes of this clause, the term ‘nonentitlement area’ has the same meaning given that term under section 102(a)(7) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(7)).”; and

(ii) by striking subparagraph (E).

SEC. 403. Capital Magnet Fund.

Section 1339 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4569) is amended—

(1) in subsection (b)(1), by striking “pursuant to section 1337” and inserting “pursuant to section 401 of the Housing Finance Reform and Taxpayer Protection Act of 2013”; and

(2) in subsection (h), by striking paragraph (7).

SEC. 404. Additional taxpayer protections.

(a) Ensuring benefits support citizens and lawful permanent residents.—The Secretary of Housing and Urban Development and the Secretary of the Treasury, respectively, shall ensure that grant amounts allocated to covered grantees, allocated by covered grantees to eligible recipients, or allocated to individuals by such eligible recipients are used for the benefit of only lawful permanent residents and citizens of the United States in carrying out the activities of—

(1) the Housing Trust Fund; and

(2) the Capital Magnet Fund.

(b) Not To be used for political activities.—Consistent with the existing requirements under sections 1338(c)(10)(D) and section 1339(h)(5) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, the Secretary of Housing and Urban Development and the Secretary of the Treasury, respectively, shall ensure that grant amounts allocated by covered grantees to eligible recipients or allocated to individuals by such eligible recipients are not used for—

(1) political activities;

(2) advocacy;

(3) lobbying, whether directly or through other parties;

(4) influencing the selection, nomination, election, or appointment of one or more candidates to any Federal, State or local office;

(5) personal counseling services;

(6) travel expenses; and

(7) preparing or providing advice on tax returns.

(c) Penalties.—

(1) CIVIL MONEY PENALTY.—If an eligible recipient or any other individual in receipt of grant amounts described by this section violates any provision of subsection (a) or (b), the Secretary of Housing and Urban Development or the Secretary of the Treasury, as the case may be, may impose a civil penalty on such recipient or individual, as the case may be, of not more than $1,000,000 for each violation.

(2) CRIMINAL PENALTIES.—Whoever, being subject to the provisions of subsection (a) or (b), knowingly participates, directly or indirectly, in any manner in conduct that results in a violation of such provisions shall, notwithstanding section 3571 of title 18, United States Code, be fined not more than $1,000,000 for each violation, imprisoned for not more than 5 years, or both.

(3) RULE OF CONSTRUCTION.—The penalties imposed under paragraphs (1) or (2) shall be in addition to any other available civil remedy or any other available criminal penalty and may be imposed whether or not the Secretary of Housing and Urban Development or the Secretary of the Treasury, as the case may be, imposes other administrative sanctions.

(d) Definition.—As used in this section—

(1) the term “covered grantee” means—

(A) for purposes of the Housing Trust Fund, a State or State designated entity; and

(B) for purposes of the Capital Magnet Fund, an eligible grantee as described under section 1339(e) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992;

(2) the term “eligible recipient” means—

(A) for purposes of the Housing Trust Fund, a recipient as described under section 1338(c)(9) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992t; and

(B) for purposes of the Capital Magnet Fund, a recipient of assistance from the Capital Magnet Fund;

(3) the term “Capital Magnet Fund” means the Capital Magnet Fund established under section 1339 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4569); and

(4) the term “Housing Trust Fund” means the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568).

SEC. 501. Repeal of GSE charters.

(a) Fannie Mae.—Effective on the FMIC certification date, the charter of the Federal National Mortgage Association is repealed and the Federal National Mortgage Association shall have no authority to conduct new business under such charter, except that the provisions of such charter in effect immediately before such repeal shall continue to apply with respect to the rights and obligations of any holders of—

(1) outstanding debt obligations of the Federal National Mortgage Association, including any—

(A) bonds, debentures, notes, or other similar instruments;

(B) capital lease obligations; or

(C) obligations in respect of letters of credit, bankers' acceptances, or other similar instruments; or

(2) mortgage-backed securities guaranteed by the Federal National Mortgage Association.

(b) Freddie Mac.—Effective on the FMIC certification date, the charter of the Federal Home Loan Mortgage Corporation is repealed and the Federal Home Loan Mortgage Corporation shall have no authority to conduct new business under such charter, except that the provisions of such charter in effect immediately before such repeal shall continue to apply with respect to the rights and obligations of any holders of—

(1) outstanding debt obligations of the Federal Home Loan Mortgage Corporation, including any—

(A) bonds, debentures, notes, or other similar instruments;

(B) capital lease obligations; or

(C) obligations in respect of letters of credit, bankers' acceptances, or other similar instruments; or

(2) mortgage-backed securities guaranteed by the Federal Home Loan Mortgage Corporation.

(c) Existing guarantee obligations.—

(1) EXPLICIT GUARANTEE.—The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any obligation described under subsections (a) and (b).

(2) CONTINUED DIVIDEND PAYMENTS.—Notwithstanding section 502 or any other provision of law, and subject to section 601, provision 2(a) (relating to Dividend Payment Dates and Dividend Periods) and provision 2(c) (relating to Dividend Rates and Dividend Amount) of the Senior Preferred Stock Purchase Agreement, or any provision of any certificate in connection with such Agreement creating or designating the terms, powers, preferences, privileges, limitations, or any other conditions of the Variable Liquidation Preference Senior Preferred Stock of an enterprise issued pursuant to such Agreement—

(A) shall not be amended, restated, or otherwise changed to reduce the rate or amount of dividends in effect pursuant to such Agreement as of the Third Amendment to such Agreement dated August 17, 2012, except that any amendment to such Agreement to facilitate the sale of assets of the enterprises to facilitate compliance with the provisions of section 502(b) shall be permitted; and

(B) shall remain in effect until the guarantee obligations described under subsections (a)(2) and (b)(2) are fully extinguished.

(3) APPLICABILITY.—Notwithstanding section 502, all guarantee fee amounts derived from the single-family mortgage guarantee business of the enterprises in existence as of the FMIC certification date shall be subject to the terms of the Senior Preferred Stock Purchase Agreement.

(d) Federal Safety and Soundness Act.—

(1) IN GENERAL.—The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended—

(A) in section 1303—

(i) in paragraph (2), by striking “'Federal Housing Finance Agency” and inserting “Federal Mortgage Insurance Corporation”;

(ii) in paragraph (3), by striking “means” and all that follows through the period at the end, and inserting “means the Federal Home Loan Bank Act.”;

(iii) by repealing paragraph (4); and

(iv) in paragraph (9), by striking “Director of the Federal Housing Finance Agency” and inserting “Board of Directors of the Federal Mortgage Insurance Corporation”;

(B) by repealing section 1313A; and

(C) by repealing section 1317(d).

(2) EFFECTIVE DATE.—The amendments made by paragraph (1) shall take effect on the FMIC certification date.

SEC. 502. Wind down.

(a) Wind down.—

(1) AUTHORITY OF FHFA.—Beginning on the date of enactment of this Act and ending on the FMIC certification date, the Director of the Federal Housing Finance Agency, in consultation with the Corporation and the Secretary of the Treasury, shall take such action, and may prescribe such regulations and procedures, as may be necessary to wind down the operations of the enterprises in an orderly manner that complies with the requirements of this Act and any amendments made by this Act.

(2) LIMITATION.—Notwithstanding any authority granted to the Director of the Federal Housing Finance Agency under paragraph (1), the sale, transfer, exchange, or other disposition of any asset subject to the wind down required under this section shall be prohibited, if the Corporation—

(A) in its discretion determines that such sale, transfer, exchange, or disposition would materially interfere with the ability of the Corporation to carry out the requirements of this Act; and

(B) notifies, in writing, the Director of the Federal Housing Finance Agency within 14 days of such determination.

(3) RULE OF CONSTRUCTION.—Notwithstanding any authority granted to the Director of the Federal Housing Finance Agency under paragraph (1), the Director of the Federal Housing Finance Agency—

(A) shall have no authority to sell, transfer, exchange, or otherwise dispose of any guarantee obligations described under subsections (a)(2) and (b)(2) of section 501; and

(B) shall have no rights, claims, or title to, nor any authority to sell, transfer, exchange, or otherwise dispose of, guarantee fee amounts derived from the single-family mortgage guarantee business of the enterprises in existence as of the FMIC certification date.

(b) Division of assets and liabilities; authority To establish holding corporation and dissolution trust fund.—The action and procedures required under subsection (a)—

(1) shall include the establishment and execution of plans to provide for an equitable division, distribution, and liquidation of the assets and liabilities of an enterprise, including any infrastructure, property, including intellectual property, platforms, or any other thing or object of value, provided such plan complies with the requirements of this Act and any amendments made by this Act; and

(2) may provide for establishment of—

(A) a holding corporation organized under the laws of any State of the United States or the District of Columbia for the purpose of winding down an enterprise; and

(B) one or more trusts to which to transfer—

(i) outstanding debt obligations of an enterprise; or

(ii) outstanding mortgages held for the purpose of collateralizing mortgage-backed securities guaranteed by an enterprise.

(c) Recoupment by senior preferred shareholders.—

(1) IN GENERAL.—Subject to the requirements of this Act, any proceeds from the wind down of an enterprise shall be paid first to the senior preferred shareholders of each such enterprise, then to the preferred shareholders of each such enterprise, and then to the common shareholders of each such enterprise.

(2) JOINT DETERMINATION.—The amount of any proceeds to be paid pursuant to paragraph (1) shall be jointly determined by the Director of the Federal Housing Finance Agency, the Corporation, and the Secretary of the Treasury.

(3) MAXIMUM RETURN TO SHAREHOLDERS.—The wind down of each enterprise required under this section shall be managed by the Director of the Federal Housing Finance Agency, in consultation with the Corporation and the Secretary of the Treasury, to obtain resolutions that maximize the return for the senior preferred shareholders under paragraph (1), to the extent that such resolutions—

(A) are consistent with the goal of supporting a sound, stable, and liquid housing market;

(B) are consistent with applicable Federal and State law;

(C) comply with the requirements of this Act and any amendments made by this Act; and

(D) protect the taxpayer.

(4) SALE OF CERTAIN ASSETS AS A GOING CONCERN.—Except as provided in section 601 or elsewhere as required in this Act, if the Director of the Federal Housing Finance Agency, in consultation with the Corporation and the Secretary of the Treasury, determines that the sale of any line of business, or any function, activity, or service of an enterprise as a going concern will maximize the return for the senior preferred shareholders as required under paragraph (3), the Director may conduct such sale, provided that—

(A) under no circumstance, shall such sale transfer, convey, or authorize, or be deemed to transfer, convey, or authorize, any guarantee or Federal support, assistance, or backing, implicit or explicit, related to any such line of business, function, activity, or service; and

(B) such sale does not impede or otherwise interfere with the ability of the Federal Mortgage Insurance Corporation to carry out the functions and requirements of this Act.

(5) RULE OF CONSTRUCTION.—For purposes of this subsection, the term “proceeds” does not include any guarantee fee amounts derived from the single-family mortgage guarantee business of the enterprises in existence as of the FMIC certification date.

SEC. 503. Aligning purpose of conservatorship with FMIC.

(a) Power as conservator.—Section 1367(b)(2)(D) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617(b)(2)(D)) is amended to read as follows:

“(D) POWER AS CONSERVATOR.—After the date of enactment of the Housing Finance Reform and Taxpayer Protection Act of 2013 the Agency shall, as conservator, take such actions as are necessary—

“(i) to ensure the efficient, effective, and expeditious wind down of the enterprises;

“(ii) to manage the affairs, assets, and obligations of the enterprises and to operate the enterprises in compliance with the requirements of the Housing Finance Reform and Taxpayer Protection Act of 2013;

“(iii) to assist the Federal Mortgage Insurance Corporation, in a consultative capacity, in carrying out the requirements under the Housing Finance Reform and Taxpayer Protection Act of 2013; and

“(iv) to maintain liquidity and stability in the secondary mortgage market until such as time as the charters of the enterprises are revoked pursuant to title V of such Act.”.

(b) Rule of construction.—Nothing in this Act, or any amendments made by this Act, except as may be explicitly provided for in this Act, or any amendment made by this Act, shall be deemed to alter the powers, authorities, rights, and duties that are vested in the Federal Housing Finance Agency and the Director of the Federal Housing Finance Agency with respect to its supervision and regulation of the enterprises.

SEC. 504. Conforming loan limits.

(a) In general.—Beginning on the date of enactment of this Act, the limitations governing the maximum original principal obligation of conventional mortgages that may be purchased by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, referred to in section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) and section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), respectively, shall not exceed $417,000 for a mortgage secured by a single-family residence, $533,850 for a mortgage secured by a 2-family residence, $645,300 for a mortgage secured by a 3-family residence, and $801,950 for a mortgage secured by a 4-family residence, except that such maximum limitations shall be adjusted effective January 1 of each year beginning after the date of enactment of this Act, subject to the limitations in this paragraph. Each adjustment shall be made by adding to each such amount (as it may have been previously adjusted) a percentage thereof equal to the percentage increase, during the most recent 12-month or 4-quarter period ending before the time of determining such annual adjustment, in the housing price index maintained pursuant to section 1322 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4542). If the change in such house price index during the most recent 12-month or 4-quarter period ending before the time of determining such annual adjustment is a decrease, then no adjustment shall be made for the next year, and the next adjustment shall take into account prior declines in the house price index, so that any adjustment shall reflect the net change in the house price index since the last adjustment. Declines in the house price index shall be accumulated and then reduce increases until subsequent increases exceed prior declines.

(b) Special exception for Alaska, Hawaii, Guam, and USVI.—The limitations set forth under subsection (a) shall be increased by not to exceed 50 per centum with respect to properties located in Alaska, Guam, Hawaii, and the Virgin Islands.

(c) High-Cost area limit.—The limitations set forth under subsection (a) shall also be increased, with respect to properties of a particular size located in any area for which 115 percent of the median house price for such size residence exceeds the limitation under subsection (a) for such size residence—

(1) for the first year following the date of enactment of this Act, to the lesser of 150 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence;

(2) for the second year following the date of enactment of this Act, to the lesser of 145 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence;

(3) for the third year following the date of enactment of this Act, to the lesser of 135 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence;

(4) for the fourth year following the date of enactment of this Act, to the lesser of 130 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence; and

(5) for the fifth year following the date of enactment of this Act, and each year thereafter, to the lesser of 125 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence.

SEC. 505. Portfolio reduction.

(a) Graduated reduction.—

(1) IN GENERAL.—Each enterprise shall not own, as of any applicable date, mortgage assets in excess of—

(A) as of December 31, 2013, $552,500,000,000; and

(B) on December 31 of each year thereafter until the FMIC certification date, 85 percent of the aggregate amount of the mortgage assets that the enterprise was permitted to own as of December 31 of the immediately preceding calendar year.

(2) RETAINED PORTFOLIO TO FACILITATE ORDERLY WIND DOWN.—On December 31 of the year in which the FMIC certification date occurs, the Corporation shall establish an allowable amount of enterprise owned mortgage assets in an amount equal to the amount necessary to facilitate—

(A) the orderly wind down of the enterprises; and

(B) appropriate loss mitigation on any legacy guarantees of the enterprises.

(b) Mortgage assets defined.—For purposes of this section, the term “mortgage assets” means, with respect to an enterprise, assets of such enterprise consisting of mortgages, mortgage loans, mortgage-related securities, participation certificates, mortgage-backed commercial paper, obligations of real estate mortgage investment conduits and similar assets, in each case to the extent such assets would appear on the balance sheet of such enterprise in accordance with generally accepted accounting principles in effect in the United States as of September 7, 2008 (as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board from time to time; and without giving any effect to any change that may be made after September 7, 2008, in respect of Statement of Financial Accounting Standards No. 140 or any similar accounting standard).

SEC. 506. Repeal of mandatory housing goals.

(a) Repeal of housing goals.—The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 is amended by striking sections 1331 through 1336 (12 U.S.C. 4561–6).

(b) Conforming amendments.—The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended—

(1) in section 1303(28), by striking “, and, for the purposes” and all that follows through “designated disaster areas”;

(2) in section 1324(b)(1)(A), by striking clauses (i), (ii), and (iv);

(3) in section 1341—

(A) in subsection (a)—

(i) in paragraph (1), by inserting “or” after the semicolon at the end;

(ii) in paragraph (2), by striking the semicolon at the end and inserting a period; and

(iii) by striking paragraphs (3) and (4); and

(B) in subsection (b)(2)—

(i) in subparagraph (A), by inserting “or” after the semicolon at the end;

(ii) by striking subparagraphs (B) and (C); and

(iii) by redesignating subparagraph (D) as subparagraph (B);

(4) in section 1345(a)—

(A) in paragraph (1), by inserting “or” after the semicolon at the end;

(B) in paragraph (2), by striking the semicolon at the end and inserting a period; and

(C) by striking paragraphs (3) and (4); and

(5) in section 1371(a)(2), by striking “with any housing goal established under subpart B of part 2 of subtitle A of this title, with section 1336 or 1337 of this title,”.

SEC. 601. Continuation of multifamily business of the enterprises.

(a) In general.—Notwithstanding any provision of title V, or any other provision of law, effective on the FMIC certification date, all functions, activities, infrastructure, property, including intellectual property, platforms, or any other object or service of an enterprise relating to the maintenance and operation of the multifamily guarantee business of an enterprise shall be transferred, without cost, to the Corporation.

(b) Authority of Director.—The Corporation is authorized, upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest, on any mortgage on multifamily housing purchased by the Corporation pursuant to the transfer of an enterprise's multifamily guarantee business under subsection (a).

(c) Limitation on ongoing operation of multifamily business.—In carrying out the multifamily guarantee business of an enterprise transferred pursuant to subsection (a), the Corporation shall ensure that any such business continues to operate, as applicable, consistent with—

(1) the Delegated Underwriting and Servicing Lender Program established by the Federal National Mortgage Association; and

(2) the Program Plus Lender Program established by the Federal Home Loan Mortgage Corporation, especially the Series K Structured Pass-Through Certificates offered by the enterprise.

(d) Explicit guarantee.—The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any guaranty—

(1) issued by the Corporation pursuant to this subsection; and

(2) obligation assumed by the Corporation pursuant to the transfer of an enterprise's multifamily guarantee business under subsection (a).

(e) Guarantee fee.—

(1) IN GENERAL.—The Corporation shall collect a reasonable fee for any guaranty under this subsection and shall make such charges as it may determine to be reasonable for the analysis of any trust or other security arrangement proposed by an issuer of a security backed by multifamily mortgages guaranteed under this section.

(2) DEPOSIT INTO MORTGAGE INSURANCE FUND.—Any guarantee fee amounts collected under this subsection shall be deposited in the Mortgage Insurance Fund.

SEC. 602. Multiple lender issues.

With respect to the dwelling of a borrower that serves as security for an eligible mortgage, if the borrower enters into any credit transaction that would result in the creation of a new mortgage or other lien on such dwelling where the loan-to-value ratio of such credit transaction amount is 80 percent or more, the creditor of such new mortgage or other lien shall seek and obtain the approval of the creditor of the senior eligible mortgage loan before any such credit transaction becomes valid and enforceable.

SEC. 603. GAO report on full privatization of secondary mortgage market.

(a) GAO report.—Not later than 8 years after the date of enactment of this Act, the Comptroller General of the United States shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the feasibility of maintaining a fully privatized secondary mortgage market, including recommendations on how to best carry out any displacement of the insurance model established under this Act.

(b) Corporation plan To transition to a fully private secondary mortgage market.—

(1) REQUIRED SUBMISSION TO CONGRESS.—Not later than 6 months after the date on which the report required under subsection (a) is submitted, the Corporation shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a plan to transition to a fully privatized secondary mortgage market.

(2) REQUIRED CONTENT OF PLAN.—The plan required to be submitted under paragraph (1) shall describe, chronicle, and specify all the legislative, administrative, and regulatory actions necessary to carry out a transition to a fully private secondary mortgage market, including all actions necessary to dissolve the Corporation and successfully displace the insurance model established under this Act.

SEC. 701. Authority to issue regulations.

The Corporation may prescribe such regulations and issue such guidelines, orders, requirements, or standards as are necessary to carry out this Act, or any amendment made by this Act.

SEC. 702. Fair value accounting.

In any evaluation, oversight, audit, or analysis by the Corporation of the cost of the Mortgage Insurance Fund, the insurance or guarantee activities of the Corporation required under this Act, including any fee or charge in connection with the provision of such insurance or guarantee, or the financial transactions of the Corporation, the Corporation shall conduct any such evaluation, oversight, audit, or analysis based on the fair-value accrual accounting method.

SEC. 703. Rule of construction.

Nothing in this Act shall be construed to prohibit or otherwise restrict the ability of a holder of any loss position in any covered security insured under this Act from restructuring, retranching, or resecuritizing such position.

SEC. 704. Severability.

If any provision of this Act or the application of any provision of this Act to any person or circumstance, is held invalid, the application of such provision to other persons or circumstances, and the remainder of this Act, shall not be affected thereby.

SECTION 1. Short title; table of contents.

(a) Short title.—This Act may be cited as the “Housing Finance Reform and Taxpayer Protection Act of 2014”.

(b) Table of contents.—The table of contents for this Act is as follows:


Sec. 1. Short title; table of contents.

Sec. 2. Definitions.

Sec. 101. Elimination of Fannie Mae and Freddie Mac.

Sec. 201. Establishment.

Sec. 202. Management of Corporation.

Sec. 203. Advisory Committee.

Sec. 204. Office of the Inspector General.

Sec. 205. Staff, experts, and consultants.

Sec. 206. Reports; testimony; audits.

Sec. 207. Specific offices.

Sec. 208. Office of Consumer and Market Access.

Sec. 209. Office of Multifamily Housing.

Sec. 210. Equitable access for lenders and borrowers.

Sec. 211. Office of Taxpayer Protection.

Sec. 301. Duties and responsibilities.

Sec. 302. Standards for credit risk-sharing mechanisms.

Sec. 303. Insurance; Mortgage Insurance Fund.

Sec. 304. Loan limits; Housing Price Index.

Sec. 305. Authority to protect taxpayers in unusual and exigent market conditions.

Sec. 306. General powers.

Sec. 307. Exemptions.

Sec. 308. Regulatory consultation and coordination.

Sec. 309. Authority to issue regulations.

Sec. 310. Equivalency in protection of the Mortgage Insurance Fund.

Sec. 311. Approval and supervision of guarantors.

Sec. 312. Approval and supervision of aggregators.

Sec. 313. Approval of private mortgage insurers.

Sec. 314. Approval of servicers.

Sec. 315. Authority to establish and approve small lender mutuals.

Sec. 316. Supervisory actions related to capital and solvency.

Sec. 317. Ownership, acquisitions, and operations of covered entities.

Sec. 321. Establishment of the Securitization Platform.

Sec. 322. Management of the Platform.

Sec. 323. Membership in the Platform.

Sec. 324. Fees.

Sec. 325. Purposes and obligations of the Platform.

Sec. 326. Uniform securitization agreements for covered securities and required contractual terms for noncovered securities.

Sec. 327. Approval and standards for collateral risk managers.

Sec. 331. Review of loan documents; disclosures.

Sec. 332. National mortgage database.

Sec. 333. Working group on electronic registration of mortgage loans.

Sec. 334. Multiple lender issues.

Sec. 335. Required harmonization of standards within eligible mortgage criteria.

Sec. 401. Definitions.

Sec. 402. FHFA transition.

Sec. 403. Transfer and rights of employees of the FHFA.

Sec. 404. Transition Committee.

Sec. 405. Transition assessments.

Sec. 406. Transfer of powers and duties on the system certification date; continuation and coordination of certain actions.

Sec. 407. Technical and conforming amendments relating to abolishment of FHFA.

Sec. 408. Repeal of mandatory housing goals.

Sec. 501. Affordable housing allocations.

Sec. 502. Housing Trust Fund.

Sec. 503. Capital Magnet Fund.

Sec. 504. Market Access Fund.

Sec. 505. Additional taxpayer protections.

Sec. 506. Promoting affordable housing investment.

Sec. 601. Minimum housing finance system criteria to be met prior to system certification date.

Sec. 602. Transition of the housing finance system.

Sec. 603. Resolution authority; technical amendments.

Sec. 604. Wind down.

Sec. 605. Portfolio reduction.

Sec. 606. Oversight of transition of the housing finance system.

Sec. 607. Authority to establish provisional standards.

Sec. 608. Initial fund level for the Mortgage Insurance Fund.

Sec. 609. GAO report on full privatization of secondary mortgage market.

Sec. 701. Establishment of multifamily subsidiaries.

Sec. 702. Disposition of multifamily businesses.

Sec. 703. Approval and supervision of multifamily guarantors.

Sec. 704. Multifamily housing requirement.

Sec. 705. Establishment of small multifamily property program.

Sec. 706. Multifamily housing study.

Sec. 707. Multifamily platform study.

Sec. 708. Short-term residential housing.

Sec. 801. Rule of construction.

Sec. 802. Severability.

Sec. 803. Transfer notification under TILA.

Sec. 804. Investment authority to support rural infrastructure.

Sec. 805. Consolidation of similar housing assistance programs.

Sec. 806. Bureau of Consumer Financial Protection review; GAO report.

Sec. 807. Determination of budgetary effects.

SEC. 2. Definitions.

As used in this Act, the following definitions shall apply:

(1) AFFILIATE.—The term “affiliate” means any person that controls, is controlled by, or is under common control with another person.

(2) AFFORDABLE RENTAL HOUSING.—The term “affordable rental housing” means a rental housing unit that is considered affordable for extremely low-, very low-, low-, and moderate-income families if the rent charged, including utilities or a utility allowance, does not exceed 30 percent of the respective income limit in that market area for extremely low-, very low-, low-, or moderate-income families, respectively, of the size appropriate for the number of bedrooms in the unit, as established by the Secretary of Housing and Urban Development.

(3) AGENCY TRANSFER DATE.—The term “agency transfer date” means the date that is 6 months after the date of enactment of this Act.

(4) APPROPRIATE FEDERAL BANKING AGENCY.—The term “appropriate Federal banking agency” has the same meaning as in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), and includes the National Credit Union Administration in the case of any credit union.

(5) APPROVED AGGREGATOR.—The term “approved aggregator” means an entity that is approved by the Corporation pursuant to section 312.

(6) APPROVED ENTITY.—The term “approved entity” means—

(A) an approved guarantor;

(B) an approved multifamily guarantor;

(C) an approved aggregator;

(D) an approved private mortgage insurer; and

(E) an approved servicer.

(7) APPROVED GUARANTOR.—The term “approved guarantor” means an entity that is approved by the Corporation pursuant to section 311.

(8) APPROVED MULTIFAMILY GUARANTOR.—The term “approved multifamily guarantor” means an entity that is approved by the Corporation pursuant to section 703.

(9) APPROVED PRIVATE MORTGAGE INSURER.—The term “approved private mortgage insurer” means an entity that is approved by the Corporation pursuant to section 313.

(10) APPROVED SERVICER.—The term “approved servicer” means an entity that is approved by the Corporation pursuant to section 314.

(11) AREA.—The term “area” means a metropolitan statistical area, a micropolitan statistical area, and a noncore area, as such areas may be established by the Office of Management and Budget.

(12) BOARD; BOARD OF DIRECTORS.—The terms “Board” and “Board of Directors” mean the Board of Directors of the Federal Mortgage Insurance Corporation, unless the context otherwise requires.

(13) CHAIRPERSON.—The term “Chairperson” means the Chairperson of Board of Directors of the Federal Mortgage Insurance Corporation, unless the context otherwise requires.

(14) CHARTER.—The term “charter” means—

(A) with respect to the Federal National Mortgage Association, the Federal National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.); and

(B) with respect to the Federal Home Loan Mortgage Corporation, the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.).

(15) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.—The term “Community Development Financial Institution” has the same meaning as in section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702).

(16) COMMUNITY LAND TRUST.—The term “community land trust” means a nonprofit organization or State or local government that owns real property and leases the land through homeownership programs that—

(A) use a ground lease to—

(i) make real property affordable to low- or moderate-income borrowers; and

(ii) stipulate a preemptive option to purchase the real property from the home owner at resale so that the affordability of the real property is preserved for successive low- and moderate-income borrowers;

(B) monitor properties to ensure affordability is preserved over resales; and

(C) support homeowners to promote successful homeownership and prevent foreclosure.

(17) CORPORATION.—The term “Corporation” means the Federal Mortgage Insurance Corporation established under title II.

(18) COVERED ENTITY.—The term “covered entity” means—

(A) an approved guarantor;

(B) an approved multifamily guarantor; and

(C) an approved aggregator that is neither an insured depository institution nor an affiliate of an insured depository institution.

(19) COVERED GUARANTEE TRANSACTION.—

(A) DEFINITION.—The term “covered guarantee transaction” means a transaction, as that term shall be defined by the Corporation by regulation, involving the agreement to guarantee—

(i) any eligible mortgage loan;

(ii) any pool of such eligible mortgage loans; or

(iii) the payment of principal and interest on covered securities collateralized by eligible mortgage loans before payments insured by the Corporation are made.

(B) RULES OF CONSTRUCTION.—A covered guarantee transaction—

(i) shall not be construed to be—

(I) a contract for sale of a commodity for future delivery or a swap under the Commodity Exchange Act; or

(II) a contract of insurance or reinsurance under any Federal or State law regulating the sale, underwriting, provision, or brokerage of insurance;

(ii) shall not be subject to any requirement of the Commodity Exchange Act; and

(iii) shall not be subject to any requirement imposed under State law pertaining to the sale, underwriting, provision, or brokerage of insurance or reinsurance.

(20) COVERED MARKET-BASED RISK-SHARING TRANSACTION.—

(A) DEFINITION.—The term “covered market-based risk-sharing transaction” means any private market transaction, as that term shall be defined by the Corporation by regulation, involving a covered security issued subject to a standard risk-sharing mechanism, product, contract, or other security agreement approved by the Corporation under section 302.

(B) RULES OF CONSTRUCTION.—A covered market-based risk-sharing transaction—

(i) shall not be construed to be a contract of insurance or reinsurance under any Federal or State law regulating the sale, underwriting, provision, or brokerage of insurance; and

(ii) shall not be subject to any requirement imposed under State law pertaining to the sale, underwriting, provision, or brokerage of insurance or reinsurance.

(21) COVERED SECURITY.—The term “covered security” means—

(A) a single-family covered security; and

(B) a multifamily covered security.

(22) CREDIT RISK-SHARING MECHANISM.—The term “credit risk-sharing mechanism” means any mechanism, product, structure, contract, or security agreement by which a private market holder assumes the first loss position, or any part of such position, associated with the pool of eligible mortgage loans collateralizing a covered security, or by which an approved guarantor or approved multifamily guarantor manages the credit risk related to guarantees provided for covered securities.

(23) CSP.—The term “CSP” means the securitization infrastructure announced by the Federal Housing Finance Agency on October 4, 2012, and developed by the enterprises while under conservatorship, under the authority of the Federal Housing Finance Agency pursuant to the Safety and Soundness Act, and commonly referred to as the “common securitization platform”.

(24) DAYS.—The term “days” means—

(A) with respect to any period of time less than or equal to 10 days, business days; and

(B) with respect to any period of time greater than 10 days, calendar days.

(25) DEPOSITORY INSTITUTION HOLDING COMPANY.—The term “depository institution holding company” has the same meaning as section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)).

(26) ELIGIBLE BORROWER.—The term “eligible borrower” means a borrower who—

(A) applies for an eligible mortgage loan; and

(B) meets the standards required of a borrower to be approved for an eligible mortgage loan.

(27) ELIGIBLE MORTGAGE LOAN.—The term “eligible mortgage loan” means—

(A) an eligible single-family mortgage loan; and

(B) an eligible multifamily mortgage loan.

(28) ELIGIBLE MULTIFAMILY MORTGAGE LOAN.—The term “eligible multifamily mortgage loan” means a commercial real estate loan—

(A) secured by a property with—

(i) 5 or more residential units; or

(ii) 2 or more residential units, if the requirement under clause (i) is waived by the Corporation for purposes of carrying out a demonstration or pilot program;

(B) the primary source of repayment for which is expected to be derived from rental income generated by the property;

(C) the term of which may not be less than 5 years but not more than 40 years, except that the term may be less than 5 years subject to standards set by the Corporation;

(D) that satisfies any additional underwriting criteria established by the Corporation to balance supporting access to capital with managing credit risk to the Mortgage Insurance Fund, including—

(i) a maximum loan-to-value ratio;

(ii) a minimum debt service coverage ratio; and

(iii) considerations for restrictive or special uses of a property, including non-residential uses, properties for seniors, manufactured housing, and affordability restrictions, and the impact of such uses on clauses (i) and (ii); and

(E) that satisfies any additional underwriting criteria that may be established by the Corporation.

(29) ELIGIBLE SINGLE-FAMILY MORTGAGE LOAN.—The term “eligible single-family mortgage loan” means—

(A) a loan that—

(i) has been originated in compliance with minimum standards issued by the Corporation by regulation, provided that such standards—

(I) are uniform and equal in kind, nature, and application regardless of—

(aa) the originator of the mortgage loan; or

(bb) the role performed by an approved entity with respect to the mortgage loan;

(II) are, to the greatest extent possible, substantially similar to the regulations issued by the Bureau of Consumer Financial Protection under section 129C(b) of the Truth in Lending Act (15 U.S.C. 1639c); and

(III) permit—

(aa) residential real estate loans secured by a property with 1 to 4 single-family units, including units that are not owner-occupied;

(bb) loans secured by manufactured homes, as defined in section 603(6) of the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5402(6));

(cc) residential real estate loans secured by a property with 1 to 4 single-family units that are originated by a State housing finance agency, as defined in section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x);

(dd) loans originated by a Community Development Financial Institution;

(ee) loans originated by a mission-based nonprofit lender;

(ff) loans secured by real property in a permanently affordable homeownership program or community land trust; and

(gg) loans to entities that provide non-owner occupied rental housing with care providers for individuals with intellectual and developmental disabilities;

(ii) has a maximum original principal obligation amount that does not exceed the applicable loan limitation established under section 304;

(iii) has an outstanding principal balance at the time of purchase of insurance available under title II that does not exceed 80 percent of the value of the property securing the loan, unless—

(I) for such period and under such circumstances as the Corporation may require, the seller agrees to repurchase or replace the loan upon demand of the Corporation in the event the loan is in default;

(II) an approved private mortgage insurer guarantees or insures—

(aa) not less than 12 percent of the unpaid principal balance of the loan, accounting for any down payment required under clause (iv), for loans in which the unpaid principal balance exceeds 80 percent but not more than 85 percent of the value of the property securing the loan;

(bb) not less than 25 percent of the unpaid principal balance of the loan, accounting for any down payment required under clause (iv), for loans in which the unpaid principal balance exceeds 85 percent but not more than 90 percent of the value of the property securing the loan;

(cc) not less than 30 percent of the unpaid principal balance of the loan, accounting for any down payment required under clause (iv), for loans in which the unpaid principal balance exceeds 90 percent but not more than 95 percent of the value of the property securing the loan; and

(dd) not less than 35 percent of the unpaid principal balance of the loan, accounting for any down payment required under clause (iv), for loans in which the unpaid principal balance exceeds 95 percent of the value of the property securing the loan; or

(III) that portion of the unpaid principal balance of the loan which exceeds 80 percent of the value of the property securing the loan is subject to other credit enhancement that—

(aa) meets standards comparable to the standards required of private mortgage insurers under subclause (II); and

(bb) is approved by the Corporation;

(iv) has a down payment that is—

(I) for a first-time homebuyer, as that term shall be defined by the Corporation by regulation, equal to not less than 3.5 percent of the purchase price of the property securing the loan; or

(II) for non first-time homebuyers, equal to—

(aa) not less than 3.5 percent of the purchase price of the property securing the loan, if such purchase occurs prior to the system certification date or less than 1 year after the system certification date;

(bb) not less than 4 percent of the purchase price of the property securing the loan, if such purchase occurs during the period that begins 1 year after the system certification date and ends less than 2 years after the system certification date;

(cc) not less than 4.5 percent of the purchase price of the property securing the loan, if such purchase occurs during the period that begins 2 years after the system certification date and ends less than 3 years after the system certification date; or

(dd) not less than 5 percent of the purchase price of the property securing the loan, if such purchase occurs during any period after the period set forth in item (cc);

(v) satisfies standards related to establishing title or marketability of title, as may be required by the Corporation, which standards may include the required purchase of title insurance on the property securing the loan;

(vi) contains such terms and provisions with respect to insurance, property maintenance, repairs, alterations, payment of taxes, default, reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters, including matters that set forth terms and provisions for establishing escrow accounts, performing financial assessments, or limiting the amount of any payment made available under the loan as the Corporation may prescribe; and

(vii) contains such other terms, characteristics, or underwriting criteria as the Corporation, in consultation with the Bureau of Consumer Financial Protection, may determine necessary or appropriate; or

(B) a loan refinanced pursuant to the authority granted under section 305(i).

(30) 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.

(31) EXTREMELY LOW-INCOME.—The term “extremely low-income” means—

(A) in the case of owner-occupied units, income not in excess of 30 percent of the median income of the area; and

(B) in the case of rental units, income not in excess of 30 percent of the median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.

(32) FEDERAL HOME LOAN BANK.—The term “Federal Home Loan Bank” means a bank established under the authority of the Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.).

(33) FEDERAL HOME LOAN BANK SYSTEM.—The term “Federal Home Loan Bank System” means the Federal Home Loan Banks and the Office of Finance and any authorized subsidiary of one or more Federal Home Loan Banks.

(34) FHFA RELATED TERMS.—

(A) FEDERAL HOUSING FINANCE AGENCY.—The term “Federal Housing Finance Agency” shall mean—

(i) prior to the agency transfer date, the Federal Housing Finance Agency established under section 1311 of the Safety and Soundness Act (12 U.S.C. 4511);

(ii) on and after the agency transfer date but prior to the system certification date, the Federal Housing Finance Agency established within the Corporation under title IV; and

(iii) on and after the system certification date, the Corporation.

(B) FHFA DIRECTOR.—The term “FHFA Director” has the same meaning as the term “Director” in section 401(1).

(35) FEDERAL REGULATORY AGENCIES.—The term—

(A) “Federal regulatory agency” means, individually, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Bureau of Consumer Financial Protection, the National Credit Union Administration, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Federal Housing Finance Agency; and

(B) “Federal regulatory agencies” means all of the agencies referred to in subparagraph (A), collectively.

(36) FIRST LOSS POSITION.—The term “first loss position” means, with regard to a covered security—

(A) either—

(i) the fully-funded position to which any credit loss on such covered security resulting from the nonperformance of underlying mortgage loans will accrue and be absorbed, to the full extent of the holder’s interest in such position; or

(ii) the guarantee provided by an approved guarantor or approved multifamily guarantor with respect to an eligible single-family mortgage loan, pool of eligible single-family mortgage loans, or a single-family covered security or eligible multifamily mortgage loan, pool of eligible multifamily mortgage loans, or a multifamily covered security, as applicable; and

(B) the position or guarantee described under subparagraph (A), as applicable, which is required to absorb any initial credit loss on a covered security prior to the Corporation becoming obligated to make any payment of insurance in accordance with this Act.

(37) HUD-APPROVED HOUSING COUNSELING AGENCY.—The term “HUD-approved housing counseling agency” means an agency certified by the Secretary of Housing and Urban Development under section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)).

(38) INSURED DEPOSITORY INSTITUTION.—The term “insured depository institution” means—

(A) an insured depository institution, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and

(B) an insured credit union, as defined under section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

(39) ISSUER.—For a noncovered security, the term “issuer” shall have the same meaning as under the Securities Act of 1933 (15 U.S.C. 77b) and the rules and regulations promulgated thereunder. The Platform shall not be deemed to be an issuer of noncovered securities for purposes of the Securities Act of 1933.

(40) LOW-INCOME.—The term “low-income” means—

(A) in the case of owner-occupied units, income not in excess of 80 percent of median income of the area; and

(B) in the case of rental units, income not in excess of 80 percent of median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.

(41) MARKET PARTICIPANT.—The term “market participant” means any—

(A) approved entity;

(B) private market holder; and

(C) member of the Securitization Platform.

(42) MEDIAN INCOME.—The term “median income” means, with respect to an area, the unadjusted median family income for the area, as determined and published annually by the Secretary of Housing and Urban Development.

(43) MISSION-BASED NONPROFIT LENDER.—The term “mission-based nonprofit lender” means an organization that—

(A) is exempt from taxation pursuant to section 501(c)(3) of the Internal Revenue Code of 1986;

(B) makes—

(i) residential real estate loans for the purpose of promoting or facilitating homeownership for poor or low- or moderate-income, disabled, or other disadvantaged persons or families; or

(ii) real estate loans for the purpose of promoting or facilitating affordable rental housing for low-income persons or families and subject to any other additional criteria established by the Corporation;

(C) sets interest rates on such loans that—

(i) are lower than the bank prime loan rate, as determined under the Federal Reserve Statistical Release of selected interest rates (commonly referred to as the “H.15”) by the Board of Governors of the Federal Reserve System, for the last day of the most recent weekly release of such rates; or

(ii) are, after adjusting for inflation, no-interest loans or loans with interest rates at or below the interest rates for mortgage loans generally available in the market;

(D) except as described under subparagraph (B), does not engage in the business of a mortgage originator or mortgage broker;

(E) conducts its activities in a manner that serves public or charitable purposes;

(F) receives funding and revenue and charges fees in a manner that does not incentivize the organization or its employees to act other than in the best interests of its clients;

(G) compensates employees in a manner that does not incentivize employees to act other than in the best interests of its clients; and

(H) meets such other requirements as the Corporation determines appropriate.

(44) MODERATE-INCOME.—The term “moderate-income” means

(A) in the case of owner-occupied units, income not in excess of median income of the area; and

(B) in the case of rental units, income not in excess of median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.

(45) MORTGAGE AGGREGATOR.—The term “mortgage aggregator” means a person that—

(A) arranges, in connection with a single-family covered security, a credit-risk sharing mechanism that is approved by the Corporation pursuant to section 302;

(B) issues such single-family covered security through the Securitization Platform;

(C) does not originate eligible single-family mortgage loans; and

(D) is not affiliated with a person that actively engages in the business of originating eligible single-family mortgage loans.

(46) MORTGAGE-BACKED SECURITY.—The term “mortgage-backed security” means an asset-backed security, as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), that is collateralized by—

(A) a mortgage loan, including any residential real estate loan or commercial real estate loan; or

(B) a collateralized mortgage obligation of mortgage-backed securities.

(47) MORTGAGE ORIGINATOR.—The term “mortgage originator” has the same meaning as in section 103(cc)(2) of the Truth in Lending Act (15 U.S.C. 1602(cc)(2)).

(48) MULTIFAMILY BUSINESS.—The term “multifamily business” means the activities and processes of the enterprises of—

(A) purchasing, selling, lending on the security of, or otherwise dealing in multifamily mortgage loans;

(B) securitizing a pool of multifamily mortgage loans; and

(C) issuing multifamily securities.

(49) MULTIFAMILY COVERED SECURITY.—The term “multifamily covered security” means a multifamily mortgage-backed security—

(A) collateralized by eligible multifamily mortgage loans; and

(B) that is insured by the Corporation pursuant to section 303.

(50) MULTIFAMILY MORTGAGE-BACKED SECURITY.—The term “multifamily mortgage-backed security” means a mortgage-backed security collateralized by commercial real estate loans secured by properties with 5 or more residential units in accordance with the requirements of this Act.

(51) NONCOVERED SECURITY.—The term “noncovered security” means any mortgage-backed security other than a covered security.

(52) NONELIGIBLE MORTGAGE LOAN.—The term “noneligible mortgage loan” means any mortgage loan other than an eligible mortgage loan.

(53) OFFICE OF FINANCE.—The term “Office of Finance” means the Office of Finance in the Federal Home Loan Bank System.

(54) PERMANENTLY AFFORDABLE HOMEOWNERSHIP PROGRAM.—The term “permanently affordable homeownership program” includes programs administered by community land trusts, nonprofit organizations, or State or local governments that—

(A) use a ground lease, deed restriction, subordinate loan, or similar legal mechanism to—

(i) make real property affordable to low- or moderate-income borrowers; and

(ii) stipulate a preemptive option to purchase the real property from the homeowner at resale to preserve the affordability of the real property for successive low- and moderate-income borrowers;

(B) monitor properties to ensure affordability is preserved over resales; and

(C) support homeowners to promote successful homeownership and prevent foreclosure.

(55) PERSON.—The term “person” means an individual, corporation, company (including a limited liability company or joint stock company), association (incorporated or unincorporated), mutual or cooperative organization, partnership, trust, estate, society, or any other legal entity.

(56) PLATFORM; SECURITIZATION PLATFORM.—The terms “Platform” and “Securitization Platform” mean the securitization infrastructure established under part I of subtitle C of title III.

(57) PLATFORM DIRECTORS.—The term “Platform Directors” means the board of directors of the Securitization Platform.

(58) PLATFORM SECURITY.—The term “Platform security” means a mortgage-backed security issued through the Securitization Platform.

(59) PRIVATE LABEL MORTGAGE-BACKED SECURITIES MARKET.—The term “private label mortgage-backed securities market” means the market in which noncovered securities are issued, bought, and sold.

(60) PRIVATE MARKET HOLDER.—The term “private market holder” means the holder or holders, other than an approved guarantor or an approved multifamily guarantor, of the first loss position with respect to eligible mortgage loans collateralizing any covered security insured in accordance with this Act.

(61) 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;

(C) any Federal Home Loan Bank; and

(D) the Securitization Platform.

(62) RESIDENTIAL REAL ESTATE LOAN.—The term “residential real estate loan” includes any—

(A) real estate mortgage loan;

(B) personal property loan secured solely by the home itself;

(C) hybrid land-home loan for a manufactured home, as defined in section 603(6) of the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5402(6)), to which the requirements of paragraph (29)(A)(v) shall not apply; and

(D) mortgage loan secured by real property in a community land trust or permanently affordable homeownership program.

(63) SAFETY AND SOUNDNESS ACT.—The term “Safety and Soundness Act” means the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.).

(64) SENIOR PREFERRED STOCK PURCHASE AGREEMENT.—The term “Senior Preferred Stock Purchase Agreement” means—

(A) the Amended and Restated Senior Preferred Stock Purchase Agreement, dated September 26, 2008, as such Agreement has been amended on May 6, 2009, December 24, 2009, and August 17, 2012, respectively, and as such Agreement may be further amended and restated, entered into between the Department of the Treasury and each enterprise, as applicable; and

(B) any provision of any certificate in connection with such Agreement creating or designating the terms, powers, preferences, privileges, limitations, or any other conditions of the Variable Liquidation Preference Senior Preferred Stock of an enterprise issued or sold pursuant to such Agreement.

(65) SINGLE-FAMILY ACTIVITIES.—The term “single-family activities” means the activities and processes of the Corporation in providing insurance for single-family covered securities as provided in this Act.

(66) SINGLE-FAMILY COVERED SECURITY.—The term “single-family covered security” means a single-family mortgage-backed security—

(A) collateralized by eligible single-family mortgage loans; and

(B) that is insured by the Corporation pursuant to section 303.

(67) SMALL MORTGAGE LENDER.—The term “small mortgage lender” means a community bank, credit union, mid-sized bank, non-depository institution, Community Development Financial Institution, mission-based nonprofit lender, or housing finance agency that originates residential real estate loans or commercial real estate loans.

(68) STANDARDIZED COVERED SECURITY; STANDARDIZED SECURITY FOR SINGLE-FAMILY COVERED SECURITIES.—The terms “standardized covered security” and “standardized single-family covered security” mean a single-family covered security that is—

(A) issued through the Platform; and

(B) in a form, and includes the standardized and uniform terms for the security and transaction that have been, developed by the Platform Directors and approved by the Corporation for use across various issuances.

(69) STANDARDIZED NONCOVERED SECURITY; STANDARDIZED SECURITY FOR SINGLE-FAMILY NONCOVERED SECURITIES.—The terms “standardized noncovered security” and “standardized single-family noncovered security” mean a single-family noncovered security that is—

(A) issued through the Platform; and

(B) in a form, and includes the standardized and uniform terms for the security and transaction that have been, developed by the Platform Directors for use across various issuances.

(70) STATE.—The term “State” means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands or any Federally recognized Indian tribe, as defined by the Secretary of the Interior under section 104(a) of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a–1(a)).

(71) SYSTEM CERTIFICATION DATE.—The term “system certification date” means the date on which the Board of Directors certifies that the requirements of section 601 have been met.

(72) VERY LOW-INCOME.—

(A) IN GENERAL.—The term “very low-income” means—

(i) in the case of owner-occupied units, families having incomes not greater than 50 percent of the median income of the area; and

(ii) in the case of rental units, families having incomes not greater than 50 percent of the median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.

(B) RULE OF CONSTRUCTION.—For purposes of the Housing Trust Fund established under section 1338 of the Safety and Soundness Act (12 U.S.C. 4568), the Capital Magnet Fund established under section 1339 of the Safety and Soundness Act (12 U.S.C. 4569), and the Market Access Fund established under section 504, the term “very low-income” means—

(i) in the case of owner-occupied units, income in excess of 30 percent but not greater than 50 percent of the median income of the area; and

(ii) in the case of rental units, income in excess of 30 percent but not greater than 50 percent of the median income of the area, with adjustments for smaller and larger families, as determined by the Secretary of Housing and Urban Development.

SEC. 101. Elimination of Fannie Mae and Freddie Mac.

(a) Fannie Mae.—Effective on the agency transfer date, the Corporation shall take all steps necessary to dissolve and eliminate the Federal National Mortgage Association pursuant to the provisions of this Act. The charter for the Federal National Mortgage Association shall be repealed pursuant to title VI.

(b) Freddie Mac.—Effective on the agency transfer date, the Corporation shall take all steps necessary to dissolve and eliminate the Federal Home Loan Mortgage Corporation pursuant to the provisions of this Act. The charter for the Federal Home Loan Mortgage Corporation shall be repealed pursuant to title VI.

SEC. 201. Establishment.

(a) Establishment.—Effective on the agency transfer date, there is established the Federal Mortgage Insurance Corporation, which is charged with ensuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by the institutions and other persons subject to its jurisdiction and which shall have the powers hereinafter granted.

(b) Purpose.—The purpose of the Corporation shall be to—

(1) facilitate a liquid, transparent, and resilient single-family and multifamily mortgage credit market by supporting a robust secondary mortgage market, including during the transition to the new housing finance system;

(2) provide insurance on any mortgage-backed security that satisfies the requirements under this Act to become a covered security;

(3) monitor and supervise approved entities to the extent provided in this Act;

(4) supervise the regulated entities;

(5) facilitate the broad availability of mortgage credit and secondary mortgage market financing through fluctuations in the business cycle for eligible single-family and multifamily lending across all—

(A) regions;

(B) localities;

(C) institutions;

(D) property types, including housing serving renters; and

(E) eligible borrowers;

(6) ensure continued, widespread availability of an affordable, long-term, fixed rate, prepayable mortgage, such as a 30-year fixed rate mortgage; and

(7) preserve and maintain a liquid forward execution market for eligible single-family mortgage loans and single-family covered securities, such as the To-Be-Announced market.

(c) General supervisory and regulatory authority.—

(1) IN GENERAL.—Each approved entity shall, to the extent provided in this Act, be subject to the supervision and regulation of the Corporation.

(2) REGULATED ENTITIES; OFFICE OF FINANCE.—The Corporation shall have general regulatory authority over each regulated entity and the Office of Finance, and shall exercise such general regulatory authority to ensure that the purposes of this Act, any amendments made by this Act, and any other applicable law as to which the Corporation has responsibility under this Act are carried out.

(d) Federal status.—The Corporation shall be an independent agency and an instrumentality of the Federal Government.

(e) Succession.—The Corporation shall have succession until dissolved by an Act of Congress.

(f) Principal office.—The Corporation shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof.

(g) Authority to establish other offices.—The Corporation may establish such other offices in such other place or places as the Corporation may deem necessary or appropriate in the conduct of its business.

(h) Prohibition.—The Corporation shall not engage in mortgage loan origination.

SEC. 202. Management of Corporation.

(a) Board of Directors.—

(1) MEMBERS.—The management of the Corporation shall be vested in a Board of Directors consisting of 5 members who shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who—

(A) are citizens of the United States; and

(B) have demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working in, housing and housing finance.

(2) POLITICAL AFFILIATION.—Not more than 3 of the members of the Board of Directors may be members of the same political party.

(3) DUTIES.—The Board of Directors shall advise the Chairperson regarding overall strategies and policies to carry out the duties and purposes of this Act.

(b) Chairperson and Vice Chairperson.—

(1) CHAIRPERSON.—

(A) DESIGNATION.—1 of the members appointed pursuant to subsection (a)(1) shall be designated by the President to serve as Chairperson of the Board of Directors.

(B) TERM.—Except as provided in subsection (c)(1)(A), the Chairperson shall be appointed for a term of 5 years, unless removed before the end of such term by the President under subparagraph (C).

(C) REMOVAL FOR CAUSE.—The President may remove the Chairperson for inefficiency, neglect of duty, or malfeasance in office.

(D) DUTIES AND AUTHORITIES.—

(i) IN GENERAL.—The Chairperson—

(I) shall—

(aa) be the active executive officer of the Corporation, subject to supervision by the Board of Directors;

(bb) oversee the prudential operations of each regulated entity; and

(cc) ensure that each approved entity and regulated entity operates in a safe and sound manner, including—

(AA) through the maintenance of adequate capital, standards, and internal controls; and

(BB) by ensuring compliance with the rules, regulations, guidelines, and orders issued pursuant to this Act; and

(II) may exercise such incidental powers as may be necessary or appropriate to assist the Corporation in fulfilling the duties and responsibilities of the Corporation in the supervision and regulation of each approved entity and regulated entity.

(ii) DELEGATION.—The Chairperson may delegate to officers and employees of the Corporation any of the functions, powers, or duties of the Chairperson, as the Chairperson considers appropriate.

(2) VICE CHAIRPERSON.—

(A) DESIGNATION.—1 of the members appointed pursuant to subsection (a)(1) shall be designated by the President to serve as Vice Chairperson of the Board of Directors.

(B) TERM.—Except as provided in subsection (c)(1)(B), the Vice Chairperson shall be appointed for a term of 5 years, unless removed before the end of such term by the President under subparagraph (C).

(C) REMOVAL FOR CAUSE.—The President may remove the Vice Chairperson for inefficiency, neglect of duty, or malfeasance in office.

(3) ACTING CHAIRPERSON.—

(A) DURING VACANCY IN THE POSITION OF CHAIRPERSON.—Except as provided in section 402, in the event of a vacancy in the position of Chairperson of the Board of Directors or during the absence or disability of the Chairperson, the Vice Chairperson shall act as Chairperson.

(B) DURING VACANCIES IN THE POSITION OF CHAIRPERSON AND VICE CHAIRPERSON.—Except as provided in section 402, in the event of vacancies in the positions of Chairperson and Vice Chairperson, or during the absence or disability of both the Chairperson and the Vice Chairperson, the President shall designate 1 of the other members appointed pursuant to subsection (a)(1) as Acting Chairperson.

(C) RETENTION OF AUTHORITY.—Any person confirmed to serve as Chairperson, or acting as Chairperson, whether designated to act as such by the President under this paragraph or acting in such capacity by operation of this paragraph or section 402, shall for the period that such person is serving as Chairperson or acting as Chairperson—

(i) act for all purposes as the Chairperson; and

(ii) have all the rights, duties, powers, and responsibilities of the Chairperson.

(c) Staggered terms; term continuation.—

(1) TERMS.—

(A) TERM OF INITIAL CHAIRPERSON.—The initial member of the Board of Directors appointed pursuant to subsection (a)(1) and designated as Chairperson under subsection (b)(1) shall serve a term of 30 months.

(B) TERM OF INITIAL VICE CHAIRPERSON.—The initial member of the Board of Directors appointed pursuant to subsection (a)(1) and designated as Vice Chairperson under subsection (b)(2) shall serve a term of 30 months.

(C) TERM OF OTHER APPOINTED MEMBERS.—1 of the other initial members of the Board of Directors appointed pursuant to subsection (a)(1) and not designated as Chairperson or Vice Chairperson under subsection (b) shall serve a term of 30 months and the other 2 initial members shall serve a term of 4 years.

(D) ALL OTHER TERMS.—After the expiration of the initial terms under subparagraphs (A) through (C), all subsequent members of the Board of Directors appointed pursuant to subsection (a)(1) shall serve for a term of 5 years.

(2) CONTINUATION OF SERVICE.—Each member of the Board of Directors appointed pursuant to subsection (a)(1), including any member appointed to serve as Chairperson or Vice Chairperson, may continue to serve after the expiration of the term of office to which such member was appointed until the expiration of the next session of Congress subsequent to the expiration of said fixed term of office.

(d) Vacancy; manner of fulfillment.—Any vacancy on the Board of Directors shall be filled in the manner in which the original appointment was made, and the person appointed to fill such vacancy shall be appointed only for the remainder of such term.

(e) Compensation of members.—

(1) CHAIRPERSON.—The Chairperson shall receive compensation at the rate prescribed for Level II of the Executive Schedule under section 5313 of title 5, United States Code.

(2) OTHER APPOINTED MEMBERS.—All members of the Board of Directors not described in paragraph (1) shall receive compensation at the rate prescribed for Level III of the Executive Schedule under section 5314 of title 5, United States Code.

(f) Ineligibility for other offices during service; postservice restriction.—

(1) RESTRICTIONS DURING SERVICE.—No member of the Board of Directors may, during the time such member is serving in such capacity and for the 2-year period beginning on the date such member ceases to serve as a member of the Board of Directors—

(A) be an officer, employee, or director of any—

(i) insured depository institution;

(ii) insured depository institution holding company;

(iii) Federal Reserve bank;

(iv) regulated entity;

(v) approved entity; or

(vi) non-bank financial institution or company that originates eligible mortgage loans; or

(B) hold stock or have beneficial ownership in any—

(i) insured depository institution;

(ii) insured depository institution holding company;

(iii) regulated entity;

(iv) approved entity; or

(v) non-bank financial institution or company that originates eligible mortgage loans.

(2) CERTIFICATION.—Upon taking office, each member of the Board of Directors shall certify under oath that such member has complied, and will comply, with this subsection and such certification shall be filed with the secretary of the Board of Directors.

(g) Status of directors, officers, and employees.—

(1) IN GENERAL.—A member of the Board of Directors, officer, or employee of the Corporation has no liability under the Securities Act of 1933 (15 U.S.C. 77b et seq.) with respect to any claim arising out of or resulting from any act or omission by such person within the scope of such person’s employment in connection with any transaction involving the disposition of assets (or any interests in any assets or any obligations backed by any assets) by the Corporation. This subsection shall not be construed to limit personal liability for criminal acts or omissions, willful or malicious misconduct, acts or omissions for private gain, or any other acts or omissions outside the scope of such person’s employment.

(2) EFFECT ON OTHER LAW.—This subsection does not affect—

(A) any other immunities and protections that may be available to such person under applicable law with respect to such transactions; or

(B) any other right or remedy against the Corporation, against the United States under applicable law, or against any person other than a person described in paragraph (1) participating in such transactions.

(3) RULE OF CONSTRUCTION.—This subsection shall not be construed to limit or alter in any way the immunities that are available under applicable law for Federal officials and employees not described in this subsection.

(h) Independence.—

(1) IN GENERAL.—Each member of the Board of Directors shall be independent in performing his or her duties.

(2) INDEPENDENCE DETERMINATION.—In order to be considered independent for purposes of this subsection, a member of the Board of Directors—

(A) may not, other than in his or her capacity as a member of the Board of Directors or any committee thereof—

(i) accept any consulting, advisory, or other compensatory fee from the Corporation; or

(ii) be a person associated with the Corporation or with any affiliate of the Corporation; and

(B) shall be disqualified from any deliberation involving any transaction of the Corporation in which the member has a financial interest in the outcome of the transaction.

(i) Administration.—Except as may be otherwise provided in this Act, the Board of Directors shall administer the affairs of the Corporation fairly and impartially and without discrimination.

(j) Voting.—A majority vote of all members of the Board of Directors is necessary to resolve all voting issues of the Corporation.

(k) Meetings.—The Board of Directors shall meet in accordance with the bylaws of the Corporation—

(1) at the call of the Chairperson; and

(2) not less frequently than once each quarter.

(l) Quorum.—3 members of the Board of Directors then in office shall constitute a quorum.

(m) Bylaws.—A majority of the members of the Board of Directors may amend the bylaws of the Corporation.

SEC. 203. Advisory Committee.

(a) Establishment.—

(1) IN GENERAL.—The Corporation shall establish an Advisory Committee for the purpose of advising the Office of Consumer and Market Access and the Board of Directors on developments in the primary and secondary mortgage markets that have material effects on the ongoing mission of the Corporation.

(2) DUTIES.—The Advisory Committee shall provide advice and recommendations to the Office of Consumer and Market Access and the Board of Directors as to material developments in the following areas:

(A) Housing prices and affordability.

(B) The effectiveness of consumer protections in the housing market.

(C) Volume and characteristics of eligible mortgage loan originations.

(D) The condition of the rental housing market.

(E) Small lender participation in the secondary mortgage market.

(F) Access to credit in rural and underserved communities.

(G) Competition among approved entities.

(H) Fair, equitable, and nondiscriminatory access to mortgage credit for individuals and communities.

(b) Composition and qualifications.—

(1) IN GENERAL.—The Advisory Committee shall be composed of 14 members as follows:

(A) 1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, non-depository mortgage originators having less than $10,000,000,000 in total assets.

(B) 1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, credit unions having less than $10,000,000,000 in total assets.

(C) 1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, banks having less than $10,000,000,000 in total assets.

(D) 1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience working with, banks having more than $500,000,000,000 in total assets.

(E) 1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocation, or regulatory experience working with, regional banks having more than $10,000,000,000 and less than $500,000,000,000 in total assets.

(F) 1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience with private mortgage insurance.

(G) 1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience with securitization.

(H) 1 member who shall have a demonstrated technical, academic, or professional understanding of, and practical, disciplinary, vocational, or regulatory experience with investor protection and institutional investors.

(I) 1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with consumer protection.

(J) 1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with policies and programs to support sustainable homeownership.

(K) 1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with multifamily housing development.

(L) 1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with affordable rental housing.

(M) 1 member who shall have a demonstrated technical, academic, or professional understanding of, or practical, disciplinary, or vocational experience with asset management.

(N) 1 member who shall have a demonstrated professional understanding of and vocational experience with State bank, non-bank, or insurance regulation.

(2) EXPERIENCE WITH RURAL HOUSING.—Of the members of the Advisory Committee identified under subparagraphs (B) and (C) of paragraph (1), at least 1 shall be required to have practical, disciplinary, or vocational experience working in rural areas and with rural borrowers.

(3) EXPERIENCE WITH FAIR LENDING.—Of the members of the Advisory Committee identified under paragraph (1), at least 1 shall be required to have demonstrated practical, academic, disciplinary, or vocational experience with fair lending practices and policies and programs that promote fair, equitable, and nondiscriminatory access to credit in underserved markets.

(c) Member selection.—Members of the Advisory Committee shall be appointed to the Committee by the Chairperson, subject to approval by a majority of the Board of Directors.

(d) Meetings.—The Advisory Committee shall meet no less frequently than once during each calendar quarter.

SEC. 204. Office of the Inspector General.

(a) Office of Inspector General.—

(1) ESTABLISHMENT.—On the agency transfer date, there is established the Office of the Inspector General of the Federal Mortgage Insurance Corporation.

(2) HEAD OF OFFICE.—

(A) IN GENERAL.—The head of the Office of the Inspector General of the Federal Mortgage Insurance Corporation shall be the Inspector General of the Federal Mortgage Insurance Corporation, who shall be appointed by the President, by and with the advice and consent of the Senate, in accordance with section 3(a) of the Inspector General Act of 1978 (5 U.S.C. App.).

(B) TRANSITIONAL PROVISION.—Notwithstanding subparagraph (A), during the period beginning on the agency transfer date and ending on the date on which the Inspector General of the Federal Mortgage Insurance Corporation is confirmed, the person serving as the Inspector General or the Acting Inspector General for the Office of the Inspector General within the Federal Housing Finance Agency on the date that is 1 day prior to the agency transfer date shall act for all purposes as, and with the full powers of, the Inspector General of the Federal Mortgage Insurance Corporation.

(3) OFFICE OF THE INSPECTOR GENERAL AUTHORITIES.—Beginning on the agency transfer date, the authority of the Office of the Inspector General of the Federal Mortgage Insurance Corporation shall include all rights and responsibilities of the Office of the Inspector General of the Federal Housing Finance Agency as such rights and responsibilities existed on the date that is 1 day prior to the agency transfer date.

(b) Provision of property and facilities.—The Chairperson shall provide the Office of the Inspector General of the Federal Mortgage Insurance Corporation with—

(1) appropriate and adequate office space at each central and field office location established by the Corporation, together with such equipment, office supplies, and communications facilities and services as may be necessary for the Inspector General of the Federal Mortgage Insurance Corporation to operate such offices; and

(2) the necessary maintenance services for—

(A) any office provided under paragraph (1); and

(B) the equipment and facilities located in any such office.

(c) Hiring of employees, experts, and consultants.—Notwithstanding paragraphs (7) and (8) of section 6(a) of the Inspector General Act of 1978 (5 U.S.C. App.), the Inspector General of the Federal Mortgage Insurance Corporation may select, appoint, and employ such officers and employees as may be necessary—

(1) for carrying out the functions, powers, and duties of the Office of the Inspector General; and

(2) to obtain the temporary or intermittent services of experts or consultants or an organization of experts or consultants, subject to the applicable laws and regulations that govern such selections, appointments, and employment, and the obtaining of such services, within the Corporation.

(d) Submission of budget.—

(1) IN GENERAL.—For each fiscal year, the Inspector General of the Federal Mortgage Insurance Corporation shall transmit a budget estimate and request for funds to the Chairperson.

(2) REQUIRED CONTENT.—The budget request required under paragraph (1) shall—

(A) specify—

(i) the aggregate amount of funds requested for such fiscal year for the operations of the Office of the Inspector General of the Federal Mortgage Insurance Corporation; and

(ii) the amount requested for all training needs, including a certification from the Inspector General that the amount requested satisfies all training requirements for the Office of the Inspector General of the Federal Mortgage Insurance Corporation for that fiscal year; and

(B) specifically—

(i) identify and specify any resources necessary to support the Council of the Inspectors General on Integrity and Efficiency; and

(ii) justify the need for any resources identified and specified under clause (i).

(e) Amendments to Inspector General Act of 1978.—The Inspector General Act of 1978 (5 U.S.C. App.) is amended—

(1) in section 6(e)(3), by inserting “Federal Mortgage Insurance Corporation” after “Federal Emergency Management Agency”;

(2) in section 8G(a)(2), by striking “the Federal Housing Finance Board”; and

(3) in section 12—

(A) in paragraph (1), by striking “Director of the Federal Housing Finance Agency” and inserting “Chairperson of the Federal Mortgage Insurance Corporation”; and

(B) in paragraph (2), by striking “Federal Housing Finance Agency” and inserting “Federal Mortgage Insurance Corporation”.

(f) Effective date.—The amendments made by this section shall take effect on the agency transfer date.

SEC. 205. Staff, experts, and consultants.

(a) Compensation.—

(1) IN GENERAL.—The Board of Directors may appoint and fix the compensation of such officers, attorneys, economists, examiners, and other employees as may be necessary for carrying out the functions of the Corporation.

(2) RATES OF PAY.—Rates of basic pay and the total amount of compensation and benefits for all employees of the Corporation may be—

(A) set and adjusted by the Board of Directors without regard to the provisions of chapter 51 or subchapter III of chapter 53 of title 5, United States Code; and

(B) reasonably increased, notwithstanding any limitation set forth in paragraph (3), if the Board of Directors determines such increases are necessary to attract and hire qualified employees.

(3) PARITY.—The Board of Directors may provide additional compensation and benefits to employees of the Corporation, of the same type of compensation or benefits that are then being provided by any agency referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b) or, if not then being provided, could be provided by such an agency under applicable provisions of law, rule, or regulation. In setting and adjusting the total amount of compensation and benefits for employees, the Board of Directors shall consult with and seek to maintain comparability with the agencies referred to under section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b).

(b) Detail of government employees.—Upon the request of the Board of Directors, any Federal Government employee may be detailed to the Corporation without reimbursement from the Corporation, and such detail shall be without interruption or loss of civil service status or privilege.

(c) Experts and consultants.—The Corporation may procure the services of experts and consultants as the Corporation considers necessary or appropriate.

(d) Technical and professional advisory committees.—The Board of Directors may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Corporation.

SEC. 206. Reports; testimony; audits.

(a) Reports.—

(1) IN GENERAL.—After the system certification date, the Corporation shall submit, on an annual basis, to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a written report of its operations, activities, budget, receipts, and expenditures for the preceding 12-month period.

(2) CONTENTS OF REPORT.—The report required under subsection (a) shall include—

(A) an analysis of—

(i) with respect to the Mortgage Insurance Fund established under section 303(e)—

(I) the current financial condition of the Mortgage Insurance Fund;

(II) the exposure of the Mortgage Insurance Fund to economic conditions and an analysis of any stress tests conducted with respect to the Fund;

(III) an estimate of the resources needed for the Mortgage Insurance Fund to achieve the purposes of this Act; and

(IV) any findings, conclusions, and recommendations for legislative and administrative actions considered appropriate to the future activities of the Corporation;

(ii) whether or not the actual reserve ratio of the Mortgage Insurance Fund met—

(I) the reserve ratio set for the preceding 12-month period; or

(II) the reserve ratio goals established in section 303(e)(7);

(iii) the detailed plan of the Corporation to ensure that the goals set for the reserve ratio for the Mortgage Insurance Fund are met and maintained for the next 12-month period;

(iv) the state of the private label mortgage-backed securities market, including the submission of a reasonable set of administrative, regulatory, and legislative proposals on how to limit the Federal Government’s footprint in the secondary mortgage market;

(v) how and the extent to which the Corporation and the Small Lender Mutual established under section 315(a)(1) has fulfilled its obligations to ensure that community and mid-size banks, credit unions, and other small lenders have equitable and meaningful access to the secondary mortgage market; and

(vi) the report required under section 208(b)(2)(B);

(B) a discussion of the significant problems faced by consumers in shopping for or obtaining mortgage credit or services;

(C) a justification of the Corporation’s budget for the preceding 12-month period;

(D) a list of the significant rules and orders adopted by the Corporation, as well as other significant initiatives conducted by the Corporation, during the preceding 12-month period and the plan of the Corporation for rules, orders, or other initiatives to be undertaken during the next 12-month period;

(E) a list, with a brief statement of the issues, of the public supervisory and enforcement actions to which the Corporation was a party during the preceding 12-month period;

(F) the actions of the Corporation taken regarding rules, orders, and supervisory actions with respect to covered entities; and

(G) an assessment of significant actions by State attorneys general or State regulators relating to Federal law within the Corporation’s jurisdiction.

(b) Testimony.—After the system certification date, the Chairperson shall appear annually before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives to provide testimony on the report submitted under subsection (a).

(c) Reports to the Office of Management and Budget.—

(1) FINANCIAL OPERATING PLANS AND FORECASTS.—The Corporation shall provide to the Director of the Office of Management and Budget copies of the—

(A) Corporation’s financial operating plans and forecasts as prepared by the Corporation in the ordinary course of its operations; and

(B) quarterly reports of the Corporation’s financial condition and results of operations as prepared by the Corporation in the ordinary course of its operations.

(2) RULE OF CONSTRUCTION.—This subsection shall not be construed to—

(A) require any obligation on the part of the Corporation to consult with, or obtain the consent or approval of, the Director of the Office of Management and Budget with respect to any reports, plans, forecasts, or other information referred to in paragraph (1); or

(B) authorize any jurisdiction or oversight by the Director of the Office of Management and Budget over the affairs or operations of the Corporation.

(d) Audit.—

(1) ANNUAL AUDIT.—The Comptroller General of the United States shall annually audit—

(A) the financial transactions of the Corporation; and

(B) the Mortgage Insurance Fund.

(2) AUDITING STANDARDS.—The audit required under this subsection shall be completed in accordance with the United States generally accepted government auditing standards as may be prescribed by the Comptroller General.

(3) PLACE OF AUDIT.—The audit required under this subsection shall be conducted at the place or places where accounts of the Corporation are normally kept.

(4) ACCESS.—Notwithstanding any other provision of law, upon request and in such reasonable form as the Comptroller General may request, the Comptroller General shall have access to—

(A) any records, books, accounts, documents, reports, files, papers, property, or other information under the control of or used by the Corporation;

(B) any records or other information under the control of a person or entity acting on behalf of or under the authority of the Corporation, to the extent that such records or other information are relevant to an audit required under this subsection; and

(C) the officers, directors, employees, financial advisors, staff, working groups, and agents and representatives of the Corporation (relating to the activities on behalf of the Corporation of such agent or representative).

(5) RULE OF CONSTRUCTION.—All records, books, accounts, documents, reports, files, papers, property, or other information referred to in paragraph (4) shall remain in the possession and custody of the Corporation.

(6) COPIES.—The Comptroller General may, as the Comptroller General considers appropriate, make and retain copies of the records, books, accounts, documents, reports, files, papers, property, or other information to which the Comptroller General is granted access under paragraph (3).

(7) REPORT.—

(A) SUBMISSION TO CONGRESS.—The Comptroller General shall submit to Congress a report of each annual audit conducted under this subsection not later than six and one-half months following the close of the year covered by such audit.

(B) REQUIRED CONTENT.—The report required under subparagraph (A) shall—

(i) set forth the scope of the audit; and

(ii) include—

(I) the statement of assets and liabilities, as well as any surplus or deficit;

(II) the statement of income and expenses;

(III) the statement of sources and application of funds;

(IV) such comments and information as the Comptroller General may deem necessary to inform Congress of the financial operations and condition of the Corporation and the Mortgage Insurance Fund, together with such recommendations with respect thereto as the Comptroller General may deem advisable; and

(V) a description of any program, expenditure, or other financial transaction or undertaking observed in the course of the audit, which, in the opinion of the Comptroller General, has been carried on or made without authority of law.

(C) COPIES.—A copy of each report required under subparagraph (A) shall be furnished to the President and to the Chairperson at the time such report is submitted to Congress.

(8) ASSISTANCE AND COSTS.—

(A) PERMITTED USE OF OUTSIDE ASSISTANCE.—For the purpose of conducting an audit under this subsection, the Comptroller General may employ by contract, without regard to section 3709 of the Revised Statutes of the United States (41 U.S.C. 6101), professional services of firms and organizations of certified public accountants for temporary periods or for special purposes.

(B) COST OF AUDIT COVERED BY CORPORATION.—

(i) IN GENERAL.—Upon the request of the Comptroller General, the Chairperson shall transfer to the Comptroller General from funds available the amount requested by the Comptroller General to cover the reasonable costs of any audit and report conducted by the Comptroller General pursuant to this subsection.

(ii) CREDIT OF FUNDS.—The Comptroller General shall credit funds transferred under clause (i) to the account at the United States Treasury established for salaries and expenses of the Government Accountability Office, and such amounts shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report.

SEC. 207. Specific offices.

(a) Establishment.—

(1) GENERAL AUTHORITY.—The Corporation—

(A) shall establish within the Corporation any office required to be established by this Act;

(B) may establish such other offices or suboffices as are necessary and proper for the functioning of the Corporation; and

(C) may eliminate or consolidate any office or suboffice established under subparagraph (B).

(2) APPOINTMENTS.—Except as may otherwise be specifically provided, the head of any office established pursuant to paragraph (1) shall be appointed by the Board of Directors.

(b) Underwriting.—The Corporation shall establish an Office of Underwriting in the Corporation, whose functions shall include ensuring that eligible single-family mortgage loans that collateralize single-family covered securities insured under this Act comply with the requirements of this Act and minimize risk to the Mortgage Insurance Fund.

(c) Securitization.—The Corporation shall establish an Office of Securitization in the Corporation, whose functions shall include—

(1) overseeing and supervising the Securitization Platform established under part I of subtitle C of title III; and

(2) ensuring that small mortgage lenders have equitable access to—

(A) the Securitization Platform, including through the development and facilitation of options such as multi-guarantor pools and multi-lender pools of eligible single-family mortgage loans to be securitized and issued as single-family covered securities through such Platform; and

(B) any small lender mutual established or approved under section 315.

(d) Federal Home Loan Banks.—

(1) IN GENERAL.—Upon the system certification date, the Corporation shall establish an Office of Federal Home Loan Bank Supervision in the Corporation, whose functions shall include—

(A) overseeing, coordinating, and supervising the Federal Home Loan Banks and the Federal Home Loan Bank System;

(B) supervising any authorized subsidiary of 1 or more Federal Home Loan Banks that is an approved aggregator pursuant to section 312(m), including with respect to the capitalization of any such subsidiary;

(C) serving as the central point of coordination within the Corporation with respect to any regulations or regulatory actions relating to the role of a Federal Home Loan Bank, or subsidiary or joint office thereof, as a covered entity; and

(D) monitoring whether any regulation or regulatory action taken with respect to a Federal Home Loan Bank, or subsidiary or joint office thereof, approved under section 312 in its role as a covered entity does not adversely impact the traditional liquidity and advance mission of the Federal Home Loan Banks and Federal Home Loan Bank System.

(2) TRANSFER OF FUNCTIONS.—Effective on the system certification date, there are transferred to the Office of Federal Home Loan Bank Supervision in the Corporation all functions of the Federal Housing Finance Agency of the Corporation relating to—

(A) the supervision of the Federal Home Loan Banks and the Federal Home Loan Bank System; and

(B) all rulemaking authority of the Federal Housing Finance Agency of the Corporation relating to the Federal Home Loan Banks and the Federal Home Loan Bank System.

SEC. 208. Office of Consumer and Market Access.

(a) Establishment.—The Corporation shall establish an Office of Consumer and Market Access in the Corporation, whose functions shall include the responsibilities set forth under subsection (b).

(b) Responsibilities.—

(1) ADMINISTERING THE MARKET ACCESS FUND.—The Office of Consumer and Market Access shall administer the Market Access Fund established under section 504.

(2) MONITORING, COORDINATING, AND FACILITATING THE NEEDS OF UNDERSERVED MARKETS.—

(A) IN GENERAL.—The Office of Consumer and Market Access shall—

(i) monitor, on a macro level, the national, regional, and area single-family and multifamily housing finance markets to identify underserved markets, communities, and consumers in accordance with the market segments identified and defined under section 210;

(ii) coordinate with Federal and State agencies regarding existing policies and initiatives that address—

(I) the housing needs of underserved markets, communities, and consumers; and

(II) the affordable housing needs of markets, communities, and consumers; and

(iii) provide information on business practices and technical assistance to market participants regarding communities identified as underserved with regards to addressing the housing needs of consumers in that community.

(B) ANNUAL STATE OF COVERED SECURITIES MARKET REPORT.—

(i) IN GENERAL.—The Office of Consumer and Market Access shall, on an annual basis, submit a report to Congress on the state of the covered securities market, and make such report available to the public.

(ii) REQUIRED CONTENT.—The report required under clause (i) shall include—

(I) an assessment of the extent to which the covered securities market is providing liquidity to eligible borrowers in all segments of the mortgage origination primary market, including underserved segments identified and defined by the Corporation under section 210; and

(II) recommendations for such legislative, regulatory, or administrative actions as may be necessary to address any deficiencies in the availability of mortgage credit in any market or region identified pursuant to clause (i) via existing Federal programs or the covered securities market.

(iii) RELIANCE ON PUBLIC DATA.—In preparing each report required under this subparagraph, the Office of Consumer and Market Access—

(I) shall use, to the maximum extent practicable, publicly available data and data otherwise collected under this Act; and

(II) shall not include or review any confidential information or information collected by the Corporation as part of its supervisory or examination authorities that is confidential.

(C) INCENTIVE STUDY.—The Office of Consumer and Market Access shall, on a biennial basis, conduct a study on incentives to encourage mortgage lenders and mortgage originators to address the housing needs of underserved markets and communities.

(D) INCLUSION IN ANNUAL REPORT.—The Corporation shall include the report required in subparagraph (B) and the study required in subparagraph (C) in the annual report required under section 206.

(E) CONSULTATION.—The Office of Consumer and Market Access shall consult with the Federal Home Loan Banks and any small lender mutual established or approved under section 315 on approaches, methods, and practices designed to address the housing needs of underserved markets and communities.

SEC. 209. Office of Multifamily Housing.

The Corporation shall establish an Office of Multifamily Housing in the Corporation, whose functions shall include—

(1) developing, adopting, and publishing specific eligibility criteria to ensure that eligible multifamily mortgage loans that collateralize multifamily covered securities insured under this Act comply with the requirements of this Act; and

(2) performing any other activity relating to the multifamily housing finance system that the Corporation may determine appropriate to fulfill the requirements of this Act.

SEC. 210. Equitable access for lenders and borrowers.

(a) Equitable access in underserved market segments.—

(1) IN GENERAL.—Subject to subsection (b), the Corporation shall seek to support the primary mortgage market for eligible mortgage loans on an equitable, nondiscriminatory, and non-exclusionary basis to help ensure that all eligible borrowers have access to mortgage credit, including underserved segments of the primary mortgage market as identified and defined by the Corporation under paragraph (2).

(2) UNDERSERVED MARKET SEGMENTS.—The Corporation shall, by regulation, identify and define not more than 8 segments of the primary mortgage market in which lenders and eligible borrowers have been determined to lack equitable access to the housing finance system facilitated by the Corporation. The regulation required under this paragraph shall set forth the criteria by which the Corporation identified such underserved market segments. The identified underserved market segments required to be identified and defined under this paragraph may include the following:

(A) Historically underserved communities, including rural and urban areas.

(B) Manufactured housing.

(C) Small balance loans.

(D) Low- and moderate-income creditworthy borrowers.

(E) Preservation of existing housing stock created by State or Federal laws.

(F) Affordable rental housing.

(3) REPORTS ON SERVING UNDERSERVED MARKET SEGMENTS.—

(A) ANNUAL REPORTS.—The Corporation shall require that each approved guarantor and approved aggregator engaged in a covered guarantee transaction or in a covered market-based risk-sharing transaction submit on annual basis a public report describing the actions taken by such approved guarantor or approved aggregator during the year, consistent with its business judgment, to provide credit to the underserved market segments identified and defined by the Corporation pursuant to this subsection, including corporate practices designed to serve such identified market segments. The annual report required under this subparagraph shall be approved by the board of directors and signed by the chief executive officer of the approved guarantor or approved aggregator submitting the report.

(B) REPORT TEMPLATE.—The Corporation may establish an optional template for the annual report required under subparagraph (A).

(C) REPORT NOT SUBJECT TO PRIOR REVIEW OR APPROVAL.—An annual report required under subparagraph (A) shall not be subject to prior review or approval by the Corporation.

(D) COORDINATION WITH OTHER FEDERAL AND STATE AGENCIES.—The Corporation shall, in establishing the requirements for the annual report required under subparagraph (A), coordinate with other Federal and State agencies, as necessary, to reduce duplicative reporting requirements.

(b) Limitations.—

(1) LIMITATION ON USE OF AUTHORITIES AND INFORMATION.—In carrying out this title, the Corporation shall not interfere with the exercise of business judgment of an approved aggregator or approved guarantor in determining which specific mortgage loans to include in a covered guarantee transaction or a covered market-based risk-sharing transaction, including through the Corporation’s use of—

(A) the approval process for a guarantor or an aggregator established under subtitle B of title III;

(B) its general supervisory and examination authorities under subtitle B of title III; or

(C) information collected under this section, section 501, or section 208.

(2) RULE OF CONSTRUCTION.—Nothing in this subsection shall prevent the imposition of the variable incentive-based fees authorized in section 501 nor shall it exempt covered entities from compliance with the Fair Housing Act (42 U.S.C. 3601 et seq.) and the Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) as required in section 408(d).

(3) CONSISTENCY WITH SAFETY AND SOUNDNESS.—The Corporation shall take appropriate measures designed to ensure that the requirements under this section are implemented in a manner consistent with safety and soundness principles.

SEC. 211. Office of Taxpayer Protection.

(a) Establishment.—The Corporation shall establish an Office of Taxpayer Protection whose functions shall include the responsibilities set forth under subsection (b).

(b) Responsibilities.—

(1) STUDY ON MARKET CONCENTRATION AND THE IMPACT OF THE FMIC GUARANTEE.—The Office of Taxpayer Protection shall, on a semi-annual basis, conduct a study and submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on—

(A) market concentration in the secondary mortgage markets, including the exposure of the Mortgage Insurance Fund to the top 10 largest approved aggregators and approved guarantors, as measured by the total outstanding principal balance at origination of eligible single-family mortgage loans collateralizing single-family covered securities for which such aggregator or guarantor has obtained insurance provided under this Act in the previous 6 months;

(B) the general state of underwriting standards in the origination of eligible single-family mortgage loans and the effect of insurance provided under this Act on such underwriting standards;

(C) whether the insurance provided under this Act produces a subsidy to any approved entity or approved entities;

(D) a comparison of the treatment in the secondary mortgage markets of mortgage-backed securities guaranteed by the Government National Mortgage Association and single-family covered securities insured under this Act, which shall include—

(i) a discussion of the characteristics of—

(I) mortgage loans collateralizing mortgage-backed securities guaranteed by the Government National Mortgage Association; and

(II) eligible single-family mortgage loans collateralizing single-family covered securities insured under this Act; and

(ii) an analysis of any actions taken in the secondary mortgage markets to manipulate the guarantee provided by the Government National Mortgage Association and the insurance provided under this Act to the advantage of the secondary mortgage markets; and

(E) what steps the Corporation has taken to minimize any potential long-term costs to the taxpayers and the Mortgage Insurance Fund relating to risks identified in subparagraphs (A) through (D).

(2) ANNUAL REPORT ON TAXPAYER PROTECTION AND THE EXPOSURE OF THE MORTGAGE INSURANCE FUND.—

(A) IN GENERAL.—The Office of Taxpayer Protection shall, on an annual basis, submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives containing the information required under subparagraph (B).

(B) REQUIRED CONTENT.—The report required under subparagraph (A) shall—

(i) include an analysis of the adequacy of—

(I) the first loss position required under this Act, including the sufficiency of any permissible risk-sharing or risk mitigation permitted as a substitute for equity capital intended to cover the initial credit losses on a covered security prior to use of any amounts in the Mortgage Insurance Fund, the ability of the first loss position to absorb credit loss on covered securities, and to protect taxpayers; and

(II) the performance of eligible single-family mortgage loans collateralizing single-family covered securities insured under this Act based upon current underwriting standards and how that performance differs from the performance of noneligible mortgage loans based upon the underwriting standards for such noneligible mortgage loans, including with respect to—

(aa) debt to income ratio;

(bb) loan to value ratios;

(cc) credit history;

(dd) loan documentation;

(ee) occupancy status;

(ff) credit enhancements;

(gg) housing counseling by a HUD-approved housing counseling agency;

(hh) loan payments;

(ii) the purpose of the loan, such as to refinance or purchase a home;

(jj) the type of loan product, such as a 30-year fixed interest rate mortgage loan, a 15-year fixed interest rate mortgage loan, or an adjustable interest rate mortgage loan;

(kk) the mortgage loan origination channel; and

(ll) such other underwriting criteria that would be useful to the Director of Taxpayer Protection; and

(ii) provide recommendations for such legislative, regulatory, or administrative actions to—

(I) address any need to further limit overexposure of the Mortgage Insurance Fund to any 1 approved entity or business practice;

(II) foster and encourage a robust private secondary mortgage market for noneligible mortgage loans and mortgage-backed securities that are not guaranteed by the Government National Mortgage Association; and

(III) assist the Corporation in protecting taxpayers, including a recommendation as to whether a counter-cyclical increase of the reserve ratio of the Mortgage Insurance Fund or of the capital standards required of individual approved guarantors is necessary to protect taxpayers.

(3) ANNUAL REPORT ON SYSTEM-WIDE LEVERAGE.—The Office of Taxpayer Protection shall, on an annual basis, submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on system-wide leverage in the secondary mortgage market.

(4) ANNUAL REPORT ON EARLY PAYMENT DEFAULTS.—The Office of Taxpayer Protection shall, on an annual basis, submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on early payment defaults on eligible single-family mortgage loans for the preceding year, which shall include any eligible single-family mortgage loan that becomes delinquent or that is in default within 24 months of the origination of the loan.

(5) INCLUSION IN ANNUAL REPORT.—The Corporation shall include the reports required under paragraphs (2) and (3) in the annual report required under section 206.

(6) RELIANCE ON PUBLIC DATA.—In preparing each report required under this section, the Office of Taxpayer Protection—

(A) shall use, to the maximum extent practicable, publicly available data and data otherwise collected under this Act; and

(B) shall not include or review any confidential information or information collected by the Corporation as part of its supervisory or examination authorities that is confidential.

SEC. 301. Duties and responsibilities.

(a) Duties.—The principal duties of the Corporation shall be to—

(1) carry out this Act in a manner that fulfills the purposes of the Corporation as described in section 201(b);

(2) minimize any potential long-term cost to the taxpayer, including through the use of the Mortgage Insurance Fund, the assessment of insurance fees, and the approval of approved entities and credit risk-sharing mechanisms;

(3) facilitate fair access to the secondary mortgage market for small mortgage lenders originating eligible single-family and multifamily mortgage loans, including through the establishment, approval, and oversight of small lender mutuals;

(4) ensure integrity and discipline in the mortgage market, particularly by monitoring the safety and soundness of regulated entities and approved entities;

(5) ensure that approved entities maintain the capacity to further the requirements of the Corporation pursuant to section 201(b)(5) and that approved guarantors, approved multifamily guarantors, and approved aggregators are in compliance with section 210(a)(3);

(6) promote the standardization of the secondary mortgage market through the use of uniform securitization agreements, servicing agreements, and the Securitization Platform;

(7) increase transparency in single-family and multifamily mortgage markets, including through the National Mortgage Database; and

(8) ensure continued, widespread availability of an affordable, long-term, fixed rate, prepayable mortgage, such as a 30-year fixed rate mortgage.

(b) Scope of authority.—The authority of the Corporation shall include the authority to exercise such incidental powers as may be necessary or appropriate to fulfill the duties and responsibilities of the Corporation set forth in this Act.

(c) Delegation of authority.—The Board of Directors may delegate to any duly authorized employee or representative any power vested in the Corporation by law.

SEC. 302. Standards for credit risk-sharing mechanisms.

(a) Approval.—

(1) AUTHORITY.—The Corporation shall develop, adopt, and publish, after notice and comment, standards for the consideration and, as appropriate, the approval of credit risk-sharing mechanisms that shall require that the first loss position of private market holders on single-family covered securities is—

(A) adequate to cover losses that might be incurred in a period of economic stress, including national and regional home price declines, such as those observed during moderate to severe recessions in the United States; and

(B) not less than 10 percent of the principal or face value of the single-family covered security at the time of issuance.

(2) FRAUD PROHIBITION.—

(A) PROHIBITION.—It shall be unlawful for any person to intentionally create and issue any instrument or security as a first loss position on a single-family covered security that such person knows or in the exercise of reasonable care should have known does not satisfy the requirements of this section.

(B) PENALTY.—Violations of subparagraph (A) shall be punishable in accordance with section 1343 of title 18, United States Code.

(b) Approval of credit risk-sharing mechanisms.—

(1) CONSIDERATIONS FOR APPROVAL OF VARIOUS MECHANISMS.—In approving credit risk-sharing mechanisms under subsection (a), the Corporation shall—

(A) consider proposals that include credit-linked structures or other instruments that are designed to absorb credit losses on single-family covered securities;

(B) consider any credit risk-sharing mechanisms undertaken by the enterprises;

(C) ensure that the first loss position is fully funded to meet the requirements of subsection (a)(1)(B);

(D) ensure that each type of proposed mechanism—

(i) enables the Corporation to verify that the first loss position is fully funded;

(ii) minimizes any potential long-term cost to the taxpayer;

(iii) accommodates the availability of mortgage credit on equal and transparent terms in the secondary mortgage market for—

(I) small mortgage lenders; and

(II) lenders from all geographic locations, including rural locations;

(iv) allows for broad availability of mortgage credit and secondary mortgage market financing through fluctuations in the business cycle for eligible single-family lending across all—

(I) regions;

(II) localities;

(III) institutions;

(IV) property types, including housing serving renters; and

(V) eligible borrowers;

(v) fulfills the requirements under section 314 with respect to loan modifications and foreclosure prevention;

(vi) does not prevent the securitization of refinanced or modified eligible single-family mortgage loans within single-family covered securities during a period when the authority under section 305(i) is exercised;

(vii) does not diminish market liquidity and resiliency;

(viii) does not prevent the refinancing of underwater eligible single-family mortgage loans; and

(ix) does not present an unnecessary risk to the Mortgage Insurance Fund;

(E) consider whether the approval of any credit risk-sharing mechanism will impair the operation and liquidity of forward market executions for eligible single-family mortgage loans and single-family covered securities, such as the To-Be-Announced market, taking into consideration other risk-sharing options available to market participants; and

(F) take necessary steps to prevent abuse and deceptive practices in the use of the credit risk-sharing mechanisms, including by—

(i) creating appropriate standards relating to—

(I) the vintages or categories of covered securities that are referenced by a credit risk-sharing mechanism;

(II) standardization of the terms and features of credit risk-sharing structures; and

(III) measures that prevent the duplicative sale by a guarantor of the same mortgage credit risk in the same pool of eligible single-family mortgage loans; and

(ii) requiring additional disclosures and affirmative representations that must be made by entities that create and issue credit risk-sharing mechanisms.

(2) NOTICE AND PUBLICATION.—The Corporation shall—

(A) provide prompt notice to any person seeking approval for a credit risk-sharing mechanism of the approval or denial of that credit risk-sharing mechanism; and

(B) make available detailed information regarding approved mechanisms on the website of the Corporation.

(3) REVIEW OF APPROVED CREDIT RISK-SHARING MECHANISMS.—

(A) AUTHORITY TO SUSPEND.—The Corporation may, from time to time and in its discretion—

(i) conduct reviews of approved credit risk-sharing mechanisms to determine whether such credit risk-sharing mechanisms continue to satisfy the considerations for approval under paragraph (1);

(ii) assess the functioning of the forward market for eligible single-family mortgage loans and single-family covered securities, including the To-Be-Announced market, to determine whether any approved credit risk-sharing mechanism has adversely affected the liquidity or resiliency of such market; and

(iii) suspend the approval of—

(I) any credit risk-sharing mechanism that it determines does not satisfy the considerations for approval under paragraph (1); or

(II) any credit risk-sharing mechanism that it determines has adversely affected the liquidity or resiliency of the forward market for eligible single-family mortgage loans and single-family covered securities, including the To-Be-Announced market.

(B) RECONSIDERATION.—

(i) DEVELOPMENT OF EXPEDITED PROCESS.—The Corporation shall develop an expedited process for the reinstatement of the approval of any credit risk-sharing mechanism that is suspended under subparagraph (A)(iii).

(ii) REVISION OF MECHANISM.—If a credit risk-sharing mechanism is suspended under subparagraph (A)(iii), the credit risk-sharing mechanism may be adapted or revised, as necessary, for reconsideration for reinstatement of the approval of the credit risk-sharing mechanism under the expedited process developed under clause (i).

(C) NO EFFECT ON EXISTING MECHANISMS.—The suspension of the approval of any credit risk-sharing mechanism under subparagraph (A)(iii) shall have no effect on the status of single-family covered securities and related instruments using the credit risk-sharing mechanism that were issued prior to the suspension.

(4) ADDITIONAL CREDIT RISK-SHARING MECHANISMS.—

(A) APPROVAL.—In addition to credit risk-sharing mechanisms approved by the Corporation under subsection (a), the Corporation shall consider and may approve additional fully-funded credit risk-sharing mechanisms that—

(i) may be employed by an approved guarantor to manage the credit risk relating to guarantees provided for single-family covered securities; and

(ii) do not represent the first loss position with respect to single-family covered securities.

(B) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be construed to limit an approved guarantor from engaging in other forms of risk-sharing or risk mitigation using mechanisms that have not been considered or approved by the Corporation.

(5) REPORTS.—

(A) IN GENERAL.—Not later than 1 year after the agency transfer date, and annually thereafter until the system certification date, the Corporation shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives that—

(i) discusses each credit risk-sharing mechanism that the Chairperson considered in carrying out the requirements of this section;

(ii) describes how the operation and execution of each approved credit risk-sharing mechanism fulfills the requirements of this section; and

(iii) explains how the Corporation arrived at the determinations made under clause (ii), including a discussion of the data considered.

(B) SUBSEQUENT REPORTS.—On the system certification date and annually thereafter, the Corporation shall publish in the Federal Register a list of the credit risk-sharing mechanisms that the Corporation approved or suspended, addressing the identical concerns set forth under clauses (i) through (iii) of subparagraph (A) and, with respect to any suspension, the considerations under paragraph (1) that are no longer satisfied.

(C) MULTIFAMILY REPORTS.—The Corporation shall include in the reports prepared under subparagraphs (A) and (B) a description of the credit risk-sharing mechanisms approved by the Corporation for multifamily guarantors pursuant to section 703.

(c) Collateral diversification standards.—The Corporation shall establish standards, after notice and comment, for the appropriate minimum level of diversification for eligible single-family mortgage loans that collateralize single-family covered securities that are issued subject to an approved credit risk-sharing mechanism in order to reduce the credit risk such single-family covered securities could pose to the Mortgage Insurance Fund.

(d) Rule of construction.—Nothing in this section shall be construed to require the Corporation to approve any credit risk-sharing mechanism.

(e) Applicability of the Commodity Exchange Act and Securities Act of 1933.—

(1) EXEMPTION FROM THE COMMODITY EXCHANGE ACT; PRIOR CONSULTATION REQUIRED.—

(A) EXEMPTION.—No counterparty that enters into a swap, as that term is defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a), for purposes of structuring any credit risk-sharing mechanism that is approved by the Corporation pursuant to this section, which credit risk-sharing mechanism is designed to be used or is used by a private market holder to assume losses and to reduce the specific risks arising from losses realized under such credit risk-sharing mechanism associated with any single-family covered security insured in accordance with section 303 or section 305, shall be deemed, by reason of such swap transaction, to be a commodity pool, as that term is defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a).

(B) PRIOR CONSULTATION REQUIRED.—Before approving any credit risk-sharing mechanism that would be exempt from the Commodity Exchange Act pursuant to subparagraph (A), the Corporation shall consult with the Commodity Futures Trading Commission.

(2) EXEMPTION FROM SECTION 27B OF THE SECURITIES ACT OF 1933; PRIOR CONSULTATION REQUIRED.—

(A) EXEMPTION.—Any credit risk-sharing mechanism that is approved by the Corporation pursuant to this section, which credit risk-sharing mechanism is designed to be used or is used by a private market holder to assume losses and to reduce the specific risks arising from losses realized under such credit risk-sharing mechanism associated with any single-family covered security insured in accordance with section 303 or section 305, shall be exempt from section 27B of the Securities Act of 1933 (15 U.S.C. 77z-2a).

(B) PRIOR CONSULTATION REQUIRED.—Before approving any credit risk-sharing mechanism that would be exempt from section 27B of the Securities Act of 1933 pursuant to subparagraph (A), the Corporation shall consult with the Securities and Exchange Commission.

SEC. 303. Insurance; Mortgage Insurance Fund.

(a) Authority.—The Corporation shall, in exchange for a fee in accordance with subsection (e)(8), insure the payment of principal and interest on a covered security with respect to any failure to pay on such covered security subject to the requirements of this section.

(b) Terms and conditions.—

(1) IN GENERAL.—The Corporation shall, by regulation, establish terms and conditions for the provision of insurance under this Act.

(2) SINGLE-FAMILY.—The terms and conditions required to be established under paragraph (1) shall, for single-family covered securities, include terms and conditions that ensure—

(A) eligible single-family mortgage loans collateralizing single-family covered securities have been delivered to the Platform; and

(B) with respect to each single-family covered security, either—

(i) private market holders have taken a first loss position that satisfies the requirements of section 302; or

(ii) an approved guarantor has provided a guarantee in satisfaction of the requirements of section 311.

(3) MULTIFAMILY.—The terms and conditions required to be established under paragraph (1) shall, for multifamily covered securities, include terms and conditions that ensure, with respect to each multifamily covered security, that an approved multifamily guarantor has provided a guarantee in satisfaction of the requirements of section 703.

(c) Cash payments; continued operations.—The Corporation shall facilitate the timely and unconditional payment of principal and interest on covered securities insured under this Act by paying, in cash when due, any shortfalls in principal and interest due on the covered security, and continuing to charge and collect any fees for the provision of insurance (in accordance with subsection (e)(8)) relating to the covered security in the event of any losses that may be incurred (1) in excess of a payment default on the covered security that exceeds the first loss position assumed by a private market holder, (2) in the case of a covered security that is guaranteed by an approved guarantor or approved multifamily guarantor as a result of the insolvency of the guarantor, or (3) upon the failure of the servicer or guarantor to transfer to the bond administrator for the covered security funds in amounts necessary to make timely payment of principal and interest due on the covered security.

(d) Cost recovery.—In the event the Corporation makes a payment on a covered security based on subsection (c)(3), the Corporation shall recover such amount paid, and reasonable costs and expenses, from the servicer or guarantor.

(e) Mortgage Insurance Fund.—

(1) ESTABLISHMENT.—On the agency transfer date, there shall be established the Mortgage Insurance Fund, which the Corporation shall—

(A) maintain and administer;

(B) use to carry out the insurance functions authorized under this Act, including any function or action authorized under section 305; and

(C) invest in accordance with the requirements of paragraph (10).

(2) DEPOSITS.—The Mortgage Insurance Fund shall be credited with any—

(A) fee amounts required to be deposited in the Fund under this section;

(B) amounts earned on investments pursuant to paragraph (10);

(C) assessment amounts authorized to be deposited into the Fund under section 405(b); and

(D) assessment amounts required to be deposited into the Fund under section 608(c).

(3) FEES FOR SINGLE-FAMILY AND MULTIFAMILY COVERED SECURITIES.—In determining the amount of any fee to be charged by the Corporation under this section, the Corporation shall charge a separate fee for single-family covered securities and multifamily covered securities, as appropriate for each asset class.

(4) SEPARATE ACCOUNTING REQUIRED.—The Corporation shall keep and maintain separate accounting for deposits in the Mortgage Insurance Fund related to fee amounts charged and collected for the insurance of single-family covered securities and multifamily covered securities.

(5) FIDUCIARY RESPONSIBILITY.—The Corporation has the responsibility to ensure that the Mortgage Insurance Fund remains financially sound.

(6) USE AND TREATMENT OF AMOUNTS IN THE FUND.—

(A) IN GENERAL.—The Mortgage Insurance Fund shall be solely available to the Corporation for use by the Corporation to carry out the functions authorized by this Act, for the expenses of the Corporation, and for—

(i) compensation of the employees of the Corporation;

(ii) purposes of—

(I) funding the CSP; and

(II) establishing the Securitization Platform under section 321, multifamily subsidiaries under section 701, the initial Small Lender Mutual under section 315, and any other entity authorized by this Act that facilitates an orderly transition to the new housing finance system; and

(iii) covering all other expenses of the Corporation.

(B) PROHIBITION.—The Mortgage Insurance Fund may not be used or otherwise diverted to cover any other expense of the Federal Government.

(C) EXEMPTION FROM APPORTIONMENT.—Notwithstanding any other provision of law, amounts in the Mortgage Insurance Fund shall not be subject to apportionment for the purposes of chapter 15 of title 31, United States Code, or under any other authority.

(D) NOT GOVERNMENT FUNDS.—Amounts in the Mortgage Insurance Fund shall not be construed to be Government or public funds or appropriated money.

(7) RESERVE RATIO GOALS FOR MORTGAGE INSURANCE FUND.—The Corporation shall—

(A) endeavor to ensure that the Mortgage Insurance Fund attains a reserve ratio—

(i) of 1.25 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title within 5 years of the system certification date; and

(ii) of 2.50 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title within 10 years of the system certification date; and

(B) after the expiration of the period referred to in subparagraph (A)(ii), endeavor to ensure that the Mortgage Insurance Fund maintains a reserve ratio of not less than 2.50 percent of the sum of the outstanding principal balance of the covered securities for which insurance is being provided under this title.

(8) MAINTENANCE OF RESERVE RATIO; ESTABLISHMENT OF FEES.—

(A) ESTABLISHMENT OF FEES.—The Corporation shall charge and collect a fee, and may in its discretion increase or decrease such fee, in connection with any insurance provided under this title to—

(i) achieve and maintain the reserve ratio goals established under paragraph (7); and

(ii) fund the operations of the Corporation.

(B) FEE CONSIDERATIONS.—In establishing fees under subparagraph (A), the Corporation shall consider—

(i) the expected operating expenses of the Mortgage Insurance Fund;

(ii) the risk of loss to the Mortgage Insurance Fund in carrying out the requirements under this Act;

(iii) the risk presented by, and the loss absorption capacity of, the credit risk-sharing mechanism or guarantee that is provided on the pool of eligible mortgage loans collateralizing the covered security to be insured under this title;

(iv) economic conditions generally affecting the mortgage markets;

(v) the extent to which the reserve ratio of the Mortgage Insurance Fund met—

(I) the reserve ratio set for the preceding 12-month period; or

(II) the reserve ratio goals established in paragraph (7); and

(vi) any other factors that the Corporation determines appropriate.

(C) FEE UNIFORMITY.—The fee required under subparagraph (A)—

(i) except as provided in subparagraph (D), shall be set at a uniform amount applicable to all institutions purchasing insurance under this title;

(ii) may not vary—

(I) by geographic location; or

(II) by the size of the institution to which the fee is charged; and

(iii) may not be based on the volume of insurance to be purchased.

(D) SEPARATE AND DISTINCT FEES BASED ON CREDIT RISK-SHARING MECHANISMS.—Nothing in subparagraph (C) shall prohibit or be construed to prohibit the Corporation from charging separate and distinct fees under this paragraph based on the type or form of credit risk-sharing mechanism applicable to the covered security to be insured under this title.

(E) DEPOSIT INTO MORTGAGE INSURANCE FUND.—Any fee amounts collected under this paragraph shall be deposited in the Mortgage Insurance Fund.

(9) FULL FAITH AND CREDIT.—The full faith and credit of the United States is pledged to the payment of all amounts from the Mortgage Insurance Fund which may be required to be paid under any insurance provided under this title.

(10) INVESTMENTS.—

(A) IN GENERAL.—The Board of Directors may request the Secretary of the Treasury to invest such portion of amounts in the Mortgage Insurance Fund that, in the judgment of the Board, is not required to meet the current needs of the Corporation.

(B) ELIGIBLE INVESTMENTS.—Pursuant to a request under subparagraph (A), the Secretary of the Treasury shall invest such portions in obligations of the United States with maturities suitable to the needs of the Corporation, as determined by the Board, and bearing interest at a rate determined by the Secretary of the Treasury, taking into consideration, at the time of the investment, market yields on outstanding marketable obligations of the United States of comparable maturity.

(C) PROHIBITED INVESTMENTS.—Amounts in the Mortgage Insurance Fund may not be invested in any—

(i) covered security insured under this title; or

(ii) mortgage-backed security issued by the enterprises.

(f) Mandatory loss review by the Inspector General of the Federal Mortgage Insurance Corporation.—

(1) IN GENERAL.—If the Mortgage Insurance Fund is required to make any payment of principal or interest, or both, on a covered security with respect to losses incurred on such covered security to any holder of such covered security, the Inspector General of the Federal Mortgage Insurance Corporation shall—

(A) review and make a written report to the Corporation regarding the decision of the Corporation to insure such covered security and the supervision by the Corporation of all market participants involved in the creation, issuance, servicing, guarantee of, or insurance of such covered security, which shall—

(i) ascertain why the covered security resulted in a loss to the Mortgage Insurance Fund; and

(ii) make recommendations for preventing any such loss in the future; and

(B) provide a copy of the report required under subparagraph (A) to—

(i) the Comptroller General of the United States;

(ii) the appropriate Federal banking agency or State regulatory authority, as appropriate, of any market participant involved in the creation, issuance, servicing, guarantee of, or insurance of such covered security; and

(iii) the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.

(2) DEADLINE FOR REPORT.—The Inspector General of the Federal Mortgage Insurance Corporation shall comply with paragraph (1) as expeditiously as possible, but in no event shall the report required under paragraph (1) be submitted later than 6 months after the date on which the loss was incurred.

(3) PUBLIC DISCLOSURE REQUIRED.—

(A) IN GENERAL.—The Corporation shall disclose any report on losses required under this subsection, upon request under section 552 of title 5, United States Code, without excising—

(i) any portion under section 552(b)(5) of that title; or

(ii) any information under paragraph (4) (other than trade secrets) or paragraph (8) of section 552(b) of that title.

(B) EXCEPTION.—Subparagraph (A) does not require the Corporation to disclose the name of any holder of the covered security, or information from which the identity of such a person could reasonably be ascertained.

(4) REVIEW BY COMPTROLLER GENERAL.—The Comptroller General of the United States shall, under such conditions as the Comptroller General determines to be appropriate, review any report made under paragraph (1) and recommend to the Corporation improvements in the supervision of market participants.

SEC. 304. Loan limits; Housing Price Index.

(a) Establishment.—The Corporation shall establish limitations governing the maximum original principal obligation of eligible single-family mortgage loans that may collateralize a covered security to be insured by the Corporation under this title.

(b) Calculation of amount.—The limitation set forth under subsection (a) shall be calculated with respect to the total original principal obligation of the eligible single-family mortgage loan and not merely with respect to the amount insured by the Corporation.

(c) Maximum limits.—

(1) IN GENERAL.—Except as provided in paragraph (2), the maximum limitation amount under this subsection shall not exceed $417,000 for a mortgage loan secured by a 1-family residence, for a mortgage loan secured by a 2-family residence the limit shall equal 128 percent of the limit for a mortgage loan secured by a 1-family residence, for a mortgage loan secured by a 3-family residence the limit shall equal 155 percent of the limit for a mortgage loan secured by a 1-family residence, and for a mortgage loan secured by a 4-family residence the limit shall equal 192 percent of the limit for a mortgage loan secured by a 1-family residence, except that such maximum limitations shall be adjusted effective January 1 of each year beginning after the effective date of this Act, subject to the limitations in this paragraph. Each adjustment shall be made by adding to each such amount (as it may have been previously adjusted) a percentage thereof equal to the percentage increase, during the most recent 12-month or 4-quarter period ending before the time of determining such annual adjustment, in the housing price index maintained by the Chairperson pursuant to subsection (d). If the change in such house price index during the most recent 12-month or 4-quarter period ending before the time of determining such annual adjustment is a decrease, then no adjustment shall be made for the next year, and the next upward adjustment shall take into account prior declines in the house price index, so that any adjustment shall reflect the net change in the house price index since the last adjustment. Declines in the house price index shall be accumulated and then reduce increases until subsequent increases exceed prior declines.

(2) HIGH-COST AREA LIMITS.—The limitations set forth in paragraph (1) may be increased by not more than 50 percent with respect to properties located in Alaska, Guam, Hawaii, and the Virgin Islands. Such foregoing limitations shall also be increased, with respect to properties of a particular size located in any area for which 115 percent of the median house price for such size residence exceeds the limitation for such size residence set forth under paragraph (1), to the lesser of 150 percent of such limitation for such size residence or the amount that is equal to 115 percent of the median house price in such area for such size residence.

(d) Housing Price Index.—

(1) NATIONAL INDEX.—The Corporation shall establish and maintain a method of assessing a national average single-family house price for use in calculating the loan limits for eligible single-family mortgage loans under subsection (c), and other averages as the Corporation considers appropriate, including—

(A) averages based on different geographic regions; and

(B) an average for houses whose mortgage collateralized single-family covered securities.

(2) CONSIDERATIONS.—In establishing the method described under subsection (a), the Corporation may take into consideration the data collected in carrying out the functions described under section 332, and such other data, existing house price indexes, and other measures as the Corporation considers appropriate.

SEC. 305. Authority to protect taxpayers in unusual and exigent market conditions.

(a) In general.—If the Corporation, upon the written agreement of the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury, and in consultation with the Secretary of Housing and Urban Development, determines that unusual and exigent circumstances have created or threaten to create an anomalous lack of mortgage credit availability within the single-family housing market, multifamily housing market, or entire United States housing market that could materially and severely disrupt the functioning of the housing finance system of the United States, the Corporation may, for a period of 6 months—

(1) provide insurance in accordance with section 303 to any single-family covered security regardless of whether such security has satisfied the requirements of section 302; and

(2) establish provisional standards for approved entities, notwithstanding any standard required under subtitle B or section 703, pursuant to section 607.

(b) Considerations.—In exercising the authority granted under subsection (a), the Corporation shall consider the severity of the conditions present in the housing markets and the risks presented to the Mortgage Insurance Fund in exercising such authority.

(c) Terms and conditions.—Insurance provided under subsection (a) shall be subject to such additional or different limitations, restrictions, and regulations as the Corporation may prescribe.

(d) Bailout strictly prohibited.—In exercising the authority granted under subsection (a), the Corporation may not—

(1) provide aid to an approved entity or an affiliate of the approved entity, if such approved entity is in bankruptcy or any other Federal or State insolvency proceeding; or

(2) provide aid for the purpose of assisting a single and specific company to avoid bankruptcy or any other Federal or State insolvency proceeding.

(e) Notice.—Not later than 7 days after authorizing insurance or establishing provisional standards under subsection (a), the Corporation shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that includes—

(1) the justification for the exercise of authority to provide such insurance or establish such provisional standards;

(2) evidence that unusual and exigent circumstances have created or threatened to create an anomalous lack of mortgage credit availability within the single-family housing market, multifamily housing market, or entire United States housing market that could materially and severely disrupt the functioning of the housing finance system of the United States; and

(3) evidence that failure to exercise such authority would have undermined the safety and soundness of the housing finance system.

(f) Additional exercise of authority.—

(1) IN GENERAL.—Subject to the limitation under subsection (g), the authority granted to the Corporation under subsection (a) may be exercised for 2 additional 9-month periods within any given 3-year period, provided that the Corporation, upon the written agreement of the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury, and in consultation with the Secretary of Housing and Urban Development—

(A) determines—

(i) for a second exercise of authority under subsection (a), by an affirmative vote of 23 or more of the Board of Directors then serving, that a second exercise of authority under subsection (a) is necessary; or

(ii) for a third exercise of authority under subsection (a), by an affirmative vote of 23 or more of the Board of Directors then serving, and an affirmative vote of 23 or more of the Board of Governors of the Federal Reserve System then serving, that a third exercise of authority under this section is necessary; and

(B) provides notice to Congress, as provided under subsection (e).

(2) ORDER OF EXERCISE OF AUTHORITY.—Any additional exercise of authority under this subsection may occur consecutively or non-consecutively.

(g) Limitation.—The authority granted to the Corporation under this section may not be exercised more than 3 times in any given 3-year period, which 3-year period shall commence upon the initial exercise of authority under subsection (a).

(h) Normalization and reduction of risk.—Following any exercise of authority under this section, the Corporation shall—

(1) establish a timeline for approved entities to meet the approval standards set forth in this Act; and

(2) in a manner and pursuant to a timeline that will minimize losses to the Mortgage Insurance Fund, establish a program to either—

(A) sell, in whole or in part, the first loss position on covered securities issued pursuant to this section to private market holders; or

(B) transfer for value to approved entities, or work with approved entities to sell, in whole or in part, the first lost position on covered securities issued pursuant to this section.

(i) Authority to respond to sustained national home price decline.—

(1) AUTHORITY.—In the event of a significant decline of national home prices, in at least 2 consecutive calendar quarters, the Corporation, by an affirmative vote of 23 or more of the Board of Directors then serving, may for a period of 6 months permit the transfer of guarantees of eligible mortgage loans that secure covered securities if such eligible mortgage loans are refinanced, regardless of the value of the underlying collateral securing such eligible mortgage loans.

(2) ADDITIONAL EXERCISE OF AUTHORITY.—The authority granted to the Corporation under paragraph (1) may be exercised for additional 6-month periods, if upon each additional extension of such authority there is an affirmative vote of 23 or more of the Board of Directors then serving.

(3) LIMITATION.—The Corporation shall not provide insurance under this section to any covered security that includes mortgage loans that do not meet the definition of an eligible mortgage loan, as defined in this Act, except for mortgage loans refinanced from eligible mortgage loans in covered securities.

(4) RULE OF CONSTRUCTION.—No provision in this section shall be construed as permitting the Corporation to lower any other requirement related to the requirements set forth under the definition of an eligible mortgage loan.

SEC. 306. General powers.

(a) Corporate powers.—The Federal Mortgage Insurance Corporation shall have the power—

(1) to adopt, alter, and use a corporate seal, which shall be judicially noticed;

(2) to enter into, execute, and perform contracts, leases, cooperative agreements, or other transactions, on such terms as it may deem appropriate, with any agency or instrumentality of the United States, or with any political subdivision thereof, or with any person, firm, association, or corporation;

(3) to execute, in accordance with its bylaws, all instruments necessary or appropriate in the exercise of any of its powers;

(4) in its corporate name, to sue and to be sued, and to complain and to defend, in any court or tribunal of competent jurisdiction, Federal or State, but no attachment, injunction, or other similar process, mesne or final, shall be issued against the property of the Corporation;

(5) to conduct its business without regard to any qualification or similar statute in any State of the United States;

(6) to lease, purchase, or acquire any property, real, personal, or mixed, or any interest therein, to hold, rent, maintain, modernize, renovate, improve, use, and operate such property, and to sell, for cash or credit, lease, or otherwise dispose of the same, at such time and in such manner as and to the extent that it may deem necessary or appropriate;

(7) to prescribe, repeal, and amend or modify, rules, regulations, or requirements governing the manner in which its general business may be conducted;

(8) to accept gifts or donations of services, or of property, real, personal, or mixed, tangible, or intangible, in aid of any of its purposes;

(9) to appoint and supervise personnel employed by the Corporation;

(10) to establish and maintain divisions, units, or other offices within the Corporation, including those established in sections 207, 208, 209, and 211 in order to carry out the responsibilities of this Act, and to satisfy the requirements of other applicable law; and

(11) to manage the affairs of the Corporation and conduct the business of the Corporation, as necessary.

(b) Litigation authority.—

(1) IN GENERAL.—In enforcing any provision of this Act, any regulation or order prescribed under this Act, or any other provision of law, rule, regulation, or order, or in any other action, suit, or proceeding to which the Corporation is a party or in which the Corporation is interested, and in the administration of conservatorships and receiverships, the Corporation may act in the Corporation’s own name and through attorneys or other agents acting on behalf of the Corporation.

(2) SUBJECT TO SUIT.—Except as otherwise provided by law, the Corporation shall be subject to suit (other than suits for claims for money damages) by a regulated entity or market participant with respect to any matter under this Act or any other applicable provision of law, rule, order, or regulation under this Act, in the United States district court for the judicial district in which the regulated entity or market participant has its principal place of business, or in the United States District Court for the District of Columbia, and the Corporation may be served with process in the manner prescribed by the Federal Rules of Civil Procedure.

(c) Expenditures.—Except as may be otherwise provided in this title, the Corporation shall determine the necessity for, and the character and amount of its obligations and expenditures, and the manner in which they shall be incurred, allowed, paid, and accounted for.

(d) Exemption from certain taxes.—The Corporation, including its franchise, capital, reserves, surplus, mortgage loans or other security holdings, and income shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.

(e) Exclusive use of name.—No individual, association, partnership, or corporation, except the body corporate named under section 201, shall hereafter use the words “Federal Mortgage Insurance Corporation” or any combination of such words, as the name or a part thereof under which such individual, association, partnership, or corporation shall do business. Violations of the foregoing sentence may be enjoined by any court of general jurisdiction at the suit of the proper body corporate named under section 201. In any such suit, the plaintiff may recover any actual damages flowing from such violation, and, in addition, shall be entitled to punitive damages (regardless of the existence or nonexistence of actual damages) of not exceeding $1,000 for each day during which such violation is committed or repeated.

(f) Fiscal agents.—The Federal Reserve banks are authorized and directed to act as depositories, custodians, and fiscal agents for the Corporation, for its own account or as fiduciary, and such banks shall be reimbursed for such services in such manner as may be agreed upon, and the Corporation may itself act in such capacities, for its own account or as fiduciary, and for the account of others.

(g) Other powers.—The Corporation is authorized to assess and collect fees on regulated entities and approved entities, including for applications, examinations, and other purposes, as authorized by this Act.

(h) Federal Home Loan Bank assessment.—The Corporation shall have the authority to assess a fee on the Federal Home Loan Banks to cover the necessary costs related to supervising the Federal Home Loan Banks. The costs associated with the secondary market activities of the Federal Home Loan Banks pursuant to section 312 shall be covered by the fee charged pursuant to this subsection.

(i) Rule of construction related to fair housing.—Nothing in this Act shall be construed as authorizing the Corporation to waive, repeal, amend, or modify requirements relating to fair housing law, including those requirements under the Fair Housing Act (42 U.S.C. 3601 et seq.) and the Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.).

SEC. 307. Exemptions.

(a) Securities exempt from Securities and Exchange Commission regulation.—

(1) COVERED SECURITIES.—

(A) IN GENERAL.—All securities insured or guaranteed by the Corporation shall, to the same extent as securities that are direct obligations of or obligations guaranteed as to principal or interest by the United States, be deemed to be exempt securities within the meaning of the laws administered by the Securities and Exchange Commission.

(B) CONFORMING AMENDMENT.—The first sentence of section 3(a)(2) of the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is amended by inserting “or any security insured or guaranteed by the Federal Mortgage Insurance Corporation;” after “Federal Reserve bank;”.

(2) CREDIT RISK-SHARING MECHANISMS.—Section 27B(c) of the Securities Act of 1933 (15 U.S.C. 77z-2a(c)) is amended—

(A) in paragraph (1), by striking “or” at the end;

(B) in paragraph (2), by striking the period at the end and inserting “; or”; and

(C) by adding at the end the following:

“(3) purchases or sales of any asset-backed security that is a credit risk-sharing mechanism approved by the Federal Mortgage Insurance Corporation in accordance with section 302 or section 703(c) of the Housing Finance Reform and Taxpayer Protection Act of 2014, which credit risk-sharing mechanism is designed to be used or is used, as determined by the Federal Mortgage Insurance Corporation, by a private market holder to assume losses and to reduce the specific risks arising from losses realized under such credit risk-sharing mechanism associated with any pool of eligible mortgage loans that collateralizes a covered security insured in accordance with section 303 or 305 of that Act.”.

(b) QRM exemption.—Section 15G(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–11(e)) is amended—

(1) in paragraph (3)(B)—

(A) by striking “Association, the” and inserting “Association and the”; and

(B) by striking “and the Federal home loan banks”; and

(2) by adding at the end the following:

“(7) COVERED SECURITIES INSURED BY THE FEDERAL MORTGAGE INSURANCE CORPORATION.—Notwithstanding any other provision of this section, the requirements of this section shall not apply to any covered security, as such term is defined under section 2 of the Housing Finance Reform and Taxpayer Protection Act of 2014, insured or guaranteed by the Federal Mortgage Insurance Corporation or any institution that is subject to the supervision of the Federal Mortgage Insurance Corporation.”.

(c) Counterparties exempt from the Commodity Exchange Act.—Section 1a(10) of the Commodity Exchange Act (7 U.S.C. 1a(10)) is amended by adding at the end the following:

“(C) EXEMPTION.—Solely as it relates to the specific role of a counterparty in connection with the swap transaction described in this paragraph, the term ‘commodity pool’ does not include any counterparty that enters into any swap for purposes of structuring a credit risk-sharing mechanism that is approved by the Federal Mortgage Insurance Corporation in accordance with section 302 or section 703(c) of the Housing Finance Reform and Taxpayer Protection Act of 2014, which credit risk-sharing mechanism is designed to be used or is used, as determined by the Federal Mortgage Insurance Corporation, by a private market holder to assume losses and to reduce the specific risks arising from losses realized under such credit risk-sharing mechanism associated with any pool of eligible mortgage loans that collateralizes a covered security insured in accordance with section 303 or 305 of that Act.”.

SEC. 308. Regulatory consultation and coordination.

(a) Consultation permitted.—The Corporation may, in carrying out any duty, responsibility, requirement, or action authorized under this Act, consult with the Federal regulatory agencies, any individual Federal regulatory agency, the Secretary of the Treasury, the Secretary of Housing and Urban Development, any State banking regulator, any State insurance regulator, and any other State agency, as the Corporation determines necessary and appropriate.

(b) Coordination required.—The Corporation shall, as required by this Act, in carrying out any duty, responsibility, requirement, or action authorized under this Act, coordinate with the Federal regulatory agencies, any individual Federal regulatory agency, the Secretary of the Treasury, the Secretary of Housing and Urban Development, any State banking regulator, any State insurance regulator, and any other State agency.

(c) Avoidance of duplication.—To the fullest extent possible, the Corporation shall—

(1) avoid duplication of examination activities, reporting requirements, and requests for information;

(2) rely on examination reports made by other Federal or State regulatory agencies relating to an approved entity and its subsidiaries, if any; and

(3) ensure that approved entities are not subject to conflicting supervisory demands by the Corporation and other Federal regulatory agencies.

(d) Protection of privileges.—

(1) IN GENERAL.—Pursuant to the authorities provided under subsections (a) and (b), to facilitate the consultative process and coordination, the Corporation may share information with the Federal regulatory agencies, any individual Federal regulatory agency, the Secretary of the Treasury, the Secretary of Housing and Urban Development, any State bank supervisor, any State insurance regulator, any other State agency, or any foreign banking authority, on a one-time, regular, or periodic basis, as determined by the Corporation, regarding the capital assets and liabilities, financial condition, risk management practices, or any other practice of any market participant.

(2) PRIVILEGE PRESERVED.—Information shared by the Corporation pursuant to paragraph (1) shall not be construed as waiving, destroying, or otherwise affecting any privilege or confidential status that any market participant or any other person may claim with respect to such information under Federal or State law as to any person or entity other than such agencies, agency, supervisor, or authority.

(3) RULE OF CONSTRUCTION.—No provision of this subsection may be construed as implying or establishing that—

(A) any person waives any privilege applicable to information that is shared or transferred under any circumstance to which this subsection does not apply; or

(B) any person would waive any privilege applicable to any information by submitting the information directly to the Federal regulatory agencies, any individual Federal regulatory agency, any State bank supervisor, any State insurance regulator, any other State agency, or any foreign banking authority, but for this subsection.

(e) Federal and State authority preserved.—Unless otherwise expressly provided by this section, no provision of this section shall limit or be construed to limit, in any way, the existing authority of any Federal agency or State regulatory authority.

SEC. 309. Authority to issue regulations.

(a) General authority.—The Corporation may prescribe such regulations and issue such guidelines, orders, requirements, or standards as are necessary to—

(1) carry out this Act, or any amendment made by this Act; and

(2) ensure—

(A) competition among approved entities in the secondary mortgage market;

(B) liquidity in the secondary mortgage market and the forward execution market for eligible single-family mortgage loans and single-family covered securities, such as the To-Be-Announced market; and

(C) mitigation of systemic risk in the secondary mortgage market.

(b) Capital standards.—

(1) IN GENERAL.—For each type of covered entity the Corporation shall establish, by regulation, capital standards and related solvency standards necessary to implement the provisions of this Act.

(2) DEFINITIONS.—

(A) IN GENERAL.—The regulations required under this subsection shall define all such terms as are necessary to carry out the purposes of this subsection.

(B) CONSIDERATIONS IN DEFINING INSTRUMENTS AND CONTRACTS THAT QUALIFY AS CAPITAL.—In defining instruments and contracts that qualify as capital pursuant to subparagraph (A), the Corporation—

(i) shall include such instruments and contracts that will absorb losses before the Mortgage Insurance Fund; and

(ii) may assign significance to those instruments and contracts based on the nature and risks of such instruments and contracts.

(C) CONSIDERATIONS IN DEFINING CAPITAL RATIOS.—Solely for the purposes of calculating a capital ratio appropriate to the business model of the applicable entity pursuant to subparagraph (A), the Corporation shall consider for the denominator—

(i) total assets;

(ii) total liabilities;

(iii) risk in force; or

(iv) unpaid principal balance.

(3) DESIGNED TO ENSURE SAFETY AND SOUNDNESS.—The capital and related solvency standards established under this subsection shall be designed to—

(A) ensure the safety and soundness of a covered entity;

(B) minimize the risk of loss to the Mortgage Insurance Fund;

(C) in consultation and coordination with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration, reduce the potential for regulatory arbitrage between capital standards for covered entities and capital standards promulgated by Federal regulatory agencies for insured depository institutions and their affiliates; and

(D) be specifically tailored to accommodate a diverse range of business models that may be employed by covered entities.

(4) SUPPLEMENTAL CAPITAL REQUIREMENTS.—In order to prevent or mitigate risks to the secondary mortgage market of the United States that could arise from the material financial distress or failure, or ongoing activities, of covered entities that are large approved aggregators or large approved guarantors that engage in covered guarantee transactions, the Corporation, by regulation—

(A) shall establish supplemental capital requirements for covered entities that are large approved aggregators or large approved guarantors; and

(B) may establish such other standards for covered entities that are large approved aggregators or large approved guarantors that the Corporation determines necessary or appropriate.

(c) Market share limitation for certain large entities.—The Corporation shall establish, by regulation, market share limitations for large approved aggregators and large approved guarantors that would take effect only in the event the Corporation has reason to believe the supplemental standards established under subsection (b)(4) are insufficient to prevent or mitigate risks to the secondary mortgage market of the United States that could arise from the material financial distress or failure, or ongoing activities, of such approved aggregators and approved guarantors.

(d) Recognition of distinctions between the approved entities and the Federal Home Loan Banks.—

(1) IN GENERAL.—Prior to promulgating any regulation or taking any other formal or informal action of general applicability and future effect relating to the Federal Home Loan Banks, including the issuance of an advisory document or examination guidance, the Chairperson, in consultation with the Office of Federal Home Loan Bank Supervision, shall consider the differences between the Federal Home Loan Banks and approved entities with respect to—

(A) the Banks’—

(i) cooperative ownership structure;

(ii) mission of providing liquidity to its members;

(iii) affordable housing and community development mission;

(iv) capital structure; and

(v) joint and several liability; and

(B) any other differences that the Corporation considers appropriate.

(2) CAPITAL CONSIDERATIONS.—The Corporation, in coordination with the Office of Federal Home Loan Bank Supervision, shall establish capital standards, as required under section 309(b), with respect to a Federal Home Loan Bank, or subsidiary or joint office thereof, that is approved as an aggregator under section 312, that—

(A) are adequate to support the role of a Federal Home Loan Bank as a covered entity, consistent with the safe and sound operations of the Bank or Banks involved; and

(B) do not adversely impact the traditional liquidity and advance business of the Federal Home Loan Bank System or the marketability or creditworthiness of Federal Home Loan Bank consolidated obligations.

(e) Regulations relating to force-placed insurance.—

(1) IN GENERAL.—The Corporation shall, by regulation, set standards for the purchase of force-placed insurance by market participants.

(2) LIMITATION.—No standards developed, adopted, or published under paragraph (1) shall concern the regulation of the business of insurance or preempt any State law, regulation, or procedure concerning the regulation of the business of insurance.

(f) Use and protection of personally identifiable information.—

(1) PRIVACY CONSIDERATIONS.—In collecting information from any person, in publicly releasing information held by the Corporation, or in requiring approved entities to publicly report information, the Corporation shall take steps to ensure that proprietary, personal, or confidential consumer information that is protected from public disclosure under section 552(b) or 552a of title 5, United States Code, or any other provision of law, is not made public.

(2) TREATMENT OF APPROVED ENTITIES.—With respect to the application of any provision of the Right to Financial Privacy Act of 1978 to a disclosure by an approved entity subject to this subsection, the approved entity shall be treated as if it were a “financial institution” as defined in section 1101 of that Act (12 U.S.C. 3401).

(3) NON DISCLOSURE.—

(A) IN GENERAL.—Unless otherwise specified by this Act, any personally identifiable information obtained or maintained by the Corporation in connection with any supervision or enforcement authority or function, including the Office of General Counsel and Office of the Inspector General of the Federal Mortgage Insurance Corporation, may not be disclosed to any non supervisory or non enforcement office, division, or employee of the Corporation, or to any other Federal or State agency unless—

(i) the information is necessary and appropriate for such office, division, or employee of the Corporation to comply with this Act, and the office, division, or employee cannot reasonably obtain the information through the normal course of business of such office, division, or employee;

(ii) the other Federal or State agency has satisfied any conditions of information sharing that the Corporation may establish, including treatment of personally identifiable information and sharing of information that shall conform to the standards for protection of the confidentiality of personally identifiable information and for data integrity and security that are applicable to Federal agencies; or

(iii) the records are relevant to a legitimate law enforcement inquiry, or intelligence or counterintelligence activity, investigation, or analysis related to international terrorism within the jurisdiction of the receiving entity.

(B) PROTECTION OF PERSONALLY IDENTIFIABLE INFORMATION BY SPECIFIC OFFICES.—Any office created under section 207(a)(1)(B) shall—

(i) develop standards regarding treatment and confidentiality of personally identifiable information and the collection and sharing of information that are tailored to the purpose or mission of the office; and

(ii) obtain approval from the Chairperson of the standards developed under clause (i) prior to the operation of the office.

(g) Consumer Privacy.—The Corporation shall not obtain from an approved entity any personally identifiable financial information about a consumer from the financial records of the approved entity, except—

(1) if the financial records are reasonably described in a request by the Corporation and the consumer provides written permission for the disclosure of such information by an approved entity to the Corporation; or

(2) as may be specifically permitted or required under other applicable provisions of law and in accordance with the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.).

(h) Option for approved guarantors and approved aggregators.—

(1) ESTABLISHMENT OF PROCESS FOR APPROVAL.—The Corporation may, if it determines necessary or appropriate, establish a process and criteria for approved guarantors and approved aggregators to apply to the Corporation for approval to operate a cash window for the purchase of individual eligible single-family mortgage loans.

(2) REQUIREMENTS.—If the Corporation establishes a process and criteria under paragraph (1), the Corporation—

(A) may grant approval to an approved guarantor or an approved aggregator that applies to operate a cash window for the purchase of individual eligible single-family mortgage loans only if the Corporation determines that—

(i) the approved guarantor or approved aggregator meets the criteria established under paragraph (1); and

(ii) the operation of the cash window would not pose a risk to the Mortgage Insurance Fund; and

(B) to ensure the safety and soundness of each approved guarantor and approved aggregator, shall establish standards for the regulation, supervision, and operation of each cash window that an approved guarantor or approved aggregator is approved to operate under this paragraph.

SEC. 310. Equivalency in protection of the Mortgage Insurance Fund.

In order to protect the Mortgage Insurance Fund and promote multiple sources of first loss positions, the Corporation shall seek to ensure equivalent loss absorption capacity between approved credit risk-sharing mechanisms pursuant to section 302 and capital standards for approved guarantors pursuant to section 311.

SEC. 311. Approval and supervision of guarantors.

(a) Standards for approval of guarantors.—

(1) IN GENERAL.—The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of guarantors to guarantee the timely payment of principal and interest on securities collateralized by eligible single-family mortgage loans and insured by the Corporation.

(2) REQUIRED STANDARDS.—The standards required under paragraph (1) shall include—

(A) the financial history and condition of the guarantor;

(B) a requirement that the guarantor maintain capital levels as defined by the Corporation, pursuant to subsection (g);

(C) the capability of the management of the guarantor;

(D) the general character and fitness of the officers and directors of the guarantor, including the compliance history of the guarantor’s officers and directors with Federal and State laws and the rules and regulations promulgated by self-regulatory organizations (as defined in section 3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)), as applicable;

(E) the risk presented by the guarantor to the Mortgage Insurance Fund;

(F) the adequacy of insurance and fidelity coverage of the guarantor;

(G) the ability of the guarantor to—

(i) at the discretion of the guarantor, transfer investment risk and credit risk to private market holders in the single-family market in accordance with the credit risk-sharing mechanisms approved by the Corporation under section 302;

(ii) create mechanisms to guarantee multi-lender pools; and

(iii) ensure that eligible single-family mortgage loans that collateralize a single-family covered security insured under this title are originated in compliance with the requirements of this Act;

(H) the capacity of the guarantor to take the first loss position;

(I) that the guarantor has the capacity to guarantee eligible single-family mortgage loans in a manner that furthers the purposes of the Corporation described in section 201(b)(5);

(J) a requirement that the guarantor timely issue publicly available audited financial statements on an annual basis prepared in accordance with generally accepted accounting principles used in the industry;

(K) that the guarantor is in compliance with section 210(a)(3);

(L) that the guarantor has substantial analytical capabilities to effectively manage credit risk;

(M) that the guarantor does not originate eligible single-family mortgage loans and is not an affiliate of a person that actively engages in the business of originating eligible single-family mortgage loans; and

(N) any other standard the Corporation determines necessary to protect the Mortgage Insurance Fund.

(3) RULE OF CONSTRUCTION.—Nothing in subparagraph (I) of paragraph (2) shall be construed to prevent the Corporation from approving a small or specialty guarantor, provided that the guarantor has the capacity to adequately diversify its risk to meet appropriate safety and soundness concerns.

(4) CONSULTATION AND COORDINATION.—To promote consistency and minimize regulatory conflict, the Corporation shall consult and coordinate with appropriate Federal and State regulators and officials when developing standards pursuant to this subsection.

(b) Application and approval.—

(1) APPLICATION PROCESS.—

(A) IN GENERAL.—The Corporation shall establish an application process, in such form and manner and requiring such information as the Corporation may require, for the approval of a guarantor under this section.

(B) APPLICATION REVIEW.—The Corporation shall establish internal timelines for its processing of an application under this section, including timelines for any action to approve or to deny an application under this section.

(C) PROHIBITION ON CONTROL BY INSURED DEPOSITORY INSTITUTIONS OR AFFILIATES OF INSURED DEPOSITORY INSTITUTIONS.—

(i) IN GENERAL.—It shall be unlawful for an insured depository institution or an affiliate of an insured depository institution to control an approved guarantor.

(ii) RULE OF CONSTRUCTION REGARDING CONTROL.—For purposes of this subparagraph, any insured depository institution or affiliate of an insured depository institution has control over an approved guarantor if the company directly or indirectly or acting through 1 or more other persons owns, controls, or has power to vote 10 percent or more of any class of voting shares of the approved guarantor.

(2) APPROVAL.—The Corporation may approve any application made pursuant to paragraph (1), provided the guarantor meets the standards established under subsection (a).

(3) DENIAL.—The Corporation shall have the authority to deny any application made pursuant to paragraph (1) if an officer or director of the guarantor has, at any time prior to the date of the approval of such application, been—

(A) subject to a statutory disqualification pursuant to section 3(a)(39) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(39)); or

(B) suspended, removed, or prohibited from participation pursuant to section 8(g) of the Federal Deposit Insurance Act (12 U.S.C. 1818(g)), prohibited from certain action pursuant to paragraphs (6) or (7) of section 8(e) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)), subject to an action resulting in a written agreement or other written statement under section 8(u)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(u)(1)), for which a violation may be enforced by an appropriate Federal banking agency, or subject to any final order issued with respect to any administrative enforcement proceeding initiated by such agency under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818).

(4) NOTICE AND PUBLICATION.—The Corporation shall—

(A) provide prompt notice to a guarantor of the approval or denial of any application of the guarantor to become an approved guarantor under this section;

(B) publish a notice in the Federal Register upon approval of any guarantor; and

(C) maintain an updated list of approved guarantors on the website of the Corporation.

(c) Requirement to maintain approval status.—

(1) AUTHORITY TO ISSUE ORDER.—If the Corporation determines that an approved guarantor no longer meets the standards for such approval or violates a requirement under this Act, including any standard, regulation, or order promulgated in accordance with this Act, the Corporation may—

(A) suspend or revoke the approved status of the approved guarantor; or

(B) take any other action with respect to such approved guarantor as may be authorized under this Act.

(2) RULE OF CONSTRUCTION.—The suspension or revocation of the approved status of an approved guarantor under this section shall have no effect on the status as a covered security of any covered security collateralized by eligible mortgage loans with which the approved guarantor contracted prior to the suspension or revocation.

(3) PUBLICATION.—The Corporation shall—

(A) promptly publish a notice in the Federal Register upon suspension or revocation of the approval of any approved guarantor; and

(B) maintain an updated list of such approved guarantors on the website of the Corporation.

(4) DEFINITION.—In this subsection, the term “violate” includes any action, taken alone or with others, for or toward causing, bringing about, participating in, counseling, or aiding or abetting, a violation of the requirements under this Act.

(d) Prudential standards for supervision.—The Corporation shall prescribe prudential standards for approved guarantors in order to—

(1) ensure—

(A) the safety and soundness of approved guarantors; and

(B) the maintenance of approval standards by approved guarantors; and

(2) minimize the risk presented to the Mortgage Insurance Fund.

(e) Reports and examinations.—For purposes of determining whether an approved guarantor is fulfilling the requirements under this Act, the Corporation shall have the authority to require reports from and examine an approved guarantor, in the same manner and to the same extent as the Federal Deposit Insurance Corporation has with respect to an insured depository institution under the provisions of subsection (a) of section 9 of the Federal Deposit Insurance Act (12 U.S.C. 1819).

(f) Enforcement.—The Corporation shall have the authority to enforce the provisions of this Act with respect to an approved guarantor, in the same manner and to the same extent as the Federal Deposit Insurance Corporation has with respect to an insured depository institution under the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818).

(g) Capital standards.—

(1) IN GENERAL.—Pursuant to the requirement to establish capital and related solvency standards under section 309(b), the Corporation shall establish standards for approved guarantors that require an approved guarantor to—

(A) hold 10 percent capital; and

(B) maintain solvency levels adequate for the approved guarantor to withstand losses that might be incurred by the approved guarantor in a period of economic stress, including national and regional home price declines, such as those observed during moderate to severe recessions in the United States.

(2) RISK-SHARING CONSIDERATIONS.—For purposes of paragraph (1), the Corporation shall consider the extent, amount, and form of risk-sharing and risk mitigation through the use by approved guarantors of credit risk-sharing mechanisms approved pursuant to section 302(b)(4). The Corporation shall allow such risk-sharing and risk mitigation to fulfill required amounts of capital to be held under paragraph (1)(A) such that it ensures an equivalent amount of loss absorption capacity as required under section 302(a)(1)(B) while maintaining an appropriate structure of capital as determined by the Corporation.

(3) STRESS TESTS.—The Corporation shall conduct appropriate stress tests of each approved guarantor that has total assets of more than $10,000,000,000, provided that such stress tests shall be—

(A) specifically tailored to the business model of the approved guarantor; and

(B) utilized to—

(i) ensure the safety and soundness of the approved guarantor; and

(ii) minimize the risk the approved guarantor may present to the Mortgage Insurance Fund.

(h) Resolution authority for failing guarantors.—

(1) IN GENERAL.—Notwithstanding any other provision of Federal law, the law of any State, or the constitution of any State, the Corporation shall—

(A) have the authority to act, in the same manner and to the same extent, with respect to an approved guarantor as the Federal Deposit Insurance Corporation has with respect to an insured depository institution under subsections (c) through (s) of section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821), section 12 of the Federal Deposit Insurance Act (12 U.S.C. 1822), and section 13 of the Federal Deposit Insurance Act (12 U.S.C. 1823), while tailoring such actions to the specific business model of the approved guarantor, as may be necessary to properly exercise such authority under this subsection;

(B) in carrying out any authority provided in subparagraph (A), act, in the same manner and to the same extent, with respect to the Mortgage Insurance Fund as the Federal Deposit Insurance Corporation may act with respect to the Deposit Insurance Fund under the provisions of the Federal Deposit Insurance Act set forth in subparagraph (A);

(C) prescribe regulations governing the applicable rights, duties, and obligations of an approved guarantor placed into resolution under this subsection, its creditors, counterparties, and other persons, as the Corporation deems necessary to properly exercise the authority provided in subparagraph (A);

(D) consistent with the authorities provided in subparagraph (A), immediately place an insolvent approved guarantor into receivership; and

(E) upon placing an approved guarantor into receivership, treat single-family covered securities insured by the Corporation under section 303 in the same manner as the Federal Deposit Insurance Corporation treats deposit liabilities under section 11(d)(11)(A)(ii) of the Federal Deposit Insurance Act and insured deposits under section 11(f) of the Federal Deposit Insurance Act, where the Corporation shall have the same right of subrogation as the Federal Deposit Insurance Corporation has under section 11(g) of the Federal Deposit Insurance Act.

(2) LEAST-COST RESOLUTION REQUIRED.—The Corporation may not exercise any authority under paragraph (1) with respect to any approved guarantor unless the total amount of the expenditures by the Corporation and obligations incurred by the Corporation in connection with the exercise of any such authority with respect to such approved guarantor is the least costly to the Mortgage Insurance Fund, consistent with the least cost approach specified in the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), of all possible methods for meeting the Corporation's obligations under this Act and expeditiously concluding its resolution activities, subject to section 13 of the Federal Deposit Insurance Act where the Corporation and the Board of Directors shall have the same authority as the Federal Deposit Insurance Corporation and the Federal Deposit Insurance Corporation’s board of directors.

(3) TAXPAYER PROTECTION.—The Corporation, in carrying out any authority provided in this subsection, shall prescribe regulations to ensure that any amounts owed to the United States, unless the United States agrees or consents otherwise, shall have priority following administrative expenses of the receiver when satisfying unsecured claims against an approved guarantor, or the receiver therefor, that are proven to the satisfaction of the receiver.

(i) Hearing.—Upon notice of denial of an application for approval under subsection (b) or upon a notice of suspension or revocation of the approved status of an approved guarantor under subsection (c), the applicant or approved guarantor shall be afforded a hearing under subsection (h) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818(h)), in the same manner and to the same extent as if the Corporation were the appropriate Federal banking agency, provided that the approved guarantor submits a request to the Corporation for a hearing not later than 10 days after the date on which the notice is published under subsection (b)(3) or (c)(3).

(j) Other activities.—An approved guarantor shall be prohibited from being an approved aggregator.

(k) Provision of pool level insurance.—Subject to such standards as the Corporation may provide, an approved guarantor may provide insurance or other credit enhancement on a pool of eligible single-family mortgage loans collateralizing a single-family covered security insured under this title.

(l) Prohibited activity.—An approved guarantor may not—

(1) originate eligible single-family mortgage loans; or

(2) be an affiliate of a person that actively engages in the business of originating eligible single-family mortgage loans.

(m) Guarantors required to pay claims.—Subject to such standards as the Corporation may provide, an approved guarantor may not for any reason withhold payment of funds that would ensure holders of single-family covered securities receive timely payment of principal and interest on single-family covered securities. The Corporation shall by regulation develop a process for the mediation and resolution of disputed payment amounts.

SEC. 312. Approval and supervision of aggregators.

(a) Standards for approval of mortgage aggregators.—

(1) IN GENERAL.—The Corporation shall develop, adopt, and publish standards for the approval by the Corporation of mortgage aggregators to deliver eligible single-family mortgage loans to the Securitization Platform for securitization by such aggregator as a single-family covered security.

(2) REQUIRED STANDARDS.—The standards required under paragraph (1) shall include standards with respect to the ability of mortgage aggregator to—

(A) aggregate eligible single-family mortgage loans into pools, including multi-lender pools, as appropriate;

(B) transfer investment risk and credit risk to private market participants in accordance with the credit risk-sharing mechanisms approved by the Corporation under section 302;

(C) ensure equitable access to the secondary mortgage market for single-family covered securities for all institutions regardless of size or geographic location; and

(D) ensure that eligible single-family mortgage loans that collateralize a single-family covered security insured under this title are originated in compliance with the requirements of this Act.

(3) ADDITIONAL REQUIRED STANDARDS.—The standards required under paragraph (1) shall also include—

(A) the financial history and condition of the mortgage aggregator;

(B) the adequacy of the capital structure of the mortgage aggregator;

(C) the capability of the management of the mortgage aggregator;

(D) the general character and fitness of the officers and directors of the mortgage aggregator, including the compliance history of the mortgage aggregator’s officers and directors with Federal and State laws and the rules and regulations promulgated by self-regulatory organizations (as defined in section 3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)), as applicable;

(E) the risk presented by the mortgage aggregator to the Mortgage Insurance Fund;

(F) the adequacy of insurance and fidelity coverage of the mortgage aggregator;

(G) a requirement that the mortgage aggregator submit audited financial statements to the Corporation;

(H) that the mortgage aggregator has the capacity to aggregate mortgage loans in a manner that furthers purposes of the Corporation described in section 201(b)(5);

(I) that the mortgage aggregator is in compliance with section 210(a)(3); and

(J) any other standard the Corporation determines necessary to protect the Mortgage Insurance Fund.

(4) RULE OF CONSTRUCTION.—Nothing in subparagraph (H) of paragraph (3) shall be construed to prevent the Corporation from approving a small or specialty mortgage aggregator, provided that the mortgage aggregator has the capacity to adequately diversify its risk to meet appropriate safety and soundness concerns of the Corporation.

(5) CONSULTATION AND COORDINATION.—To promote consistency and minimize regulatory conflict, the Corporation shall consult and coordinate with appropriate Federal and Stat